BEAC: for an institution that impacts the CEMAC’s economies

Djimadoum Mandekor, economist, former central director at BEAC. Author of ” Pour sortir la BEAC de sa gouvernance défaillante. Promouvoir une banque centrale assurant l’intérêt général.” (2024)

The Bank of Central African States (BEAC), the central bank common to the countries of the Central African Economic and Monetary Community (CEMAC), has once again distinguished itself by heavily publicizing its record profit achieved at the end of 2024. This publicity, unusual in the discreet world of central banks, subtly reveals the real objectives of its officials and the members of its supervisory bodies who, moreover, award themselves an unimaginable performance bonus in other contexts.

Beyond the financial results of the central bank

As a public institution, the BEAC has been primarily a regulatory structure of the financial system for decades, within the framework of a monetary policy mission intricately linked to the economic policies of the States. Its main function is to monitor the overall activity of credit institutions and other financial institutions to prevent inflation (a widespread and sustained increase in prices) and ensure the stability of the financial sector. Its operating result, whether profit or loss, is therefore not the main criterion for evaluating its effectiveness.

It is accepted today that the institution does not directly finance companies but intervenes through banks primarily via advances. This evolution has taken hold worldwide in the name of combating inflation, which is considered very harmful to economies and consumers.

Many central banks now refrain from directly financing states and companies, even when it is not explicitly prohibited as is the case in the United States and England. However, they had implemented so-called unconventional measures to stimulate the recovery of business credit during the monetary crisis that began in 2008-2009. Several other countries (Argentina, in Eastern Europe and Africa) allow the central bank to lend directly to the state under tightly regulated conditions, among other things by national constitutions, the statutes of issuing institutions, and the effective decision-making autonomy of their leaders.

The BEAC only subscribed to the cessation of direct monetary financing of states in December 2016, whereas it had committed to it for 2009. This measure was only taken because it was a condition set by the International Monetary Fund (IMF) for granting its financial support to member states facing the collapse of their foreign assets and the budget deficit caused by the drop in oil prices. It was only included in the BEAC statutes in November 2021.

However, in underdeveloped countries like those in CEMAC, where underemployment and poverty are endemic, the limitation of a central bank’s interventions to the strict application of monetary management rules is seen by some economists and analysts as a denial of its leaders’ responsibilities in the growth of economic activities and employment.

BEAC National Directorate (Yaounde) – BEAC Heritage

CFA Franc Reform: A Publicity stunt

It was to address these criticisms, which were less widespread in the CEMAC than in the neighbouring sub-region of the West African Economic and Monetary Union (WAEMU), attributing the situation of the Franc Zone countries to the effects of the CFA Franc, a currency pegged to the euro, and the obligation to build up international currency reserves managed by the French Treasury, that a committee composed of the CEMAC Commission and the BEAC was created. Its mission is to propose a change in the CFA Franc while maintaining it as “a stable and strong common currency” despite its significant impact on the rise in the price of the zone’s exports. However, the committee announced in the final communiqué of the CEMAC Heads of State Summit of November 28, 2019, has not yet produced any document. This suggests that it was merely a means of stemming the tide of protests led by young people, intellectuals, and some business leaders.

The monetary reforms introduced in the 1990s and since 2015 have not truly led to the development of the financial sector that could boost growth and economic diversification. While awaiting the ever-hoped-for fundamental transformation of the CFA franc, the BEAC should more resolutely design and implement provisions that allow for easier and less costly financing of investments. Solutions used elsewhere to deepen the financial sector and develop financial inclusion in Africa and other regions should be adapted and tested while continuing to focus on controlling inflation and building an appropriate level of foreign currency assets.

The still-awaited development of the financial sector

The decision of the BEAC’s Monetary Policy Committee (MPC) of March 24, 2025, reducing its main policy rate, the interest rate on calls for tenders (TIAO), from 5% to 4.5%, justified by better prospects in 2025 for inflation, below 3%, and foreign exchange reserves, 4.8 months, undoubtedly also aims to boost growth, but even more so to reduce the cost of member states’ public debt. Indeed, since the zone’s banking system is cash-based, this measure will not encourage it to distribute many new loans while, moreover, it is faced with an elevated level of non-repayment or difficult-to-repay customer loans.

