(Business in Cameroon) - According to official documents obtained by Ecofin Agency on the sidelines of the extraordinary summit of CEMAC heads of state, the net free equity of the Bank of Central African States (BEAC) has declined by 52% in 2018.
Two main reasons are put forward to justify this situation. On the one hand, BEAC, which plans to strengthen its existing cooperation with international financial actors, has optimized the way it calculates its exposure to States. Because of this optimization, the BEAC recorded XAF212 billion of receivables held in national treasuries as a loss. On the other hand, the vast majority of the investments made by the institution have expired and the capital gains they generated are no longer available.
The institution's 2019 financial results should provide more detail and precision. But central bank officials believe that recovering free equity capital to its pre-2018 level remains quite difficult. This is due to the decline in income from foreign assets. In accordance with its articles of association, BEAC is obliged to invest in financial products with strong guarantees.
The challenge is that these type of financial products, located in developed markets, are so much in demand by many investors that their returns have fallen. For the institution, there is a need to urgently think about the issue.
The Beac is still being solicited by some CEMAC institutions to solve their financing problems. In addition, it needs to reassure States that it can effectively assist them in investing the surplus on their net foreign assets.