Cameroon Explores Structured Finance for Development Strategy

Cameroon seeks substantial funding to realize its SND30 development goals by 2030, facing limitations with traditional financing and domestic resources. The country aims to utilize structured finance and innovative funding methods, as highlighted in a recent seminar focused on educating financial professionals. Experts advocate for alternative mechanisms such as securitization to mobilize required resources effectively.

Cameroon is in urgent need of significant funding to achieve the objectives established in its National Development Strategy (SND30) by the year 2030. The country faces challenges due to limited domestic resources and restricted access to conventional financial markets. As a solution, Cameroon is now considering alternative financing avenues, with a particular emphasis on structured finance. A seminar dedicated to this theme took place in Douala from February 26 to 28, 2025, organized by GM Finance under the auspices of the Ministry of Finance.

The seminar was designed to enhance the knowledge of financial professionals from various sectors, including government agencies, state-owned firms, private enterprises, multinational corporations, and banking institutions. Hubert Otele Essomba, a financial expert and associate director at GM Finance, highlighted that structured finance comprises intricate financial tools that blend loans, equity, bonds, and derivatives to formulate tailored financial solutions. Among these tools are public-private partnerships (PPPs), hedge funds, sovereign wealth funds, securitization, and credit ratings.

The Ministry of Finance and financial advisors assert that exploring alternative funding sources is vital for Cameroon to satisfy its liquidity requirements. This need arises at a moment when the nation’s debt remains substantially lower than the regional limit of 70%. For the year 2025, which is pivotal for Cameroon’s development initiatives, the government plans to raise CFA1.795 trillion in debt, with 70.8% from project loans and 29.2% from budgetary support.

From 2025 to 2027, Cameroon anticipates borrowing CFA5.407 trillion. To procure these funds, the nation must depart from traditional financing strategies and adopt inventive mechanisms that balance risk and returns. Essomba emphasizes the potential of tapping into sovereign wealth funds, pension funds, and bonds due to their flexibility. He states, “There is plenty of funding available on the international market. However, Cameroon must develop strong financial engineering and create an attractive environment to draw in these funds.”

Securitization emerges as a promising prospect in Cameroon’s financial strategy. Catherine Gerst, a former managing director of Moody’s France, noted that securitization facilitates financing for development projects effectively. “What makes securitization unique is that it allows institutions to leverage the assets on their balance sheets—credit portfolios for banks or receivables for companies—by selling them to a special-purpose entity that raises funds from the market. This transforms illiquid assets, such as receivables, into tradable securities.”

In conclusion, for Cameroon to mobilize the necessary resources to achieve its ambitious SND30 goals, structured finance and innovative mechanisms such as securitization will be crucial. These strategies necessitate robust financial expertise, transparent governance, and a favorable environment for business to attract international investors.

Cameroon faces significant financial challenges to meet its development goals set for 2030, necessitating a shift to alternative financing strategies, particularly structured finance. The recent seminar demonstrates a commitment to enhancing financial expertise in this area, emphasizing the need for innovative instruments such as securitization. To attract international investment, Cameroon must foster an environment conducive to financial engineering and transparent governance.

Original Source: www.businessincameroon.com

About Carmen Mendez

Carmen Mendez is an engaging editor and political journalist with extensive experience. After completing her degree in journalism at Yale University, she worked her way up through the ranks at various major news organizations, holding positions from staff writer to editor. Carmen is skilled at uncovering the nuances of complex political scenarios and is an advocate for transparent journalism.

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