Gov’t signs 200 billion FCFA agreement with lending institutions.

According to the agreement, 200 billion FCFA has been set as the ceiling for loans guaranteed by government, which the lending institutions must not exceed. 

Finance Minister, Louis Paul Motaze, signed the agreement on behalf of government while the representatives of National Association of Banking Institutions in Cameroon, APECCAM, and the National Association of Microfinance Institutions in Cameroon, ANEMCAM, signed for the two bodies.  

The agreement was signed in Yaounde on Wednesday August 16, with the country’s Finance boss outlining the details involved. 

According to Minister Motaze, government has noticed that enterprises have the projects but lack funding while banks on the other hand have money but the difficulty is the procedure to lend money to enterprises in need. 

This, owing to the fact that creditors aren’t able to present guarantee for the loans they are requesting.

“We in government have decided that we can try to see what we can do; when you have a file, seeking for credit, go to your bank, the bank will examine and will see if your project is good one. If the project is a good one but that you lack guarantee, the bank will table it the Minister of Finance to see the possibility of government providing guarantee on behalf of the person requesting the loan,” Minister Motaze told reporters.

He stated that out of the 200 billion FCFA, banking institutions alone will consume 85%, which is about 170 billion FCFA while the remaining 15% representing 30 billion FCFA will be consumed by microfinance institutions.

Also, 30% of the loans are meant for public establishments while private sector operators are allocated a larger share of 70%. Minister Motaze added that the 200 billion FCFA agreed as ceiling was inserted in the 2023 State Budget and consequently approved by the National Assembly, during the last budgetary session. 

These loans, he warned, must not be given to help distressed businesses pay their debts, or mob up expenditure on irrelevant, frivolous and unprofitable ventures.

He underlined that only investors who want to increase export of local commodities and products, boost government’s import substitution effort will be given priority. The loans are also intended to help restructure the industrial base and boost job creation for the benefit of the teeming youth population.

Request for common guarantee fund

The banks and microfinance institutions, grouped under the banner of APECCAM and ANEMCAM have jointly asked for the creation of a common guarantee fund so that obstacles arising from late signing of loan guarantee agreements could be avoided.

APECCAM Secretary General, Pierre Kam, who spoke to reporters after the signing, said they were supposed to have started scrutinising and approving loan applications since the beginning of the 2023 financial year. 

He said the fact that they are now signing the agreement when the fiscal year is barely four months to its end, means they are going to be under intense pressure to scrutinize and approve loan applications.

It is even more challenging, given that even after an application has been approved, it must again be submitted to the Ministry of Finance, which must further scrutinise and either visa or reject a specific application.

The APECCAM scribe however expressed hope that the government will keep to its promise to take not more than two weeks to respond to approved applications submitted to MINFI by any bank.

They have also called on government to create an environment where external lenders and technical partners get more involved in the activities of local microfinance institutions; especially as there is growing need in financing and computerizing the agriculture sector.