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Ulrich D’POLA KAMDEM, Senior Economist at the Nkafu Policy Institute and Coordinator of the Nkafu Policy Institute

Cameroon: Nkafu Policy Institute Publishes Report on the Effect of BEAC’s Monetary policy

January 16, 2021

By Boris Esono Nwenfor

Officials of Foretia Foundation during the launch of the report on BEAC's monetary policy
Officials of Foretia Foundation during the launch of the report on BEAC’s monetary policy

The Nkafu Policy Institute, a think-tank at the Denis and Lenora Foretia Foundation has published a report detailing the effect of BEAC’s monetary policy in Cameroon brought about by the ongoing COVID-19 pandemic.

The report was made public during a press conference January 13 at the Foundation’s headquarters in Yaounde. It had as panellists Dr Jean Cédric KOUAM – Economic Policy Analyst, Head of Fiscal and Monetary Policy Sub-Section at the Nkafu Policy Institute; and Mr Ulrich D’POLA – Senior Economic Policy Analyst, Co-Coordinator of the Nkafu Policy Institute.

Cameroon’s Monetary Policy Report published by the Nkafu Policy Institute was born out of the need to evaluate the decisions taken by the Monetary Policy Committee (MPC) of the Bank of Central African States (BEAC) on the activities of economic agents (firms, households) and the general price level. These are reflected in three main transmission mechanisms, namely: interest rates (interest rate channel), stock prices (other asset price channel) and the number of loans offered by commercial banks (credit channel).

Opening the press conference, Fri Asanga, Chief Operating Officer of Foretia Foundation said: “We hope that the operational recommendations in this report will be widely disseminated to inspire decision-makers to propose policies and reforms that will effectively transform Cameroon’s potential for the benefit of its citizens.

“The report is structured around five key inter-related thematic parts as follows While Part I examines the socio-economic situation in Cameroon before Covid-19 Part II focuses on the economic and social repercussions of the pandemic on the economic conjuncture in 2020 Part III then, presents BEAC’s responses to this gloomy economic conjuncture while part IV brings forth the reactions of the Cameroonian economy to BEAC’s monetary policy decisions in 2020. Finally, part V proposes some monetary policy options to decision-makers (V). 

The objective of the report is to analyze the contribution of the monetary policy conducted by the Bank of Central African States in strengthening the resilience of the Cameroonian economy in 2020. More specifically, it examines whether the monetary policy decisions taken by the Monetary Policy Committee (MPC) have influenced the general price level, the average overall effective rates practised by financial institutions and their deposit and credit operations, as well as the contribution of monetary aggregates to growth.

A host of key recommendations were taken from the Monetary Policy Report. One of them called on BEAC through the banking commission in central Africa should multiply its efforts to encourage commercial banks to easily grant credit to individuals and SMEs. 

The second key recommendation indicates that BEAC should ensure that their lending and deposit rates from secondary banks reflect the interest rate on call for tenders to improve the functioning of the interest rate channel.

BEAC should consider a policy of inflation targeting to the detriment of price-level targeting. By setting expectations on price developments, inflation targeting would enable BEAC to provide greater incentives for banks to facilitate access to credit and encourage consumers to spend while guaranteeing financial and microeconomic stability.

Ulrich D’POLA KAMDEM, Senior Economist at the Nkafu Policy Institute and Coordinator of the Nkafu Policy Institute

About the Nkafu policy institute and the Denis & Lenora Foretia Foundation

The Denis & Lenora Foretia Foundation was created to catalyze Africa’s economic transformation by focusing on social entrepreneurship, science and technology, innovation, public health, and progressive policies that create and expand economic opportunities for all.  

The Nkafu Policy Institute is a Think Tank within the Foundation that focuses on using the independent analysis to inform public debate. Its mission is to advance public policies that help all Africans prosper in free, fair, and democratic economies. The Institute has distinguished itself as a leading research centre in Cameroon, committed to promoting open debate that builds consensus toward a democratic future. 

Note: the full report of the Nkafu Policy Institute Report on the Effect of BEAC’s Monetary policy can be downloaded on the websites of the Denis & Lenora Foretia Foundation and the Nkafu Policy Institute; as well as on the foundation’s various social networks.

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