Financial market regulator recommends cut in govt borrowing

Commission des Marchés Financiers in Cameroon has invited the Government to no longer use the products of its bonds to provide financial support to companies in the industrial or productive sector especially when they have a status of joint private or parastatal company.

"Such unorthodox financial approach is even more inappropriate as it contradicts the will of the State, promoter of the Cameroonian financial market, to develop this market by enrichment on the side of the Douala Stock Exchange", noted the CMF. This was an invitation to the Government to push those businesses that would need funding to present themselves directly to the financial market using public savings.

On the two last loans made by Cameroon, the funds allowed them to directly fund some companies like the national airline (Camair-Co), the Geovic mining operator, the national operator of telecommunications (Camtel) for its optical fiber project, the company in charge of the construction of the infrastructure of water (Camwater), or even the company in charge of the construction of the dam of Mem'vele and one in charge of the management of the Central gas of Kribi (KPDC).

For 2014, the undertakings concerned are once again the Camair-Co, electricity of Cameroon, Sodecoton, the Matgenie and the Cicam. The reasons justifying the involvement of the State in these companies, even though they are supposed to generate cash, are not always clearly expressed.

After having already received 20 billion CFA francs for its launch, Camair-Co continuous delay in producing profit and the use of the last fund is still unclear.

The other constraint faced by these companies is associated with the unfavourable economic environment, the absence of financial information and the strong presumption of a profitability low or non-existent of these companies. With these setbacks, costs of access to the market may be much more prominent than those of the Government.

In addition to this, be reckoned with the specific challenges of the Douala Stock Exchange in terms of not only costs, but also procedures which could make complex management of a public appeal offering these undertakings.

In a situation where banks have liquidity surplus, companies still have the ability to make financial via syndicated loans that have the advantage of ensuring mobilization levels desired, in a maximum of discretion, and with better care. The other possibility is to call upon investment funds such as the case for Actis, which entered the capital of the national electricity company.