Presented at the AFRACA (African Rural and Agricultural Credit Association) sub-regional workshop for Francophone Africa, held in Yaoundé – CAMEROON, from November 25 – 27, 2009 By AYONGWA, Roger Emmanuel General Manager, UNICS Plc

Introduction 1. Agriculture plays a crucial role and constitutes the backbone of Cameroon's economy: i. employing 70 percent of the countrys workforce, ii. providing 42 percent of its GDP, and iii. 30 percent of its export revenue (MINREX Dec stats). 2. The importance of farm credit as a critical input to agriculture is reinforced by the unique role of Cameroonian agriculture in the macroeconomic framework and its role in poverty alleviation: i. Economic importance, ii. Social stability.

Content of presentation Part 1: UNICS Plc, products, relation to agric credits Part 2: Major risks related to agric credits Part 3: Experiences in 05 regions of Cameroon Part 4: Perspectives, way forward, & Conclusion

Who we are; Our mission; UNICS products and services Credit portfolio; Implication in agric credits.

Who are we ? UNICS – Unity Co-operative Society: Vision: Bank, Group of companies Microfinance Institution of the 1st Category: members Created in January 2000 with Head Office in Yaoundé PLC since Jan. 2009, pending accreditation as Cat. 2 MFI 10 branches in Cameroon spread over 5 regions Over clients (30 Sept. 09); 107 full time staffs At 30/09/09 (in FCFA) - Share Capital: 320 M; Own resources: about 1,000 M; Resources collected: 2,600 M; Placements: 2,700 M (80% short term), total balance sheet: 4,000 M.

Our Mission We Co-operate to solve future economic problems through present day decisions and actions, thereby producing viable citizens capable of living creatively in society. Socio-economic mission to our society – social development with a financial objective : 1. Provision of financial services to all categories of people and businesses 2. Accomplish sustained and profitable service delivery – classic and specific: savings, credits, money transfer.

UNICS Products and Services 1. Conventional financial services: Resources: Ordinary savings, Term deposits Ordinary credits (loans, salary/business overdrafts, lines of credit) Cautions Money transfer: Western Union 2. Specific services Speedy loans & Automatic overdrafts (for salary earners) Speedy Cash money transfer Cheque-clearing, project financing, business partnerships, etc.

UNICS PORTFOLIO SEGMENTATION, & VOLUME OF FINANCING at 30/09/09 SECTORSPORTFOLIO % Agriculture % Manufacturing % Business % Services % Total %

Agric Loans: Purposes Obtention of all forms of input to agricultural production: Buying of inputs for the cultivation of food grain crops as well as for horticulture, aquaculture, animal husbandry, floriculture and sericulture businesses; Purchase of agricultural machinery (tractors, harvesters and trucks); Construction of irrigation systems; Purchase of agricultural land; Environmental and animal Protection Projects.

Nature of UNICS involvement in agricultural credits Direct financing: Involvement with the provision of funding for: Farming – subsistence and commercial; Animal husbandry; The distribution of farm products. Parties involved: enterprises, groups, individuals. Indirect financing: Funding is provided to parties involved indirectly in production: sub-contractors, salaries of agric workers.

1. Synopsis of the nature of risks involved 2. Mechanisms by UNICS to manage some of these risks

2.1 – Synopsis of risks 1. Credit analysis risks: Weak technical capacity of credit analysts – HR factor Lack of sector statistics for decision-making 2. Credit realization risks: Guarantees generally difficult to liquidate; 3. Credit utilization risks: Object of credit misdirected, due to poor follow-up or collusion; 4. Price and currency risks: Prices most often determined by consumers instead of producers – Cocoa, Coffee, Cotton, Vegetable oil…; 5. Natural and Systemic risks: Unpredictable times due to climate changes, risks related to changes in laws or regulations, instability and unpredictability of political environments

2.2 – Risk-Management Mechanisms 1. Personnel Training & Development; 2. Portfolio Segmentation; 3. Customized credit facilities and follow-up of use; 4. Proper Organisation of the Credit Department: Decision in committees; Regular reviews, and reporting; Policies and procedures at the disposal of all parties; Proper clientele education.

THE UNICS EXPERIENCE AT KRIBI, LIMBE, BUEA, & BONABERI REGIONACTORS & INTERVENTIONVOLUMERESULTS SOUTH (KRIBI) Indirect: 03 main contractors related to SOCAPALM. Workers of contractors. Guarantees: AVI, field followup. Presently about 30M FCFA (40% of branch portfolio) Positive SOUTH WEST (Limbe/ Buea) Indirect: 04 main contractors related to CDC. Workers of contractors. Guarantees: AVI, field followup. Presently about 50M FCFA (25% of branch portfolio) Positive LITTORAL (Bonaberi) Indirect: Payment of workers salaries related to SEBPC. Guarantees: AVI. Sector hit by global crisis. About 50M FCFA, loss due to lay-off. Negative

THE UNICS EXPERIENCE AT AKWA, BIYEM- ASSI, & BAFUT REGIONACTORS & INTERVENTIONVOLUMERESULTS LITTORAL (Akwa) Direct: Private agricultural concern in the South West, for acquisition of agricultural machinery, construction of irrigation systems. Rubber business. Guarantees: Mortgage. 100M FCFA (About 33% of portfolio). Not yet evident. CENTRE (Biyem- Assi) Indirect: Group funding of a GIC. Poor structure, object diverted, poor follow-up. Guarantees: Business shop pledge. 20M FCFA (about 25% of portfolio) Negative NORTH WEST (Bafut) Direct: Private agric concerns. So far for food grain crops and animal husbandry. Guarantees: Various pledges. 3M FCFA (about 15% of the portfolio) Overall positive

Perspectives: Challenges & way forward Implantation: Problematic proximity, communication costs, security, etc Way forward: Means of mobility – motorbikes, temporary locations, partnerships. Innovations, e-banking technologies: Use of mobile phones offers an opportunity of getting into the e-banking industry. Way forward: Forge ahead with the establishment of partnerships in this regard. More sustainable sourcing of funds: Rarity of funds, and usually at exhorbitant costs (6% - 12%, generally). Way forward: Need to open up to national and international funders, so as to, in turn, offer funding at more sustainable rates. Guarantees for agric projects: Rthis still constitutes a major area of worry, due to the rarity of real guarantees among credit postulants. Way forward: Need to explore more innovative means of getting securities for credits to lower delinquency rates.

CONCLUSION CREDIT = CONFIDENCE BUT BETTER TRUST, THEN VERIFY, THAN BE SORRY THANKS FOR YOUR KIND ATTENTION!!!