Business

29, February 2020

EUROMONEY says Cameroon still a high-risk option ⁰

Cameroon finally held its repeatedly postponed legislative and municipal elections in February for the first time in seven years. It came amid the continuing swell of separatist fervour from the Anglophone community situated in the northwest and southwest regions bordering Nigeria. The elections took place without notable social upheaval, but have done little to usher in a calmer political environment. A partial boycott was spurred by the main opposition Movement for the Rebirth of Cameroon (MRC) – the party led by Maurice Kamto, who was living in exile until Thursday, when he returned to Cameroon. This invariably handed an easy victory to the Cameroon People’s Democratic Movement (RDPC) supporting the octogenarian president Paul Biya, despite the other large opposition party, the Social Democratic Front (SDF), participating.

Euromoney’s panel of experts is only too aware of the high risks associated with investing in Cameroon, which remains outside the top-100 sovereign borrowers, ranking a lowly 132nd out of 174 countries ranked in Euromoney’s survey. On a score of 34.7 out of a maximum 100 risk points (where a higher score implies safety), Cameroon is far riskier than neighbouring Gabon or Nigeria, and more in line with Gambia and Madagascar, while similar to Algeria and Ukraine in the crowd-sourcing survey:

One of Euromoney’s Cameroon contributors is Patrick-Nelson Essiane, an economist at the Bank of Central African States, and financial manager at the Initiative for Research and Analysis in Sustainable Development in Central Africa (IRADDAC). He brings to attention several political risks, including the constitutional council ordering the annulment of legislative elections in some parts of the southwest and northwest regions, where re-runs are expected in 20 to 40 days. He also notes that in mid-February an incident involving the army and secessionists resulted in the death of women and children in Ngarbuh (northwest region), highlighting the insecurity.

“The international community called for a deeper and independent investigation of this tragedy,” he says. “While between February 4 and 22, according to local media, 14 civilians and one of the military were killed by Boko Haram in the far north region, yet there were no special mentions of these incidents internationally.”

On top of that, three out of 10 regions have faced some instability recently, though with most of the violence occurring away from the biggest cities relatively close to the border with Nigeria.

Economic risk

However, on macro-fiscal metrics, Cameroon’s risks do appear to be slowly improving. That is the impression given by the IMF’s latest extended credit facility (ECF) programme review, showing accelerating GDP growth, the non-oil primary fiscal deficit narrowing and ample imports coverage. Cameroon can access the pool of regional forex reserves and also received a $76.1 million disbursement from the IMF in January, on completion of the fifth programme review, bringing the total up to $590 million.

If recent forecasts from the IMF, central bank and government are assessed as one, economic growth was around 3.3% in 2019, and could rise to around 4.5% in 2020, on the back of an increase in gas production, and decent prospects for manufacturing and telecommunications. “As economic activity in Cameroon is relatively well balanced geographically, the episodes of violence in the southwest, northwest and far north regions would have probably a moderated impact on the macroeconomic performance of Cameroon,” says Essiane. “In addition, the key industrial centre of Cameroon (Douala) is not fundamentally affected by the crisis, even if we see an increase of the workforce in this city due to migrations from the northwest and southwest regions.”

Yet Essiane admits there are some prominent risks to figure. “The northwest and southwest crisis has affected agriculture in these two regions since 2017, with a huge decrease of the Cameroon Development Corporation (CDC) production of banana, palm oil and rubber. “Informal food agricultural production also decreased, with farmers leaving their plantations, leading to an increase in food inflation in urban centres of the country.”

Oil

Moreover, last year, Sonara, the national oil refinery, suffered a fire, contributing to lower-than-projected tax revenue, constraining budget implementation. Treasury finances have become stretched by the government’s military expenses to address Boko Haram in the far north and the Anglophone crisis. Plus, Cameroon is acutely vulnerable to a global downturn caused by trade friction and/or the spread of the coronavirus disease (Covid-19), especially to any related falls in oil prices. The implications are non-trivial. For while Cameroon’s debt remains stable, there is “high risk of debt distress”, according to the IMF, with the debt servicing-to-exports ratio breaching the accepted threshold continuously until 2025, and significantly so until 2022. This is due, first, to the inclusion of Sonara’s maturing short-term liabilities and later because of a maturing Eurobond.

