Recent economic cycles and regulations are key drivers in Cameroon’s loan market. Banking regulation is pivotal and is governed by laws and institutions both nationally and within the community, such as the Bank of Central African States (BEAC), the Central African Banking Commission (COBAC), and the Central African Economic and Monetary Community (CEMAC).
Economic Impact
Real GDP growth fell slightly to 3.4% in 2022, down from 3.6% in 2021, primarily due to sustained investment and non-oil activities. Inflation rose sharply to 6.2% in 2022, surpassing the CEMAC target of 3%.
Despite a 2020 recession owing to COVID-19 countermeasures, the economy bounced back with 3.4% growth in 2021.
Regulatory Landscape
Notable national laws include Law No 2022/006, addressing banking secrecy, and Law No 2019/021, regulating credit activities in banking and microfinance.
Community rules also apply, particularly in crisis management of credit institutions, anti-money laundering, and foreign exchange regulation.
Market Trends
Financial institutions can publicly raise funds, provide loans, and offer other services, subject to approval.
With 13 operational banks holding assets of approximately XAF1,700 billion (approximately USD3 billion), Cameroon’s banking system demonstrated resilience even during the 2008-2009 financial crisis.
The Ukraine conflict has had far-reaching economic consequences globally, with notable repercussions on Cameroon’s loan market.
The high-yield market in Cameroon plays a crucial role in financing, yet it remains under-researched. Several factors hint at its evolving landscape:
Alternative credit providers like MFIs and microcredit agencies have gained prominence in Cameroon, affecting financing terms and structures:
Cameroon’s banking and finance sector is adapting to meet the demands of a diversifying investor base and borrower needs. Key trends are outlined below:
The rise in ESG and sustainability-linked lending reflects a global trend, driven by regulatory shifts and stakeholder pressures. In Cameroon, while direct data on ESG lending is limited, key developments indicate a move toward sustainable finance.
Climate-Action Investments
World Bank studies propose that poverty in Cameroon could be significantly reduced by 2050 through climate-action reforms.
Green Growth
The African Development Bank (AfDB) suggests leveraging natural resources to fund green initiatives in Cameroon.
Alternative Financing
A UNDP forum emphasised the role of sustainable finance in Cameroon’s economic agenda.
Green Bonds
Such bonds are recognised as a viable method for funding green projects, potentially laying the groundwork for sustainability-linked lending in Cameroon.
Project Funding
AfDB has financed sustainable urban sanitation and port development, indicating a shift toward green project finance.
In Cameroon, entities wishing to offer financial services to companies must abide by regulatory requirements. These requirements differ for banks and non-banks, as summarised below.
Requirements for Banks
Credit institution license
Banks in the CEMAC zone must procure a unified license, facilitating cross-border operations.
Corporate structure
Banks must be established as public limited companies with board governance.
Shareholder information
Detailed data, including shareholding distribution and notarised declarations, must be provided.
Management profiles
Necessary personal and professional details of directors and officers must be submitted.
Procedures for Banks
Application
The bank must first draft an authorisation request.
MINFI submission
A duplicate of the application must then be presented to the Ministry of Finance.
COBAC process
The Central African Banking Commission then reviews and decides on the application within six months.
For Non-Banks
Equity financing
Equity Financing is possible via angel investors, venture capital, private equity, and IPOs.
Strategic partnerships and joint ventures
Companies can form partnerships or joint ventures with other firms to access capital, technology, or distribution channels.
Debt financing
Debt financing is possible through the issuance of bonds, convertible debt, compound transferable securities, supplier credit, and trade credit (companies can negotiate deferred payment terms with customers, effectively obtaining financing from their accounts receivable).
Collective Investment Schemes (CIS)
These are structured as portfolios that can pool funds from multiple investors. The types of CIS available include:
Innovative financial instruments
The introduction of instruments like Islamic finance securities.
Emerging Regulatory Frameworks
Regulatory changes
These include:
Regulation of Foreign Lenders Providing Loans in Cameroon
Freedom to lend
Foreign lenders can issue loans in Cameroon, according to Regulation No 02/18/CEMAC/UMAC/CM of 2018, governing CEMAC’s foreign exchange.
Declaration
Loans from non-resident entities must be declared to the Ministry of Finance (MINFI) 30 days prior to disbursement.
