Tied French loans made France Cameroon’s largest creditor and supplier

Evidence

France is also the country that provided the largest funding to Cameroon between 1975 and 1998, granting the country 253 loans worth 5,035 million, much more than Germany, the second bilateral lender (86 loans for a total of 2,166 million), according to the ECA. These loans were mostly ‘tied’, meaning that they involved a counterpart: in exchange for the loans, Cameroon had to procure goods and services from France. As a result, France became Cameroon’s largest creditor but also its main supplier. Some other data reported by the ECA: French loans have never been denominated in CFA francs, although the latter is ‘the natural extension of the French currency in Cameroon’, but rather in French francs (at the time) or in dollars. For this reason, the Cameroonian debt contracted with Paris – meaning the value of its outstanding debt – increased as a result of the 1994 devaluation. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 253 (#expands, via linked claim)

France’s positions as a privileged creditor in the franc zone is due to at least three reasons. First, the stability of the exchange rate offered by the fixed parity tends to encourage borrowing in the anchor currency: the exchange rate risk against the euro is lower than that of other currencies. Second, as we shall see later, the CFA system pushes domestic credit down, forcing states to resort to foreign debt to finance their development. Finally, the political dimension of the CFA franc, which places the states of the franc zone under the tutelage of the French government, often forces them to turn to France in case of need. — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 252 (#corroborates, via linked claim)

Categorization

• XREF: connects to: French loans to Cameroon were tied and never denominated in CFA francs — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 253; Fixed parity and credit compression make France the zone’s privileged creditor — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 252

Related

• French loans to Cameroon were tied and never denominated in CFA francs (similarity 0.95)
• Fixed parity and credit compression make France the zone’s privileged creditor (similarity 0.86)
• The French Treasury holds accounts in each franc zone central bank (similarity 0.82)
• France avoided needing dollars to buy from CFA-zone countries. (similarity 0.82)
• African franc-zone reserves effectively grant France subsidized loans below market rates. (similarity 0.82)
• The French guarantee of the CFA franc was illusory since African reserves exceeded debts (similarity 0.81)
• The CFA guarantee arrangement secretly benefits France at Africa’s expense (similarity 0.81)
• French Treasury guarantees unlimited convertibility by lending money to franc zone central banks (similarity 0.81)
• Unlimited CFA convertibility is guaranteed by the French Treasury lending as needed (similarity 0.81)
• The CFA franc’s parity was set without regard for local economic realities (similarity 0.80)
• France’s guarantee is backed by pooled African reserves and French central bank seats (similarity 0.80)
• Franc-zone bank credit allocation suppressed African firms competing with French companies (similarity 0.80)
• The convertibility guarantee costs France under 1.3 percent of GDP (similarity 0.80)
• The CFA franc was a political choice that deprived non-adapting African actors of credit (similarity 0.80)
• The devaluation doubled France’s financial capacity in CFA francs overnight. (similarity 0.79)

Broader Connections

• French loans to Cameroon were tied and never denominated in CFA francs #expands (0.85) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 253
• Fixed parity and credit compression make France the zone’s privileged creditor #corroborates (0.70) — Fanny Pigeaud_ Ndongo Samba Sylla, Africa’s Last Colonial Currency, 252