The move will help fight financial crimes and rebuild customer confidence in microfinance institutions working in conformity with regulations in force.
Members and customers of credit unions across the country are more and more complaining less of micro-finance institutions vanishing with their hard-earned savings. Credit for this good development can be given to government which has not relented its efforts in ensuring that establishments authorized to carry out microfinance activities are only those worthy in banking and finance.
Each year, the Ministry of Finance releases a list of credit unions licensed to perform microfinance activities in Cameroon; with the aim of letting the public make informed choices and not fall into the hands of crooks and quacks. This has paid off over time. This year, some 412 microfinance institutions are permitted to function across the national territory, down from over 500 establishments some four years ago.
This is an indication that government has been taking appropriate steps to rid the sector of microfinance institutions which are wanting in capital, respect for regulations and professionalism, so that they do not wreak havoc on Cameroonians.
Before government sprang into action, there was general laissez-faire in the sector.
One could just get up, mobilise a few family members and friends, then set up a microfinance institution before luring some unsuspecting people to join them. The end result had always been that after a few months or years of operation, they would disappear overnight with the savings of their ‘prey’. The case of Chartered Financial Assistance microfinance, COFINEST, First Investment for Financial Assistance and a few others are still fresh in mind.
With the government now separating the fine microfinance institutions from the crumbs, and urging managers and promoters of the authorized microfinance establishments to acquaint themselves with the 2017 regulation of the Banking Commission of Central African States on conditions and the exercise and control of microfinance activities, there are brighter days for the sector that promotes financial inclusion.
The move will also help rebuild members and customers confidence which negatively dropped after 2011 with the fall of major microfinance outfits.
Also, once the authorized microfinance institutions toe the line as government is wanting them to, they will significantly benefit from the Risk Prevention Bureau for Microfinance Institutions which helps microfinance establishments make informed choices with regards to issuing loans to their respective customers.
The outfit collects and disseminates information on the worthiness of customers of microfinance institutions.
Microfinance institutions play an important role in financing the national economy; especially small and medium size enterprises. Their activities are too sensitive to be left unmonitored and uncontrolled.