(Business in Cameroon) – The average bank loan rate in Cameroon fell to 8.29% by the end of Q3 2024, down from 8.91% a year earlier, according to the Bank of Central African States (BEAC). The 62-basis-point drop was largely driven by lower rates for SMEs, which account for 80% of the country’s businesses.
While borrowing costs rose for most, SMEs and large corporations were exceptions. Large companies saw stable rates at 6.88%, but SMEs benefited from a sharp cut, with their average loan rate dropping from 12.24% in September 2023 to 8.98% a year later a 3.26-percentage-point decline.
The BEAC report does not explain why banks eased credit conditions for SMEs, traditionally seen as having limited financing access. However, international financial institutions such as the International Finance Corporation (IFC), Proparco, and the European Investment Bank (EIB) have been injecting funds into Cameroon’s banking sector through credit lines and guarantees, enabling local banks to offer SMEs better loan terms.
Higher Rates for Other Borrowers
Unlike SMEs, individual borrowers face rising costs. The average personal loan rate climbed to 15.75% by late September 2024, up from 14.98% a year earlier. This puts individual borrowing costs 6.77 percentage points higher than SME rates.
Other businesses outside SMEs and large corporations are also feeling the impact. Their average loan rate jumped from 14.18% to 18.88%, a 470-basis-point increase. Public sector borrowers and local governments saw their rates rise from 14.81% to 16.54%.
The overall rise in borrowing costs stems from the BEAC’s tight monetary policy, in place since late 2021, which includes higher key interest rates, reduced liquidity injections, and tighter bank funding conditions. While these measures aim to control inflation, SMEs have managed to secure better financing terms thanks to backing from international lenders, reinforcing their role in Cameroon’s economy.
