The Nkafu Policy Institute in Yaoundé has organized a public debate on adopting best practices towards improving Cameroon’s ranking on the Doing Business Index. The debate in its 3rd edition took place on July 22nd 2021 at the Solomon Tandeng Muna Foundation, Yaoundé-Cameroon. It had as main objective providing a platform for Cameroonian and African high-level experts the opportunity to objectively resolve the barriers of credit accession in Cameroon for both national and foreign investors.
Opening the session in Yaoundé, the Interim Chief Executive Officer at the Denis and Lenora Foretia Foundation Ms Fri Asanga said the institute has since 2019 been critically analyzing Cameroon’s Doing Business Index which is actually an internationally recognized index indicating how well a country is performing. Ms Asanga said Cameroon occupies the 167th position out of 190 economies according to the latest index.
The Nkafu Policy Institute in its concept note says according to the Doing Business report published by the World Bank Group (WBG), which ranks 190 world’s economies with respect to the ease of doing business score, Cameroon dropped by one place in 2020 from 166th to 167th. It scored 46.1 out of 100 available points, 0.1 point higher than in 2019. For the WBG, this Cameroon’s performance is due to the fact that the country has improved one out of ten indicators: access to credit information. It says the country currently ranks 80th in the “Getting Credit” score, with a score of 60 over 100 with respect to getting credit and 6 in the depth of credit information. Conversely, the score for credit coverage bureaus is zero. Consequently, its economic transformation is undermined by a less favorable credit environment. This problem, the institute noted, seems to stem from inadequate policies that amplify the difficulties faced by potential investors at various levels in seeking credit to finance their economic projects.
In addition to the burdensome conditions to be met by credit seekers, the Nkafu Policy Institute also said there is equally the problem of information asymmetry between lenders and borrowers which negatively affects the process of obtaining credit for both domestic and foreign investors. For many credit specialists, this could be explained by the absence of credit bureaus. They argue that, a large number of accredited microfinance institutions in Cameroon are located in areas with poor internet connectivity, making it difficult to identify and lend to micro-entrepreneurs. Despite the creation of the Risk Prevention Office (CREMF) in 2018 which helps these institutions to track and disseminate correct data on all their clients, the challenge is still huge.
It also noted in its report that women’s access to credit in Cameroon is still very large due to the lack of guarantees, discriminatory regulations, insecure employment even though women represent 76% of total borrowers from microfinance institutions in the world (World Bank). Credit bureaus that collect and share microfinance data, the institute noted are more likely to benefit female entrepreneurship by building credit histories for women. Nevertheless, based on the 2020 World Bank’s DBI report, Cameroon’s position in the DBI report is due to the fact that the country has improved one out of ten indicators: access to credit information. Indeed, Cameroonian state has established a framework, in relation with the Economic and Monetary Community of Central Africa, for the licensing and operation of credit bureaus.
This debate thus focused on investigating the benefits of introducing credit bureaus as a facilitator of credit accession in Cameroon. Centered around the main thematic , “Obtaining credit in Cameroon: Credit bureaus are essential to facilitate the process”. Informed by existing debates, some experts are of the opinion that credit bureaus are a solution to the hindrances to credit access while other experts support the view that the existing credit system remains efficient in as much as the procedures put in place to obtain credit are strictly followed by investors Specifically. It provided an opportunity for panelists to examine Cameroon’s past performance in the Doing Business Index, critically assess the current legislation as regards access to credit, assess the role of the actual reporting credit system and institutions responsible for the implementation of credit policies. The debate also created avenues for participants to understand the benefits and challenges of introducing credit bureaus in the country, the importance of providing equitable access to credit for women and also identified and propose policy recommendations to ease access to credit for local and foreign investors in the country.
It noted that In Cameroon, 38.5% of people live below the poverty line while about 90% of the population work in the informal sector. What Cameroonian businesses need is access to credit and not some other procedure. it also noted that programs and credit models that the banking system proposes in Cameroon are not really adaptable to the population which is predominantly in the informal sector. While collateral requirements are some of the major hindrances to accessing credit in Cameroon, the slow pace on the failure to contextualize the credit is due to the fact that it is inspired by systems of other countries and contexts which are becoming more difficult to function in Cameroon
The debate provided a forum for at least 50 participants from various fields of expertise and allowed them to build new relationships and strengthen existing ones. Participants included government officials, speakers, entrepreneurs, humanitarian organizations, non-governmental organizations, academics and researchers, students, the general public, and civil society actors. It served as a unique occasion to better inform on the reforms needed for Cameroon to achieve its emerging status by 2035 and created a platform for professional development and career advice.
Source: Bantu Voices