Cameroon and China: any Benefits?

Chinese Economic Relevance To Cameroon

By Ernest Ndukong

President Paul Biya and wife, Chantal, were in Beijing, China, last week for a 72-hour official visit. Among other reasons, the President is expected to have discussed and ensured that China’s presence is more profitable to Cameroon and to Cameroonians.

According to an International Monetary Fund (IMF) report, China is the second most valuable country in the world with a gross domestic product (GDP) of over FCFA 2,900 trillion, while Cameroon is 94^th with a market value of all final goods and services worth about FCFA 11 trillion.

With a population of over 1.3 billion people, as at November 2010, China has investments all over the world, Cameroon included. From Chinese shops through restaurants to massaging centres; their products are generally believed to be cheap, affordable and last for just a short while.

Basically, a couple of Cameroonians have gained employment in Chinese shops, clinics and restaurants based in Cameroon. Many others are teaching the world’s most famous language in China.

Many a Cameroonian can boast of the latest electrical equipment at a very low cost, thanks to China. About a decade ago, a Dissociated Vertical Deviation (DVD) set could be acquired for over FCFA 500,000; but, today, it is twenty times less than that. Electronic appliances, in general, have witnessed a tremendous drop in their prices. This, in a way, has increased the standard of living of Cameroonians as they now consume a variety of goods and services which, before now, could be attributed only to the top class in society.

The sad side of this is the non-durable nature of Chinese products. Someone, in an attempt to describe how short-lasting Chinese products are, said he bought a pair of trousers and by the time he got home, it had got torn inside the shopping bag. It has, however, been observed that Chinese products are of various qualities and prices, with the former a function of the later.

China has also helped Cameroonians to see and utilise more profitably, their economic potentials. These small-eyed looking people have caused Cameroonians to fish, farm and to rear and sell for profit. Healthcare is now more available and affordable. Could one be right to conclude that we now have a longer life expectancy?

Cameroon has benefited significantly in this four-decade-old relationship with China. The Buea Regional Hospital was refurbished by China which provided part of the building cost. The hospital, despite its shortcomings like inconsistent flow of water, a couple of arrogant nurses and doctors, haphazard alternative means of electricity; is reputable for the town of Buea.

The 20,000 capacity sports edifice in Yaounde is another Chinese handwork. Not only does this structure beautify the national capital, but hosts, comfortably, national and international sports competitions.

This partnership is expected to grow from power to power with the signing of seven agreements between Jing Tao and Biya on July 20, 2011. The agreements will mean; more interest-free loans granted to Cameroon, more non-reimbursable assistance to the Central African nation and the sending of batches of medical equipment and supplies to Cameroon.

The two Heads of State equally agreed on issues like climate change, food safety and poverty reduction. Resources, energy, infrastructure and agriculture were other topical issues the parties discussed and it is hoped that by the next trip to Beijing or Yaounde by either Presidents, it would be an evaluation meeting that should see Cameroon become an emerging nation before 2035.

Cameroon’s exports to China are witnessing an upward trend as the years pass by. In 2000, seven percent of Cameroon’s total export was to China, a portion, which grew by five percent from the previous year’s record of about two percent. This feat then went down again in 2005 when China occupied the eighth position of Cameroon’s export destinations. Exports to China are mainly timber, cotton and crude oil.

What, however, remains dubious is whether the Chinese involvement in development activities in Cameroon and worldwide hasn’t strings.

Cameroon and China: any Benefits?

Chinese Economic Relevance To Cameroon

By Ernest Ndukong

President Paul Biya and wife, Chantal, were in Beijing, China, last week for a 72-hour official visit. Among other reasons, the President is expected to have discussed and ensured that China’s presence is more profitable to Cameroon and to Cameroonians.

According to an International Monetary Fund (IMF) report, China is the second most valuable country in the world with a gross domestic product (GDP) of over FCFA 2,900 trillion, while Cameroon is 94^th with a market value of all final goods and services worth about FCFA 11 trillion.

With a population of over 1.3 billion people, as at November 2010, China has investments all over the world, Cameroon included. From Chinese shops through restaurants to massaging centres; their products are generally believed to be cheap, affordable and last for just a short while.

