Cameroon’s Treasury raised a total of CFA49.8 billion on the Beac public securities market during the week of October 16 to 20, 2023, we learned. According to the operations report published by the central bank, these funds were raised through issues of 26-week fungible Treasury bills (BTA) (CFA39.8 billion raised out of CFA40 billion sought) and 52-week bills (the 10 billion sought were oversubscribed).

The weighted average interest rates for these transactions were 5.59% for 26-week BTAs and 5.85% for 52-week securities, for an overall average of 5.7%, well above the usual 3%. This rate is even slightly higher than the 5.67% average offered by the Cameroon Treasury on this market in September2023 but remains below the general market average, estimated at 6.29% that month.

Investor interest in Cameroonian bonds, which picked up again in September, continued in October, after the lack of interest seen at the start of the year. According to central bank data, the subscription rate for the 26-week BTAs was 99.80%, while 52-week securities were 140% oversubscribed. By way of comparison, the average subscription rates for this category of securities in Cameroon were 46.7% and 68.8% in June and August 2023 respectively.

Source: Business in Cameroon

Cameroon’s power company Eneo just released its 2022 annual report, outlining the damages it has suffered in 5 years in the North-West and South-West regions where the Anglophone crisis rages.

According to the report, “Eneo has maintained its operations in the North-West and South-West, despite the particularly deteriorated security conditions, which have jeopardized its agents, equipment, deployment and finances. A commitment to continue providing electrical service, while recording losses of around CFA15 billion per year, or over CFA75 billion in unbilled distributed energy and unpaid billed energy over the last 5 years”.

Continuity of service in the face of insecurity has been maintained, thanks to the good condition of distribution lines and transformers. As of the end of 2022, the availability rate stood at 84% in the South-West region and 80% in the North-West.

However, as the company points out, the above-mentioned condition of the distribution network and transformers during the period under review contrasts with the deterioration of other electrical equipment installed in this part of Cameroon.

Vandalized equipment

Many out-of-service facilities are primarily concentrated in what are termed “red zones,” where approximately 50% of infrastructure in the South-West and 80% in the North-West are affected. These facilities have fallen victim to vandalism or natural deterioration. Efforts to rehabilitate these structures are underway, taking into consideration safety measures.

Eneo is working with both willing residents and the authorities. The risk to field teams is permanent. “It is in this context that network extension work (some twenty kilometers more in the Fako region) and the reconstruction of destroyed networks have been carried out”, the company said.

The Anglophone crisis has been a burden on businesses operating in the affected regions. Many of them have experienced vandalism of their equipment and have had their employees abducted, subjected to violence, and even killed. Faced with this climate of insecurity, numerous economic operators have had to relocate their activities. Others, like the CDC, a state-owned agro-industrial unit and the second-largest employer in the country after the central administration, had to temporarily suspend their operations. However, they have gradually resumed activities following an observed period of calm on the ground.

According to government estimates, the crisis led to a national loss of 0.8 percentage points of GDP growth in 2019 and 0.3 percentage points in 2020. “These growth point losses correspond to a cumulative real loss in national GDP of CFA421.3 billion between 2017 and 2020,” said the Minister Delegate to the Minister of the Economy, Paul Tasong, while addressing the members of parliament on November 23, 2021. He was presenting the Reconstruction Plan for the North-West, South-West, and Far North regions. Similarly, due to this crisis, the value of trade between Cameroon and Nigeria between 2015 and 2019 decreased from CFA15.6 billion to CFA2.9 billion, representing an 81% decline. “These declines are observed in both exports (-68.9%) and imports (-85%),” Paul Tasong explained.

Source: Business in Cameroon

The Cameroonian Ministry of Finance issued a note Tuesday informing of the signing of a new cooperation deal with China. The document, signed as part of a visit by Minister Louis Paul Motazé to Beijing, aims to “eliminate double taxation on income and prevent tax evasion and avoidance.”

