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CEMAC: In 2018, local bank’s loans were mainly channeled towards countries

CEMAC: In 2018, local bank’s loans were mainly channeled towards countries
  • Comments   -   Thursday, 16 January 2020 16:04

(Business in Cameroon) - In 2018, bank lending within the CEMAC region rose by 8.8%, the region’s central bank BEAC informs in its 2018 activity report.  

According to the central bank, this increase falls “in line with the 22.4% increase in net claims on the Cemac states.” The increase in claims on companies was only 4%. This means that during the period under review, bank financing was more dynamic in favour of CEMAC States than companies established in the sub-region.

The boom of government securities market  

This can be explained by the increase in fundraising activities on the BEAC's public securities market since the end of 2016, a period marked by the fall of the prices of raw materials exported by CEMAC countries (particularly crude oil) in international markets.

This situation, which led to a decline in government revenues in the region forced CEMAC countries to turn to the BEAC government securities market in search of funds to partially finance their respective budgets.

On the government securities market, only local banks, authorised by governments as primary dealers, operate. A country such as Cameroon, which has been the main player in this market since its launch, has a total of 19 banks.

Secure investment opportunities

As a result, BEAC's public securities market has become an excellent opportunity for commercial banks to make secure, short-term investments. This market is dominated by transactions of fungible Treasury bills, which have a maturity of up to one year.

According to a report by the Supervisory Board of the BEAC's securities settlement and custody unit, at June 30, 2018, the outstanding debt of CEMAC member States on the securities market reached XAF1,020 billion. According to the same source, 89.5% of this financing was provided by banks approved as primary dealers.

During the period under review, the main providers of financing to CEMAC member States were Afriland First Bank (XAF150.9 billion), Ecobank Cameroon (XAF112 billion), UBA Cameroon (XAF65.4 billion) and UBC (XAF23.7 billion).

Brice R. Mbodiam

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