Documentation
Declarations must include the loan contract, repayment schedule, and borrower’s financial statements.
Post transaction
Within 30 days post-loan, borrowers must provide proof of effective loan utilisation.
Credit institutions
It is permitted to execute international transfers for loan repayment upon furnishing relevant documentation.
Repayment reporting
The MINFI and Central Bank must be informed within 30 days of repayments.
The Uniform Act on Securities (AUS) under OHADA does not restrict the nationality of lenders or the provision of security to foreign entities.
The AUS categorises securities as personal and real, stating that real securities are valid per Uniform Act provisions and may be established by debtors or third parties.
Community law specifies some securities, like those related to water, air, and maritime law, as well as interests not covered by the Uniform Act or between financial institutions, that could be subject to specific legislation.
Restrictions and Controls on Foreign Currency Exchange
Enhanced administrative control
Transactions exceeding XAF1 million per month per entity are generally unrestricted, provided the origin of the funds to be transferred is justified, and the requested documents are supplied to certified commercial banks. These measures aim to combat money laundering and terrorism financing.
Opening foreign currency accounts
Opening a foreign currency current account outside the CEMAC member states now requires authorisation from the BEAC (Bank of Central African States). Similarly, opening such accounts within CEMAC member states also necessitates BEAC authorisation.
Repatriation of export earnings
The obligation to repatriate export earnings remains in place, with no exceptions provided.
Importation of goods
Importation of goods within the CEMAC region is generally unrestricted, except for gold and other goods subject to specific regulations. Member states, including Cameroon, have some discretion to impose additional restrictions on goods imports for humanitarian, health, security, or environmental reasons. All goods imports must be declared to customs.
Expanded role of BEAC
The foreign exchange regulation strengthens the role of the BEAC by involving it more in transaction reporting, authorisation, monitoring compliance with exchange regulations, and interpreting CEMAC regulations.
Restrictions on the Use of Loan Proceeds and Debt Securities
Agent
According to OHADA’s Uniform Act on General Commercial Law, a commercial agent negotiates and possibly finalises contracts for third parties in sectors like sales and services. There are the following agent types:
Trust
In finance, a trust is a legal construct where a trustor assigns a trustee to manage assets for a beneficiary.
Equivalents
In CEMAC, loan transfer mechanisms rely on contractual practices, as well as legal statutes. Key contractual elements are outlined below:
Under Cameroonian law, this transaction can take two forms:
In accordance with Article 1689 of the Cameroon Civil Code, in the transfer (assignment) of a claim, right or action against a third party, delivery takes place between the assignor and the assignee by delivery of the document of title. The essential element in an assignment of claims is the guarantee of the existence of the claim, without which the assignment will be devoid of any purpose (Article 1693 of the Civil Code).
Under OHADA law, the assignment of a claim by way of security must be notified to the debtor of the assigned claim in order to be enforceable against them. Failing this, the debtor must intervene in the deed (Article 84 of the AUS). With regard to registration, in accordance with Article 82 of the AUS, a contract for the assignment of a claim by way of security takes immediate effect between the parties, regardless of the date on which the assigned claim arises, falls due or is payable, and is enforceable against third parties from the time it is entered in the Trade and Personal Property Credit Register (TPPCR).
Debt buy-back by the borrower or sponsor is not specifically regulated in the CEMAC region by specific regulations or legal provisions.
However, this does not mean that debt buy-back is entirely prohibited. On the contrary, the possibility of repurchasing debt depends primarily on the terms and conditions specified in the loan or borrowing agreement between the borrower and the lender. These terms can vary from one contract to another and may either permit or restrict the repurchase of debt by the borrower or sponsor.
In the context of CEMAC banking law, it is important to note that “certain funds” provisions are not explicitly regulated by specific legal provisions within the region. Rather, they are typically governed by contractual agreements between parties involved in acquisition finance transactions.
The ways in which certain aspects of “certain funds” may be addressed in CEMAC banking practice are outlined below.
Contractual Agreements
The rules regarding “certain funds” in public acquisition finance transactions within CEMAC countries are primarily established through contractual agreements between the relevant parties, including the borrower, lenders, and arrangers. These agreements specify the obligations of the parties to ensure that the necessary funds are available and committed for the acquisition.
