Business

10, June 2023

African Development Bank: Cameroonian Jacques Edjangue is VP for People and Talent Management ⁰

Cameroonian Jacques Edjangue has been confirmed Thursday as the Vice President for People and Talent Management of the African Development Bank (AfDB) Group. Since June 20, 2022, Edjangue had held the same position but as an interim, after stepping down as Acting Director of the Human Resources Management Department and the Language Services Department.

Jacques Edjangué holds an MBA from Colorado State University, USA, a degree in English Literature from the University of East Anglia, UK, and a degree in Leadership and Negotiation from Harvard University, USA. He holds two Master’s degrees from the University of Buea in Cameroon, one in interpretation and the other in translation. He also holds a Master’s degree in Afro-American literature from the University of Yaoundé I.

Before joining the AfDB 21 years ago, Jacques Edjangué headed the language and conference services of the Secretariat of the International Panel of Eminent Personalities, set up by the Assembly of Heads of State and Government of the African Union. He was also the personal interpreter for Ketumile Masire, former President of Botswana and facilitator of the peace process in the Democratic Republic of Congo. Appointed deputy director and deputy permanent representative at the Organisation internationale de la francophonie (OIF) in 2000, he represented the OIF at the United Nations Economic Commission for Africa and the African Union in Addis Ababa, Ethiopia. He has 28 years of experience in multinational institutions.

Source: Business in Cameroon

8, June 2023

Pipeline Palaver: Chad’s Ambassador returns to Yaoundé ⁰

Chad’s ambassador to Cameroon, Djidda Moussa Outhman (pictured), returns to Yaoundé today after he left his position on April 20 due to “a dispute over the Cameroon-Chad pipeline”. This good news announced by Ibrahim Adam Mahamat, spokesman for the Chadian Foreign Ministry, marks the official end of the dispute.

As a reminder Tensions started between the two partners after the Chadian government, in an April 20 statement, expressed its dissatisfaction with the recent developments in the management of the pipeline. The country found it unfair that the Cameroonian national hydrocarbons company (SNH) and the British Savannah Energy signed an agreement under which SNH will acquire 10% of Savannah Midstream’s (subsidiary of Savannah Energy) shares in Cameroon Oil Transportation Company (Cotco). N’Djamena said this agreement reflects a new rapprochement between Cameroon and its “enemy,” especially since they pledged in their agreement to “support each other”.

The agreement particularly triggered Chad’s anger, insofar as, through the deal between SNH and Savannah Energy, Cameroon implicitly recognizes the British junior’s ownership of the Chadian oil assets purchased from Exxon Mobil. N’Djamena has therefore nationalized the assets in question to halt the deal. N’Djamena is also criticizing the Cameroonian authorities for failing to issue a no-objection to the Cemac Competition Council to facilitate the acquisition of Petronas’ assets in Chad by the Chadian oil and gas corporation (SHT). This transaction will enable Chad to take control of Cotco, with 53.7% of the capital.

The SNH-Savannah Energy deal

On April 26, 2023, Cameroonian President Paul Biya sent the Secretary General of the Presidency of the Republic (SGPR), Ferdinand Ngoh Ngoh, to N’Djamena to hand over a sealed envelope to General Mahamat Deby Itno. “We have talked with Chadian authorities. All the issues have been addressed and the misunderstandings cleared up,” the envoy said, suggesting that the situation was already under control. On May 11, 2023, the Cemac Competition Council gave the green light for the deal between SHT and Petronas, thus confirming that Cameroon had finally issued a no-objection. Four days later, the then President of the Cemac Commission, Daniel Ona Ondo, signed the decision authorizing the deal.

However, the Cemac authorities’ approval is subject to a series of commitments to be made by the Chadian party to ensure that its dominant position does not harm the interests of the other parties involved. Indeed, Cemac authorities demand that part of the Chadian shares in Cotco be transferred to Cameroon. According to reliable sources, the details of this transaction were discussed during a recent mission to Yaoundé led by Gali Ngothé Gatta, Minister Secretary General of the Presidency of the Republic of Chad. The mission focused on the deal between SNH and Savannah Energy and ways to avoid triggering a new crisis with Chad, whose intention is to expel Savannah Energy completely from Cotco’s shareholding.

