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Agricultural Funding: PM Recommends Partnership Approach

Below is a press release issued following the Cabinet Meeting of Thursday, 31 March, 2016.

The Prime Minister, Head of Government, Mr Philemon YANG, today, Thursday 31 March 2016 as from 3:00 p.m., chaired a Cabinet Meeting in his Office.  In attendance were one Minister of State, Ministers, Ministers-Delegate and Secretaries of State.

Two statements related to Government’s agricultural policy featured on the agenda: 

  1. 1.  The Minister for Agriculture and Rural Development presented the broad lines of the strategy for “reviving the cocoa and coffee sector”.
  2. 2.    The Minister-Delegate in the Ministry of Finance, for his part, presented some sources and terms of “financing of agriculture”.

The Minister in charge of Agriculture began his statement with a summary assessment of the cocoa/coffee sector, characterized by a very inadequate growth in production. Production figures for 2015 are: 250,000 tons of cocoa, 20,000 tons of Robusta coffee and 3,000 tons of Arabica coffee. Yet, the international context is favourable with growing demand due to new consumption habits in Asia.

Next, he presented the Cocoa/Coffee Sector Recovery and Development Plan, adopted by the Government in September 2014, whose production targets by 2020 are as follows: 600,000 tons of cocoa; 125,000 tons of Robusta coffee and 35,000 tons of Arabica coffee. The production aspect of this recovery plan emphasizes the production and dissemination of good quality planting material, the fertilisation and protection of plantations, support for post-harvest operations, extension of the network of feeder roads and the supervision, training and structuring of rural actors. Different programmes and projects are under way in the sector, including the Project on the Production and Dissemination of Cocoa and Coffee Plant Materials, the Project to Support the Use of Fertilizers in the Cocoa and Coffee sub-sectors, the Project to Support Fungi Control in the Cocoa and Coffee sub-sectors and the Project to Support Quality Management in the Cocoa and Coffee sub sectors.

However, they are beset by numerous constraints such as the absence of agricultural statistics, the narrowness of the land exploited, aging farmers, inaccessibility of production basins, disorderly farming and post-harvest practices, funding difficulties and the cost of fertilizers. The Minister also deplored the proliferation of institutions that characterize the cocoa and coffee sub-sectors and suggested ways of streamlining them.

The second statement allowed the Minister-Delegate in the Ministry of Finance to reiterate the contribution made by the agriculture sector over the last five years, which is 16.5% of GDP and 73% of the primary sector GDP. It posted an overall surplus of CFAF 656.3 billion in 2014 and is the first foreign exchange earner, with 55% of total exports.

Efforts to support the agricultural sector continued with a 12% increase in the budget of the Ministry in charge of Agriculture during the 2014-2016 period, from CFAF 98.3 billion to 110.2 billion. Apart from subsidies allocated to the sector’s public institutional actors, tax support measures  have also been introduced in that regard, namely VAT exemption for fertilizers, seeds, pesticides and agricultural equipment; VAT exemption for interest accruing on loans linked to financial lease operations; tax exemption on the revenue of collective entities of the agricultural sector as well as of individual farmers.

The Minister-Delegate in the Ministry of Finance said that the sector’s needs, as defined in the National Agricultural Investment Plan, are evaluated at CFAF 3,350 billion over the 2014-2020 period. To address all these funding needs, the Cameroon Government has established a CFAF 4.5 billion Facilitation Fund as part of the Rural Finance Development Support Programme (PADMIR). The banking sector’s contribution to agricultural funding was evaluated at about CFAF 313.6 billion on 31 December 2015, or close to 14.9% of bank credit.

He recalled with regard to external financing that Cameroon’s agricultural policy benefits from financial contributions from the French Development Agency through C2D, and the World Bank as part of co-financing of the Agricultural Competitiveness Improvement Project.

Actions under way or contemplated to strengthen the agricultural financing policy include especially a stronger institutional framework through establishing the Cameroon Rural Financial Corporation (CARFIC), with fully released capital of CFAF 10 billion; the operationalization of the commodities stock exchange in Cameroon; creation of an exports bank; the creation of an alternative component in the Douala Stock Exchange to finance SMEs; and the action plan to enhance financial intermediation in Cameroon. 

Furthermore, arrangements to facilitate rural investors’ access to credit are being experimented. These include the introduction of minimum guaranteed banking service while suppressing charges on accounts; the popularization of mobile banking; interest rate bonuses and; the promotion of a banking culture etc.

In perspective, given the substantial funds the sector will need to attain the expected production targets, an in-depth reflection is in progress to explore innovation funding sources, pool funds, streamline existing intervention programmes and projects as well as channel resources into a funding circuit likely to optimize and boost their effectiveness for the development of the sector.

At the end of the two statements and the ensuing discussions, the Prime Minister instructed:

- the Minister for Agriculture and Rural Development to submit to him a scheme to streamline the institutional arrangement and the interventions of stakeholders in the cocoa and coffee sub-sectors.

- the Minister for Finance and the Minister in charge of the Economy to prioritize the partnership approach in looking for funding for the agricultural sector and to take this requirement into consideration in programming related expenditure.

He also enjoined the Minister for Finance to expedite the finalization of procedures to establish the Cameroon Rural Financial Corporation (CARFIC).

The Meeting was adjourned at 4:30 p.m./-

Yaounde, 31 March 2016

Séraphin Magloire FOUDA,

Secretary-General of the

Prime Minister’s Office.

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