• WAEMU imposes new loan rate caps from June 1

• BCEAO sets 14% for banks, 24% for others

• Reform aims to protect borrowers, align lending costs

Banks and microfinance institutions in the West African Economic and Monetary Union (WAEMU) must comply with new usury rate caps from June 1.

Set by the Central Bank of West African States (BCEAO) on Dec. 31, 2025, the ceilings are 14% per year for banks and 24% for financial institutions, microfinance lenders and other credit providers, according to a central bank notice. The limits apply to the annual percentage rate (APR), the maximum rate at which lenders can issue loans.

The caps are intended to protect borrowers from excessive lending rates. The APR reflects total mandatory borrowing costs relative to the loan amount. The BCEAO said the revision aims to align credit regulation with market conditions and the cost structures of different lenders across the union.

For microfinance institutions, the reform marks a shift. They had been using a 27% cap to calculate the APR on their products. From June 1, any loan exceeding 24% “exposes the institution to direct sanctions from the WAEMU Banking Commission, regardless of management intent,” said Boris Blé, a Côte d’Ivoire-based specialist in microfinance.

For banks, the ceiling is 14%. “The gap between the two caps is not preferential treatment. It reflects the higher operating and lending costs faced by microfinance institutions,” Blé said, describing the rule as an adjustment to their business model rather than an exemption.

As the deadline approaches, institutions will need to strengthen internal controls, adjust loan pricing and ensure their calculations comply with the new rules. Beyond compliance, the change poses broader governance and risk management challenges for the region’s financial sector.

Chamberline Moko