State Bonds : Rendering The Harvest Productive!

The State of Cameroon is by every means very credible in the eyes of internal and external lending partners. The country’s signature doesn’t suffer from any doubt and she harvests scarce liquidity from the money market with little stress. Great prowess in borrowing indeed!
Visibly, Cameroon is among the countries in sub-Saharan Africa whose public securities are currently the most competitive demonstrated by the fact that she gets short-term financing with interest rates below 3% and less than 7% for long-term funding. Stakeholders say the country’s credible signature is as a result of her ability to refund promptly. Authorities of the Ministry of Finance are regularly quoted as saying that the competitiveness of Cameroonian securities stems from the credibility of the signature of the government of Cameroon, which to date has not recorded any repayment defaults on the money market since its launch over ten years ago. Good news certainly! Can it also mean borrowing wisely and refunding promptly?
The sixth bond issue by public call for savings issued by Cameroon ended late last month on a very satisfactory note. In effect, subject to the validation of data by the Central African Financial Markets Supervisory Commission (Cosumaf), the Minister of Finance, Louis Paul Motaze, issued a statement on Friday May 27, 2022 giving the provisional results of the 2022-2029 bond issued by the State of Cameroon. Going by his statement, the country was able to collect a total of FCFA 239 billion on the sub-regional financial market, up from the targeted FCFA 200 billion. This makes a coverage rate of 119%. Out of the FCFA 239 billion proposed by subscribers, the State treasury reportedly retained FCFA 235 billion. 
It is even stated that even before the opening of subscriptions, the four arrangers recruited by the State of Cameroon to accompany it in the fundraising operation had already guaranteed firm underwriting of FCFA 180.5 billion. The sub-regional tour of Libreville on May 16, Douala, May 17 and Brazzaville, May 19 before rounding off in Yaounde on May 23, 2022 to present the outlines of the operation to private and institutional investors in the sub-region to fetch the remaining FCFA 19.5 billion with a minimal value of FCFA 10,000 was therefore an icing on the cake.   The State thus tactfully enticed the investors to wholly subscribe to the bond, which pays 6.25% interest, has a maturity of seven years, with a two-year grace period.
By every reading, the just-ended operation signals resounding success for Cameroon, more so considering the fact that the bond issue was made in a difficult economic context marked by the uncertainty of financial markets, the increase in key rates of central banks; implying rising cost of credit.  A veritable show of lender’s confidence in the country’s credible signature. 
The ball is now on the court of government to channel the scarce but seemingly easily-gotten liquidity into effective use so that when time comes for reimbursement, the State would not be pushed to rob Paul so as to pay Peter. The visible chest-beating of stakeholders who manned the successful operation is understandable. The context wasn’t friendly for a bountiful harvest but the outcome turned out to be rather pleasantly surprising. At least this calls for merrymaking. However, all and sundry must be made to understand that the FCFA 235 billion retained is not a gift but a loan that will be reimbursed with interest.  Two years which is the period of grace is not infinity. It will soon come. The interest rate of 6.25 % is mathematically huge when one places it side-by-side the amount and number of subscriptions to the bonds.
It pays therefore to get down to work and materialise the projects whose presentations charmed the lenders to deep their hands into their wallets to chip in what the State coffers now hold. The message that the funds will be used to carry out some infrastructure projects in various sectors, listed in the 2022 finance law should be upheld. The energy sector, planning and territorial development, road infrastructure, urban development, extension of Kribi Deep Seaport, reconstruction of the North West, South West and Far North regions, as well as counterpart funds for some projects shouldn’t be forfeited  now that the State has pocketed the money. None of those who subscribed to the bonds would play a police behind government to ensure that what the money was borrowed for is not relegated to the backstage. But it is a collective moral responsibility of vote holders to ensure that the precious catch is not wasted. 
The traceability and coherence of public policies, which Finance Minister said are proof of Cameroon's credibility and therefore of its ...



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