CERTIFICATION

This is to certify that this Internship Report is written by NIBA ZITA

MUGHU a student from the Accounting and Finance department in the Higher
Institute of Commerce and Management (HICM) of the University of Bamenda
who carried out an academic internship at the Bamenda Police Cooperative Credit
Union (BAPCCUL) ltd Old treasury street Bamenda which is a category one
Microfinance institution.

Academic supervisor
Field supervisor
MR. ARMSTRONG PEACE F. MR. NONO GABRIEL

Sign……………………………… Signature……………………………

Date……………………………… Date………………………………….

Head of Department

Dr. NDAM MAMA

Sign………………………………..

Date……………………………….

i
 DECLARATION

I NIBA ZITA MUGHU (15C0497 of the marketing department in the Higher

Institute Of Commerce and Management of the University of Bamenda hereby
declare that this piece of work is a product of my heart earned knowledge acquired
during my internship in the Bamenda Police Cooperative credit Union
(BAPCCUL) ltd Old treasury street Bamenda And it is considered as a partial
fulfillment of the conditions required for the award of a Bachelor Degree in
Business Administration(BBA) In Accounting and Finance.

Name: NIBA ZITA MUGHU

Signature:____________ Date:_____________

ii
 DEDICATION
This piece of work is dedicated to my beloved family

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 ACKNOWLEDGEMENTS
I wish to express special gratitude to my academic supervisor, the ever present

Mr. Armstrong Peace for his Guidance, constant encouragement throughout this
report.

Same goes to the head of department of the marketing Dr. Ndam Mama for his
exemplary support in and out of the class room.

I express my deepest thanks to the staff of BAPCCUL for their collaboration with
me throughout my industrial training period.

Special thanks goes to my family and friends for their financial social and moral
support especially Mr. Edward Suh, Mrs. Alice Alimbo, Afor Miranda, Atanga
Felix, Niba Franklin, Neh Harrriet, Alaboh Emmanuela, and Anuafu Maximus.

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 ABSTRACT
This report is based on an internship carried out at BAPCCUL Old treasury street
Bamenda. It provides an outline and elaboration of all the services offered by
BAPCCUL, their functions and how they operate, the major problem they face,
their SWOT analyses and recommendations, and ends up with the general
conclusion. It also provides a detailed explanation of all the activities that I carried
out during the internship period. This report is divided into five chapters.

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 LIST OF ABREVIATIONS
AGM------------------Annual General Meeting

BAPCCUL-----------Bamenda Police cooperative credit union limited.

BOD-------------------Board of directors.

CamCCULL --------Cameroon Co-operative Credit Union League Limited

CEMAC---------------Comminaute Economique et Monitaire de l’Afrique Centrale.

COBAC---------------Banking Commission for Central African states

EGM------------------ Educational General meeting.

FCFA------------------Franc de la cooperation Financier en Afrique central.

MINFI-----------------Ministry of Finance

NGO-------------------Non-GovernmentalOrganization

SB----------------------supervisory board.

