(Business in Cameroon) - Today April 1st, Cameroon launched a campaign for its XAF220 billion fundraising operation via bond issuance. On various media, the Ministry of Finance, which initiated the operation, explains that subscription to the dematerialized securities issued on the money market by auction can start 5 working days before the auction date.
The first bonds will be auctioned on April 8 before 11 am while the second and the third will respectively be auctioned on April 15 and April 29 before 11 am. The first issuance is for 5-year bonds aimed at raising XAF100 billion with an interest rate of 5.7%. The second is for 3-year bonds aimed at raising XAF70 billion with an interest rate of 4% while the third is for 2-year bonds aimed at raising XAF50 billion with an interest rate of 3.5%.
The funds raised will finance projects for the improvement of the living standards of residents of the country’s 10 regions. XAF73.5 billion will fund projects in the sports sector, XAF63.2 billion for road development and renovation while XAF45 billion will fund pending health projects like the acquisition of health equipment.
Subscriptions and advantages
According to the Ministry of Finance, “any economic agent/investor (individual or corporate) wishing to make a safe and profitable investment” can subscribe to these bonds.
“Subscriptions are made through the primary dealers which are: credit institutions and brokerage firm,” the ministry adds.
As for the advantages, the ministry explains that the interest rates on bonds are higher than what investors can expect from savings accounts. Also, those interests are paid every year at the anniversary date of the acquisition and in Cameroon, they are tax-free for residents and non-residents.
Apart from being risk-free, the Ministry of Finance explains, “bonds benefit from the state's sovereign guarantee. They offer subscribers a known rate of return over a given period. Also, holders can sell them at any time to their banks without a substantial discount. Bonds are also eligible to cover the regulatory commitments of insurance companies, for refinancing at the Beac and are negotiable (sales, guaranteed purchases) through Cameroon's primary dealers."
The 2020 finance bill authorizes the government to seek XAF320 billion on the public securities market for the implementation of growth-enhancing projects. It is based on that authorization and the express permission of the President of the Republic that the Minister of Finance launched the three operations.