Richard NYAMBOLI  [//20]

The reform of the banking sector in Cameroon has won back some of the customer confidence that was lost together with the bank crash of the nineties in the wake of the economic crisis. If latest statistics are anything to go by, however, it will mean that citizens confidence in our banks has not been fully restored. Nearly half of all monetary transactions are carried out in cash and mostly outside the formal channels of financial establishments.

All that may change with the advent of the Douala stock Exchange . Its promoters predict that the DSX may herald a new attitude among Cameroonians towards their money and how best to raise, secure and fruitfy it. Much economic activity in this country, just as in most of sub-Saharan Africa, takes place in the so-called informal sector which is poorly regulated. Operations carried out within the informal economy are preponderantly in cash as opposed to paper money, the stuff on which formal financial institutions thrive. That is one reason for the extremely low savings rate often decried by our banks. There are other reasons, no doubt, such as the high poverty rate in the country as a whole which leads to low family incomes; the inability of banks to elicit individual savings, the absence of credible banking establishments in the hinterland and the high cost of bank charges where they do exist.

The stock exchange has the advantage that it will provide the ultimate legal framework and a stable economic and psychological environment for doing business. In order to buy and sell stock at the DSX, Cameroonians will be obliged to save money. By so doing, a culture of raising capital through internal savings will be cultivated. The stock exchange will definitely impact positively on the on-going privatisation of state corporations to the extent that the huge capital often needed to invest in such projects can more readily be raised in a stock market than through the present commercial banks. Until now, the high cost of investment credits available in commercial banks has been a hindrance.

Similarly, the Douala Stock Exchange will help rid many private entrepreneurs of the cottage-industry-mentality which stifles the growth of their businesses. Many chief executives tend to maintain their private businesses within the family fold much longer than necessary for lack of an enlightened alternative. Now, however, may private firms will afford to go public, their shares quoted at the Douala Stock Exchange, to the benefit of everybody.

Alongside the banks, the DSX will generate internal savings and, in turn, provide additional security and protection to clients deposits. The stock exchange is definitely the gateway to economic modernism. It is the way to the future, both for nationals and for foreign investors alike. Even as the rate of savings within the average population may be low, some sectors of the national economy have been able to accumulate huge savings over the years but have been wary of putting all of it at the service of the economy for lack of proper guarantees. The insurance companies, for instance, now boast of a veritable war chest of about CFA 100,000 million while funds generated by the State from the sale of treasury bonds are estimated at 10 times that amount. The stock exchange will be able to garner all these funds and channel them in an appropriate manner to the service of the national economy.