(AfDB) - Cameroon’s Minister of Agriculture and Rural Development Gabriel Mbairobe and the General Manager of the Commercial Bank of Cameroon, Léandre Djummo, have signed, on September 8, 2022, in Yaoundé, an agreement for the establishment of an Agricultural Sector Development Fund. The African Development Bank’s Director General for Central Africa, Serge N'Guessan, also attended the signing.

The African Development Bank and the government of Cameroon will set up the fund as part of the implementation of the Agricultural Value Chain Development Project. It will provide medium-term resources to microfinance institutions in Cameroon, so that they themselves can extend flexible medium-term loans (2 to 4 years) to enterprises in the agricultural value chain.

The Agricultural Value Chain Development Project will endow the Fund with €13.12 million, in addition to a partial credit guarantee of €4.58 million euros for risk sharing with commercial banks.

According to the recently signed agreement, the Commercial Bank of Cameroon will make the resources available to microfinance institutions, closer to the field and, therefore, to producer organizations, including small and medium-sized enterprises and also youth engaged in commercial agriculture.

“I express my gratitude to the African Development Bank Group, which, like the Cameroonian government, is convinced that agriculture is an important pillar of the structural transformation of our economy,” said Minister Mbairobe. “We are very sensitive to this multifaceted support.”

"The African Development Bank will ensure that this innovative fund has more resources, so that more farmers benefit from it and, above all, that rural development is a reality in Cameroon and in the Central African sub-region," said Director General N'Guessan.

General Manager Djummo of the Commercial Bank of Cameroon thanked the Minister of Agriculture for the rigorous monitoring of the project and its outcome, all the public authorities involved and the African Development Bank for placing confidence in the institution.

Under the scheme, microfinance institutions can approach the Commercial Bank of Cameroon with a request for refinancing, which will be granted at a highly concessional 3% interest rate. In turn, the microfinance institution extends loans to its clients, typically cooperatives and small agricultural enterprises, and others, tapping 30% of its own resources to do so. The Agricultural Sector Development Fund will contribute a further 60% of the loan, which assumes a financial counterpart of 10%.

With financing of €115.05 million, the Agricultural Value Chain Development Project is 77.6% financed by the African Development Bank Group, 21.5% by the State of Cameroon and 0.9% by beneficiaries. Its objective is to help create shared wealth, jobs for young people, and strengthen food and nutritional security by bolstering the competitiveness of the oil palm, plantain banana and pineapple sectors, of which Cameroon is one of the main exporters in Central Africa.