(Business in Cameroon) - Cameroon’s government plans to raise a total of CFA450 billion through securities issues this year. As part of this plan, the Minister of Finance, Louis Paul Motazé (pictured), met Thursday with investors to urge them to participate in the fundraising, especially since the country has recently increased its interest rates on the Beac public securities market.

Since December 2022, fungible Treasury bills (BTAs) issued by the Cameroonian government have carried an interest rate of 4.11%, compared to a maximum of 3% previously. This is the highest interest rate offered by Cameroon on this market for many years. The country had to revise its offers upward mainly because of the high demand for financing on the market. For example, while it was only CFA3,282 billion in 2021, the outstanding Treasury securities issued by CEMAC States reached CFA5,302.4 billion at the end of December 2022, up by more than CFA2,000 billion in one year (+61%).

Attractive interest rate policy

A market connoisseur explained that the practice of attractive interest rates by some CEMAC countries that do not always have a good credit rating on the market, coupled with the desire by primary dealers (SVTs) to make profits, has, over the years, led to an increase in interest rates. This is in addition to the sluggishness of the secondary market, which is reflected in the excessive concentration of government securities in banks' portfolios (81% at the end of 2022); and the need for the SVT banks to comply with the prudential ratios imposed by the banking regulator (Cobac) to limit risks. According to market players, these two realities have reduced the room for maneuver of market intermediaries, making it increasingly difficult for governments to mobilize resources.

To dodge this difficulty, Cameroon has adopted a hybrid strategy since 2022, carrying out fundraising operations both on the Beac public securities market and the regional market (Bvmac). Before this strategy was adopted, the government was more focused on the secondary market, which is considered less expensive and very flexible.

This year, Cameroon intends to raise CFA250 billion on the Beac market, and CFA200 billion on the Bvmac, we learned. However, given the current situation regarding public securities, “nothing is certain,” an authorized source said. Hence the importance of the meeting yesterday between the Minister of Finance and investors.

Brice R. Mbodiam