Informal borrowing sources and uses: insights from the North West Region, Cameroon

Abstract

This article seeks to analyse the informal borrowing sources of the poor as well as the purposes for borrowing. The obsession on characterising the poor as financially excluded fails to grasp their active financial lives. This article emphasises how relations of credit/debt are rooted in complex social and cultural forces. It is precisely because of the social embeddedness of credit that family finance, though interest-free, is not a first resort. Similarly, credit in kind from shopkeepers, though critical to consumption smoothing, is detested by some people. Also, it is argued that the involvement of the traditional leader in repayment enforcement in informal financial groups challenges the economistic narrative that attempts to separate credit from cultural norms.

Keywords:

• Informal finance
• debt
• gender
• social relations
• Cameroon

Acknowledgements

I am grateful to those individuals and organisations who willingly provided information. I am also grateful to the ‘gatekeepers’ who negotiated access to research participants. I am grateful to the editor, journal manager and two anonymous reviewers for extensive comments and suggestions as this article gradually came to fruition. All remaining errors, however, are mine.

Notes

1. Schreiner, “Informal Finance and the Design of Microfinance.”

2. Rutherford, “Money Talks.”

3. Peebles, “Rehabilitating the Hoard,” 602.

4. Ghate, “Informal Finance”; Johnson and Rogaly, Microfinance and Poverty Reduction.

5. Paulson and Townsend, “Entrepreneurship and Financial Constraints.”

6. Banerjee and Duflo, “The Economic Lives of the Poor.”

7. Collins et al., “Portfolios of the Poor.”

8. Rutherford, The Poor and their Money.

9. See Aliber, “Rotating Savings and Credit Associations and the Pursuit of Self-Discipline”; Anderson and Baland, “The Economics of Roscas”; Bortei-Doku and Aryeetey, “Mobilising Cash for Business”; Gugerty, “You Can’t Save Alone”; Johnson, “Gender Norms and Financial Markets”; Kimuyu, “Rotating Savings and Credit Associations in Rural East Africa.”

10. Guyer, Marginal Gains.

11. Collins et al., “Portfolios of the Poor.”

12. Shipton, “How Gambians Save”; Shipton, “Credit between Cultures.”

13. Lont and Hospes, “Livelihood and Microfinance.”

14. Gifford, “Utilizing, Accumulating and Protecting Livelihood Assets.”

15. Peters, Schoofs, and Sievert, “Preferences over Bank and Family Loans.”

16. Informal financial groups are called njangis and tontines in Anglophone and Francophone Cameroon, respectively.

17. Ardener, “Microcredit, Money Transfers, Women.”

18. Niger-Thomas, “Women’s Access to and Control of Credit in Cameroon.”

19. Etang, Fielding, and Knowles, “Trust and ROSCA Membership in Rural Cameroon.”

20. Rozas and Gauthier, “Les tontines favorisent-elles la performance des entreprises.”

21. Kemayou, Tadjuidje, and Madiba, “Tontine et banque en contexte Camerounais.”

22. Tchuindjo, “L’aspect Financier des tontine à Enchéres au Cameroun.”

23. Nzemen, Théorie de la pratique de la tontine au Cameroun.

24. Nyamnjoh and Fuh, “Mobility, ICTs and Mobile Money Usages.”

25. This paper strictly focuses on informal borrowing sources. It must be stressed that this does not mean that the poor do not have access to formal finance provided by microfinance institutions. In Cameroon, microfinance institutions are legally recognised as formal finance providers.

26. Guerin et al., “Credit from Whom and for What?”

27. Stiglitz and Weiss, “Credit Rationing in Markets with Imperfect Information.”

28. Guerin, Morvant-Roux, and Servet, “Understanding the Diversity and Complexity”; Servet, “Banquiers aux pieds nus.”

29. Kochar, “An Empirical Investigation of Rationing Constraints.”

30. Ardener and Burman, “Money-Go-Rounds”; Collins et al., “Portfolios of the Poor”; Guerin, “Juggling with Debt, Social Ties, and Values”; Guyer, Marginal Gains; Rutherford, The Poor and their Money; Servet, “Épargne et Liens Sociaux.”

31. Guerin, Morvant-Roux, and Servet, “Understanding the Diversity and Complexity,” 104.

32. Servet, “Banquiers aux pieds nus,” 168.

33. Ardener, “Microcredit, Money Transfers, Women,” 11.

34. Besley, Coate, and Loury, “The Economics of Rotating Savings and Credit Associations.”

35. Johnson, “Competing Visions of Financial Inclusion in Kenya.”

36. Aliber, “Rotating Savings and Credit Associations and the Pursuit of Self-Discipline”; Ardener, “The Comparative Study of Rotating Credit Associations”; Bortei-Doku and Aryeetey, “Mobilising Cash for Business”; Gugerty, “You Can’t Save Alone.”

37. Anderson and Baland, “The Economics of Roscas”; Johnson, “Gender Norms and Financial Markets.”

38. Anderson and Baland, “The Economics of Roscas”; Niger-Thomas, “Women’s Access to and Control of Credit in Cameroon.”

39. Bauchet and Larsen, “ROSCA Composition and Repayment”; Eroglu, “Informal Finance and the Urban Poor”; Geertz, “The Rotating Credit Association.”

