Joe Dinga Pefok (Uncle Joe)
The Microfinance Institutions (Credit Unions), Have Been Placed Under Provisional Administration. But So Far, COBAC Has Not Made Public The Names Of The Financial Institutions, And Has Maintained Sealed Lips On The Issue. There Is A Debate Among Experts, On Whether, Or Not, COBAC Should Make Public The Names Of The Over 70 Microfinance Institutions.
As The Mentor News has been reporting in the series on Microfinance Institutions (Credit Unions) in Cameroon, the Central African Banking Commission commonly known by the French acronym, COBAC, has together with the Central African Financial Market Supervisory Commission (COSUMAF), in the last couple of years gotten out of slumber, as regard their supervisory role over microfinance institutions in the CEMAC Zone. They have seriously stepped up their supervision of this category of financial institutions in the CEMAC Zones.
It should be noted that COBAC and COSUMAF are officially the ‘Gendarmes’ of financial institutions in the Central African Sub – region, or better still, the CEMAC Zone, But as The Mentor News stated in Part 1 & 2 of the articles in the series on Microfinance Institutions, COBAC and COSUMAF in the past focused their attention only on commercial banks, and paid very little attention to the microfinance institutions commonly known in the two Anglophone Regions of Cameroon as Credit Unions. But in the last couple of years, precisely from 2020, COBAC and COSUMAF, together with Cameroon’s Ministry of Finance, have started also focusing on microfinance institutions in the country, and the long period of laissez – faire in the microfinance sector is hopefully getting to an end.
As a result, within the last three years, COBAC has temporarily withdrawn the licenses of as many as over 70 microfinance institutions (credit unions) due to poor or bad management (Bad governance), that caused huge financial losses to those financial institutions, and plunged their accounts into red. All the microfinance institutions, whose licenses have been temporarily withdrawn, have been placed under provisional administration by COBAC, to undergo a restructuring programme.
COBAC, COSUMAF And Government Remain Silent
Meanwhile, the Central African Banking Commission (COBAC), has definitely in agreement with COSUMAF and the Cameroon Government, been mute on this issue of the temporary withdrawal of the licenses of over 70 microfinance institutions in Cameroon. The names of the affected microfinance institutions have so far not been made public, and it is not clear as to how COBAC is carrying out the restructuring of these microfinance institutions. Though The Mentor News knows some of the affected credit unions, we cannot make the names public, because the ‘Gendarme’, that is COBAC, has not officially released any name. It should also be noted that this is the first time that COBAC, which as as aforementioned did not use to pay much attention to the microfinance sector in the CEMAC Zone, has after getting up from slumber in its supervisory role over microfinance institutions, stepped into some financial institutions that were facing crisis, withdrawn their licenses temporarily, and placed them under provisional administration.
What Happens In Principle When COBAC Steps Into A Financial Institution In Crisis
It should however be noted that in principle, COBAC intervenes to restructure a financial institution, when the institution is in financial crisis, that is, the account is in red. Also, when COBAC steps into a financial institution in crisis, one of the things it does, is to temporary withdraw the license of the financial institution, and place the financial institution under a provisional administration for restructuring. It should be noted as well, that in line with the text, when COBAC places a financial institution under provisional administration, it is in principle COBAC that appoints the General Manager of the financial institution, to be in office until the end of the period of restructuring of the financial institution. This in principle is what has been happening when COBAC intervenes in commercial banks in crisis. This was what happened for example with Union Bank of Cameroon (UBC), Commercial Bank Cameroun (CBC), and Amity Bank Cameroon.
But as aforementioned, COBAC and Government have been silent on the Banking Commission’s intervention into over 70 microfinance institutions in Cameroon. It is not clear whether COBAC has treated all the microfinance institutions placed under provisional administration, the way it treats commercial banks. It is thus not clear whether COBAC has appointed new General Managers for all the microfinance institutions it has placed under provisional administration, or whether COBAC has simply placed the management teams that were in place under its control or supervision.
The Restructuring Of Commercial Banks, Usually End With New Majority Shareholders
Meanwhile, in principle, a financial establishment that runs into a financial crisis is restructured by COBAC, with special attention on the way it is managed, in a bid to avoid a reoccurrence of the poor management that plunged the financial institutions into problems. At the end of the operation, COBAC in principle reinstates the license of the financial institution, and hand back the financial institution to the owners, that is, the shareholders, with a strong warning that what happened in the past, should not reoccur or else – -.
Talking about shareholders, it should be noted that the restructuring of a commercial bank by COBAC, usually ends up with the coming in of a new majority shareholder of the bank, as there is the need for new capital to be brought in, to boost the financial situation of the bank. That was what happened for example with Union Bank of Cameroon (UBC). After COBAC restructured UBC, the Oceanic Bank of Nigeria came it with fresh capital to boost the financial situation of the bank, and replaced the Cameroon Credit Union League (the original majority shareholder), as the new majority shareholder.
But considering that the microfinance institution, or credit union, is structured in a different from the way a commercial bank, as regard its shareholders, it is not clear as to what will happen at the end to the microfinance institutions, that COBAC has temporarily withdrawn their licenses, and placed them under provisional administration.
