Financing problems of photovoltaic panels in cameroon

3.1 Institutional Barriers

Energy production in Cameroon is characterized by inequality between supply, unstable distribution and growing demand. However, the recovery of the energetic system will increase the electricity production based on the exploitation of alternative energy sources like solar.

The potential solar system of Cameroon is conducive to the implementation of large solar scale infrastructure to improve industrial development and distribution of electricity in every household; it will be an essential factor for the functioning of the Cameroonian economy.

The Government's plans however suffer several obstacles in terms of:

? Transparency

? Corruption

? Business Environment and accountability

? Taxation high

? Urbanization uncontrolled

However, we will develop some points, which attest to the poor governance in Cameroon.

3.1.1 Question of corruption

From 2011 to 2013, Cameroon has moved from 134th to 144th corrupt country. Perceived as one of the most corrupt countries in the world, It is placed in front of 143 countries on the index of perceptions of corruption (CPI). Unfortunately in recent years, Cameroon lost points, a sign that show the increasing level of corruption. Currently, the new system of International transparency of Cameroon rounded 26 points out of 100.

The Central African Republic and Congo democratic republic had the same points while Chad and Equatorial Guinea had the lowest points, between 20 and 19/100¹¹. Corruption is an obstacle to finance photovoltaic panels in Cameroon.

11 www.lanouvelleexpression.info www.transparency.org

3.1.2 Question of Competitiveness

Regarding the competitiveness Cameroon is faced with a high cost of inputs due to lower supply of energy to the domestic need, low densification of the road network and lack of efficient seaport services.

Infrastructure (123th place) and the complexity of financial markets (ranked 125th) are the areas in which the country has the lowest performance. The low competitiveness factors are also explained by the complexity of the business environment (112th). Global competitiveness index is ranked 116th in Cameroon. The appreciation of these indicators confirms the necessity to pursue reforms for improvement of the environment for private sector.

Many governmental barriers push investors to moderate their investments in Cameroon. As part of the extension of solar energy, Cameroon should strengthen its governance and strategic management of the state. We suggest that to this effect

? An improvement should be made in public financial management and revenue mobilization systems in order to increase the investment rate over 18%.

? Improve the environment of the private sector through establishment of technical assistance for the improvement of performance

? Facilitate access to the property so as to improve and manage the issue of urbanization in Cameroon.

3.2 Economical and Financial barriers For this purpose we apprehend one hypothesis:

3.2.1 Question of currency

Cameroon as part of the Franc zone (CFA) was associated with the Euro on 1 January 1999 by a peg. (1 euro = 655.95 FCFA).

The Central Bank of Cameroon, like other countries of the Franc zone, is connected by French treasure following the mechanism of the operational account, which is in principle a technique of collecting currency to ensure its international credibility.

This responsibility is heavy for Cameroon because:

? It deprives the Cameroon economic autonomy of monetary policy and it is an obstacle to the development process in Cameroon.

? Secondly, the fact that the CFA Franc is tied to Euro, shows that it is a very flexible currency, and leads to the devaluation of the CFA Franc, as it significantly slows down exports and imports and hinders competitiveness of the national economy.

For a country like Cameroon, the trade balance deficit undergoes considerable importation and double exportation. It is clear that the project to install solar panels in Cameroon will necessitate the importation of raw material. But the Mechanism of the Franc Zone encourages a form of laziness in economics, leading to a tendency of excess importation and less exportation.

Thus, at this rate, Cameroon is a net importer of consumer goods. In general, we think that a fixed parity of the CFA Franc and a fixed exchange rate will be beneficial for these states , but these are the same countries that fail to develop the industrial sectors, which waive the Small and Medium local firms who faces high costs of importation in terms of currencies CFA Franc (as linked to the Euro) and thus fail to compete with cheap imports produced in weaker currencies (Chinese Yuan) or in countries with strong currency that subsidize their exports (Swiss Franc). We believe that the CFA Franc primarily benefits foreign companies as well as those located in Africa because they repatriate their capital in Europe and enjoy absence of exchange rate risk, while African consumers do not enjoy any advantages in terms of exportations.

According to the data, we can believe that the CFA Franc is an obstacle to the development of the competitiveness of the concurrency and local businesses also to the industrialization of Cameroon.

Studies we have conducted show that the success of a project lies less in its technical execution but depends mostly to its economic or financial profitability. The challenge to restore funding for photovoltaic panels in Cameroon is to develop

models that can generate technologies to consumers at affordable prices without destroying the management model of energetic system in Cameroon. Unfavourable political environment with minimal government support for renewable energy subject renewable energy projects to the private sector in the economy.

To this end, we have realized an economic model aimed at reducing the high costs of displaying Photovoltaic firm in each household while providing quality services according to the international standard.

This model meets the reduced cost issues mentioned throughout this study.

4 Analysis of an investment project of photovoltaic panels in Cameroon

Previously we were able to enumerate the institutional, economical and financial barriers concerning the financing of photovoltaic panels in Cameroon. Considering the characteristics of Cameroon in the socio-economical, and geographical aspects, we will simulate a project Based on the internal rate of return, which is a tool for investment decision. Our project would be viable only if its internal rate of return is sufficiently higher by considering the specific premium risk to the type of project.

In principle, we must be able to determine the grounds on which the government can intervene in order to realize these types of project with return on investment.

4.1 Operational hypothesis

Our project is to install a field of solar panels with a capacity of 1MW. In principle 1MW = 1,000,000 watts per year, however this production will amount to 2000MWH. The initial investment amounts to EUR 3 million or (1.98 Billion FCFA) over a period of 25 years.

To this end we consider that the operating costs consist mainly of caretaking and cleaning. It was estimated that 27 Euros/MWh (17,710 FCFA/MWh) is the load factor of the field that corresponds to the number of hours in the year in which the fieldwork is 2000 hours. These data allow us to determine the efficiency rate of the field is (2000heures / 24 hours * 365 days) = 22.80%