Telecom group MTN recorded CFAF156 billion (at the current South African Rand value) in turnover in the first half of 2023, according to information accessed by Business in Cameroon.  The turnover is up 9.2% year-on-year against a backdrop of soaring inflation (close to 8% in May 2023) and legal dispute with Cameroonian businessman Baba Ahmadou Danpullo.

The operator was favored by the internet penetration rate, which reached 76% (according to its own data). It also claims a dominant position in the telecommunications sector, with an estimated 51.6% market share. However, the available data do not specify which segments (calls, Internet or financial services such as Mobile Money) have been the most dynamic during the period.

During the period, MTN Cameroon incurred around CFAF93.4 billion in operating expenses. These costs appear to have been boosted by payments to the government and regulatory fees. The company also mentions other increased operating expenses, without providing more details.

Against this backdrop, the company announced a gross operating profit of CFAF56.8 billion, up 12.4% year-on-year. In the first half of 2023, the profit was the best recorded by MTN in all of its subsidiaries in Francophone West and Central Africa, although the highest turnover (CFAF171.8 billion) was achieved in Côte d’Ivoire.

The exact net margin -after depreciation, amortization, and, above all, financial expenses- for the period is still not yet disclosed. According to internal sources, the seizure of MTN Cameroon’s bank accounts by billionaire Baba Danpullo has led the operator to take out unexpected loans, thereby incurring additional financial expenses. Little information is available on this subject, as Cameroon does not require multinationals to publish their financial accounts.

Source: Business in Cameroon

Cameroon’s late payments last year on a loan from Deutsche Bank Spain were not a default, credit rating agency Fitch Ratings said on Wednesday.

The central African country was late on four payments in 2022, Fitch, which rates the country “B” with a “stable” outlook, said in a statement.

However, it said it understood from authorities all delays were resolved within 18 days, so less than the 30 day grace period it applies before declaring a default.

In late July, Moody’s downgraded Cameroon from “B2” to “Caa1” due to the late payments, which it classed as an “incident of default”.

Then, last week, S&P Global Ratings lowered Cameroon from a “B/B-” rating to “Selective Default” over the debt service delays and then to “CCC+/C” a day later.

Cameroon’s sole U.S. dollar international bond has barely budged and trades at around 97 cents on the dollar, according to Tradeweb data. US133653AA31=TE

“It will be critical for Cameroon to comply with IMF conditionalities, including non-accumulation of external arrears, to receive the next (fifth) IMF disbursement in December 2023 to help cover its fiscal financing needs,” Fitch said.

The International Monetary Fund (IMF) approved a $689.5 million loan programme for Cameroon in 2021 and a fourth disbursement of $73.6 million was signed off by the IMF board in July.

Source: Reuters

The Board of Directors of the African Development Bank Group has approved a €63.09 million loan to Cameroon to promote entrepreneurship and improve skills to match industry needs.

Multinational partners, the private sector and the Cameroonian government will contribute approximately €2 million to the project cost, estimated at €64.93 million.

Covering five of Cameroon’s regions — Centre, Littoral, South, Southwest, and Far North — the project will improve skills and encourage entrepreneurship and youth and female employment in construction, transport, energy, agro-industry, ICT, and the green economy. Specifically, the project will directly strengthen 12 training centers and nine public and private entrepreneurship support facilities.

A lack of skilled human resources in Cameroon threatens the country’s industrialization process and the development of its economic growth. The project aims to get the private sector in Cameroon – in tandem with the government – involved in key structural measures: building technical and vocational training infrastructure and strengthening the capacity of stakeholders and the education system.

The private sector will contribute through three levers: the delegated management of vocational training centers, the establishment of a Vocational Training Development Fund and the funding of private initiatives backed by the Youth Project Development Support Mechanism, and the creation of a network of business incubators operating within promising sectors.

This should result in a greater quality of learning properly suited to the job market. It will promote self-employment and professional integration for young people, especially in the targeted growth sectors, and strengthen the institutional capacities of technical and professional stakeholders.

Two of the five regions in the project area have been affected by conflict: the Southwest (Anglophone Crisis) and the Far North (Boko Haram terrorist attacks). The project will help to improve the access that young people and women have to employment and better-paid activities. This will reduce the potential appeal of terrorist movements and build peace, thereby improving living conditions and economic growth in Cameroon.

The project will benefit 7,350 young people in apprenticeships by improving training courses to meet the job market’s needs, and 1,225 young entrepreneurs or project leaders in the five regions, who will be enrolled in an incubation program until they start their businesses.

The project will also significantly impact Cameroon’s socio-economic development. It could generate 28,000 additional jobs by 2050 (an average of 1,120 per year between 2027 and 2050).

