CBC, Others Lend SODECOTON 6.5 Billion
March 14, 2011 § 3 Comments
The Commercial Bank of Cameroon, CBC, has lent the Societé de Developement de Coton, SODECOTON, FCFA 6.5 billion to boost production. The CBC, which has been hemmed in dire straits by both national and sub-regional regulators of financial institutions, had hitherto, been considered at the point of collapsing. So, it came as no surprise when on Monday, March 7, CBC was paraded as the mastermind of a lending deal to help SODECOTON.
“This is an indication that the CBC, contrary to popular opinion, is in buoyant health. Despite the ongoing restructuring, the bank is teeming with liquidity,” Martin Luther Njanga, CBC Provisionary Administrator, stated at the loan convention signing ceremony at the bank’s headquarters in Douala. The overall funding made available to SODECOTON by the CBC-led consortium of lenders, stands at FCFA 6.5 billion.
Of the amount, FCFA 2 billion comes from the SGBC and another FCFA 2 billion from Afrilands First Bank. BICEC has disbursed FCFA 1 billion while CBC rounds up the tally. Since the 1990s, SODECOTON has essentially relied on financing from foreign donors to maintain its production. SODECOTON Managing Director, Iya Mohamed, said the decision to u-turn to local banks entails a whole new experience that ushers in Cameroonian content in the company’s capital.
|He said the loan will help cover costs of up to 25 percent of the company needs in terms of financing, excluding its proper resources emanating from cotton sales on the local market as well as exports. According to him, the loan deal is a win-win partnership, especially considering optimistic prices on the world market. In October last year, prices reached their highest in 140 years at the New York Stock Exchange. The situation is explained by skyrocketing demand from China, as well as slumps in production in major producing countries in Asia.|
Last month, the State-run SODECOTON announced it was working to increase cotton output by 35 percent this season, by using higher yielding strains and improving agricultural techniques.
The company’s Director of Agricultural Production, Ibrahim Ngamie, says the set target this season is to step up production to, at least, 39,000 metric tons. That would boost output of the fiber to about 150,000 tons, up from 111,000 tons last year.
SODECOTON, Cameroon’s only cotton company, is 59 percent- owned by the Government, while the rest is held by the Compagnie Francaise de Developement du Textile. Cotton, mostly grown by about 227,500 small-scale farmers in the north of the country, is Cameroon’s fifth-largest foreign exchange earner, according to the Government. There are plans to reorganise the industry, train farmers and increase the use of more resistant and higher-yielding crop strains. According to Iya Mohamed, Cameroon’s annual output, four years ago, was nearer 300,000 tons.
Source: The Post
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