Ndukong Ernest Chefon: Bonds, A Safe Heaven For Your Money

Ndukong Ernest Chefon: Bonds, A Safe Heaven For Your Money: Bonds, A Safe Heaven For Your Money By Ernest Ndukong Chefon A bond is a debt security , under which the issuer owes the holders a debt...

Bonds, A Safe Heaven For Your Money

Bonds, A Safe Heaven For Your Money

By Ernest Ndukong Chefon

A bond is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest or to repay the principal at maturity.

Bonds provide a safe ground for investment for risk averse and risk neutral persons within the business world.  

These sets of people invest in bonds for the predictable income stream and to preserve their capital investment.

The Cameroon Government through the Ministry of Finance recently launched its fourth bond issuance to the tune of FCFA 150 billion, after those of 2010, 2013 and 2014 in which FCFA 200 billion, FCFA 50 billion and FCFA 150 billion respectively were raised.

The attractive 5.5 percent interest bearing “I Owe You” to the State has until October 12, 2016, to be closed to mark the end of a fifteen day opening for a mega jackpot to be stroke by risk-fearing investors. 

This venture is particularly interesting in that not only will the investor be supporting the development of our fatherland, he/she will also be benefiting from a tax free return on investment.

The bond venture is unarguably preferable to a savings account. Directly, it yields an annual interest of 5.5 percent, up and above by over 2 percent to what a savings account will generate.

Misapprehensions about bonds abound, but the fact is that bonds can contribute an element of stability to almost any portfolio.

Bonds are a safe and conservative investment and ideal for anyone not wanting to put their money at risk.

Bonds equally provide security to the holder as they are preferred over shareholders in a company setup in the event of liquidation. Bonds are also less volatile and stabilise the value of one’s investment when other treasury instruments struggle.

In like manner as paradise is pleasurable, the process to get there is not free of sacrifice and risk. Bonds to experience certain perils like interest rate risk, inflation risk, credit risk and call risk. Interest rates are inversely related to bond prices, thus an increase in rates will lead to a fall in bond prices.

Default in bonds is not 100 percent avoidable; therefore, there is some identifiable credit risk involved.

Bonds can be redeemed by the issuer thus making the anticipated profits not being realised- call risk. Inflation can cause tremendous drop in the value of money.

All told, stocks are the much heard and talked about in the business world with swings in the market analysed in economic journals.

Bonds on the other hand don’t harvest the same satisfactory appeal, primarily because; they are unknown to the average investor.

It, however, should be noted that in investment, what is popular is hardly profitable.

Investment in the Government bonds will lead to the manifestation of Idowu Koyenikan’s words that “when money realises that it is in good hands, it wants to stay and multiply in those hands”.

CDC- Heartbeat Of Cameroon’s Economy

By Ernest Ndukong

Economies are rated based on the living standards and living costs of her citizens, which is a function of the per capita income of that economy.

Indices used to rank economies are; growth and development. Unemployment, literacy, infrastructure, health care, social amenities; are some parameters used in ascertaining the wellbeing of citizens of an economy.

Economic development implies changes in income, savings and investment, along with progressive changes in the socio-economic structure of country; while economic growth refers to an increase in the real output of goods and services in the country.

The Cameroon Development Corporation (CDC), being an agro-industrial entity, contributes enormously to the growth and development of the communities in which its estates and units are located, in particular, and to Cameroon, in general, and the rest of the world.

Employment

The CDC can boast of being the second largest employer, after the State of Cameroon, with a work force of over 21,000 employees; thus hundreds of thousand others depend on these privileged hands for livelihood.

This economically empowered population forms an enviable market for goods and services produced by other companies who rely on the revenue to pay their workers.

Financial service producers offer financial services of diverse forms to these sparingly worthwhile Cameroonians. Banks sell their products which range from salaries and saving accounts, through granting loans to discounting personal cheques for service fees thereby generating revenue from CDC spillovers.

Market

Credit Unions have increased remarkably around the CDC environment. This has directly created jobs for hundreds of workers and empowered them financially leading to higher standards of living. For instance, the population of Nigeria is a formidable strength to that economy, likewise; the populated nature of the CDC forms a first-hand market for every product, especially products tied between levels 1 and 3 of Maslow’s need hierarchy.

