(Business in Cameroon) – Interest rates charged by banks in the CEMAC region dropped over the past year, even as the regional central bank tried to tighten credit.
Data from the Bank of Central African States (BEAC) shows that the average interest rate on loans between July and September 2024 was 9.45%, down from 9.78% during the same period in 2023. That’s a drop of 33 basis points, despite BEAC’s ongoing efforts to cool down inflation by making borrowing more expensive.
Since the end of 2021, BEAC has been trying to rein in inflation with a stricter monetary policy. It stopped injecting liquidity into banks, increased its key interest rates, and took steps to drain cash from the banking system. In theory, this should have led to higher lending rates, making it harder for businesses and consumers to borrow. But that’s not what’s happening.
Instead, rates went down—and at the same time, banks actually gave out more loans. According to BEAC, the amount of new credit issued in the region rose 1.52% between the third quarter of 2023 and the third quarter of 2024.
The situation highlights a disconnect between BEAC’s policy and how banks are behaving on the ground—raising questions about how effective the central bank’s tools really are in the region.