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Financing the economy: priority to private companies, which will benefit from 70% of the CFAF 200 billion loan guarantee granted by the State in 2023

According to the Minister of Finance, Louis Paul Motaze, who presided over the signing ceremony of the portfolio guarantee agreement on 16 August in Yaoundé between the State of Cameroon, the banks and the MFIs, the ceiling of FCFA 200 billion is divided as follows: FCFA 60 billion for public institutions and FCFA 140 billion for private institutions, with 30% for large companies and 70% for SMEs (small and medium-sized enterprises). The guarantee granted by the State to the public and private sectors covers loans granted until 31 December 2023.

(EcoFinances) – Private sector companies (the number of companies operating in Cameroon is estimated at 324,899, including 324,250 SMEs in 2021, according to data from the Ministry of SMEs-Minpmeesa) are among the main beneficiaries of the loan guarantee that the State of Cameroon has just granted to both public sector institutions and companies and private companies. The portfolio guarantee agreement was signed on 16 August 2023 in Yaoundé between the State of Cameroon, the credit institutions and the microfinance institutions, during a ceremony presided over by the Minister of Finance (Minfi), Louis Paul Motaze, in the presence of the Minister Delegate to the Minister of the Economy, Planning and Regional Development (Minepat), Paul Tasong. Amount of the guarantee granted by the State in 2023: FCFA 200 billion.

« This agreement marks the effective implementation of the State guarantee facility for businesses, as provided for in the 2023 Finance Act, which empowers the Government to grant State guarantees to public establishments and public and private businesses, in respect of domestic borrowing, for a total amount of FCFA 200 billion, » explains Finance Minister Louis Paul Motaze.

Although Minfi has indicated that through this initiative the State intends to improve the quality and increase the volume of credit granted to private companies, especially SMEs, some people have nevertheless wondered about the profile of priority companies and the conditions of eligibility.

An important detail that should not escape the notice of local economic players: the guarantee granted by the State to the public and private sectors covers loans granted until 31 December 2023

Profile of priority companies

With regard to the profile of priority companies, according to the authorities, only public and private companies incorporated under Cameroonian law (with majority Cameroonian capital), established on national territory and not subject to collective proceedings are eligible for the State guarantee. In other words, safeguard, receivership or liquidation proceedings. Apart from this condition, these companies must also be active in the priority sectors of the National Development Strategy 2020-2030 (SND30): agro-industry companies, processing companies, ICT companies and start-ups.

Eligibility requirements

What are the eligibility conditions for this government guarantee? According to the Ministry of Finance, two categories of loans are eligible. « Firstly, loans intended to finance working capital requirements and, above all, investment, in the sense of gross fixed capital formation of companies operating in the sectors identified as priorities by the National Development Strategy 2020-2030 (SND30). Secondly and lastly, loans aimed at increasing local production of the main import products and strengthening our export capacity », explains a senior Minfi official, stressing that this does not include refinancing, restructuring, repayment or repurchase of an existing loan.

The State grants a CFAF 140 billion guarantee to the private sector

An important detail that should not escape the notice of local economic players: the guarantee granted by the State to the public and private sectors covers loans granted until 31 December 2023.  « The CFAF 200 billion ceiling is divided as follows: CFAF 60 billion for public institutions and CFAF 140 billion for private institutions, with 30% for large companies and 70% for SMEs (small and medium-sized enterprises). Furthermore, taking into account the socio-economic climate, these coverage ceilings may be adjusted by the State to 60% for large companies and 80% for SMEs operating in economically depressed areas », points out Didier Gilbert Edoa, Secretary General of the Ministry of Finance.

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