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

The Minister of Transport, Jean Ernest Ngallé Bibéhé, signed a decision last May 11 suspending the activities of transport company Touristique Express SA in the country. The one-month suspension, which may be renewed, applies nationwide and also prohibits the rental or transfer of the company’s rolling stock.

This decision was taken to penalize the company following reports of “serious breaches of the road regulations in force in Cameroon”. Minister Ngallé Bibéhé said one of Touristique Express SA’s buses was involved in an accident on May 9 on the road between Garoua-Boulaï and Ngaoundéré. The official toll is 14 dead and many injured. Physical damage, material losses, and loss of life were also reported.

The responsibility of both the bus driver and the company has been established. In a statement issued right after the sanction was pronounced, Touristique Express SA accepted the Minister’s decision. “The general management of Touristique Express SA regrets to announce to the public, in general, and to its customers, in particular, the cessation of its transport service on its entire network, as of midnight today, following the decision (…) of the Minister of Transport dated May 11, 2023. The service will resume as soon as the suspension is lifted,” said the company’s general manager, Mohamadou Abdoulaye.

This is a hard blow for the transport operator, its employees, and its customers because Touristique Express is the major mass road carrier to the three northern regions of Cameroon and the East, including a courier branch. The company has also become the leader in VIP transport between Yaoundé and Douala. In 2019, its staff consisted of more than 1120 people.

Source: Business in Cameroon

The Cameroonian tax directorate (DGI) announced it has collected a total of CFA818.5 billion over the first three months of 2023, up from the initial target of CFA761.5 billion. This makes a collection rate of 107.5%. Compared to the same period last year, this performance is also up CFA104.1 billion (+14.6%).

In detail, CFA694.6 billion was collected from the central government, CFA90.6 billion from decentralized local authorities, and CFA33.3 billion were oil tax revenue. If this good impetus is maintained throughout the year, the DGI is likely to exceed its annual target of CFA2,800 billion.

“The good performance (over the period under review) was supported by the digitalization of tax procedures and the contribution of new resources of the 2023 finance law, including the increase in the rates of stamp duties”, says the DGI. Indeed, since January 1, 2022, the price of tax stamps required for the legalization of certain administrative documents has increased from CFA1,000 to CFA1,500 in Cameroon. The measure was taken to broaden the tax base to replenish state coffers. “We have to find enough resources to face the difficult economic context. On the national level, we have initiated development actions and we need revenues to continue them. Let’s not forget that Covid and the Ukrainian war have eroded our budgetary capacities,” Finance Minister Louis Paul Motaze said last December.

Cameroon also introduced a tax on electronic money transfers (0.2% of the amount to be transferred), which became effective in January 2022.

Source: Business in Cameroon

The Bank of Central African States (Beac) is organizing next May 8-9 in Douala an international workshop to encourage countries within the Cemac region to move toward sustainable finance.

The meeting receives the support of the International Finance Corporation (IFC) and the Sustainable Banking and Finance Network (SBFN), Beac said in a May 3 press release. The central bank announced that participants will include officials from the CEMAC Commission, the regional stock exchange (Bvmac) and the financial market regulator (Cosumaf), the regional development bank (BDEAC), financial sector professionals as well as CEMAC economy and finance ministers. Officials from the West African Monetary Union (WAEMU), the World Bank, and the SBFN are also expected to attend.

The organizers see the upcoming event as the occasion to raise participants’ awareness of the opportunities and benefits of sustainable finance as well as strategies to move the markets toward this type of financing. “This forum will allow the creation of a firm commitment of stakeholders operating in member countries, but also the establishment of a solid connection between the Cemac and international partners for the emergence of sustainable finance in the region,” Beac said.

Sustainable finance seeks to promote real economy and long-term projects. It favors financial operations that take into account extra-financial criteria commonly known as ESG criteria (environmental, social, and governance). These criteria include carbon emissions, biodiversity protection, waste management, and societal impacts.