Documentation
The choice between short-form or long-form documentation in CEMAC banking transactions may depend on the complexity and size of the transaction. Short-form documentation is commonly used for straightforward transactions, while long-form documentation provides more comprehensive details for complex deals.
Public Filing
In CEMAC, the documentation related to acquisition finance transactions is not typically publicly filed unless required by local regulations or stock exchange rules.
We have not encountered any recent legal or commercial developments that necessitated revisions to our legal documentation.
There are legal provisions that limit the amount of interest that can be charged in the CEMAC region, including Cameroon. Here are the key points to consider:
Usury Laws in CEMAC
Regulation No 04/19/CEMAC/UMAC/CM regarding the Effective Global Rate, the prevention of usury, and the publication of banking conditions in the CEMAC region indicates that any agreement concealing a loan in any form and by any person, at a rate which, at the time it is granted, exceeds the usury rate set by the Central Bank’s Monetary Policy Committee, constitutes a usury loan.
Cameroon’s Legal Framework
In Cameroon, Article 1907 of the Civil Code requires that loan agreements do not exceed the legally set interest rate.
Article 3 of Law No 2004/015 of 21 April 2004, which fixes the legal interest rate for the execution of judicial decisions and the conventional interest rate, states that the conventional interest rate cannot exceed the rate set by the monetary authority, plus one point.
The reference rate is the average annual Effective Global Rate (TEG) used by credit institutions. For the fourth quarter, the TEG average is communicated by the Minister of Finance.
Penalties for Non-Compliance
The CEMAC Regulation provides for penalties, including imprisonment ranging from one to six months and fines ranging from XAF100,000 to XAF100 million or one of these two sanctions (Article 32).
The Cameroonian Penal Code prescribes a fine ranging from XAF5,000 to XAF1,000,000 and a prison sentence of 15 days in case of recidivism, along with a doubled fine.
Cameroon’s Banking Secrecy Law, enacted on 27 April 2022, outlines rules for financial contract disclosure. Key provisions include the following:
In Cameroon, payments to lenders are subject to specific tax regulations:
In lending to entities in our jurisdiction, two main charges are typically relevant:
In Cameroon, foreign lenders and non-traditional banks face several tax and regulatory issues, which can be mitigated as follows:
Under OHADA law, assets available as collateral to lenders fall into three categories:
The AUS outlines formalities for these collaterals, modernising credit guarantees and procedures. Failure to meet these formalities renders the security unenforceable. In bankruptcy, new security against old debt is unenforceable if taken 18 months before insolvency.
OHADA law allows for a universal security interest over a company’s current and future assets, akin to the “floating charge” in other jurisdictions. Under the AUS, assets can be assigned to secure obligations, covering both present and future assets.
However, implementation specifics may vary and certain conditions must be met. For instance, the AUS allows parties to agree that, upon non-payment, the secured creditor gains ownership of money or officially quoted assets pledged.
In Cameroon, entities can offer downstream, upstream, and cross-stream guarantees, involving both parent companies and their subsidiaries provided that the formalities of validation of regulated agreements are followed according to Articles 350, 438, 502 and 853-14 of the OHADA Uniform Act on Commercial Companies and Economic Interest Groups. Under OHADA law, various security interests can be employed in such contexts:
Under Article 639 of the OHADA Uniform Act on Commercial Company and Economic Interest Group Law, the target company is explicitly prohibited from “granting security for the subscription or purchase of its own shares by a third party”. This means that, in the context of an acquisition, the target company may not grant guarantees or securities to facilitate the acquisition of its own shares.
This article makes no exception for the possibility of granting security for the acquisition of its own shares. The extraordinary general meeting may authorise the purchase of its own shares only as part of a capital reduction not motivated by losses, but this does not extend to the granting of securities for the same purpose.
We have not identified any other specific restrictions, significant costs, or consents required beyond those mentioned elsewhere in 5. Guarantees and Security. It is essential to consider that the applicability of additional restrictions or requirements may vary depending on the specific circumstances and the relevant legal jurisdictions involved.
Under OHADA law, security is typically released when the underlying obligation is met.
Obligation Fulfilment
The main way to release security is by meeting the obligation it was designed to cover. Once met, the creditor’s claim on the security ceases.
Pledge Rules
If the pledged property has an official valuation, parties can agree that, upon non-payment, the creditor takes ownership. This does not happen if the debtor meets their obligation.
