Cameroon opened, Monday (July 17), subscriptions to its 13-week treasury bills (T-bill) on the central bank BEAC’s money market. The subscriptions, which will close today (July 19), aim to fetch the country a CFAF10 billion envelope to pay off a CFAF8 billion debt contracted 26 weeks earlier. 

This new fund-raising follows Cameroon’s first major success in that market since January 2023. Indeed, after several unsuccessful operations, on July 10, at the end of a 26-week T-bill issue, the country attracted CFAF54.5 billion in subscriptions, higher than its CFAF50 billion target. 

To keep the weighted average interest rate at 5%,  the country retained just CFAF49 billion. It is worth noting nevertheless that to attract investors, Cameroon agreed to a 5% interest rate on its short-term securities, which is the same rate it was offering for 4-year bonds ten days earlier. The rate is higher than the 3% it used to offer investors for the same type of security in the same market.

To succeed in its fundraising operations, Cameroon is adapting to the generalized rise in interest rates in that market following the tightened monetary policy adopted by the BEAC. It will surely do the same for the ongoing issue.

Source: Business in Cameroon

Cameroon’s recovery has continued, despite security concerns and external risks, including tight global financial conditions and increased oil price volatility.

Cameroon is a fragile and conflict affected state, with drivers of fragility ranging from insurgency and conflicts along its borders and in neighboring countries, to poor governance, social exclusion, and climate change.

Nevertheless, economic prospects remain positive in the medium term, provided reforms continue, and the external environment is supportive.

The three-year arrangements under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) approved in July 2021 amount to SDR (Special Drawing Rights) 483 million (about US$689.5 million, or 175 percent of quota). Completion of the fourth review will allow a disbursement of SDR 55.2 million (about US$73.3 million).

Culled from the IMF

Cameroon spent CFAF45.7 billion on fish imports in 2021, according to the 2021 sectoral note on the animal industry and fisheries sub-segment published by the stats institute INS. That year, fourteen countries supplied 60,554 tons of frozen fish to Cameroon but, there were three main suppliers, the Netherlands, Uruguay, and Mauritania notably. They accounted for over 70% of Cameroon’s fish imports during the said period.

The Netherlands was the leading supplier, accounting for almost 24,500 tons of fish valued at just over CFAF22.8 billion. It was followed by Uruguay, the Latin American country that signed a framework agreement with Cameroon, in 2022, to intensify cooperation -that framework was submitted to be reviewed by President Paul Biya in June 2023.  The country supplied Cameroon with over 12,000 tons of fish, worth more than CFAF4 billion.

During the period under review, Mauritania supplied the Cameroonian market with 7,237 tons of fish, valued at a little over CFAF7.5 billion.  Two other African countries closed the top5 of Cameroon’s fish suppliers in 2021. These are Angola (6,802 tons for CFAF3.1 billion spent) and Senegal (2,393 tons for just over CFAF1.5 billion).

Although China has become Cameroon’s leading trade partner in recent years, it was the 10th largest supplier of frozen fish in 2021. According to INS data, it exported only 573 tons of fish to Cameroon behind India (1,555 tons), Spain (1,478 tons), Morocco (1,163 tons), Argentina (998 tons), and even Russia (881 tons).

Officials have noted that frozen fish, along with rice, significantly impact Cameroon’s trade balance despite its approximately 400 kilometers of coastline renowned for its fish stock. Unfortunately, this coastline is mainly exploited by foreign fishermen who supply the commercial circuits of their home countries.

Source: Business in Cameroon

The Africa Finance Corporation (AFC) has two new shareholders, including Cameroon’s public pension fund, the CNPS. The Pan-African Corporation announced the news on June 20, 2023.

“We warmly welcome CNPS and SBM Capital Market Securities as investors in AFC. This step is evidence of AFC’s role as a preferred partner for infrastructure investment on the continent, to deepen economic integration, enable import substitution, and develop Africa’s manufacturing and industrial capacity,” commented Samaila Zubairu, CEO of AFC.

While the investment’s amount and the stake acquired by the CNPS are yet to be known, the move should, according to the pension fund, help it achieve its goal of bringing its annual return on financial investments to around XAF40 billion by 2026. “For the next five years, we intend to double the [financial investment income from 2021],” said CNPS boss, Alain Olivier Mekulu Mvondo Akam, in an interview with Cameroon Tribune, a state-owned newspaper. He referred to the increase in return on investments from only XAF7 billion in 2017 to XAF20.5 billion in 2021.

Last year, gains from financial investments stood at XAF24.2 billion, thus up by 18% YoY,   according to official data from CNPS. They are expected to increase further in 2023 following CNPS’s recent participation in the capital of Chanas Assurances Vie, another public pension fund investment. CNPS has joined the insurance company’s shareholding alongside the National Hydrocarbons Company (SNH), the state’s entity responsible for oil and gas exploration and production. These two state-owned enterprises have also recently offered to buy the assets of British investment fund Actis in ENEO, Cameroon’s power utility.

Established in 2007, the Africa Finance Corporation (AFC) is a pan-African financial institution that addresses the continent’s infrastructure deficit.

Source: Business in Cameroon

The Cameroonian public treasury earned 51 billion FCFA from taxes during the acquisition of Guinness Cameroon by the French group Castel. This comprises 36 billion FCFA from capital gains tax and 15 billion FCFA from registration fees, according to Cameroon’s Minister of Trade, Luc Magloire Mbarga Atangana.

The official revealed this to the parliament on June 23, 2023, while answering concerns voiced by one of the deputies, Daniel Ngalle Etongo, who feared Castel’s domination of the local market (80%) and the deal’s impact on consumers (price hike). The deputy also feared that the transaction violated antitrust laws. In response, Minister Atangana said the acquisition was in line with the Central African Economic Union’s common market rules.