Thus, in 2015-16, the TIAO set at 3.5% – 4% had no significant effect on economic growth. Financial stability and economic financing cannot be ensured with the important level of bad and compromised loans held by banks in the subregion; around 16.4% in 2023 according to the World Bank (15.3% in Cameroon; 16.4% in CAR; 17% in Congo; 7.6% in Gabon; 32% in Equatorial Guinea; and 31.5% in Chad). This excessive rate of non-performing loans results in a high average cost of bank credit. According to the BEAC, in CEMAC, it stood at 9.70% in the second quarter of 2024, thanks to the volume of loans to large companies. By customer category, this rate stands at 16.24% for individuals, 10.41% for small and medium-sized enterprises, and 8.62% for large enterprises. It is therefore time for the BEAC to undertake initiatives to promote adequate growth in the ratio of credit to the economy over gross domestic product (GDP), an indicator of financial sector growth, established at 16.4% in 2021, compared to 28.5% in WAEMU, 27.7% for sub-Saharan Africa as a whole and 32.2% for the UN’s least developed countries. For its part, the banking rate is stagnating at 15%, whereas in 2011 the BEAC planned to increase it to 20% in 2016. The unavailability of updated data on this rate in CEMAC confirms the insufficient attention paid to it by the institutions concerned.

Since the banking restructuring of the early 1990s, which led to excess liquidity in the CEMAC banking system, thanks in part to the transfer of non-performing bank loans to states, the BEAC’s overall inertia considering the near stagnation of the financial sector is no longer acceptable. Drawing on the experience of other central banks in this area, it should be able to propose, in close consultation with all stakeholders (banking system; Central African States Development Bank (BDEAC); other financial institutions; employers’ organizations; bank user advocacy associations; legal, accounting, and financial experts, etc.), ways to promote the sustainable and broader distribution of credit, and thus support job creation.

Accelerating the Implementation of Financial Inclusion

While the BEAC is already partially refinancing the BDEAC, which primarily targets the public sector and large companies, it should, among other things, like Banque Al Maghrib (the Moroccan central bank), examine the feasibility of a refinancing mechanism and a financial support fund for SMEs and startups, and the establishment of local SME promotion committees, drawing on its branches in the various member countries.

The accelerated implementation of the regional financial inclusion strategy, adopted in December 2023 after a long gestation period that began a decade ago, should also help get on the right track. To this end, the BEAC should be more proactive with the states that are the main stakeholders in this initiative. In this area, the rapid establishment and widespread adoption of certain components of the financial infrastructure (central balance sheet registers, financial information bureaus, or credit bureaus, etc.) will facilitate the reduction of information asymmetry and the expansion of bank credit, as well as the reduction of lending costs.

The COBAC’s improvement of the regulatory framework for banking activities, particularly in combating corruption among credit and microfinance institution officials, as well as the effective independence of the banking supervisor, COBAC, would also contribute to expanding access to credit and reducing its cost, particularly by reducing bad loans. Greater regional and gender diversity among bank managers and staff also contributes to transparent, equitable, more productive, and less risky credit distribution. Faced with various forms of discrimination in credit granting and social inequalities, BEAC leaders should draw inspiration from the American, British, Canadian, and European central banks, which have recently initiated discussions to develop workable solutions.

Governance focused on improving overall well-being

In 2025, the IMF forecasts GDP growth of 6.3% in the West African Economic and Monetary Union (WAEMU) and 2.4% in the CEMAC. The latter continues to face high and persistent poverty rates, resulting from insufficient economic growth, a lack of employment opportunities, and rapid population growth. In 2023, according to the World Bank, approximately 31.1% of the subregion’s population lived on less than USD 2.15 per day. In the WAEMU, this proportion was lower, at 23.4% in 2023.

To achieve lasting poverty reduction, refraining from intervening in the prudent but determined development of the financial sector and solutions that stimulate economic growth is unsustainable. It is therefore important to draw the right lessons from the failures of national development banks and the mixed performance of the BDEAC, in which the subregional central bank was or still is a shareholder. These failures stemmed particularly from many institutional failings (politically and ethnically exposed and/or engaged leaders, corruption, dependence on states, etc.).

The BEAC, with revised and more dynamic governance, should facilitate the achievement of this objective by mobilizing adequate human and financial resources, including the amounts currently paid as performance bonuses to managers and members of decision-making bodies. Recently, economists Célestin Monga and Prof. Bruno Bekolo-Ebe have each advocated for the adoption of such an approach in their respective works (African Central Banks and the Challenges of Economic Transformation, African Center for Economic Transformation (2025), and Le Paradoxe des bons resultats de la BEAC, April 2025). Only an inclusive and integrated approach would promote the capture of all the potential available in CEMAC and the appropriate implementation of economic and monetary policies ensuring overall well-being.

In this era of digitalization also proclaimed by the BEAC, between the construction of new agencies with uncertain economic and financial profitability, and the support for initiatives driving the expansion of credit to the economies of CEMAC, there should be no hesitation.