Basically, a couple of Cameroonians have gained employment in Chinese shops, clinics and restaurants based in Cameroon. Many others are teaching the world’s most famous language in China.

Many a Cameroonian can boast of the latest electrical equipment at a very low cost, thanks to China. About a decade ago, a Dissociated Vertical Deviation (DVD) set could be acquired for over FCFA 500,000; but, today, it is twenty times less than that. Electronic appliances, in general, have witnessed a tremendous drop in their prices. This, in a way, has increased the standard of living of Cameroonians as they now consume a variety of goods and services which, before now, could be attributed only to the top class in society.

The sad side of this is the non-durable nature of Chinese products. Someone, in an attempt to describe how short-lasting Chinese products are, said he bought a pair of trousers and by the time he got home, it had got torn inside the shopping bag. It has, however, been observed that Chinese products are of various qualities and prices, with the former a function of the later.

China has also helped Cameroonians to see and utilise more profitably, their economic potentials. These small-eyed looking people have caused Cameroonians to fish, farm and to rear and sell for profit. Healthcare is now more available and affordable. Could one be right to conclude that we now have a longer life expectancy?

Cameroon has benefited significantly in this four-decade-old relationship with China. The Buea Regional Hospital was refurbished by China which provided part of the building cost. The hospital, despite its shortcomings like inconsistent flow of water, a couple of arrogant nurses and doctors, haphazard alternative means of electricity; is reputable for the town of Buea.

The 20,000 capacity sports edifice in Yaounde is another Chinese handwork. Not only does this structure beautify the national capital, but hosts, comfortably, national and international sports competitions.

This partnership is expected to grow from power to power with the signing of seven agreements between Jing Tao and Biya on July 20, 2011. The agreements will mean; more interest-free loans granted to Cameroon, more non-reimbursable assistance to the Central African nation and the sending of batches of medical equipment and supplies to Cameroon.

The two Heads of State equally agreed on issues like climate change, food safety and poverty reduction. Resources, energy, infrastructure and agriculture were other topical issues the parties discussed and it is hoped that by the next trip to Beijing or Yaounde by either Presidents, it would be an evaluation meeting that should see Cameroon become an emerging nation before 2035.

Cameroon’s exports to China are witnessing an upward trend as the years pass by. In 2000, seven percent of Cameroon’s total export was to China, a portion, which grew by five percent from the previous year’s record of about two percent. This feat then went down again in 2005 when China occupied the eighth position of Cameroon’s export destinations. Exports to China are mainly timber, cotton and crude oil.

What, however, remains dubious is whether the Chinese involvement in development activities in Cameroon and worldwide hasn’t strings.

Cameroon and China: any Benefits?

Chinese Economic Relevance To Cameroon

By Ernest Ndukong

President Paul Biya and wife, Chantal, were in Beijing, China, last week for a 72-hour official visit. Among other reasons, the President is expected to have discussed and ensured that China’s presence is more profitable to Cameroon and to Cameroonians.

According to an International Monetary Fund (IMF) report, China is the second most valuable country in the world with a gross domestic product (GDP) of over FCFA 2,900 trillion, while Cameroon is 94^th with a market value of all final goods and services worth about FCFA 11 trillion.

With a population of over 1.3 billion people, as at November 2010, China has investments all over the world, Cameroon included. From Chinese shops through restaurants to massaging centres; their products are generally believed to be cheap, affordable and last for just a short while.

Basically, a couple of Cameroonians have gained employment in Chinese shops, clinics and restaurants based in Cameroon. Many others are teaching the world’s most famous language in China.

Many a Cameroonian can boast of the latest electrical equipment at a very low cost, thanks to China. About a decade ago, a Dissociated Vertical Deviation (DVD) set could be acquired for over FCFA 500,000; but, today, it is twenty times less than that. Electronic appliances, in general, have witnessed a tremendous drop in their prices. This, in a way, has increased the standard of living of Cameroonians as they now consume a variety of goods and services which, before now, could be attributed only to the top class in society.

