The Microfinance Market of Cameroon - Analyzing Trends and Current Development

The microfinance market recorded double digit growth in 2011. The microfinance market of Cameroon registered an impressive double digit growth in 2011. Thanks to ongoing expansionary and aggressive market penetration measures adopted by major players, CAMCCUL, CCA and MC2, growing customers and members confidence in the 1st Trust and CCA brand and swift response made by major stakeholders following the collapse of COFINEST to regain customers and members confidence. Major players such as MC2, launched more than eight new units that fully went operational, while CAMCCUL registered more than 10 new units.The collapsed of COFINEST weakened customers confidence. The exponential growth that greeted the microfinance market of Cameroon in 2010 slow down in 2011 following the collapse of a major player CONFINEST that affected customers and members confidence negatively. In early 2011, the government announced the official closure of COFINEST with major shareholders arrested for mal-practices and mismanagement in the market. This sparked fear within depositors and non depositors who rushed in other microfinance institutions to withdraw their deposits. However, with quick action taken by major stakeholders such as the government to ensure creditors start receiving their funds, and assurance from other players such as CAMCCUL, MC2, and CCA customers gradually regain confidence.Regulators tightened up control to watch against crooks and quacks. Following the collapsed of CONFINEST a major player in the microfinance sector in 2011 regulatory authorities became actively involved in the control and supervision of MFIs activities. For example, control mission from the regulatory and supervisory authority COBAC became increasingly present in major MFIs to scrutinize their activities with respect to basic prudential norms. Again, attempt by the government to win the interest of different stakeholders particularly in the phase of the crises in North Africa and the Presidential election billed for October 2011 led to a corporate citizenship image. COBAC recently started a nationwide evangelism to sensitize promoters of microfinance institutions in Cameroon on the need of professionalism so the sector does not become an all-comers affair.Class one institutions dominate with CAMCCUL controlling an outright 53% share. The Cameroon microfinance landscape is out rightly dominated by class one institution that controls close to 86% of the market in terms of number of institutions and outlets with CAMCCUL the market leader controlling an outright 55% of the overall market. In 2010, and 2011 category one MFIs constituted about 510 of the 589 institutions existing in Cameroon at the time. The growing number of category one institution is their easy formation, lower capital requirements and the fact that they can easily opt to belong to a network and benefit the many advantages from the umbrella institution. The case of CAMCCUL, MC2 and CVECA are good examples. However, in value terms and overall market growth, category two institutions experienced the fastest growth, registering more than 35% of value and volume growth in 2010/2011. Thanks to their strong positioning in most urban areas and target of the mid to richer portion of the deprived segment of the population.ATMS and Cash dispensing gaining grounds within MFIs in 2011. Through growing partnership between commercial banks and MFIs in Cameroon, the distribution of electronic cards became increasingly noticeable between MFIs customers in 2011. Major Commercial banks such as Afriland First Bank distribute electronic cards to MFIs clients through MC2 their rural banking channel, while EB-ACCION the microfinance brand introduced by Ecobank in partnership with Accion International, distribute electronic cards to its customers with possibilities of their customers to withdraw cash using the card directly from the ATMs installed in the MFI or any of those ATMs at Ecobank branches in the country. This trend is expected to continue particularly as major category two institutions warm up for license as a full flesh bank.EB-Accion remains the only major new player in the market in 2011. EB-ACCION a product of a partnership between ACCION International and Ecobank remains the only major player that enters the market in 2010, with three outlets all based in Douala. It continues to benefit from the country wide banking platform already installed by Ecobank.15% constant value CAGR expected annually over the forecast period. Over the forecast period the microfinance market is expected to continue to register an annual growth of 15%, in deposits, credits, and number of outlets. Growth is expected to be driven by growing members and customers acceptance of mobile money and micro-insurance, activities of new players such as EB-ACCION, expansionary strategies adopted by CCA and 1st Trust and favorable measures put in place by the government to protect depositors. Again, new players of late have laid emphasis on daily cash collections, with concepts such as bankers on wheel, backup and money pause increasingly gaining customers acceptance. The present of successful and sustainable microfinance models such as the MC2, of the First bank Group and the credit Union that have been able to overcome the challenges traditionally faced by the financial services sector in servicing the low income population are prominent factors expected to drive growth.