Enforcement
In case of non-payment, creditors may enforce the security, such as through public auction. This is unnecessary once the obligation is met.
Under OHADA’s AUS Articles 225 and 226, the priority of competing security interests in Cameroon is as follows:
Priority in Immovable Property
Priority in Moveable Property
Contractual Priority Variations
Priority can be contractually altered within lender groups, provided it aligns with mutual agreements.
Contractual Subordination
Provisions survive a Cameroon-incorporated borrower’s insolvency if well-drafted, legally enforceable, and OHADA-compliant.
Under Cameroon law, material security interests that can prime a lender’s security interest by operation of law typically involve statutory liens or claims that take precedence over other creditors’ interests. Some examples include:
There are several ways to structure around priming liens and protect a lender’s security interest:
Under OHADA law, loan default typically triggers collateral enforcement for secured lenders. The initial enforcement step involves notifying the debtor of the intended action. Failure to comply leads to legal action for debt repayment. If unsatisfied, the creditor may initiate insolvency proceedings.
The OHADA Uniform Act on Simplified Recovery and Enforcement Procedures (AUVE) outlines two methods to compel payment: injunction to pay and injunction to deliver or return property.
AUVE also regulates enforcement measures, including:
According to the general principles of private international law applicable in Cameroon, a clause that chooses a foreign law as the law governing the contract, or which submits to a foreign jurisdiction, will generally be accepted by Cameroonian courts, subject to certain conditions, outlined below.
Choice of Foreign Law
The choice of a foreign law as the law applicable to the contract is generally upheld, provided that it does not violate Cameroonian international public policy or mandatory local laws.
Submission to a Foreign Jurisdiction
The choice of a foreign jurisdiction to settle disputes arising from the contract is also likely to be recognised, unless the Cameroonian courts consider themselves exclusively competent due to the nature of the dispute or for reasons of public policy.
Waiver of Immunity
A waiver of immunity clause would require careful consideration. Jurisdictional immunity, particularly for states or state entities, is a complex issue that cannot easily be waived by a simple contractual clause.
Formal Requirements
The contract must be properly formalised, and jurisdictional clauses must be clearly set out to avoid any ambiguity.
Under the legal framework provided by Law No 2007/001 of 19 April 2007, which governs the recognition and enforcement of foreign judicial decisions and foreign arbitral awards in Cameroon, the enforceability of a judgment given by a foreign court or an arbitral award in Cameroon is subject to specific procedures and conditions, as outlined below.
Competent Authority
The President of the Court of First Instance or a judge delegated by the President serves as the judge for disputes related to the enforcement of foreign judicial decisions and acts and foreign arbitral awards in Cameroon (Article 5 of the law).
Application for Recognition and Enforcement
To seek recognition and enforcement in Cameroon, the party must submit an application to the competent Cameroonian authority. This application should include the following documents:
Verification by the Judge
The Cameroonian judge responsible for the enforcement of foreign decisions and arbitral awards will verify certain criteria:
Decision on Enforcement
The Cameroonian judge will issue a decision based on the verification results (Article 8). If the conditions are met, the judge may grant “exequatur” (recognition and enforcement). This recognition may be partial, applying only to specific aspects of the foreign decision.
Appeal
The decision of the judge responsible for enforcement can only be appealed before the Supreme Court (Article 8).
There are no other matters that might impact a foreign lender’s ability to enforce its rights under a loan or security agreement.
The commencement of insolvency processes under OHADA law significantly impacts a lender’s ability to enforce its loan, security, or guarantee. The key implications are outlined below.
Suspension of Individual Actions
When insolvency proceedings begin, all individual creditor actions against the debtor are suspended or prohibited. Creditors cannot pursue outstanding debts individually during insolvency.
Creation of Collective Mass
Insolvency proceedings automatically create a collective mass of creditors represented by the appointed trustee (syndic). The trustee acts on behalf of this group and can take legal actions on its behalf, linking individual creditors to the process.
Impact of Redress Proceedings
If insolvency aims at redress or rehabilitation (redressement judiciaire), a concordat de redressement must be negotiated between the debtor and creditors, seeking solutions to the debtor’s financial issues. Court approval marks the end of redress proceedings, and the debtor regains control while following the concordat’s terms.
Outcome of Liquidation
In cases of liquidation (liquidation des biens), the business dissolves, and creditors are organised into a union. Creditors await the liquidation’s outcome, with claims settled based on a legal hierarchy. Some creditors may not recover fully, resulting in losses.
