Documente Academic
Documente Profesional
Documente Cultură
Academic supervisor
Field supervisor
MR. ARMSTRONG PEACE F. MR. NONO GABRIEL
Sign……………………………… Signature……………………………
Date……………………………… Date………………………………….
Head of Department
Sign………………………………..
Date……………………………….
i
DECLARATION
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.
v
LIST OF ABREVIATIONS
AGM------------------Annual General Meeting
BOD-------------------Board of directors.
MINFI-----------------Ministry of Finance
NGO-------------------Non-GovernmentalOrganization
SB----------------------supervisory board.
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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
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CHAPTER ONE
INTRODUCTION
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.
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
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
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
interests levied on loans that are granted to the members. The rates per month are
as follows;
-Overdraft; 5%
2
-Contract 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.
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.
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
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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.
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 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
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.
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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.
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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.
GENERAL
ASSEMBLY
GENERAL MANAGER
8
2.2 PRODUCTS AND SERVICES OFFERED BY BAPCCUL
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accounts. Thus, withdrawals from savings do not require any prior
notification.
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-A copy of National Identity Card.
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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;
-Cash security.
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-Cash withdrawal.
However, the above functions and services do not go without charges. The
withdrawers account is debited 1% of the amount Withdrawn.
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.
-Overdraft; 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.
Activities carried out in the member service department include the following;
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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.
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.
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.
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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.
This refers to the monthly repayments of a loan. Here, the constant amortization
schedule is used. Below is an example for better illustration;
Duration = 5 months
Purpose = business
Interest = 1%
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Date of loan = 28/7/2016
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.
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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:
• Sex
• Telephone number
• References
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• Sureties if needed
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.
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.
20
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
21
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
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CHAPTER THREE
SECTION ONE
3.1 PRESENTATION
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
23
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.
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.
24
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.
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
25
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.
SECTION TWO
Strengths of BAPCCUL
26
-A reliablesoftware for its operations (ALPHA MICROFI) and an internet
connection for inter branch transactions.
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.
27
- 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.
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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.
-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.
29
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.
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.
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REFERENCES.
Annual reports
31
APPENDICES
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APPENDIX 1
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APPENDIX 2
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