The economy bounced back in 2012, stimulated by the recovery in the oil sector and strong domestic demand, which was in turn driven by investments in infrastructure. This trend should continue in 2013 and 2014.
Relative macroeconomic stability could be undermined by the maintenance of subsidies on oil products.
Despite ongoing social policies, Millennium Development Goal (MDG) indicators highlight the scale of challenges to be met against a background of strong population pressure.
The rebound in the economy initiated following the 2008/09 financial crisis continued in 2012, with growth estimated at 4.9%, versus 4.1% in 2011. Supported by higher oil production and strong domestic demand tied to the launch of large infrastructure projects, this positive performance should continue in the 2013-14 period.
In 2012, budgetary policy remained expansive with increased investment spending and spending on subsidies. According to estimates, the budget balance should remain in deficit, at 3.5% of gross domestic product (GDP), compared to a deficit of 2.7% in 2011. The monetary situation was characterised by a fall in net external assets (NEA) and an increase in domestic credit. Inflation, which should reach 3% (compared with 2.9% in 2011), can be explained by electricity price increases as well as the impact of flooding on harvest stocks. With a 32.6% share of exports, oil remains the main export. Estimates based on 2012 first-quarter performances indicate that several external balances will remain in deficit. The debt level remains manageable, with a ratio of public debt stock/GDP of around 16.7%.
Cameroon has abundant natural resources. However, revenues obtained from the exploitation of these resources, and from oil in particular, have not been sufficiently channeled into structural investments in infrastructure and the productive sectors. The decline of the agricultural and forestry sectors in the country’s economic structure over the past decade attests to this. Recently, the State has undertaken steps aimed at reviving the productive sectors, particularly by strengthening infrastructure. While efforts to maintain macroeconomic stability are continued, poor governance persists and impedes the optimal use of public resources for the country’s socio-economic development.
Figure 1: Real GDP growth 2013 (Central)
Table 1: Macroeconomic indicators 2013
|Real GDP growth||4.1||4.9||5||5.2|
|Real GDP per capita growth||1.9||2.8||2.9||3|
|Budget balance % GDP||-2.7||-3.5||-3.9||-4.2|
|Current account % GDP||-4.5||-5.3||-5.3||-6.2|
Recent Developments & Prospects
Table 2: GDP by Sector 2013 (percentage of GDP)
|Agriculture, forestry & fishing||-||-|
|Agriculture, hunting, forestry, fishing||22.9||23.6|
|Electricity, gas and water||1.1||1|
|Electricity, water and sanitation||-||-|
|Finance, insurance and social solidarity||-||-|
|Finance, real estate and business services||10.4||10.9|
|General government services||-||-|
|Gross domestic product at basic prices / factor cost||100||100|
|Public Administration & Personal Services||-||-|
|Public Administration, Education, Health & Social Work, Community, Social & Personal Services||7.3||8.2|
|Public administration, education, health & social work, community, social & personal services||-||-|
|Transport, storage and communication||21.9||19.5|
|Transportation, communication & information||-||-|
|Wholesale and retail trade, hotels and restaurants||6.6||7.1|
|Wholesale, retail trade and real estate ownership||-||-|
The economic recovery begun after the 2008/09 financial crisis continued in 2012, with an estimated growth rate of 4.9%, up from 4.1% in 2011. This performance is attributable to both a rise in oil production (+9.7%, compared to -7.3% in 2011) and strong domestic demand linked to the start of large infrastructure projects. In 2012, private sector activity boosted internal demand by 6.5%, up from just 5.3% in 2011.
Through the supply of goods and services for various projects, the effect of this increased demand was felt throughout the economy. The recovery has boosted the growth of the non-oil sector, estimated at 5% in 2012, and of agriculture (+4.1%), agro food (+3.6%), construction (+11.2%), as well as transportation and telecommunications (+8.8%).
This momentum should be sustained in 2013. The national hydrocarbons society (Société nationale des hydrocarbures, SNH) should benefit from new oil fields coming into activity, particularly at Dissoni, which could boost production by 17 000 to 20 000 barrels per day (bpd). This will bring production from its current level of 63 000 bpd to 90 000 or 100 000 bpd. Growth should also be boosted by the drilling of new mines in the Douala/Kribi-Campo basin, the reopening of certain mines in the Rio del Rey basin (thanks to new extraction techniques), the optimisation of production facilities and the development of the Kribi gas power plant.
