Joe Dinga Pefok (Uncle Joe)
The Microfinance Institutions (Credit Unions) That We See Around Are Not All The Same, As They Are In Different Categories (1, 2, 3). Despite The Propaganda Being Made, The Fact Is That A Bulk Of Microfinance Institutions In Cameroon Are of Category 1, Which Is The Lowest. Also, Most Of Them, Just As Their Names Show, Operate More Like “Village Credit Unions”.
Many microfinance institutions in Cameroon are in reality not financially strong due to a number of factors like low membership, low savings, and poor management, among others. It should be noted that with most microfinance institutions, especially those in Anglophone Cameroon commonly known as cooperative credit unions, the shareholders are persons with accounts in the financial institutions. To open an account, one has to first of all pay 100,000 francs CFA for membership registration. That money serves as the member’s share, and also as part of the credit union’s capital. So if a credit union does not have many members, t is a problem.
There is also the issue of savings and deposits. If members of a credit union do not save or deposit much, it is a problem for the financial institution. It is part of the savings and deposits of members that a credit union uses to give out as loans to other members, and on which it receive interests.
There are three categories of Microfinance Institutions in Cameroon, which are Category 1, Category 2, and Category 3. Statistics from the Ministry of Finance on Micro Finance Institutions show that, over the years, the bulk of these financial institutions are of Category 1, which is the lowest category, and thus are not financially solid. By the end of 2020 for example, there were a total of 415 Microfinance institutions in the country. Details showed that as many as 342 (82 %) of the microfinance institutions in the country were of Category 1, while 70 (17 %) of the microfinance institutions were of Category 2, and only 3 (0.72 %) of the micro finance establishments were of Category 3, which is the highest category in the country. The 415 Micro Finance Establishments had a total of 1713 branches across the country. Worth noting, that 57 % of the 342 Category 1 Microfinance Institutions then, were affiliated to CAMCUL alone.
‘Village Microfinance Institutions’
As aforementioned, many microfinance institutions, especially in the Northwest Region of the country, are created, named, and operated more as “Village Microfinance Institutions”, which make it difficult for them to expand beyond the capacity of the people of those villages. Many people in all the villages in Cameroon will certainly like to have microfinance institutions created in their villages, and bearing the names of their different villages. They consider that as a pride for their villages, as the names of the villages are projected. They however forget that a microfinance institution, or a credit union, is first of all a business, no matter the propaganda made about it.
And a business has to be viable, for it to be sustainable, as well as for it to be a source or an object of pride. The viability of a credit union depends on a number of factors like the number of members (membership) and the character of individuals, savings and deposits, and good management. The membership factor is based on the assumption that a credit union with many members, means much savings and deposits, and if the credit union is well managed, it will be a very good business for all members.
But the fact is that when there are so many microfinance institutions around, and with several of them operating like “Village Credit Unions”, some of them are bound to suffer from the problem of low membership, with all the negative effects. Unfortunately, or so it seems, the people of all villages in the Northwest Region, and to an extent the Southwest Region, want to have their own credit unions. We are talking about the multiplicity of microfinance establishments, in a country with an economy that is frequently in crisis due to bad governance, and also a country with impoverished masses due as well to bad governance. It is very difficult today for the ordinary Cameroonian, that microfinance institutions are meant to serve, to save much. That is, for those who even have something to save or deposit.
“Village Credit Unions” Owned By Member, Not The Villages
Worthy of note that these “Village Credit Unions”, are in reality NOT owned by those villages or tribes, but rather by groups of sons and daughters of those villages, that are members of the credit unions. This is the fact, even though the names and the way these credit unions operate, may give the false impression that they are owned by those villages. There are many cases where almost all workers of a “Village Credit Union”, are sons and daughters of that village. They include workers of the different branches of the credit union, outside the village. There are even cases where the Palaces of some of those villages are conspicuously present (represented) during the general assemblies of some of these “Village Credit Unions”, when the palaces are not shareholders or members.
But it should be noted that when a “Village Credit Union” crumbles for whatever reason, the direct losers are not the village or tribe, but rather the members of the credit union. And as aforementioned, a microfinance institution or a cooperative credit union, in Cameroon, is registered as a limited liability company.
7 Credit Unions Created By Villages In Batibo Sub –division Alone.
Come to think of it that as by the end of last year, that is 2025, the Northwest Region which has the highest number of microfinance institutions in the country, counted as many as 97 microfinance establishments. This is even after some had crashed. As regard “Village Microfinance Institutions”, sons and daughters of villages in Batibo Sub-division for example, have created as many as seven credit unions, including Batibo Cooperative Credit Union, instead of the sub –division just having one or two. The people of each village in Batibo Sub –division, want to have its own credit union. Well, some people will raise the aspect of proximity to the people, in defense of ‘Village Credit Unions”, to try to justify why each village needs to have a Credit Union. But the question is how financial strong are these ‘Village Credit Unions”, to be able to stand the stiff competition in the microfinance sector, and rise beyond the lowest category (Category 1).
