China Eximbank provides RMB 450 million government concessional loan for 1500 Social Housing Units Project

On January 12, 2011, China Eximbank and the Republic of Cameroon signed a government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO.1 (2011) TOTAL NO.(351) No. 1420303052011110020] worth RMB 450,000,000 (CFA 38 billion) for the 1500 Social Housing Units Project. The borrowing terms of the GCL were as follows: a maturity of 20 years, a grace period of 5 years, a 2% interest rate, a 0% default (penalty) interest rate, a 0.30% commitment fee, and a 0.30% management fee. The proceeds from this loan were on-lent to Société Immobilière du Cameroun (SIC). The ultimate borrower (SIC) agreed to deposit project-related revenues in a revenue account to facilitate repayment. The proceeds of the GCL were to be used by the borrower to finance 85% of the cost (RMB 524,000,000) of a commercial contract between the Ministry of Urban Development and Housing of the Republic of Cameroon and China Shenyang International Economic & Technical Cooperation Corporation, which was signed on December 23, 2010. As of December 31, 2020, the loan (GCL) had achieved a 100% disbursement rate and its outstanding amount was equivalent to CFA 27.4 billion. Its outstanding amount was equivalent to CFA 40 billion as of December 31, 2016, CFA 35 billion as of December 31, 2017, CFA 32 billion as of December 31, 2018, and CFA 31 billion as of December 31, 2019. The purpose of the project was to build 1,500 low-cost housing units, including 650 housing units in Yaounde; 650 housing units in Douala; 50 homes in Bafoussam; 50 homes in Bamenda; 50 homes in Limbe; and 50 accommodations in Sangmelima. China Shenyang International Economic & Technical Cooperation Corporation was the contractor responsible for project implementation. The project entered implementation in March 2013 and reached completion on April 25, 2017. There are some indications that the China Eximbank loan for the 1500 Social Housing Units Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank. The lender responded by withholding new loan disbursements. Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Project ID#88213). Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions. The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022. Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals). The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed). Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress. Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project. He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding. He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’

Additional details

1. The Chinese project title is 1500套社会住房 or 喀麦隆1520套社会住房项目. The French project title is Projet de Construction de 1500 Logements Sociaux au Cameroon. 2. The loan agreement can be accessed in its entirety in SourceID#67399 or https://www.documentcloud.org/documents/20485597-cmr_2011_172. 3. The loan identification number in the Government of Cameroon's Commonwealth Secretariat Debt Recording and Management System (CS-DRMS) is 2011101. 4. Société Immobilière du Cameroun (SIC) is a Cameroonian state-owned enterprise.

Number of official sources

10

Number of total sources

24