Microfinance Survival: The Impact of Credit Management on the Sustainability of Micro Finance Institutions in Cameroon

Just as there is rapid growth of Microfinance institutions in Cameroon, there is an alarming rate of bankruptcy, and consequently closure by these institutions. The prevalence of numerous closures of long time well-known microfinance institutions in Cameroon serves as the impetus for this research in an effort to seek and find the main cause of these closures. The credit management process was seen as the major cause of most of these sudden closures due to poor loan portfolio management. In 2014, Cameroon had 500 microfinance institutions and by 2015 only 418 microfinance institutions were listed (CRTV 2015). Renowned microfinance institutions left a huge clientele financially incapacitated due to their unexpected bankruptcy and closure. This research selected one highly rated functioning microfinance institution to find out the lapses in the credit management process. Data was collected using questionnaires, direct observation and secondary data. Data analysis is descriptive. Results show that there were a good number of lapses like: high provision, poor recovery procedure, credit officers without an educational background in the field, manual execution of some loans, slow credit management processes, bad faith of customers and poor follow up of loans given out. Key Words: Credit Management, Microfinance Institution (MFI), Recovery Procedure, Lender, Borrower, Bad debt, Doubtful debt, Microcredit DOI: 10.7176/HRL/50-05 Publication date: December 31st 201