Source: Business in Cameroon

Cameroon’s President Paul Biya recently signed a decree empowering the Minister of Economy to get a loan of $15 million (CFA9.2 billion) from the International Islamic Trade Finance Corporation (ITFC). The loan has been in the pipeline with this member of the Islamic Development Bank (IsDB) since 2021 to finance raw material acquisitions for the state-owned steel producer Alucam.

This measure is yet another rescue plan to get the only steel producer within the Cemac region out of bankruptcy. The dark period for Alucam started in 2014 when the Canadian firm Rio Tinto, which had control over 46.7% of the company’s assets, announced its withdrawal. The situation directly affected Alucam’s subsidiaries Socatral (sheet metal) and Alubassa (kitchen utensils).

In 2015, Rio Tinto’s assets were transferred to the State of Cameroon, which has been since looking for a partner without success. This means that 8 years after a call for investors was launched, no strategic partner seems to be interested in the aluminum company.

Falling exports

In 2017, Alucam experienced a slight improvement in activities, with a net profit of CFA2.2 billion. But this good momentum turned short in January 2018 when a sudden energy disruption weakened all of the company’s tanks, slowing activities. As a result, Alucam’s turnover fell from CFA123.4 billion in 2017 to CFA99.2 billion in 2018. The net result came out with a deficit of CFA10.8 billion that year and the company even became one of the most insolvent customers of the power utility Eneo.

In July 2020, for example, during a consultation with stakeholders in the metal industry in Yaoundé, the Minister of Trade, Luc Magloire Mbarga Atangana, announced a decision to temporarily open the sheet metal market to fill the deficit, due to the decline in production of Socatral, Alucam’s sheet metal subsidiary.  “Because of the Alucam/Socatral incident, there is currently a gap between the offer and the demand. We will temporarily open the market” to fill that gap, the official explained.

In an attempt to get things back on track, the government finalized on December 4, 2020, the proposed absorption of Socatral by Alucam. The merger-absorption was ratified in 2021 and led to the transfer of all Socatral’s assets (CFA33.6 billion) and liabilities (CFA15.9 billion) to Alucam. The latter’s capital was also increased by over CFA2 billion. However, this move was not enough to bring Alucam out of the turbulence zone. The National Institute of Statistics (INS) reported that aluminum exports in Cameroon fell by 34.7% in H1 2021, despite the aforementioned merger-absorption.

Alucam faces risks of dissolution

The State of Cameroon has been negotiating since 2022 with a pool of three European banks (the International Tropical Conservation Fund (ITCF), the Franco-German financial group BHF, and investment bank BPI)  to rebuild the equity of Alucam, which has fallen from CFA5.9 billion in 2019 to -CFA8.3 billion in 2020, down 240.8%. Since that date, the company’s equity has been below half its CFA21 billion share capital.

“The financial performance of Alucam in FY2020 has led the company to bankruptcy, despite the merger with Socatral. To dodge risks of dissolution, a reconstitution of equity is necessary”, the Technical Commission for the Rehabilitation of Public and Para-Public Sector Enterprises (CTR) said in its 2020 report. Indeed, given the situation, and under Article 665 of the Ohada Uniform Act on the law of commercial companies and economic interest groups, the State of Cameroon had until 2022 to recapitalize Alucam and bring its equity to at least half of its share capital (about CFA10.5 billion). Per Article 667 of the same act, beyond that deadline, “any interested party may take legal action to request the dissolution of the company.”

Source: Business in Cameroon

Although Cameroon has multiple times demonstrated its creditworthiness on the Beac public securities market, the country still finds it difficult to raise funds on the market.

The Cameroonian Treasury launched yesterday an operation to raise CFA45 billion on the Beac market: CFA20 billion through the issuance of 26-week fungible treasury bills (BTAs) and CFA25 billion through the issuance of 6-week fungible treasury bonds (OTAs). The interest rate was 6.25%.

In the end, the country was only able to gather CFA23 billion, an achievement rate of just over 50%. In detail, out of an offer of CFA17 billion from investors on the BTA segment, the country finally retained only CFA16 billion, in line with its policy of caution on costs. The OTA segment only raised CFA7 billion, despite an offer of CFA19 billion from investors.