“Notwithstanding the strengthened dominant position of the acquiring company, the acquisition of Guinness Cameroon SA by the Brasseries et Glacières Internationales SA (BGI, parent company of the Castel Group) is in line with the common market rules within the Central African Economic Union. This is subject to the involved companies’ adherence to the commitments they have made,” Atangana said. 

Investment program

“This acquisition operation was not within the national jurisdiction of the State of Cameroon but fell exclusively under the Community Council of Competition and the CEMAC Commission. It is now up to Cameroon, in perfect understanding with the CEMAC Commission, to ensure strict compliance with the commitments made, particularly in terms of planned investments in production tools, expansion and improvement of the distribution network, preservation and creation of jobs, and consumer rights protection. The Ministry of Commerce has ensured this, especially as beer is one of the products whose prices are subject to prior approval,” he added.

Announced on July 14, 2022, by both brewers involved, the purchase of Guinness Cameroon by Castel was approved on March 28, 2023 by the CEMAC’s Competition Community Council.

The CFA300 billion includes a 200 billion FCFA investment program to boost Guinness products in Cameroon over 5 years. This involves building three new production lines in Yaoundé, Garoua, and Bafoussam. These lines will have an annual production capacity of 2.1 million hectolitres. The details were revealed to the press on December 13, 2022, by Stéphane Descazeaud, MD of Société anonyme des boissons du Cameroun, a local company controlled by Castel. The Cameroonian government will see to it that these commitments are implemented.

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

The partnership with the Dutch port of Antwerp is the most beneficial that the port of Douala has. This was stated by the Douala Autonomous Port (PAD), the State company that manages the eponymous port.

The PAD made the statement in a technical note issued on the sidelines of a mission of Antwerp port officials to Douala, Cameroon’s economic capital. The mission began on June 19, 2023.

“To date, the collaboration has yielded 14 capacity-strengthening grants for PAD employees and a project supporting the establishment of a port-related professions training center,” the note reads.

The visit aims to renew the partnership between the two ports with an enhanced focus on accelerating the modernization of the port of Douala. Throughout the mission, “the PAD will outline its requirements for the development of specific economic zones at the Douala port, towards implementing the principles of an industrial-port complex”.

Besides the Douala port, the Port of Antwerp works in partnership with the deep-water port of Kribi, southern Cameroon. “The Autonomous Port of Kribi (PAK) and the Port of Antwerp have been diligently formulating a new, more ambitious agreement that covers a broader range of activities and better aligns with the Port of Kribi’s challenges,” said Patrice Melom, Director General of PAK, on July 1, 2021.

According to Melom, the PAK’s challenges include “increasing its reception capabilities and operational performances, making its industrial zone more appealing to foster value and traffic generating logistical and transformational activities; improving accessibility and connectivity with the hinterland; and ensuring harmonious integration into its environment through sustainable and inclusive development of its zone of influence.”

Source: Business in Cameroon

The first annual meeting of the board of directors of Société Nationale des Hydrocarbures (SHN) was held on 13 June, where the initial purchase deal of Savannah Energy’s assets in the Chad-Cameroon pipeline was put on the shelf.

Adolphe Moudiki, managing director of Société Nationale des Hydrocarbures (SNH), has suffered another setback in his bid to buy shares in Cameroon Oil Transportation Company (Cotco), which manages the Cameroon side of the Chad-Cameroon pipeline.

Following the board of directors’ meeting held in the Cameroonian capital Yaoundé on 13 June, the acquisition by SNH of 10% of Savannah Energy’s assets in Cotco was “frozen” following a decision by the chairperson of the board Ferdinand Ngoh Ngoh, who is also secretary general of the presidency.

Arm wrestling

Contested by Chad, the initial agreement – which was concluded on 19 April and amounted to $44.8m – has been at the heart of a tug-of-war between the Chadians and Cameroon.

The quarrel came to a head the following day, on 20 April, with the recall of the Chadian ambassador based in Yaoundé. Since then, Cameroon has stepped up its efforts to mollify tensions, with President Paul Biya sending Ngoh Ngoh to N’Djamena for talks with Chadian President Mahamat Idriss Déby Itno.

Biya also asked his trade minister, Luc Magloire Mbarga Atangana, to pass on Cameroon’s agreement for Chad to buy out the assets of Malaysia’s Petronas in Cotco to the Central African Economic and Monetary Community (CEMAC).

This “corporate open sesame” – essential under regional agreements – should enable N’Djamena to hold 53.7% of the shares in the company that manages the Cameroonian section of the pipeline – an objective that Déby Itno and his government were particularly keen to achieve.

A freeze, before the rest

However, N’Djamena did not accept Savannah Energy’s presence and remained determined to oust it from Cotco. A new round of negotiations was then held in Paris on 24 May at the Cotco board meeting.

The Chadian side – supported by Menguele Judith Clairence, the Cameroonian finance ministry representative on Cotco’s board – came up against Moudiki, who was in favour of maintaining the agreement with Savannah. The meeting ended without a definitive winner.

A few days later, however, the SNH chief attempted to replace Clairence. On 8 June, he was turned down by the presidency, which thereby signalled its agreement with Chad. Five days later, in a new round of talks, Ngoh Ngoh, obtained a freeze on the deal between Savannah and the Cameroonian oil and gas company.

The Chadian government has taken note of this decision, quietly welcoming it. But the decision is not yet final, as further negotiations are undoubtedly still to come on Cotco’s shareholding structure.

It appears that this oil dispute being contested by N’Djamena and Yaoundé is far from over.

Source: Africa Report