To mitigate the impacts of the Covid-19 pandemic on the banking system and the financing of economic activity in the West African Monetary Union (UMOA), the Central Bank of West African States (BCEAO) has taken five measures in favour of microfinance institutions (MFIs), according to its officials on Wednesday.The first measure authorises MFIs to grant to their clients affected by the effects of the pandemic and who request it, “an extension of maturities on their loans, for a period of 3 months renewable once, without interest charges, fees or late payment penalties.”
On the other hand, receivables for which maturities are deferred must be classified in a specific sub-account in the category of fixed loans for the duration of the deferral. The same move obliges MFIs to report information on deferred loans to the Ministerial Monitoring Structures (MMS).
The second measure concerns the MFIs referred to in Article 44 of the law regulating decentralised financial systems (SFD). These are SFDs which level of activity reaches a threshold of 2 billion CFA francs in outstanding deposits or loans at the end of two consecutive financial years. The BCEAO also obliges them to communicate to it information relating to claims that have been carried forward.
In its third measure, the Central Bank suggests that it will assess, in relation with the General Secretariat of the UMOA Banking Commission and the SMS, the implications of these measures on the accounting and prudential situation of MFIs and will take, if need be, the appropriate decisions.
The fourth measure relates to the loans granted by credit institutions to MFIs that are eligible for the provisions of the BCEAO opinion on the extension of maturities of the claims of credit institutions affected by the Covid-19 pandemic. The BCEAO adds that “MFIs wishing to do so are therefore invited to contact their banking partners to benefit from the measure to extend the maturity of their commitments.”
In the last measure, the BCEAO stresses that bank loans granted to MFIs referred to in article 44 of the law regulating the FDS are eligible as support for Central Bank refinancing. “Exceptionally, the managers of the Issuing Institute add that, in order to increase liquidity in favour of the microfinance sector, the special window for refinancing bills carried on small and medium enterprises (SMEs) is extended to bank claims held on these MFIs.