The Directorate General of National financial institutions (DGIFN) of the Ministry of Finance and Budget held, Wednesday, October 30, 2019, in Brazzaville, the Annual consultation meeting with the leaders of the microfinance sector in the Republic of Congo.  

Presided over by Constant Badia, Director General of National Financial Institutions (DGIFN), this meeting focused on, among other things, the situation in the microfinance sector as of 31 December 2018 and the brief overview of Regulation NO.1/17/CEMAC/UMAC/COBAC. 

 Congo has 58 licensed microfinance institutions (EMF), including 33 MUCODED, Mutual Savings and Credit Union of Congo’ Network Funds (Caisses du Réseau MUCODEC: Mutuelles congolaises d'épargne et de crédit) and 25 independent institutions.  

In addition, there are 31 unlicensed Mutual Savings and Credit Union (CMEC), which are monitored by the Rural Administration, set up by the State, with the assistance of the International Fund for Agricultural Development (IFAD). 

The administrative and financial situation traces the data transmitted not only by the MUCODEC network, but also by the following independent microfinance institutions: CAPPED, HOPE, CCEC, EUC, CFPR, MECRECU, CCD, COFINA, GCF, CMPC, FODAM, OMEGA FINANCE, CECFK and Natif Cred.SA.

In 2018, the number of EMF staff was 1,673 employees, compared to 2,046 employees in 2017, a decrease of 18 percent, due to the cessation of activities in certain financial institutions.

With regard to the number of employees, of which independent MFIs employ a large number (1,233), compared to MUCODEC network (440), which represents respectively 74 percent and 26 percent of the market shares.

Number of customers

In 2018, the total number of clients was 498,810, against 471,242 members in 2017, an increase of 5, 85 percent.

The MUCODEC network holds the highest market share due to the domiciliation of salaries (civil servants and private). For example, it has 340,806 members alone, or 68 percent of the market share, while independent MFIs have only 158,004 members, representing 32 percent.

Financial situation

The balance sheet situation increased slightly, by 3.60 percent compared with the previous year. In fact, the total balance sheet of MFIs at the end 2018 is estimated at 224.948 billion, against 217.138 billion FCFA in 2017.

During the period under review, the total balance sheet of MUCODEC network represent 85.85 percent of the market share, rising to 193.135 billion FCFA, against 14.14 percent of independent MFIs, which stands at 33.021 billion FCFA.

Thus, the general profit achieved by the sector in 2018, was 1.106 billion FCFA, against 925 million FCFA in 2017, an increase of 181 million FCFA, an annual increase of 19.56 percent. 

Credit

Loans granted by microfinance institutions in 2018 amounted to 81.332      billion F, compared to 85.625 billion F in 2017, a decrease of 5 percent compared to the previous year (4.294 billion F). This decrease is partly due to the MUCODEC network whose credit protfolio was reduced by 14.96 percent.

Notwithstanding this reduction in the market share, in terms of credit, the MUCODEC network represents more than three quarters (88.31 percent), compared with 20.13 percent for independent MFIs).

Arrears are down 19.54 percent compared to the previous year, reaching 9.632 billion F in 2018, compared with 11.971 billion F in 2017.

Despite 5 MFIs that have not provisioned their claims, the provisions made up of the rest of MFIs, are down 16 percent compared to the previous year, to 6.114 billion F in 2018, compared to 7.281 billion in 2017.

Savings

During 2018, deposits collected by microfinance institutions amounted to 159.334 billion F, compared to 153.121 billion F in 2017, an increase of 6.213 billion F (4 percent year-on-year), the market share of the MUCODEC network representing 88.31 percent of all deposits

Brief overview of Regulation NO. 1/17/CEMAC/UMAC/COBAC of 27/09/2017, concerning the requirements for exercising and controlling the microfinance activity in the CEMAC zone and its consequences 

The Central African Banking Commission (COBAC), a published on 27 September 2017, a new regulation on microfinance, under N0.01/17/CEMAC/UMAC/COBAC. The principle laid down in this Rule concerns:

-Legal situation review of 1^st category Microfinance institutions. It concerns the organisation, administration and management. This chapter introduces changes in the legal situation of these institutions. This invoves the modification of status and the completion of legal formalities; membership in a network by decision of the General Assembly (Authorisation of affiliation); the holding of the General Assembly of the governing body approving affiliation; the signing of the affiliation Agreement.

-Networking of 1^st category Microfinance institutions. Section 33 of the aforementioned Rule requires that the activities of microfinance institutions (MFIs) of this category shall be carried out exclusively within the network. Section 5 of the COBAC EMF R-2017/ 02 Rule, specified the number of affiliated institutions for the creation of a network. This section sets the compliabce deadline (for CEMAC microfinance institutions in operation at the date of entry into force of this Rule), at a transitional period of 24 months maximum.

-Increase in the share capital of 2^nd and 3^rd microfinance institutions. Section 2 of the COBAC EMF R-2017/03 Rule, provides that 2^nd and 3^rd microfinance institutions operating before the entry into force of this Rule, shall have a transitional period of 4 years (2018-2021), as of 1 July 2018, to fully comply.  2^nd category institutions shall have a share capital of a least 100 million F as of 1 July 2018; 150 million F as of 1 July 2019; 200 million F as of 1 July 2020 and 300 million F as of 1 July 2021.

For the 3^rd category MFIs: 50 million F as of 1 July 2018; 75 million F as of 1 July 2019; 100 million F as of 1 July 2020 and 150 million F as of 1 July 2021.

Findings of the Directorate General of National Financial Institutions (DGIFN) of the Republic of Congo. 

DGIFN, after taking stock of progress in the implementation of the new regulation, presented the following concerns: 

-         The thorny issue of financial and statistical data transmission. Section 91 of Rule N0. 01/17/CEMAC/UMAC/COBAC of 27/09/2017 provides that microfinance institutions shall be required, each year, to forward to the Central African Banking Commission (COBAC), within four months following the end of the financial year, an Anuual information form, the format and content of which shall be determined by instruction from COBAC. Unfortunately, of the 25 lincensed independent micorfinance institutions, 16 do not report regularly. DGIFN is willing to take a legally binding text to compel MFIs to fulfil their obligation.

-         Certification of accounts. It is required by section 11 of Rule N0. 01/17/CEMAC/UMAC/COBAC of 27/09/2017 which provides that “the transactions of microfinance institutions are controlled by at least one auditor, natural person or moral person authorised under the conditions laid down in this Rule”. In Congo, 14 independent MFIs (out of 25) have an auditors. But the accounts of these MFIs are not certified by them because of the certified costs.

-         Governance issue in MFIs. The separation of powers between the Board Chairperson (CEO) and the General Manager (GM) is enshrined in sections 21 and 22 of the EMF COBAC R-2017/04 Rule, relating to corporate governance.

-         Section 21 : “Internal rules in force in each microfinance institution must define, in a clear and unequivocal manner, the arrangements for the separation of responsibilities at the head of the institution, ensuring a balance of powers and authority, so as to avoid the concentration of decision-making power in the hands of one and same the person” ;

-         Section 22: “The functions of chairman of the Board of directors and General Manager of a microfinance institution must not be exercised by the same person”.

This consultation meeting of DGIFN tutelage of the Ministry of Finance and Budget with the leaders of MFIs, which was attended by the representative of the Association of consumers of financial products and services, allowed fruitful discussions on consumers' protection issues.

The Press office of the Ministry of Finance