Business

15, January 2024

US-owned cargo ship targeted with anti-ship ballistic missile off Yemen coast ⁰

Houthi rebels have hit a US-owned container ship with a ballistic missile off the coast of Yemen, the US says.

The vessel, Gibraltar Eagle, reported “no injuries or significant damage”, according to the United States military command for the Middle East (Centcom).

The Marshall Islands-flagged vessel is continuing on its journey in the Gulf of Aden.

Iranian-backed Houthis have been attacking ships since November, in protest at Israel’s war against Hamas.

Shipping company Eagle Bulk Shipping said its vessel was carrying steel products and was about 160km (100 miles) offshore in the Gulf of Aden when it was hit.

It said the container “suffered limited damage to a cargo hold but is stable and is heading out of the area”.

Hours earlier Centcom said that another missile, fired in the direction of a US destroyer in the Red Sea, had been intercepted and shot down by a US fighter jet.

The Houthis have been attacking commercial ships in the Red Sea that the group says are linked to Israel, or bound for Israeli ports. It says the attacks are a show of support for the Palestinians and Hamas in Gaza, as Israel continues its military campaign there.

The British maritime security firm, Ambrey, says the Gibraltar Eagle was “assessed to not be Israel-affiliated”.

But a senior Houthi official said on Monday that American vessels were also considered targets. “It is enough for ships to be American for us to target them”, Nasr al-Din Amer said.

The Houthi attacks on cargo ships in the Red Sea have led many of the world’s biggest shipping companies to change course, thus causing major disruption to global commerce.

In reaction to Monday’s strike, the US Department of Transportation issued a maritime alert, recommending “that US flag and US-owned commercial vessels” remain clear of specified areas in the Red Sea and Gulf of Aden.

On Monday, the world’s second largest oil company, QatarEnergy, announced its decision to pause shipping via the route while it sought security advice.

Last week, US and the UK forces struck Houthi targets in Yemen in retaliation for attacks on shipping. The joint forces, in coordination with allies, carried out dozens of air and sea strikes on Houthi missile launch sites and air defence systems inside Yemen.

Source: BBC

12, January 2024

Southern Cameroons: CDC accumulates CFA35 billion in salary arrears despite govt aid ⁰

Despite resuming operations in 2020 after a suspension in September 2018 due to the Anglophone crisis, CDC continues to struggle with paying its employees’ salaries. This challenge persists despite various financial support from the state, the sole shareholder of the company.

“The operational challenges faced by CDC do not allow it to honor its financial commitments. There is a notable overall increase in its debt… For social debt, the increase is linked to the evolution of salary arrears as of December 31, 2022, by 17.78%, despite state support, as well as the accumulation of unpaid social security contributions increasing by 15%. As of June 30, 2023, salary arrears stand at CFA35.7 billion, and the social debt to the National Social Security Fund (CNPS) is CFA26.7 billion,” reveals the report on the situation of public and parastatal enterprises in 2022 recently published by the Technical Commission for the Rehabilitation of Public and Parastatal Sector Enterprises (CTR). This equates to approximately 17 months of accumulated salary arrears, given a monthly payroll estimated at CFA2 billion according to official figures.

CDC recorded cumulative losses of CFA38.7 billion between 2019 and 2021, according to CTR data. This made it the local company bearing the heaviest burden of ongoing separatist demands in the Northwest and Southwest regions. In 2018, for instance, 12 production sites out of the company’s 29 were completely halted due to insecurity created by separatists in the plantations. The separatists even transformed some of these sites into bases for their armed militias, resulting in the killing and severe injury of several workers.

This challenging situation officially led to the loss of 6,124 jobs out of the more than 22,000. Job losses likely increased during 2022 due to the precarious situation of the CDC. “There is an increasingly significant staff turnover, despite government subsidies allocated for partial salary payments,” reveals the CTR report.

Source: Business in Cameroon

9, January 2024

Biya regime faces inflation challenges as rates persist above CEMAC threshold ⁰

Cameroon’s inflation rate over the past year averaged 7.5% in November 2023, according to information released by the national statistics agency INS.

Although this indicator is down by 0.2% compared to October 2023’s 7.7%, it still represents more than double the 3% threshold tolerated in the Cemac. According to the document, inflation rates remain above 7% in 9 out of 10 regions in the country, with the highest recorded in Bertoua (East) at 8.9%. Bamenda, the regional capital of the Northwest, has the lowest rate at 6.1%, but it still surpasses the community norm.