40. Stiglitz, “Peer Monitoring and Credit Markets.”

41. Lee and Persson, “Financing from Family and Friends.”

42. Collins et al., “Portfolios of the Poor.”

43. Guerin et al., “Credit from Whom and for What?”

44. Lee and Persson, “Financing from Family and Friends.”

45. Karaivanov and Kessler, “(Dis)advantages of Informal Loans,” 100.

46. Collins et al., “Portfolios of the Poor.”

47. Stiglitz, “Peer Monitoring and Credit Markets.”

48. Collins et al., “Portfolios of the Poor,” 141.

49. Guerin et al., “Credit from Whom and for What?” 132.

50. Gifford, “Utilizing, Accumulating and Protecting Livelihood Assets.”

51. Ibid.

52. Burkart and Ellingsen, “In-Kind Finance.”

53. Gifford, “Utilizing, Accumulating and Protecting Livelihood Assets.”

54. Guerin, “Juggling with Debt, Social Ties, and Values”; Guérin and Kumar, “Market, Freedom and the Illusions of Microcredit.”

55. Taylor, “Liquid Debts.”

56. Mauss, “The Gift,” 60.

57. Weber, Economy and Society, 81.

58. Peebles, “The Anthropology of Credit and Debt.”

59. Guerin, Morvant-Roux, and Servet, “Understanding the Diversity and Complexity.”

60. Soederberg, “The Politics of Debt and Development,” 536.

61. Hillenkamp and Servet, “Comprendre autrement le marché.”

62. On class dynamics, see Akram-Lodhi et al., “The Political Economy of Land”; Bernstein, Class Dynamics of Agrarian Change.

63. Graeber, Debt: The First 5000 Years.

64. National Institute of Statistics, Statistical Yearbook.

65. Nyambod, “Environmental Consequences of Rapid Urbanisation.”

66. United Councils and Cities of Cameroon. The North West Region, also referred to as the Grassfields, has over 30 ethnic groups (Jindra, “Christianity and the Proliferation of Ancestors,” 357). It is worth noting that there are over 200 ethnic groups in Cameroon (Nyamnjoh, “Cameroon: A Country United by Ethnic Ambition,” 106). Some scholars claim that some of the ethnic groups in the North West Region of Cameroon are part of the Bantus. For an illuminating study of ethnicity in Cameroon and its complexity, see Vubo, “European and Cameroonian scholarship on ethnicity.”

67. National Institute of Statistics, Statistical Yearbook.

68. United Councils and Cities of Cameroon.

69. Vubo, “Matriliny and Patriliny.”

70. Ibid.

71. Vubo, “Matriliny and Patriliny,” 155.

72. National Institute of Statistics, Statistical Yearbook.

73. United Councils and Cities of Cameroon.

74. See Fubah, “The Art of the Bambui Kingdom,” 23.

75. Nkwi and Warnier, “Elements for a History,” 60–1. One of our respondents had to obtain permission from the traditional leader as the ‘father of all’ to bury her son who committed suicide (considered a ‘bad’ death). Permission was granted after paying a fine worth about 500,000 CFA Franc [US$802].

76. Warnier, “The King as a Container.”

77. Guérin and Kumar, “Market, Freedom and the Illusions of Microcredit.”

78. Karaivanov and Kessler, “(Dis)advantages of Informal Loans.”

79. Lee and Persson, “Financing from Family and Friends,” 2344.

80. Soederberg, “Debtfare States.”

81. Guerin et al., “Credit from Whom and for What?”; Collins et al., “Portfolios of the Poor.”

82. Interviewee 26.

83. Accessed February 16, 2018. https://www.journalducameroun.com/une-microfinance-vecteur-de-pauvrete-au-cameroun-par-paul-geremie-bikidik/

84. Interview 18.

85. Interview 50.

86. Interview 38.

87. It is worth noting that traditional leaders in other administrative regions (e.g. Centre Region) in the country are not so influential. So, the discussion about the powers of traditional leaders is limited to the North West Region and is not representative of traditional leaders in the entire country. The influential position of traditional rulers in the North West Region was beneficial to the British who, during the colonial era, used them to govern the territory.

88. Some people in these communities believe that their ancestors are living in another world, which explains why ceremonies are often conducted in their honour, at times several years after their death. Based on informal discussions, some people perform ceremonies in honour of their ancestors to seek material blessings.

89. Soederberg, “The Politics of Debt and Development.”

90. Regarding ‘symbolic power’, see Bourdieu, “The Forms of Capital.”

91. Guerin, “Juggling with Debt, Social Ties, and Values,” 47.

92. Garikipati et al., “The Cost of Empowerment.”

93. Guerin, “Juggling with Debt, Social Ties, and Values,” 47.

94. Jindra, “Christianity and the Proliferation of Ancestors”; Page, “Slow Going”; Geschiere, “Funerals and Belonging.”

95. Interview 18.

96. Interview 43.

97. Interview 68.

98. Johnson, “Competing Visions of Financial Inclusion.”

99. Anderson and Baland, “The Economics of RoSCAs.”

100. Interview 15.

101. Interview 22.

102. Interview 36.

103. Interview 67.

104. Interview 46.

105. D’Espallier, Guérin, and Mersland, “Women and Repayment.”

106. Khandker, Khalily, and Kahn, “Grameen Bank.”

107. Gibbons and Kasim, Banking on the Rural Poor.

108. Karim, “Microfinance and its Discontents.”

109. Johnson, “Gender Norms and Financial Markets.”

110. Interview 61.

111. Interview 12.

112. Interview 19.

113. Interview 65.

114. Guerin, “Juggling with Debt, Social Ties, and Values,” 40.

115. Guerin, “Juggling with Debt, Social Ties, and Values”; Shipton, “The Nature of Entrustment.”

116. Guerin, “Juggling with Debt, Social Ties, and Values”; Taylor, “Liquid Debts.”

117. This percentage is quite significant since women constituted 47.1% of the respondents in our study.

118. Collins et al., “Portfolios of the Poor,” 54.

119. Kammoun, “Gender Use of Expletives and Verbal Abuse.”

120. Guerin, “Juggling with Debt, Social Ties, and Values,” 41.

121. Mauss, “The Gift.”