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Cameroon mobilizes 355 Billion FCFA for Internal Debt Settlement and funding of Projects

In a press release made public on July 31, 2024, Louis Paul Motaze set the national opinion on the direction that will be given to the 550 million USD, or approximately 335 billion captured on the international capital market.

According to the MINFI, the resources mobilized will make it possible to significantly continue the settlement of the domestic debt” estimated at the end of June 2024 at 847 billion CFA francs out of the 13,070 billion total debt. On the merits of this additional debt, the Minfi press release indicates that the settlement of the domestic debt will help stimulate the activities of SMEs; consolidate economic growth; improve the business climate and strengthen the confidence of the private sector in the State of Cameroon. If for the Cameroonian authorities, this operation is a success and materializes the credibility of Cameroon’s signature internationally.

For some financial analysts, two aspects demonstrate that Cameroon is not well perceived on the international capital market. First, the interest rate and then the maturity period expressed by this Eurobond which seems to work against Yaoundé. Let us specify in passing that this fundraising operation which closed from July 29 to 31, 2024 was led by Citigroup as placement agent, the American Bank and Cygnum Capital Middle East having acted as co-arrangers. According to sources close to the matter, the operation carried out by the Cameroonian Government is accompanied by an interest rate of 10.75% for a maturity of 7 years.

This is poorly perceived by third parties who think that the interest rate and maturity period are higher compared to recent Eurobond issues from some African countries whose maturity varies between 6 and 13 years for an interest rate ranging from 6.61% to 10.37%. Proof that Cameroon is not a safe destination, that investors, failing to sidestep the financial needs of Paul Biya’s country, prefer to reduce the maturity period while increasing the interest rate. A situation that contrasts completely with the assurances of Louis Paul Motaze, who in a press release sees in this operation Cameroon’s ability to mobilize the investor community.

After having mobilized 750 million USD in 2015 at a rate of 9.5% over 10 years, then 685 million euros at an interest rate of 5.95%, repayable over 11 years in July 2021. Cameroon has once again succeeded in the feat of mobilizing the sum of 550 million US, or 335 billion CFA francs. This fundraising is dependent on the implementation of the enabling decree signed on July 22, 2024 by the Cameroonian Head of State, Paul Biya.

Through the said decree, the Minister of Finance, Louis Paul Motaze and on behalf of Cameroon is authorized to “…resort to loans on domestic and international financial markets in order to finance development projects included in the 2024 finance law and to settle outstanding payments.”

Of the 616 billion FCFA sought, 335 billion FCFA out of 336 billion have just been collected from international investors, i.e. a remaining gap of 1 billion while the 280 billion FCFA will have to be captured on the local market via securities issues.

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