However, 2012 was marked by events that negatively impacted on growth. The agricultural sector stagnated with floods in the North of the country resulting in crop losses. Rice paddy and sorghum stocks were partly damaged and seedlings and cultivated areas were literally swallowed up (cotton, onion, rice, and sorghum). The effect of this bad weather was compounded by external developments including the contraction in global demand for raw materials linked to the ongoing sovereign debt crisis in the euro area and falling prices for Cameroon’s key raw materials exports (wood, rubber, coffee, cocoa and cotton) due to geopolitical tensions. In addition, net external demand continued to exert a negative effect on growth in 2012 due to a deterioration in the exchange rate (-7.5%) and a rise in imports, particularly in equipment necessary for large public works.
To consolidate gains since 2010, when the Growth and Employment Strategy was launched (and continued in the 2010-20 Growth and Employment Strategy Paper, GESP), Cameroon maintained its investment programme in the energy, transportation, telecommunications and manufacturing sectors. Initiatives included: i) the paving of roads, notably on the Djoum-Mintom-Congolese border (233 km), Fumban-Magba trunk (66 km), Ekok-Mamfe (73 km), and Garoua Boulaï-Ngaoundéré trunks; ii) the construction of the gas fired plant at Kribi and hydro electrical dams at Mekin, Lom Pangar and Memve’ele; iii) the extension of the fibre optic network; iv) the construction of 10 000 low cost housing units; and v) the construction of a new cement works in Douala.
Thus, with the help of these projects and their effect on domestic demand, the economic recovery begun in 2010 should be sustained over the 2013-14 period. The extractive industries should grow, with: the Kribi gas plant scheduled to be operational in the first quarter of 2013 contributing an additional 216 MW to the country’s electricity supply; private investment to exploit the Mbalam gas well and the gas fields from Logbaba to Douala (212 billion cubic metres of gas and almost 4.2 million barrels of condensates); and the start of production of new oil wells, which will boost extraction volumes. These investments should represent 21.9% of GDP in 2013 and 22.9% in 2014 and these combined factors should enable Cameroon to reach 5% growth in 2013 and 5.2% in 2014. Following mixed results during the first two years of the 2010-2020 development strategy, the country is edging towards the 5.5% targeted growth rate.
In the short to medium term, certain factors risk impacting growth projections for 2013 and 2014. These include the ongoing crisis in Europe and possible delays to public construction projects due to poor absorption capacities attributable to administrative deficiencies. The country’s growth also remains vulnerable to climatic shocks, as demonstrated by the 2012 floods, and to volatility in world prices for primary raw materials.
Over the 2013-14 period however, the rise in oil production combined with the gradual decline in imports of equipment and the completion of a number of large construction projects in the transportation and electricity sectors, should offset these risks.
According to estimates, inflation should level at 3% in 2012, up slightly from the 2.9% recorded in 2011. This is due to higher prices for food and non-alcoholic drinks, higher electricity prices and the effects of the floods that damaged harvests.
In 2012, budgetary policy remained expansive with large expenditures linked to subsidies and infrastructure projects. Budget execution was marked by a strong rise in income (+9.6%) over the previous year. This result was due to increased oil revenues (+10.5%) and tax collection efforts (+8.4%). In total, income accounted for 18% of GDP in 2012, up from 17.9% in 2011. Transfers and subsidies continued to rise, specifically driven by oil products and capital expenditure (linked to the public investment plan). In parallel to controlling current spending in 2012, budget execution progressed in reversing previous tendencies of poor investment absorption. Thus in 2012, the budgetary execution rate for spending reached around 89.2% of forecasts, compared with 86.2% in 2011. The adoption of the budget programme should strengthen strategic tools (the medium term budget framework and the medium term spending framework) already present in a large number of ministerial departments.
