Commercial Bank’s diagnostics on financing agricultural business

Three specific themes provided the discussions between Commercial Bank managers, bankers, experts and customers, promoters of credit institutions, economic and institutional operators on November 3, 2022, led by Léandre Djummo, CEO of Commercial Bank. “For Erhvervsbanken, it is a matter of enabling the bank’s customers and other actors involved in the development of service and production activities in the agro-industrial sector to exchange, conduct dialogue and propose strategies and actions adapted to the local context, which will allow them to strengthen agricultural production and food security”, initially indicated Leandre Djummo.

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Around the general theme “The financing of the agro-industry as a lever for the import substitution strategy”the participants were edified on “the inventory and the most significant progress in terms of import substitution”, presented by the expert in economic policy analysis, Babissakana, managing director of the Prescriptor company, “the impact of the strategies of import substitution on the economy” , by Benjamin Fomba Kamga, economist and teacher at the University of Dschang, and “the role of banks in the financing of agro-industrial projects”, by Nikolaos Milianitis, head of the regional representation for Central Africa in the European Investment Bank (EIB).

Five products that the government considered priorities in processing and national production were analyzed by the expert Babissakana: rice, fish, wheat, milk and corn. Products that could benefit from bank financing under the import substitution policy. This group of foods represents 70% of Cameroon’s food imports, or 408 billion FCFA. Babissakana offers significant financial support from the government or banks to companies capable of massive exports. The financial expert also calls for the extension of the import substitution policy to include non-food products such as oil products, which significantly increase Cameroon’s trade balance deficit. Keep in mind that the agro-food sector represents 1494 billion FCFA of Cameroon’s GDP (16.7%).

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In his presentation, Benjamin Fomba Kamga highlighted the limits of the import substitution strategy: the creation of profit situations on the products, the increase in learning time due to the absence of competition and the creation of pockets of corruption to maintain the benefits of this policy. The teacher proposes an alloy on the triptych “import-substitution-industrialization-promotion of exports”, in priority sectors: agro-food, rice, corn, fish, milk, wheat, textiles, clothing, leather, mining, metallurgy and iron and steel. In addition, Benjamin Fomba Kamga believes that public and private financial support to reduce Cameroon’s trade balance deficit (about 1000 billion FCFA on average per year) must go hand in hand with the principles of good governance. The teacher believes that corruption, mismanagement or favoritism will have a negative effect on these contributions of funds to support import substitution. However, it acknowledges “the urgency of advancing the import substitution policy outlined in SND 30 by involving all stakeholders and experts”.

Nikolaos Milianitis reiterated in his presentation the possibility of obtaining sufficient financing in favor of import substitution (multilateral bank, regional banks, national development banks, local commercial banks, microfinance, cooperatives, etc.). This specifies, under strict conditions, the head of the EIB’s regional representation for Central Africa (adequate capital of the promoter, good technical expertise and management capacity, well-established business plan, decisive feasibility studies, co-financing with the EIB, etc. ….). The topics addressed by participants in the 3rd edition of the Commercial Bank Business Development Forum gave rise to extensive exchanges on the difficult road access to agricultural basins, the banks’ low investment in agricultural projects, lack of clarity in business plans or unrealistic projects that were implemented. out of certain agricultural initiatives.

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“We hope to have made an inventory of the financing possibilities for the agro-industry in light of the government’s strategy to promote import substitution and discuss the contribution of local companies to achieving its goals. Through the Business Development Forum, Commercial Bank wants to contribute to the development of tools to optimize investments in the agro-industrial sector and create winning synergies to develop this activity sector, which generates both growth and jobs.” , concluded Léandre Djummo.

Reaction 1. “Access to land is very difficult for agro-industrialists…”, Mr. Tchoffo, Agro-industrial

I started processing cassava. In a project of 3500 hectares, I am utilizing only 500 hectares because I am facing several difficulties. The very first challenge is land, which is difficult to access. This does not only concern cassava cultivation. When we talk about import substitution, the responsibility must be shared between the state and the economic players in agriculture. The state believes it can reduce dependence on imports by subsidizing both wheat and corn crops while providing financial support to agro-industrialists. This policy will not work. We must also think of lowering taxes and duties for agro-industrialists and traders and then encourage them to pay their taxes regularly. The conditions for providing financing must also be relaxed by the financial institutions. The Business Development Forum thus allows us to identify these various problems of financing the agro-industry.

Reaction 2. “Commercial Bank is an exceptional bank in terms of support”, Gabriel Dombeu, PCA ADI

The difficulties in connection with import substitution are of different kinds. However, the agro-industrialists that we are summarize them around two factors. First access to land, then finance. Nor can we hide this competition from foreign investors who do not agree with the state’s goals. In order to succeed in import substitution in Cameroon, it will be necessary to harmonize the state’s goals with the concerns of the economic actors and the indicators of the banks. It is therefore necessary to unite in this form of consultation, the public authorities, the economic players and Handelsbanken. But it must be recognized that the Managing Director of Commercial Bank is an exceptional banker because he has a flair for the concerns of his clients, individuals or companies. His special character is that he knows business as well as banking. We just want to ask that he continue to accompany us as he already is.

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