In a recent webinar on financing industrialization in Central Africa organized by the Subregional Office for Central Africa of the UN Economic Commission for Africa (ECA), leaders of the private sector called on State authorities to lay emphasis on improving the enabling environment for investment in order for industrialization to thrive in the sub-region. They also called for greater transparency by the private sector in their business operations as an enabler to the functioning of financial markets that can help with mobilizing resources for industrialization.
According to Mr Célestin Tawamba, who heads the Cameroon Employers’ Association (GICAM) – a leading movement of industrialists in the country, financing is an important factor for boosting industrialization but “you always have to create a trustworthy infrastructure for this to happen,” referring to the role of the State. Such infrastructure, he said, includes the creation of special industrial zones and a well-functioning financial market. He noted that for the market to function properly, companies also need to be well structured and transparent in their business transactions. But he warned that excessive taxation does not help matters, arguing for tax regimes based on profits, rather than on the cash flow of a companies – which is the prevailing regime.
Expressing similar views, Cameroonian economist and to Government Advisor – Mr. Christian Penda Ekoka, said the creation of economic clusters bringing together the full range of actors in the value chain of the supply or demand of particular products, for instance wood products, would improve productivity that attracts investment for industrial players. He opined that the lack of such poles have contributed to the decline of industrialization in the Central African subregion in general and in Cameroon in particular, stating that industrial growth in Cameroon, for instance, declined from 3.6% in 2016 to 1.3% in 2017.
Debaters also pointed to the difficulty with long-term financing. According the Secretary of State for Industry of Equatorial Guinea, Mr Cesar Hinestrosa Gomez, who joined the panel remotely from Malabo, in such an environment, banks consider the risks of long-term loans that could finance industrialization as very high. He therefore joined other members of the panel to call for the creation of guarantee funds in the subregion.
Ms Mama Keita who heads the Data Centre of the ECA’s Subregional Office for Central Africa posited that the inability of banks to offer long-term loans also stemmed from the very low volume of private savings in the subregion and across many parts of Africa. This corroborated the argument put forth by Ms Gaimin Nonyane – head of Economic research at Ecobank, who testified that “liquidity is a serious problem in Africa because saving rates are very low and this constrains the lending power of the banks”.
Ms Mama Keita however went on to add that the subregion needs to find ways to improve on the mobilization of private savings, take advantage of the opportunities offered by artificial intelligence and developing stakeholders’ capacity in drafting bankable industrial projects that attract financing.
The General Manager of the Cameroon Development Corporation (CDC) – which is the second largest employer in the country after Government, Mr Franklin Ngoni Ikome Njie, added to Ms. Keita’s argument for bankable projects, saying “it is a matter of focusing on where we have comparative advantage” for projects in order to get financing. Reacting to Mr Njie’s intervention, a participant remarked that large outfits such as the CDC, should actively look for joint-ventures with bigger outfits abroad to improve their financing to move to an industrial stage of production.
In the view of the General Manager for Central and West Africa of the credit risk insurance firm, COFACE – Mr Olivier Bagneki, one way to stimulate the growth of small and medium sized industrial outfits (SMEs) to strive in business and expand, is to leverage the use of factoring – a process whereby companies can sell their invoices from slow-paying clients in order to mobilize immediate working capital that they (SMEs) need to pay for important expenses in carrying out their projects.
The contributions of the webinar will enrich discussions at the 34th session of the Intergovernmental Committee of Experts for Central Africa (ICE), which the Subregional Office for Central Africa of ECA has convened for N’Djamena, Chad from 18 to 21 September 2018 under the theme: “Financing Industrialization in Central Africa.”