has undergone something of a transformation in recent years, after a difficult
period of political decline and economic atrophy. Dependence on a narrow
base of commodity exports, especially oil, and the unchecked growth of
a large and inefficient public sector, had contributed to the malaise of
an economy with the potential to be amongst the most rich and diverse on
the continent. But since the mid-1990s, after a difficult transition from
one-party rule to multiparty democracy, Cameroon has enjoyed a degree of
political stability unrivalled elsewhere in the region and an economy that
has posted creditable growth despite difficult external conditions. Once-hostile
opposition parties have been attracted into government, while previously
sceptical donors have displayed increasing confidence in a reform process
that is beginning to bear fruit. Moribund, patronage-riddled state ownership
has given way to an aggressive programme of privatisation that has already
attracted significant foreign direct investment. New policies are promoting
the diversification of the agricultural sector and encouraging local processing
of raw materials. Efficiency of government has improved. Donors have agreed
a debt relief programme and are helping to fund a process of social and
physical infrastructure renewal.
1999, the reform process had reached a critical point. Growth had to be
translated into an appreciable improvement in the living standards of ordinary
Cameroonians if political stability were to be maintained. Donor tolerance
of persistent corruption had worn thin. The most politically risky privatisations
remained to be completed. President Paul Biya insisted that his government
would not falter, but an uncertain regional security environment, weak
prices and depressed demand for traditional exports on world markets were
likely to complicate the process.
GDP growth for 1997/98 was estimated at 5 per cent, with the inflation
rate falling to 1.6 per cent in the 12 months to June 1998 from 9.6 per
cent in the year earlier. Non-oil exports grew by 7 per cent, driven by
coffee, cotton, and timber. In an indication of the success of efforts
to promote reform, growth in the financial year 1998/99 was forecast at
more than 4 per cent, despite a fall in prices for all of Cameroon's principal
exports-oil, cocoa, timber, coffee, cotton and aluminum. An IMF mission
to Cameroon in February 1999 praised the government's management of the
economy, and endorsed the progress made in meeting targets set as part
of the SDRl62 million ($220 million) enhanced structural adjustment facility
(ESAF) agreed in 1997, despite the increasingly unfavourable external trade
performance in mobilising non-oil revenue more than offset the shortfall
in oil revenue, and public expenditure was kept within the limits set by
the IMF. Illustrating progress made in implementing structural reforms,
the IMF cited the completion of an independent audit of the national oil
company, liberalisation of the domestic market for refined petroleum products,
adoption of a restructuring plan for the port of Douala, and the launching
of competitive bids for the establishment of a second cellular telephone
company. After a careful media campaign designed to prevent the kind of
popular disturbances witnessed elsewhere on the continent over the introduction
of new sales taxes, in January 1999 the government introduced value-added
tax of 18.7 per cent on a wide range of goods and services.
are limited to basic commodities such as fish, meat, milk, flour, books
and pharmaceutical products, with officials warning that any price increases
resulting from the introduction of the new tax will be due to overcharging
by unscrupulous retailers. The introduction of VAT, the further strengthening
of the tax administration, and the reduction of tax fraud were considered
by the IMF to be critical for raising non-oil revenue collection and meeting
the overall budgetary revenue target of CFAF893 billion ($1.6 billion)
in 1998/99. Initial indications show that the new tax is performing well.
which is at the cornerstone of the reform process, has generally proceeded
smoothly. The ailing national railways company, the Regie nationale de
chemin de fer du Cameroun (Regifercam), which recorded a substantial loss
in 1998, has been successfully sold to a French-South African consortium
Saga-Comazar. Bids have also been invited for the state-owned Cameroon
Airways (Camair), with a sale due to be completed by mid-2000. The heavily
indebted airline operates an ageing fleet of six aircraft and enjoys a
dubious reputation for reliability and efficiency. However, Camair has
rights to a number of potentially lucrative routes, and officials have
already received preliminary inquiries from Air France and South African
issues, however, are likely to prove more controversial. Local businessmen
have expressed concern at reports that the government intends to sell the
national water supply company, the Societe national des eaux du Cameroun
(SNEC), and the national electricity company, the Societe national de l'electricite
(SONEL) to French interests. The national business forum, the Groupement
interpatronal du Cameroun, demanded a postponement of the sales to allow
for a more competitive bidding process. The call was energetically adopted
by elements of the media and the parliamentary opposition, which accused
the government of relinquishing Cameroon's economic sovereignty in order
to satisfy the IMF and World Bank. However, the enabling legislation was
easily approved by the national assembly in November, and plans for the
sale of the two utilities are now well advanced. Privatisation of one of
the country's biggest, most successful and politically sensitive companies
is also likely to prove problematic.