SWOT-----------------Strength, Weakness, Opportunities and threats

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 TABLE OF CONTENTS
CERTIFICATION ..................................................................................................... i
DECLARATION ....................................................................................................... i
DEDICATION ......................................................................................................... iii
ACKNOWLEDGEMENTS ..................................................................................... iv
ABSTRACT ...............................................................................................................v
LIST OF ABREVIATIONS .................................................................................... vi
TABLE OF CONTENTS ........................................................................................ vii
CHAPTER ONE ........................................................................................................1
1.1 BACKGROUND INFORMATION ....................................................................1
1.2 PROBLEM STATEMENT .................................................................................2
1.4 METHODOLOGY...............................................................................................3
1.5 PLAN OF WORK ................................................................................................4
CHAPTER TWO .......................................................................................................5
BACKGROUND OF THE INSTITUTION AND TASKS CARRIED OUT BY
THE INTERN ............................................................................................................5
2.1ORGANISATIONAL SRTUCTURE OF BAPCCUL .........................................5
2.1.1THE GENERAL ASSEMBLY ..........................................................................5
2.1.2THE BOARD OF DIRECTORS .......................................................................6
2.1.3 THE SUPERVISORY BOARD .......................................................................6
2.1.4 WOMEN’S COMMITTEE ...............................................................................6
2.1.5 THE GENERAL MANAGER ..........................................................................7
2.1.6 THE BRANCH MANAGER ............................................................................7
2.1.7 THE LOANS OFFICER ...................................................................................7
2.1.8 THE ACCOUNTANT ......................................................................................7
2.1.9. THE ACCOUNT CLERK ...............................................................................7
2.1.10.THE CASHIER ...............................................................................................8
2.1.11. THE DAILY COLLECTORS .......................................................................8
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2.2 PRODUCTS AND SERVICES OFFERED BY BAPCCUL ..............................9
2.2.1 THE SAVINGS ACCOUNT ............................................................................9
2.2.2 DEPOSIT ACCOUNT ....................................................................................10
2.2.3 MONEY TRANSFER SERVICES ................................................................10
2.2.4 PAYMENTS OF SALARIES .........................................................................10
2.2.5 AUTOMATED TELLER MACHINE (ATM) SERVICES ...........................11
2.2.6 OVERDRAFT FACILITIES ..........................................................................13
2.2.7 SPECIAL WITHDRAWAL SLIPS FACILITIES .........................................13
2.2.8 LENDING FACILITIES ................................................................................14
2.3 ACTIVITIES CARRIED OUT DURING INTERNSHIP.................................15
2.3.1 ACTIVITIES CARRIED OUT AT THE MARKETING AND MEMBER
SERVICE DEPARTMENT .....................................................................................15
2.3.2 SKILLS ACQUIRED AT THE LENDING AND COLLECTION
DEPARTMENT .......................................................................................................17
2.3.3 THE ACCOUNTING SERVICE....................................................................21
2.4 THE BRANCHES OF BAPCCUL ....................................................................22
CHAPTER THREE..................................................................................................23
PRESENTATION OF THE MAJOR PROBLEM ..........................................23
3.1 PRESENTATION .........................................................................................23
3.2 NATURE OF THE PROBLEM ........................................................................23
3.3 MANIFESTATION ...........................................................................................23
3.4 CAUSES OF HIGH INTEREST RATES .........................................................24
3.4.1 OPERATIONAL COST .................................................................................24
3.4.2 THE COST OF MONEY ................................................................................24
3.4.3 THE NEED FOR FINANCIAL VIABILITY ................................................25
3.5 CONSEQUENCES OF HIGH INTEREST RATES ON THE
MICROFINANCE INSTITUTION .........................................................................25
3.5.1 HIGH INTERESTS REDUCE THE LEVEL OF LOANS CONTRACTED 25

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3.5.2 IT CONSTITUTES A THREAT TO THE GROWTH OF THE
ORGANIZATION ...................................................................................................26
3.6 SWOT ANNALYSES OF BAPCCUL ..........................................................26
CHAPTER FOUR ....................................................................................................29
SITUATIONAL ANALYSIS ................................................................................29
4.1 RECOMMENDATIONS ...................................................................................29
CHAPTER FIVE......................................................................................................30
GENERAL CONCLUSION ....................................................................................30
REFERENCES.........................................................................................................31
APPENDICES .........................................................................................................32

ix
 CHAPTER ONE
INTRODUCTION

1.1 BACKGROUND INFORMATION

The idea of credit unionism was brought up in Cameroon by Rev.Father

Anthony Jansen, a Roman Catholic priest from Holland. The very first credit union
in Cameroon was created in Njinikom- North West Region in 1963 with a
membership of 16 and a total savings of CFAF21000.The idea was further spread
by Tony Barnicle and the idea of credit union spread all over the North West and
southwest regions. By the 8th day of June 1968, 34 credit unions were already in
existence. These credit unions came together to form the Cameroon Cooperative
credit union league (CAMCCUL) ltd, which is today regarded as the umbrella
under which all other credit unions function. It is also the largest micro-financial
institution in Cameroon and in the CEMAC sub region.

With respect to the rapid spread of credit unionism, on the 5th day of
Febuary 1969 in the Mankon Police Recreation Hall, BAPCCUL started with a
meeting of some members of the west Cameroon police force among which Messrs
M.H. Ntune , Ane C.T chief Yakum Ntaw and Pema Rudolf, all came together and
agreed to form a credit union. They were 84 in number, thus giving the name
Bamenda Police Cooperative Credit Union, with its head office in old town
Bamenda. It was later transferred from old town to old treasury street Bamenda.
BAPCCUL also has branches in Nkwen (ST paul junction), Ghana street, up-
statio,Nkambe, Mbot, Ndu, Nwa, Kumba ,Douala-bonaberie , Douala-Camp
yabassi, NJombe, Yaounde-Biyem-assi, Yaounde Enana, Bafia,Voumdou,
Makenene, bafousam-Tyo-ville, Foumbot, Limbe, New Bonaprisco Douala,

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Baffousam Djomoun, Oku. It is a category one micro finance institution owned
and controlled by its members and dedicated to alleviate poverty and improve on
the welfare of their members.

1.2 PROBLEM STATEMENT

The sector of microfinance in Cameroon is witnessing an increasing growth rate

On daily basis. This is because many people are now aware of their existence and

Importance unlike before. Both the literate and illiterate population is developing

more confidence in microfinance institutions.

