Yaoundé - 02 October 2023 -

Credit to the economy: Cameroon relaunches CFAF200 billion facility, adjusts terms to avoid identified challenges

Credit to the economy: Cameroon relaunches CFAF200 billion facility, adjusts terms to avoid identified challenges
  • Comments   -   Thursday, 17 August 2023 18:55

(Business in Cameroon) - Finance Minister Louis Paul Motaze signed, Wednesday (August 16), a CFAF200 billion loan guarantee to support public and private companies. The agreement was signed, in Yaoundé, with APECCAM–Association professionnelle des établissements de crédit du Cameroun– and ANENCAM –Association nationale des établissements de microfinance du Cameroun, respectively the union of Cameroonian credit institutions and the union of local microfinance institutions. 

The agreement, which supports access to bank loans, is expected “to speed up loans to businesses, SMEs particularly, therefore stimulating credit to the economy and private investment in key sectors identified in the 2020-2030 national development strategy,” according to Minister Motaze.  

This is the second time Cameroon, through its Ministry of Finance, is formalizing this sovereign guarantee introduced by the 2021 Finance law.  The first such agreement was signed with APECCAM and ANENCAM on July 22, 2021. 

According to sources close to the matter, the implementation of this state support has faced several challenges. "I would like to point out that this facility had already been implemented in 2022. But, it has to be said, we did not feel that you (credit and microfinance institutions, editor's note) fully played your part as agreed. The expected results did not live up to our expectations," Minister Motaze said last Wednesday pointing at banks and microfinance institutions’ role in the failure of the support operation in 2022.   

To ensure that the 2023 operation does not suffer the same fate, the terms of the guarantee have been redesigned. This redesigning has taken into account all the observations made by banks and microfinance institutions, particularly the observations related to the security of payment means in case of guarantee call, the Finance Minister explains. 

“I would therefore like to remind you of your commitments, which I will personally follow up closely. We expect you to be rigorous in examining and selecting the projects to be submitted to the government. I also note that you have formulated your guarantee claims (...), which are well above the authorized ceiling. There is, therefore, every reason to hope that the implementation of this facility will be significantly improved in 2023,” the Finance Minister added. 

Eligibility criteria

Thirty percent (30%) of the CFAF200 guarantee is provided by the State of Cameroon. It is solely dedicated to Cameroonian firms and those majorly owned by Cameroonians. Also, 30% of the guarantee targets public sector enterprises against 70% for private companies. 

According to Gilbert Didier Edoa, Secretary General of the Ministry of Finance, the guarantee will cover 30% of loans to large companies and 70% of loans to SMEs. This coverage can rise to 60% for large companies and 80% for SMEs operating in economically depressed areas –notably the North-West, South-West, and Far-North regions, which have been hit by the Anglophone crisis in the first two cases, and by the Boko Haram attacks in the latter.

Eligible loans are credits to finance working capital requirements, particularly investments in sectors identified as key in the 2020-2030 National development strategy. Those sectors include notably energy, financial services, agribusiness, digital technology, forestry-wood, textiles-confectioning-leather, mining-metallurgy-siderurgy, hydrocarbons-petrochemicals-refining, chemicals-pharmaceuticals, construction and services.

"Priority is also given to loans aimed at boosting local production of our main import products and strengthening our export capacity. Refinancing, restructuring, repayment or repurchase of an existing loan will be excluded from this scope,"  Gilbert Didier Edoa emphasizes.

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