The Bank’s funding is motivated by the need to support Cameroon’s strategic efforts to reduce the shortage of skilled labor in priority sectors.

The project aligns with Cameroon’s National Development Strategy 2020-2030 (NDS30) and two priority areas of the Bank’s 2023-2028 Country Strategy Paper for Cameroon: developing infrastructure to promote the agro-industrial sector and strengthening human capital and governance to improve the institutional and business framework. It also aligns with one of the Bank’s “High 5” strategic priorities – improving the quality of life for the people of Africa – and its new Ten-Year Strategy for 2023-2032, which is being finalized.

Source: AFDB

On July 13, 2023, the 2024 budget preparation workshop was officially opened, in Yaoundé, by Finance Minister Louis Paul Motaze. During his opening address, he described national and international uncertainties that could lead to a significant drop in Cameroon’s oil revenues in 2024. “(…) The uncertainties weighing on the global economy call for caution regarding the forecast of a substantial increase in domestic revenues in 2024, in a context of falling prices and a crumbling potential for the mobilization of oil revenues, which are projected -in the latest budgetary framework- to drop by more than CFAF195 billion compared to 2023,” Minister Motazé said.

The projections need to be taken with caution considering the uncontrolled fluctuations in the dollar exchange rate and even crude oil prices, which may evolve favorably in the coming months, as long as the war between Russia and Ukraine persists. Apart from oil revenues, budget support and funds raised are also expected to drop in 2024. “The projections are not better concerning financing resources, which could also experience a significant contraction in 2024 due to the reduction in budgetary support and domestic borrowing,” Minister Motazé further stated on July 13, 2023.

Indeed, the economic and financial program with the IMF (the International Monetary Fund) will end in 2024. In the framework of the program, Cameroon receives gradual disbursements of budget support, amounting to CFAF770 billion, including CFAF380 billion directly from the IMF. A significant portion of that support has already been disbursed and, with the program coming to an end, the financial lifeline will cease.

On February 10, 2023, when inaugurating the newly appointed executives of the national sinking fund CAA and the Deposits and Consignments Fund (CDC), the Minister of Finance had urged the executives to find solutions to address the decrease in budget support. “Cameroon is not destined to be indefinitely under a program [with the IMF], so we should remember that management involves foresight. It is therefore up to all of us, including you, to find replacement resources for this budget support so that Cameroon can continue moving forward and continue to finance its development. I count on you,” he said.

In addition to the projected drop in oil revenues and the imminent end of budget support, Louis Paul Motazé also fears Cameroon will have a hard time raising funds on the sub-regional capital market, where it regularly sources resources to finance the budget deficit. The country did raise CFAF176.7 billion out of CFAF150 billion for its 2023 bond issue but raising funds in the CEMAC zone is becoming challenging. The reason is the restrictive monetary policy implemented by the central bank (BEAC) to combat inflation. The measures it has taken for that purpose have dried up liquidity from commercial banks’ coffers and raised interest rates.

Source: Business in Cameroon

The Central African Republic’s Finance Minister Hervé Ndoba recently met, in Douala, with investors active on the Bank of Central African States (BEAC). This meeting aims to catch the of interest Cameroonian investors in the fundraising operations his country is planning for the said market. 

“The Central African government plans to cover a portion of its financing needs through the issuance of public securities in the market. To this end, the 2023 finance law forecasted XAF80 billion worth of public securities will be issued to meet the financing needs. The securities include T-bills and T-bonds with desirable long-term maturities, as well as acceptable coupon rates and prices. In the first half of 2023, the Central African Treasury raised XAF42.65 billion, including XAF34.98 billion through T-bonds and XAF7.67 billion through T-bills. The amount raised corresponds to 53.3% of the target meaning that in the second half, XAF37.34 billion need to be raised,” Central African authorities said in an official document.

To achieve its 2023 target, in August, the Central African Republic will launch four fundraising operations. Overall, it intends to raise XAF25 billion, including XAF15 billion with 4 and 5-year T-bonds and XAF10 billion with 26 and 52-week T-bills. For the success of those operations, the country is betting on investors based in Cameroon since official data show they regularly contribute up to 70% of the funds raised on the BEAC public securities market.

Source: Business in Cameroon

Amine Homman Ludiye is the new CEO of Cameroon’s power utility, ENEO. The Moroccan was appointed on June 26, in Yaoundé during an extraordinary board meeting of the company. ENEO is controlled (51%) by Actis, the British investment fund.

ENEO’s new boss replaces Belgian Patrick Eeckelers who resigned on June 26 also. The latter quit after holding the helm for barely a year, but not without cause.

