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Country Commercial Guides for FY 2000:
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CHAPTER VIII: TRADE AND PROJECT FINANCING
A. DESCRIPTION OF THE BANKING SYSTEM
Cameroon's banking system is controlled by the Banque des Etats de l'Afrique Centrale (BEAC), a common central bank also serving the five other member countries of the Central African sub-region. BEAC is monitored closely and regulated by the French Treasury. In 1993, member states of BEAC created a supranational supervisory authority, COBAC (Commission Bancaire de l'Afrique Centrale), over all banking and finance institutions in the Central African CEMAC sub-region and granted it extensive powers to discipline delinquent institutions. In order to further secure the banking system, a sub regional deposit guarantee fund covering CEMAC countries, FEGADAC, was created.
Like all other signatories to a 1948 agreement creating the Communaute Financiere Africaine franc zone, Cameroon is obliged to hold at least 65 percent of its foreign reserves in an account ("compte d'operation") that is supervised and managed in Paris by the French Treasury. This account is the principal means by which France guarantees the exchange of CFA francs into French francs at a fixed exchange rate (1 FF = 100 CFA). The introduction of the Euro currency early this year, expanded even further the convertibility of the CFA franc. Lending/borrowing base rates are set by the BEAC, and banking institution are not allowed to lend below the floor rate, except by authorization of the National Assembly.
Cameroon's banking system is currently made up of nine operating full-service commercial banks with 60 branches. The return of a U.S. bank operation to Cameroon in 1998 has facilitated and improved financial transactions between the U.S. and Cameroon. Previously, these banks were obliged to hold non-interest-bearing government bonds equivalent to 10 percent of their assets. GRC arrears on these bonds have been consolidated at BEAC, and commercial banks are no longer required to purchase new government bonds. The dominant factor in the now normalizing banking crisis was the large amount of non-performing debt that the GRC and public enterprises owed the banking system. Weaknesses of commercial banks in Cameroon include a lack of willingness to take risks and assess good venture; outdated products which reflect the need for modern banking, and the lack of quality service and bank secrecy.
B. FOREIGN EXCHANGE CONTROLS AFFECTING TRADE
Foreign exchange controls exist in Cameroon primarily for statistical purposes and to enable the Ministry of Finance to certify that remittances conform with established regulations. Authorizations for foreign transfers are routinely granted. Foreign exchange rationing is not practiced in Cameroon.
C. GENERAL AVAILABILITY OF FINANCING
The Board of Directors of EX-IM Bank voted in October 1998 to expand its programs to finance the export sale of U.S. goods and services to Cameroon. Specifically, U.S. exporters or Cameroonian buyers of U.S. goods can apply for EX-IM bank financing under the short and medium-term private sector financing program.
Importers and exporters use internationally accepted methods of settlement. Local sources of commercial credit are extremely limited; therefore, the liberal credit terms usually offered by the competition may in fact outweigh a considerable price differential. Nevertheless, due to pervasive credit risk extending even to the banking and public sectors, many U.S. firms exporting to Cameroon find it prudent to insist on irrevocable, confirmed letters of credit drawn on banks with strong foreign correspondents. Foreign competition often grants credits of 180 days for consumer goods and 24 months for small machinery and equipment. European banks often quote liberal terms and may discount paper for their exporters who are pursuing long-term credits.
D. HOW TO FINANCE EXPORTS/METHODS OF PAYMENT
Due to pervasive credit risk, extending even to the banking and public sectors, many U.S. firms exporting to Cameroon find it prudent to insist on irrevocable letters of credit drawn on banks with strong foreign correspondents. The return of a U.S. bank operation to Cameroon in 1998 has facilitated and improved financial transactions between the U.S. and Cameroon. European banks often quote liberal terms and may discount paper for their exporters who are pursuing long-term credits of 180 days for consumer goods and 24 months for small machinery and equipment. Transactions are most frequently settled through guaranteed, irrevocable letters of credit.
E. TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE
Foreign investors can obtain local financing for investment and trade purposes at non-discriminatory terms. However, as a result of Cameroon's comparatively high interest rates, most investors prefer to borrow from foreign sources. The U.S. Export-Import Bank suspended lending to Cameroon in 1992 and rescheduled a substantial part of the country's payment arrears. Currently, the U.S. Export and Import Bank is only willing to consider finance of short-term loans and guarantees for exports to private Cameroonian buyers. A pilot project to include the public sector in Cameroon is currently under study.
F. AVAILABILITY OF PROJECT FINANCING
Multilateral financial institutions have long been active in project financing in Cameroon. The World Bank has a resident representative in Yaounde, and its affiliate, the International Finance Corporation (IFC), maintains regional offices in Douala for borrowers in Central Africa. The African Development Bank (AfDB) Group involvement in Cameroon started in 1972 and has thus far financed more than 30 projects valued at over USD 700 million. OPIC has guaranteed funding for one project in recent years and has expressed interest in assisting Cameroon, but no new projects have yet developed.
G. TYPES OF PROJECTS RECEIVING FINANCING SUPPORT
AfDB closed its Cameroon office when the country moved to the status of being qualified only for concessional resources. Vigorous efforts to initiate a new Cameroon program, particularly through AfDB's Private Sector Unit, are underway. Evidence of this is that Cameroon was the recipient from the African Development Fund of two loans (for poverty alleviation and support for the ESAF program—USD 38 million) and three aid packages (for rural electrification and potable water—USD 41 million) in early 1998. Currently, consideration is being given to a national agricultural research and extension (UA 8.97 million) project. These institutions have financed projects in the public and private sectors including agricultural and industrial projects.
H. LIST OF BANKS WITH CORRESPONDENT U.S. BANKING ARRANGEMENTS
The following eight of Cameroon's nine commercial banks have U.S. correspondents. The Highland Corporation Bank's approval to operate as a full bank is still under consideration by COBAC.
- Amity Bank: Citibank, New York, and Bankers Trust, New York.
- Banque Internationale du Cameroun pour l'Epargne et le Crédit (BICEC): Citibank, New York.
- Caisse Commune d'Epargne et d'Investissement (CCEI): Republic National Bank, New York, and Citibank, New York.
- Commercial Bank of Cameroon: Credit Commerical de France, New York, New York
- Citibank: Citibank, New York.
- Societe Commerciale de Banque Credit-Lyonnais (SCB-CL): Credit-Lyonnais, New York.
- Societe Generale de Banque au Cameroun (SGBC): Societe Generale, New York.
- Standard Chartered Bank: Standard Chartered Bank, New York
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
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