Brief Info

MINFI

Order No.00000638/MINFI of 17 July 2023 setting the conditions for granting and implementing the state guarantee to public establishments and public and private companies, in respect of domestic loans for the financial year 2023.

31 July 2023

On 17 July 2023, the Minister of Finance, H.E. Louis Paul MOTAZE issued Order No. 00000638/MINFI setting the conditions for granting and implementing the State guarantee to Public Establishments and Public and Private Companies, in respect of domestic loans for the financial year 2023 (the « Order« ). Within the meaning of the Order, the State guarantee is a portfolio guarantee whose purpose is to promote loans to businesses at improved maturity rates, enabling these businesses to develop their activities to the full.

The first aspects of the Order relate to the nature, conditions and characteristics of the guarantee and the loans eligible for the guarantee.  The State of Cameroon provides a portfolio guarantee capped at CFAF 200 billion until 31 December 2023[1] . This guarantee is allocated at 30% for public establishments and companies and 70% for private sector companies. The coverage limit of the guarantee is limited to 30% of the sums due on the due date for large companies and 70% for SMEs. This ceiling may be adjusted by the State to 60% for large companies and 80% for SMEs operating in economically depressed areas such as the North-West, South-West and Far-North regions.

Loans eligible for the State guarantee are intended to finance the working capital and investment needs of companies operating in one of the sectors identified as a priority by the National Development Strategy 2020-2030 (SND30)[2] .

The Order defines the conditions of eligibility for the portfolio guarantee. The State guarantees loans granted to public institutions, public and private companies in Cameroon that are not subject to reorganisation proceedings and operate in one of the SND30 priority sectors[3] .

In order to benefit from State-guaranteed loans, eligible companies put together a file that requires the approval of the lending institutions, the Ministry of Finance (MoF) and the National Public Debt Comittee (Comité National de la Dette Publique, CNDP).

The guaranteed loan agreement is evidenced by a guarantee certificate which gives rise to the payment of a guarantee commission liquidated in favour of the Autonomous Sinking Fund (Caisse Autonome d’Amortissement), at a rate of 1% for public companies and 1.5% for private companies.

Any guarantee call by the lending institution must fully comply with the conditions set out in the Order[4]. It may not be called until 90 days after the debt has been downgraded and the bank account has been legally closed. The lending institution sends MoF a request for compensation following the company’s default on payment, based on an established request form. If the claim is approved, the State pays the amounts due within 60 days and the lending institution issues MoF with a certificate of non-repayment in accordance with a defined format within 90 days. In the event of non-payment and a guarantee call, the State will only reimburse its share of the debt when the account is closed.

The action for recovery following payment of the State-guaranteed loan is taken by the lending institution with a view to recovering the outstanding amounts, under penalty of repayment of the sums received. On first request, the lending institution reimburses the State the sums collected in proportion to the guarantee, after deduction of the costs inherent in the procedure. Payments are made within 90 calendar days of the date of collection.

It should be noted, however, that the State cannot be called upon in the event of default by the principal debtor as a result of force majeure.

[1] Article 4 of the Order.

[2] Article 5 (1) of the Order.

[3] Article 6 of the Order.

[4] Article 9 of the Order.