A troubled reign

When he took over the utility in April 2022, Patrick Eeckelers initiated a reorganization that focused on cost management. On June 7, 2022, he dissolved the inspectorate general, seen as costly, and placed the fight against fraud under the supervision of the deputy director of security. This led to tensions and power struggles within the organization.

On August 17, 2022, Eeckelers was even arrested and questioned for nearly two hours at the Judicial Police Headquarters in Yaoundé before being released. According to some of his co-workers, this was the Belgian’s most humiliating experience.

However, three months after the former CEO was released, on November 23, ENEO’s board had “encouraged (ed.note: him) to continue with the ongoing reorganization of the company to effectively address the challenges of our ambitious operational plan,” as stated in a note issued to the staff after a board meeting. Eeckelers’s organizational adjustments were approved. The general secretariat, where he believed part of the opposition against him was orchestrated, was dissolved, and the tariff and regularization units, strategy, internal control, and reporting were directly attached to him.

Still, all this was not enough to restore the Belgian’s trust who now feared for his safety, especially because those behind his arrest, which he considered arbitrary, were not held accountable. “This case knocked him down,” said one of his colleagues. Right after quitting the company, Patrick Eeckelers left the country.

A new boss, a new fire

Amine Hommane Ludiye, the ENEO’s new CEO is described as a very ambitious executive. For many, the Moroccan’s appointment is not surprising, given that he was said to be eager to take over the firm at the apex of the Eeckelers crisis. 

Ludiye joined ENEO in 2021 as Deputy CEO in charge of production. At the time, he was expecting to replace Eric Mansuy, who sat at the top chair before Patrick Eeckelers stepped in, in March 2022. After joining, the Moroccan became an Actis representative on the board, further boosting his hopes to one day lead the utility.

Roadmap

Amine Hommane Ludiye is set to officially take over today, June 29. One of the key missions laid out for him by ENEO’s board chairman, Séraphin Fouda, is restoring serenity within the company.

“He’s been asked to do everything possible to improve the social climate, particularly by focusing on regional balance and gender promotion,” said a source who took part in the board meeting held on June 26. Similarly, as Secretary-General of the Prime Minister’s Office, Fouda instructed the former CEO of Engie North Africa to examine the issue of the Common Initiative Group for Socioeconomic Promotion of Staff (Gic-P Eneo) and propose solutions to resolve the crisis

Since 2017, when the staff acquired a 5% stake in the company through Gic-P Eneo, no dividends have been distributed. Some individuals are becoming impatient and want to sell their shares, especially since the prospect of the government buying out Actis’s shares does not reassure these minority shareholders.

According to Séraphin Fouda, calming the social climate is essential considering the challenges facing Eneo. For instance, the electricity provider must prepare to commercialize the first kilowatts of electricity from the Nachtigal hydroelectric plant by the end of this year to fulfill contractual obligations. This involves paying the Nachtigal Hydro Power Company (NHPC), the entity managing the production infrastructure, XAF10 billion per month for the purchased energy. “To achieve this, the PCA has called for an acceleration of the pole replacement program, network expansion to serve new customers, particularly industrial clients, and the acquisition of meters,” detailed a participant in the board meeting.

To mobilize the necessary funds for these investments, Amine Hommane has been advised to prioritize multilateral financial institutions such as the World Bank or the African Development Bank, which offer better borrowing conditions. However, his two predecessors have failed to convince the International Finance Corporation (IFC), the World Bank’s arm dedicated to the private sector, to provide the ENEO a financing of XAF210 billion for over three years. Internal sources point to the need for improved governance as well as better relations with the government and its entities, ENEO’s primary client. Since May 2023, both parties have struggled to agree on the value of the State’s debt to the utility. This is also one of the main issues that Amine Hommane Ludiye has to tackle. It should be noted that Actis expects him to enhance the company’s attractiveness as it may sell the government its stake in the company.

Source: Business in Cameroon

On June 20, 2023, Cameroon’s Acting Minister of Industry, Fuh Calistus Gendry, visited the site that housed the Cellucam, the former public paper pulp maker that went bankrupt in 1982.

The official went to check progress made on the site’s rehabilitation and according to local newspaper Cameroon Tribune, Cametal, the company in charge of the project, failed the contract’s terms. Gendry addressed the company’s management with a formal notice urging them to get back in line.

Indeed, it appears that since it took over the contract, on July 8, 2021, Cametal mostly engaged in scrap metal collection, and has not met its obligations regarding the dismantling and deconstruction of scaffolding, pollution control, and equipment decontamination, or building rehabilitation. The project’s monitoring committee pointed out that the progress rates reported by the contractor were not always correct.