The State significantly increased resources allocated to current expenditure and to petrol subsidies. These reached XAF 662 billion (CFA franc BEAC), or more than 1 billion euros in 2012, compared with XAF 550 billion in 2011. They should rise to XAF 689 billion in 2013. Alone, subsidies and transfers consumed more than 27% of total income and 26% of total spending during the 2012 budget exercise. Throughout the previous budget period, these ratios were 24% and 22%, respectively. Capital expenditure accounted for 32% of income and 31% of spending in 2012, unchanged from 2011.
In light of the country’s weak infrastructure as well as delays built up over the years, investment ratios more than comply with GESP goals. This rhythm should be sustained over the 2013-4 period, with an average of 35% for income and 31% for spending. However, this rise in investment spending should have been accompanied by a gradual increase in spending on maintaining existing infrastructure – which is not currently the case.
The trend in terms of subsidies and transfers is worrying. Indeed, petrol subsidies and the continued tax exemption status of food imports weigh heavily on public finances. In addition, the subsidies on petrol products have led to large arrears being accumulated with SONARA, the national oil refining company, and in turn, to the company’s high debt with national banks. Beyond the high opportunity cost in terms of investment, these measures provoke questions about their sustainability in regards to public finances and their efficiency in combatting poverty. The government should urgently consider introducing more targeted social protection nets (such as public transportation subsidies) and other direct assistance to low-income individuals.
The 2013 budget law maintained this focus on supporting consumption and purchasing power, particularly for cash crop farmers. It also continued incentives for importers of goods of mass consumption (rice, wheat, fish, cement, etc.).
The sole measures currently undertaken by the government to overturn this trend focus on promoting local production. This is the case, for example, of programmes to revive rice production, which will benefit from Japanese, Chinese and Indian aid, projects to develop intensive aquaculture, as well as aid to improve fishing and fish conserving facilities.
While better fiscal mobilisation in 2012 enabled the public investment programme to be reinforced, the impact of food imports tax exemptions and petrol pump price subsidies continued to make budgetary management less efficient. The budget balance should deteriorate during the 2012 period, with a deficit of 3.5% of GDP, compared to 2.7% in 2011. In light of this situation, the State raised external financing (of XAF 49 billion), issued Treasury bonds (XAF 50 billion) and drained XAF 41 billion from central bank reserves.
If this trend in spending continues (subsidies and transfers), the budget deficit could exceed 3% over the 2013-14 period, save for a significant increase in oil revenues.
Table 3: Public Finances 2013 (percentage of GDP)
|Total revenue and grants||17.4||16.6||17.9||18||17.6||17.5|
|Total expenditure and net lending (a)||17.5||17.7||20.7||21.5||21.5||21.7|
|Wages and salaries||5.7||5.4||5.5||5.7||5.8||5.8|
Cameroon is part of the Central African Economic and Monetary Community (CEMAC). As such, its monetary policy is determined by the Bank of Central African States (BEAC), which prioritises controlling inflation and maintaining parity between the CFA franc and euro.
Over the 2011-12 period, the country experienced a fall in net external assets and a rise in domestic credit. Net external assets declined by 12.6% in 2012 over the previous year, affected by the coverage of primary goods imports and fuel. Credits to the economy recorded an 11.3% increase in 2012, due to higher commitments from the private sector (up XAF 232.5 billion) and non-financial sector public companies (up XAF 14.6 billion) to the banking system. Also affecting domestic credit were the participation of banks in financing the construction of the Kribi gas power plant, the modernisation and increase in production capacities at SONARA, as well as the numerous loans obtained by companies sub-contracted on structural projects.
Money mass declined slightly by 0.1%, going from XAF 2 703.3 billion in 2011 to XAF 2 701.5 billion in 2012. Deposits fell by 2.1%, while currency in circulation rose by 10.2%. The relative share of deposits in money mass went from 83.7% to 82.1% over the same period, reflecting increased national savings. This development in money supply is accompanied by a 3% increase in consumer prices, which still conforms to the convergence criteria and multilateral surveillance programme of the CEMAC zone. Lastly, it should be noted that in 2012, Cameroon drew on reserves rather than resorting to monetary financing of its deficit.
