Burkina Faso’s Financial Markets Face Regulatory Challenges

The microfinance sector in Burkina Faso is a vital component of the country’s financial system, but it faces significant regulatory challenges.

Overwhelming Dominance by One Institution

Réseau des Caisses Populaires du Burkina (RCPB) dominates the market, serving 60 percent of clients and accounting for 80 percent of outstanding portfolio and savings. This imbalance in institutional size and capacity hinders efforts to strengthen the sector.

Prioritizing Consolidation and Protection

The National Microfinance Strategy and Plan of Action 2012-2016 aims to:

• Consolidate the sector by strengthening or closing weak MFIs that pose a threat to clients
• Protect the interests of MFI clients and preserve confidence in the sector through increased social performance management

Progress on Responsible Finance is Uneven

While some institutions, such as RCPB and mid-sized MFIs, are taking small steps towards addressing transparency and client protection issues:

• Most MFIs lack knowledge of these subjects
• Regulatory bodies face challenges in effectively implementing their mandates
• Internal recourse mechanisms are weak
• Financial illiteracy is widespread among clients

Efforts to Strengthen Consumer Protection Practices

The Professional Association for Microfinance Institutions of Burkina Faso (AP/SFD-Burkina Faso) is working with the Responsible Finance through Local Leadership program to:

• Improve transparency and client protection practices among its members
• Advocate for inclusion of transparency and consumer protection principles in Burkina Faso’s new National Microfinance Strategy

Sector Growth and Challenges Ahead

The microfinance sector in Burkina Faso has shown growth, with 77 legally registered MFIs serving over 1.3 million clients. However:

• Regulatory challenges persist
• The sector requires continued support to ensure its stability and sustainability