Talking about a market, the corporation is a huge market for inputs like fertilisers, fuel, movable and immovable equipment of all sorts - and the list is in-exhaustive.  Some companies make annual turnovers of billions of francs CFA from supplies just to CDC. How about fuel consumption of over 120 million FCFA a month or spare parts and other materials imported from overseas - a veritable market indeed.

Balance of Payment/Trade

The business of CDC helps in giving the Cameroonian economy a positive balance of payment and trade on the foreign exchange platform. Her business repatriates home more than three scores of billions of francs annually. This puts our economy in a rational position to benefit from the advantages of foreign trade. CDC’s reputable involvement in foreign trade has built some unvalued goodwill for the country, that even her citizens resident overseas, enjoy some unmeasurable degree of freedom and friendliness.

Feeding the Nation

Two of CDC’s three main products are exported and palm oil and its bi-products are consumed locally. Every household uses cooking oil on a daily basis for preparing food. The bi-products of palm oil are used in feeding and growing animals and in the production of soap and kernel oil is also used medicinally. What is sold to the industries is added some value to end up as vegetable oil which the nation consumes. The average Cameroonian family consumes sub-standard banana.

Social Amenities

This agro-industrial complex created in 1947 provides electricity to some of its remote areas where ENEO has not yet had installations. One does not need to over-emphasise the importance of light as even God affirmed how pleasing it is, during the creation of the world.

The Corporation has embraced the near obligation to disenclave parts of our beloved fatherland by opening roads and constructing bridges. Its social clubs are at the service of the nation. Recreational facilities like swimming pools, tennis courts, football pitches, to name a few, have been made available to the over 21,000 workers and hundreds of thousands within the environs of CDC.

As a respecter of corporate social responsibility, the CDC provides health care to her workers and their immediate dependents. Worthy of note is the fact that the medical population of the CDC is above 50,000 people. To ensure that this need is attained, the CDC has built and equipped hospitals, clinics, health posts to realise the dream of ‘a healthy workforce is a productive workforce’.

Bio-friendliness

CDC has green plants and green plants are not just important to the human environment, they form the basis for long-term health of environmental systems. Green plants remove carbon dioxide from the atmosphere and generate oxygen required for human and animal life. CDC trees reduce pollution, control erosion, constitute wildlife habitat, saves energy & enhanced human comfort. CDC trees purify the air we breathe, act as sound barrier to noise and cool temperatures.
An African proverb says thus ‘you should not hoard your money and die of hunger’.

Commercial Delights, Sniffles of Cameroon's Presidential Election

Commercial Ecstasies, Tears Of Presidential Election

Ernest Ndukong

It is interesting to have twenty-three persons vying for the country’s top job- the President of the Republic of Cameroon. Could it mean that as many as fifty-three and now twenty-two have noticed Biya’s shortcomings and want to correct and do better? It is splendid if the response is affirmative.

The twenty-three candidates all have diverse strategies of achieving their set goals and the goals are many and different.

From the build-up characterised by decamping, meetings to determine parties’ candidates, registration of voters, campaigns and campaign funds to Election Day and now waiting to hear the winner, there has been enormous commercial occurrences.

The media has been particularly concerned with the Presidential Elections as they owe a responsibility to serve their readers, viewers and listeners sufficiently and reliably. A good number of these media organs have become very popular resulting from their coverage and the consumers’ judgment of the truism in the information they present.

 It has been, undoubtedly, established that many of these media organs have witnessed a boom in sales and turnover during this period. In as much as this period presents better and higher proceeds, a newspaper manager recounts that turnover depends on the strength of publications and how reliable news is.

Politicians also bought pages in newspapers and air/video time on radio and television to pass their parties’ messages to the Cameroonian populace, to request for confidence and their votes. Despite some politicians’ good fate in conveying their manifestos, others used some unscrupulous media organs to destroy their opponents. The question in most lips is ‘what reputation would these unethical media organs have after the elections?’

The nation and its people have also been exposed to the outside world thanks to foreign media organs and the new media. Africa 24, for instance, has been broadcasting from Yaounde for a while now while other foreign houses pay exacting focus on our election. Online publications, facebook, twitter, Skype and YouTube have had significant hits in Cameroon and by Cameroonians in the Diaspora. This will largely help in setting the minds of our Diaspora friends who will participate in this year’s elections.

It is worthy to specify that most of the Presidential Election debates and analyses were from the private press for the reason that the government suspended all political oriented programmes on State media. Whether or not it is a correct decision, most Cameroonians quip that they needed even more political oriented programmes at this time to be abreast with happenings in and out of the country.

