CAMOFI

CAMOFI, short for Caisse de Mobilization et de Financement, was a state-owned development bank established in Burundi in 1977. It was created with equity capital of 200 million Burundian francs and operated as part of a highly state-directed financial system. Rather than functioning solely as a conventional commercial lender, CAMOFI occupied a privileged institutional position in the management of public-sector liquidity and government finance. State-owned enterprises were required to place their deposits with CAMOFI or with the central bank. CAMOFI also held the exclusive right among deposit-taking institutions to purchase Treasury bonds. Commercial banks were required to maintain interest-free deposits with CAMOFI, with the required amounts calculated as percentages of different categories of deposits held by those banks. These arrangements gave CAMOFI access to a significant pool of financial resources and made it an important instrument of economic policy, despite its limited commercial profitability. The institution’s principal development role was to provide financing for medium- and long-term projects. In practice, however, its financial performance remained weak. CAMOFI never generated significant profits and was described as poorly managed. The central bank repeatedly injected cash in attempts to preserve the institution, indicating that its problems were considered systemically or politically important enough to warrant official support. CAMOFI’s leadership included senior figures from Burundi’s political and economic establishment. Grégoire Banyiyezako, an economist, served as director-general from September 1995 to November 1996. Antoine Nduwayo, who had been prime minister from February 1995 to July 1996, subsequently became CAMOFI’s director-general. Nduwayo’s appointment illustrated the close connection between the bank and the state’s governing elite. The institution’s financial condition deteriorated sharply during the 1990s. In 1997, CAMOFI recorded a loss of 560 million Burundian francs before subsidies, an amount almost three times its stated equity capital. It ultimately collapsed in November 1998, with debts exceeding five times its equity. The collapse followed repeated central-bank support and marked the failure of a development-finance model that combined preferential access to deposits, political influence, and weak financial controls. Later assessments attributed CAMOFI’s failure to lax management, while other accounts characterized the institution as having been exploited by politically connected interests. State enterprises including CAMOFI and CADEBU were reportedly treated by elements of the ruling elite as sources of rents. Managers, associates, and politically connected borrowers were alleged to have benefited from large loans and other financial relationships before the institutions failed. These interpretations place CAMOFI’s collapse within broader concerns about governance, public-sector financial management, and the politicization of Burundi’s banking system. CAMOFI was no longer operating after its November 1998 collapse. Its former chief executive later went on to lead Banque de commerce et de développement, established on 14 January 1999, linking the institution’s final leadership period to a subsequent chapter in Burundi’s banking sector.

CAMOFI was founded in Burundi in 1977 as a state-controlled development bank with initial equity capital of 200 million Burundian francs. Its creation reflected the country’s use of state financial institutions to direct savings and investment toward public and development priorities. CAMOFI was designed to finance medium- and long-term projects and to occupy a central role in the banking system’s relationship with state-owned enterprises. The bank’s institutional privileges were substantial. State-owned enterprises were required to use CAMOFI or the central bank for handling deposits. CAMOFI was also the only deposit institution authorized to purchase Treasury bonds. In addition, commercial banks had to place interest-free deposits with CAMOFI. The required deposits were calculated using defined percentages of several categories of deposits held by the commercial banks. These rules gave CAMOFI a protected source of liquidity and made it an instrument of monetary and fiscal policy rather than a bank competing solely on commercial terms. Despite its privileged position, CAMOFI did not achieve significant profitability. Its management was criticized as weak, and the central bank injected cash into the institution several times in efforts to keep it functioning. The bank became closely associated with senior political and administrative figures. Grégoire Banyiyezako, an economist who later became Minister of Commerce, Industry and Tourism and subsequently governor of the Bank of the Republic of Burundi, served as director-general between September 1995 and November 1996. Antoine Nduwayo, a former prime minister who held office from February 1995 to July 1996, later became director-general. The bank’s financial position deteriorated substantially in the late 1990s. In 1997, it reported a loss of 560 million Burundian francs before subsidies, nearly three times its equity capital. Continued official support was unable to resolve the underlying weaknesses. CAMOFI collapsed in November 1998, at which point its debts were more than five times its equity. The collapse was subsequently interpreted as part of a wider governance failure involving Burundi’s state-owned financial institutions. In October 2003, a senior central-bank official said that CAMOFI and CADEBU had failed because of lax management. Other accounts went further, arguing that the institutions had been plundered or used as sources of rents by members of the ruling elite. Managers, associates, and politically connected borrowers were said to have benefited from large loans and preferential access before the institutions failed. CAMOFI’s failure ended the life of a development bank whose formal policy role had been undermined by weak controls, political interference, and poor financial performance. Its former chief executive later led Banque de commerce et de développement, established on 14 January 1999, as Burundi’s banking sector entered a subsequent phase of institutional reorganization.