The sad side of this is the non-durable nature of Chinese products. Someone, in an attempt to describe how short-lasting Chinese products are, said he bought a pair of trousers and by the time he got home, it had got torn inside the shopping bag. It has, however, been observed that Chinese products are of various qualities and prices, with the former a function of the later.

China has also helped Cameroonians to see and utilise more profitably, their economic potentials. These small-eyed looking people have caused Cameroonians to fish, farm and to rear and sell for profit. Healthcare is now more available and affordable. Could one be right to conclude that we now have a longer life expectancy?

Cameroon has benefited significantly in this four-decade-old relationship with China. The Buea Regional Hospital was refurbished by China which provided part of the building cost. The hospital, despite its shortcomings like inconsistent flow of water, a couple of arrogant nurses and doctors, haphazard alternative means of electricity; is reputable for the town of Buea.

The 20,000 capacity sports edifice in Yaounde is another Chinese handwork. Not only does this structure beautify the national capital, but hosts, comfortably, national and international sports competitions.

This partnership is expected to grow from power to power with the signing of seven agreements between Jing Tao and Biya on July 20, 2011. The agreements will mean; more interest-free loans granted to Cameroon, more non-reimbursable assistance to the Central African nation and the sending of batches of medical equipment and supplies to Cameroon.

The two Heads of State equally agreed on issues like climate change, food safety and poverty reduction. Resources, energy, infrastructure and agriculture were other topical issues the parties discussed and it is hoped that by the next trip to Beijing or Yaounde by either Presidents, it would be an evaluation meeting that should see Cameroon become an emerging nation before 2035.

Cameroon’s exports to China are witnessing an upward trend as the years pass by. In 2000, seven percent of Cameroon’s total export was to China, a portion, which grew by five percent from the previous year’s record of about two percent. This feat then went down again in 2005 when China occupied the eighth position of Cameroon’s export destinations. Exports to China are mainly timber, cotton and crude oil.

What, however, remains dubious is whether the Chinese involvement in development activities in Cameroon and worldwide hasn’t strings.

Our Financial Institutions

The Throes & Thrills Of Financial Institutions

By Ernest Ndukong

Financial institutions provide financial services and act as financial intermediaries to clients or members. They include banks, building societies, credit unions, insurance companies, pension funds, brokers, mortgage loan companies among others.

Banking is the universally accepted term for describing institutions performing financial services. Central banks and other regional financial unions like COBAC (Central African Banking Commission) regulate and set the standards of operation for other financial institutions. The Bank of Central African States (BEAC) issues the currency, regulates the money supply and sets the interest rates in Cameroon.

Commercial banks and microfinance institutions deal directly with natural and legal persons.

Apart from the routine financial services, commercial banks perform functions such as; processing of payments by telegraphic transfers, issuance of bank drafts/statements and bank cheques, lending of funds, accepting time deposits and underwriting of bonds.

Microfinance institutions have mostly low-income earners and solidarity lending groups as clients. It is a faction whose object is a globe in which, as many pitiable and near-poor family units as possible, have enduring access to an appropriate range of high quality financial services, including not just credit, but also savings, insurance and money transfer.

Many have linked commercial banks to high income earners and well-to-do in society and microfinance institutions to low-income earners and the underprivileged in society. Their claim is that bank services are very expensive and not in any way customer-friendly, while services of microfinance institutions are affordable.

Some years ago, one needed at least FCFA 200,000 to own a bank account, whereas 10 percent of that amount would create you an account with a microfinance institution. With the coming of many financial service providers, the pioneer businesses have now adjusted their rates to retain their customers.

Acquisition of loans is another issue which scared most people away from banks because their conditions were unwieldy, unclear and thought to be expensive. Conversely, it took and still takes very little to get a loan from a microfinance institution.

The Bone

The bone of contention here is; who is right and who is wrong, who profits more than the other, who is customer-friendly and who is not? Now, would you claim to be customer-friendly and lend out other people’s funds to unworthy clients, or to inexistent clients, or to those who cannot pay back?

