Douala, Cameroon, February 11, 2002
—The International Finance Corporation and PROPARCO have finalized an innovative project financing for Société Camerounaise de Mobiles (SCM), to develop and operate a nationwide GSM cellular telephone network in Cameroon.
IFC and PROPARCO are jointly providing a credit enhancement facility—comprising partial guarantees and a stand-by facility—for a FCFA 29 billion (about US$41 million equivalent) loan arranged by Société Générale (SG). The credit enhancement was supplemented by subordinated loans from PROPARCO and IFC for a total of Euro 5 million.
This is one of the first credit enhancements of a local currency loan for a major infrastructure project in Africa. Structured to maximize the use of local currency financing, it encourages local and regional banks to participate in long-term project financing for an infrastructure project, increases the amount of local currency loans, and extends their maturity.
The credit enhancement facility was successfully syndicated by SG to a group of eight commercial banks: Société Générale de Banques au Cameroun, Banque Internationale du Cameroun pour l’Epargne et le Crédit, Crédit Lyonnais Cameroun, Standard Chartered Bank Cameroun, Commercial Bank of Cameroon, Afriland First Bank, Société Générale de Banques en Guinée Equatorial, and Société Générale Tchadienne de Banques.
SCM, one of two private cellular companies operating in Cameroon, has a 15-year license granted in 1999 by the government of Cameroon. Since operations began in January 2000, SCM has out-performed its original estimates and is leading the market with 226,000 subscribers. SCM’s presence has introduced competition in the telecom market resulting in strong growth and substantial price reductions. Along with the introduction of new services, this has helped to significantly improve access to telecom services. With SCM’s arrival, overall telephone penetration (mobile and fixed) grew from approximately 100,000 at year-end 1999 to an estimated nearly 450,000 today. SCM is majority-owned by Orange S.A., the mobile subsidiary of France Telecom.
PROPARCO, a subsidiary of the French development agency, Agence Française de Dévéloppement, is dedicated to private sector financing.
Marc Gilbert, PROPARCO’s Representative in Douala, said, “The development of such a modern, efficient, and affordable infrastructure is an essential tool in fighting poverty and in supporting a process of sustainable development. SCM’s telecom infrastructure contributes to improving links with remote areas, increasing competitiveness through better and cheaper access to information, and attracting foreign investors.”
Mohsen Khalil, Director of the joint World Bank-IFC department for Global Information and Communication Technologies, said, “SCM is an example of the pivotal role that the private sector can play in developing the information infrastructure of Africa, an essential pre-requisite for integrating with the increasingly information-based global economy. By using a new instrument to promote local currency financing for the first time in Africa, IFC is helping to upgrade the country’s infrastructure and make urgently needed communications infrastructure more affordable to a large part of the population.”
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC's committed portfolio at the end of FY01 was $14.3 billion.