They now prefer to save and borrow money from these financial institutions

instead of borrowing from lay people in the society. Money borrowed from a

financial institution is granted in the form of a loan. When a loan is granted to a

member of a credit union, he/she has to pay back the money with an additional

percentage rate which is referred to as the interest. The main problem faced by

many financial institutions and BAPCCUL in particular is the issue of high

interests levied on loans that are granted to the members. The rates per month are

as follows;

-Loans within shares and savings; 0.8%

-Loans above shares and savings; 1.5%

-Overdraft; 5%

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 -Contract loans; 2.5%

-special loans (school fee, Christmas, anniversary loans); 2.5%

-Njangi financing; 2%

Given the fact that BAPCCUL uses simple interest method, when these rates are
compounded they appear to be very high, which becomes a problem to the
organization.

1.3 OBJECTIVES OF THE STUDY

The main objective of this study is to assess the impacts of high interest rates on
the growth of MFIs with a case study of BAPCCUL.

Apparently, this study will also seek to asses other issues that have to do with
interest rates such as;

-How interest rates affect the way the member repays his/her loan.

-How loan repayment affects member savings.

1.4 METHODOLOGY
Both primary and secondary sources have been used to collect data and information
used for this work. My one months of internship with BAPCCUL was full of
interaction, discussion, interview and research with the staff, members of the union and
the other interns who started before I came. The workers were ready and willing to
give us all the information that we requested and could facilitate the drafting of this
report as well as to have a better understanding of the organization.

Primary data was gotten from interactions and in the course of filling loan
forms and other forms that require the member’s information such as savings

3
withdrawal forms, deposit slips. Primary information was also gotten from
interviewing the staff and members of BAPCCUL and also from discussions with other
interns. Secondary information gotten from BAPCCUL brochures, calendars, the BYE
LAWS, loan policy book, interactions with previous interns.

1.5 PLAN OF WORK

This work will be divided in to five (5) chapters. Each chapter will be
divided into sub-sections with respect to the information patterning to the chapter.

Chapter one will be made up of the general introduction which presents an

abstract of the entire report. It consists of subsections like the background of the
study, its objectives, problem statement, methodology and the plan of work.

Chapter two focuses on the enterprise where the internship was carried out
and also the position of the intern in the institution the chapter ends with some
identified challenges faced by the organization and suggested solutions. The last
part of this chapter identifies the major problem faced by the organization.

Chapter three has to do with the detailed examination of the problem

identified in chapter. It focuses on the nature of the problem, manifestation, causes
of the problem, methods used to resolve the problem and its effects on the growth
of the organization.

Chapter four is an extension of chapter three which seeks to give a logical

and more comprehensive nature of the problem identified. It shows the SWOT
analyses of BAPCCUL, bringing out its Strength, Weaknesses, Opportunities, and
Threats.

Chapter five is the general conclusion of the report. It presents the methods used by
the organization to solve the problem and general recommendations.
4
 CHAPTER TWO

BACKGROUND OF THE INSTITUTION AND TASKS CARRIED OUT BY

THE INTERN

2.1ORGANISATIONAL SRTUCTURE OF BAPCCUL

BAPCCUL is owned and controlled by its members. These members come
together to form the general assembly which represents the highest authority of the
credit union. They assemble in the general assembly and elect the board members
which are headed by the union president who represents the institution where ever
necessary. The elected board of directors under the supervision of the union
president manages and supervises the functioning of the union. The BOD is
preceded by the various committees which are created with respect to the various
tasks and activities of the union. A clear picture of the hierarchy of authority in
BAPCCUL is painted below.

2.1.1THE GENERAL ASSEMBLY

The general assembly consists of all duly registered members of the union and they
represent the highest authority in the hierarchy. They have the greatest say in
matters concerning the credit union. They are the ones that elect the BOD during
the AGM. It is held once in a year in the area where the head office is found. This
is usually done towards the end of the financial year and it is during this occasion
that dividends that were calculated on member savings are being shared and vital
decisions are taken.

5
2.1.2THE BOARD OF DIRECTORS

The BOD of the union should constitute at least 3 and at most 12 members
depending on the capacity of the union at a given time. The board members operate
on a three ears mandate renewable twice only. The management and organization
of the union activities are fully controlled and supervised by the board members.
This is where strategic decision making takes place.

2.1.3 THE SUPERVISORY BOARD

They are regarded as the “watchdogs” of the union because they have access to all
the documents and files of the union. They check the records of the union to ensure
the effectiveness and efficiency of the staff and to see that the monthly financial
statements are presented. They check to see that all decisions taken at the GA are
well executed and on time and also check the inventory positions to avoid stock
shortages. It is made up of a chairperson and two other members.

2.1.4 WOMEN’S COMMITTEE

This committee is out to educate and encourage women to join and participate
in credit union activities. The women’s committee undertakes visits to women
groups to inform women the products and services of the union,both members and
would-be members.

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2.1.5 THE GENERAL MANAGER
He is the focal point on decision making concerning the functioning of the various
branch offices and he is supposed to report to the BOD on any matters arising. He
is responsible for signing all official documents of the union.