Once rehabilitated, the former Cellucam site is expected to host several companies. One of these is the Société camerounaise d’industrialisation et d’exploitation du bois (Scieb), which plans to set up a wood technopole on the site. According to the Memorandum of Understanding (MoU) signed with the Cameroonian government on May 12, 2020, in Yaoundé, 80 billion FCFA should be invested in this project.

Source: Business in Cameroon

Cameroon remains the largest energy supplier in the Cemac region, with a total installed capacity of 1,750 MW, equivalent to the combined capacities of Congo, Gabon, and E. Guinea.

In a special report focused on energy access in sub-Saharan Africa, the United Nations Conference on Trade and Development revealed that the country holds the largest share of installed power in the Cemac region, accounting for 48% of the total capacity of 3,700 MW. Gabon follows with 780 MW, representing 21% of the sub-regional total, ahead of Congo with 640 MW (18%), and Equatorial Guinea with 350 MW (10%). These figures imply that the capacity of the Songloulou hydroelectric dam (384 MW) in Cameroon surpasses that of Equatorial Guinea as a whole.

Despite this lead over other Cemac countries, Cameroon still faces significant challenges in providing efficient electricity access to its entire population. To address this issue, the country has undertaken multiple energy projects in recent years. As a result, all turbines of the Nachtigal dam (420 MW) are set to be operational by 2024. This single infrastructure project will then account for nearly 66% of Congo’s current total capacity and about 54% of Gabon’s.

However, compared to other African countries with the same level of development, Cameroon is behind. For example, Côte d’Ivoire has an installed capacity of 2,230 MW, 480 MW more than its Central African peer. This means that even the full commissioning of its Nachtigal dam will not bring Cameroon to the same level as Côte d’Ivoire. Also, around 10% of Côte d’Ivoire’s electricity production is exported to other West African countries (Ghana, Togo, Benin, Burkina Faso, Mali, and Liberia, notably), whereas Cameroon often finds itself in production deficits of up to 100 MW at certain times of the year, according to its power utility Eneo. Similarly, the Central African country is only aiming for a capacity of 5,000 MW by 2030, while its West African counterpart rather eyes 6,000 MW.

The major barrier to a developed electricity sector, according to Cameroonian authorities, is the lack of financial resources to carry out projects and the shortcomings in the country’s energy policy. Yet, the country boasts the third largest hydroelectric potential in sub-Saharan Africa (12,000 MW), behind the Democratic Republic of Congo and Ethiopia.

Source: Business in Cameroon

The Bank of Central African States (Beac) has presented its view on how the ongoing war between Russia and Ukraine has impacted the Cemac economies in 2022. In a recent economic and statistical bulletin, the institution observed a V-shaped impact resulting from the conflict.

On a good note, “the economic growth went from 1.8% in 2021 to 2.9% in 2022 thanks to a good impetus in the oil and gas sector in the region, despite a slight decline in the non-oil sector”. However, before the war started, Beac was expecting a 3.2% growth, meaning the war caused a loss of 0.3pts.

Although there has been an improvement in the prices of crude oil and natural gas on the international market, with positive financial repercussions for Cemac countries, demand was less vigorous. Beac points out that gross domestic demand has made a smaller contribution to Cemac growth in 2022, even though it remains the main driver of real growth in the region (2.1 points in 2022, against 7.4 points in 2021), with a slight decline in the contribution of private consumption (3.5pts in 2022, against 4.0pts in 2021) and that of public consumption and gross investment (- 1.1 points and – 0.4 points respectively).

The Russia-Ukraine war has also triggered strong inflationary pressures in the Cemac, as many countries in the region depend on Russian wheat and construction raw materials from Ukraine. In 2022, due to higher food prices, inflation rose to an annual average of 5.6% and 6.7% year-on-year, compared with 1.7% and 2.6% respectively a year earlier. Before the outbreak of the war, Beac forecasted inflation to be 2.1%.

A good point of the conflict, Beac found, is an improvement in the public finances of Cemac countries as a result of “the upward trend in the prices of exported products (…), particularly crude oil”. Overall, the budget balance, including grants, reached 2.5% of GDP in 2022, compared with -1.2% of GDP in 2021. Before the start of the crisis, it was forecast at 0.5% of GDP, an increase of 2.0 percentage points.

About money supply and its counterparts, the Beac noted “a surge in the monetary system’s net foreign assets, which doubled to CFA2,863.8 billion; a 4.7% deceleration in the monetary system’s net claims on CEMAC countries, to CFA8,585.1 billion; a 7.7% rise in loans to the economy, to CFA9,912.3 billion; and a currency coverage ratio of 73.1% (against 64.0% in 2021), up 6 basis points on the level projected before the war”.

Source: Business in Cameroon