According to the Organization for Economic Co-operation and Development (OECD), double taxation, recognized as a barrier to trade and investment between countries, “arises when comparable taxes are imposed in two or more states on the same taxpayer in respect of the same taxable income or capital, e.g. where income is taxable in the source country and the country of residence of the recipient of such income.” To avoid this practice, which experts believe hampers international trade, cross-border investment, and the movement of people, states generally signs tax treaties.

National Development Strategy 2020-30

The Ministry of Finance revealed that the new agreement between Cameroon and China is the fruit of “a long negotiation process that began in 2013”. It marks “a decisive step in the implementation of the National Development Strategy 2020-30 (SND30) and towards the emergence of our country by 2035″. “Since China is one of Cameroon’s leading economic and trade partners, it was necessary to negotiate a tax agreement to remove tax obstacles to trade between the two countries, in particular the double taxation of companies operating in both countries,” the ministry explained.

Over the past two decades, China has become Cameroon’s leading customer (25.8% market share in 2021, according to the INS) and supplier (17.5% market share in 2020) as well as a leading investor. According to data contained in the 2021 World Investment Report published by UNCTAD, the stock of foreign direct investment (FDI) captured by Cameroon between 2000 and 2020 is estimated at $9,026 million (CFA 5,434.3 billion), mainly thanks to China. “Between 2000 and 2014, Cameroon captured CFA 2,750 billion in foreign direct investment, including CFA 1,850 billion from China. This represents around 67% of FDI entering Cameroon”, points out a document from the Presidency of the Republic, citing UNCTAD data.

The Cameroonian government seeks through the new agreement with China to further enhance the existing level of economic cooperation with the Asian country. “This agreement will undoubtedly boost trade between Cameroon and China, and attract even more Chinese investment to Cameroon,” the Finance Ministry said.

New mining projects in the pipeline?

The signing of this tax agreement occurs at a time when the Cameroonian government is embarking on several mineral exploitation projects, many of which are of significant interest to China. One such project is the Mbalam-Nabeba mining project, a world-class iron ore deposit spanning Cameroon and Congo.

Cameroon has chosen Bestway Finance, an investment vehicle allied with China’s AustSino, to build the railroad that will make the deposit exploitable. The license to mine the deposit was awarded on August 17, 2022, to Cameroon Mining Company, also linked to Bestway Finance, which recently announced agreements with at least four Chinese companies for the project. At the Lobé iron ore deposit in Kribi, in the southern region of Cameroon, China’s Sinosteel was awarded the operating license signed on July 1, 2022.

By inking this agreement with China, Cameroon now has 15 double taxation treaties and two global multilateral agreements. On a bilateral basis, these include agreements signed with France (1976), Canada (1988), Switzerland (1990), Tunisia (1999), Morocco (2012), South Africa (2015), the United Arab Emirates (2017), Germany (2017), the Czech Republic (2023) and the six Cemac member countries. However, these agreements do not always guarantee an increase in FDI for Cameroon. For example, despite signing the agreement with the United Arab Emirates in 2017, the first investment from that country has yet to materialize.

Source: Business in Cameroon

Only a few months after their release, forgers have already found a way to make the counterfeit versions of the new range of banknotes put into circulation on December 15, 2022.

Pending the dismantling of the counterfeiting network, Beac Governor Abbas Mahamat Tolli (pictured) called on the population to be more vigilant when handling these banknotes. “I invite users to be very careful every time they make transactions, and to make sure that the bills they receive are genuine”, he said at the end of the FY2023 third session of the Monetary Policy Committee (CPM), held on September 25 in Douala.

Abbas Mahamat Tolli pointed out that the new range of banknotes currently in circulation contains several security features that enable users to detect the real from the fake. “So far, there hasn’t really been a forgery that we’re afraid of. And the level of forgery is very minimal. People are not very vigilant”, he continued.

Indeed, the banknotes put into circulation on December 15 feature numerous security features, between nine and eleven in all, depending on the denomination. These features are visible and sometimes invisible to the naked eye. A special feature of these bills is that they can be identified by the visually impaired, thanks to tactile lines, which can be felt when touched, depending on the notes.

