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the challenges awaiting the Regional SA

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Charles Rollin Ombang Ekath can be proud of him. The founder and Managing Director of La Régionale d’Epargne et de Crédit will reach a new level in the Cameroonian financial ecosystem. This is the passage from the status of microfinance to that of Bank for this structure which started its activities in 1993 as a cooperative. The prerequisite for this operation is to have a minimum share capital of 10 billion; which is not yet the case for this 2nd category EMF. In order to cross this threshold, La Régionale has opted for a public offer for the sale of shares on the Central African Securities Exchange (Bvmac) based in Douala.

Read also : Banking sector: the Regional wants to go into banking

It hopes to mobilize an amount of 8.2 billion FCFA to strengthen its equity, thus increasing its capital from 8.04 billion to more than 16 billion FCFA. The Central African Financial Market Supervisory Commission (Cosumaf) gave the green light on December 8, 2020 for this operation, the subscription of which runs from February 9 to 21. In detail, 196,000 new shares at 42,000 FCFA per unit will be offered to the public. The minimum subscription is 5 shares, we learn from an official source. The operation will be arranged by the brokerage firm Financia Capital, headed by Cameroonian Serge Eric Nana.

Structural challenges

According to specialists, the Cameroonian microfinance operation should rather go smoothly in view of its performance. The institution has demonstrated sustained growth and financial strength for at least 10 years. With 110,000 active customers, its total balance sheet amounted to 25 billion CFA francs in 2019, for net banking income of more than 4 billion and a profit of 1.8 billion CFA francs. In 2020 and despite the coronavirus health crisis, microfinance generated net equity of around 10 billion and a positive net result of 1.5 billion FCFA. If it succeeds in banking, La Régionale will have to adjust its internal organization to align it with the requirements of Cobac. For example, it will need to have a high-quality Board of Directors as well as all the operational committees, such as the audit, risk and remuneration committee, among others.

Read also : La Régionale SA opens a new branch in Mvog-Ada

With regard to the organization of the operational entity (General Management), it must put in place all the procedures required for all business lines (internal control, internal audit, risk control, compliance, etc.). In addition, the future bank will have to equip itself with an IT tool allowing it to generate its regulatory statements on time, which must be available every month, and no longer quarterly as for microfinance. “The advantage of the Regional is that it already has an administrative machine well in place. It will just have to improve given the level of requirements required in the banking sector. To achieve this, it will have to recruit quality human resources and train those who are not up to standard,” comments a specialist.

Strategy

By moving to the next category, La Régionale must prepare for some of the toughest competition. 16 banks are already established in the country and are among the most successful in the CEMAC zone. By way of illustration, in the second half of 2019, they granted 58% of the overall envelope for new loans in the CEMAC zone. To assert itself in the financing of the Cameroonian economy, the structure headed by Charles Rollin Ombang Ekath has free reign on medium and even long-term credits which offer more leeway to companies in the development of their activities. . In the second half of 2019, the distribution of new loans according to their maturity revealed a predominance of short-term loans, which represent 86.02% of total bank loans in Cameroon.

Read also : Microfinance: the Regional increases its capital to 12 billion FCFA

On the other hand, loans with medium and long maturity, essentially dedicated to the financing of investments, constituted only 13.17 and 0.33%. The bank can also deploy on the activity of leasing. This is a credit transaction intended to finance the acquisition or use of movable or immovable property for professional use. In Cameroon, this method of financing, although suitable for SMEs, remains very little popularized. It represents less than 1% of the volumes of loans granted in one year. Owned by Charles Rollin Ombang Ekath (64%), the Swedish fund Nordic Microcap Investment (14%) and other shareholders (22.07%), La Régionale is present in Cameroon through a network of 42 branches, and in Gabon where she implanted four. It will thus become the second local microfinance to become a bank, after Crédit Communautaire d’Afrique (CCA Bank) in 2017.



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