Source: Business in Cameroon

7, June 2023

Cameroon: Banana exports hit lowest point in May, since January 2023 ⁰

Cameroonian banana exporters shipped 12,558 tons of fruits in May 2023, according to data provided by the sector group Assobacam. This is the worst level since the beginning of the year, after the 18,101 tons in January, 16,185 tons in February, 19,227 tons in March, and 13,928 tons in April.

The situation is mainly due to Plantations du Haut Penja (PHP), whose banana exports fell by 16% from 11,336 tons in April 2023 to 9,761 tons in May. But despite this sharp drop, the local subsidiary of Compagnie Fruitière de Marseille remains the market leader, with 77.7% of the overall exported volumes.

On the other hand, the state company Cameroon Development Corporation (CDC) saw a slight improvement with shipment reaching 1,968 tons in May compared to 1,803 tons the previous month (+8%). Minor player Boh Plantations’ volumes also grew by 5% over the period, official data showed.

Source: Business in Cameroon

6, June 2023

World Bank says global economy on precarious footing amid high interest rates ⁰

Global growth has slowed sharply and the risk of financial stress in emerging market and developing economies (EMDEs) is intensifying amid elevated global interest rates, according to the World Bank’s latest Global Economic Prospects report.

Global growth is projected to decelerate from 3.1% in 2022 to 2.1% in 2023. In EMDEs other than China, growth is set to slow to 2.9% this year from 4.1% last year. These forecasts reflect broad-based downgrades: growth projections for 70 percent of EMDEs and nearly all advanced economies have been downgraded.

“The surest way to reduce poverty and spread prosperity is through employment—and slower growth makes job creation a lot harder,” said World Bank Group President Ajay Banga. “It’s important to keep in mind that growth forecasts are not destiny. We have an opportunity to turn the tide but it will take us all working together.”

Most EMDEs have seen only limited harm from the recent banking stress in advanced economies so far, but they are now sailing in dangerous waters. With increasingly restrictive global credit conditions, one out of every four EMDEs has effectively lost access to international bond markets. The squeeze is especially acute for EMDEs with underlying vulnerabilities such as low creditworthiness. Growth projections for these economies for 2023 are less than half those from a year ago, making them highly vulnerable to additional shocks.

“The world economy is in a precarious position,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President. “Outside of East and South Asia, it is a long way from the dynamism needed to eliminate poverty, counter climate change, and replenish human capital. In 2023, trade will grow at less than a third of its pace in the years before the pandemic. In emerging markets and developing economies, debt pressures are growing due to higher interest rates. Fiscal weaknesses have already tipped many low-income countries into debt distress. Meanwhile, the financing needs to achieve the sustainable development goals are far greater than even the most optimistic projections of private investment.”

The latest forecasts indicate that the overlapping shocks of the pandemic, the Russian invasion of Ukraine, and the sharp slowdown amid tight global financial conditions have dealt an enduring setback to development in EMDEs, one that will persist for the foreseeable future. By the end of 2024, economic activity in these economies is expected be about 5% below levels projected on the eve of the pandemic. In low-income countries—especially the poorest—the damage is stark: in more than one-third of these countries, per capita incomes in 2024 will still be below 2019 levels. This feeble pace of income growth will entrench extreme poverty in many low-income countries.

“Many developing economies are struggling to cope with weak growth, persistently high inflation, and record debt levels. Yet new hazards—such as the possibility of more widespread spillovers from renewed financial stress in advanced economies—could make matters even worse for them,” said Ayhan Kose, Deputy Chief Economist of the World Bank Group. “Policy makers in these economies should act promptly to prevent financial contagion and reduce near-term domestic vulnerabilities.”

In advanced economies, growth is set to decelerate from 2.6% in 2022 to 0.7% this year and remain weak in 2024, the report says. After growing 1.1% in 2023, the U.S. economy is set to decelerate to 0.8% in 2024, mainly because of the lingering impact of the sharp rise in interest rates over the past year and a half. In the euro area, growth is forecast to slow to 0.4% in 2023 from 3.5% in 2022, due to the lagged effect of monetary policy tightening and energy-price increases.

