(Business in Cameroon) - Douala Urban Community (CUD) filed a lawsuit on November 2, 2023, against Afriland First Bank (AFB), Commercial Bank-Cameroon (CBC), and Sicc Congo Management in the Wouri High Court. The municipality aims to invalidate its guarantee on a CFA3.2 billion loan taken by Sicc Congo Management, its primary private partner for the construction of Douala's Congo market, from a banking consortium consisting of AFB and CBC.

According to the head of the CUD's Legal Affairs and Litigation Division, who made the news public on April 16, this action is in response to the banks' intent to enforce this guarantee. "The banking consortium of Afriland First Bank and Commercial Bank-Cameroon asked us to repay the guarantee. We did not respond to them and have sought legal action to annul it," stated Guillaume Moukete Ekoume. The two banks are demanding CFA2.4 billion from the Douala city council, which acted as guarantor for 75% of the loan amount.

To justify this opposition, the division head argues that the contract between the parties "is illegal because it was not authorized by the city's community council," led by Fritz Ntone Ntone at the time. CUD is also demanding an audit of the investments made by Neo Congo Mall. For the moment, proceedings are pending before the court.

For the construction of Douala's Congo Market, the Douala Urban Community entered into a public-private partnership with Sic Congo Management in 2013, with a total investment cost of CFA7.4 billion over a 10-year operating period. To execute the project, the private partner had secured a CFA3.2 billion loan from the AFB-CBC banking consortium, with the public partner's guarantee. In 2019, Sic Congo Management decided to transfer its contract to Neo Industry, owned by Cameroonian businessman Emmanuel Neossi, who pledged to repay the loan.

Contract termination

For project implementation, Neo Industry established the project company, Neo Congo Mall. In July 2019, this company signed amendments with the Douala Urban Community (CUD) making substantial changes to the original project. Initially planned for 1,800 shops, the shopping center's capacity increased to 3,300 units. The investment cost nearly quadrupled, reaching CFA28 billion, excluding the debt inherited from Sicc Congo Management, and the contract duration was extended from 10 to 30 years.

However, in December 2022, the city mayor, Roger Mbassa Ndine, terminated the contract with Neo Congo Mall. The reasons cited were the "difficulties" faced by the company in completing the construction of this commercial infrastructure and repaying the CFA3.2 billion debt. Initially, the work, which began in 2019, was supposed to be completed by 2021, under the contract terms.

As a result of this termination, "the public partner (CUD) would pay the guarantee on the private partner's (Neo Congo) bank loan and reimburse the private partner for the residual value of investments made until the end of 2022," estimated the 2022 report on budget risk costs generated by projects executed in public-private partnership (PPP), published by the Ministry of Finance (Minfi) in May 2023. This legal initiative by the municipality thus raises questions.

To date, no negotiations are underway to sign a contract with a new service provider who could continue the construction of Congo Market, we learned.