Creditor Claims
Regardless of redress or liquidation, creditors must submit claims to insolvency proceedings, specifying the nature, amount, and guarantees. The court reviews and acknowledges these claims before determining their rank among creditors.
In the event of a company’s insolvency under OHADA law, the order in which creditors are paid is determined by their legal ranking (Articles 225 and 226 of the AUS).
In Cameroon, insolvency proceedings’ duration varies based on several factors like initiator, outstanding debts, and procedure type (preventative settlement or liquidation). Creditor objections and the firm’s financial health can also affect the timeline.
The quickest cases, initiated by companies keen on uncontested liquidation, may wrap up in approximately six months.
In OHADA jurisdictions, company rescue procedures outside formal insolvency are governed by two mechanisms: conciliation and preventive settlement (règlement préventif).
Conciliation
The conciliation process is preventive, consensual, and confidential. The goal of negotiations between debtors and creditors is to reach a consensus and formalise it in a conciliation agreement. The key traits of this approach include a focus on prevention, achieving mutual agreement, maintaining confidentiality, and the involvement of a neutral conciliator. The overarching objective is to restructure either the finances or operations of the company to avoid insolvency.
Preventive Settlement (Règlement Préventif)
The preventive settlement mechanism aims to prevent insolvency and resolve debts through a concordat (debtor-creditor or court-approved concordats). The primary purpose is to avert insolvency and settle debts using a concordat as the resolution framework.
In Cameroon, there are several risk areas for lenders if the borrower, security provider, or guarantor were to become insolvent:
Enforcement of Loan
The commencement of insolvency proceedings generally triggers a stay of enforcement actions against the debtor. This means that lenders may be prevented from enforcing their loans during the insolvency proceedings.
Enforcement of Security
Similarly, the enforcement of security interests may also be stayed during the insolvency proceedings. However, secured creditors generally have priority over unsecured creditors in the distribution of the debtor’s assets.
Value of Collateral
As a lender, one main risk is that the value of the collateral decreases below the cost of the security that was lent out.
Invalidation of Cover
The interests of the lender are completely separate from those of the borrower, so the lender’s right to claim is unaffected if the borrower does anything to invalidate the cover.
Automatic Liability
The guarantor to a facility automatically becomes liable to the creditor upon default by the borrower.
Project finance in Cameroon aims to fill infrastructure gaps and stimulate economic growth. Key insights include:
Major Projects
Cameroon’s government has laid out noteworthy second-generation projects for 2020-2030. The IMF highlights financial challenges and advises prudent planning.
Infrastructure
Focus areas are transportation, hydropower, sanitation, and ports. Notable is the Nachtigal Hydropower Project, a public-private initiative to address power issues.
Financing
Central sectors are transportation, energy, and sanitation. Funding combines government resources, loans, and collaborations with international financial entities like the African Development Bank.
Cameroon is committed to fostering public-private partnerships (PPPs) to address infrastructure deficits and drive economic development.
Significantly, the legal framework for PPPs was strengthened with the enactment of Law No 2023/008 of 25 July 2023, establishing the general regime for public-private partnership contracts in Cameroon. This recent legislation underscores Cameroon’s commitment to structuring and promoting PPPs for crucial infrastructure projects and to boost economic growth.
In addition to these laws and regulations, there are guidelines for PPP procurement in Cameroon, covering the Expression of Interest document, bidding advice, bid evaluation, and bidder prequalification, among other aspects.
The country established its PPP policy framework between 2005 and 2009, with 21 projects disclosed in 2013 in areas like transport, urban development, energy, and agri-food.
Potential PPP transaction challenges may include strict regulations, bureaucracy, regulatory ambiguity, and financing difficulties. Understanding Cameroon’s PPP legal and regulatory landscape is vital for effective engagement.
The applicable laws and dispute resolution procedures for project documents in Cameroon can be complex and depend on contract terms and the nature of the relevant project. Here is a condensed overview.
Dispute Resolution
Litigation or ADR
Cameroon offers litigation or alternative methods like arbitration or mediation for disputes.
Arbitration for projects
Arbitration, chosen in project contracts, may streamline future disputes under different contracts.