Someone opined that ‘there is no free service offered by a bank’. This statement is subject to its own arguments. Bank staff usually claim to be busier than the bee, such that they might not even explain products to customers. After all, when it’s time to debit the customer, his opinion is not sought. Whether or not these clients bother to listen to a less busy banker, is entirely another issue.

Some bank managers devote more time to well-dressed clients who probably are coming to request for overdrafts. It has been observed that clients with the most sophisticated signatures and vocal nature are liabilities to themselves. But, these are the people who make a fast return for investors.

It is also clear that if a ‘buyam-sellam’ does not deposit her sales, the white-collar person may not have funds to take home. This is to say there should be a reconciliation in the diverse nature of treating clients because they are, independently, important to the financial abode. However, a Buea-based bank manager explained that there are some important personalities in society like the Governor and Ministers, whom you cannot allow to queue up for long. He further explained that these personalities may bring in more clients if they are treated with some respect.

Interest Rates

Bank rates, generally, are believed to be expensive when it is looked at with a narrow mind. From a broader perspective, it is commensurate to the value of the service in question. An account holder with a microfinance institution in Buea may not have access to his funds if he is in Yaounde, because the institution may not have a branch there or their operating software does not permit the operation of an account out of home.

But most, if not all, banks in Cameroon give access to their customers’ funds wherever they are located, especially with the coming of Automated Teller Machines (ATM). My good friend above should not expect this to be cheap, not to talk of being free. What is sad here is a situation where transactions are taxed per operation and not, perhaps, the bank card itself.

Interest rates, both on savings and loans, are determined by the central bank which expects banks to respect with stringency. Microfinance institutions sometimes flex the rates. This explains why their rates are generally higher than those of banks.

It is common practice to see microfinance institutions giving up to 10 percent interest on savings and 24 percent on loans. While banks’ interest rate on saving is, at most, 3.5 percent, that on loans is about 16.5 percent per annum.

Many have complained about the secrecy in determining the amount repayable for a loan in credit unions and other microfinance institutions. Jacob Fisiy wondered how he will be indebted by FCFA 5 million after repaying more than 70 percent of a FCFA 7 million loan he took from a credit union.

Contacted to react to the assertion, a loan officer, who requested not to be named, hinted that the customer is not far from the truth but he could have exaggerated. He explained that this might occur if the client is not faithful with repayment and, thus, suffers from his delinquency and, more so, when it is calculated on a reducing balance basis.

The Organisation for the Harmonisation of Business Laws in Africa (OHADA) stipulates that banks use the straight line method, which is why clients can easily know how much they will be repaying for their loans and thus can plan well.

Ironically, banks ought to have a higher interest rate on loans to generate more income so as to meet up with their obligations held at the Central Bank. The multitudes of microfinance institutions scare most people about their going concern and long term survival. The COFINEST saga is still fresh in the minds of many. It was declared bankrupt in July 2010 and placed under a liquidator, only for it to close its doors on February 22, 2011. Others that have closed up include; Zion Financial Credit, Famme Cameroun, IRCARFLAW and, recently, VIRGO Solution, who reportedly vamoosed with circa FCFA 100 million in Kumba.

Some customers refer to their bankers as ‘bank charges’, saying they are curtailed a minimum of FCFA 5,000 as bank charges on a monthly basis. Some of them expressed their worries over Cameroon Calling on CRTV on Sunday, July 17, 2011. An account-related officer counteracted by saying that bank charges on individual accounts no longer exist, if the client manages a credit balance account.

Role Of Competition

Competition, banking awareness and customer search has impacted positively to these financial service providers in particular and the economy as a whole. Most financial institutions have dropped their rates to very affordable levels. This has had a significant effect on the performance of banks in Cameroon, some of which can now boast of quarterly Balance Sheet values of over FCFA 100 billion and a yearly net profit of over FCFA 10 billion.

Competition has also had a positive impact on customers who now have more access to their funds. Financial institutions have extended working hours to around 5 pm and some even work on weekends.

Money transfer has become cheaper, faster and even more reliable. It costs FCFA 500 or less, to send FCFA 10,000 to any part of the country and the beneficiary gets the cash a few minutes later. Perhaps, the only high-priced transfer agency is Western Union and MoneyGram, probably because they are not locally owned.