The report also offers an analysis of how increases in U.S. interest rates are affecting EMDEs. Most of the rise in two-year Treasury yields over the past year and a half has been driven by investor expectations of hawkish U.S. monetary policy to control inflation. According to the report, this particular type of interest rate increases is associated with adverse financial effects in EMDEs, including a higher probability of financial crisis. Moreover, these effects are more pronounced in countries with greater economic vulnerabilities. In particular, frontier markets—those with less developed financial markets and more limited access to international capital—tend to see outsized increases in borrowing costs; for instance, sovereign risk spreads in frontier markets tend to rise by more than three times as much as those in other EMDEs.

In addition, the report provides a comprehensive assessment of the fiscal policy challenges confronting low-income economies. These countries are in dire straits. Rising interest rates have compounded the deterioration in their fiscal positions over the past decade. Public debt now averages about 70% of GDP. Interest payments are eating up a rising share of limited government revenues. 14 low-income countries are already in, or at high risk of, debt distress. Spending pressures have risen in these economies. Adverse shocks such as extreme climate events and conflict are more likely to tip households into distress in low-income countries than anywhere else because of limited social safety nets. On average, these countries spend just 3% of GDP on their most vulnerable citizens—well below the 26% average for developing economies.

5, June 2023

Voodoo Economics: Paul Biya adjusts the state budget to cover debt ⁰

Cameroon’s President signed a decree last June 2 to modify the 2023 Finance Act. Per this amendment, the state budget has been raised from CFA6,345.1 billion to CFA6,726.9 billion, up CFA381.8 billion (the general budget is up by CFA367.7 billion, while the budget for special appropriation accounts is up by CFA14.1 billion).

Paul Biya said part of the extra amount will be used to cover debt and the other part will be for welfare projects, especially since the International Monetary Fund (IMF) has been pressuring the country to reduce fuel subsidies as “they benefit better-off social groups more”. The reduction of fuel subsidies has led to a sharp increase in pump prices and a rise in inflation and the government has therefore resorted to other measures to curb the shock. These include the improvement of the minimum wage and the remuneration of state employees.

Although it seems to be a good initiative, the new budget adjustment is not a pro-poorest-oriented approach. Indeed, the largest increase planned in the budget is for debt repayment (30% of the revised general budget). Taken together, additional personnel costs (+CFA55 billion) and additional transfers to households (+CFA125.3 billion) only represent a direct extra benefit of CFA180.3 billion. The revised budget also envisages a reduction in current and capital expenditure of almost CFA100 billion. And although these charges are often perceived as a source of ‘mismanagement’ by some citizens, they serve as a means of resource allocation by the government, and their elimination can have consequences on the economic activity of those who depend on them”.

Moreover, in addition to making additional repayments, the government plans to issue CFA 200 billion in new loans with interest rates on the rise, representing additional revenue opportunities for investors.

Source: Business in Cameroon

3, June 2023

Chad-Cameroon Pipeline: Yaoundé and Ndjamena at daggers-drawn position ⁰

Nicolas de Blanpré, the former head of the Chadian subsidiary of British Savannah Energy was appointed MD of the Cameroon Oil Transportation Company (COTCo). The information was made public this week by Savannah Energy, which claims to have acquired the assets of American multinational Exxon Mobil in Cotco.

The twist here is that the newly appointed MD was expelled from N’Djamena, Chad, in December 2022 following a conflict between the British oil company and the Chadian government. The dispute was over the takeover of Exxon Mobil’s assets held by Esso Pipeline Investments Limited (EPIL) in the Doba oilfield in the southern region of Chad and the Chad-Cameroon pipeline.