Governing Law
Contracts specify the governing law and dispute resolution procedure. Parties often have autonomy unless local laws restrict choices.
International arbitration is common in international contracts, impacting enforceability and dispute resolution.
Local Laws and Regulations
Cameroon’s legal framework is influenced by both the French civil law and the English common law traditions due to its bilingual and bijural nature. This duality could impact the governing laws and dispute resolution mechanisms for project documents.
Cameroon has a Public Contracts Code that sets out the rules applicable to the award, execution, and control of procurement, which might influence project contracts within the country.
Foreign Ownership of Real Property
Based on Ordinance No 74-1 of 6 July 1974 regarding the real estate regime in Cameroon
Foreign individuals or legal entities wishing to invest in Cameroon can conclude leases or acquire real estate properties, except in border areas, as stipulated by Article 10 of the aforementioned ordinance. The acts for such transactions must be endorsed by the relevant ministerial authorities to be valid.
Water Rights
In Cameroon, water rights are generally exercised over lands of the public maritime and fluvial domains, among others. According to Ordinance 74/2, establishing the domain regime, lands of the public domain are inalienable, meaning they cannot be transferred to others either for a fee or for free. They cannot be part of any transaction leading to their transfer to individuals or state organs.
Remedial Rights on Liens by Foreign Lenders
The ordinance does not explicitly address the rights of foreign lenders holding or exercising remedial rights on liens on any such property. However, Articles 7 and 8 set out the conditions for obtaining land titles and the establishment of real estate rights on properties, which could extend to remedial rights on liens by lenders.
Restrictions and Legal Requirements
Certain legal formalities are required for the validity of acts relating to real estate transactions, as laid out. Furthermore, in case of resale, the state has a pre-emptive right to repurchase the property.
Structuring a deal and determining the legal form of a project company in Cameroon entails a thorough understanding and consideration of various legal, regulatory, and financial facets. Here is an overview of the main issues and relevant laws.
Legal Form of Project Company
Project companies in Cameroon often take the form of a corporation or a limited liability company.
The key laws are the OHADA Uniform Act on General Commercial Law, OHADA Uniform Act on Commercial Companies and Economic Interest Groups.
Foreign Investment
There are no general restrictions on foreign investment, but certain sectors may have specific regulations.
The key laws are the Investment Charter of Cameroon, and specific regulatory laws.
Central Bank Regulations
Monetary policy and financial regulation are overseen by the Bank of Central African States (BEAC).
Key regulations pertain to foreign exchange control, monetary transfer, and lending regulations.
Relevant Treaties
Cameroon is a party to various international treaties and agreements that could impact project structuring and operations.
Examples include treaties within the CEMAC (Economic and Monetary Community of Central Africa) region, and bilateral investment treaties.
Regulatory Approvals and Compliance
The relevant approvals are required from governmental and regulatory bodies like the Ministry of Finance, the National Anti-Corruption Commission, and sector-specific authorities.
Local laws, including labour laws, environmental regulations, and tax laws, must be complied with.
Financing
Financing of the project must be structured in compliance with local and international financial regulations and standards.
Taxation
Adequate planning and compliance with taxation laws are crucial for the financial viability of the project.
The key laws are the General Tax Code of Cameroon, the various Finance Acts and their implementing circulars.
Contractual Agreements
Clear and enforceable contracts for construction, supply, operation, and other critical project components must be drawn up in accordance with local laws and international standards.
Dispute Resolution
Clear dispute resolution mechanisms must be established within contracts. It is also important to understand the legal framework for dispute resolution in Cameroon.
Insurance
Appropriate insurance cover should be in place to mitigate project risks.
Environmental and Social Compliance
National and international environmental and social standards and regulations must be complied with.
Intellectual Property Protection
Any intellectual property associated with the project must be complied with in accordance with Cameroonian laws and international treaties.
Project finance in Cameroon encompasses a variety of funding sources and structures. The financing framework often mirrors international standards, while also reflecting the country’s economic landscape and regulatory environment. Below is an overview of typical financing sources and structures employed in project financings within Cameroon.
Bank Financing
Traditional bank loans remain a prevalent source of project financing. Local and international banks provide loans with varying terms and conditions based on the project’s viability and the borrower’s creditworthiness.
Syndicated loans, involving multiple banks, are also common for larger projects.
Export Credit Agency (ECA) Financings
ECAs provide financial support to promote exportation and often support projects that will utilise exports from their respective countries.
