Local banks in Cameroon are increasingly working with government to finance the economy so as to attain set objectives in the country's growth vision. For four years running, the Cotton Development Corporation, SODECOTON, has moved away from the hitherto cumbersome dependence on foreign banks to finance its production.
Last Friday, a consortium of five banks, led by Commercial Bank Cameroon (CBC) loaned out FCFA 35.5 billion to finance SODECOTON's 2013/2014 cotton season. The loan was the fourth operation of local banks for SODECOTON's production. In 2011, four banks loaned out FCFA 6.5 billion, moved the amount to FCFA 10 billion in 2012 and FCFA 15 billion in 2013.
According to a press statement that sanctioned the national monetary committee session on November 1, 2013, internal loans (financing the economy by local banks) has been on a steady increase. Internal loans, the statement notes, witnessed a 15 per cent increase between 2012 and 2013 moving from FCFA 1,574.6 in August 2012 to FCFA 1,809.9 same period 2013. External financing also grew but not at the rate of internal financing. It moved to FCFA 1,518.02 billion by August 2013 witnessing a 6.9 per cent increase compared to the same period the previous year.
The implication of local banks in financing the economy has been gaining momentum since 2010 when the State in less than two weeks raised FCFA 200 billion from the capital market through mandatory borrowing. While mandatory borrowing seeks to finance giant projects underway in the country, the sale of treasury bonds, has become a regular means of raising money to feed the State treasury.
In the 2013 State budget, government raised FCFA 250 billion through the capital market and plans to raise FCFA 280 billion this year. Already, FCFA 80 billion has been raised in an operation initially launched to harvest FCFA 50 billion. Experts say the increasing involvement of local banks in financing the economy testify of confidence the banks have on government and its institutions.
Cameroon Tribune caught up with the Director General of SODECOTON, Abdou Namba, the latest beneficiary of the local banks' loans to evaluate the path covered with the financing and how he intends to use the new one.