(Business in Cameroon) - Following its latest monetary policy committee held December 18 in Yaoundé, the Bank of Central African Countries (Beac) announced it is further tightening conditions for access to financing within the Cemac area.

This said, the bank increased the rate on the marginal lending facility by 75 basis points, from 5.25% to 6%, while the penalty rate for banks grew to 8.30% from 7.55%. Only the interest rate for bids (TIAO) was maintained, after an increase by 55 basis points last October 31. On that date, Beac had already increased key interest rates. The TIAO rose to 3.50% from 2.95%, penalty rate for banks from 7% to 7.55% while the rate on the marginal lending facility grew from 4.7% to 5.25%.

A reason for these repeated rate hikes over the last 3 months, according to Governor Abbas Mahamat Tolli, is Beac’s ambition to develop interbank loans, rather than encouraging credit institutions to use the central bank’s discount window to obtain refinancing. Another reason is to curb capital flight; a move that helped replenish struggling foreign exchange reserves; the Cemac zone being a major importer of almost all current consumer products. “When XAF100 is injected into the Cemac zone, almost XAF90 is spent abroad, because we import a lot,” explained a Beac official.

However, finance experts rather see the interest rate hike as a barrier to the financing of the sub-region’s economies. They say because of this measure, it’s now going to be tougher for companies to access bank loans in the coming months which could slow activities.

Let’s recall that the volume of new credits granted in H1 2018 within the Cemac region dropped by 11.91% to XAF4,500.2 bln compared to the same period in 2017 (XAF5,108.71 bln), according to Beac statistics.

Brice R. Mbodiam