Chad wants to freeze the bank accounts of Cameroon Oil Transportation Company (COTCO) to stop them being accessed by directors of Savannah Energy Plc, escalating a dispute over Savannah’s acquisition of Exxon Mobil Corp.’s oil assets in both countries.

Chad, which owns 54% of COTCO, asked lenders managing that company’s accounts “not to act on instructions to move funds, particularly abroad,” according to a statement released on Friday by COTCO. Such a move would require the approval of management, it said. Chad wants the management replaced.

Chad has challenged December’s $407 million purchase by London-based Savannah of assets including a stake in COTCO, saying the final terms were inconsistent with those that had been shared with authorities a year earlier. The dispute escalated in March when Chad nationalized the assets on its side of the border, including Savannah’s share of the more than 900 kilometer (560 miles) Chad-Cameroon oil pipeline.

In an emailed response, Savannah referred to COTCO’s statement. It has said it holds an effective 41% indirect equity interest in COTCO as a result of the acquisition.

Cameroon’s Mines and Energy Minister Fuh Calistus Gentry declined to comment when reached by phone.

Chad has been under military rule since 2021 when Interim President General Mahamat Deby replaced his father, former President Idriss Deby, who was killed fighting rebels in northern Chad, according to the government.

Source: Bloomberg

Germany agreed to provide a grant of €60 million, or about CFA39.3 billion to support development projects in Cameroon between 2023 and 2024. According to the deal signed last May 31 in Berlin by Cameroon’s Minister of Economy, Alamine Ousmane Mey, and the State Secretary at the German Federal Ministry for Economic Cooperation and Development (BMZ), Jochen Flasbarth, the funding will mainly be oriented toward sustainable natural resource management, rural development, governance, decentralization, peace, and social cohesion, as well as health, social protection, and demographic policy.

€20 million (about CFA13.11 billion) will be allocated under the financial cooperation, and the remaining €40 million (about CFA26.2 billion) will be dedicated to technical cooperation, we learn. This new disbursement is expected to further boost the active project portfolio of Germany in Cameroon which is currently estimated at €382 million (approximately CFA250.21 billion), according to Cameroonian authorities.

Source: Business in Cameroon

US rating agency Fitch, in a statement published Friday, has maintained Cameroon’s long-term foreign-currency issuer default rating at B and affirmed that the country has a stable outlook. The result followed a thorough evaluation of Cameroon’s issuer profile.

The B rate is the second level of the highly speculative category on the Fitch rating scale, 6 levels above the D profile (default), where a country like Ghana ranks. Cameroon also performed better than Congo and Gabon, respectively rated CCC+ and B- but remains behind Côte d’Ivoire, rated BB-.

“Cameroon’s ‘B’ IDR reflects the relatively diversified economy underpinning resilient growth, and moderate general government debt level compared with peers. We expect continued progress on fiscal consolidation, through control of spending and better non-oil revenue mobilization, which will improve Cameroon’s fiscal position and debt/GDP will remain on a downward path,” Fitch’s statement reads.

The rating agency believes that the government’s import-substitution policy should help maintain a sustained level of growth and offset a possible drop in oil revenues following a surge in prices triggered by the war in Ukraine. Forecasts are on GDP growth of 4% in 2023 and 4.2% in 2024, compared with 3.7% in 2022, thanks to economic resilience spurred by the IMF-led program. According to Fitch, this should reduce the budget deficit to 1.2% and then 1% of GDP in 2023 and 2024 respectively, compared with 1.4% in 2022 and 2.6% in 2021. “Gradual fiscal consolidation reflects improvement in non-oil revenue mobilization – revenue administration measures and continued digitalization of procedures in tax and customs administrations, and reduction of tax exemptions from 2024,” Fitch said.

Looming Risk 

The resilience of the economy and a moderate budget deficit should above all enable Cameroon to improve its debt ratio. Fitch forecasts that the outstanding public debt should fall to 39.6% of GDP in 2024 from 44.7% at the end of 2022.

However, several risks loom and could lead to the country’s rating being downgraded to the lower category. These include “declining external demand from key trading partners, renewed inflationary pressures, and supply chain disruption”. Fitch also points to security risks in the North, Northwest, and Southwest that significantly weigh on public finances, as well as uncertainties surrounding the succession of President Paul Biya. “The succession of President Paul Biya, aged 90, remains uncertain. Although we assume the successor will be within the ruling party, the lack of a succession plan poses the risk of party infighting and threatens policy continuity,” the agency said.