Meanwhile in some big villages in the Northwest Region, the creation of credit unions has even descended to the level of quarters or groups. Four credit unions have for example, been created by sons and daughters of Pinyin, a village in Santa Sub –division. Five credit unions have been created by sons and daughters of Mankon in Bamenda 2 Sub – division. This of course does not include the Azire Cooperative Credit Union Ltd and Ntarikon Cooperative Credit Union Ltd, which though bearing names of quarters in Mankon, or better still, Bamenda, are in fact not in that category of “Village Credit Unions”.
Tough Competition For Survival
Meanwhile, since there are so many microfinance institutions around, the competition amongst them is really tough. In Douala, many of these financial houses try to exploit tribal connections, in a bid to make headways. They try to exploit their tribal connections to survive. Meeting groups of the different communities of Northwest villages in Douala are being lobbied to have their all their ‘bank accounts’ in the credit unions of their different villages. The managements of the branches of these credit unions in Douala frequently visit their different village meetings, to encourage all members to open individual accounts in those microfinance institutions, which they present as the pride, or even the property, of their different villages or tribes.
It is not for nothing that almost all, if not all credit unions in Douala with roots in the Northwest and Southwest Regions, have branches mostly in Bonaberi (Douala IV), which host the biggest Anglophone community in the nation’s economic capital (Douala). One will find a similar situation in quarters with large Bamileke communities in Douala. There you find the branches of many of the microfinance establishments, with roots in the West Region.
But there are a number of microfinance institutions with big branches in Douala, with roots in the Northwest Region like the Azire Cooperative Credit Union Limited, AZICCUL, which are not connected to a particular tribe, and that are visibly waxing strong, as they attract customers or members who hail from different parts of the country. AZICCUL also apparently benefitted from the fact that it was one of the first credit unions to be created in Bamenda, and so attracted many people. By then, there were very few credit unions around. Today, AZICCUL owns a big storey building with eight floors at ‘Feu Rouge’ Bessengue, the central part of the nation’s economic capital, Douala. The AZICCUL branch occupies the first and second floors, while the other floors are occupied by other establishments that do rent them. That is, good business. The building also gives a powerful image of AZICCUL to the Douala population. Some people will definitely question why AZICCUL did not instead put up such a structure in Bamenda. Well, in business, wisdom demands that you invest where you can make profit.
Financially Weak Micro Finance Institutions
As aforementioned, credit unions have just been springing up like mushrooms. But as aforementioned also, a large majority of these microfinance institutions are in Category 1, the lowest category. This means that they do not have a big capital. And when there are also quite a number of people around, who borrow money and would not repay on time, or would not even want to repay at all, it becomes a very big problem for many of these small microfinance institutions that are more of ‘Village Credit Unions’, and whose managements are often not strict on loan conditions with some tribes people or acquaintances.
Since there are so many microfinance establishments, the competition is not only tough but rough, and some resort to all sorts of desperate means to get customers. Three years ago in Douala, The Mentor saw a publicity van that was running around Deido Quarter, inviting people to go and open accounts at a microfinance establishment in a building behind ‘Boulangerie Coaf’ (Deido), for 2,000 francs CFA (Two thousand francs CFA). More so, any person that went to that microfinance establishment to open an account for 2,000 francs CFA received a gift. It was said to be a promotion. But this could not be considered as a good business promotion strategy. Those were rather signs of desperation. A finance institution should not go to that level. It however was not surprising that after sometimes, that so called microfinance institution, disappeared.
Only Two Microfinance Have Developed Into Banks
Meanwhile, only two microfinance institutions in Cameroon have so far developed into commercial banks. They are Credit Communautaire d’Afrique Bank (CCA Bank) with headquarters in Douala, and La Regionale with headquarters in Yaounde. These two are both former microfinance institutions that were created in the Francophone part of the country. Today, documents show that CCA Bank which started as a microfinance institution in Bafoussam, is dealing with hundreds of billions of francs CFA.
CAMCUL And Union Bank Of Cameroon
It should be noted that at creation, the Union Bank of Cameroon, UBC, had the Cameroon Credit Union League, CAMCUL, with headquarters in Bamenda, as the majority shareholder. Thus UBC originally had as indirect majority shareholders, all the credit unions in the Northwest and Southwest Regions that were members of the CAMCUL Network. In fact all the credit unions affiliated to CAMCUL, were obliged to open accounts in Union Bank of Cameroon.
But unfortunately along the line, poor management got the bank into financial crisis (account in red), and the Central African Banking Commission, COBAC, had to intervene. COBAC as is the tradition, set up a provisional administration to run the bank that was placed under restructuring. After the Union Bank of Cameroon was restructured by COBAC, Oceanic Bank of Nigeria provided the needed fresh capital to boost the capital of the bank, and became the new majority shareholder of UBC.
