Cameroon Business Overview
Cameroon is a lower-middle-income country with a population of over 25 million (2018). Located along the Atlantic Ocean, it shares its borders with Chad, the Central African Republic (CAR), Equatorial Guinea, Gabon, and Nigeria. Two of its border regions with Nigeria (northwest and southwest) are Anglophone, while the rest of the country is Francophone. Cameroon is endowed with rich natural resources, including oil and gas, minerals, high-value species of timber, and agricultural products, such as coffee, cotton, cocoa, maize, and cassava.
Political Context
Cameroon’s ruling party, the Cameroon People’s Democratic Movement (CPDM), has long dominated the country’s political landscape, occupying 148 of 180 seats in the National Assembly and 81 of 100 in the Senate. In November 2018, disputed election results returned President Paul Biya to office. At 85 years old, Paul Biya, who has held power since 1982, is now serving his seventh term as the country’s president.
Having enjoyed several decades of stability, for many years now Cameroon has been grappling with attacks by Boko Haram in the Far North and a secessionist insurgency in the Anglophone regions. Since September 2017, this situation has displaced more than 500,000 people internally and claimed the lives of close to 400 civilians and over 200 military, gendarmerie, and police officers. Figures from the UN Refugee Agency (HCR) show that Cameroon is currently hosting over 401,213 refugees, primarily from the Central African Republic (289,982) and Nigeria (108,164).
Social Context
Because its poverty reduction rate is lagging behind its population growth rate, the overall number of poor in Cameroon increased by 12% to 8.1 million between 2007 and 2014, and poverty is increasingly concentrated, with 56% of poor living in the northern regions.
Economic Overview
Cameroon is the largest economy in the Central African Economic and Monetary Community (CEMAC), a region experiencing an economic crisis triggered by the steep fall in oil prices. Along with its CEMAC partners, Cameroon has therefore had to put fiscal adjustment measures in place to adjust to the terms of trade shock and restore macro-stability and confidence in the common currency.
Growth in Cameroon is expected to reach 4.3% this year. The rebound is driven by three factors: an increase in natural gas production, with a new liquefied natural gas (LNG) offshore terminal coming online; the slight downturn in the oil sector; and sustained momentum in the construction, industry, housing, and services sectors.
The World Bank’s Country Economic Memorandum, issued in April 2017, notes that if Cameroon is to become an upper-middle-income country by 2035, it will have to increase productivity and unleash the potential of its private sector.
Specifically, Cameroon’s real GDP will have to grow by roughly 8% (or 5.7% per capita) between 2015 to 2035, which in turn will require the investment share of GDP to increase from about 20% in 2015 to 30% in 2035, and productivity growth to reach 2% over the same period from its average zero growth rate over the past decade. These challenges, though daunting, can be met.
Development Challenges
Cameroon suffers from weak governance, hindering its development and ability to attract investment. It ranks 152 out of 180 countries in the 2018 Transparency International corruption perceptions index, and 166 out of 190 economies in the World Bank’s Doing Business 2019 report.
Cameroon was declared IBRD creditworthy in 2014 and is currently a blend country: its IDA18 allocation is about $787 million and current IBRD exposure limit, $392 million.
The World Bank’s portfolio comprises 18 national IDA, Global Environment Facility, and Trust Fund operations, with a net commitment of roughly $2.4 billion.
The IBRD is financing a transport sector development project and an electricity transmission and energy reform project.
The World Bank is also supporting the improvement of Cameroon’s competitiveness in energy, transport, and telecommunications as well as working to improve the business climate. The Bank is also helping improve service delivery for human development through a social safety net system and local development, with a focus on providing greater access to basic public services through infrastructure upgrades and capacity building in the northern regions.
The World Bank has adopted a new Country Partnership Framework with Cameroon for the period 2017-2021, aligned with the Government’s 2010-2013 National Growth and Employment Strategy. This new framework includes 12 objectives grouped into three areas:
- eliminate multiple poverty traps in rural areas, in particular in the northern regions;
- strengthen infrastructure and private sector development; and
- improve governance.
On July 8, 2019, the World Bank approved the report on the mid-term review of the Country Partnership Framework with Cameroon. The report affirmed the relevance of the pillars that are the focus of the World Bank’s involvement but recommends a stronger emphasis on the fragility-related factors that impede the country’s development efforts.
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