Cameroon publishes sustainable finance framework
Cameroon has completed a sustainable finance framework that identifies projects supporting the country's sustainable development and could herald sovereign ESG-labelled debt issuance or blended finance initiatives.
Cameroon's last major financing was a US$550m private placement in July. The 9.50% July 2031 amortiser had a weighted-average life of five years and a yield of 10.75%. The country also has a US$103m note due this year.
The framework shows that more lower middle-income economies are seeking to raise sustainable finance to close the climate funding gap. The market saw several debut ESG-labelled bonds from sovereign issuers in developing countries in 2024.
The sustainable bond format remains popular due to its mix of green and social categories and was used by Madagascar and Honduras last year, while Sudan, Botswana and El Salvador opted for social bonds. Other West African countries including Senegal, Ivory Coast and Benin already have frameworks in place.
Cameroon's new framework has identified eligible green projects including renewable energy, natural resources and land, biodiversity, clean transport, green buildings and energy efficiency, among others, and the country also intends to finance various adaptation efforts to make infrastructure more resilient to physical climate risks.
Social projects include access to essential services, basic infrastructure and housing, as well as employment and food security. In 2024, an estimated 3.3 million people required humanitarian assistance, according to the United Nations.
The government is planning to allocate two-thirds of proceeds to green projects, including a significant share to blue projects, and the remainder will finance social projects. Most of the expenditure will be new financing, according to S&P, which provided a second-party opinion on the framework.
NDC aligned
The eligible projects align with Cameroon's nationally determined contributions under the Paris Agreement on climate change, which was put in place in 2021, as well as its Vision 2035 and National Development Strategy.
Cameroon's NDC increased its emissions reduction target to 35% by 2030 compared with 2010 but 23% of that target is conditional on international support in the form of financing, technology transfer and capacity building, while the remaining 12% will come from Cameroon's efforts.
The country is at the crossroads of Central and West Africa and faces uncertainty across political, social, economic and security environments and significant challenges including poverty, food security, inequality and human rights despite a wide range of natural resources from oil and gas and mineral ores to timber and agricultural products.
Forestry covers 42% of the country's land mass which includes the Congo Basin, the Sanaga River and Lake Chad. Cameroon is particularly exposed to environmental problems around water, land use and biodiversity and social problems, including a long-running armed conflict with separatists, all of which could be amplified by the effects of climate change.
Cameroon is due to hold elections in October. It is a member of the Economic and Monetary Community of Central Africa and its members, which also include Gabon, Chad, Equatorial Guinea, Central African Republic and the Republic of Congo, share monetary policy and currency with a common central bank.
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