INS explains that this inflation mainly stems from “an 11.6% increase in food product prices, a 13.8% rise in transportation costs, and a 7.7% increase in the prices of furniture, household items, and everyday maintenance products.” However, the stats agency notes that food inflation has decreased by 0.4% during the period under review, following the decline in the prices of bread and cereals (-1.1%), fish and seafood (-1.1%), oils and fats (-1.1%), as well as vegetables (-0.4%). On the other hand, meat and fruit prices increased during the same period, by 0.6% and 1.9%, respectively. For non-food products, the decrease only concerns alcoholic beverages, tobacco, and narcotics (-0.1%).

In the 2024 budget, the Cameroonian government anticipates that inflation will decrease to 4% next year, compared to 6.7% at the end of December 2023, although this rate remains above the community threshold. In response to the inflationary situation, the Bank of Central African States (BEAC) tightens liquidity in banks through repeated increases in its main policy rates, suspension of liquidity injection operations into the CEMAC banking system, and intensification of liquidity absorption operations from banks. However, BEAC acknowledges that only 20% of inflation is of monetary origin.

Source: Business in Cameroon

1, January 2024

Biya regime says Cameroon to become net iron ore exporter in 2024 ⁰

Cameroon will become a net exporter of iron ore in 2024, Interim Minister of Mines, Industries and Technological Development Fuh Calistus Gentry has said.

“We have negotiated a huge project, which will involve 100 million tons of iron ore,” Gentry told reporters Sunday night in the capital, Yaounde. “We are from 2024 a mining nation… we are going to see regional explosion of the industry.”

He said Cameroon is particularly keen to working with China to tap its mineral resources.

Gentry spoke shortly after President Paul Biya said in a televised address to the nation that Cameroon is richly endowed with mineral resources that could be “excellent niche for financial resources.”

Source: Xinhuanet

15, December 2023

Cocoa price surge boosts incomes of Cameroon’s farmers ⁰

A sharp rise in the price paid for cocoa beans has boosted the incomes of farmers in Cameroon as top global producers Ivory Coast and Ghana suffer a supply shortage this season.

Several farmers told Reuters that they have been selling their beans at prices ranging from 2,000 to 2,200 CFA francs ($3.67) per kilogram, up from 750 to 1,290 CFA francs/kg last season.

New York cocoa futures rose to a 46-year high on Monday as crop problems in West Africa tightened global supplies. Ghana cocoa port arrivals are down around 50% year-on-year so far this season, while Ivory Coast’s are down more than 35%.

Cameroon is not expecting a similar drop in production. It targets around 300,000 metric tons of cocoa annually, making it the world’s fourth biggest producer in recent years.

“I have made much more money from cocoa sales, which has enabled me to clear an overdue loan,” said Susan Itoe, a cocoa farmer near Konye in the South West region.

Cameroon’s guaranteed cocoa farmgate price for the 2023/24 season was set at 1,500 CFA francs/kg. But the actual prices paid to farmers are flexible depending on the market and have risen even higher.

In Ivory Coast and Ghana, by contrast, prices are fixed for the entire season.

“Cameroon is benefiting from the malaise of Ghana and Ivory Coast following flooding and cocoa swollen shoot virus,” said Epie Promise Ngolepie, a cocoa consultant at agri-tech company Help Farmers Cameroon, who told Reuters that prices were expected to fall by 2025 as production picks up again in West Africa.

The high cost of inputs and high cost of transporting the produce due to bad roads were, however, eroding the gains, he added.

“Price has always been our problem… So this increase is well appreciated especially as we have improved the quality of our cocoa,” said Esapa Patrick Enyong, president of the South West Farmers’ Cooperative Union, which groups thousands of farmers in the country’s largest cocoa production basin.

Cameroon was recently added to Annex ‘C’ of the International Cocoa Agreement, which places it on the list of countries producing fine flavoured cocoa.

The liberalisation of the country’s cocoa trade since the 1990s has also contributed to the higher prices, said Michael Ndoping, General Manager of the National Cocoa and Coffee Board (NCCB).

“All these factors put together make the cocoa trade these days very encouraging and we hope this will last for some time,” Ndoping said.