The IMF’s comprehensive debt sustainability analysis factors in various scenarios and indicates the debt load can be sustained and properly addressed. However, that assumes there are no shocks, including any undisclosed liabilities. There is nothing to suggest there might be, but the experience of Mozambique and Zambia should certainly temper the enthusiasm for investing in Cameroon.

Culled from Euromoney.com

26, February 2020

Tensions surround post-Brexit trade negotiations ⁰

As they rubber-stamped the bloc’s 46-page negotiating document, general affairs ministers from the 27-nation EU used words such as complicated, difficult, and tough with respect to the forthcoming talks aimed at trying to reach a free trade deal with the UK.

Michel Barnier was referring to a claim made on a number of occasions by London-appointed Northern Ireland Secretary Brandon Lewis that there would not be a border on the Irish sea.

However, this is a key component of the Brexit withdrawal agreement that the British Government has fully endorsed. It is crucial to preventing highly contentious border checks on land between the Republic of Ireland and Northern Ireland.

When trade talks start next week, major challenges are also likely to emerge relating to fishing rights, employment standards, climate change, and a whole range of other issues.

Outside the venue of the ministers’ meeting in Brussels, workers’ unions held a demonstration. They highlighted the fact that poverty and youth unemployment levels remain very high in the EU. It is time, they said, for the remaining 27 countries to take action.

Right now, everything remains the same. It is as though the UK is still in the EU. But when the Brexit transition period ends on December 31, there will be wide-ranging consequences if a trade deal has not been reached. That is the outcome many experts are predicting. It’s anticipated Boris Johnson is set to prioritize UK-US relations above ties between London and Brussels.

The UK delegation led by negotiator David Frost is due to arrive here next Monday to begin formal talks with the EU’s team, headed up by Michel Barnier. According to analysts, the two biggest obstacles standing in the way of a possible deal are the unrealistic time frame and the influence of eurosceptic Donald Trump.

Source: Presstv

22, February 2020

Ryanair CEO calls for profiling of Muslims, sparks outrage ⁰

Ryanair’s chief executive Michael O’Leary has sparked outrage after he called for the profiling of Muslim men at airports, claiming that terrorists are “generally of a Muslim persuasion”.

Muslim men should be profiled and face further checks at airports because “that is where the threat is coming from,” the controversial CEO of Europe’s largest low-cost carrier said in an interview with the Times newspaper published on Saturday.

He further noted under such profiling guidelines, passengers that would be flagged as a potential threat for terrorism would “generally be males of a Muslim persuasion”.

“Who are the bombers? They are going to be single males traveling on their own… If you are traveling with a family of kids, on you go; the chances you are going to blow them all up is zero,” he said.

“You can’t say stuff, because it’s racism, but it will generally be males of a Muslim persuasion. Thirty years ago it was the Irish. If that is where the threat is coming from, deal with the threat,” he added.

A spokesman for the Muslim Council of Britain has accused O’Leary of “Islamophobia” and “encouraging racism”.

“In Germany this week a white person killed eight people. Should we profile white people to see if they’re being fascists? He’s being very blinkered and is actually encouraging racism,” Labour MP Khalid Mahmood told the Times.

The legislator was referring to mass shootings in Germany’s southwestern city of Hanau late on Wednesday during which eight people were killed and five others wounded.

Germany has been targeted in recent years by several extremist attacks, one of which killed 12 people in the heart of Berlin in December 2016.

But far-right attacks have become a particular concern for German authorities. The increase in hate crimes in recent months has prompted the country to expand a crackdown on right-wing political violence in order to repress the disturbance.

It seems that there has been a rise in far-right attacks across Europe in recent years.

On Thursday, a Muslim prayer leader was stabbed in the neck in front of hundreds of horrified onlookers at a mosque near Regent’s Park in the British capital London.

Raafat Maglad, who is in his 70s, returned to the London Central Mosque on Friday, saying he was sorry for the alleged attacker.

“I forgive him. I feel very sorry for him. What is done is done, he is not going to return,” he said, adding that as a Muslim he does not hold any hatred in his heart.

Maglad, who had his arm in a sling as he was escorted in to the mosque by security, said it was “very important” for him to attend Friday prayers.

Addressing worshipers over the loudspeaker system after prayers had ended, London’s mayor Sadiq Khan urged people to remain vigilant and reassured them that police would maintain a presence at the mosque, particularly as the holy month of Ramadan approaches.

