VIII. TRADE AND PROJECT FINANCING Cameroon's banking system is controlled by the Banque des Etats de l'Afrique Centrale (BEAC), a common central bank serving five other member countries of the Central African (UDEAC) sub region. BEAC is controlled by the French treasury. Like all other signatories to a 1948 agreement setting up the franc zone, Cameroon is obliged to hold at least 65 percent of its foreign reserves in an "operational account" (or "compte d'op ration") supervised and managed in Paris, France, by the French treasury. This account is the principal condition by which France continues to guarantee the convertibility of the CFA vis-a-vis the french franc. Lending and borrowing base rates are set by the BEAC, and no banking institution is allowed to lend below the floor rate, except by derogation of Parliament. The current borrowing rate of 8 percent percent was established in 1994 and the lending rate is established at 12.5 percent, plus a 3 percent tax. Despite a system-wide restructurization exercise carried out in 1989-1992, Cameroon's banking system has liabilities substantially in excess of any realistic valuation of its assets. Member states of BEAC last year created a supervisory authority over all banking and finance institutions in the "Union Douani re et Economique de l'Afrique Centrale " (UDEAC) sub region and entrusted it with extensive powers to discipline delinquent institutions. COBAC (Commission Bancaire de l'Afrique centrale), as the authority is called, has already withdrawn the license of Cameroon's only investment bank. Cameroon's banking system is currently made up of nine full- service commercial banks. These banks are obliged to hold non-interest-bearing government bonds equivalent to 10 percent of their assets. GRC arrears on previous bonds has been consolidated at BEAC, and commercial banks are no longer willing to purchase new bonds. BEAC has begun the training of commercial bank staff ahead of the announced creation of the securities market. Foreign exchange controls exist in Cameroon primarily for statistical purposes and to enable the Ministry of Finance to certify that remittances conform with established rules, regulations and the terms of investment code incentives. Authorizations for foreign transfers are routinely granted. Foreign exchange rationing is not a current concern in Cameroon's commercial circles. Foreign investors can obtain local financing for investment and trade purposes at non-discriminatory terms. However, as a result of Cameroon's comparatively high interest rates, most prefer to borrow from foreign sources. The GRC does not have any Eximbank-type programs for the financing of Cameroon's exports. Cameroonian exporters and their foreign counterparts deal directly with their bankers. Importers and exporters use internationally-accepted methods of settlement. The guaranteed, irrevocable letter of credit is the most frequently used, and the most secure, method of settlement. Eximbank suspended lending to Cameroon in 1992 and cancelled a substantial part of Cameroon's arrears. Multilateral financial institutions have been active in project financing in Cameroon. The World Bank and its affiliate, the International Finance Corporation (IFC), are present in Cameroon. The African Development Bank is present as well. These institutions have been financing both the public and the private sector. They have financed productive investments as well as public works projects. 1. The International Bank for Reconstruction and Development (IBRD), a member of the World Bank group makes long-term loans at market- related rates primarily to developing nations. The International Development Agency (IDA), the soft loan window of the World Bank, lends to the poorest of the development countries. Both the IBRD and IDA work to promote broadly based economic growth and frequently focuses on structural adjustment, sectoral reform and individual project lending and operate under the same set of procurement guidelines. Typically the World Bank does not finance the entire cost of a project. Rather, it finances the components of a project purchased with foreign exchange, which on average is about 40 per cent of the total project cost. Each project may cover a wide variety of sectors and can involve anywhere from one to hundreds of separate contracts providing export business opportunities for suppliers worldwide. CONTACTS: U.S. Department of Commerce Liaison to the U.S. Executive Directors Office International Bank for Reconstruction and Development 1818 H. St., NW Washington D.C. 20433 Tele: (202) 458-0118 Fax: (202) 477-2967 Office of Multilateral Development Banks U.S. Foreign Commercial Service U.S. Department of Commerce Room H-1107 Washington D.C. 20230 Tele: (202) 482-3399 Fax: (202) 273-0927 2. The African Development Bank (AFDB), headquartered in Abidjan, Cote d'Ivoire, is an international financial institution created by Africans in 1963 to promote the economic and social development of its member African countries. Founded with initial capital resources of USD 250 million, it has authorized capital today of over USD 22.3 billion. The bank belongs to the African Development Bank Group (ADBG) which also includes the African Development Fund (ADF) and the Nigerian Trust Fund (NTF). The AFDB makes loans to development projects in 51 countries in Africa. The ADB provides development financing on concessionary terms to the poorer African member countries. The NTF was established by the Government of Nigeria in 1976 to assist in the development efforts of the poorer ADB members. The ADFB has 21 non- regional members. The United States joined in 1982. CONTACTS: U.S. Department of Commerce Liaison Office to the U.S. Executive Directors Office African Development Bank Ave. Joseph Anoma 01 B.P. 1387 Abidjan 01, Cote D'Ivoire Tele: (225) 21-46-16 Fax: (225) 22-24-37 Office of Multilateral Development Banks U.S. & Foreign Commercial Service U.S. Department of Commerce Room H-1107 Washington, D.C. 20230 Tele: (202) 482-3399 Fax: (202) 273-0927 Following are Cameroon's nine commercial banks and their U.S. correspondents: 1. Banque Internationale pour le Commerce et l'Industrie (BICIC): French American Banking Corporation, New York. 2. Soci t Camerounaise de Banque-Cr dit Lyonnais (SCB-CL): Cr dit Lyonnais, New York 3. Soci t G n rale de Banque au Cameroun (SGBC): Soci t G n rale, New York 4. Banque M ridien- BIAO Cameroun (BMBC): Meridian Bank, New York, and Bank of America, New York. 5. Standard Chartered Bank: Standard Chartered Bank, New York. 6. Cr dit Agricole du Cameroun (CAC): D. J. Bank, New York. 7. Caisse Commune d'Epargne et d'Investissement (CCEI): Republic National Bank, New York, and Citibank, New York. 8. International Bank of Africa Cameroun (IBAC): Bank of America International, New York 9. Amity Bank: Citibank, New York, and Bankers Trust, New York.