Microfinance and Financial Consumer Protection in CEMAC Region

Project Development Objective ( PDO )

This project aims to support the efforts of the Bank of Central African States (BEAC) and the Banking Commission (COBAC) to (i) develop a robust regulatory and supervisory framework for Microfinance, and (ii) enhance Financial Consumer Protection framework in the CEMAC region.


Microfinance plays an important role in the CEMAC and has the potential to play a more significant role especially among the populations in the rural and agricultural sectors. However, the framework for the regulation and supervision of MFIs was designed and implemented at the beginning of 2000, in the context of a fragmented, weak and heterogeneous sector. The 2015 FSAP highlighted that the supervision of the sector is inadequate. The authorities lack the resources necessary to ensure reporting, observance of the prudential rules, and effective supervision of the entire sector. As a result, weaknesses of governance, transparency, capacity, and information systems persist and threaten the viability of many MFIs. They have already led to the closure and liquidation of several MFIs, some of them large, affecting thousands of low-income depositors. Also, the most recent CEMAC FSAP recommended having a consumer protection framework in place covering banks, NBFIs and MFIs. There is an absence of a dedicated legal, regulatory and institutional framework on Financial Consumer Protection along the lines of international good practices. There is also currently no mechanism for mediation for clients. The 2015 FSAP recommended the need to put in place Consumer Protection rules to ensure that consumers receive information that allows them to make informed decisions, are not subject to unfair or deceptive practices, and have access to recourse mechanisms to resolve disputes.

Activities / Output

1. Enhance CEMAC regulatory and supervisory framework by reviewing of the “reglement CEMAC for microfinance institutions” and already-drafted secondary regulations prepared by COBAC and where appropriate, addressing any short-comings by drafting any needed secondary CEMAC regulations (including MFIs’ prudential ratios); and provide capacity building to supervisors.
2. Enhance Financial Consumer protection framework by identifying the regulatory gaps (covering financial consumer protection), weaknesses in market practices, and consumer issues; deliver market conduct supervisory training and capacity building to banks, NBFIs and MFIs. Draft regulations and guidelines or draft a Financial Consumer Protection Law and Regulations as required for all financial services providers (banks, NBFIs and MFIs) and develop a communications and awareness strategy and action plan developed to introduce new financial consumer protection requirements to the industry.

Expected Outcomes

The main expected outcomes of the project include the following:

MFI’s supervisory and regulatory framework
1. Strengthened rules on MFIs
2. MFIs enforced and supervisory tools delivered.
3. Improved framework for MFI crisis management enforced, enabling effective resolution of failing MFIs

Consumer Protection Framework
1. Increased adequacy of financial consumer protection framework and practices in key dimensions such as legal framework, institutional arrangement, fair treatment, disclosure requirements, responsible lending, dispute resolution and recourse, in line with international good practices and principles (G20)