Source: Reuters

13, December 2023

Developing Countries Paid Record $443.5 Billion on Public Debt in 2022 ⁰

Amid the biggest surge in global interest rates in four decades, developing countries spent a record $443.5 billion to service their external public and publicly guaranteed debt in 2022, the World Bank’s latest International Debt Report shows. The increase in costs shifted scarce resources away from critical needs such as health, education, and the environment.

Debt-service payments—which include principal and interest—increased by 5 percent over the previous year for all developing countries. The 75 countries eligible to borrow from the World Bank’s International Development Association (IDA)—which supports the poorest countries—paid a record $88.9 billion in debt-servicing costs in 2022. Over the past decade, interest payments by these countries have quadrupled, to an all-time high of $23.6 billion in 2022. Overall debt-servicing costs for the 24 poorest countries are expected to balloon in 2023 and 2024—by as much as 39 percent, the report finds.

“Record debt levels and high interest rates have set many countries on a path to crisis,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President. ‘Every quarter that interest rates stay high results in more developing countries becoming distressed—and facing the difficult choice of servicing their public debts or investing in public health, education, and infrastructure. The situation warrants quick and coordinated action by debtor governments, private and official creditors, and multilateral financial institutions—more transparency, better debt sustainability tools, and swifter restructuring arrangements. The alternative is another lost decade.’’

Surging interest rates have intensified debt vulnerabilities in all developing countries. In the past three years alone, there have been 18 sovereign defaults in 10 developing countries—greater than the number recorded in all of the previous two decades. Today, about 60 percent of low-income countries are at high risk of debt distress or already in it.

Interest payments consume an increasingly large share of low-income countries’ export, the report finds. More than a third of their external debt, moreover, involves variable interest rates that could rise suddenly. Many of these countries face an additional burden: the accumulated principal, interest, and fees they incurred for the privilege of debt-service suspension under the G-20’s Debt Service Suspension Initiative (DSSI). The stronger US dollar is adding to their difficulties, making it even more expensive for countries to make payments. Under the circumstances, a further rise in interest rates or a sharp drop in export earnings could push them over the edge.

As debt-servicing costs have climbed, new financing options for developing countries have dwindled. In 2022, new external loan commitments to public and publicly guaranteed entities in these countries dropped by 23% to $371 billion—the lowest level in a decade. Private creditors largely abstained from developing countries, receiving $185 billion more in principal repayments than they disbursed in loans.

That marked the first time since 2015 that private creditors have received more funds than they put into developing countries. New bonds issued by all developing countries in international markets dropped by more than half from 2021 to 2022, and issuances by low-income countries fell by more than three-quarters. New bond issuance by IDA-eligible countries fell by more than three-quarters to US$3.1 billion.

With financing from private creditors drying up, the World Bank and other multilateral development banks stepped in to help close the gap. Multilateral creditors provided $115 billion in new low-cost financing for developing countries in 2022, nearly half of which came from the World Bank. Through IDA, the World Bank provided $16.9 billion more in new financing for these countries than it received in principal repayments—nearly three times the comparable number a decade ago. In addition, the World Bank disbursed $6.1 billion in grants to these countries, three times the amount in 2012.

The latest International Debt Report marks the publication’s 50th anniversary. It highlights key insights from the World Bank’s International Debt Statistics database—the most comprehensive and transparent source of external debt data of developing countries. The new edition also features an expanded analytical framework, one that goes beyond the latest data to examine near-term outlook for debt as well. It also includes an overview of the Bank’s debt-related activities and an analysis of emerging trends in debt management and transparency.

“Knowing what a country owes and to whom is essential for better debt management and sustainability,” said Haishan Fu, Chief Statistician of the World Bank and Director of the World Bank’s Development Data Group. “The first step in avoiding a crisis is having a clear picture of the challenge. And when problems arise, clear data can guide debt restructuring efforts to get a country back on track towards economic stability and growth. Debt transparency is the key to sustainable public borrowing and accountable, rules-based lending practices which are so vital to ending poverty on a livable planet.”

The report notes that IDA-eligible countries have spent the last decade adding to their debt at a pace that exceeds their economic growth—a red flag for their prospects in the coming years. In 2022, the combined external debt stock of IDA-eligible countries hit a record US$1.1 trillion—more than double the 2012 level. From 2012 through 2022, IDA-eligible countries increased their external debt by 134%, outstripping the 53% increase they achieved in their gross national income (GNI).