2.1.6 THE BRANCH MANAGER

This is the general supervisor of the branch offices and ensures the controlling,
directing, organizing and planning in the branch offices. The branch manager is
answerable to the general manager.

2.1.7 THE LOANS OFFICER

The loan officer is in charge of the Lending and collection department. He is
responsible for the analyzing of all loan files before presentation for decision to be
taken and ensuring the proper follow up of these loans to guarantee repayment.

2.1.8 THE ACCOUNTANT

The accountant is responsible for preparing all the financial statements at the end
of each month. He monitors the work of cashiers to make sure that transactions are
properly posted into the members accounts; he treats civil servants salaries and that
of the private sector for members who receive their salaries through BAPCCUL.
The accountant reconciles all bank accounts and all treasury accounts (stock,
Telecash, Inter-branch accounts).

2.1.9. THE ACCOUNT CLERK

The account clerk is also in charge of the treatment of salaries, treatment of
inter branch transfers and purchases within the union. He carries out almost all the
tasks that are liable to the accountant.
7
 2.1.10.THE CASHIER
This is the only person that deals directly with cash. Thecashier receives
member’s deposits and savings and posts them into their various accounts.

2.1.11. THE DAILY COLLECTORS

They are appointed by the manager to do collection of daily savings at member’s
business sites, homes and job sites.

The hierarchical organization (organizational structure), is clearly seen on the chat

below;

GENERAL
ASSEMBLY

SUPERVISORY BOARD OF WOMEN COMMITEE

COMMITTEE DIRECTOR

GENERAL MANAGER

HEAD OF ACCOUNTING HEAD OF LOAN HEAD OF MEMBER BRANCH MANAGER

DEPARTMENT DEPARTMENT SERVICE DEPARTMENT

ACCOUNTING CLERKS LOAN OFFICER MEMBERSHIP CLERKS LOAN OFFICERS/ MEMBERS

AND CASHIERS SERVICE / CASHIER

Source; BAPCCUL organigram 2013

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2.2 PRODUCTS AND SERVICES OFFERED BY BAPCCUL

2.2.1 THE SAVINGS ACCOUNT

Savings are considered as one of the most important elements or service that
sustains a MFI. The saving nature and size greatly influences growth. For this
reason, members are always advised to save frequently and wisely. This is the. The
savings account is regarded as an investment account because it yields interest to
the member at the end of the year and the amount of savings also determine the
ability of a member to contract a loan. A portion of the savings constitutes the
loans granted to members. This yields interest which is in turn shared to the
members as dividends at the end of the year in proportion to the size of the
member savings and duration in the union. Due to the insurance paid on this
account, withdrawal requires short written notification of 1month for a withdrawal
below 50% of savings and 3months for a withdrawal above 50% of the total
savings. Failure to notify will mean a penalty of 2% will be levied on the amount
the member wants to withdraw at a time. However, there are twoexceptional
accounts. These are;

a) Group accounts; Groups do operate depositaccounts. For this reason,

theirsignatories can withdraw money from the account without prior notice.
Buthowever, like any other savings account, it yield interest normally
special withdrawal slips are issued to groups, with which they can carry out
withdrawals or payments to third parties.
b) Minor accounts; these are account that are opened and operated by an adult
on behalf of a minor(child) until he gets to the age where he can carry out
the transactions himself. Minors are not allowed to withdraw from their

9
 accounts. Thus, withdrawals from savings do not require any prior
notification.

2.2.2 DEPOSIT ACCOUNT

This account is considered as a current account. Members can withdraw any
amount of money from this account without any prior notification. This account
yields no interest and members are expected to pay a deposit fee when keeping
money into this account.

2.2.3 MONEY TRANSFER SERVICES

Given the fact that BAPCCUL is a category one microfinance institution,
itnormally supposed to deal only with members and not customers. This explains
why money transfer services are regarded as extra services because it includes non-
members that are customers.

2.2.4 PAYMENTS OF SALARIES

In order for a worker to receive his salary through BAPCCUL, he/she must first of
all have an account with BAPCCUL. The union assists in the payment of civil
servant salaries, private worker salaries and also pensioners. This increases the
ability of a member to benefit from loan facilities and gives them an advantage in
other services offered as compared to those who are not paid their salaries through
BAPCCUL.

Documents to submit for salary transfer

-A Hand-written application bearing CFAF1000 fiscal stamp (for civil servants)
addressed to the Ministry of Finance and Budget.

-Certificate of non-indebtedness from your former banker except treasury cases.

10
-A copy of National Identity Card.

-A copy of your most recent pay slip.

-An attestation of bank account (Done by BAPCCUL at CFAF2000)

-A certificate of effective service or Pension decision.

-01 passport size photograph.