A 29-year-old man who is believed to have been attending prayers was arrested on Thursday on suspicion of attempted murder inside the mosque.

However, concerns about the wider threat to mosques were voiced following the stabbing.

London Central Mosque is one of the country’s largest and can hold 5,000 worshipers with people from across London going there for prayers.

Although the incident has not been declared a terrorist incident, the Met’s SO15 counter terror unit is looking into it.

Less than a year ago, the mosque was affected by another stabbing incident.

Britain’s Muslim community has lost trust in the government. Fifty-two percent of all hate crimes last year were aimed at Muslims. But mosques are struggling to get government funding allocated to protecting places of worship. They receive a fraction of what other faiths are awarded.

Source: Presstv

16, February 2020

Aviation body allows resumption of US flights south of Iran ⁰

US authorities have allowed airlines in the country to resume flying through the airspace south of Iran now that tensions between the two countries have subsided.

The US Federal Aviation Administration said on Saturday that flights can resume over much of the Persian Gulf and the Sea of Oman, adding that it had come to the conclusion that hostilities in the region had de-escalated.

The aviation watchdog enacted bans on entering parts of the airspace over Iraq, Iran and the Persian Gulf in early January when tensions flared up between Tehran and Washington over a series of incidents that even raised the prospects of war in the region.

Pilots and carriers were instructed to avoid the region because there was a risk that civilian aircraft could be confused with military planes operating in the area.

Concerns about the safety of flights deepened on January 8 when Iran accidentally shot down a Ukrainian airliner flying from Tehran to Kiev.

EU aviation safety group withdraws alert for Iran overflights

All 176 people on board were killed in the incident which came hours after Iran fired ballistic missiles at two American military bases in Iraq.

The missile attacks had come in response to US airstrikes in early January that killed a top Iranian military commander along several Iranian and Iraqi military personnel.

Iran has taken full responsibility for the downing of the Boeing 737-800 operated by Ukraine International Airlines, saying it will do it best to clarify the circumstances surrounding the incident.

Aviation bodies in Europe as well as major airlines around the world have already removed bans on flights through the Iranian and Iraqi airspace.

Source: Presstv

13, February 2020

Nigeria wants launch of West Africa’s Eco currency delayed ⁰

This week in business on The Morning Call, Amelia Martha Nakitimbo looks at Nigeria’s call for a delay in the launch of the West African single currency.

The Nigerian Presidency in a tweet sent out on Monday “the convergence criteria between states” which have “not been met by the majority of countries.”

Meeting the convergence criteria has been a sort of glass ceiling hindering the realisation of this single currency over the last twenty years.

Also this week, Ghanaian President, Nana Akufo-Addo assured his counterparts that the Secretariat of the African Continental Free Trade Area will be operational by the 31st of March, 2020.

In a closed door session during the during the 33rd AU Summit in Addis Ababa, Ethiopia, President Akufo-Addo indicated that the premises have been already been furnished based on the specific requirements agreed with the AU Commission including the installation of critical Data and IT Infrastructure facilities and Security Systems.

The summit voted South Africa’s Wamkele Mene to be the first head of the AfCFTA Secretariat.

Source: Africa News

5, February 2020

Tower Resources Begins Cameroon Survey Ahead of Drilling ⁰

London-listed Tower Resources has started the site survey at its Thali license offshore Cameroon, ahead of the planned drilling operation at the NJOM-3 well.

Tower Resources said Tuesday that the Geoquip Marine geotechnical drillship vessel MV Investigator was at the proposed site for the NJOM-3 well, and was conducting the site survey.

The MV Investigator is expected to complete its boreholes in a few days, Tower said, adding that analysis of the data and preparation of final reports “will take a little longer, but should allow the Company to move to more concrete scheduling of the NJOM-3 well on the Thali block later in February.”

Tower was last month given a one-year extension to the initial period of the exploration phase of the Thali PSC.

The company then said that, once the MV Investigator survey is complete, it would discuss the survey results with the drilling company COSL before finalizing arrangements for the well itself.

Tower and COSL in August 2019 signed a letter of intent for the supply of the COSL Seeker rig to drill NJOM-3 instead of the Topaz Driller jack-up previously agreed with Vantage Drilling.