Customers will now heave a sigh of relief when many other services will be offered at no cost. The Minister of Finance signed a circular stating in Article 3 that, henceforth, the following minimum banking services will be free of charge; opening of accounts, delivery of account statements, bank books, cheques, certificates of non-indebtedness, change of address and others. Loan and saving rates will also be customer friendly.

What trickles in some analytical minds is that, customers of all financial institutions are complaining about similar things. Where then, is the ideal financial house? Or are clients just too idle and lack a better topic of discussion that they spend time complaining? Or could it be that banking in Cameroon has no concern for the one who brings in the income?

There are just too many unanswered questions.

Second Bridge Over Wouri River: Economic Implications

Second Wouri River Bridge, An Economic Booster

By Ernest Ndukong

Bridges are constructed considering their function, the nature of the terrain, the material and financial dispositions available. They are intended to span physical obstacles to provide and facilitate passage over these physical impediments.

The present 1 800 meters long Wouri Bridge, constructed about sixty years ago, entertains over 40,000 vehicles on a daily basis. At the time of its building, about 2 000 vehicles were using the bridge a day. Thus, the wear and tear cannot be established figuratively, due to the magnitude of excess usage. A new bridge is, therefore, inevitable.

France will contribute in loan about 87 percent of the FCFA 100 billion-worth project to build another bridge over the Wouri River. The bridge will have 2x2 road lanes and 1 railway lane in 5 lots.

Information released indicates that the functionalities chosen for the new bridge are; to ensure a better traffic flow, thus, limiting traffic congestions; enable the safe movement of pedestrians and cycles; withstand a two-way railway line, replace the old bridge in the medium term, be compatible with the various projects related to by-pass and to eventually enable one phasing of the execution.

The construction will provide some Cameroonians with a source of income when they would be employed both as skilled and unskilled labour.

The free flow of traffic in and out of Douala will not only facilitate the delivery of commodities and on time, but it will, equally, increase the number of appointments fulfilled. Many have testified how they lost money as a result of missed appointments because they were trapped (like miners) in congestion at the ‘famous’ Bonaberi Bridge.

The localities to be served include the industrial area of Bonaberi and Douala, the West, Northwest and Southwest regions of Cameroon, and also neighbouring countries like Chad and Central Africa Republic.

What, however, still remains a mystery, as is always the case, is when the loan of over FCFA 85 billion would be repaid and at what interest rate. Normally, lenders establish their rates and terms, but little or nothing has been heard about this multi-billion francs loan.

It was equally rumoured that a Chinese company had a cheaper offer for the project but it was signed in preference for the French. Reasons are best known by Cameroon authorities. In the same chitchat, it is observed that the Chinese offer was rejected because of the non-durable nature of their products.

It should be noted that, despite the numerous loans and debt relief packages from France, who are our colonial parents, reports still put Germany at the top of bilateral donors to Cameroon.

The German Ambassador to Cameroon, H.E. Reinhard Buchholz, on July 6, revealed that Cameroon and Germany would soon sign a new convention that would cover three years of development assistance amounting to about FCFA 50 billion. He added that Cameroon remains one of Germany’s most favoured bilateral partners. A similar amount was invested in Cameroon in 2010.

Oil & Gas Sector Expands

Climate Considered As Oil & Gas Sector Expands

By Ernest Ndukong

Oil and gas are a veritable profit making sector. Seven of the 10 biggest companies in the world deal in the lucrative industry with the likes of Exxon Mobil, Royal Dutch Shell, BP, Sinopec and Total generating over FCFA 10,600 trillion as yearly revenue.

Perhaps, one of the only exceptions is South Sudan, the newest nation in the world with enormous oil reserves but arguably one of the poorest and least developed nations on earth.

That huge earnings are derived from the oil and gas sector is a truism, but the hazardous remittances need urgent intervention else, climate change would not require experts to explain it. With this in mind, Cameroon has opened the first landfill gas recovery plant which will catch methane coming from decaying waste at the Nkolfoulou waste disposal site in the outer reaches of Yaounde.

