Instruction No. 004 on Performance Indicators for Savings and Credit Cooperatives and Microfinance Institutions

INSTRUCTION NO. 004 TO SAVINGS AND CREDIT COOPERATIVES AND MICROFINANCE INSTITUTIONS REGARDING PERFORMANCE INDICATORS

The Central Bank of Congo,

Having regard to Law No. 005/2002 of May 7, 2002, relating to the establishment, organization, and functioning of the Central Bank of Congo, specifically Article 6;

Having regard to Law No. 003/2002 of February 2, 2002, relating to the activity and control of credit institutions, specifically Article 34;

Having regard to Law No. 002/2002 of February 2, 2002, laying down provisions applicable to Savings and Credit Cooperatives, specifically Article 66;

Having regard to Instruction No. 1 to Microfinance Institutions, specifically Articles 45 to 46;

Decrees the performance indicators applicable to Savings and Credit Cooperatives and Microfinance Institutions, hereinafter referred to as "regulated entities".

Article 1
This Instruction aims to establish the performance indicators to be respected in the management of regulated institutions.

Article 2
Regulated entities must ensure compliance with the performance indicators set out in this Instruction to determine the efficiency and viability of their activities.

Article 3
The indicators covered by this Instruction concern:

• Portfolio quality;
• Efficiency and productivity;
• Profitability and sustainability;
• Balance sheet management.

Article 4
Portfolio quality indicators provide information on the percentage of non-performing assets that erode the institution's revenues and have a negative impact on its cash flow situation. The ratios to be respected are of two types, namely:

• Risk Portfolio;
• Loan write-off ratio.

Article 5
Efficiency and productivity indicators measure the microfinance institution's ability to control its operational costs. The ratios to be respected are of two types, namely:

• Operational efficiency;
• Number of borrowers per credit agent.

Article 6
Profitability and sustainability indicators measure the regulated entity's ability to cover its operating expenses with its revenues to maintain its activities and ensure future growth. The ratios to be respected are of four types, namely:

• Return on equity;
• Return on assets;
• Portfolio yield;
• Operational self-sufficiency.

Article 7
Balance sheet management indicators focus on the degree of adequacy of major items in the statement of financial position relative to the net balance sheet total excluding subsidies. The ratios to be respected are of three types, namely:

• Idle cash ratio;
• Credit outstanding ratio;
• Fixed assets ratio.

Article 8
The calculation method for the aforementioned indicators is set out in the annex, which forms an integral part of this Instruction.

Article 9
This Instruction enters into force on January 1, 2013.

Done in Kinshasa, on April 14, 2012

J-C. MASANGU MULONGO
Governor

CALCULATION METHOD FOR PERFORMANCE INDICATORS

INDICATORS	RATIOS	FORMULAS	NORMS
Quality Indicators
Risk Portfolio	Outstanding principal of credits with at least one late repayment	Gross loan portfolio amount	< 5 % Loan write-off ratio

ANNEX
x 100 x 100 x 100 x 100 x 100 x 100 x 100 x 100 x 100 x 100 x 100