Grace Ashiru
The Bank of Central African States (BEAC), central bank for the six CEMAC member countries—Cameroon, Congo, Gabon, Equatorial Guinea, Chad, and the Central African Republic—announced on May 27, 2025, a record liquidity injection of 420 billion CFA francs to commercial banks across the region. This is the largest liquidity provision since BEAC resumed such operations in June 2024 after a suspension of over a year.
Rising Demand for Liquidity in CEMAC Banking Sector
The injection responds to mounting liquidity demand from commercial banks. On May 16, 2025, banks requested 540.9 billion CFA francs in refinancing, far exceeding BEAC’s capped offer of 320 billion CFA francs. This significant gap highlights persistent liquidity constraints within the regional banking system.
Policy Shift to Support Credit Growth
This liquidity operation follows a key monetary policy change by BEAC in March 2025. The central bank cut its tender interest rate (TIAO)—the rate at which commercial banks borrow from BEAC—from 5% to 4.5%. This marks the first rate reduction since late 2021 and is intended to lower borrowing costs for banks, incentivizing increased lending to businesses and consumers.
Why Is BEAC Increasing Liquidity Now?
Several factors explain BEAC’s current liquidity support and easing:
- Economic Recovery Challenges: The CEMAC economies face inflationary pressures, sluggish growth, and lingering effects from the COVID-19 pandemic that continue to dampen credit demand.
- Liquidity Pressure on Banks: Slower deposit growth and capital outflows have tightened bank reserves, limiting their lending capacity.
- Global Financial Conditions: External shocks, including higher global interest rates and commodity price volatility, have increased funding costs and stressed regional financial systems.
Regional Comparison: Similar Moves Across Africa
BEAC’s actions reflect a broader trend among African central banks responding to similar pressures:
- The West African Economic and Monetary Union (WAEMU) central bank increased liquidity injections in early 2025, amid inflationary concerns and tighter global financing conditions, while also easing policy rates.
- The Bank of Ghana and Bank of Zambia have both augmented liquidity operations and reduced policy rates in recent months to support banking sectors under strain.
These coordinated efforts across Africa illustrate the balancing act central banks face—stimulating growth while managing inflation and financial stability risks.
Expected Impact on CEMAC Economies
- Easing Credit Conditions: By reducing refinancing costs, BEAC aims to encourage banks to extend more affordable loans, boosting private sector activity.
- Banking Sector Stability: Enhanced liquidity helps banks maintain adequate reserves and meet demand, preventing credit crunches.
- Economic Growth Support: More accessible credit can drive investment, job creation, and consumer spending, vital for the region’s economic rebound.
- Inflation Management Risks: While easing monetary policy, BEAC must monitor inflation carefully to avoid undermining price stability.
Outlook
BEAC’s record liquidity injection and rate cut mark important steps toward supporting financial and economic stability in the CEMAC zone. The success of these measures will depend on effective transmission of lower costs to borrowers and the region’s ability to navigate ongoing global and domestic economic challenges.
