The usury ceiling has fallen: what it changes for a WAEMU bank

One lever fewer

Since 1 June 2026, the usury rate ceiling has been lowered by one point across the eight WAEMU states. One point sounds small. It is less so once you notice that, for many institutions, that point was the room that absorbed imprecise assessment.

The mechanism is simple. Facing an application whose risk is poorly understood, an institution has two answers: refuse, or approve and price higher. The second answer makes the borrower pay for the uncertainty. It works while the ceiling allows it.

Lowering the ceiling does not make borrowers riskier. It makes imprecision more expensive — and it makes it visible.

What the constraint reveals

A credit policy that compensates imprecision with price generally does not know it. The cost is spread across all borrowers, including the good ones, who pay for the uncertainty the institution has about the others.

This cross-subsidy has a rarely measured side effect: it makes the institution less competitive on its best applications, precisely the ones a better-equipped competitor will come for. You lose the good clients first, and notice only when the remaining portfolio deteriorates.

A lower ceiling removes the cross-subsidy. What remains is to discriminate better.

What “discriminate better” actually means

Discriminating better does not mean refusing more. A system that improves discrimination screens out applications that would have defaulted, and accepts applications that would have been refused out of caution. Both effects count, and the second is usually the larger.

The measure that matters is not the acceptance rate, nor the default rate taken alone. It is discriminatory power: the ability to separate, within the population handled, those who will repay from those who will not.

Discriminatory power is measured after the fact, by score cohort. Few institutions perform that exercise, for want of a system that records the score assigned at origination — without which comparing prediction to outcome is impossible.

The organisational consequence

One point off the ceiling shifts the arbitration from the commercial side to the risk department. That is a change of governance as much as a change of arithmetic.

It also makes credit policy more alive: when margin no longer catches approximations, thresholds, exclusions and weights must be adjustable quickly, and their effect measurable before activation. A policy that needs a software release to change a threshold cannot keep that pace.