Denis Kwei Ngangwa, Yaounde Branch Manager, Manchok Credit Union, speaks on the management and loan policies of credit unions.

What services do we find in credit unions that we do not have in micro finance institutions?

A credit union cooperative is a micro finance institution. The first requirement is registration to become member. Once registered any client becomes a member which means he/she is part of the decision making body. Credit unions value their members more than any other thing.

Members top the chart of the body before Board of Directors. This is simply because the group belongs to members who designate Board of Directors and can do away with them at anytime necessary. Being a member is simple.

But it all depends on each credit union. It suffices to deposit a particular amount of money which counts for registration fees and shares. (FCFA 21,000, 25,000, 32,000 …). We also offer fertilizer to members on credit. Credits unions also pay salaries. We also offer contract loans to members.

What is the loan policy of credit unions?

Registered members can save from FCFA 500 and above either on daily, weekly or monthly basis. Saving more increases the chances of being offered a loan. The member gives the conditions to pay the loan and the most important thing with the credit union is that the interest rate is very low though depending on each house (we are at 1.5 per FCFA 1,000 per month) which means FCFA 100,000 goes for FCFA 1,500 as interest rate per month. The category of payment duration is also encouraging, ranging from 12 to 24 months for an amount like FCFA 100, 000.

The maximum duration for building loan is 48 months and any other loan 24 months as maximum duration. The interest drops as the loan reduces.

Offering support for contract loans ….?

Members who win contracts bring the contract documents and requirement to the credit union from where they are analysed. The credit union prepares the bank documents for the member so much so that payments are wired to the credit union account from where the member (contractor) regularises the contract with the credit union before clearing the money.

All that is required of members is to pay charges for the contract operations preparations to the credit union which in most cases is not much. However, we do not just do it on a platter of gold. Contractors are obliged to present collateral (business house or landed property).

And management schemes..?

Another factor is management and operations. Getting a loan in the bank is bureaucratic meanwhile credit unions are more flexible. Their loan operation schemes. If you go for 10 million in a bank and promises to pay in five years with an interest rate of 500 000 and if you happen to carry out a business of FCFA 15 million and opts to pay back the loan, they won’t accept but in the credit union they will happily accept. Those are some of the advantages that credit unions offer to customers.

Just that sense of belonging whereby members know they can choose who manages them encourages adherence. The micro finance market in Cameroon has failed a lot of times with customers crying out loud on their savings lost.

This has made Cameroonians to lost trust for such institutions and is moving towards credit unions where they think their money is safe, given that most of them are from the same villages and know who to hold responsible in times of crash.