2.2.5 AUTOMATED TELLER MACHINE (ATM) SERVICES

ATM services are facilities of withdrawals which are made possible with the
aid of ATM machine and ATM cards which are issued to members on
special commands. Each card has a secret code that the machine uses to refer
to the account of the member. Mistakes made in entering the code can cause
the machine to retain the card till further notice.
BAPCCUL offers four types of ATMcards. These cards are classified into
debit and credit or prepaid cards.
The debit cards are divided into three depending on the capacity of the
transaction withdrawals with the debit cards are done from the deposit
account. They are;
 The Baobab card.With this card, the maximum amount one can
withdraw in 24hours is CFAF250000 and the minimum amount is
CFAF10000.The cost of acquiring a BAOBAB card is CFAF20000.
 TheIroko card. Here, the maximum amount of withdrawal is
CFAF100,000 in 24hours and the minimum amount is
CFAF5,000.The cost of acquisition is CFAF18000

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  The Eucalyptus card. The maximum amount of withdrawal is
CFAF50000 FRS and the minimum is CFAF2000 .The cost of
acquisition is CFAF17000.
BAPCCUL offers one type of credit card (prepaid) which is;
 The Azobecard(Prepaid card).This is considered as a recharge card
because it can be used by both members and non-members. It suffices
for the card to be loaded with money. So far as you know the
password, you can withdraw money with it from any BAPCCUL
ATM machine. It has no limit of withdrawals. All depends on how
much you load in the card.The cost of acquisition is CFAF15000
All the cards have a lifespan of 2years and it’s renewable at the cost of
CFAF5000 irrespective of the type. The cards are produced in
morocco and the renewal process should take at most 10days.

The ATM services offer some advantages to both the union and the
users. Some of the advantages include;

-Its operational 24/24 and 7/7.as such, it reduces inconveniences.

-Daily limits help members to control unnecessary expenditure.

-Reduces work burden and stress.

-It’s more accurate ie free from errors.

-Theyprovide Confidentiality in banking transactions.

-Cash security.

Other ATM services include;

12
 -Cash withdrawal.

-Short bank statements

-Account balance enquiry.

-Inter- account transactions.

-Printed receipts and statements.

However, the above functions and services do not go without charges. The
withdrawers account is debited 1% of the amount Withdrawn.

2.2.6 OVERDRAFT FACILITIES

It is a short term loan usually for one month available to those with standing orders
and those whose salaries are paid by BAPCCUL. The union shall lend up to any
amount if the repayment willingness and capacity of the borrower has been
established. The charge is 5% per month.

2.2.7 SPECIAL WITHDRAWAL SLIPS FACILITIES

This is a service whereby Mr. X for example can send some other person to
withdraw money from his credit union deposit account with the use of this slip. For
this slip to be honored, the legal signature of the account owner must be on the slip
and should correspond with the specimen signature in the office among other
parameters.

Possession of a NID card and the SWS must be to his names. The bearer does a
photocopy of his NID and sign on it twice. This is then attached to the slip for
payments to be done.

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2.2.8 LENDING FACILITIES
BAPCCUL grants two types of loans ie productive and non -productive loans.

Productive loans are loans for purposes that generate income to the
borrowers or members. These include; business and agricultural loans.

On the other hand, non-productive loans are loans that do not generate any
income to the members. They include loans such as consumption loans, school fees
loans, and anniversary loans.

All loans granted a BAPCCUL have the following like features;

-Loans within shares and savings; 0.8%

-Loans above shares and savings; 1.5%

-Overdraft; 5%

-Contract loans; 2.5%

-special loans(school fee, Christmas, anniversary loans);2.5%

-‘’Njangi’’ financing; 2%

Contract financing.

BAPCCUL also grants loans for the sponsorship of business contracts acquired by
private individuals or institutions .the loan amount is determined by the coverage
ratio and the repayment capacity of the member at 2.5% interest rate per month for
a maximum duration of I year. The collateral security must be located within the
urban areas of BAPCCUL.

14
‘’Njangi’’ financing

These are loans granted to duly registered groups whereby all or some of the
members benefit the thrift on the same day. The amount of the loan granted is
determined by the number of members in the group and their repayment capacity.
The Loan amount should not exceedCFAF10,000,000.The interest rate is 2% per
month and the duration depends on the number of members but should not go
above 12 months.

2.3 ACTIVITIES CARRIED OUT DURING INTERNSHIP

2.3.1 ACTIVITIES CARRIED OUT AT THE MARKETING AND MEMBER

SERVICE DEPARTMENT
The member service can be otherwise referred to as the reception. It is where
new members or even old members visit for inquiries. It provides all necessary
information to members in relation to opening of accounts, members’ account
situations, directing members and assisting in the filling of pay vouchers and cash
receiver slips.

Activities carried out in the member service department include the following;

 Opening of accounts and control of saving withdrawal forms Marketing the

Organization, account opening, verification of cheques, control of the
transfer register (telecash),opening of accounts and control of saving
withdrawal forms
 Opening of accounts;

15
Before a member accepts to open an account, he must first of all be informed about
the various accounts that exist at BAPCCUL, their merits as well as in
conveniences. After which the following documents are required from the member.