Still in line with communication, local and international telecommunication organs have had increased revenue during this period. Appointments, discussions, suggestions and even resolutions were mostly on the phone as only two weeks were allocated for campaigns.

Transport communication equally experienced a peak with movements be it by land, air or rail. Twenty-three presidential candidates and innumerable campaign teams toured the nation and even beyond in two weeks to deliver messages, policies and promises to execute when given the opportunity to occupy the Etoudi palace.

Cameroonians have moved towns and regions to vote where they registered, some run back home in fear of any political turbulence that may result from the elections. All and sundry in the transport sector experience an upsurge in activities and thus an upsurge in earnings though some did not make absolute profits due to reasons like short-sightedness in business, fear of hierarchy and inadequate planning.

 It was reported in the media last week that a political party commandeered a partially filled CAMAIR-CO plane to the Northern part of the country while there were ordinary passengers and other political parties stranded at the Yaounde Nsimaleng airport.

Some pundits argue that it was a near suicidal mission to meet Cameroonians in all the administrative units of the country and others abroad considering the time campaigns were launched to the voting day.

When many people travel, hawkers along the way benefit from increased turnover, toll gates have higher returns and filling stations experience a boom in litres pumped.

When people migrate to different various places, hotels, snacks, bars, tourist sites and wenches observe an amplified market resulting to profits. People would need places to spend the night or nights, they would need food and drinks, need to relax and have fun and fun. This would be intense if it is a delegation of, say, a political party.

Church services on Election Day were reduced to about just two instead of about four for some churches and attendance was not at its best or as on other normal Sundays. The fewer the number of Christians, the smaller the amount generated from offerings and tithes, everything being equal.

Activities and work in offices and companies were almost completely halted or postponed till after the elections. One could find very few senior government officials in their offices as most had travelled out or were in the field to canvass for votes for the ruling party. Contracts in companies were practically postponed till after the elections for reasons difficult to associate with a presidential determination exercise.

The Promises

Many consider politicians as liars because most if not all have said things which they end up not fulfilling. During this presidential period, the twenty three candidates said many things which fall under sectors like economy, health, education, defence and national sovereignty. Their dreams are good to the ears but the fear of them becoming a nightmare is not absent in the minds of Cameroonians. Cameroon should be a paradise if the eventual winner taps from the ideologies, policies and objections of the twenty-two vanquishes or even inviting them to be part of the ruling team as we saw Barack Obama appointing Hilary Clinton Secretary of State in the United States of America.

Campaign Funds

The State treasury swelled by FCFA 265 million as registration by 53 initial presidential hopefuls and it is expected that FCFA 690 million would be paid to the twenty three remaining candidates even though some have rejected the amount claiming it is not commensurate to the work expected of the presidential aspirants and teams. Contributions and donations in kind, cash and cheque at home and abroad were also made for most parties in preparation of a successful poll for respective parties.

Dangote's Triumphant Entry To Cameroon

Dangote Entry Economic Hiker

By Ernest Ndukong

The coming into the country of the richest man in Africa and his group, whose fortune surpasses US$ 13 billion, can, to some extent, be compared to Jesus’ triumphant entry into Jerusalem.

The Dangote Group plans to invest some US$ 700 million in Cameroon, starting with a FCFA 56 billion (US$ 115 million) worth cement project. The economic, political, social and reputational impact that the project(s) will have on this Central African nation and its people, cannot be gainsaid.

The ground-breaking project took three years to move from paper to the ground. This hitherto ‘invisible’ idea finally became tangible last September 19, with the signing of agreements between the parties concerned and the laying of the foundation stone of the cement factory in Douala, Cameroon’s economic capital.

The cement manufacturing plant is expected to be completed by mid 2013 after which there would be 1.5 million metric tons increase in cement in the country on a yearly basis. This capacity is only about six percent less than what the lone cement producing outfit CIMENCAM produces in a year.

Dangote Group will import 70 percent of clinker - the raw material for cement and the rest would come from within.

Cement Sufficiency

According to a release from the Ministry of Industry, Mines and Technological Development, the country’s demand for the bolster product is over 2.5 million tons a year. It is also stated that this consumption grows annually by about eight percent.

By 2014, CIMENCAM’s third plant is expected to be productive, producing over 600.000 tons of cement annually. This would mean about 3.7 million tons of cement would be available and demand should be at about 3.1 million tons, everything being equal.

