Experts Say Micro-finance Is Anti-Poverty Drug

By Kini Nsom

The effective use of micro-finance institutions has been described as the surest way of conquering poverty and leading Cameroon to achieving the UN Millennium Development Goals, MDGs by 2015.
According to a Yaounde Micro-finance specialist and University lecturer, Dr. Justin Bomda, micro-finance institutions help the poor to have access to finances.
"This means that only micro-finance institutions have the capacity to create wealth among the poor," he said.

This idea among other stakes in the micro-finance sector constituted the main substance for a series of papers the expert presented to economic journalists in Limbe, Southwest Province last week.

The occasion was a three-day training seminar the Association of the Economic Journalists of Cameroon, popularly known by its French acronym as AJEC, organised. Friedrich Ebert Foundation sponsored the seminar that rounded off at the Limbe Atlantic Beach Hotel last weekend. The seminar was pegged on the theme: " The importance of micro-finance on the national economy.

Dr. Bomda expounded on the concept, genesis and the evolution of the micro-finance sector in the country. He stated that the efforts government is making in the fight against poverty would come to nought if micro-finance institutions were not given an enabling environment to flourish.

Outlining the role micro-finance institutions play in the national economy, the specialist said such institutions were the banks of the poor.
Micro-finance institutions, he went, do not ask for collateral security from their customers before giving them loans. Besides, he said, the poor have loans at relatively low interest rates.

Examining the MDGs, he said such goals could only be achieved if government regulates micro-finance institutions well, enabling them to create riches among the poor. He picked holes with the poverty reduction strategy paper, PRSP, claiming that power points are made of mere wishes and not concrete proposals on how riches can be created.

Since micro-finance institutions do not apply practical banking rules, he said, they should globally support women who are ready to do small businesses to improve on the livelihood of their families.

The resource person also talked about the various categories of micro-finance institutions and procedures for registering them. He said the Central African Banking Commission known by its French acronym as COBAC, is the outfit that oversees the functioning of micro-finance institutions. According to him, the role of government, funding bodies and the civil society in the promotion of micro-finance institutions is primordial in the fight against poverty.

Another resource person, David Kegne, a micro-finance expert attached to the World Bank, highlighted some eleven rules enunciated by the G8 countries on the functioning of micro-finance institutions.

The rules point to the fact that the poor need not only special credit schemes but also need to save, transfer funds and be involved in micro-financial schemes that have to do with health and insurance. Although the funding from foreign donors is needed, it was recommended that stakeholders should always strive to mobilise local capital for micro-finance institution.

Micro-finance institutions were advised not to rely on foreign funding for more that seven years and ensure good governance.
According to Kegne, Micro-finance institutions should only work with funding bodies that have the same vision with them. He urged them to limit interest rates to customers, be transparent, be efficient and train their workers.

Government As Bad Manager

During the occasion, government was portrayed as a bad manager in the micro-finance sector. The case of the Post Office Savings Bank in which the savings of poor Cameroonians were embezzled, was cited as a testimony that government is a poor manager in the micro-finance sector.
However, it was observed that government could play its role of facilitator and protector in the sector.

According to statistics, the micro-finance sector today in the country has 500.000 customers in eight out of 10 Provinces. This represents 3.2 percent of the total savings when compared to commercial banks, while the money mass is put at two percent.
While presenting the situation of micro-finance sector in the country, the resource person cited a few networks that make the domain tick.

These include Cameroon Credit Union League, CAMCUL, which is found in eight provinces, Mutuelles Communautaire, MC2, in 10 provinces, Caisse Villageoise which is in three provinces. Given the dual nature of the micro-finance institutions, it was observed that they have a double responsibility of serving the poor while also striving to remain in business. That is why stakeholders advised government to define a special tax policy for micro-finance institutions so that they can give loans to the poor at low interest rates.