CEMAC: BEAC’s 320 Billion CFA Franc Injection Falls Short of Banks’ Liquidity Needs

BEAC’s recent cash injection of 320 billion CFA francs into CEMAC’s banking system failed to meet the demand of 540.9 billion. This occurred after a key interest rate cut aimed at easing bank conditions. Despite these efforts, liquidity challenges persist, highlighting ongoing issues in the banking sector.

The Bank of Central African States (BEAC) made a substantial injection of 320 billion CFA francs into the banking system of the Central African Economic and Monetary Community (CEMAC) on May 16, 2025. However, this amount falls significantly short of the 540.9 billion CFA francs that commercial banks had requested.

This heightened demand for liquidity comes just two months after BEAC’s Monetary Policy Committee made a noteworthy decision to reduce its key policy interest rate. On March 24, 2025, the central bank cut the interest rate on tenders (TIAO) from 5% to 4.5%. This marked the first decrease in the rate since late 2021, and it was an effort to pivot from the previous trend of tightening credit access.

The intention behind lowering the rate was twofold: it aimed to improve the refinancing conditions for commercial banks obtaining funds from the BEAC, and also to encourage these banks to subsequently lower their lending rates to companies and businesses. This, in theory, would foster increased economic activity in the region. However, the continued significant demand for liquidity, even after such monetary policy adjustments, indicates that banks in the region are still grappling with substantial financial pressures.

These ongoing liquidity challenges raise questions about the effectiveness of the BEAC’s recent measures to stimulate the banking sector. Despite the central bank’s efforts to inject capital into the system, the banking sector within CEMAC continues to face hurdles that prevent it from fully participating in the economic recovery efforts that the region desperately needs. The situation certainly underscores the complexities surrounding the financial landscape in Central Africa, amid evolving monetary policies and economic conditions.

In summary, the BEAC’s injection of 320 billion CFA francs was insufficient compared to the need expressed by commercial banks, which sought over 540 billion. While the central bank has taken steps to ease monetary conditions through a rate cut, banks still find themselves under significant liquidity stress. This situation suggests that deeper, perhaps more systemic issues within the CEMAC banking sector remain unaddressed, impacting overall economic optimism in the region.

Original Source: www.businessincameroon.com