Credit Access in Cameroon

Cameroon is a country in Central Africa located right below the Sahara Desert. With a population close to 24 million, estimates show that 48 percent of the population lives below the poverty line. The majority of those who live in poverty reside in northern, rural regions. Although Cameroon has experienced growth in GDP since 2018, it is the largest economy in the Central African Economic and Monetary Community (CEMAC), a region that has suffered in Africa due to the fall of oil prices. Cameroon aims to become an emerging country by 2035, which means the real GDP will have to grow by 8 percent. In order to reach this goal, credit access is an advancement that must be focused on. Seeking a solution for credit access in Cameroon is a crucial task for its government.

Unfortunately, in 2017, only 10 percent of Cameroon’s population reported that they have a bank account.

Agriculture and the Economy

It’s clear that financial services and education are not reaching a large portion of Cameroon’s population. Often described as a miniature Africa, Cameroon exhibits all the climates of the continent, with a large chain of mountains separating the arid and green regions. This terrain presents a challenge in acclimating the population to new advancements such as mobile banking and loan access.

Cameroon’s economy is rooted in agriculture, something found mostly in rural regions where access to credit is poor. Because of the country’s rich landscape and natural resources, 70 percent of the population’s labor force is in Cameroon farms. However, 23 percent of farmer households rely on subsistence farming, which means they are working to feed themselves and their family. This is an alternative to both consuming and selling the produce.

While subsistence farming can provide a family with a self-sufficient method towards survival, its success is dependent on a non-hazardous climate and funding. Specifically, this is access to expensive chemical fertilizers. Subsistence farming also doesn’t help improve the economy’s investment sector when many people are farming to live instead of making money to save. Most farmers sell their products at the marketplace, where physical cash is exchanged for goods. Out of the 90 percent who do not own a bank account, the majority reported that they had no money to save or made no regular income.

A Need to Expand Credit Access in Cameroon

There are currently around 840 or so accredited microfinance institutions in Cameroon. The country’s loan performance has worsened due to the number of uninformed loans given to consumers. In 2018, the Risk Prevention Bureau for Microfinance (CREMF) was established as a system that helps these institutions track and disseminate the correct data on all their customers. This makes it somewhat easier for them to recover borrowed money. However, the challenge is still present: the majority of these microfinance institutions are in rural areas with low internet connectivity. This makes it difficult to continue giving out loans to those who need them.

In order to make credit access in Cameroon more financially inclusive, mobile services must be extended to rural areas. Additionally, services should also cover financial education and funding for farmers. In 2008, Express Union introduced mobile money. Mobile money offers a quick method for payments and access to finances.

While there are 6.8 million subscribers, there are only 1.5 million active users of mobile money services. The biggest challenge is implementing a cashless culture in a country that is reliant on a cash-based agricultural market.

Improvement Efforts

In order to establish an equal financial climate, the government of Cameroon and the World Bank Group renewed its strategy. This 2017-2021 project focuses on three main areas:

  1. poverty traps in rural areas
  2. access to better transportation
  3. improving weak governance.

The main objectives of this framework are increased market productivity in the agricultural sectors, improved health and improved access to credit in Cameroon.

Another solution to help foster jobs in Cameroon is the Agriculture Investment and Market Development Project (AIMD). Participants of this project are working to pave a bridge between agriculture and agribusiness. For example, this includes:

  • educating farmers on new techniques
  • providing them with the means to create quality produce
  • connecting them with agro-industrial companies like Guinness through mobile applications.

These advancements have helped to boost the financial sector and improve credit access in Cameroon. As a result, the livelihood of the country’s poor has improved. With consistent improvement, it’s possible that Cameroon’s economy can emerge into one that is economically stable, with more equally-distributed prosperity among regions.

– Isadora Savage
Photo: Pexels

Farming in Africa
Africa faces the challenges of a growing population as well as low farm productivity. Weather changes, shorter fallow periods, deforestation, worsening farmland and the loss of young people in farming communities that move to urban areas further hinders the ability of African farms to increase farm yields.

