For some years now, the contribution of local banks to financing the economy has been increasingly visible. The national financial and monetary committee in its recent report saluted the improved performance thanks to the new-found relationship between the State and the banks. According to the report, internal loans increased by 15.1 per cent between March 2014 and 2015. In effect, the amount of internal debts rose from FCFA 2,017.1 billion in March 2014 to FCFA 2,322.1 billion during the same period in 2015. This is justified by increased funding of the economy by local banks through the various financing modes sought by government. Meanwhile, external debts dropped by 1.8 per cent.
The report cannot be surprising for those who have been keeping track of national economic performance of late. Since 2010 when government raised over FCFA 200 billion in the money market in less than two weeks, the trend has been improving by the day. Government is increasingly embracing the sale of treasury bonds and other operations in the money market to run the economy and finance growth-induced projects. For instance, in the 2013 Finance Law, government projected to raise FCFA 250 billion from the money market through the issuance of different bonds. The amount rose to FCFA 280 billion in 2014 and over FCFA 320 billion this fiscal year. A recent ordinance of the Head of State gives finance authorities the leeway to take concessional loans to the tune of FCFA 500 billion and non-concessional loans to 1,200 billion.
The ground is fertile for the harvest. All these because of government’s resolve to get the private sector onboard the development train on one hand, and the confidence the banks have on government on the other. To say the least, mutual trust has been restored between the two. Salutary indeed! The time taken to raise money from the local banks, like is the case now, is shorter and sometimes less strenuous compared to going to donor agencies to get similar funding. The performance of the local banks augurs well for the local economy given the international economic environment characterized by crises, especially those in the Eurozone. In fact, it is telling of Cameroon’s capability to wither the storm, stand strong in the face of global economic hazards and pursue her emergence drive without much difficulty all things being equal. The mutual confidence exhibited in the chunk of money pumped into the economy from within also comforts the inclusive growth policy highly sought for by public authorities.
But the euphoria surrounding the government-bank new posture relationship to keep the economy buoyant shouldn’t veil the fact that what banks give out are not gifts but loans which must be paid back. Banks are not and shall never be philanthropic organizations. They do not even fabricate money but rather sell what they get from their clients to make gains. As such, borrowers like the State now, must have feasible projects on which the loan would be used. Better still, once borrowed, the money should be used on the identified projects so that when the time comes to refund, the State would not need to rob Peter to pay Paul. Up till now, the loan refund has not posed any problem as both parties are reportedly keeping to the terms of their agreement for the good of all. Borrowing is inevitable for a State that wants to evolve especially in the face of increasingly scarce financial resources. Having the assurance that you can turn left and right and have what you need is more than heart soothing. There is therefore need to maximize the existing opportunities offered by the banks’ confidence and move the economy forward.