Economic Cooperation, Regional Integration & Trade
By virtue of its geographic position and diversified economy, Cameroon is the motor of regional trade in central Africa, particularly in the CEMAC zone. This is belied by statistics for the decade to 2010 as the Cameroonian economy accounted for almost 40% of GDP in the zone, 16.8% of exports and 38.8% of imports and more than 44% of money supply. According to the central bank, the leading trade partner for Cameroon in the CEMAC zone is Equatorial Guinea, with 30% of trade, followed by Chad (27%), Congo (25%), Gabon (11%) and Central African Republic (7%). Cameroon exports primarily food products, meat, mineral water, fruit juices, palm oil, iron and steel to the region. It imports crude oil, cigarettes, and liquefied gas (originating primarily in Equatorial Guinea). Aside from crude oil, Congo is the leading partner for Cameroon in the CEMAC zone, with 41% of trade. It is followed by Gabon (20%), Equatorial Guinea (16%), Chad (15%) and Central African Republic (8%). Despite the volume of these exchanges, numerous barriers persist that compromise full use of this trade potential.
The Douala free port – which is a hub for foreign trade (95% of customs income and most traffic to Cameroon is handled by the port) and an access point for neighbouring landlocked countries (Chad and CAR) – suffers from a number of issues. In the absence of adequate support structures, it has become a holding area and warehouse for a number of organisations, as importers are allowed eleven free days before having to pay storage fees. According to several sources, the one-stop shop for foreign trade (GUCE), which oversees customs clearance, takes up to eight weeks to process shipments. As a result, the port is near-permanently overcrowded. Awaiting the completion of modernisation works on the Kribi and Limbe ports, the government adopted a number of measures in 2012 including: implementing regulations, publishing performance standards for customs officials and optimising the management of dock workers. The digitalisation of the GUCE which is under way, should facilitate the execution of port formalities and reduce both delays and costs. In addition and for the purpose of regional integration, the government is highly involved in installing communications infrastructure. It also contributes to the convergence programme for the sub-region and it respects the four criteria imposed on regional states under the multilateral monitoring framework. Lastly, the government fulfils its financial obligations to sub-regional institutions and takes an active role in sub-regional meetings.
During the 2012 budget year, exports were dominated by crude oil (32.6%). Excluding petrol products, the other five leading other exports accounted for 27.3% of the total: unprocessed cocoa beans, cut wood, unprocessed logs, natural rubber and raw cotton. Food products and equipment comprised the majority of imports. The exemption measures on foodstuffs provoked a phenomenon of re-exports to neighbouring countries, constituting a risk for the current account balance.
Despite the good performance of world prices of its exports in 2012, Cameroon should continue to post several external deficits (estimates based on first quarter results). The current-account deficit should reach 5.3% of GDP at the end of 2012, versus 4.5% in 2011. The trade-account deficit should similarly become more pronounced, at around 4.4% of GDP, compared to 3.9% in 2011. The current-account balance should remain in deficit in 2013, at 5.3% of GDP, due primarily to the trade-account deficit, which should reach 4.7% of GDP.
In terms of economic partnerships, France remains the largest foreign investor in Cameroon, although China appears to be increasingly involved. It is already participating in several projects in the country, particularly in transportation and energy infrastructure. Cameroon has signed an economic partnership agreement (EPA) with the European Union, which has yet to be ratified. It should be recalled that in September 2011, the European Commission announced that unless the EPA is ratified before January 2014, the country will be excluded from market access regulations. Cameroon must urgently pre-empt the impact of this action on its economy.
Table 4: Current Account 2013 (percentage of GDP)
|Exports of goods (f.o.b.)||17.6||14.9||16.2||18.3||17.8||16.7||16.2|
|Imports of goods (f.o.b.)||16.6||19.5||18.9||22.2||22.2||21.4||21.5|
|Current account balance||-6.5||-7.7||-5.2||-4.5||-5.3||-5.3||-6.2|
Public debt levels should reach XAF 2 020 billion by 31 December 2012, or 15.6% of GDP, down by 9 billion over 2011. Foreign debt represents 65.4% (XAF 1 321 billion) of the total debt, and domestic debt 34.6% (XAF 700 billion).