Source: Business in Cameroon

Customs-led public auctions relaunch Tuesday, September 26 in Douala, after a year of break. The sales will end on September 28, according to the official timetable.

Goods to be sold are those that have been stored for more than nine months without being cleared from customs warehouses. They include various items such as electronics, household appliances, antiques, food products, machinery, etc. The customs estimates their value at tens of millions of FCFA.

Let’s note that public auctions are held to relieve congestion in ports and customs warehouses, increase customs revenues, and boost the competitiveness of the national economy through better management of goods flows.

By Alain Tabot-Tanyi

Household final consumption prices in Cameroon went up 0.5% MoM in August 2023, following a 0.4% rise the previous month, the National Institute of Statistics (INS) reports in a recent note. “The price hike is mainly due to a 1.3% MoM increase in food prices and a 1.1% MoM rise in education costs.”

This overall food price trend came with inflation that reached a yearly average of 7.8% at the end of August, way beyond the 3% community threshold tolerated in the Cemac region. “Inflation rose mainly due to a 13.3% YoY increase in food prices, a 10.4% YoY increase in transport costs, and an 8.6% YoY increase in prices for furniture, household goods and everyday cleaning products,” INS said. Compared to the same month in 2022, the overall price level increased by 7.4% in August 2023.

Bread, cereals, meats, fish and seafood, milk, cheese, eggs, oils and fats, fruits and vegetables, and sugar are among the food products that have seen the sharpest price hikes. Transportation costs have also risen by 16.8% YoY.

However, inflation is not only driven by surging costs of fresh produce and energy items, which saw increases of 13.9% and 5.7%, respectively. Depending on the origin of the products, the increase is more pronounced for local products, with prices rising by 8.5%, than for imported products, which saw prices rise by 6.0%, according to reports. The INS report notes that the inflation rate consistently exceeded 7% in nine regional capitals. The highest rate was observed in Bertoua (East), and the lowest in Garoua (North).

Source: Business in Cameroon

In his recent circular relating to the preparation of the 2024 State Budget, President Paul Biya instructed the effective implementation of the beer-marking system to fight fraud in Cameroon. The said reform was considered years ago but it was not implemented due to reservations expressed by brewing companies. In 2019, the companies even introduced an appeal asking the government to abandon the reform.

According to sources familiar with the matter, the marking will start with beers and then be extended to include cigarettes and other medicines (goods that are listed among the most exposed to smuggling). As is the case with wines and spirits since June 1, 2012, it involves fixing an identification sticker on the goods.

The government explains that the aim of the reform is to boost tax revenues by ensuring traceability and production control for products most affected by illicit trades.  At the same time, we learn, the marking will provide manufacturers with solutions enabling them to protect and authenticate their production. From that point of view, it’s a win-win situation.

Another rise in the prices of beer 

Despite the positive points put forward by the government, brewing companies seem not convinced. “Cameroonian brewery companies, well aware of food safety and public health challenges, have committed themselves to food safety quality standards, which obliged them, in recent years, to acquire an automated state-of-the-art traceability system,” explains a brewing company’s executive. 

According to the latter, the introduction of tax marking that will be implemented by a service provider contracted by the government means brewers will have to abandon the marking and traceability system that they invested huge financial resources to acquire a few years ago.

In addition, we learn, that marking also means “modifying the layout of the production lines acquired, in order to integrate the specifications of the supplier’s equipment, bearing the losses inherent in the installation and testing phases, or bearing the costs of adapting and training staff in the use and mastery of these new technologies.” For brewing companies, these will generate additional costs that could lead to further increases in beer prices in Cameroon. 

A feared service provider

In addition to the technical reservations expressed by brewers, the identity of the service provider announced by the government to implement the beer marking reform is also a cause for concern. To implement this reform, the Cameroonian government is said to have discreetly recruited the Swiss company Sicpa, which has already benefited or is still benefiting from contracts of the same type in Kenya and Morocco. In these two African countries, argue the brewers whose statements are corroborated by certain media, the contract awarded to Sicpa for the marking of liqueurs, tobacco, water, and sweetened beverages is controversial.

