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1. Information Asymmetry: A Major Obstacle to Credit Provision In Cameroon

Author:
Jean-Cedric Kouam and Maurice Tchegho
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
According to the report published by the World Bank, which ranks the world’s economies Doing Business (2020) according to the ease of doing business, Cameroon ranked 167th out of 190 economies, a loss of one place compared to 2019. However, the country gained 0.1 point by recording a score of 46.1 points out of the 100 at stake. According to the World Bank, this slight increase is the result of the improvement of one of the ten indicators taken into account in the calculation of the score, that relating to access to credit. Indeed, with the help of the Economic and Monetary Community of Central Africa (CEMAC), Cameroon has established a framework for the granting of licenses and the operation of credit bureaus (1) which has enabled it to rank 80th in terms of obtaining credit, with a score of 60 out of 100 for obtaining credit and 6 for the depth of information on credit. Conversely, the score for credit bureaus is zero (World Bank, 2020). Despite this notable progress, particularly with regard to access to credit information, information asymmetry remains a serious problem in the relationship between the credit applicant and the credit provider in Cameroon. Defined as the lack of communication of accurate and reliable information from companies, this translates into the fact that one of the contracting parties holds information that it decides, voluntarily or not, to transmit to the other party. This constitutes an obstacle to project financing. From this situation, a major concern arises: What are the causes and consequences of informational opacity in the credit granting process in Cameroon?
Topic:
Communications, Finance, Business, and Credit
Political Geography:
Africa and Cameroon

2. A Look at the Legal Framework and Constraints of Credit Granting In Cameroon

Author:
Steve Tametong and Martial Nteme
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
The realisation of an investment depends, in certain cases, on the use of credit. The granting of credit requires a prior credit operation. According to section 3 of Law No. 2019/021 of 24 December 2019 to lay down certain rules relating to credit activity in the banking and microfinance sectors in Cameroon, a credit operation means “the act by which a reporting institution, acting for consideration, advances or promises to advance funds to a natural or legal person, or makes a commitment by signature in the interest of the latter”. In reality, the credit applicant is faced with challenges that stem partly from his or her ignorance of the legal framework for granting credit in Cameroon. It is therefore necessary for each credit applicant to master the legal environment that governs the granting of credit. This is the first articulation of this analysis (I). The second section examines the conditions and constraints of credit granting (II). The third section sets out recommendations for improving the framework for granting credit in Cameroon (III).
Topic:
Infrastructure, Finance, Investment, and Credit
Political Geography:
Africa and Cameroon

3. Diaspora Investors and Access to Bank Credit in Cameroon: Constraints and Opportunities

Author:
Ballo Ngomna and Joel Moudio
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
According to the Doing Business 2020 report, “compared to the previous year, sub-Saharan African economies improved their average score by 0.9 points” on the Doing Business index, which ranks countries on the ease of doing business. Overall, Cameroon’s index value (46.1) does not give it an honourable ranking (167th out of 190). However, its ranking is better in terms of obtaining loans (80th out of 190), one of the ten components used to calculate the index.
Topic:
Economics, Finance, Credit, and Banking
Political Geography:
Africa and Cameroon

4. Examining the Difficulties Encountered by Women in Obtaining Credit in Cameroon

Author:
Jean-Cedric Kouam, Ulrich D'Pola, and Shandy Mopia
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
In Cameroon, women represent 50% of the total population (World Bank, 2020). Vulnerable jobs among women – i.e., those of unpaid family workers and those of self-employed persons – represent 80.82% of total jobs among women, compared to 62.89% among men (World Bank, 2019). One of the reasons for the high vulnerability of women’s employment is the difficulty of accessing finance (credit), which is limited to micro-finance. Indeed, more than 90% of women do not have an account with a formal banking institution and therefore cannot benefit from the credit, and only 16.8% of women have access to credit for any use. However, access to credit and other financial services for women is a prerequisite for the economic empowerment of women and promulgation of gender equality. It is a pathway to fight against the economic marginalization of women and promote economic inclusion. The role of women in economic development cannot be underestimated, even though most women are involved in the informal sector. Major challenges, such as access to credit, limit the ability of women to grow from the informal to the formal sector or exploit the same economic opportunities as men. This challenge is pertinent and is faced by several countries in sub-Saharan Africa, where most women are involved in informal activities such as agriculture. While the general conditions necessary for access to credit in Cameroon do not discriminate gender-wise, women still face several impediments that make access to credit difficult for them as compared to men. This article looks at the difficulties encountered by women in obtaining credit and makes key recommendations to respond to these challenges to make credit easily accessible for women.
Topic:
Gender Issues, Finance, Credit, Banking, and Equality
Political Geography:
Africa and Cameroon

5. Obtaining Credit in Cameroon: Problems and Prospects

Author:
Dr. Louis-Marie Kakdeu, Ulrich D’POLA KAMDEM, and Egoh Aziz
Publication Date:
10-2020
Content Type:
Special Report
Institution:
The Nkafu Policy Institute
Abstract:
In keeping with its mission, and in this report, entitled, “Obtaining Credit in Cameroon: Problems and Prospects” the Institute undertakes the third in a series of its six thematic reports dedicated to the Doing Business Index Project (DBIP). The report examines the business environment in Cameroon, specifically about how prospective investors could obtain credit from financial institutions in the country. It proposes useful suggestions to the Government of Cameroon (GOC) for improving its monetary and fiscal policies, especially, those which revolve around the micro- and macro-economic issues, and which are articulated in the financial sector of the national economy. The central purpose of this report is to offer informed knowledge in public policy-making, to public policy-maker in Cameroon, as the mandatory catalysts for improving or easing the Doing Business Concept in Cameroon’s business, economic, social and political landscapes.
Topic:
Economics, Finance, Business, Macroeconomics, Microeconomics, and Credit
Political Geography:
Cameroon