In a statement released Friday, the Chadian Oil Ministry made it clear that “as majority shareholders of Cotco SA, the Republic of Chad and SHT (the Chadian oil and gas corporation) will take necessary measures, in consultation with Cameroonian authorities, to swiftly appoint a new CEO for Cotco”. Following the green light given last month by the Cemac Council of Competition for the acquisition of Petronas Carigali Chad Exploration & Production Inc. by SHT, Chad (both SHT and the government) now holds a 53.77% stake in Cotco. And based on this shareholding, the county now has the power to name the leaders of the company.

On the day Savannah appointed the new CEO for Cotco, a General Assembly of Cotco took place in Paris, resulting in several significant decisions.

Firm opposition

During the General Meeting, which “was held despite the many time-wasting tactics by Esso Pipeline Investments Limited (EPIL) allegedly owned by Savannah Energy (…), to have it postponed”, the Chadian Ministry of Hydrocarbons points out, several decisions were taken. The participants have decided that all the directors of EPIL (Savannah Energy, ed) will be dismissed with immediate effect and that almost all the draft resolutions previously proposed by EPIL, including the resolution proposing the allocation of profits and the distribution of dividends for 2022, will be removed. This means that no dividends will be distributed for 2022.

“As EPIL (Savannah Energy, ed) is no longer a member of the Doba field consortium in Chad, it no longer has the right, under Cotco SA’s articles of association, to hold shares in Cotco SA”, the press release explains. But what the statement did not mention is that although Chadian authorities dispute Savannah Energy’s takeover of EPIL’s assets in their country, the case is still pending before the International Court of Arbitration of the International Chamber of Commerce in Paris. A clear verdict has yet to be given.

Despite this, Chad has asked banks holding Cotco SA accounts in the Cemac zone, as well as the Cemac central bank (Beac) to block fund transfers requested by the dismissed directors, particularly abroad. “The fund transfer restrictions do not concern the payment of the salaries of Cotco SA’s Cameroonian and Chadian employees, as well as the taxes and social contributions owed to the administrations of Cameroon and Chad,” the statement read.

On its side, Savannah Energy is also holding tight. Nicolas de Blanpre issued a press release on June 1, 2023, in which he presented himself as the company’s CEO, despite Chad’s protests. “(…) Mr. Soumahoro Khalif Allah Ahmed is currently acting as interim CEO for Mr. Nicolas de Blanpre, under a special delegation of authority dated May 24, 2023. Within the framework of this interim assignment, Mr. Soumahoro Khalif Allah Ahmed has full powers to represent the Managing Director and to commit the company,” he wrote.

Tense social climate

Nicolas de Blanpre made that statement because the position of the Acting CEO is also opposed. Indeed a group of lawyers challenged Mr. Soumahoro’s appointment in a June 1 statement. They argue that Mr. Soumahoro Khalif Allah Ahmed cannot serve as the CEO, even in an interim capacity, of Cotco because Mr. Nicolas de Aubin de Blanpre was appointed as the director and CEO of Cotco on May 24, 2023, by the Board of Directors. However, this appointment is subject to validation by the General Assembly and the ministry responsible for Employment, considering regulations regarding foreign workers. The lawyers also mention that a legal opposition has been authorized against all the actions and official communications of Mr. Soumahoro Khalif Allah Ahmed Stéphane and the requested nullification of these actions will be examined starting from June 2, 2023, by the court of the company’s registered office.

When contacted for further information, Attorney Michel Voukeng, a member of the group, revealed that the June 2 hearing has been postponed to June 7 to allow for the submission of evidence. He did not disclose the identities of the clients he represents but mentioned that they have opposing interests to Mr. Soumahoro.

According to reliable sources, the challenge to Mr. Soumahoro’s interim position comes after the dismissal of at least four directors of Cotco within a week. Attorney Michel Voukeng questions whether, even as an interim CEO, Mr. Soumahoro has the authority to do more than handle day-to-day affairs and whether he can terminate executives appointed by the Board of Directors.