Cameroon Development Corporation (CDC), which employs 13,000 people and
has a registered capital of CFAFl5.6 billion ($26 million), produces and
processes rubber, oil palm, bananas and tea and has attracted interest
from American, French and south-east Asian firms. However, the CDC has
historically been a focus for Cameroon's anglophone community, which is
reluctant to see the corporation pass into private hands. The complexity
of land rights in areas on which CDC has its major plantations is likely
to further complicate and perhaps delay the process.
of the overstaffed, underpaid, inefficient and demoralised civil service
has also been an important focus of the reform programme. In late January
the government launched a new civil service census, the second in ten years.
Its aim is to identify and remove so-called"ghost workers" - salaries claimed
on behalf of non-existent staff- from the government payroll. Officials
believe that the probe will help to reduce the government's monthly wage
bill to CFAF18 billion ($30 million), which will represent annual savings
of about CFAF50 billion.
however, have been less pleased with the government's record on corruption,
which continues to present a major challenge. In September 1998, a German-based
anti-corruption organisation, Transparency International (TI), ranked Cameroon
as the most corrupt of 85 countries included in its annual survey. President
Biya angrily rejected the survey's findings, but nevertheless launched
a new campaign against corruption. However, until now, only junior officials
have been detained in connection with alleged irregularities, fuelling
speculation that the authorities are either unable or unwilling to pursue
the "big fish."
and business opportunities
1998, Cameroon introduced new legislation that offered incentives for companies
investing in marginal and deep-water fields. The government had hoped to
reverse the oil sector's steady decline from a peak of nearly 200,000 barrels/day
(bid) in the mid-1980s, and to attract the kind of substantial foreign
direct investment pouring into the sector elsewhere in the region. However,
depressed prices and the associated uncertainty across the industry in
recent months, combined with a legacy of official mismanagement and corruption,
have undermined the strategy. A border dispute with Nigeria around the
Bakassi peninsula has also hindered exploration and development in the
potentially oil-rich Rio del Rey basin. Most analysts, therefore, expect
output to continue to fall from the 110,000 b/d recorded in 1998, as existing
fields mature. Commercially exploitable reserves are forecast to be exhausted
within ten years.
gloomy outlook for oil prices has also contributed to delays in a $1.4
billion project to construct a pipeline from Doba in southern Chad across
Cameroon to a terminal at Kribi on the Atlantic coast. Separate environmental
concerns and political factors mean development may not now begin until
2000. However, the project will bring substantial employment opportunities
and numerous associated contracts, while in the longer term, Cameroon can
expect to generate revenue from the pipeline and loading terminal.
government has forecast a cocoa crop of 128,000 tonnes in 1998/99, compared
with an estimated 122,000 tonnes in 1997/98, as a result of better weather,
improved support services and encouraging prices. Coffee also enjoyed a
good season, with the 1998/99 harvest nearly 10 per cent up on the 1.53
million bags recorded in 1997/98. However, Cameroon's other main agricultural
sector export, cotton, has performed less well. In October the Compagnie
francaise pour le development des fibres textiles (CFDT), which provides
technical assistance to the Cameroon state cotton monopoly, Sodecoton,
and controls 30 per cent of its shares, reported that cotton output in
1997/98 had fallen to 180,000 tonnes, down from 223,000 tonnes the previous
year. Smuggling to Nigeria was also reported to have increased to 5.5 per
cent of total output, double that estimated for 1996/97.
an indication of its new enthusiasm for liberalising the agricultural sector,
in December the government sold its majority holding in the Cameroon Sugar
Company (Camsuco) to the French agro-industrial group, Somdiaa, for CFAF11
billion ($20 million). Camsuco has 12,000 hectares of sugar plantations
and a sugar mill with an annual capacity of 80,000 tonnes, In the 1980s
it produced around 70,000 tonnes, but in recent years mismanagement contributed
to a fall in production to just 5,000 tonnes.
already owns Camsuco's rival, the Societe sucriere du Cameroun (Sosucam),
and will now enjoy a monopoly position on the domestic market, which is
estimated to have a capacity of 120,000 tonnes. In January, Somdiaa announced
that it would invest CFAF 21 billion ($35 million) to double its local
sugar production to 100,000 tonnes/year.
petitions from the timber industry, the government implemented legislation
banning all unprocessed log exports in January 1999. The timber exporters'
association, the Groupement de Ia filiere bois au Cameroun (GFB), estimates
that the ban will lead to an annual loss of CFAF35 billion ($60 million)
in budgetary receipts and CFAF13O billion in export earnings. In recent
years forestry has been Cameroon's second most important source of exports.
