Benoît Djossou is the Director of Accreditation and Regulation at the National Agency for the Supervision of Decentralized Financial Systems (Anssfd). According to him, about forty illegal institutions are counted; this calls for vigilance and caution on the part of the population. He tells us here about the Agency's support to bring structures operating in the microfinance sector to comply with the regulations in force.

The Nation: Do all the structures for collecting savings and/or granting credit operating today in Benin comply with the legal requirements of existence in this area?

Benoît Djossou: No. We can't say it all the way. It is true that after the 2010 crisis, in 2011 there was a census of all initiatives that carry out microfinance activities, whether authorized or not. On occasion, there were 721 illegal structures, 495 of which operated outside the regulations, i.e. a proportion of 69% of structures in illegality. In this context, a national strategy for the consolidation of the microfinance sector had to be developed, which was adopted by all stakeholders in November 2013.

What was the sanitation strategy?

The strategy had three axes, one of the pillars of which is dedicated to informal structures. It was a question of identifying structures showing signs of viability to accompany them to formalize, since there were some that are of a certain size. That is how we selected a batch of twenty-five that we are trying to bring into compliance with the regulations. To do this, we have requested the support of the issuing institution: the Central Bank of West African States (Bceao), which has favourably acceded to our grievance and is accompanying us in this process.

Despite this, the census we carried out in 2019 made it possible to identify again thirty-eight structures that operate outside the regulations. So from 495 in 2011, we are at about forty structures still illegal today.

Is the formalization process underway at the level of these new structures identified?

The National Institute of Statistics Applied to the Economy (Insae), which carried out the study, did not submit its provisional report until the first quarter of 2020. When we have the final report, we will do the right treatment.

But first, at the national level, the Committee for Financial Stability and Sanitation of the Microfinance Sector (Csfasm), in its program of activities, identifies areas, departments where it sensitizes men in uniform, including police officers, local elected officials, other decentralized ministerial structures so as to always convey the message that: to practice microfinance, it is necessary to obtain prior approval. We also sensitize the populations so that they always ensure that the structures are authorized before committing their savings. On this point, Article 20 of Law No. 2012-14 of 21 March 2012 regulating  decentralized financial systems requires all structures that are authorized to include on their signs, billboards, the number and other authorization references. It is just to allow the populations to know if the structure towards which they are moving, have the approval issued by the Minister in charge of Finance to exercise.

In concrete terms, what support does ANSSFD provide to structures?

For example, when promoters submit their files, we set up teams to verify them and make observations in order to perfect and improve the quality of management documents. When you have a structure that exercises and the management manuals are not good, be sure that it is the deviance in management. In the end, when the structure reaches the end of the approval procedure, you are sure that the management documents are of good quality. This does not necessarily guarantee their application in management as soon as approval is obtained.

But once the institution is authorized, we do the check at least once a year. At the end of the audit, there are recommendations that are accompanied and when the institution does not implement them, we are entitled to apply the necessary sanctions.

The managers of the structures often say that the process of obtaining approval is an obstacle course: difficult and arduous but also and above all too long. What do you say to that?

The approval process is long, not because of the supervisory authorities that are made up of Anssfd and  Bceao. Articles 8 and 9 of the above-mentioned Act clearly defined the legal duration of the investigation of a case totalling six months. The Agency has three months and the Bceao has two months. And at the end of these five months, if the file is unfavorable, it is notified to the promoters. If it is favourable, the time to prepare the orders and everything else, the ministry has one month. But it turns out that when the Anssfd or the Bceao make observations to be taken into account by the leaders, it is at this level that we observe a long duration before the return of the corrected file. Sometimes it is after two years that the promoter reacts. When it's like that, we go through the whole process again because in the meantime, the data has evolved.

Some licensed structures would not meet regulatory obligations. What is the Agency doing to avoid possible financial sinkholes?

When I was talking about the three pillars of the strategy, the first is focused on illegal structures, but the second pillar is about legal structures that do not comply with regulations . These are structures that have governance problems, structures whose prudential ratios may not be respected. Depending on the seriousness of the breaches observed, we have a number of penalties provided for in sections 70 et seq. of the act that we apply. With breaches of regulations , the structure can receive blme, warning, call to order; we can go so far as to ban a part of activities.

When the management of a structure no longer gives the assurance, the authority can take precautionary measures by asking to no longer collect savings for example. Leaders can also be removed from office also in terms of sanctions after warnings, if breaches of the provisions persist. And appoint provisional administrators in accordance with the provisions of article 62 of the law. It must also be said that breaches of the legislation may lead to the withdrawal of approval and the winding-up of the institution.

Are there structures in this situation, where the savings of the populations would be in danger?

No. But there are structures whose management deserves special attention from the authority. These are often governance problems, but people's savings are secure.

Can we conclude that the crisis of illegal structures of 2010, the famous Icc-Services et al. affair, is definitely behind us and that we will no longer witness such a financial abyss?

We cannot say that. The crisis of 2010, the population is for much. It's not all up to the promoters of the illegal structures. I will tell you about a personal experience I had. I was on a mission in Parakou where hostesses were trying to approach me for an Icc-Services type structure. I asked them if they know who they are dealing with and if they have heard of the Icc case once. The answer they gave me is disconcerting: "Before this broke out, we would have already done well".

This means that they are aware of what they are doing. It is in this spirit that people embark on these kinds of initiatives and when it farts, we begin to call the state for help. However, the State raises awareness in all departments. We have posted the list of authorized institutions in almost all municipalities: town halls, arrondissements, police stations, gendarmeries. But people are attracted by easy gain and throw themselves into projects like this. The evidence, after the Icc-Services trial in February 2019, the following month, in March or April, we detected another network in Zongo that was able to collect in the space of one or two months, nearly 400 million CFA francs.

The consolidation of the microfinance sector is really important to us. People therefore have a big role to play. We invite them to be careful not to fall into the traps of networks. When they go to a structure to do operations, they must ensure that the institution has its approval. If the structure is not authorized, it means that the responsibility of the State is not engaged.