China Eximbank provides RMB 937,500,000 government concessional loan for E-National Higher Education Network Project

China Eximbank provides RMB 937,500,000 government concessional loan for E-National Higher Education Network Project In 2012, China’s Ministry of Commerce (MOFCOM) reported that the Cameroonian Ministry of Higher Education signed a memorandum of understanding (MOU) with the Cameroonian subsidiary of China Communications Services Corporation (the parent company of Sichuan Telecom Construction Engineering Co., Ltd), in which it was determined that China Communications Services Corporation would undertake feasibility studies, environmental assessments, and construction for the E-National Higher Education Network Project.

In 2015, MOFCOM reported that an intergovernmental framework agreement for the project had been signed in Beijing but was still awaiting the Cameroonian President’s authorization of the loan agreement before the project could officially commence.

On July 27, 2016, the Cameroonian President issued a decree authorizing the Cameroonian Minister of the Economy, Planning, and Regional Development to sign a loan with China Eximbank for the E-National Higher Education Network Project.

Then, on August 22, 2016, China Eximbank and the Republic of Cameroon signed a government concessional loan (GCL) agreement [CHINA EXIMBANK GCL NO. (2015) 11 TOTAL NO. (550)] worth RMB 937,500,000 for the E-National Higher Education Network Project.

The borrower agreed to deposit project-related revenues in a special account to facilitate repayment.

The proceeds of the GCL were to be used by the borrower to finance a $150,000,000 commercial contract between the Ministry of Higher Education of the Republic of Cameroon and Sichuan Telecom Construction Engineering Co., Ltd, which was signed on February 20, 2013 (as well as the Complementary Agreement and Complementary Agreement II that the two parties signed on November 26, 2013 and April 8, 2014, respectively).

The first loan disbursement (worth 30% of the face value of the loan) was released on June 5, 2017.

As of December 31, 2020, the loan had achieved a 80.7% disbursement rate (with an undisbursed balance of CFA 4.9 billion). The loan’s outstanding amount was equivalent to CFA 72.1 billion as of December 31, 2020.

The purpose of the project is to facilitate the establishment of a computer network for higher education, and to provide a digital campus development center for eight universities in Cameroon.

The first component of this project is a 'one child, one computer' initiative, for which China is providing Cameroon students with 500,000 laptops. This component of the project costs 50 billion FCFA, and it was expected to be complete by 2019.

The second component of the project involves the construction, equipment and commissioning of nine University Digital Development Centers (one in each State University and one at the Cameroon-Congo Inter-State University, Sangmelima Campus).

This part of the project costs 25 billion FCFA, and together both components are worth 75 billion FCFA (which is equivalent to the total amount of the project and the total amount financed by China Eximbank). Project implementation commenced on November 26, 2017. As of July 2021, project implementation was still underway.

There are some indications that the China Eximbank loan for the E-National Higher Education Network Project may have financially underperformed vis-a-vis the original expectations of the lender. In January 2019, Cameroon unilaterally withheld debt service payments to China Eximbank. The lender responded by withholding new loan disbursements.

Then, in July 2019, China Eximbank and the Government of Cameroon signed a debt rescheduling agreement (as captured via Record ID#88213).

Under the terms of the agreement, China Eximbank agreed to reschedule 18 loans previously contracted by the Government of Cameroon — with scheduled principal repayments between July 2019 and March 2022 — by allowing the borrower to defer scheduled principal repayments between July 2019 and March 2022 to later dates but without any maturity extensions.

The total amount of restructured debt was equivalent CFA 148 billion ($253 million) — or 70% of the loan principal that was scheduled for repayment between July 2019 and March 2022.

Under the terms of the agreement, the Government of Cameroon agreed to repay 30% of the loan principal according to the original July 2019-March 2022 schedule (i.e. without any payment deferrals).

The lender and the borrower also agreed to cancel the committed but undisbursed loan balances worth approximately CFA 10 billion (for certain loans with disbursement deadlines that had already passed).

Then, in January 2020, the International Monetary Fund (IMF) classified the Government Cameroon as facing a high risk of debt distress.

Eighteen months later, during an address before Cameroon’s National Assembly on June 28, 2021, the Minister of Water and Energy (MINEE) Gaston Eloundou Esommba provided an update on the ICBC-financed Bini à Warak Hydroelectric Power Plant Project.

He noted that the project had been 'on hold' since November 2019 because ICBC suspended the loan agreement, even though the Government of Cameroon had already mobilized XAF 22 billion of counterpart funding.

He also explained that 'the reason for this suspension is that Cameroon did not settle some of its debts towards China on time, so, it is in a cross-default situation.’