Electronic Money Transfer Hurricane Hits Cameroon

By Affuembey Enow

A brief walk along the Paul Biya Boulevard in Buea or perhaps some of our major cities, and no one would fail to observe the sign posts of money transfer agencies. Express money transfer agencies are now wrestling beer parlours for attention. Money transfer has evolved to the level where it is a substantial source of revenue for the government and a good source of employment for the Cameroonian youth. The proliferation of these financial institutions is testament to an underperforming banking sector in the country, for the kind of services they offer builds on the rising hump on the backs of ailing banks who could have offered swift money transfer for their clients. Cameroonians are forced to use money transfer for money intended for investment because it is too costly and too slow to do so through the banks. Payments are not done by cheques, not because the confidence in cheques is low, but it takes a lot of time to have a cheque cleared in most commercial banks in Cameroon.

The upsurge of money transfer agencies could also be explained by the stagnation of the debt and credit industry. A parent cannot simply deposit money in the bank account of his sibling and let them carry out their purchase with debit cards. In fact, a student in the University of Yaounde 1, cannot carry out purchases with a credit card for his parents in Ngaoundere to foot the bill at the end of the month. The clientele is thus forced to move about with physical cash. The money transfer agencies reduce the distance within which one needs to move with money. It should be recalled that some travelling agencies not only transport humans, but also deliver parcels and transfer cash from one part of the country to another. This is testimony of either the distrust Cameroonians have for their banks, or perhaps banks have failed to exploit this important niche.

The birth of the money transfer houses is timely. When an industry becomes flooded with firms, those well grounded will have a lion's share of the market because their longevity must have built for them a reputation. There are a few actors here who have the most of the market because they are among the oldest. But then a serious question comes to mind, and it is to know if the sector is regulated. The money transfer business is that which exposes the client to exploitation and swindle. It is therefore proper that the public notices always carry authorization and/or registration members. Those of money transfer agencies scarcely (if not never) carry these numbers. As long as this sector is one where consumer exploitation is possible, consumer protection should be very present. The sector needs to be regulated and monitored very closely.

The presence of these money transfer agencies has not only brought employment, but has pushed the banks to engage in similar services. For this reason, regulatory authorities need to realize that their effective watch and control is an asset both in the present and in the future. A strategic plan needs to be put in place to make sure that within a given period of time they will not only be transferring money but must have diversified into consumer banking products. These agencies could move to credit card provision, so they would also be in charge of producing credit records for individuals. This move will make them more indispensable in the banking sector. Money transfer companies have the potential to one day become like "Capital One" in the US. For the good of every body, if they prefer to remain small the government should force them out of their cocoons. In other words, they have a hidden potential which development minded authorities can exploit and encourage their future growth, so that they can fulfil vital financial intermediary role. In the meantime, all effort should be geared at regulating the sector. The world of finance being very complex in nature needs only clean and ethical actors. Without this, con men and money launders will have found a new breeding ground where ejecting them will be a mammoth task. The time is now.

© The Entrepreneur Newspaper 2007

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