• 2003

  Official criticism of management practices

  [1]CAMOFIen.wikipedia.org

  A senior central-bank official attributes CAMOFI’s collapse, together with CADEBU’s, to lax management.

• 1999

  Banque de commerce et de développement is created

  [1]CAMOFIen.wikipedia.org

  A subsequent bank is established on 14 January, and CAMOFI’s former chief executive goes on to run it.

• 1998

  CAMOFI collapses

  [1]CAMOFIen.wikipedia.org

  The development bank collapses in November with debts exceeding five times its equity.

• 1997

  CAMOFI records a major loss

  [1]CAMOFIen.wikipedia.org

  The bank loses 560 million Burundian francs before subsidies, nearly three times its equity capital.

• 1996

  Leadership passes to Antoine Nduwayo

  [1]CAMOFIen.wikipedia.org

  After Banyiyezako’s tenure ends in November, former prime minister Antoine Nduwayo becomes director-general.

• 1995

  Grégoire Banyiyezako becomes director-general

  [1]CAMOFIen.wikipedia.org

  Economist Grégoire Banyiyezako begins serving as CAMOFI’s director-general in September.

• 1977

  CAMOFI is founded

  [1]CAMOFIen.wikipedia.org

  Burundi establishes CAMOFI as a state-controlled development bank with equity capital of 200 million Burundian francs.

A state-directed development bank and public-finance institution serving Burundi’s state-owned enterprise sector and medium- to long-term investment needs.

• Development banking

  Medium- and long-term project finance

  CAMOFI’s stated development function was to provide financing for projects requiring medium- and long-term capital. The available reference material does not identify specific sectors, named projects, loan products, or eligibility criteria.

• Deposit banking · 1977

  State-enterprise deposit services

  State-owned enterprises were required to place deposits with CAMOFI or the central bank. This requirement gave CAMOFI a mandated public-sector deposit base and made it an important channel for managing state-enterprise liquidity.

• Public finance · 1977

  Treasury-bond purchases

  CAMOFI held the exclusive right among deposit institutions to purchase Burundi Treasury bonds. This role connected the bank directly to government borrowing and distinguished it from ordinary commercial banks.

• 2003

  Allegations of political rent extraction and plundering

  Later assessments of CAMOFI’s collapse argued that lax management alone did not fully explain its failure. The bank and other state enterprises were reportedly treated by politically connected elites as sources of rents, with managers, associates, and connected borrowers allegedly benefiting from large loans.

  Source

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• 1998

  Collapse after repeated rescue attemptsOther

  Background

  CAMOFI remained loss-making despite several cash injections from the central bank.

  Action taken

  The institution ceased operating after collapsing in November.

  Aftermath

  Its debts exceeded five times its equity, and its failure became associated with weak management and political misuse of state financial institutions.

  Source

• 1977

  Establishment as a state-directed development bankStrategy

  Background

  Burundi sought an institution capable of directing deposits and longer-term finance toward state and development priorities.

  Action taken

  CAMOFI was created as a state-controlled bank with a mandate to fund medium- and long-term projects and manage designated public-sector financial flows.

  Aftermath

  The model gave CAMOFI extensive institutional privileges but did not produce sustained profitability or sound financial performance.

  Initial equity capital. 200 million BIF (1977)

  Source

1. 1CAMOFIen.wikipedia.org