What Will Likely Happen After The Restructuring
What is very likely to happen however, is that something will have to be done to see that money gets into these microfinance institutions, to boost their financial situation. A financial institution, whose account plunges into red, cannot automatically have its account turn blue, after restructuring, or because it has been restructured. A possible way out for microfinance institutions that plunged into financial crisis, because of many unpaid loans, especially big loans, will likely be to embark on a no – nonsense debt recovery operation. This operation is likely to even start during the restructuring phase.
But another problem that comes up here is that, the management (Board and appointed management) of many of the affected microfinance institutions that ran into serious financial problems, because of unpaid loans, gave out most of the big loans under questionable or irregular ways, under the influence of corruption. It is difficult to recover such money, as it is difficult for the credit unions concerned, to win such cases in court. If the management of financial institution gives out a loan, in violation of the text, or without respecting laid down conditions to grant such a loan, and the loan is not repaid, who is to blame!
Meanwhile, for those microfinance institutions or credit unions, that plunged into financial crisis, because of embezzlement by management (Board and appointed management), things are more complicated. They need new capital to boost their financial situations. But the question is where the money is going to come from. Perhaps the financial institutions will go after the embezzlers with court actions, to try to recover some of the money. Perhaps the financial institutions will have to embark on operations to try to bring in many new members, and thus money. It should be noted that it is not COBAC’s role to go after embezzlers, or the debtors of a financial institutions.
Debate On Whether COBAC Should Release The Names Of More Than 70 Microfinance Institutions
Meanwhile, as aforementioned, unlike with commercial banks that neither COBAC nor Government (Ministry of Finance), conceals information when the Banking Commission intervenes in the financial institution, both COBAC and the Government have so far been silent on the issue of the over 70 microfinance institutions. That is, the microfinance institutions that have within the last 3 years seen their licenses temporarily withdrawn, and the financial institutions placed under provisional administration. Some of the names are known by The Mentor News, just that since the names have not been officially made public, it is inappropriate for us to make them public, considering especially that we are talking about financial institutions; a very delicate sector.
Meanwhile, a debate emerged at the beginning of this year, and has been ranging on, as to whether COBAC should make public or not, the names of the over 70 microfinance establishments or Credit Unions in Cameroon, that have within the last three years seen their licenses withdrawn, and the financial institutions placed under provisional administration. But the debate seems to be limited to experts in the financial sector, probably because most members of the public do not even know that some microfinance institutions have had their licenses temporarily withdrawn by COBAC.
Argument In Favour Of Publishing The List
One of the experts, who, is strongly in support of the view that COBAC should make public the list of the over 70 microfinance institutions, that have within the last three years seen their licenses temporarily withdrawn by the Banking Commission, is ANGE NGANGDJO, a banker and consultant. He did a beautiful analysis on the issue, which the French language daily , L”ECONOMIE, that prides itself as the first daily economic newspaper in the CEMAC Zone, had as its lead story, in its edition of January 26, 2026. The article was titled: “Protection Des EPARGNANTS: Pourquoi La COBAC Doit Publier La List Des Microfinance Sous Administration Provisoir” Approximately translated or interpreted as: “Protection Of Account Owners (People With Accounts In Financial Institutions). Why COBAC Should Publish The List Of Microfinance Establishments Placed Under Provisional Administration”.
The newspaper corroborated the expert in stating that: “Pres des 70 EMF ont connu des retraits de leaurs agrement par la Commission Bancaire de L’Afrique Centrale” That is, more than 70 microfinance establishments have seen the withdrawal of their agreements or licenses by the Central African Banking Commission. The expert, Ange Ngandjo (banker and consultant), in his article, strongly argued that is very wrong, that a financial institution should be in trouble, to be point of being placed under provisional administration, while the members or those with accounts in the financial institution, are deprived of information as to what is happening, and thus exposing them to risk. He said this was not only a lack of transparency by COBAC, but that COBAC was only being very unfair to members or customers of these financial institutions. He thus urged COBAC to publish the list of the over 70 microfinance institutions in Cameroon, placed under provisional administration.
Argument Against Publication Of List
However, there are some experts who argue in support of the decision by COBAC, not to make public the list of over 70 microfinance institutions that have been placed under provisional administration, stating that commercial banks and microfinance establishments have different categories of shareholders as well as customers, with different financial capacities and mentalities. They do point out that the bulk of members of credit unions are ordinary Cameroonians, that is, Cameroonians struggling for survival, or Cameroonians that are not rich, and who will certainly react to the least information that they think threaten their small savings, in very desperate ways. They argue that if COBAC were to officially make public, information that the license of a certain microfinance institution or credit union has been temporarily withdrawn, and the establishment placed under provisional administration, there will definitely be a run on the financial institution, as customers will definitely panic, and will desperately try to withdraw the little money they have in their savings or deposit accounts. It will be difficult to convince the customers that placing the financial institution under provisional administration, does not, mean an end to it.
Why Credit Unions Need To Be Thoroughly Cleaned Up, And How
It is indisputable that a large majority of the ordinary members of microfinance institutions or credit unions in Cameroon, especially in the two Anglophone regions, that is, the Northwest and Southwest Regions, are in general very disappointed with the way the credit unions are being run by the Boards and management.
Why the large majority of ordinary members of credit unions, are not happy with the way the financial institutions are being managed, why there need to be a thoroughly cleanup of credit unions, and how that can be done, will be the subject of another article in the series on microfinance institutions in Cameroon, probably next week.
