A foreign exchange initiative designed to boost reserves in six Central African nations may raise less than $500 million by the April 30 deadline, significantly falling short of the target range of $5 billion to $10 billion, according to sources in the oil industry.
The environmental restoration funds, established in 2018 under the Bank of Central African States (BEAC), were intended to strengthen the hard-currency reserves of Cameroon, Gabon, Chad, Equatorial Guinea, Central African Republic, and Republic of Congo. However, disagreements between oil companies and BEAC authorities over the fund’s usage have hindered progress, with some companies yet to make deposits.
Oil firms, including TotalEnergies and Perenco, have raised concerns about the funds being ring-fenced, limiting their ability to count them as reserves in line with International Monetary Fund (IMF) guidelines. As a result, only partial contributions have been made, and some projects have not yet established the necessary restoration funds.
A senior industry source estimated that the total contribution could reach between $350 million to $500 million by May, well below the original target. The six nations had hoped to use the funds to shore up their fragile economies, but the reduced amount threatens to exacerbate the region’s economic instability.
Investment into the region is also expected to decline, with experts forecasting a $45 billion loss in foreign investments by 2050, should the new foreign exchange rule be implemented. Additionally, the dispute over BEAC’s refusal to waive its sovereign immunity has led to a deadlock, with the IMF and U.S. lawmakers now closely monitoring the situation.
The funding shortfall and ongoing negotiations have led to a bleak outlook for the region’s economic future unless these issues are resolved soon.