Fortunately, many tools like drones and soil sensors are becoming more and more accessible and affordable within the continent. Especially with the African population growing at such a high rate (it’s projected to reach 2 billion people by 2050), farming in Africa needs to make use of new technologies to improve in order to prevent mass hunger in its own countries as well as in the world. Here are some examples that demonstrate how technology in Africa improves farming:

Precision Farming

Zenvus, a precision farming startup in Nigeria, helps farmers determine appropriate fertilizers to apply to their soil as well as to optimally water their farms. The company acquires such information by measuring and analyzing soil data such as nutrients, temperature and vegetative health. The group improves farm productivity and reduces input waste for small-scale farmers.

UjuziKilimo, a big data analytics startup in Kenya, also uses precision farming to adjust irrigation needs for individual plants. While these precision farming examples demonstrate that technology in Africa indeed improves farming, Africa still requires major changes in their infrastructure in order to technologically connect the entire continent and make a large-scale soil map.

More Affordable and Effective Irrigation Methods

Sunculture sells solar-powered drip irrigation kits in Africa that make watering crops more affordable. Other efforts have also been made to increase the use of groundwater through the distribution of low-cost treadle pumps and drip-irrigation kits in Kenya, Tanzania, Zambia and other countries.

One example is portable water pumps occurs via the nonprofit organization, Kick Start. Their pumps are sold in Kenya, Tanzania and Mali from $35 to $95, and the product has been able to take 667,000 people out of poverty! For now, however, surface water is the main source of irrigation for most of Africa, so more surface water storage systems are required to optimize the numerous parts of Africa’s use of river water.

Unfortunately, some obstacles to the development of surface water storage (in some places) would be the cost of construction and possible environmental effects. The Hippo water roller, a drum that hauls large amounts of water by being rolled on the ground, helps numerous people in Africa that lack local water facilities and result in walking long distances to reach their water sources.

Improved Soil Management

Western Kenya is the perfect example of a densely populated area in Africa with low and declining soil fertility and continued threat to land resources. While also facing poverty and food security issues, such areas desperately need to conserve their natural resources, slow population growth rates and fight the HIV/AIDS pandemic.

One solution delivered by the World Agroforestry Centre was a low-cost integrated soil package that used organic manure to supplement phosphorus dressings as well as existing organic resources like biomass transfer to provide nitrogen to crops. A set of other technologies like high-quality crop seeds replenished phosphorus and nitrogen in the soil.

With the help of these technologies, farmers in Kenya increased their maize production by 2 to 3 times their typical yields!

Financial Solutions

FarmDrive connects smallholder farmers to credit and helps financial institutions increase their agricultural loan portfolios in Kenya. M-Farm in Kenya and AgroSpaces in Cameroon assist farmers to earn more by providing pricing data to prevent asymmetric price transmission.

Better Crop Storage Techniques

In 2015, the Alliance for a Green Revolution in Africa (AGRA), supported by agronomist experts from The Rockefeller Foundation, trained 2,000 farmers on various methods to reduce post-harvest loss. This made a significant impact because before the training, over 50 percent of the farmers AGRA trained either made no use of storage at all or only utilized sacks to store grain.

Some did use plastic containers, custom-made mud-walled structures, baskets and other traditional methods. However, these methods lead to 30 to 40 percent loss of their grain harvests. In comparison, AGRA’s simple storage technologies such as hermetic cocoons and bags, metal silos and polypropylene storage bags successfully kept harvested maize in good condition for six months.

Without rotten produce or pests after 12 months of storage in Tanzania, maize could be sold over longer periods of time. This enabled farmers to make more sales and thus accumulate more income and provide for improved nutrition for families and communities. So, to sustainably feed the entire growing population in Africa, such storage technologies need to be distributed and made locally.

Agricultural development is essential to eradicating poverty and to bringing food security to developing nations, so it is crucial that technology in Africa improves farming.

– Connie Loo

Photo: Flickr