CAN WITHDRAWAL IS ADDING THE LAST NAIL ON THE COFFIN OF CAMEROON’S  ECONOMY



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In the 2019 Finance Act, the non-oil revenue growth rate is set at 16%. An optimistic projection strongly backed by the revenues that the activities around the African Cup of Nations in Cameroon should generate. With the remoteness of the event, big concerns weigh on the banking sector in particular.

CAN WITHDRAWAL IS ADDING THE LAST NAIL ON THE COFFIN OF CAMEROON'S  ECONOMY
CAN WITHDRAWAL IS ADDING THE LAST NAIL ON THE COFFIN OF CAMEROON’S  ECONOMY

On December 11, 2018, rating agency Fitch Ratings said the withdrawal of CAN 2019 from Cameroon “could strengthen existing pressures on the country’s banking sector.”





If Fitch Ratings’ revised banking outlook analysis admits that “it is too early to determine whether the repayment of bank loans granted in the context of the tournament could be disrupted by the decision to play it elsewhere”.

The study notes that after exchanges with institutions Although CAN was maintained in the country, “it was unlikely that CAN-related revenues would be the primary driver, especially for large long-term loans to build stadiums. Tax revenues were more likely to support repayment. ”




In the 2019 Finance Act, the non-oil revenue growth rate is set at 16%. An optimistic projection strongly backed by the revenues that the activities around the African Cup of Nations in Cameroon should generate. With the remoteness of the event, big concerns weigh on the banking sector in particular.

A situation that causes great concern, since the rating agency believes that the capacity to absorb losses in the banking sector is low, especially with a ratio, equity / assets of around 8%. , which is largely insufficient given the high exposure to risks.




As a result, Fitch Ratings highlights the risk that writedowns on CAN loans, such as stadium and hotel projects, may materialize by the end of next year.

We also noted that delays in projects could cause problems for the banking sector. The loans are being serviced, but our discussions with the banks have shown that the final repayments on several exposures extend beyond 2019. ”

With regard specifically to loans granted in connection with the construction of hotels, the reimbursement is not for tomorrow or the day after tomorrow if we stick to the statements of the actors.













Indeed, according to a testimonial from the promoter of the hotel Franco, Françoise Pouené, to the television channel France 24, At the Hotel Franco, the work undertaken for the organization of the African Cup of Nations (CAF) in 2019 were to expand the capacity from 72 to 180 rooms. A huge investment for the owner who has not yet recovered from the eviction of Cameroon.

“I am very disappointed to know that this CAN will not take place in 2019 after all the personal commitment I made, I lost sleep after an investment of about 9 billion FCFA.

Admittedly, we could not amortize all the investment in one month, but we would have benefited from the advantage of visibility in Cameroon “, regrets the one that is commonly called” mamy nyanga “.



But for Fitch Ratings, this situation was predictable. “Our view that asset quality indicators are not expected to improve significantly in 2019 already reflects weak loan growth (up 3% over the past 12 months) and continued accumulation.

large private sector arrears in public payments that limit the ability of borrowers to pay their debts, “said the report of the London rating agency.



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