(Business in Cameroon) – The Bank of Central African States (BEAC) injected CFA250 billion into the CEMAC region’s banking system on September 3, 2024. This operation came as banks continue to experience high liquidity demands. According to BEAC’s report published on September 5, 2024, the entire amount was swiftly absorbed by commercial banks, leaving some unsatisfied.
Seven banks requested a total of CFA423 billion, leading to an oversubscription rate of nearly 170%. However, BEAC, limited by the available funds, could only provide CFA250 billion at an average interest rate of 6.75%. This liquidity injection followed a failed attempt by BEAC on September 2, 2024, to withdraw CFA50 billion from banks through bond issuance, highlighting the significant liquidity needs banks face to support the economy.
The renewed liquidity injections since June 2024 mark a shift after more than a year of suspension. Previously, BEAC had adopted tighter monetary policies, including reducing refinancing margins for banks and increasing liquidity withdrawals through bond issuance. BEAC also raised key interest rates to curb inflationary pressures, which the bank attributes partly to excess liquidity in the system.
Despite these restrictive measures, bank lending in the CEMAC region continued to grow. According to BEAC’s 2023 activity report, gross loans to customers reached CFA11.742 trillion, up by 10.5% compared to December 2022. Banks turned to the interbank market for loans to keep financing economic agents in the face of stricter refinancing conditions from the central bank.
In recent months, inflationary pressures in the region have eased. This has prompted BEAC to relax its policies, resuming liquidity injections in June 2024. Over time, the amount made available to banks has increased from CFA50 billion to CFA250 billion. Meeting these liquidity needs is expected to help the CEMAC region achieve its projected growth rate of 3.6% in 2024, the highest in a decade, according to BEAC Governor Yvon Sana Bangui.
