COVID-19 and the Non-Repayment of Agricultural Loans in West Cameroon: A major Challenge for the Small Farmer in an Individual Loan Situation

Yannick Tamo Fogue,Ibrahim Muhammad

doi:10.31586/ojar.2022.181

Yannick Tamo Fogue, Ibrahim Muhammad

Open Access

https://doi.org/10.31586/ojar.2022.181

Copy DOI

Abstract

This study raises the problem of the non-repayment of agricultural credits by producers who are members of the Community Growth Mutual (MC2), in this period of COVID-19. It questions the economic mores in force in most member countries of the Organization for the Harmonization of Business Law in Africa (OHADA), where credit has become difficult for small rural farmers; And refers to the theory of the vicious circle of poverty, which advocates an indispensable recourse to foreign capital in the event of financial breakdown, as a means of increasing capital. Since the capital of rural producers remains insufficient and their possibility of reinvestment decreases, then becomes zero because of agricultural credit. To understand the factors of the non-repayment of these credits, data were collected from 100 agro-sylvo-pastoral producers of the Bayangam group (West-Cameroon) of both sexes, aged at least 18 years, having obtained an unpaid credit from the MC2 since 2019, and a manager of this microfinance institution. After analysis, it appears that beyond overproduction and anti-COVID-19 measures that lead to the missale or fall in prices on the market, the conditions of access to credit, the non-possession of acceptable guarantees, the misuse of the object of credit and the practice of financial cavalry by the borrower, as well as the rigidity of the procedures for prosecuting debtors significantly explain this non-repayment. It is associated with determinants such as age, level of education, marital status, type of agricultural activity of the debtor. Hence the need for flexibility of microfinance institutions vis-à-vis rural agro-sylvo-pastoral producers, who are severely affected by the economic shock of the COVID-19.

Highlights

Microfinance is generally perceived as a set of financial and banking services for the poor
Secondary data were collected from the archives and documents of the Community Growth Mutual (MC2) in Bayangam (West Cameroon), which provided information on the normative framework for granting credit and recovery, and made it possible to identify the farmers who took out loans there
This study aimed to analyze the socio-economic factors hindering the credibility of rural producers of the Bayangam group with the Community Growth Mutual (MC2), the case of individuals who are not members of peasant groups or organizations, who have decided as agro-sylvo-pastoral farmers to apply for a credit to boost their activities

Summary

Introduction

Microfinance is generally perceived as a set of financial and banking services for the poor. The COBAC regulation N°01/02/CEMAC/UMAC of April 13, 2002, relating to the conditions of exercise and control of the Microfinance Activity in the Economic and Monetary Community of Central Africa, defines it as authorized entities, not having the status of bank, but providing financial services to entrepreneurs with few economic resources, to help establish a small, self-managed business to eradicate poverty This activity has experienced a strong outbreak in Cameroon, since the 90s when it diversified with Laws No 90/053 of 19 December 1990 on freedom of Association and No 92/006 of 14 August 1992 on Cooperative Societies and Groups of Common Initiative (GIC) [1]. In this period of COVID-19 health crisis that has made it difficult to trade with the countries of the sub-region, constitutes a major obstacle to the development of the Social Economy [6]

Objectives

Methods

Findings

Discussion

Conclusion