-National identity card and a photocopy.

-Three passport size photographs.
 A minimum amount of CAF35000 is required of which CFAF25000goes for
the purchase of shares and each share is valued at CFAF1000.
 CFAF5000 is paid as building contribution fee,CFAF4000is paid as
registration fee andCFAF1000 is saved into the member’s account.

When all the conditions above are fulfilled, the membership application form, the
signature card, and the passbook will be filled. When this is completed, the
member’s information will be recorded in the software (ALPHA MICRO
FINANCE) and a new account is created where the member is given a new
account number.

 Assisting members to fill various slips.

The member service offer assistance to the members by helping them in filling the
pay-in, withdrawal, and inter-branch withdrawal and sending slips.

A pay in slip is used when members or persons they send wants to pay in money
into their accounts or some once else’s account. This slip indicates the members
account number, name, telephone number, the depositors name and signature as
well as the clerks name and signature. It also contains cash analyses and the
purpose for deposit which could be savings, deposit, shares, loan repayment, loan
interest, fines, deposit fee, loan fees and others.

16
The withdrawal slip is filled only by members or other signatories when they want
to withdraw money from their accounts. Unlike the pay in slips members cannot
send someone to withdraw on their behalf except with an authorization by legal
authorities It contains the same information like the pay in slips with addition the
NIC, date and place of issue of NIC, the clerks name and signature. Also included
is the special withdrawal slip number, cash analyses and purpose of withdrawal
which could be loan, deposit, savings, shares, or other withdrawals.

2.3.2 SKILLS ACQUIRED AT THE LENDING AND COLLECTION

DEPARTMENT
The lending and collection department is the main determinant of the growth and
progress of every microfinance institution. It’s so because this is where the most
lucrative transactions are carried out. However, if these transactions are not well
managed, it may tend to cause the downfall of the organization. All loan
applications requesting as from CFAF3000000 are executed at the level of every
branch office by the loans officer. The following skills were acquired in the
lending and collection department.

Loan Repayment schedule(amortization).

This refers to the monthly repayments of a loan. Here, the constant amortization
schedule is used. Below is an example for better illustration;

Loan amount= CFAF5000000

Duration = 5 months

Purpose = business

Interest = 1%

17
 Date of loan = 28/7/2016

HINT =constant amortization.

Below is an amortization table

Months Due dates Number Beginning Installment Interest Monthly Ending

of days balance amount amount repayment balance

1 27/8/16 30 5000000 1000000 100000 1100000 4000000

2 26/9/16 30 4000000 1000000 90000 1090000 3000000

3 27/10/216 30 3000000 1000000 80000 1080000 2000000

4 26/11/16 30 2000000 1000000 70000 1070000 1000000

5 26/12/16 30 1000000 1000000 60000 1060000 00

Determining member’s capacity to take loans;

Before granting loan to a member, there is need to first interview the member on
his psychological aspect to see his capabilities. First of all, it is necessary to know
the amount of loan requested and the purpose of the loan. In determining members
capacity to take a loan, it is important to take into consideration the 5(five) C’S of
lending. These include the capacity to repay, the capital, condition of the loan,
character and collaterals and in addition economic and political stability.

18
Filling of loan forms;
A loan form can only be filled when the member’s situation has been evaluated.
Before doing that we need to do some identification. The names on the loan
maker’s passbook must correspond to that on his national identity card and that in
the system. We also need to confirm the member’s account situation in the
passbook and the system. Filling of the loan forms require starting with the
application and identification phase. These include the following:

• Name of the member

• Sex

• National identity card number, date of issue and place of issue.

• Date and place of birth.

• Home and work address

• Telephone number

• References

• The member’s account situation, that is shares and loans

• Duration in the union. This is because for a member to be granted a loan,

he/she must have been in the union for at least ninety days.

• Specification of loan type(business, real estate, consumption or social loans,

agricultural and school fees loans)

• The loan amount requested

• Number of installment and amount of installment

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 • Sureties if needed

• Borrower’s signature and date.

After filling the application section, the agreement section will then be filled to
indicate the terms of the loan between the union and the borrower. The information
needed here is that of the union and the loan maker. The amount requested by the
loan maker and the amount accepted by the loan officer. The interest rate is 0.8%
for loans within shares, 1.5% for loans above savings and 2.5% for special loans
will also be indicated. Then the signature of the borrower, loan officer and
manager.

Skills relating to loans monitoring.

Business loans, agriculture loans and real estate loans are always monitored to
see their progress. To monitor a business loan for example, there is need to see the
daily sales record in order to analyze cash flow, turnover and stocks at hand. This
will enable the loan officer to know if the member will be able to meet up with his
obligation and give him some advice.

Skills relating to loans recovery,

Loan recovery is one of the methods through whichdelinquency is prevented. This

involves calling the loan maker, going to loan maker’s homes, offices or business
site to recover loans. During recovery it is necessary to make loan makers give
reasons why they have not pay their loans.