In 2016, for example, Kenyan politician Raila Odinga, former Minister of Finance and several-time presidential candidate, openly criticized the “dubious conditions” under which the Swiss company had been awarded the contract. The politician also accused the company of illegally collecting taxes but the Swiss company outright rejected the accusations.

In Morocco, it was Sicpa’s prices that were criticized by brewers, cigarette manufacturers, and lemonade makers. Indeed, we learn, in 2014, before renewing the contract it signed in 2010, Sicpa was supplying a cigarette sticker at a cost 15 times higher than the price it was offering in Canada and Turkey. In addition, to pay the service provider, Moroccan tax authorities imposed outrageous annual fees on the producers operating in the sectors whose goods are concerned by the marking.

For a tax expert, “these operational constraints can be overcome with collective willingness.” He believes that brewing companies should also consider the fact that the marking protects their market by helping combat “fraudulent, contraband and counterfeit products, sold at unbeatable prices.” The expert claims that only dishonest taxpayers should fear the sticker, which will enable tax authorities to control the quantities of goods produced or imported by every economic agent.

Source: Business in Cameroon

As banks across Africa navigate a challenging economic climate and come to terms with an increasingly digitised continent and the immense opportunity this brings, there’s an opportunity for bankers and banks to battle it out for top honours in the prestigious pan African competition, Battle of the Banks Africa 2023.

The winning bank and their team of star bankers will be regarded as the best new talent on the continent in terms of business and financial performance, with a sharp understanding of risk management strategies and corporate governance.

In the first-of-its-kind in Africa, ICAP Training Solutions has partnered with global Capital Markets Professional Services firm Andile, to bring ProBanker’s Battle of the Banks simulation engine to market. Inviting Africa’s young bankers to enter. The Battle of the Banks Africa is a robust competition and training opportunity that will see entrants gain insight into how different areas of a bank interact to enhance overall business and financial performance.  In addition to this, entrants will develop important skills and understanding of how macroeconomic indicators impact the decision-making process at the highest levels of bank leadership.

ICAP Training Solutions’ CEO Yonatan Rom says: “The Battle of the Banks Africa provides a simulated environment where young bankers must think about what it takes to run an entire organisation and make strategic, corporate governance, risk and financial decisions. The simulated banking market provides practical experience and learning in a hands-on manner.”

The simulation provides bankers with skills that cannot be obtained anywhere else, other than through years of experience. Those banks who enter teams also benefit from the training as entrants can apply their learnings to their everyday roles and responsibilities back in the office.

Alongside the learning and upskilling, the top performing teams progress to the final four “shoot-out” on 22 November. Here teams will prepare a 4-quarter performance report which will be delivered via a 25-minute presentation on their simulated bank’s performance.

The ‘Battle’ is based on stock performance, net income, loan performance, Basel ratio and capitalisation usage. Each of these areas is afforded its own weighting metric and has an overall weighting of 65%. Making up the other 35% is the conceptual learning (15%) and the simulated assignments (20%).

“Our intention behind Battle of the Banks Africa is to drive practical experience, provide a unique learning simulation, develop skills and business acumen, give access to online training tools and webinars and enable networking with other young bankers from across Africa. The winners will emerge as the best young bankers in Africa,” says Pieter Kelbrick, Andile’s Managing Director.

To enter as a team, visit www.battleofthebanks.org and sign-up before 15 September 2023. Entrance costs $2,750 for a team of four. First prize winners will receive a prestigious floating trophy for the best performing young bankers on the continent, other prizes to be awarded are individual winners’ trophies, gold medals and certificates as well as a $2000 ICAP Academy coupon. There are also prizes for the second, third and fourth winners. The Most Aggressive Bank, Most Cautious Bank and Best Bank presentation in the Grand Finale will also receive prizes.