The NJOM3 well is planned to be drilled to a total depth of 1,100 meters intersecting at least three reservoir zones already identified by the NJOM1B and NJOM2 discovery wells drilled on the Njonji structure by the previous operator Total.

The well is designed to confirm the greater reservoir thicknesses observed on the reprocessed 3D seismic in the up-dip area of the structure, and also evaluate additional reservoirs that were not present in the areas where Total’s wells are located.

The NJOM3 well is designed to supplement Total’s well data with a suite of measurement and logging tools and drill stem test (DST) flows to surface. The company’s intention is then to suspend the well with a view to subsequent completion as one of four initial production wells on the structure.

Source: oedigital

31, January 2020

Cameroonian employers and tax authorities are at daggers drawn ⁰

The representatives of Cameroon’s top employers are calling for the sacking of Cameroon’s tax chief, a sign of deteriorating relationships across the business and government sectors as the economy underperforms.

The president of the Groupement Inter-Patronal du Cameroun (GICAM), Célestin Tawamba, in a letter dated 16 January and addressed to President Paul Biya, complained about the attitude of the current head of the Direction Générale des Impôts (DGI), Modeste Mopa Fatoing.

An observer of the country’s economic environment, summed up the letter, saying it was “an indictment and, above all, an explicit demand for [Fatoing’s] dismissal”.

In what was obviously a deliberate leak, the letter made the front page of the economic newspapers. One headline dated 22 January, stated: “Consummate breakdown of relations between the Directeur Général des Impôts and companies”, and carried substantial extracts from the letter. Naturally, this ignited activity on social media.

Gicam’s tax reform in question

According to a copy of the letter, seen by Jeune Afrique, the bosses’ boss openly criticised the DGI boss for, among other things, “his inability to engage in dialogue and to deal with contradiction, the refusal to issue administrative documents which has led to considerable delays in making investments, his inability to devise a short- and medium-term fiscal policy likely to boost growth while ensuring an appreciable level of revenue for the state, his lack of knowledge of the reality for companies”.

For Tawamba, it seems, the straw that broke the camel’s back was Fatoing’s “hostility to a GICAM tax reform proposal in which he [Fatoing] thought he perceived an attempt by the private sector to replace the state, despite instructions from his superiors”.

The cornerstone of GICAM’s 300-page tax reform proposal, submitted in 2018, was to reduce the minimum collection rate on turnover from 2.2% to 1.1%. This would provide companies with a tax break worth 51bn CFA francs ($8.7bn). Tawamba, who is also the founder of the Cadyst Invest Group, has continually advocated abandoning taxation based on activity in favour of a tax based on profit.

Cameroon and the IMF

DGI Fatoing dismissed the complaints. “The DGI is not opposed to anything,” he said.

A tax administration official said: “Arbitrations in budgetary and fiscal matters are made by the presidency” and pointed out that 71% of GICAM’s proposals were validated by a steering committee set up in 2018 by finance minister Louis Paul Motaze, most of which are gradually being implemented.

“The remaining 29% of the proposals, which include the issue of minimum collection, require in-depth studies of their impact, all this while Cameroon is under a programme with the IMF. Moreover, the minister of finance had made this known to employers on 3 November 2018, in Douala,” said our source.

Recipient of the letter, President Paul Biya, has remained silent.

Culled from The Africa Report

30, January 2020

Yaounde: SNH issues tender for seismic study provider ⁰

Cameroon’s state-owned Société Nationale des Hydrocarbures du Cameroun (SNH) has launched a tender for a feasibility study for a 3D seismic shoot, onshore in the Douala/Kribi-Campo Basin.

Interested parties must acquire the tender file by February 14 with a meeting to be held on February 17, followed by a site visit. Bids, in French or English, must be submitted to the SNH’s contracts unit by March 6, at 1 pm. The feasibility study is expected to take a maximum of four months.

Bids will be opened that day, with a first phase looking at administrative and technical bids. For those companies that get through this step, the bids will then be scrutinised on a financial basis. Bidders may attend the comparison, which will be carried out by the Special Committee for the Award of Contracts relating to Petroleum Operations.

Bidders must pay 763 euros ($840) to secure the tender file and 4,574 euros ($5,038) as a bid bond.

SNH expects to pay for the study from its 2020 budget.