According to official figures, log production reached 3.6 million cubic
in 1997/98, when the sector accounted for more than 7 per cent of GDP.
However, officials believe that in the longer-term, the move towards local
processing will make the sector more profitable, as well as yielding environmental
dividends. Despite the new legislation and a fall in demand, forestry has
continued to attract foreign investment. In January the Société
forestiére de Chine du Cameroun (CFIC), a subsidiary of China Jilin
Forest Industry, was awarded a timber exploitation licence. The company
says that it plans to invest CFAF6 billion in a sawmill and plywood factory,
which will process 150,000 cubic metres of wood a year and create 4,000
recent months the government has adopted measures to strengthen competition
in the banking sector. In late September measures were introduced to allow
bank commissions to be determined by the market, and to deregulate foreign-exchange
dealing so as to ease exchange operations and improve the quality of service.
Previously, only commercial banks had been allowed to carry out foreign
currency exchange operations. This additional competition may put further
pressure on commercial banks, which are only now recovering from a loss
of confidence and associated liquidity crisis at the end of 1998, when
speculation of a devaluation of the CFA franc, which turned out to be false,
had been rife.
a separate initiative to deepen the financial sector, in early 1999 Cameroon
and its partners in the regional economic grouping, the Communauté
économique et monétaire de l'Afrique centrale (CEMAC), agreed
to work towards the establishment of a regional stock market by November
2000, with start-up capital of CFAF1 billion ($1.75 million). Officials
believe a new bourse could have 60 listings within five years. Such an
instrument has long been advocated by the private sector in Cameroon as
a potentially vital source of financing. However, a number of political
and logistical problems are still to be overcome, including, for example,
rivalry between Cameroon and Gabon over the location of a new exchange.
government has pledged to introduce a new mining code as part of an initiative
to increase investment in the sector. The most encouraging prospects include
the bauxite deposits in Minim-Martap, with reserves estimated at 900 million
tonnes, and Ngaoundal, with 200 million tonneé, in central Cameroon.
New development could help supply smelters at Edea, which are owned and
operated by Alucam, a subsidiary of the French Pechiney group. Alucam is
considering doubling primary aluminium production capacity from about 92,000
to 200,000 tonnes a year, but will first require cheaper and more reliable
supplies of electricity, improved transport infrastructure and better access
to the port at Douala.
is proving itself to be one of the more successful examples of structural
reform in Africa. That success is all the more remarkable given the failure
of a series of reform initiatives since the 1980s, the fall in prices for
most of Cameroon's traditional exports and the unsettled political and
security environment in the region. The process is, however, far from complete.
The achievements that led to the IMF's anticipated disbursal of the second
tranche of its ESAF in 1999 were impressive, but there is little room for
complacency. While a number of measures have been adopted to reduce the
profile of the state, it remains the focus of the national political and
economic agenda. Vested interests continue to benefit for a culture in
which transparency and accountability do not easily thrive. Political tensions
have been suppressed, but not resolved. However, if the process of renewal
can be continued, Cameroon, which straddles English- and French-speaking
Africa and enjoys an abundance of human and natural resources, could offer
a potential business environment that would be the envy of the continent.
and business environment
has the potential to be one of the strongest economies in Sub-Saharan Africa.
Improvements in economic management and the imposition of fiscal restraints
are indications of government commitment to reforming the economy. The
rate of privatisation of state-owned enterprises is increasing, as is the
level of non-oil earnings. Recent positive macroeconomic figures will give
support to Cameroon's appeal to the Paris Club for additional debt rescheduling.
The business environment is becoming more encouraging, levels of investment
in the oil sector have risen, and other areas of the diversified economy
are benefiting from the many different investment and P production incentives.
An overhaul of the financial sector is under way.
exchange is freely available. Capital and profits, royalties and other
payments may be repatriated without charges. Domestic credit is available.
Tied to the French franc, the CFA franc is fully convertible and stable
and is now pegged to the Euro.
is preferential access to markets of the EU.
regarding investment were set up in 1990 and new tariff codes were introduced
in 1994. The Investment Code Management Unit promotes and approves investment.
