(Business in Cameroon) - In March 2021, the Bank of Central African States (BEAC) injected a record XAF1,213 billion into the CEMAC banking circuit through its weekly liquidity injection operations.
“This is the first time credit institutions operating in the sub-region have ever captured such a huge amount during the liquidity injections operations organized by the central bank within a month,” the National Sinking Fund of Cameroon (CAA) writes in its report on Cameroon’s public debt as of end-March 2021.
Indeed, all over the 2020 financial year, the weekly volumes captured by banks were modest, ranging between XAF30 billion and XAF80 billion out of the XAF250 billion offered by the BEAC at each of the operations. However, since early 2021, banks have been showing a growing interest in the liquidities offered.
This interest is growing to such an extent that the demand is increasingly exceeding the offers. This fact now supports the bet that the central bank could raise the cap of its weekly offers as stated on Mach 27, 2020 by the monetary policy committee, which informed that the cap could be increased from XAF250 billion to 500 billion if needed. This will not only support the banks seeking liquidities but also allow the central bank to reap additional dividends as the interest rate on the liquidities it offers is about 3.25%, its key rate.
The BEAC never explained the reasons that prompted banks to renew their interest in the liquidity injections. However, some bankers indicate that credit institutions usually request additional liquidities when their needs exceed their usual consumptions. So, this interest could be explained by a progressive resumption of economic activities despite the 2nd wave of the coronavirus pandemic, which greatly affected CEMAC economies in 2020.
Last year, the central bank had started withdrawing liquidities from the economic circuit. But, in March 2020, at the onset of the coronavirus pandemic in the CEMAC region, it resumed the liquidity injection operations. That resumption was in line with the wish expressed by economic operators (GICAM) and bankers (APECCAM). At the time, it was presented as one of the response measures against the coronavirus health crisis that finally became an economic crisis.
Brice R. Mbodiam