Work will consist of collecting data and information from official agencies; mapping the various challenges that will need to be overcome; identify stakeholders; make recommendations on design and operational planning, including security and logistics; estimate the cost of the survey; prepare terms of reference for a quality assurance expert and for the selection of a seismic contractor, and finally submit the full report.

SNH is offering nine blocks for direct negotiations, of which six are in the Douala/Kribi-Campo Basin. CGG is offering data packages for areas in the country and is assisting with the licensing. The seismic company has 7,637 square km of 3D seismic in the basin, with another 12,571 km of 2D seismic.

Source: Energyvoice.com

23, January 2020

Yaounde to receive the sixth US$76.1 million disbursement from the IMF ⁰

The Executive Board of the International Monetary Fund (IMF) today completed the fifth review of the arrangement under the Extended Credit Facility (ECF) for Cameroon. The completion of the review enables the disbursement of SDR55.2 million (about US$76.1 million), bringing total disbursements under the arrangement to SDR427.8 million (about US$590 million).

The Executive Board also approved the authorities’ request for a waiver of nonobservance of the continuous performance criteria on the non-accumulation of new external payments arrears, based on the corrective actions taken by the authorities.

Cameroon’s three-year arrangement was approved on June 26, 2017 for SDR 483 million (about US$666.1 million, or 175 percent of Cameroon’s quota— The arrangement aims at supporting the country’s efforts to restore external and fiscal sustainability and to lay the foundations for a more sustainable, inclusive and private sector-led growth.

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:

“Cameroon’s performance under the ECF-supported program has been mixed. All end-June 2019 performance criteria have been met but four out of the five indicative targets for end-June were missed. Structural reforms are advancing but with delays.

“Cameroon is supporting the CEMAC’s regional external and financial stability through fiscal consolidation and enforcement of foreign exchange regulations. It will be important to also fully align the new Petroleum Code with the BEAC’s foreign exchange regulation.

“Staying the course on fiscal consolidation is essential for building fiscal and external buffers. The authorities are encouraged to broaden the non-oil revenue base, reduce discretionary tax exemptions, combat tax fraud and evasion, and enhance tax and customs administration. Completion of the Treasury Single Account reform and reduced recourse to direct interventions and exceptional spending procedures will help improve cash management and budget execution and strengthen fiscal transparency and budget credibility.

“Urgently addressing financial and fiscal risks associated with the National Oil Refinery (SONARA) is critical. SONARA’s corporate restructuring should be based on a thorough cost-benefit analysis of all available options. The planned audits of four large state-owned enterprises (SOEs) and the clearance of government cross-debts with state-owned enterprises and of government arrears will help mitigate contingent risks.

“Cameroon is at high risk of debt distress. To safeguard debt sustainability, it is important to strictly adhere to the disbursement plan for contracted-but-undisbursed loans and to limit nonconcessional borrowing to macrocritical projects for which concessional financing is not available.

“Enhancing the business climate and governance is key to promoting private sector-led and inclusive growth. Bold actions must be taken to strengthen contract enforcement, improve compliance with the Extractive Industry Transparency Initiative (EITI) recommendations and AML/CFT standards, reduce nonperforming loans, and resolve ailing banks. Further steps to diversify the export base and enhance investment efficiency remain essential to unlock Cameroon’s growth potential.

“Cameroon’s program continues to be supported by policies and reforms by the regional institutions in the areas of foreign exchange regulation and monetary policy and a recovery in regional net foreign assets that is critical to the program’s success.”

IMF Communications Department

20, January 2020

As Brexit nears, UK’s Johnson pushes for deeper trade ties with Africa ⁰

The United Kingdom is positioning itself to be the ‘investment partner of choice’ for Africa, holding a summit with leaders of 21 African countries on Monday, days before it leaves the European Union (EU).

Britain’s prime minister, Boris Johnson, who secured the country’s January 31st departure from the EU trading bloc is determined to enter into new agreements with other countries.

British companies run several projects on the African continent including smart street lighting in Nigeria and environmentally friendly breweries in Kenya. They have reportedly signed deals worth more than $7.8 billion ahead of Monday’s summit.

The UK government says it has signed 11 trade agreements with African countries, and is expected to unveil a new strategy for development in Africa, focusing on infrastructure and trade.

The Department for International Development says it is now focusing on digital technologies, green energy and women entrepreneurs.

Source: Africa News