Source: Business in Cameroon

Cameroon is about to secure a valuable partner for its National Development Strategy 2020-2030. Yesterday, the Minister of Economy (Minepat) signed a Memorandum of Understanding (MoU) with Zhu Chunyu, the CEO of the Silk Road Investment Fund (SRIF), an investment fund controlled by the Chinese government. The validation of the agreement will see Cameroon receive a loan of $30 billion, or about CFA18,330 billion to finance development projects.

According to information relayed by Cameroon Tribune, the MoU is just the first step in the process leading to actual disbursements. Further general and specific agreements will need to be signed at the time of implementing the selected projects.

Strong Exposure to China

“The Prime Minister has provided clear indications regarding expectations and strategic directions under the NDS-30, and the Chinese side will position itself in projects that offer profitability to attract them,” the Minister of Economy explained. The availability of this significant funding, which amounts to three times the budget of Cameroon for 2023, is expected to accelerate the implementation of the NDS-30, officially estimated at CFA88 trillion. However, the disbursement will further strengthen Cameroon’s exposure to China. As of March 31, 2023, the debt owed to China accounted for 64.5% of Cameroon’s bilateral debt and 26.2% of its external debt, amounting to CFA2,106.7 billion.

Due to difficulties in meeting its obligations to its lender, Cameroon received debt restructuring from Eximbank in July 2019. According to the Cameroonian Ministry of Economy, the Chinese state-owned import-export bank agreed to reschedule 70% of the amount (excluding interest) that Cameroon owed it, covering the period from July 2019 to March 2022. This funding, relating to 22 projects in Cameroon’s portfolio, is estimated at CFA150 billion.

Source: Business in Cameroon

The Cameroonian Ministry of Agriculture has adopted a strategy to boost local rice production in the next few years. The country wants to bring the local volume to 750,000 tons by 2030 and phase out imports.

“Not only do we want to produce more rice, but we also want to make it available to local consumers first. We want the local rice to be of high quality at an affordable price. And this strategy will require us to put in the necessary means, including making our agriculture more modern and mechanized, restructuring the sector, and involving the private sector more in the whole chain,” Minister Gabriel Mbairobe said during a meeting held on May 16 in Yaoundé with stakeholders to validate the strategy. According to details provided following this work session, 60,000 ha will be developed for irrigated rice and 200,000 ha for rain fed rice with 6,000 tons of certified seed produced per year by 2030. Additionally, the government plans to provide rice producers across the country with power tillers, mini-harvesters, threshers, and hullers, among others.

Overall, the project is expected to swallow up to CFA385 billion, including CFA298 billion for irrigated areas and CFA87 billion for other goods and services. The funds will be raised from development partners, the private sector, and the public investment budget.

As a reminder, rice and frozen fish are the main food products imported into Cameroon. According to the National Institute of Statistics (INS), Cameroon imported 652,565 tons of rice for a total of CFA162.5 billion during the first 10 months of 2022, 4.6% of the country’s total imports over the period. With the new strategy, Cameroon’s rice self-sufficiency is projected to reach 97%.

Source: Business in Cameroon

Energy provider Eneo Cameroon has warned users that it would implement a planned power cut across most areas of Yaoundé 06:30-18:30 May 21. The interruption is to allow technicians to undertake improvements to the electricity network. Details on the affected areas, duration of power cuts were not made public.

Traffic disruptions are possible in affected areas due to malfunctioning traffic signals. Businesses without backup generators may suspend operations for the duration of the power disruptions.

Mobile voice and data services could be negatively impacted. Power disruptions could also affect ATMs and fueling stations.

Blackouts could adversely affect security protocols, including alarm systems and electronic fences; opportunistic criminal activity could increase during the electricity disruptions.

According to the Ministry of the Economy’s report, Cameroonian economic operators spent CFA23.6 billion on imported secondhand clothing during the first 10 months of 2022. This represents a decline of 16.4% compared to the corresponding period in the previous year.

The amount spent between January and October 2022 allowed the acquisition of 48,191 tons of clothes, shoes, bags, and other second-hand items, we learned. This volume is also down 12.2% compared to that imported over the same period in 2021.

The Minister does not explain the reasons for this decline, but the war in Ukraine and the disruption of supply channels worldwide could be blamed. The drop in used clothes’ imports helped improve Cameroon’s trade deficit by CFA462 billion during the period under review. There were also declines in the purchase of clinker (-38.8%), soaps and detergents (-25.0%), wines and spirits (-17.1%), and transport equipment (-6.8%), among others.

Source: Business in Cameroon