MICROCAPITAL BRIEF: Government of Cameroon Partners with United Nations Development Program (UNDP), International Fund for Agricultural Development (IFAD), United Nations Capital Development Fund (UNCDF) To Consolidate Microfinance Sector

The government of Cameroon recently partnered with three agencies of the United Nations to consolidate the country’s microfinance sector by increasing governmental regulations and mergers of microfinance institutions (MFIs). The new partners are the United Nations Development Program (UNDP), an initiative to alleviate extreme poverty and promote sustainability and equal rights in developing countries; the International Fund for Agricultural Development (IFAD), a project to tackle rural poverty; and the United Nations Capital Development Fund (UNCDF), a program to increase access to microfinance and other forms of investment capital for small businesses and individuals in developing countries. Passed in May 2013, this national strategy aims to correct for what has been deemed an oversupply of MFIs in the market, which allegedly has led to the lowering of profit margins and risk standards. The government of Cameroon also reportedly claims that this new consolidation will expand the financial inclusion of low-income people, reduce corruption and financial scandals in the country, improve the regulatory framework and professionalism of MFIs and protect clients of MFIs from poor governance and lack of resources [1]. Similar consolidation strategies to counteract the oversupply and underregulation of MFIs were initiated in South Africa during the 2000s [2] and in the Indian state of Andhra Pradesh between 2010 and 2012 [3]. While the number of MFIs to be consolidated in Cameroon is unclear, approximately 1,200 MFIs were consolidated in South Africa from an estimated 3,500 microlenders, and the number of MFIs in Andhra Pradesh declined by approximately 21 percent [2, 3].

As of June 2013, the Republic of Cameroon encompasses between 400 and 500 MFIs, which hold combined savings of XAF 400 billion (USD 800 million) and serve 1.5 million Cameroonians. Within three to four years, 15 other countries in Africa and Asia plan to consolidate their microfinance sectors as well [1].

In the year 2012, UNCDF had an annual income of USD 60 million and operations in 48 of the world’s least developed countries. UNDP estimates an institutional budget of USD 857 million for the 2012-2013 fiscal year and has operations in 177 countries and territories as of 2013. IFAD disbursed new commitments of USD 1 billion during 2011, bringing its portfolio of ongoing projects to USD 10.3 billion, and has operations in 97 countries as of 2013.

By Michael Averell, Research Associate

About United Nations Development Program (UNDP)

The mission of the United Nations Development Program (UNDP) is to provide developing countries with knowledge, experience and resources in line with the United Nations’ Millennium Development Goals (MDGs), a set of eight goals intended to be achieved by 2015. UNDP operates in partnership with national governments in 177 countries and territories as of 2013. Each country office of UNDP contributes to the organization’s annual Human Development Report, which is intended to provide a benchmark for development. UNDP estimates an institutional budget of USD 857 million for 2012-2013.

About International Fund for Agricultural Development (IFAD)

The International Fund for Agricultural Development (IFAD), an agency of the United Nations, was established in 1977 as an outcome of the 1974 World Food Conference. IFAD is dedicated to eradicating rural poverty in developing countries by focusing on country-specific solutions. IFAD disbursed new commitments of USD 1 billion during 2011, bringing its portfolio of ongoing projects to USD 10.3 billion. IFAD operates in 97 countries as of 2013.

About United Nations Capital Development Fund (UNCDF)

UN Capital Development Fund (UNCDF) is the UN’s capital investment agency for developing countries. It endeavors to create opportunities for poor people and their small businesses by increasing access to microfinance and other forms of investment capital. UNCDF focuses on Africa and the poorest countries of Asia, with particular commitment to countries emerging from crisis. In the year 2012, UNCDF had an annual income of USD 60 million and operations in 48 of the world’s least developed countries.

Sources and Additional Resources

[1] MicroWorld.org: “Cameroon: a new national strategy to consolidate microfinance,” http://www.microworld.org/en/news-from-the-field/article/cameroon-new-national-strategy-consolidate-microfinance

[2] Intellecash – Arohan: “Leading the Way in Consolidating the Microfinance Industry in India,” http://www.gdrc.org/icm/country/za-mf-paradigmshift.pdf

[3] Business Standard: “Consolidation: A way forward for the MFI industry,” http://intellecap.com/sites/default/files/publications/intellecash-arohan-leading_the_way_in_consolidating_the_microfinance_industry_in_india.pdf

MicroCapital story, April 19, 2012, “MICROCAPITAL BRIEF: IKEA Foundation Donates $39m to United National Development Program’s “Swaayam” Women’s Empowerment Program in India,” https://www.microcapital.org/microcapital-brief-ikea-foundation-donates-39m-to-united-nations-development-programs-swaayam-womens-empowerment-program-in-india/

MicroCapital story, February 23, 2013, “MICROCAPITAL PAPER WRAP-UP: “Microinsurance Product Development for Microinsurance Providers;” by Michael J. McCord; published by Microfinance Centre, Microinsurance Centre, International Fund for Agricultural Development,” https://www.microcapital.org/microfinance-paper-wrap-up-microinsurance-product-development-for-microinsurance-providers-by-michael-j-mccord-published-by-microfinance-centre-microinsurance-centre-internatio/

MicroCapital story, February 7, 2013, “MICROCAPITAL EVENT: International Fund for Agricultural Development (IFAD), World Bank to Host Global Forum on Remittances, May 20-23, 2013, Bangkok, Thailand,” https://www.microcapital.org/microfinance-event-international-fund-for-agricultural-development-ifad-world-bank-to-host-global-forum-on-remittances-2013-may-20-23-2013-bangkok-thailand/

MicroCapital story, November 7, 2011, “MICROCAPITAL BRIEF: United National Capital Development Fund Seeks Financial, Technical Services Providers to Expand Savings Microfinance Program MicroLead,” https://www.microcapital.org/microcapital-brief-united-nations-capital-development-fund-seeks-financial-technical-service-providers-to-expand-savings-microfinance-program-microlead/

MicroCapital story, September 22, 2011, “MICROCAPITAL BRIEF: MasterCard Foundation, UN Capital Development Fund (UNCDF) Announce $23m Expansion of MicroLead Program to Promote Savings in Developing Countires,” https://www.microcapital.org/microcapital-brief-mastercard-foundation-un-capital-development-fund-uncdf-announce-23m-expansion-of-microlead-program-to-promote-savings-in-developing-countries/

MicroCapital Universe Profile: United Nations Development Program (UNDP) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+Nations+Development+Program+%28UNDP%29

MicroCapital Universe Profile: International Fund for Agricultural Development (IFAD) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Fund+for+Agricultural+Development+%28IFAD%29

MicroCapital Universe Profile: United Nations Capital Development Fund (UNCDF) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+Nations+Capital+Development+Fund+%28UNCDF%29

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