The International Fund for Agriculture (IFAD), a United Nations agency based in Rome, will support rural microfinance in Cameroon, West Africa, with a USD 13.5 million loan and USD 200,000 grant. The money will support the IFAD Rural Microfinance Development Support project whose overall goal is to reduce poverty, increase incomes and support the livelihoods of poor in rural areas. The project targets rural populations in the centre, extreme north, north-west and western regions of Cameroon, where access to suitable financial services is difficult. Currently a network of microfinance institutions (MFIs) exist in these areas. The project is aimed at young people, especially women; smallholder farmers and microenterprises.
The Rural Microfinance Development Support project is co-financed by the IFAD, United Nations Development Program (UNDP) and the Republic of Cameroon for a total project cost of USD 22.5 million. The UNDP will contribute USD 300,000; the Republic of Cameroon will contribute USD 2.6 million and beneficiaries and MFIs will contribute the remaining USD 5.9 million. The project is supervised by the IFAD who will work in conjunction with other development partners during the six year project implementation.
In late 2008 MicroCapital reported about the need for regulation in Cameroon’s microfinance industry. Currently there is a lack of cooperation between banks and MFIs as well as MFIs operating outside of the law and being unregulated. The national government is organizing training seminars and forums for stakeholders to tackle some of these problems. Cameroon is a member of the Economic and Monetary Community of Central Africa (CEMAC), a group of six countries with a common central bank. According to a 2006 CEMAC study, there are 714 MFIs in Cameroon, with over 475,000 clients, or 2.9 percent of the total population. In the study the total loans outstanding were reported as USD 111 million with an average loan size of USD 233. Currently there are 19 MFIs in Cameroon that report to the MIX Market, the microfinance information clearinghouse.
The IFAD is a specialized agency of the United Nations and was established as an international financial institution in 1977 following the food crisis in Africa. IFAD’s mission is to enable poor rural people to overcome poverty in developing countries by working with governments, non-government organizations (NGOs) and other partners to increase access to financial services, technology and other resources. Loans are provided at highly concessional, intermediate and ordinary terms, depending upon the borrower’s per capital GNI (gross national income). Grants are limited to 10 percent of the total loan and grant program. The IFAD currently works in 115 countries. Since its inception, IFAD has invested USD 10.6 billion in 796 programs and projects that have reached over 330 million impoverished women and men. As at 31 December 2007 the IFAD had USD 6.9 billion Total Assets.
By Sally Levy, Research Assistant
Additional Resources:
AllAfrica.com: Cameroon: UN Funds Multi-Million Dollar Scheme to Boost Rural Employment
International Fund for Agriculture: Home
IFAD Press Release: IFAD to provide Cameroon with US$13.5 million loan and US$0.2 million grant for Microfinance development
IFAD Project Documents: Report and Recommendation of the President to the Executive Board on a proposed loan to the Republic of Cameroon for the Rural Microfinance Development Support Project
MicroCapital Story: Cameroon’s Microfinance Industry in Need of Regulation if it is to Meet Poverty Eradication Expectations
Consultative Group to Assist the Poor (CGAP): “CEMAC Region Financial Sector Assessment Program”
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