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2.3.3 THE ACCOUNTING SERVICE
This service comprises of the mobile cashier, the cashier, and the accountant who
is the head of the department. This service has as main objective to receive and pay
out funds with specificity being;

 The accountant who carries out back office transactions such as bank
transfers, executing standingorders, calculating insurance premiums on
members savings and loans, treating salaries of members who receive their
salaries through BAPCCUL, printing members account history showing
their recent and past transactions and carrying out bank reconciliations with
other banks where BAPCCUL accounts.
 The cashier is the sole personnel who receives and release cash. Therefore
no staff has the right receive or give out cash from the union .At the end of
the day, the cashier carries out cash reconciliation with the accountant.
 The mobile cashier or daily savings collector goes round town to collect
cash from members of the daily savings, registers the amounts against their
names on a form and on their passbooks. He then hands the form to the
accountant who enters the amount against each person’s name in the system.

At the end of the day, cash balances must be equal to cash counts. That is.

Cash balances for the day= cash count for the day

Cash balances = (opening balances + cash receipts)-(cash pay outs)

= Opening balances + Total debits – Total credits

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Cash balances Total Debits Total Credits Closing Balances
Add opening 1000000
balances
Add cash receipts 3000000
Less cash pay outs 3500000
TOTAL 4000000 3500000 500000

2.4 THE BRANCHES OF BAPCCUL

The Bamenda Police Cooperative Credit Union (BAPCCUL) Ltd was created on
the 05/02/1969 in the Mankon Mobile recreation hall by the policemen of former
west Cameroon who were on service in Bamenda union. They were 84 in number,
thus giving the name Bamenda Police cooperative Credit union, with its head
office in old town Bamenda. It is a category one micro finance institution owned
and controlled by its members and dedicated to alleviate poverty from the society
and improve on the welfare of their members.

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 CHAPTER THREE
SECTION ONE

PRESENTATION OF THE MAJOR PROBLEM

3.1 PRESENTATION

The main problem faced by many microfinance institutions in Cameroon as a

whole and BAPCCUL in particular is that of high interest levied on the loans
granted to the members.

3.2 NATURE OF THE PROBLEM

BAPCCUL’s main problem is that of high interest rates that are levied on loans
granted to members. As we all know, the back bone of every microfinance
institution is the management of the lending and collection department. No credit
union can function and grow without lending money to its members. When this
money is being given out, the members are expected to repay in installments with
respect to the duration stipulated by the contract. It is true that the interest on the
loan is to ensure the growth of the organization and also for the union to be able to
pay dividends to their members at the end of the year because the money lent out is
the money that is saved by other members and they are expecting an interest on it
at the end of the financial year. However,when the interest oloans is too high, it
discourages borrowers from taking loans and as such can have an adverse effect on
the union’s growth.

3.3 MANIFESTATION

The process of loan granting is not just a ‘one minute decision’. It’s a decision that
requires file study as well as other evaluation methods that can determine the
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members’ probability of repaying the loan. This must be done because of the
dangers involved in loan delinquency. The 5 Cs of lending must be taken into
consideration as well as past records of the organization’s loan contracts. But all
these are not taken into consideration in BAPCCUL. At times loans are granted
based on personal relations with the member, which does not go in conformity
with the principles of lending. Coupled with the high interest, the loan is highly
vulnerable to becoming delinquent.

3.4 CAUSES OF HIGH INTEREST RATES

3.4.1 OPERATIONAL COST
Lending money out involves a very high operational cost especially when the
money is of a low amount. On a day to day basis microfinance agents are on the
field for loan followup and monitoring. At times they travel to very remote areas
which are difficult to access and the transport is very high. This activity is very
time consuming but it is one of the core activities that aid to assure loan repayment
and as such is very important. Consequently, microfinance institutions charge
highinterests in order to meet up with the operational costsincurred.

3.4.2 THE COST OF MONEY

Money used by the credit union to give out loans is either gotten from the
members’ savings or borrowed from the bank. When members save money in their
accounts, the union uses this money to grant loans to other members. Those who
have saved the money are expecting an interest on the amount. for this reason, the
union has to lend out this money so as to generate interest for the members and
ensure the survival of the institution.

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Also, all credit unions function in partnership with banks. They save and borrow
money from these banks at very high interest rates. For this reason, the interest
rates charged on their loans should be such that can cover the loan they have
contracted with the bank and also yield them a profit on it. Taking into
consideration these aspects, credit unions are obliged to levy interest rates which
are considered to be very high to the borrower.

3.4.3 THE NEED FOR FINANCIAL VIABILITY

Microfinance institutions are operating in a very competitive market. The most

important aspect that can make a credit union strong and reliable is its liquidity
statues. It will mean a lot to a member to always have what he wants at any point
in time. It generates a great deal of confidence in the member and thus constitutes
an advantage to the union. In order to do this, the union can go extra miles just to
make sure it does not run out of cash. Also, microfinance institutions do not only
aim at covering cost but also to make some profits. This profit is needed to pay the
staff and sponsor the entire functioning of the organization. This leads to the
charging of high interests on loans.

