Cameroon must stop borrowing for its businesses, says the CMF

Nov 30, 2014

The Financial Markets Commission (CMF) in Cameroon has urged the government to stop using bonds to finance companies in the industrial and manufacturing sector.

"Such a financially unorthodox approach is particularly inappropriate, as it contradicts the will of the State, promoter of the Cameroonian capital market, to develop this market by boosting listings on the Douala Stock Exchange," said the CMF, quoted by Ecofin news agency.

The State has issued a total of CFAF250 billion(€381.1 million) worth of bonds on the market of the Central Bank of CEMAC States (BEAC) in 2013.

The CMF urges the government to encourage businesses in need of funding to address themselves directly to the financial market, by making a public offering.

The call comes as companies in Africa increasingly use corporate bonds to raise their own debt.

Helios Towers Nigeria has recently issued a $250 million (€187.2 million) bond to finance the purchase of telecom tower masts, which was Nigeria’s first-ever corporate issuance outside the banking and oil sectors.

Earlier this year, Moroccan company OCP Group issued a debut $1.55 billion corporate bond.

“We are seeing more non-sovereigns across Africa doing deals,” says Nicholas Samara, a debt banker at Citigroup, quoted by the Financial Times.

Corporate bonds are a riskier bet for investors than sovereign bonds, but offer higher yields.ADNFCR-2976-ID-801763420-ADNFCR