BEAC lowers its interest rate to stimulate access to credit

Jul 24, 2013

The Governor of the Bank of Central African States (BEAC) Lucas Abaga Nchama announced last Friday (July 19th) that the bank rate will be slashed by 0.5 percent - including on tenders applied to banks - in a bid to make credit more affordable in the region.

The Governor of the Bank of Central African States (BEAC) Lucas Abaga Nchama announced last Friday (July 19th) that the bank rate will be slashed by 0.5 percent - including on tenders applied to banks - in a bid to make credit more affordable in the region.

He explained that this cut has been possible due to lower inflationary pressures and growth in the Economic and Monetary Community of Central Africa (CEMAC).

"This rate was four percent and today it is 3.5 percent. This should send economic operators a strong signal and stimulate growth, as we cannot be satisfied with a growth rate of three percent although it is still strong," said Lucas Abaga Nchama, cited by Cameroon Tribune.

This decline is expected to reduce the cost of credit granted by banks to economic agents, which should boost economic activity through cheaper loans granted in large quantities.

It remains to be seen whether banks will follow this cut, given that the central bank has no way to impose an interest rate on commercial banks.

African banks are often reluctant to lower their interest rates because of risk factors, as companies often cannot provide guarantees.ADNFCR-2976-ID-801615953-ADNFCR