8, December 2023

CPDM Crime Syndicate: Biya wants Camtel to remain a public entity ⁰

Cameroon’s President Paul Biya opposes the privatization of the country’s incumbent telecoms operator, Camtel. The decision was the subject of a letter addressed on December 4, 2023, by the Secretary-General of the Presidency (SGPR) to the Minister of Finance (Minfi).

Ferdinand Ngoh Ngoh instructs Minister Louis Paul Motazé, also the president of the Interministerial Committee for the Rehabilitation of Public and Parastatal Enterprises, to suspend any rehabilitation plan aiming at privatizing Camtel or any segment of its operations. The SGPR’s letter follows Minister Motazé’s appearance before the National Assembly’s Finance and Budget Committee on November 15, 2023, where he defended the 2022 budget settlement. Responding to questions about Camtel’s underwhelming performance compared to other telecom operators, the Finance Minister revealed the government’s intention to restructure the telecom giant into three entities, forming a holding.

“Referring to Camtel’s low level of competitiveness, given the dynamism observed in the telecommunications sector, the Finance Minister acknowledged that the company’s performance was not up to expectations. For this reason, an inter-ministerial committee has been set up to examine the restructuring of the company. The government is currently considering how to improve the company’s performance. It is envisaged that the company will be transformed into a holding company made up of three entities”, reads the report on the work of the National Assembly’s Finance and Budget Committee, on the defense of the 2022 Settlement Act by the Minister of Finance.

The report also mentions the plan to alleviate the significant burden on Camtel, including its 4,000 employees and a heavy debt of CFA600 billion. However, the minister did not explicitly mention privatization during his presentation to the deputies.

Furthermore, sources close to Camtel’s rehabilitation discussions disclosed that a ministerial-level meeting took place to address the alarming situation of Camtel. Representatives from the Ministry of Posts and Telecommunications (Minpostel), the Ministry of the Economy (Minepat), and Camtel’s Director-General were present alongside the Minister of Finance (Minfi) and a representative from the Presidency. Contrary to claims of privatization, major proposals focus on reinforcing the autonomy of business units (fixed, mobile, transport) under Camtel, reducing staff, and addressing the substantial debt.

Since 2020, Camtel has held three licenses, covering the operation of electronic communications transport networks, fixed communications networks, and mobile networks. The Finance Minister’s revelation of the transformation project into a holding with three subsidiaries corresponds to the specifics of these licenses.

In response to the President’s opposition to privatization, discussions arise about the suggested holding structure. A holding, or “mother company,” can have its assets predominantly or wholly owned by the state or its entities, maintaining the company in the public domain. However, assets in both the holding and its subsidiaries could also be majority or wholly owned by private operators, aligning with the concept of privatization.

This proposed option, which the President opposes according to the SGPR’s letter, appears more reassuring to many telecom operators in Cameroon. Critics argue that Camtel, operating as a wholesaler managing infrastructure leased by other actors, competes directly with retailers, such as mobile operators and internet service providers.

A 2017 report entitled “Cameroon Economic Memorandum” by the World Bank supports this perspective, suggesting the government ends the monopoly of companies like Camtel and Bolloré in sectors producing essential inputs for other activities. During a workshop in March 2017 in the Cameroonian capital on determining reforms for improving the competitiveness of the ICT sector in Cameroon, the World Bank recommended transforming Camtel into a holding with two entities: one controlled by the state, managing infrastructure and fixed telephony networks; and another dedicated to mobile services and the marketing of home fiber optics, open to private investors.

Source: Business in Cameroon

5, December 2023

Yaoundé introduces online customs declarations for air passengers ⁰

The Cameroonian government is launching a mobile app for non-intrusive air passenger control. In a December 1 statement, Edwin Fongod Nuvaga, the Director-General of Customs, said the “Douane Cmr” in French or “Customs Cmr” in English app is set to go live on January 1, 2024, and will be available for download on Google Play and the App Store.

The app will replace the traditional paper forms handed out to travelers by airlines. The Customs Department encourages all passengers heading to Cameroon to promptly download this application. Through this user-friendly platform, travelers will now validate and systematically submit their declarations using an electronic questionnaire before landing at Cameroonian airports.