3.5 CONSEQUENCES OF HIGH INTEREST RATES ON THE

MICROFINANCE INSTITUTION

3.5.1 HIGH INTERESTS REDUCE THE LEVEL OF LOANS CONTRACTED

When interest rates are raised to a certain level, it discourages members from
contracting loans. This is due to the burden involved in repaying the loan. With
members who pay by standing order, it’s a big deal to them because a great
percentage of their salaries will be deducted every month until the loan is fully
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recovered. This will mean a period of low standards of living. Also, investors feel
reluctant to contract loans because the interest rates are a threat to his profits.
However, high interests have a greater impact on non-productive loans than
productive loans. Thus, scares away most business men who are the highest people
who take loans and overdrafts.

3.5.2 IT CONSTITUTES A THREAT TO THE GROWTH OF THE

ORGANIZATION

The growth of any microfinance institution is greatly dependent on the success of

the lending and collection department. However, the success of the loans
department is very much influenced by interest rates. When interest rates are too
high, members are less willing to contract loans. Given the fact that most of the
organization’s profits are generated through loans, it becomes a big hindrance to
the growth of the organization which can eventually cause the downfall of the
organization.

SECTION TWO

3.6 SWOT ANNALYSES OF BAPCCUL

The SWOT analysis of BAPCCUL is a demonstration of the Strengths,

Weaknesses, Opportunities and Threats.

Strengths of BAPCCUL

-BAPCCUL has highly qualified and competent workers.

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-A reliablesoftware for its operations (ALPHA MICROFI) and an internet
connection for inter branch transactions.

-It’s the second largest credit union in the CamCCUL network

-A strong liquiditybackupfrom its savingsUnion Bank of Cameroon (UBC).

-Good loan policies.

-Branches are located in strategic areas.

-A good and strategic management team.

Weaknesses of BAPCCUL.

-Difficultiesinloan recovery

-Not enough staff in the branch offices which delays the members and over works
the existing staff

-The loan granting process has a lot of forms to fill and as such leads to boredom
and at times the members get tired and angry due to too much questions asked in
order to fill the loan forms, especially with loans above savings.

-Loan delinquencies.

Opportunities that BAPCCUL has.

-The possibility of increasing staff and improving on productivity.

-Developing new marketing strategies (aggressive marketing).

-Increasing the loan patronage-sensitization.

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 - Technological innovations and new production like ATM machines and
preference shares will promote the institution, thus attracting new members.

Threats to BAPCCUL.

-Competition from other financial institutions and especially other credit unions
who offer almost the same products and services as BAPCCUL.Such as the
Ntarikon cooperative credit union ltd.

-The problem of loan delinquency.

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 CHAPTER FOUR
SITUATIONAL ANALYSIS

4.1 RECOMMENDATIONS
-The union should reduce the rate of interest levied on loans and lay more
emphasies on the collateral security and other elements that are taken into
consideration when granting loans.

-the duration of repayment should be extended especially for productive loans

because businesses need some time to recover all their credit sales.

-Trade unions can make more profits by embarking on strict loan follow up
policies that will ensure that all the loans are recovered. By this, more profits
will be realized as compared to instances where the interest rates are high and at
the same time there is an indication of a high rate of loan delinquency.

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 CHAPTER FIVE

GENERAL CONCLUSION
This report is a mirror reflection of all that I gathered as information during my
two months vocational training with the Bamenda Police Cooperative credit
union old treasury street Bamenda.

The first chapter focuses on the background of the organization. It indicates

when, where and how it was created. It also states why BAPCCUL was created
i.e the objectives of the union.

Chapter two dwells on the products and services offered by BAPCCUL,their

various branch offices and the accounts they operate. All these services are
elaborated in details showing their advantages and inconveniences both to the
members and to the organization, as well as the society at large.

Chapter three brings in the main problem faced by BAPCCUL, which is that of
high interest rates levied on loans granted. It shows the nature of the problem,
manifestations, causes of the problem and the eventual consequences to the
members and the organization.

Chapter four shows the SWOT analyses of BAPCCUL; show their Strengths,
Weaknesses, Opportunities, and Threats to the organization with respect to the
internal and external business environments. The second part of this chapter
gives recommendations based on the problem identified in chapter three.

Chapter five is the general conclusion of the work.

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REFERENCES.
Annual reports

BAPCCUL brochures BAPCCUL calendars,

BAPCCUL BYE- LAWS

Discussions with other interns.

Interview with BAPCCUL staff and members.

Loan policy book,

Minutes of the mini EGM held on the 20/08/2016

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APPENDICES

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APPENDIX 1

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APPENDIX 2

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