Regarding the disputed statement from the CEO of Cotco, which supports Mr. Soumahoro as the interim CEO, the lawyer argues that Nicolas de Aubin de Blanpre himself does not have the authority to act as the CEO of Cotco. Firstly, he points out that the resolutions made during the Board of Directors meeting on May 24, 2023, in Paris, need to be authenticated by a notary to have legal effect in Cameroon. Additionally, this appointment still requires ratification from the General Assembly and validation from the Minister of Employment through the signing of the employment contract, per the law. “You cannot transfer something you don’t possess yourself,” says Attorney Voukeng. Furthermore, he notes that Mr. De Blanpre himself has been dismissed by the majority shareholder of Cotco, which is the Chadian oil and gas corporation.

Source: Business in Cameroon

1, June 2023

Cameroon Marine Services seeks $6.5bn expansion fund from IFC ⁰

The Cameroonian marine services company APM SA is seeking a loan of €10 million (about CFA6.5 billion) from the International Finance Corporation (IFC) to finance its expansion strategy. The request will be reviewed by the IFC’s board of directors on June 20, according to a recent information note from the institution.

If approved, the resources will specifically enable the beneficiary to “expand its existing warehousing facilities in the port area of Douala, construct additional warehousing facilities in the largest industrial zone of Douala, build a timber park in the port area of Kribi, and refinance existing long-term local currency debt facilities,” IFC said.

The financial package proposed by the institution includes a €5 million loan from its account, while the remaining €5 million will be granted through the International Development Association (IDA)’s private sector window mixed financing mechanism.

Let’s note that APM owns and operates a wide range of equipment (loaders, trailers, forklifts, trucks) used for handling goods at the quayside and also has rental warehousing properties for third parties. The company also provides transportation services for clients’ goods in the hinterland. APM is owned by local investors, including Gabriel Manimben (30%), Messac Kwete (25%), Roch Mbanya (14%), Steve Yoh (11%), Joseph Faufack (10%), and five other shareholders.

Source: Business in Cameroon

19, May 2023

Yaoundé: IMF Reaches Staff-Level Agreement with Cameroon on the Fourth Reviews ⁰

An International Monetary Fund (IMF) team, led by Ms. Cemile Sancak, Mission Chief for Cameroon, visited Yaoundé during May 4-17 to discuss progress on reforms and the authorities’ policy priorities in the context of n the fourth reviews of the three-year program supported by the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) arrangements. The arrangement was approved by the IMF Executive Board for a total amount of SDR 483 million (about US$689.5 million) on July 29, 2021.

At the conclusion of this visit, Ms. Sancak issued the following statement:

“The mission has reached staff-level agreement with the Cameroonian authorities on the economic and financial policies that could support the approval of the fourth reviews of the program under the ECF and EFF arrangements. Completion of the fourth reviews by the IMF Executive Board, scheduled in late June 2023, would enable the disbursement of SDR 55.2 million (about US$73.8 million).

“Following an incipient recovery that started following the COVID-19 shock, Cameroon is facing renewed risks from the external environment, including tight global financial conditions and increased oil price volatility. The economic recovery has continued, and growth is estimated at 3.7 percent in 2022. Headline inflation reached 7.3 percent year-on-year at end-2022, up from 3.5 percent at end-2021. While domestic food prices have been the main drivers, non-food and non-energy prices have also increased.

“The overall fiscal deficit declined to 1.1 percent of GDP in 2022 from 3 percent in 2021 while the non-oil primary deficit increased to 4 percent of GDP in 2022 from 3.9 percent in 2021. Non-oil revenue performance improved substantially in 2022, due to both tax and non-tax revenues. In terms of program performance, the non-oil primary deficit target under the program was met, though a substantial part of the subsidies for petroleum products for 2022, which was validated only in 2023, will be integrated into the revised 2023 budget. The temporary and minor breaches of the target on non-accumulation of external payment arrears point to the need to improve liquidity management and limit spending through exceptional procedures. Public debt at end-2022 reached 46.5 percent of GDP, declining slightly from 46.8 percent of GDP at end-2021.

“Medium-term prospects remain favorable provided reforms continue, and the external environment is supportive. Economic growth is expected to increase modestly to 4 percent while inflation is expected to moderate from 7.3 percent year-on-year at end-2022 to 5.9 percent at end-2023. The authorities are preparing a revised budget for 2023 and have expressed their continued commitment to maintaining macroeconomic stability and to further reducing the overall fiscal deficit to 1 percent of GDP and the non-oil primary fiscal deficit to 2.4 percent of GDP in 2023.

