The Impact of Micro-Finance institution (MFI) on the Cameroon economy
Department: Banking and Finance
No of Pages: 36
Project Code: BFN11
References: Yes
Cost: 5,000XAF Cameroonian
: $15 for International students
CHAPTER ONE
1.1 INTRODUCTION
BACKGROUND OF
MICRO-FINANCE IN THE CAMEROON ECONOMY
Cameroon
is a third world or developing country and like most developing countries
agriculture is its main activity and it employs like 80% of the working population
and also contributes about 75% of the GDP of Cameroon.
Due
to the under developed nature of Cameroon a majority of the population cannot
be served by commercial banks due survey. With this short coming to the poor
the idea of micro finance was introduced in Cameroon.
Microfinance
is not a new concept but back in the 19th century, money lenders were
informally performing the role of now formal financial institutions. The
informal financial institutions constitute; Cooperative credit unions, state
owned banks and social venture capital funds.
These
institutions are said to provide savings and credit services for small and
medium size businesses in developing countries and it is known that such
businesses are likely to fail (Maloney 2003).
The
first microfinance was founded by Muhammed Yunus in Bangladesh in 1976 known as
Grameen bank. Microfinance in Cameroon originated around the 1980s due to
severe economic and banking crisis.
Microfinance
renders both financial and non-financial services; financial services include
micro-insurance and money transfer; non-financial services includes training,
advising and counseling. Microfinance in Cameroon takes several forms for
example self organized groups, cooperatives, non-governmental organizations
(NGOs).
All
microfinance have as their main objective to provide financial services to the
poor who have been excluded to conventional banking (commercial banks).As a
result this empowers the poor by giving them autonomy.
Since
1992, 46 billion FCFA has been given as loans to more than 650000 people by 81
MFIs and of this amount 40% was given to boost the production storage and
marketing in Agro pastoral activities (Wikipedia 2011).
Majority
of the population deals with MFIs than commercial banks and it has about 520000
customers with deposits of 95 billion FCFA (www.camccul.orgaboutus,2007). Some commercial banks in
Cameroon includes Credit Communataire d’Afrique (CCA), UNICS, Community Credit
Company(CCC) and Dominion Finance.
1.2 STATEMENT OF PROBLEM OF STUDY
Cameroon
as a third world country falls under the category of heavy indebted poor
countries (HIPC). As such majority of the population lives below the poverty
line thus making it difficult for these persons to be served by commercial
banks.
With
these problems at hand, microfinance institutions have a very important role to
play. MFIs are out for poverty alleviation; that is try to serve the poor and
those excluded from commercial bank conventional banking.
Therefore,
given that micro-finances are out for poverty alleviation and majority of the
population of Cameroon is poor MFI have a very sensitive role to play in
Cameroon. The problem here is to know if microfinance will be able to
adequately serve the poor population in Cameroon.
The
topic is aimed at providing evidence that MFIs are important arm in alleviating
poverty in Cameroon. However, this research is aimed at providing answers to
the following research questions. To what extend does loans (credit) provided
by microfinance institution affect the economy of Cameroon?
1.3 OBJECTIVES OF THE
STUDY
The
main objective of this study is to examine the impact of microfinance
institutions on the Cameroon economy. The specific objectives include:
- Identifying the problems facing the Cameroon economy.
- To examine the impact of Microfinance credit in the Cameroon economy.
- Making necessary recommendations based on the findings.
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