Carbon dioxide, which is less hazardous to climate change than methane, would be produced after burning the gas. The intercepted methane would subsequently be converted to cooking gas used in households and companies. This will reduce the 75 percent of Cameroon’s population still using fuel wood for cooking and let our trees standing.

The notion of capturing gas will enable Cameroon earn emissions reduction credits encompassed in the Kyoto Protocol’s Clean Development Mechanism, CDM. The Director General of HYSACAM, Michel Ngapanou, said the methane capture plant was constructed at a cost of over FCFA 2 billion and a second one is under construction at the company’s waste disposal site in Douala

The signatories, Essimi Menye and Michael Ngako Tomdio for Cameroon, and Robert P Jackson for the USA, on June 29, 2011, sealed the electricity and gas contracts between the two countries.

The US government is expected to provide a non-refundable sum of FCFA 1.3 billion to finance feasibility studies of three projects.

Delphos International Ltd will spend FCFA 334 million on feasibility studies on the Limbe gas-to-electricity project. It entails replacing the 85- megawatt thermal plant that burns heavy fuel-oil to generate electricity with a 315-megawatt capacity plant that will convert gas from SONARA into electricity.

Worley Parsons Group Inc. will spend FCFA 307 million to study a project expected to transport dirt-free natural gas from SONARA to Douala and Yaounde in a workable pipeline system.

An identical FCFA 307 million by the same company will be used to carry out a study of the Gas to Markets System Project to capture offshore gas, transform and distribute it to major gas distribution centres.

Jackson, US Ambassador to Cameroon, stated the ability of these compatriot firms to carry out the studies and also noted that Cameroon stands to benefit enormously from the projects.

Diversification of energy to cleaner sources of natural gas and increased energy supply would not only enhance business and economic activities but living standards as well.

Business and Economy; July 4,2011

Improved Growth Amidst Skyrocketing External Debts

By Ernest Ndukong

Increase in prices of raw materials caused a 4.4 percent growth in the first quarter relative to the same period in 2010. Increase in price for oil resulting from the unrest in the Arab world meant increase in oil earnings. Other primary products whose earnings contributed to the growth include cocoa, coffee, cotton and timber. 2011 growth rate is forecasted at 3.8 percent as against 2.9 percent in 2010.

While the economy is growing at an undesirable slow rate, external borrowings are skyrocketing. The Minister of Finance, Essimi Menye, said Cameroon’s debt in the first quarter stood at FCFA 23.6 billion, as against FCFA 15.1 billion in the same period last year. What remains surreptitious is the purpose for which the loan was taken, how far it has been implemented and Cameroon’s total external debts.

In a related development, Cameroon and France signed the second development and debt relief contract worth FCFA 214 billion on July 1 2011. The money would be used to finance mostly primary activities and development in rural areas. Agriculture and rural development will consume 60 percent from the package while the rest will be used to improve urban development.

Still in the light of receiving cash from external sources, Cameroon will get over FCFA 13 billion of the over FCFA 36 billion that would be given by the World Bank to the Central African Economic and Monetary Community (CEMAC) zone. Job creation, poverty reduction, improving the competitiveness of the Cameroonian economy with much focus on agriculture and professional training, was the centre of discussion between Essimi Menye and Gregor Binkert, World Bank Director of Operations for the CEMAC zone.

Cotton Production Swells

Cameroon is among the top 25 cotton producing nations in the world with a production capacity of over 150,000 tonnes per annum. The cash crop witnessed a 47 percent increase in production in 2010 and SODECOTTON projects a production capacity of 200,000 tonnes in 2011. The use of pesticides, fertilisers and high yielding seeds by farmers, are some of the reasons for upsurge in cotton production.

Almost all of this soft, fluffy staple fibre is exported, be it by individual farmers or the National Cotton Corporation who buy from local farmers. Farmers, however, are very reluctant selling their crops to SODECOTTON, claiming they offer cheaper than what is offered by Nigerian buyers. It was reported in a local tabloid that the economy lost FCFA 14 billion in 2010 due to smuggling of the crop to neighbouring countries.