For decades, lending in Cameroon has been built on a foundation of physical or financial collateral. Banks and microfinance institutions (MFIs) have required land titles, vehicles, business assets or bank deposits as the primary security for a loan. While this approach has been the standard, it has also created a major bottleneck, excluding millions of creditworthy individuals and small businesses who simply don't have these assets or do not have the titles to these assets.

The truth is, your lending institution is leaving significant revenue on the table by operating within these outdated constraints.

This reliance on collateral is particularly challenging in Cameroon, where land title processes are notoriously long and complex, and a vast majority of the population works in the informal sector. These conditions make traditional lending inefficient, costly, and a barrier to a larger market.

The Reality on the Ground: The Problem with Collateral in Cameroon

Relying on physical assets as loan security creates a double-edged sword for financial institutions.

Exclusion of a Viable Market:

An estimated 90% of enterprises in Cameroon are SMEs, many of which operate informally. A thriving plantain chips vendor in Douala, a skilled artisan in Bamenda, or a cocoa farmer in the Southwest Region may have a steady income but lack a formal title or physical asset to present as collateral. These are often reliable borrowers, but they are completely shut out from the credit market.

Increased Operational Risk and Cost:

The legal process of seizing and liquidating collateral in Cameroon is often lengthy, expensive, and uncertain. This makes a collateral-backed loan a risky and cumbersome endeavor, even when things go wrong. Instead of mitigating risk, the over-reliance on collateral can actually compound it.

The Solution: A Paradigm Shift to Behavior-Based Lending 

A new era of lending is emerging, one where a borrower’s character and financial behavior are more valuable than their physical assets. Credit scoring software provides the technology to make this shift possible. Instead of just looking at what a person owns, a modern credit score analyzes what they do, using the vast amount of transactional data available in Cameroon's economy.

By analyzing this data, a credit score reveals a borrower's willingness and ability to repay, giving you a far more accurate and comprehensive risk assessment.

Finding New Customers and Hidden Profits in the Cameroonian Economy

This isn't just a new way to lend; it’s a strategy for massive market expansion. By adopting credit scoring, your institution can safely approve loans for:

The Informal Sector:

A street vendor with a regular flow of mobile money payments for their goods, or a farmer who consistently receives payments into their account from a produce buyer. Our software analyzes this data to build a financial picture and assign a credit score.

Students and Young Professionals:

A university graduate with a new job in a tech company may not have a car or property, but their consistent salary payments and Eneo bill history can be used to assess their creditworthiness.

Small Business Owners:

An entrepreneur with a mobile money or POS terminal can have their business's daily cash flow analyzed, proving their financial health far more effectively than a balance sheet alone.

These segments represent a huge, untapped market. By serving them with smart, data-driven lending, you not only increase financial inclusion but also secure a higher volume of safe loans, boosting your profitability and securing a decisive competitive edge in the market. The cost of acquiring and servicing a collateral-free loan is significantly lower, allowing you to build a profitable portfolio with a much broader customer base.