Cameroon

Overview

Policy Watch

BEAC Monetary Policy

17/12/2013

The BEAC held its 4th ordinary meeting on Dec 18th, 2013 and decided to leave the key rate unchanged at 3.25%.

BEAC Monetary Policy

31/10/2013

The BEAC decided to keep its key rate unchanged at 3.25%.

Debt vs GDP / Bonds vs bills

All Data - Cameroon

Year 2011 2012 2013 2014 2015 2016
GDP (billions US$) 18.79 17.85 19.26 20.20 - -
Total Outstanding Amount (Billion US$) 0.05 0.03 0.23 - - -
Bonds 0.05 0.03 0.08 - - -
Bills - - 0.16 - - -
Outstanding Amount/GDP (%) 0.29% 0.15% 1.20% 0.00% - -

News

Country Summary

Despite a difficult global context marked by lower commodity prices and deteriorating terms of trade, domestic economic activity has remained solid. Domestic demand has continued to grow, driven by major infrastructure projects and measures to revive production in several sectors. Growth recorded in 2012 was consolidated in 2013, although it was slightly lower than forecast. This growth was driven mainly by the tertiary sector, which accounted for 47.8% of gross domestic product (GDP), one percentage point higher than in 2012, thanks to strong performances by the transport, telecommunications, trade and hotel and catering industries. Growth was also supported by a recovery in certain branches of the secondary sector, with strong performances by the construction and extractive industries (oil and gas) and investments in basic infrastructure. This growth trend is forecast to continue in 2014 and 2015.

In 2013, Cameroon produced a medium-term budgetary framework in line with a directive issued by the Economic and Monetary Community of Central Africa (CAEMC) on programme budgets. The framework is in line with the growth and employment strategy paper for 2010-20 (Document de stratégie pour la croissance et l’emploi, DSCE), emphasising growth and employment and focusing action on developing infrastructure through major energy, transport and telecommunications projects. In addition to these actions to reduce production-factor costs, measures have been taken to support the modernisation of Cameroon’s production equipment, especially in the agricultural sector (tractor assembly plant in Ebolowa), and to support the development of manufacturing industries (leasing). The aim is to ensure that natural resources are exploited judiciously – especially in the agriculture, forestry and livestock and fisheries sectors – by growing the value chain of promising sectors (cotton, textile and clothing; timber; cocoa; rubber; etc.) through the promotion of agri-business. This strategy contributes to fiscal sustainability by reducing the country’s strong dependence on export revenue and oil prices. The strategy also aims to strengthen competitiveness by incorporating a larger market share into intra-regional trade. Achieving this objective will be helped by additional roads leading to the main sub-regional markets in CAEMC countries and Nigeria.

Parliamentary and local elections ran smoothly, bolstering socio-political stability in a region plagued by political and security crises. These elections redistributed the roles of the president’s ruling party and the opposition, but the president still holds a comfortable parliamentary majority, allowing his party to legislate without risk.

There are 13 commercial banks in Cameroon, which represent 38% of the total bank assets in the CEMAC region with XAF 2916 billion.

The Doula Stock Exchange (DSX) opened in April 2003. Three companies are currently listed on the DSX: water bottling company SEMC, agro-forestry company SAFACAM, and agro-industrial company SOCAPALM. SOCAPALM’s offering in 2009 was overbid. In late 2009, the World Bank’s Investment Finance Corporation issued bonds worth $40 million, one third of which are traded on the DSX.

Cameroon issued its first bond for XAF 200 billion in December 2010 with a maturity of 5 years at 5.6% for the financing of infrastructure projects. The bond is also currently traded on the DSX and the BVMAC, the Central Africa Stock Exchange.

Source: African Economic Outlook

Monetary policy & Public debt

With the National Directorate of the Central Bank of Central Africa States (BEAC), a National Monetary and Financial Committee is established in each Member State. Its role within the limits of the powers delegated and according to the instructions given by the Board of Directors and Monetary Policy Committee, is to examine the general financing needs of the economy of the Member State and to determine the means to satisfy them, as well as proposals for the coordination of policy on national economy with monetary policy.

