Member States of the Economic and Monetary Union of West Africa (“ UEMAO “) adopted in 1978, a single framework law dealing with the methods for fixing the legal interest rate and the definition of usury was adopted by the. Thereafter, in 1997, this text was subject to modification: the legal interest rate was indexed by the lending rate of the Central Bank of the West Africa States (“BCEAO”).
With the entry into force, on 1 April 2010, of the institutional reform of the UEMOA and the BCEAO, it became necessary to elaborate upon two separate texts, as the concepts of legal interest and of usury are based on fundamentally differing principles.
On 28 June 2013, two laws were adopted, an uniform law on the Definition and Suppression of Usury (“Usury Act”) and an Uniform Law on the Legal Interest Rate.
On the same date, the UEMOA also took an action to improve the conditions of access to credit by its Decision No. CM/UMOA/011/06/2013, byreducing its usury rate, which decreased from 18% for banks and 27% for decentralized financial system to 15% and 24%. This decision came into force on 1st January 2014.
The determination of the usury rate is performed on the basis of “the effective global conventional interest rate” (“EGC”), the conventional rate negotiated between the bank, or finance institution, and the borrower. Article 3 of the Usury Act defines the EGC as the “interest rate calculated taking into account the amortization of the debt plus fees, payments of any nature, including those paid to intermediaries that occurred in any way by the granting of the loan”.
The bank or financial institution will be considered as establishing an usury rate from the time the EGC exceeds the usury rate. The usury offence is penalized with a term of imprisonment and a fine sanction for two years and 15 million FCFA respectively. Moreover, “when a loan is usurious, by rights, excessive perceptions are imputed to interest calculated […] then due and the remainder, if any, in the debt capital”. In addition to this, the court may decide the temporary or permanent closure of the bank or financial institution.
The Council of Ministers of the Republic of Mail, member of the UEMOA, adopted on 21 February 2014 a draft uniform law on the legal interest rate and a draft uniform law on the definition and the suppression of usury, in order to comply with the regulation of UEOMA.
One of the important measures of the Malian draft usury law is to impose the intervention of the Banking Commission or the Central Bank in the case of a temporary or definitive decision for the judicial closure of credit establishments and decentralized financial systems, for violation of the usury regulations, which is not provided for by the Usury Act.