Creditworthiness

Let’s recall that Cameroon has recently repaid CFA39 billion in 3 days on this market. According to the weekly report published by the central bank, on April 17, 2023, the country repaid CFA35 billion to investors who had subscribed to a 3-year OTA issue in April 2020. Two days later, another CFA4 billion were repaid to investors who subscribed to a BTA issue 26 weeks earlier.

Yet despite this good repayment performance, Cameroon still struggles to get investors’ attention on the market. On April 18 for example, the country made a 26-week BTA issue, seeking CFA15 billion but ended up with only CFA3 billion (an achievement rate of 20%).

Tightened monetary policy

Cameroon finds itself in this position mainly because it offers lower interest rates than the other Cemac countries. Also, investors are now more interested in making profits, demanding higher interest rates, while the Cameroonian Treasury rather has a controlled-rate policy. “Cameroon is today the only SSA country which offers less than 3% for short maturity securities (BTA) and less than 7% for long maturities (OTA),” said Sylvester Moh, Director General of the Cameroon Treasury.

However, the country is making much more effort to get in line. In January 2023, for example, the average cost of BTAs issued by Cameroon reached 4.39%, compared to 2.94% for the same period in 2021. This corresponds to an increase of 145 basis points. Based on the recent market developments, the demand for higher remuneration by investors may stem from the tightening of monetary policy by the central bank. Since February 21, 2023, Beac has suspended its weekly liquidity injection operations and is instead stepping up withdrawals (twice a week) from the coffers of banks operating as Primary Dealers (SVT) on the market. In the same vein, on March 27, 2023, Beac’s Monetary Policy Committee decided to raise its key rates for the fourth time since December 2021 to curb inflation, which is projected at 6.4% in 2023. The goal is to reduce bank liquidity by making it more expensive for economic agents, including governments.

Low interest from non-bank actors

Another reason for the tightening of financing conditions on the Beac public securities market is the excessive concentration by commercial banks of government securities. Banks can directly access the primary market and buy these securities. But, according to their specifications, they are obliged to sell at least 30% of their securities portfolio on the secondary market, where non-bank players have access.

However, they sell the securities to each other and barely involve non-bank players. At the end of January 2023, banks accounted for 77.7% of outstanding government debt, compared to only 2.2% for individuals and 15.3% for institutional investors (pension funds, insurance companies, etc.).

Culled from Business in Cameroon

Chad’s nationalization of the 1000-km oil pipeline between Chad and Cameroon has led to a full-blown legal and diplomatic crisis between the two neighboring African countries, coming on the heels of ExxonMobil’s decision to divest from its hydrocarbon operations in December of last year.

In the latest escalation of the dispute over the sale of ExxonMobil’s assets in these countries to London listed Savannah Energy, Chad has recalled its ambassador to Cameroon.  In an official statement, Chad said its move was prompted by “entrenched disagreements” with its neighbor to the southwest of the continent.

According to Reuters, Exxon closed the sale of its operations in Chad and Cameroon to Africa-focused oil and gas producer Savannah in a $407 million deal in December. But the Chadian government has challenged the agreement saying the final terms of the deal were different from what had been presented to it.

Exxon’s assets included a 40 percent stake in Chad’s Doba oil project, which comprises seven producing oilfields with a combined output of 28,000 barrels per day (bpd).

It also included Exxon’s interest in the Chad-Cameroon pipeline from the landlocked nation to the Atlantic Gulf of Guinea coast through which its crude is exported.

Chad said in the statement on Thursday that it had reached out to Cameroon to raise concerns about “unfriendly actions” by some Cameroon officials that were contrary to the interests of Chad in the board of the pipeline company but did not get any response.

“Chad finds itself once again in the obligation to defend its interests and its respectability and denounces the repeated actions of Cameroon and its representatives which undermine, relations between the two countries,” the statement said.

“Consequently, Chad has decided recall its ambassador to Cameroon for consultation,” it added.

Source: Reuters