It is one of the soundest decisions the head of a microfinance institution can take. After years of rent, the building you occupy comes up for sale. The price is fair, the district is right, your teams are settled there. You buy. You stop paying rent, you book an asset on the balance sheet, and you stop depending on a landlord who might not renew.
In management terms, that is correct. In prudential terms, it is the act that tips a ratio few management teams monitor continuously — and one that ranks among the sector's most frequent breaches.
The fixed-asset coverage ratio is not a comfort indicator. It is a norm, it has a threshold, and crossing it does not show in your income statement. It shows in an inspection report, or in the note of a refinancing analyst — that is, always at the worst moment, and always in front of someone you need.
What the norm says exactly
COBAC regulation EMF 2002/09 sets the rule. It fits in one line and deserves to be written precisely, because half the errors come from stating it loosely:
Net capital funds, increased by borrowings of more than five years allocated to financing fixed assets, must cover at least 100 % of net fixed assets.
Three terms carry the whole weight.
"Net capital funds" — not accounting equity, not share capital. The prudential restatement removes what has no real loss-absorbing capacity: certain intangible assets, receivables from shareholders, items your accounting balance sheet presents at the top but which the regulator does not count. An institution steering the norm on its accounting equity is steering on a figure more generous than the one that will be put to it.
"Borrowings of more than five years allocated" — the decisive word is allocated. A generic long resource does not count; it must be contractually intended for the financing of fixed assets. A seven-year borrowing taken to fund your credit portfolio does not enter the numerator, even though it is indeed longer than five years. That confusion is common, and it turns a ratio judged comfortable into a ratio outside the norm.
"Net fixed assets" — net of depreciation. Which has a counter-intuitive consequence: the norm loosens by itself over time, as the building depreciates. The point of tension is therefore the year of acquisition, not the years that follow. You do not notice, because the problem dissolves on its own — until the next acquisition.
The principle is stricter than the ratio
One must read beyond the threshold. The principle underpinning this norm is more demanding than the 100 % it expresses: fixed assets must be financed entirely from own funds, and represent only a fraction of those funds.
In other words, an institution reaching exactly 100 % by mobilising all its long resource is not comfortable: it is at the limit. It has converted its entire buffer into concrete. An inspector reading that balance sheet does not see compliance, they see a balance-sheet structure with no margin left — and they note it.
Here lies the difference between respecting the letter and holding the house. The underlying prudential logic is simple: a microfinance institution collects short resources, mostly deposits, and employs them in loans. It cannot, on top of that, durably immobilise the capital that absorbs its losses. On the day your portfolio deteriorates, it is not your head office that repays your depositors.
Why this is a frequent breach, not an accident
Fixed-asset coverage ranks among the least respected prudential norms in the banking and financial sector of the zone — and it is particularly so among microfinance institutions.
The reason is not negligence. It is structural, and three mechanisms compound.
The first is the nature of the business. A microfinance institution that grows opens branches. Opening a branch means immobilising: premises, fit-out, safe, generator, IT, vehicle. Commercial growth mechanically produces fixed assets, at a pace the rebuilding of own funds does not automatically match.
The second is the calendar. The ratio deteriorates abruptly at acquisition, then repairs slowly through depreciation and retention of results. There is therefore never a moment when the alarm rises gradually: it is crossed at once, at signature, and the return to the norm takes financial years.
The third is monitoring. Most management teams track continuously the indicators that speak to the business — portfolio at risk, liquidity ratio, risk division. Fixed-asset coverage, by contrast, does not move from one quarter to the next in steady state. It is computed because the SESAME return requires it; it is rarely read.
The channel through which this actually costs you
A breached norm draws first an observation from the regulator, then an injunction, then — if nothing moves — a heavier measure. That path is known.
The least anticipated cost lies elsewhere, and it is financial.
Since the BEAC suspended, on 2 April 2026, refinancing operations for medium-term credit, long resource has become scarce across the zone. Commercial banks are rationing, and they ration starting with counterparties that are expensive to analyse. An institution whose fixed-asset coverage sits below the norm presents, to a credit committee, exactly the wrong profile: a balance-sheet structure that has already consumed its buffer, on a counterparty the bank has neither the time nor the data to assess in depth.
The same reasoning applies, more strictly still, to international investment vehicles specialised in microfinance debt. Their analysis begins with balance-sheet solidity before it even looks at portfolio quality. An unexplained, undated prudential breach does not merely delay the file: it removes it from the queue.
And since January 2026, the CEMAC Credit Information Bureau, operated by Creditinfo Central Africa under the aegis of the BEAC and the International Finance Corporation, has been collecting from banks, financial institutions and microfinance institutions. Its ramp-up is gradual — the BEAC targets the integration of at least 60 % of credit and microfinance institutions in the sub-region within three years. The direction of travel is clear: an institution's legibility ceases to be a matter of relationship and becomes a matter of data.
What to do before signing
A property acquisition project is not judged solely on its implicit yield against the rent saved. It is also judged on its effect on the balance-sheet structure. Four calculations, to be done before the sale agreement rather than after:
- Recompute the norm on a pro forma basis. Take the current ratio, add the projected fixed asset to the denominator, and see where you land. If the result falls below 100 %, the transaction is not impossible — it requires being structured differently.
- Verify the contractual allocation of the resource. If the acquisition is debt-financed, the maturity must exceed five years and the allocation to financing fixed assets must appear in the contract. That clause costs nothing to obtain at the negotiation stage; it is impossible to add afterwards.
- Restate capital funds, not accounting equity. The gap between the two is precisely what separates a comfortable ratio from a breached one.
- Set the schedule for returning to the norm. Retention of results, capital increase, disposal of a non-strategic asset: regulator and lender alike treat very differently a breach observed with a dated plan and a breach observed with nothing.
The fourth point is the most important, and it is the one that gets skipped. An institution that presents its own gap, quantified, with a resorption schedule, places itself in a management position. One that waits for it to be found places itself in a defensive position — and it will no longer choose the means.
What this says about the rest
Fixed-asset coverage is not isolated. It belongs to a small group of breaches that recur in most of the sector's disciplinary files: the solidarity fund, fixed-asset coverage, risk division, the liquidity ratio. That group shares one property: none of these four ratios deteriorates because of poor commercial activity. They deteriorate through failure to steer the balance-sheet structure.
That is good news. A portfolio problem takes years to repair and depends on your debtors. A balance-sheet structure problem is repaired with decisions you take alone, on a timetable that belongs to you.
Provided they are taken before the deed is signed.
Published 14 August 2026. The regulatory references cited are verified as at that date.