The market implications when supply surpasses demand are enormous and beneficial, particularly to the consumers. The price must drop for equilibrium to be established. Consumers will then buy absolutely more with their available income. The effect of this on the beauty of our villages, towns and cities are equally going to be massive.

It is important to note that the price of local cement has doubled over the past decade. The fortifying substance averagely sells at FCFA 5.000 with a lot of black marketing involved.

The Government will reduce or stop importation of cement into the country since the need for more cement to satisfy national demand would no longer be. This would mean less money spent on importation, leading to a favourable Balance of Payment (BOP), which currently has a surplus of FCFA 114 billion.

Employment

It was common practice to see many people working on a particular task in industries and factories. With mechanisation and technological advancement, fewer persons are needed for work to be completed. Nonetheless, there would still be some employment of about 200 direct workers and several hundred indirect jobs created by the cement manufacturing plant.

This would be reflected in the lives of many other Cameroonians whose relatives are part of the multi-billion project. The dependency chain would be relaxed, shortened and made more beneficial and lucrative.

The per capita income of Cameroonians would witness an upsurge, thus, leading to a higher standard of living. The effects of an improved living standard will cut across the wealth and health of Cameroonians and would definitely increase the life expectancy ratio.

Reduced unemployment would result to fewer idle minds and fewer devilish thoughts. Our society would be worth emulating and Cameroon should become an emergent economy even before 2035.

The pumping of billions into a third world economy is just one way to transform it to a developed nation. More cash means more financial transactions, more spending, increased circulation of currency, improved economic and business activities, increased income and many more positive implications. Bailouts in the Euro zone are still fresh in our memories.

Exposure

Nigeria is Africa’s biggest economy and Dangote is Africa’s richest man. The coming of this duo to Cameroon would expose the country to other foreign investors. It is an undeniable fact that Dangote is renowned not only in Africa but in the world and the goodwill associated with such popularity cannot be easily valuated numerically.

Society harbour’s many Thomases who would love to see before believe. It is expected that in not too long a time, these Thomases would come knocking to invest in Cameroon.

Many other foreign investors from almost all continents are already in Cameroon. Cameroon has enormous potentials and raw materials of all types and only need harnessers who would transform these natural and man-made resources to semi-finished or finished products for local consumption at affordable rates.

This mouth-watering deal is anticipated to widen the relationship between the two countries that are, independently, power houses of their respective regions; CEMAC and ECOWAS. The average Nigerian is either a politician or a business mogul or both.

Diplomatically, the two nations would have set precedence for peace and reconciliation for others to imitate. Cameroon and Nigeria were in conflict for over a dozen years over the Bakassi peninsular which now belongs to the former, after years of deliberations at The Hague. It is unusual to have such international investment projects between nations formerly considered enemies. Africa, being the mother of civilisation, it is just but normal, because, there be no permanent enemies.

Dangote’s Other Interests

The Dangote Group operates in as many as ten other countries in Africa, including some of Africa’s biggest economies, and is involved in diversified manufacturing and distribution. Their products range from sugar and salt through flour, pasta, tomato and vegetable oil to telecommunications, port management and food processing, amongst others.

Cameroon and Cameroonians are stakeholders in all of these sectors in which the Dangote Group is operating at the moment in different countries. Surely, the remaining US$585 million to complete the projected US$ 700 million will be invested in some of the other products.

The sector it would eventually invest in is not more important than the more than quadruple impact it will have, compared to the US$ 115 million cement manufacturing plant project.

CIMENCAM’s Third Plant

Cimenteries du Cameroun (CIMENCAM) said, September 23, that it had started work on a third plant to cost about FCFA 50 billion to complete. Cameroon’s Minister for Industry, Badel Ndanga Ndinga, laid the foundation stone for the new plant which is expected to be producing 600.000 to 700.000 tons of cement each, year as from 2014.

With many cement producing plants or companies, competition will prevail and a producer will only make abnormal profits if the right product is sent to the market at the right time, in its right quantity and at the right price. Monopoly will be a thing of the past.

A school of thought argues that, instead of opening a new cement manufacturing plant, the already existing CIMENCAM, whose services leave much to be desired, should have been expanded and made more productive, capable of satisfying local and foreign demand.

It should be noted that Cameroon also supplies countries in the sub-region such as Chad, Central African Republic and Gabon and imports cement for local use.