ECA financing can provide favourable terms including lower interest rates and extended repayment periods, enhancing the project’s financial feasibility.
Project Bonds
While not as common as bank financing, project bonds can be issued to raise capital from public or private investors. This method is more likely to be used for larger, well-established entities or projects with predictable cash flows.
Alternative Financing Sources
Streaming or royalty financing
This is more common in the mining sector where a company receives upfront financing in exchange for a percentage of future production or revenues.
Private equity funding
Private equity firms may provide capital in return for equity stakes in the project. This is a common financing mechanism for startups and growing companies.
Commodity trader financing
This involves financing from commodity trading companies, often structured around the purchase and sale of the project’s output.
Development Financial Institutions (DFIs)
DFIs like the African Development Bank provide financing with preferential terms to promote economic development. They often participate in project financings, especially in infrastructure and energy sectors.
Multilateral and Bilateral Funding
Funding from multilateral institutions and bilateral agreements between countries can also be a significant source of project financing, especially for large-scale infrastructure projects.
Government Grants and Subsidies
Governmental grants and subsidies may be available for projects aligning with national development goals or those in priority sectors.
PPPs
PPPs are increasingly being used to finance infrastructure projects. These partnerships leverage both public and private sector resources to finance, develop, and operate projects.
Microfinance Institutions
For smaller projects or entrepreneurs, microfinance institutions offer an accessible source of financing, though usually at higher interest rates.
Supplier Credit
Supplier credit can also be a source of project financing, where suppliers provide goods or services on deferred payment terms.
Leasing
Leasing arrangements for equipment or other assets are also common, especially in projects where upfront capital is limited.
In Cameroon, managing natural resources involves various considerations linked to the nation’s legal framework. Key aspects include export limitations and local beneficiation.
Export Control
Cameroon restricts the export of raw materials, especially petroleum products, aiming to promote local processing and value addition. This approach maximises economic benefits from natural resources and boosts the nation’s industrial sector.
Local Value Addition
Cameroon encourages local processing of natural resources to generate more economic value. This process drives industrial development, job creation, and economic diversification. The regulatory framework, including the Mining Code, emphasises local transformation before resource utilisation or export.
Legal Framework
Cameroon’s natural resources sector operates under several laws and ordinances, notably the Mining Code and Petroleum Code. These legal instruments outline rights, obligations, and regulatory compliance for stakeholders. They govern exploration, exploitation, and resource management within Cameroon’s jurisdiction.
In Cameroon, various laws and regulatory bodies oversee environmental, health, safety, and community consultation concerns for projects. Below is an overview of some of the key aspects.
Environmental Laws
Topics covered under environmental laws include environmental management, water and land law, conservation of biodiversity, resource protection, mining and energy law, climate change law, environmental justice, and human rights. The legal frameworks pertaining to international trade and sustainable development are also under the purview of environmental laws.
A significant legislation is Law No 96/12 of 5 August 1996 relating to Environmental Management in Cameroon, which encompasses aspects such as Environmental Impact Assessment (EIA).
Occupational Safety and Health (OSH) Laws
The primary legislation for health and safety at workplaces is Order No 039/MTPS/IMT of 26 November 1984, which sets the general rules of hygiene and safety at the workplace as well as Law No 96/03 of 4 January 1996 establishing a framework law in the field of health.
The national regulatory framework for Occupational Safety and Health (OSH) is outlined on the International Labour Organization’s (ILO) platform, providing a picture of the main elements of OSH legislation in Cameroon.
Health Regulations
The Directorate of Pharmacy, Medicines and Laboratories (DPML) regulates pharmaceuticals under Law No 90-035 of 10 August 1990, which establishes general rules for the practice and organisation of the pharmacy profession. Additionally, Framework Law No 2018/020 of 11 December 2018 regulates food and supplements. Each body oversees compliance in their domains, adhering to national health standards in synergy with the National Authority for Standards and Quality (ANOR).
Community Consultation
While the specific laws or bodies governing community consultation were not found in the provided sources, the Environmental Impact Assessment (EIA) process usually involves community consultation to assess and mitigate the social impacts of projects.
Regulatory Bodies
Various ministerial decrees and orders form the scope of health and safety legislation for companies and industries, implicating different governmental departments in the oversight of these areas.
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