In the CEMAC region, the debt to GDP ratio must stay under 70%. It’s the convergence criteria adopted between the CEMAC zone and the WAEMU zone.

In Cameroon, the domestic debt to GDP ratio was 1,59% at end of 2012 and the external debt to GDP ratio was 8,55%.

Market Structure

Issuers and Instruments issued

Instruments issued

Treasury Bills (T-Bills): Maturities available are 13 weeks, 26 weeks and 52 weeks.

Treasury Bonds (T-Bonds): Maturities available are equal or greater than 2 years. 

The nominal value of T-Bills is set at XAF 1 million or a multiple of this amount. The nominal value of Treasury bonds XAF 10 000 or a multiple of this amount. The T-Bills and T-Bonds have the same characteristics for all CEMAC members.

Market participants

Each State issues government securities by tender. States that maintain arrears on securities issued cannot issue further until the debt related to past emissions is cleared.

The Central Bank of Central Africa States (BEAC) organizes the auctions.

Primary Dealers (PDs), who are selected among the credit institutions, are the only ones who can participate in the auctions.

Commercial banks are the most active investors in government debt instruments.

Primary & Secondary Market

Primary Market

In 2012, Cameroon issued T-bills amounting to XAF 110 billion. This represents an increase of 120% compared to the amount issued in 2011. The 26-week maturity represented 68% of the T-Bill issuances in 2012. At end of 2012, the total outstanding T-Bills were equal to XAF 160 billion. The 26-week maturity represented 50% of the stock of T-Bills, followed by the 13-week maturity with 33% and 52-week maturity with 17%.

The only one T-Bonds issued by Cameroon is the “ECMR 5,60% net 2010-2015” for a total of XAF 200 billion and with a 5-year maturity. The total outstanding of this bond at end of 2012 was XAF 160 billion.

The average interest rate for government debt instruments at end of 2012 was 4,52%, of which 5,60% for the T-Bond and 1,82% for T-Bills.

Secondary Market 

Compared to the embryonic stage of development of CEMAC securities market, the secondary market is clearly inexistent. There is a need to stimulate the secondary market. However, has been some activity on the secondary market since 2011. 

Cameroon’s T-Bills secondary market recorded only a few transactions, 8,429 T-bills, for a total amount of XAF 8,4 billion in 2012. The turnover ratio of the T-Bills in 2012 was estimated at 5,27%.

Regarding the T-Bonds secondary market, 6,367,466 securities were traded in 2012 on the stock market. The turnover ratio is estimated at 31,8%.

Clearing, Settlement and Custody

Cellule de Regulation et de Conservation des Titres (CRCT) serves as account manager, settlement agent and central depository.

The CRCT is a structure, which receives the securities issued by the Treasuries of Member States of CEMAC, and held by Primary Dealers (PDs) who are its members exclusive. Membership is of Primary Dealer to the CRCT is mandatory.

The CRCT assumes the role of accounting issue. It debits the securities account of the government at each issuance and credit the investor account. It ensures daily system integrity by comparing the debited accounts against PDs accounts.

On the secondary market, any legal entity, wishing to acquire securities issued under this structure must have a "securities account" opened with a credit institution established in the CEMAC, an authorized Primary Dealers affiliated with the CRCT.

Protection of investors

The Commission for the Supervision of Financial Markets in Central Africa (CONSUMAF) is the regulator and controller of Financial Markets in Central Africa. As such, it aims to ensure the protection of investor information, savings invested in securities and the proper functioning of the market.

FOGADAC, a Guarantee Fund deposits in Central Africa was set up on 21 February 2011. The FOGADAC is a system of bank deposit insurance. Its main role is to repay or return deposits and other assets placed with banks, when they are finally in a position to make such repayment. The maximum amount, which may be claimed for reimbursement, for an investor eligible asset placed in a bank, is 5 million FCFA.

