MICROFINANCE MATTERS - The Experience of the BCEAO in Collecting and Processing Data on Microfinance

Microfinance in the eight countries that comprise the West African Monetary Union (WAMU)[1] has experienced a high rate of growth in the last few years and is now becoming an important driver in the development of the economies in this region. We know this because, unlike many central banks, the Central Bank of West African States (BCEAO) has closely monitored the sector since the start of the 1990's.

The microfinance monitoring system of the BCEAO was introduced as part of support programme for savings and credit cooperatives. The objective was to work towards a better understanding of the local financial sector, and to compile, amongst other things, statistics on the sector supporting the implementation of an appropriate legal framework. The first publication of data collected was in November 1994.

The databank, henceforth called the Decentralised Financial Systems (DFS) monograph, is compiled from the annual reports and financial statements provided by microfinance institutions in each country. The data provides a measure of the access to, and offer of, financial services in BCEAO countries and their financial performance. Statistics relating to the sector are publicly available and provide recent and reliable financial and economic information to assist in decision-making. Every institution that submits its data receives a free copy of the monograph of the country in which it operates.

The Legal Basis

Microfinance-specific regulations in WAMU, notably article 62 of the law concerning the regulation of mutualist institutions or savings and credit cooperatives, and article 3 of the framework convention, oblige microfinance institutions to produce an annual report at the end of every financial year. These reports and financial statements are given to the Supervisory Authority within six months following the end of the financial year. These regulatory measures were carried out according to the directives decreed by the BCEAO in March 1998, for the standardisation of support (including statement of profit and loss, annex statements, and annual report) and the definition of common concepts for all microfinance structures so that, from now on, harmonized financial data is available, which can be aggregated and compared for analytical purposes. Specifically, the annexes to Instruction 7[2] of the Central Bank list the indicators that must be included in the DFS annual reports.

Collected Financial Information

The information gathered from the reports and financial statements is processed on the central bank (BCEAO) level. This activity consists of annually sorting, by institution, the financial data contained in the collected documents and of entering them into a database. This information applies to general data, to know the number of service points, the number of beneficiaries and distribution according to kind, the financial resources (deposits, own funds, subsidies, credit lines), the jobs (funds/credits, investments) and the financial operations (expenses and revenues by category). It is important to note that the deposits and credits are followed up according to three types of maturities, short term (less than 12 months), medium term (12 to 36 months) and long term (more than 36 months); the credits are also treated in this way according to their objective (sector oriented). From these units of information, indicators are compiled concerning :

Results

From its experience of collecting the data annually, the BCEAO has put together a quarterly follow-up system for the DFS. This system allows for the round-up of the microfinance situation in the WAMU, based on the collected statistics and compared with a DFS sample covering 90% of the microfinance transactions in the WAMU. The statistical data statements concern the customers of the target institutions, the number of institutions and service points, their financial operations (value of deposits and outstanding credit) and the quality of their credit portfolio estimated by the value of outstanding credits (table attached in annex). This quarterly follow-up will, in this way, provide a fairly precise view of the sector, considering the high degree of concentration of microfinance operations in the Union.

As well as monitoring the sector, the indicators and data collected are useful for carrying out specific studies. The BCEAO has undertaken, as part of the initiatives aimed at improving information about the decentralised finance sector, studies relating to the impact on the beneficiaries of the services offered by microfinance institutions. These studies have been carried out in Senegal, Burkina and Mali. Furthermore, a study concerning the contribution of DFS to the financing of the crafts is underway in Mali. These various investigations have made it possible to determine to a higher extent the profile of the service beneficiaries and identify some of the obstacles to expanding access to populations without DFS.

Challenges

Difficulties are encountered in collecting information. For example, a certain number of DFS do not systematically forward information to the Supervisory Authority. Additionally, in some cases, the information passed on is incomplete, causing delays in the publication of the results of analyses on decentralised finance. Also, it has been noted that not all microfinance institutions produce the financial statements and annual reports in accordance with BCEAO's instructions. This often leads to delays in the compilation of data.

The data published is exclusively collected from decentralised financial institutions. It does not include the statistics from the Postal Cheque Accounts and National Savings Bank (CCP/CNE) or from the banks and financial institutions. The account data is not reprocessed to identify unique usernames, which would allow multiple accounts held by the same beneficiary to be eliminated.

To help reduce these impediments, the BCEAO has undertaken the compilation of an accounting programme specifically for DFS' and whose implementation should compensate for this insufficiency. Furthermore the implementation of a more accurate identification system for beneficiaries is envisaged within the information centre, thus making a better census report of beneficiaries possible, and enabling a finer evaluation of the access indicators.

Altogether, after more than a decade spent collecting and processing financial information, the BCEAO has concluded that the availability of reliable, exhaustive, recent data requires consistent support to the microfinance institutions so that they create efficient information and management systems that will allow them to take up the challenge of expanding access, and its assessment.

WAMU : PROGRESS OF THE PRINCIPAL DFS AND WAMU INDICATORS

(*) : The associations are counted on a unitary basis - on average there are about ten people for one association
NA : Not Available
Source : BCEAO

(1) The WAMU unites the following eight West African countries : Benin, Burkina Faso, the Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo. It covers a surface of 3.5 million km2, with a population of 75 million inhabitants.

(2) See the BCEAO internet site which includes all of the texts governing the microfinance sector. www.bceao.int

(3) Franc de la Communauté Financière Africaine (franc CFA)