MICROCAPITAL BRIEF: Cameroon to Encourage Islamic Financial Services, Microfinance Institutions to Transform into Banks as Part of 10-year National Development Strategy

The government of Cameroon recently released its 2020-2030 National Development Strategy, which includes plans to expand banking, microfinance and Islamic financial services. To boost the number of banks in the country from 16 to as many as 30, the government will engage microfinance institutions (MFIs) seeking to transform into banks. Banks also will be monitored to ensure they offer the services the state mandates they provide at no charge, such as small-scale savings and checking accounts. Meanwhile, the government will work to increase the availability of Islamic finance by partnering with regional institutions, such as the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) and the Commission Bancaire de l’Afrique Centrale (COBAC), to regulate the practice. Islamic finance employs mechanisms such as the sharing of profit and loss in lieu of conventional interest payments, which are not allowed under Shariah law.

Headquartered in Senegal, BCEAO is the regional central bank for eight member states, which together form the West African Monetary Union. These nations are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

COBAC is a banking commission through which six member states seek to ensure lenders comply with all relevant laws and regulations. These nations are Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea and Gabon.

By Nathan Kiplagat, Research Associate

Sources and Additional Resources

Business in Cameroon news release
https://www.businessincameroon.com/finance/0211-10975-cameroon-plans-to-boost-financial-service-offers-by-increasing-the-number-of-banks-and-microfinance-institutions-by-2030

BCEAO homepage
https://www.bceao.int

Ministry of Economy, Planning and Regional Development: Pillars of the 2020-2030 National Development Strategy
https://www.minepat.gov.cm/index.php?option=com_docman&view=download&alias=117-expose-of-minepat-pillars-of-the-2020-2030-nds-and-institutional-mechanism-for-its-implementation-cabinet-meeting-of-28-november-2019&category_slug=exposes&Itemid=284&lang=en

COBAC homepage
http://www.sgcobac.org

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