Yaoundé - 02 October 2023 -

Public securities: Cameroon remains the cheapest borrower in CEMAC, despite rising market costs

Public securities: Cameroon remains the cheapest borrower in CEMAC, despite rising market costs
  • Comments   -   Thursday, 27 July 2023 13:21

(Business in Cameroon) - In June 2023, Cameroon was the CEMAC country that raised the cheapest funds on the public securities market of the central bank BEAC. That month, the country’s average interest rate on its treasury bills was 4.7% against 5.8% for treasury bonds. Despite the 0.47 point rise in the overall cost of resources mobilized by governments on this market in June 2023, from 7.03% to 7.55% month-on-month, the interest rate on Cameroon’s bond was half that offered by Chad and the Central African Republic. 

While those two countries were offering 11.6% and 11.4% respectively on their long-term securities, Cameroon offered investors just 5.8%, according to data compiled by the central bank in its June 2023 Bulletin of Treasury Securities Market Statistics. Cameroon’s rate for bonds is thus below 6% (against 9.2% for Congo and 8.26% for Gabon), as has been the case for several years now, despite rising financing costs on the sub-regional capital market -owing to the central bank’s restrictive monetary policy. 

In the case of treasury bills, which are short-term securities maturing in 52 weeks or less, the interest situation is even bleaker although Cameroon raised its threshold from the 3% it used to offer.  According to the central bank’s figures, due to the challenging market conditions, Cameroon offered investors an average interest rate of 4.7% on its treasury bills in June 2023. For the same type of securities, Chad offered 7.1% against 6.51% for Congo and 6.32% for Gabon. Of all these countries, Cameroon is the only one, along with Gabon (6.3%), to have remained below the overall average market cost (6.49%) on securities in this category.

This prudential interest rates policy, against a backdrop of rising market costs, has dampened investor interest in Cameroonian securities since the start of 2023. The country’s securities used to be highly sought-after, with subscription rates reaching 600%. However, since January 2023, just a handful of its operations on the BEAC public securities market have been successful, with subscription rates not exceeding the amounts targeted. 

Despite investors’ lack of interest in its securities (in recent months) due to its prudential cost approach, Cameroon remains the most creditworthy on the BEAC market. In fact, according to data from the Ministry of Finance, since November 2011, when the BEAC’s public securities market was launched, the Cameroonian Treasury has paid over CFAF3,000 billion, with no default. In that light, it is a reliable partner for investors.  

Brice R. Mbodiam

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