“Meeting the objectives of the national development strategy for 2020-30 (SND30) requires a substantial expansion of fiscal space for priority spending, especially infrastructure, while maintaining debt sustainability. To meet these objectives, the authorities recognize the need to further mobilize non-oil revenues, better target priority spending, and improve expenditure efficiency. They are implementing measures to mobilize domestic non-oil revenues and broaden the tax base following the review of tax policy. Implementing recommendations from the public investment management assessment (PIMA) follow-up of 2020 and from the public expenditure and financial accountability review (PEFA) currently underway will help to improve the efficiency of public spending.

“Meeting the SND30 objectives also requires a sharp acceleration in the pace of reforms to support a deep structural transformation of the economy. This includes a concerted effort to improve the business climate for the private sector and underpin inclusive and resilient growth. The mission welcomed steps to strengthen public financial management. A credible budget and disciplined budget execution would help avoid the accumulation of unpaid domestic obligations and support timely completion of major infrastructure projects, especially in the transport and energy sectors. The mission welcomed measures to strengthen the performance and financial management of public enterprises and the planned rehabilitation of SONARA. The mission also welcomed the launch of the financial inclusion strategy and recent steps to strengthen governance, especially the launch of a broad diagnostic of economic governance and plans to strengthen the Supreme Court’s Audit Bench.

“The IMF team met with the Prime Minister, Joseph Dion Ngute, the Minister and Secretary General of the Presidency, Ferdinand Ngoh Ngoh, the Minister of Finance, Louis Paul Motaze, the Minister of the Economy, Planning and Regional Development, Alamine Ousmane Mey, the National Director of the BEAC, Emmanuel Nkoa Ayissi, and other senior officials. The mission also met with representatives of development partners, the diplomatic community, the private sector, and civil society.

“The team wishes to thank the Cameroonian authorities for their excellent cooperation and for the frank and constructive dialogue.”

Culled from IMF

18, May 2023

BEAC increases weekly withdrawal operations to CFA100 billion ⁰

The Bank of Central African States increased its weekly withdrawal operations to CFA100 billion, according to a statement made public yesterday May 16.

The monetary institute has specified that only “credit institutions authorized as primary dealers on the monetary market” are eligible for this 7-day offer with a remuneration rate of 0.75%. Usually, the central bank’s withdrawal operations involve an amount of CFA70 billion, but Beac has increased the volume to comply with the tightening of its monetary policy, which began in December 2021.

After raising its key rates four times, the bank decided on February 21 to suspend its weekly liquidity injection operations. The objective is to fight inflation, which is expected to reach 6.4% this year, more than double the 3% threshold tolerated within the Cemac region.

Source: Business in Cameroon

15, May 2023

Yaoundé: African central banks meet to find solution to climate change ⁰

The Association of African Central Banks (AACB) kicked off today in Yaoundé a three-day workshop to discuss the impact of climate change on the continent. The theme is “Impact of climate change on food security and Inflation in Africa: the role of the Financial Sector in Financing Agriculture and the Green Economy”.

“The vulnerability of food production to climatic conditions creates a strong dependence of African countries on imports, which leads in turn to their high exposure to imported inflation,” the Association said, pointing out that in such a context there is an urgent need to boost agricultural financing while remaining respectful of environmental standards.

In this vein, the ongoing workshop will work to “identify the main climate shocks in Africa and the new challenges related to food security; take stock of food insecurity and inflation, while highlighting the main factors that cause them; contribute to a better understanding of the role of central banks in stabilizing prices and the role of the financial system in a context marked by climate change”.

With about 40 members to date, the AACB is a framework for dialogue on monetary and financial issues. Among other objectives, the association aims to “promote monetary, banking and financial cooperation in Africa; contribute to strengthening efforts to establish and maintain price stability and financial stability in Africa; consider the advent of a single currency and a single central bank for the whole continent”.

Source: Business in Cameroon