CAMEROON: Strengthening the Douala Port credit worthiness

The Cameroonian Ministry of Finance has taken various steps to improve the performance of state-owned companies, including the Port Authority of Douala (Port Automone de Douala – PAD). One of the government’s objectives is to reduce the debt burden on the state emanating from public enterprises loans guaranteed by the government. As part of the restructuring program, the Ministry of Finance intends to establish new mechanisms that will allow public enterprises to access more conventional funds from capital markets. In that context, the PAD reached an agreement with the French Development Agency (Agence française de développement – AFD) on a concessional non-sovereign loan for the financing of these investments. The PAD had commissioned a financial and economic model (funded by AFD) that highlights its main economic parameters as well as an investment plan. 

Against this background, the PAD sought PPIAF’s assistance to strengthen its financial viability and enable it to gain sufficient financial strength to be able to access non-sovereign lending from development partners and commercial financing. Several tasks were performed under this technical assistance, including:

1. a financial recovery plan; 
2. a corporate and governance structure; 
3. definition of the PAD’s debt and debt environment in Cameroon; 
4. a shadow rating assessment. 

Based on the assessment, the PAD obtained a B rating, which means that the PAD has a low credit quality and, therefore, a high credit risk. As a result, six key drivers have been identified, including:

1. Sustainable growth in shipping and freight traffic.
2. Stability and growth of operating cash flow.
3. A realistic and efficient approach to the investment plan.
4. Debt rationalization.
5. Clarification and stabilization of the financial relationship with the government.
6. Establishment of long-term financing.

Recommendations were proposed to improve the financial sustainability of the Port of Douala.