Instruction No. 2022-01/IMF on the Categorization of Microfinance Institutions and Minimum Social Capital

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CENTRAL BANK OF DJIBOUTI

INSTRUCTION NO. 2022-01/IMF

ON THE CATEGORIZATION OF MFIS AND MINIMUM SOCIAL CAPITAL

The Governor of the Central Bank of Djibouti,

Having regard to Law No. 118/AN/11/6th L of 22 January 2011 amending the statutes of the Central Bank of Djibouti;

Having regard to Law No. 179/AN/07/5th L of 16 May 2007 regulating microfinance activities on the territory of the Republic of Djibouti;

Having regard to Law No. 117/AN/11/6th L of 25 May 2011 regulating financial cooperatives;

Having regard to the Commercial Code, Book 3 on Company Law;

Having regard to Law No. 119/AN/11/6th L of 22 January 2011 on the establishment and supervision of credit institutions and financial auxiliaries;

Having regard to Decree No. 2018-171/PRE of 08 May 2018 appointing the Governor of the Central Bank of Djibouti.

Orders:

Article 1: Every Microfinance Institution (MFI) must belong to one of the following categories:

• First Category:

This category includes associative-type organizations (financial cooperatives, NGOs, foundations, etc.) that are non-profit associations based on the principles of union, solidarity, and mutual aid, and whose primary purpose is to collect savings from their members and grant them credit.

No minimum capital is required for this category. Except for financial cooperatives, other associative-type organizations are not authorized to collect public savings, apart from mandatory savings within the framework of the solidarity microcredit system.

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Associative-type organizations must, prior to their approval by the Central Bank as a Microfinance Institution, meet all formal and substantive conditions regarding their establishment, in accordance with the legal and regulatory provisions to which they are respectively subject.

• Second Category:

This category includes microfinance institutions that are capital companies (joint-stock companies, limited liability companies) offering financial services to the general public but not holding the status of a bank or financial institution as defined by Law No. 119/AN/11/6th L of 22 January 2011 mentioned above.

They must have been established in accordance with the provisions of current positive law (notably the Commercial Code, Book 3 on Company Law) in the form of a joint-stock company (SA) or limited liability company (SARL), possess a minimum capital of fifty (50) million Djiboutian Francs (FDJ), and as such, meet the conditions required to collect public savings.

• Third Category:

This category groups together projects and other programs implemented by the government, with or without its development partners, to facilitate access to financial services for vulnerable populations. Institutions in this category are not authorized to collect savings.

No minimum capital is required for MFIs in this category.

Article 2: First-category and second-category MFIs must at all times demonstrate own funds at least equal to half of their social capital.

The own funds of an MFI consist of membership shares subscribed by MFI members and the MFI's assets. These assets are composed of: i) reserve funds (mandatory reserves, statutory reserves, any other reserve fund provided for in the MFI's statutes); ii) undistributed profits; iii) capital contribution surpluses (donations from national and/or international organizations).

Article 3: This Instruction enters into force upon its signature.

Done in Djibouti, on 14 March 2022

The Governor