ECAM proposal to limit the negative impact of COVID-19 on Cameroonian SMEs
Text test The crisis situation caused by COVID-19 first calls for some preliminary observations concerning the structure of the business market in Cameroon, before tackling measures to limit its effects on the various entities. As general observations, we can retain the following elements:
1. The economic and financial consequences of the health crisis caused by COVID-19 are undeniable and remain difficult to quantify, both in Cameroon and in the rest of the world. Due to the uncertainties maintained, the reduction in the mobility of people or the outright cessation of certain activities, the observable impact in the short term will be reflected in particular by a slowdown in investment, a sharp erosion of business production and their turnover, a sharp deterioration in the loan portfolio of financial institutions, etc.
2. In the specific case of Cameroon, the first characteristic of the business market is the relative importance of the informal sector, which occupies the largest mass of SMEs, and whose economic and fiscal contributions escape official statistics, as much as the framework of the actors who exercise it is made extremely difficult. The second characteristic, relating to the formal sector, reveals on the one hand, an overcrowding of companies in the tertiary sector (84.1%), and in particular in the Commerce sub-sector which accounts for 51.4% of the total number of companies and, on the other hand, a dominance of large companies in the structure of turnover, with 66% of the shares, while they represent only a population of 0.2%, or 307 companies out of 203 287. SMEs meanwhile contribute 34% to total turnover and represent 99.8% in number of companies, of which 79.1% are very small. (Source: General Census of Companies RGE-2016.
3. The analysis of the distribution of SME turnover according to the sector of activity, shows that the tertiary sector contributes 84.60%, against 14.63% for the secondary sector and less than 1% for the primary sector. (Source: the base of RGE-2016).
4. The banking sector was already showing a significant deterioration in its credit portfolio before the COVID-19 crisis, with around FCFA 579 billion in bad debts in 2019 (13.86% of total credits), due mainly by large and medium-sized enterprises, PE and TPE being financed mainly by informal alternative channels (self-financing, tontines, family support, associations, etc.).
The overall volume of bank credit to the economy was estimated over the same period at FCFA 175 billion, including FCFA 3,525 billion from credit institutions, FCFA 150 billion from financial institutions and FCFA 500 billion from microfinance institutions. The share of credit in relative values of GE and ME type businesses is estimated at 65.27% in 2019, i.e. FCFA 2,301 Billion; against 5.30% in 2019, i.e. FCFA 187 billion for PE and TPE. The health crisis will worsen this already worrying situation, in immeasurable proportions, in the current state of available information.
Speaking of the measures recommended to limit the negative effects of the crisis, we can suggest the following:
A. Emergency and health security measures:
1. List all the companies operating in the sub-sectors of strategic activities such as, food, health, transport, communication, water and electricity, in order to ensure their capacity to offer the goods and services of basic necessity throughout the duration of the crisis;
2. Organize consultations by subsector of activities, to identify, analyze and resolve all problems (technical, operational, fiscal, customs, social or financial) that may compromise the ability of these companies to carry out their activities;
3. Create mechanisms for the collection and storage of basic necessities generally marketed by small operators in the informal sector, in order to ensure their redistribution in more secure sanitary conditions, while avoiding high mobility of the operators concerned towards different traditional markets; MINAT could be restructured for this purpose.
4. Mobilize the logistics of collection and distribution to freight and trade companies, so as to ensure that they have a minimum of activities during the crisis;
5. Create a platform for identifying businesses in difficulty, whatever the sector of activity, formal or informal, in order to prepare a program for the overall recovery of the economy after the health crisis, and to study on a case-by-case basis support measures to be granted to each company.
B. Measures to secure the financial system and protect public and private assets:
1. Establish a sovereign guarantee fund to cover commitments compromised with banks during the crisis, and to ensure monitoring and recovery after the crisis. The management of such a fund should be co-ordinated collectively by representatives of public authorities, monetary authorities, the private sector and development partners;
2. Take exceptional measures to facilitate access to credit or to restructure the commitments of companies operating in the subsectors of activities deemed strategic during the crisis (food, health, transport, communication, water and electricity), in order to '' ensure its competitiveness and efficiency;
3. Involve financial institutions in the management of the platform for identifying companies in difficulty, in order to integrate the management of compromised receivables, while distinguishing the pre-health crisis situation from that post-health crisis and harmonization solutions to end the crisis around a concerted program to revive activities by sub-sector of activities;
4. Consider the distribution to households of good consumption public goods of basic necessities, convertible from financial institutions exclusively by companies approved to receive them in return for the sales of their products and services.
C. Tax and social measures:
1. Suspend the deadlines for tax litigation and soften the tax control and collection measures to help ease the social climate and support companies operating in the subsectors of activities deemed strategic during the crisis (food, health , transport, communication, water and electricity);
2. Suspend all forced recovery measures (account blocking, etc.) and adjust the collection mechanisms and tax payment deadlines to operational and financial constraints validated by mutual agreement within the framework of consultations organized by sub-sector of activity;
3. Associate the Tax Administrations (inside and at the door) and social administrations in the management of the platform of companies in difficulty, in order to enable them to recommend support measures by sub-sector of activities and by company to the extent of the possible. D. Market price stabilization measures;
4. Strengthen price control measures on the markets and severely punish the speculative behavior of certain crooked operators (seizure, closure, withdrawal of license);
5. Anticipate the possibility of creating official storage and redistribution points for basic necessities, in coordination with the companies involved in the collection and storage in private warehouses;
6. Ensure a strategic watch on the international market to guarantee the availability of essential imported products and facilitate their transportation to Cameroon, in collaboration with Financial Institutions, the customs administration and the port authorities.
The ECAM employers' movement has a tool that can serve as a basis for the creation of the platform for managing companies in difficulty, and at the same time as a basis for the design of a larger program for the overall recovery of the economy of Cameroon. , after the health crisis. The ECAM employer movement is ready to make this tool available to the Government for rapid exploitation and effective control of the systemic risks linked to the COVID-19 health crisis.
Done in Douala, April 02, 2020 For ECAM, the President PROTAIS AYANGMA