Economy

Autonomous Sinking Fund raises alarm over country’s debt burden.

CAA Headquarters in Yaounde

The Autonomous Sinking Fund, best known by its French abbreviation CAA, has raised an alarm over the country’s debt burden, describing it as unsustainable in the long term, not only for the government but Cameroonians in general.
For the first time, the CAA disclosed that debts owed by state-owned corporations will soon hit the one trillion FCFA mark.

Specifically, the most recent report issued by the CAA showed that as of September 30, 2024, debt contracted by government and transferred to public companies has reached 984.7 billion FCFA.

The state debt management agency revealed that when the amount is added to what the central administration owes, the overall volume of debt rose to 1,518 trillion FCFA, as at the end of 2023.

The most indebted state corporation or public and para public companies were identified to Cameroon Water Utilities Corporation, CAMWATER, which manages the public water supply; Cameroon Telecommunications, CAMTEL, the national telecom provider; Cameroon Cotton Production Corporation, SODECOTON, a major player in the northern agro-industrial sector; and the Cameroon Shipyard and Industrial Company, CNIC.

Others are the Electricity Development Corporation, EDC, which oversees electricity assets of the nation; SONATREL, the electricity transmission company; the Cameroon Oil Refining Corporation, SONARA; Cameroon Postal Services, CAMPOST; the Aluminum Smelting Company, ALUCAM, touted as the country’s aluminum giant; the National Real Estate Company, SIC; and the Cameroon Civil Aviation Authority, CCAA.

The CAA report also highlighted that four among the indebted companies account for over 80% of the debt, totaling 797.3 billion FCFA.

CAMTEL leads as the main beneficiary, with 280 billion FCFA as of September 30, 2024, down from 312 billion FCFA at the end of 2023, marking a repayment of 32 billion FCFA over nine months.

After CAMTEL, CAMWATER follows, whose debt stood at 222.2 billion FCFA, down from 229.6 billion FCFA as at the end of 2023.

SONATREL saw its debt increase from 154.4 billion FCFA in December 2023 to 175.7 billion FCFA as at September, 2024, while EDC reported a slight decrease from 121.1 billion FCFA to 119.4 billion FCFA in the same period.

Funding partners & rising debt

Funding partners continue to express worry over the rising debts being incurred by state corporations and the central government itself. For one, company debts are often backed by state guarantees.

Therefore, they could strain the national budget if the companies fail to meet their repayment obligations, placing the burden on the national Treasury.

To mitigate the risk, the government is working to guide public companies, typically producing what the IMF called “poor results”, towards non-sovereign loans from development partners.

In June 2015, the Ministry of Finance organised a workshop for leaders of seven public companies, including CAMTEL, Airports of Cameroon, ADC, SONARA, FEICOM, Port Authority of Douala, PAD, CAMWATER, and the Cameroon Oil Depot Company, SCDP.

The session focused on mechanisms for accessing non-sovereign financing from the French Development Agency, AFD.

However, nine years after the workshop, only CAMTEL and the Port Authority of Douala have undergone a financial rating with Bloomfield Investment. The step is crucial in assessing a company’s credit profile before seeking capital market funding.

This article was first published in The Guardian Post Edition No:3282 of Wednesday November 06, 2024