Coming to Terms with Reality. Evaluation of the Belgian Debt Relief ...

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Case study Cameroon
100% cancellation, subject of the 2005 agreement. In NPV terms the extra 10% of debt
relief looks like a small effort. However, in nominal terms, the difference can be
substantial. In the case of Cameroon, strict application of the Cologne terms on the same
216 million would lead to a cancellation of about 73 million, still leaving intact a claim of
about 43 million EUR, together with bullet principal repayment in the year 2124 of 100.4
million EUR, summing to 143.7 million EUR of remaining claims.
As already explained earlier in our general assessment of the compensation agreements
(section 3.3.3), the subject of our evaluation is not to determine whether ONDD is entitled
to a compensation, and for how much; the aim is limited to highlighting the level of
intervention (compensation paid from the DGD budget) that can be defended from a
development perspective. This also goes for the evaluation of the Cameroon compensation
claim. As again highlighted in the general assessment, the only remaining difference
between the compensation formula (used in the 2001 and 2005 agreements) and the value
of debt relief from our preferred ‘economic value’ perspective, is the fact that in the
compensation agreement the basis for calculation is the nominal value of the debt
cancelled, while in our framework it is the present value. Applied to the concrete
Cameroon case, this would mean that the basis for calculation of the claim, as in the before
last column of table 4.7, namely 153.5 million EUR, being the sum of 67.6 million and
85.9 million EUR of claims for account of the ONDD and the State respectively), which is
in nominal terms, should first be calculated in present value, at the appropriate discount
rate 86 . The claim would then be calculated as 46% of that PV.
4.2.2 A counterpart fund in the framework of debt relief: the Fonds de
Développement Belgo-Camerounais
In the framework of the contribution of the Belgian Development Cooperation to the
financial reorganisation of the ONDD, in 1995 Belgium and Cameroon agreed to set up a
counterpart fund to administer funds made available by the government of Cameroon as
counterpart for a debt swap operation. The Fonds de Développement Belgo-Camerounais
(Belgian-Cameroon Development Fund, here abbreviated as FDBC) was set up by a special
agreement dated December 28, 1995. It resulted from the purchase by the DGD of claims of
the ONDD on Cameroon of a total value of 10,892,146 EUR (439.4 million BEF). The DGD
paid 3,594,408 EUR for these claims, 33% of their nominal value. Cameroon contributed the
equivalent of this amount in FCFA to the FDBC. Cameroon also transferred to the Fund its
contribution to some other projects, including the first phase of the rural telecommunications
project, so that the total amount available to the FDBC was approximately 5.6 million EUR.
Belgium did not make additional contributions to the Fund. The Fund’s resources were to be
used for projects in the social and production sectors. On April 18, 2001 the Belgian
Technical Cooperation took over the role of the DGD in the Fund.
The FDBC was governed by a Comité Paritaire. The members of this committee were a
representative of the Caisse Autonome d’Amortissement and of the Ministry of Finance of
86 As highlighted again in the general assessment, by using as an appropriate discount rate the Commercial
Interest Reference Rate (CIRR), as of April 1, 2006 (equal to 4.36%).
Coming to Terms with Reality
Cameroon, the resident representative of BTC and the Belgian attaché for Development
Cooperation. A Comité de Suivi, composed of the members of the Comité Paritaire and of
representatives of the beneficiary technical ministries, was in charge of monitoring the
projects financed by the Fund. The daily administration and financial management of the
fund were in the hands of a coordinator paid by the FDBC.
In the course of its operation three projects were submitted to and financed by the FDBC
(1) a drinking water supply project in the university town Soa started up in 2004;
(2) the rehabilitation of drinking water fountains in Sanaga Maritime, started up in 2006;
(3) a rural water project in the Batcham district, started up in 2005.
The project formulations suggest that all three these projects met real local needs. But there
seem to be no systematic reports on the projects’ implementation and operation. We therefore
cannot evaluate in how far the projects a posteriori were effective in meeting those needs.
In addition to those projects the FDBC allocated 251,000 EUR to the BTC for the latter’s
contribution to the implementation of a European project of tropical forest management.
The question rises whether the FDBC did contribute to the development of Cameroon,
over and above what straightforward debt forgiveness would have contributed. In the latter
case the equivalent of Cameroon’s contribution to the Fund would have been available for
the general budget of the country and could have been used for general government
expenditures, current as well as investment expenditures. There are at least four reasons
why setting up a counterpart fund mechanism did probably not make an additional
contribution to the development of the country.
First, it is not clear whether in the absence of the FDBC the projects under consideration
would not have been financed by the government. If not this could be interpreted as an
indication that they had no high priority. Second, from a procedural standpoint the process
of analysing and sanctioning these projects experienced problems similar to the problems
that probably would have arisen if the projects had been financed by the national budget:
bureaucracy, dependence on the ministry in charge of water and energy and rivalry with
other administrative bodies. Third, it is not clear whether the Belgian representatives in the
governing bodies of the FDBC made specific contributions to the quality of the decision
making and to the follow-up of the decisions. The role of the Belgian representatives was
made especially difficult because Belgium was downsizing and winding up its cooperation
with Cameroon. Finally there were no procedures for monitoring and evaluating the
execution of the projects and their operation.
In 2008 it was decided to stop the operation of the FDBC and to transfer the balance of
approximately 72,000 EUR to the Cameroon’s government, specifically the Ministère de
l’Economie, de la Planification et de l’Aménagement du Territoire and the Caisse
Autonome d’Amortissement. The Caisse Autonome d’Amortissement would report on the
use of the FDBC’s balance to the to the Belgian Attaché for Development Cooperation
residing in Cotonou. This report has not been received.
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