CEMAC banking snapshot amid shifting headwinds
The Banking Commission of Central Africa (COBAC) sounded an unmistakable alarm in its 2024 activity report, revealing that the stock of so-called “compromised claims” held by commercial banks in the Economic and Monetary Community of Central Africa (CEMAC) surged to 2 024 billion CFA francs at year-end 2024. The figure, 144 billion higher than a year earlier, translates into a 7.7 percent annual leap and now equals 16.2 percent of all credit extended in the sub-region. Although the headline number remains below the 20 percent threshold often associated with systemic stress, the direction of travel has reignited debate on the quality of underwriting and the adequacy of risk provisioning across the six-nation franc-zone bloc comprised of Cameroon, Chad, Gabon, Equatorial Guinea, Congo-Brazzaville and the Central African Republic.
COBAC’s findings, corroborated by monthly balance-sheet data from the Bank of Central African States (BEAC) as well as by the most recent IMF Article IV consultations, underscore a banking landscape that has been broadly profitable yet increasingly exposed to pockets of corporate distress in the post-pandemic recovery period. The supervisory body notes that the average return on equity for CEMAC banks remained above 11 percent in 2024, but warns that such profitability could erode swiftly should non-performing assets continue to climb at their current pace.
Anatomy of non-performing assets
Within the broad category of compromised loans, the heaviest burden lies in the segment officially designated as “loans in arrears”. Under regional prudential rules, a facility becomes an arrear after three consecutive instalments, equating to 120 days, go unpaid and the probability of full recovery diminishes. These problem assets expanded to 1 536 billion CFA francs in 2024, up 6.3 percent from the previous year and now account for 12.2 percent of the outstanding loan book. By contrast, recently overdue loans, labelled “unpaid claims”, amount to 189 billion, or 1.5 percent of gross credit, while “frozen claims”, whose servicing is suspended amid legal disputes or restructuring talks, stand at 288 billion, representing 2.3 percent.
The data point to a still-manageable deterioration but one that is broad-based and persistent. Analysts consulted in Douala and Brazzaville observe that the upward drift reflects both cyclical stress—ranging from softer global demand for hydrocarbons to climatic shocks affecting agriculture—and structural bottlenecks such as limited access to credit information and slower judicial recovery procedures.
Country divergences sharpen the regional picture
Aggregates inevitably conceal national specificities. Cameroon, the sub-region’s largest economy, registered a 14.5 percent rise in overdue loans, mirroring bouts of payment delays in its manufacturing and trade clusters. Gabon posted the steepest increase at 31.4 percent, a function of lingering uncertainty in the forestry and mining supply chains as well as the recalibration of public-sector payment schedules. Congo-Brazzaville, for its part, saw a milder yet noteworthy 5.6 percent uptick, mostly concentrated in the small and medium-size enterprise portfolio.
The picture is more benign in Chad, Equatorial Guinea and the Central African Republic, each of which recorded double-digit contractions in non-performing exposures. In N’Djamena, the windfall from higher crude prices fortified borrower cash flows, while Malabo’s banks benefited from targeted restructurings underwritten by state-owned enterprises. Bangui, meanwhile, experienced a significant clean-up following donor-supported audits of state-linked entities. Such heterogeneity confirms, as COBAC stresses, that local macroeconomic conditions and the discipline of individual credit institutions determine the pace at which loan books deteriorate or recover.
Regulators and governments step up defensive measures
The acceleration of compromised claims has spurred both micro- and macro-prudential interventions. COBAC has tightened provisioning matrices, requiring higher risk-weighted capital buffers for banks whose ratio of arrears exceeds 15 percent. At the same time, BEAC maintained its policy rate at 5 percent through the second half of 2024, balancing inflationary pressures with the need to anchor financial stability. The regional monetary authority continues to cap refinancing operations for institutions that fail to submit credible remediation plans.
Governments have complemented these measures with sector-specific initiatives. Brazzaville has promoted the digitalisation of tax collection and expanded the credit information bureau in partnership with the International Finance Corporation, thereby enhancing the transparency of borrower profiles. Libreville has accelerated the clearing of verified domestic arrears, while Yaoundé has launched an agricultural value-chain guarantee fund to cushion smallholders.
Focus on Congo-Brazzaville’s banking landscape
Congo-Brazzaville’s 5.6 percent rise in non-performing exposures remains below the regional average but still warrants prudence. According to the Ministry of Economy and Finance, local banks increased their loan provisioning by 9 percent in 2024, lifting the coverage ratio to 75 percent, comfortably above COBAC’s 60 percent floor. Bank executives in Brazzaville credit the improvement to closer supervisory dialogue and to the government’s broader medium-term fiscal consolidation framework, which has reduced payment lags to contractors.
“The recent trajectory gives us confidence,” says a senior risk officer at La Congolaise de Banque, requesting anonymity. “We are witnessing more timely settlement of public contracts and a rebound in the timber value chain, both of which translate into healthier cash flows for borrowers.” Market participants nevertheless emphasise the importance of continuing structural reforms, including the operationalisation of a movable collateral registry to unlock credit for smaller firms without jeopardising asset quality.
Broader economic implications
Rising impaired assets invariably tighten financial conditions. A higher share of loans in default compels banks to set aside larger provisions, absorbing capital that could otherwise finance productive investment. Economists estimate that a sustained 100-basis-point increase in the non-performing loan ratio can shave up to 0.3 percentage points off real GDP growth in credit-reliant economies such as those of CEMAC. That said, the region’s headline capital adequacy ratio, hovering near 14 percent, remains above the 8 percent Basel II benchmark, offering a buffer against exogenous shocks.
Crucially, CEMAC’s recent adherence to IFRS 9 accounting norms is expected to improve the timeliness and precision of loan-loss recognition, thereby allowing banks and regulators to address credit weaknesses before they metastasise. The new framework, endorsed by finance ministers in 2023, aligns the region with global best practice and enhances investor confidence.
Navigating the path ahead
The durability of CEMAC’s banking stability will hinge on three interlocking factors: the pace of economic diversification, the rigour of supervisory enforcement and the resilience of public finances. For Congo-Brazzaville, successful implementation of the national development plan centred on agro-industry, transport corridors and the digital economy could steadily broaden the base of solvent borrowers. Investors already note the promising response to the government-backed SME credit guarantee scheme and the ongoing upgrade of the Pointe-Noire deep-sea port, projects that, once fully operational, are expected to boost non-oil revenue and mitigate concentration risk on bank balance sheets.
COBAC’s report serves less as an omen than as a strategic compass. By flagging vulnerabilities early, the supervisor invites banks, governments and multilateral partners to calibrate their policy mix. If proactive measures are sustained, the current uptick in compromised claims may well mark a cyclical crest rather than the onset of a structural malaise. For businesses and households alike, that would translate into continued access to the financing required to unlock the sub-region’s considerable economic promise.
