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By Henri Kouam (Download Pdf version)

Monetary Policy Can Improve Access To Credit For Women In Cameroon


COVID-19 has imposed an unprecedented shock to public health systems and macroeconomic outcomes across the CEMAC region. The pandemic has interrupted value chains, weakened the exchange rate, and depressed exports. In other to attenuate the impact of the virus on CEMAC member economies, the central bank reduced its key policy rate to 3.25% from 3.5% and injected 500 billion CFAF to ensure that banks have sufficient liquidity and do not experience financial constraints.

While the central bank determines the level of interest rates to achieve its final objective of monetary stability – consistent with article 1 of its Statute- it equally supports member states’ economic policies by purchasing government bonds. It is important to note that, Article 18 of the statutes shows that total amount of assistance granted by the bank may not exceed 20% of the budgetary revenues during the year-end. As such, any adjustments to the central banks’ tools must remain within its mandated guidelines.

In addition to monetary stability, the bank is equally mandated to support economic stability and a gradual increase in the general price level. It achieves this by ensuring sufficiently attractive levels of interest rates, which in turn enables banks to provide credit to the real economy. The third thematic report published by the Nkafu Policy Institute, show that a mix of legislative and administrative impediments hampers female access to credit. While this does not fall within the remit of the central bank, monetary policy can be designed in other to increase the amount of credit flow to the real economy. This paper looks at the role of the central bank in the process of credit creation, the implications of its tools, and how these can be adjusted in other to ensure gender parity in the process of credit creation. It concludes with key policy recommendations that reflect the banks’ mandated objectives and fall well within the remit of macroeconomic, price as well as monetary stability.

The Role of the Central Bank in Credit Creation

Credit creation is indispensable for economic activity, employment, and economic development. Kouam and Kelly (2020) find that lending to the private sector causes the economy to grow by 2.6%. In other for commercial banks to provide credit to entrepreneurs and households, they must ensure that the interest rate paid on deposits is sufficiently attractive. Commercial banks can equally lend money from the central bank and pay this after a day or lend in interbank markets at favourable interest rates.

Figure 1: There is an inverse relationship between credit growth and the level of interest rate

Source: IMF.

As illustrated in the chart, domestic credit tends to rise when the deposit rate falls. This happens because the cost of borrowing from central banks falls, creating an incentive for central banks to give loans to entrepreneurs and SMEs in the private sector. However, there is a noticeable gap between men and women who have access to credit. This is because women earn 1.5 times less than men and do not have the same access to the formal market as men do. Additionally, the unemployment rate for women is currently 3.9% versus 2.8% for men (World Bank 2021). This is almost 1 percentage point higher, which reinforces the economically-counterproductive trend of low access to credit.

To put these outcomes into perspective, unemployment averaged 5.16% between 1991 – 2020, meanwhile, credit as a percentage of GDP averaged 8.56% between 1999 – 2008, and rose precipitously to 13.5% of GDP (Figure 1). However, it is not clear that SMEs had access to credit as one would expect due to a range of regulatory and socio-economic factors. More worrying is the fact that women have lower access to credit, which has negative consequences for economic growth and society.

Given women are more exposed to arbitrary decision making at commercial banks, socio-cultural factors, and administrative demands that do not reflect their realities, It is important to rethink how central banks can adjust their tools – policy rates, liquidity injections, and purchase of government bonds – in other to ensure that entrepreneurs have access to financing.

Monetary Policy should be targeted, here’s why

Before going any further, it is important to note that the central bank – Bank of Central African States – is mandated to ensure monetary stability. Its secondary goals of gradual increases in prices and economic stability are equally unassailable, for the most part. Even so, the central bank adjusts monetary policy and lowers policy rates in other to support credit to the real economy; in other to ensure that these policies work better, they equally add liquidity in the interbank markets in other to ensure that changes in the level of interest rates are reflected in those that entrepreneurs and civil society pays to banks.

The central bank cannot ensure that women gain more access to credit as the process is decided by commercial banks, but it can ensure that the additional liquidity given to commercial banks is conditioned on the provision of credit to women that tend to be marginalized due to a range of regulatory and operational bottlenecks.  For example, the central bank added 500 billion of additional financing in interbank markets after COVID-19; this was done without any conditions to commercial banks on lending in the real economy (BEAC 2020.

In the European Union, this is not the case, the European Central Bank created a liquidity facility for commercial banks during the COVID-19 pandemic called the Targeted Longer-term refinancing Operations (TLTRO III) to provide additional financing to banks in exchange for them giving additional credit to the real economy.

According to this liquidity facility, in other, for commercial banks to access additional financing from the European Central Bank, they must prove that they have provided credit to the real economy by a fixed amount. This has ensured an ample supply of liquidity and credit to the household and the business sector during the COVID-19 pandemic. Consequently, BEAC can take a similar approach;

  1. It can provide additional liquidity to markets, but ensure that banks provide credit to the real economy in exchange for access to these financing mechanisms.  For example, if the central bank adds 15 million to the banking sector, it can request that banks provide 20% additional credit to the real economy, with a minimum threshold of women designed to bridge the gender disparity in access to credit.
  2. Credit scoring models should be transparent to ensure that regulators understand how women and men are ranked in both the formal and informal sectors. Over the long run, this can be used to measure the impact of policy measures on access to credit for women.
  3. Awareness strategies should be designed in conjunction with commercial banks to encourage female entrepreneurs into mentorship programs and other skills-oriented programs that will enable them to create or expand their business.


The central bank is mandated to ensure monetary, price, and economic stability. However, access to credit for women has been hampered by a range of administrative and operational bottlenecks, it is vital to ensure its tools are used to incentivize greater inclusion for women entrepreneurs in the private sector.

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Henri KOUAM is an Economic Policy Analyst at the Nkafu Policy Institute. He currently works as an economic consultant for a global expert network – Global Wonks.