Guide to Buying Bonds

Procedures for market participation

The BEAC organizes the auction on behalf of the states. The auction takes place at the asking price. Orders are served retained interest rates or the price offered by the bidders within the maximum interest rate or maximum price decided by the government.

At the end of the auction, the general information, including the amount of bids expressed the amounts used and the rate and limit price selected are disseminated through the press.

The methods of creating, presenting and counting of the tenders shall be determined by agreements on the one hand, between BEAC and National Treasuries, and secondly, between the BEAC and the Primary Dealers (PD). Subscriptions to government securities are firm and irrevocable. They are paid in a single payment by debiting the account of the PDs at the BEAC and credited to a special Treasury account opened for this purpose.

Given that the debt market is under developed, the optimal schedule has been adopted as part of regular program. The six National Treasures issue in turn, at regular intervals. Each National Treasury will issue T-Bills weekly on Wednesday. The amounts are generally low to allow all states to issue at the same time, resulting in each State having fifty-two issues of T-Bills per year. Each National Treasury can issue T-Bonds monthly.

The auctions are scheduled to take place every Wednesday. However, given the nature of the instrument and the expected volume of transactions in relation to the needs for public investment, treasuries are not able to issue on the set day. 

A shift schedule was developed for planned Wednesday auction sessions: 

  • Cameroon: 1st Wednesday of the month
  • Central Africa - Congo: 2nd Wednesday of the month
  • Gabon: 3rd Wednesday of the month
  • Equatorial Guinea-Chad: 4th Wednesday of the month

These emissions will occur at regular time intervals and are publicly known.

The total amount of the twelve issuances will be released in the Finance Act each year.

For each fiscal year, this amount will be communicated to the market by the Minister of Finance no later than November 30th of the previous year. This communication from the Minister responsible for finance may take the form of a conference, briefing or a press release. The amount of the issuance will not be announced at this time.

However, the amount to be raised for each auction is specified in the auction announcement in accordance with National Treasury issuance calendar.

On the secondary market, the T-Bills are traded OTC and the T-Bonds are traded on the DSX and the BVMAC.

Settlement cycle

The settlement of transactions takes place at T+3.

Taxation

The level of taxation pursuant to Regulation No. 14/07 - UEAC-175-CM-15 instituting a specific tax regime applicable to the transactions listed on the Securities of Central Africa (BVMAC) "are exempt from income Tax Securities (IRVM) or any other taxes or levies of a similar nature, interest obligations of States for residents of the CEMAC." Subscribers residing outside the CEMAC zone must comply with income tax laws of their country of residence. The Issuer shall levy any withholding tax on loan repayments.

Rating

Rating AgencyCurrent ratingOutlook
Moody’sNo ratingNo outlook
FitchBStable
Standard and Poor’sBStable

Primary Dealers

Auctions of Government securities are exclusively reserved for Primary Dealers. Each CEMAC state has its own network of Primary Dealers. However, a credit institution, which meets the eligibility requirements, may be a Primary dealer only for the country they belong to or upon request, all the states. The Ministers of Finance, select Primary Dealers from all the credit institutions in CEMAC that meet specifications adopted by the Committee of Ministers, after consulting the Monetary Policy Committee.

Market restrictions

Openness to international investors

Foreign investors can access the debt market under the same terms as nationals of the zone. There are no rules that discriminate foreign participants in the market.

Capital control

This is no restriction on foreign ownership in the CEMAC zone.

Restrictions on FX and profit repatriation

There are no restrictions on obtaining foreign exchange.

The regional central bank, the BEAC, issues CFA for circulation among the members of the CEMAC. Although the Central African franc is at par with the West African CFA franc, the two currencies are not usually accepted for payment in each other’s zones.

Foreign investors have the right to repatriate earnings and the profits from sales of financial instruments. There are no restrictions on converting or transferring funds associated with investments, including remittances of investment capital, earnings, loan repayments, and lease payments.

Documents & Resources

Documents - Ministry of Finance

Documents - Other sources