Foreign and local investors enjoy the same rights. New small and medium-sized
enterprises (SMEs) require 35 per cent local equity and there is no restriction
on larger companies. Reserved sectors include petroleum, water, telecommunications,
aluminium and cotton where direct foreign in investment is being resisted,
but equipment and services may be provided to the parastatals. The Cameroon
Investment Code, introduced in 1990 and amended in 1994, offers a package
of incentives for investors.
legal system is bi-jural, with common law in the two provinces previously
under English jurisdiction, and civil law in the eight provinces previously
governed by France, but there is considerable harmonisation of the two
jurisdictions. However, accurate legal information is not always available
to private investors. Plans are under way for an arbitration centre to
settle disputes between local companies and between local and foreign-owned
companies. While the right of private property ownership is recognised,
the government reserves the right to take up to 33 per cent of the registered
capital in a foreign-owned project. Nationalisation requires prior compensation
as agreed by an independent third party. Cameroon is a member of the Multilateral
Investment Guarantee Agency (MIGA) of the World Bank which protects against
expropriation, breach of contract and war and civil disturbance, as well
as the inconvertibility or transfer of currency. Cameroon is also a member
of the Paris-based International Chamber of Commerce. It is a member of
the African Organisation for the Protection of Intellectual Property (OPI).
(VAT) of 18.7 per cent as from January 1999 has been put on goods and services,
with certain exceptions, such as milk, flour, books and pharmaceuticals.
The corporate tax rate is 38.5 per cent, and there is a 25 per cent withholding
tax (16.6 per cent if the receiver is resident in Cameroon). Businesses
are also subject to a turnover tax of 18.7 per cent (8.8 per cent for certain
goods). Capital gains tax is 25 per cent. Incentives available include
a three-year exemption from registration fees and taxes on loans for companies
setting-up and a 50 per cent reduction on company tax for the first year.
A five-year tax holiday giving a 50 per cent reduction in company tax,
a 50 per cent reduction in withholding tax and a carrying over of losses
to the following five years is also available. Companies exporting finished
or semi-finished products are exempt from export duties, insurance and
transportation charges for products exported. Raw materials and intermediate
products originating from Central African countries, and water and electricity,
are also exempt from import duties.
establishing themselves in rural areas are able to deduct 50 per cent of
transportation costs. There are double taxation agreements with France,
Canada and Switzerland. The oil exploration tax law implemented in April
1998 offers inducements to exploit older, less profitable concessions.
The costs arising out of dry wells can be put against tax liabilities,
In the research and development stage, under certain circumstances, oil
companies and their sub-contractors may be exempt from a 15 per cent special
tax on income. An oil company's share of production will increase according
to costs incurred in deep-sea exploration and the government may fund its
own share of costs incurred by joint oil exploration.
Industrial Free Zone (IFZ), for firms exporting at least 80 per cent of
their products, operates throughout the country, both in industrial parks
and in one-off special industrial free zones (SIFZ) for agro-processing
factories. A wide range of activities are eligible, including manufacturing,
and financial and information processing services. Applications are normally
processed within 30 days. Companies in the IFZ are given a ten-year tax
holiday, with a flat rate of 15 per cent corporate tax thereafter. IFZ
firms enjoy tax-free repatriation of funds, and no foreign exchange regulations.
There is, on the whole, exemption from customs duties and taxes but import
taxes are imposed on certain categories of goods.
French and English are spoken although French is more widespread. Education
levels are relatively good. Although there is a shortage of skilled labour,
costs are fairly low. There is a minimum wage. A new labour code in 1992
introduced more flexibility, while continuing to protect the rights of
workers. Expatriate workers are allowed, depending on the amount of invested
capital, or where local skills are inadequate.
per cent of electricity is produced from hydroelectricity. Even with substantial
oil and gas reserves, oil represents only a fraction of energy consumption.
Considerable hydroelectric potential exists on the Sanaga river in the
south that so far is unmatched by demand from industry or domestic consumers.
Much of the telecommunications network is digitalised. There is a GSM cellular
telephone service for some of the main administrative centres and a second
GSM 900 cellular telephone service is expected to be established soon.
is a member of La Francophonie (the affiliation of French-speaking nations),
the Franc Zone, BEAC (the Central African Bank), ECOWAS, ACP group of signatories
to the Lomé Convention (which is due to expire in 2000), UDEAC and
CEMAC. There are bilateral investment agreements in place with many countries.