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Banking Sector: Unexploited Opportunities Still Abound

With the banking rate below 20 per cent, market shares in the banking sector are still available for new investors.

The banking sector in Cameroon appears to be a lucrative domain with new investors indicating interest to curve out a niche of their own. The latest such interested investor is the Equatorial Guinea National Bank that is in negotiations with authorities to make business in Cameroon. Reasons that makes the Cameroonian banking sector attractive are as diverse as the economy itself. Cameroon’s economy is the most diversified in the Central African sub-region reason for its resilience to double shocks caused by a slump in crude oil and raw material prices as well as security challenges in some of its regions. According to Standard Chartered Bank Senior Economist for Africa, Victor Lopez, Cameroon has been the fastest-growing economy in CEMAC since 2015 and is set to remain so in the near term. Its economy has held up well so far, given its diversified economic base and relatively firm fundamentals (low debt and comparatively manageable deficits). The banking rate in Cameroon is still low with less than 20 per cent. The 2016 Report on the Nation’s Economic, Social and Financial Situation and Prospects produced by the Ministry of Finance, indicated that “access to banking and financial services is on the rise, reflecting the increase in the banking rate from 13 per cent in 2014 to 15.5 per cent in 2015. With this low banking rate, experts say, there is still room for the sector to expand. An economist and Public Finance expert, Dr Ariel Ngnitedem holds that Cameroon presents a wide range of opportunities for the banking services. “The inclusiveness is not yet completed. We still have some potentials in the banking shares,” he quipped. Thus, the banking sector in Cameroon could be said to be under exploited as market shares are still open for investors. The huge presence of micro-finance institutions (411 in 2015) and local loan thrift schemes (njangi) is a pointer to the opportunities inherent in the sector. It is also important to note that the informal sector plays a pivotal role in the attractiveness of banking institutions. The country’s economy is driven mostly by the Small and Medium- sized Enterprises which according to statistics from the Ministry of Small and Medium- sized Enterprises, Social Economy and Handicraft, controls 95 per cent of the economy. The sector thus generates a lot of money which attracts innovative banking services. Concordant statistics indicate that some 15 commercial banks are operating in the country as at mid-2017 with 283 branches across the country.

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