Understanding money
The three categories of microfinance institution
What each category of microfinance institution is allowed to do.
Three categories, three different jobs
The Central African Banking Commission (COBAC) sorts microfinance institutions (EMFs) across the CEMAC zone, Cameroon included, into three categories. According to BEAC's own presentation of the sector, the rules separate institutions that both take savings and lend, in categories one and two, from those that only lend, in category three.
Category one: members only
A first-category EMF collects savings and grants credit, but only to its own members. These are cooperatives or mutual societies, often built out of village or professional solidarity groups. Caisse Financière Idéale (CAFID) and CFMI are among the first-category EMFs Cameroon's finance ministry lists as licensed.
Category two: open to the public
A second-category EMF also takes savings and lends, but to the general public, not just its members. It must be set up as a joint-stock company, with a higher minimum capital than a first-category cooperative. ACEP Cameroun and Caisse Centrale d'Épargne et de Crédit Coopératif (C4ED) are licensed second-category EMFs in Cameroon.
Category three: credit only
A third-category EMF is not allowed to collect savings from the public at all: it only grants credit, using its own funds or a partner's. Fonds de Financement du Développement Social (FOFIDES) is one example operating in Cameroon.
A smaller third category
The categories do not hold equal numbers of licensed institutions in Cameroon. According to the finance ministry's 2021 list, the first category counts seventeen, the second counts nine, and the third counts only two, FOFIDES among them. Lending without collecting savings is, in other words, the rarer of the three activities.
Why this matters to you
Before you hand money to an EMF, its category tells you what it may legally do. A third-category EMF cannot lawfully ask you to deposit savings with it — if one does, it is acting outside the framework COBAC allows, and your money would not carry the same protections as a deposit at an institution licensed to collect them.