Passengers will be required to provide details such as their travel number, passenger identity, passport number, details of goods or luggage carried, currencies, and any other relevant information. Customs officials explain that storing these declarations on passengers’ phones will generate a reference number in the form of a QR code. This code will be remotely scanned by customs agents upon arrival for necessary checks.

The Customs Department emphasizes that this new free service aligns with the goal of streamlining exchanges and simplifying customs procedures. It aims to expedite customs operations and combat fraudulent activities.

Source: Business in Cameroon

1, December 2023

African Development Bank loans EUR 73 million for construction of a bridge between Cameroon and Equatorial Guinea ⁰

The Board of Directors of the African Development Bank Group on 29 November 2023 granted financial support of EUR 73.44 million to Cameroon for the construction of a bridge over the River Ntem, which forms a natural boundary with Equatorial Guinea. The bridge building is part of the Regional Trade and Transport Facilitation Project for the economic corridor between Cameroon, Equatorial Guinea and Gabon.

The financial support consists of two separate loans: the first, of EUR 48.96 million, from the African Development Bank and the second, of EUR 24.48 million, from the African Development Fund, the Bank Group’s concessional loans window.

The new bridge, which will link Campo, in Cameroon to Rio Campo, in Equatorial Guinea, will not only improve the service level for the transport logistics chain along the corridor between Yaoundé, Bata and Libreville, but will also contribute to the emergence of an industrial-port activities hub in the area between the deep-water port in Kribi (Cameroon) and its counterpart in Bata (Equatorial Guinea).

In practical terms, the project will contribute to increasing the volume of trade between the two countries; reducing travel time, shipping and transport costs along the Yaoundé-Bata-Libreville multinational corridor; creating favourable conditions for promoting an industrial-port activities hub in the same area, and improving the living conditions of various populations, including women, young people and vulnerable groups in its area of influence.

Implementation of the project is due to start in December 2023, with completion scheduled for November 2028.

Source: AFDB

28, November 2023

Biya Regime New Bond: Investors hold steady despite slow start in trading ⁰

During its second trading day on November 24, 2023, 24 hours after being listed on the Central African Securities Exchange (Bvmac), the Cameroon government’s multi-tranche bond for 2023-2031 recorded no transactions.

According to the official market bulletin published by the Cemac Unified Financial Market, various investors expressed interest in acquiring 700 of these bonds during the trading session.

However, the bondholders refrained from selling them. This cautious reaction from Cameroon’s bondholders, according to market observers, may stem from the purchase price (CFA10,000), which currently does not yield any profit for the holder compared to its initial value. The refusal to sell the bond, despite the relatively modest demand (only 700 bonds out of 17.6 million), reflects a certain confidence in the bond, which has just begun trading on the Bvmac and could potentially increase in value over subsequent trading days.

On the first trading day (November 23, 2023), the bondholders used the same approach. In that inaugural session, as revealed by the Bvmac’s official bulletin, 892 bonds were traded out of a demand for 1,592. A reliable source indicates that this trading volume is more related to the commitment of brokerage firms to contribute to the excitement of the very first listing rather than a genuine desire to sell the securities involved.

During the trading sessions on November 23 and 24, 2023, all the purchase offers for bonds that were made and subsequently refused by bondholders concerned longer maturity values (7 years). This is further proof that despite the long maturity period, holders of this category of securities remain confident in the stock’s upward trend in the market.

First time in the Cemac Region

As a reminder, the 2023-2031 bond issuance is the 7th such operation successfully carried out by Cameroon on the sub-regional financial market and the first with multiple tranches experienced in the Cemac zone. Cameroon embarked on this experiment due to increasingly challenging market conditions, with high interest rates resulting from the tightening of monetary policy by the central bank.

This type of operation allows investors the flexibility to subscribe to longer maturities at higher interest rates or shorter maturities at lower interest rates. This flexibility offered to subscribers undoubtedly contributed to the success achieved by Cameroon in this operation, during which the government was able to raise more than the targeted CFA150 billion.

Investors holding these Cameroonian bonds, who do not wish to hold them until maturity, can now sell them on the financial market for cash. Transactions may result in a capital gain or discount, depending on the interest investors show (demand) in the market during trading sessions.

Source: Business in Cameroon