With domestic budget revenues estimated at XAF 2 662.2 billion and expenditure (including interest payments on public debt) estimated at XAF 2 970.9 billion, in 2013 the primary balance should represent -3.1% of GDP. The XAF 265.1 billion amortisation of public debt will require XAF 574 billion in financing. This should be covered by foreign grants of XAF 66 billion (of which XAF 43 billion falls under the Debt Reduction-Development Contract), foreign indebtedness (of XAF 258 billion) and domestic credit, through the emission of XAF 250 billion in public securities.
In terms of sustainability, debt levels will remain manageable between 2013 and 2017. Over this period, the ratio of public debt stock/GDP will remain around 16.7% and, even with extremely challenging external shocks, it will not surpass 17.6% - a figure well below the critical threshold of 70% fixed by the CEMAC zone convergence criteria. By 2014, the ratio of present value of debt to GDP could reach almost 25%. Although there is no current risk of over indebtedness, the country’s obligations towards developing economies for its infrastructure projects are beginning to be significant1 and could, in time, pose a problem for the viability of its foreign debt.
Figure 2: Stock of total external debt and debt service 2013
Economic & Political Governance
Cameroon’s ranking in the World Bank report Doing Business 2013 – at 161st place out of 185 countries – indicates a long road ahead to improve the business environment. In 2012, the government implemented a number of reforms, including: i) revising business start up regulations, with a provision for a new 48-hour maximum delay for procedures with notaries prior to approaching business creation regulation centres (CFCEs); ii) introducing a new procedure for registering with the Registre du commerce et du crédit mobilier, with greater autonomy given to CFCE agents; iii) reducing by 22% the costs of forming a company in CFCEs; iv) a three-month delay to produce land titles; v) launching a tax centre (CDI) for small companies and reinvigorating the fight against contraband, evasion and counterfeits; vi) creating commercial chambers in courts to facilitate the settling of trade disputes (Law 2011/027 of 14th December 2011), with appointed presidents; vii) continuing to digitalise the judicial system; viii) passing the application texts on the e-commerce law; ix) introducing electronic payments for customs duties, via an agreement between the banks and the Finance Ministry; x) signing the decree regulating certification; xi) creating a virtual platform between the automated customs system and the Oscar management system of the container terminal to speed up customs procedures; xii) connecting customs offices nationally to introduce a new trade system; xiii) establishing a review board for applications for construction permits in the Douala metropolitan area (CUD), which will meet twice monthly; and, xiv) digitalising the system for managing construction permits, which will introduce transparency into the system.
Cameroon’s financial sector continues to be dominated by multi-service banks. Specialist banks (business and investment banks) and leasing companies remain absent, which considerably limits long-term borrowing capacities. In addition, the cost of mobilising resources remains high, even with surplus liquidity in the banking system.
Overall, the sector is healthy, with the exception of two banks (out of a dozen), which have been struggling since 2009. They are being restructured, under the supervision of the Central African Banking Commission (COBAC), the CEMAC banking supervision body.
An assessment of the prudential ratios in mid 2012 confirmed this relative solidity: ten banks adhered to liquidity ratios, while three had excess liquidity. The CEMAC banking system consolidation programme aims for all banks in the sub-region to bring their minimum capital to XAF 7.5 billion by June 2012 and to XAF 10 billion by 30 June 2014. By 30 June 2012, the two weaker banks were struggling to meet to these standards.
The sizeable arrears the State owes to SONARA pose a risk for the Cameroonian financial system, given its high exposure.
Since 2010, the State has had recourse to the bond market and since 2011 the Treasury has issued bonds to cover short-term needs. Over 2011, the State raised XAF 50 billion in bond-equivalent securities with an average interest rate of 2.3%. By end June 2012, XAF 55 billion had been raised with an average interest rate of 2.2% - which remains competitive in comparison to the 4% charged on BEAC statutory advances to national treasuries.
Public Sector Management, Institutions & Reform
In 2012, the government undertook two broad measures aimed at increasing the effectiveness of the State’s financial management: i) lightening public procurement procedures, notably via the creation of an ad hoc ministry; and ii) adopting a results-based budget programme which should have been brought into effect on 1st January 2013. Other advances are of note, such as multiannual commitments for investment spending and the development of the market for Treasury bonds, which has improved management of the State treasury.
Public administration is highly fragmented, as seen by the large number of ministers. Reforms aimed at decentralisation are under way with more power being granted to local authorities in order to strengthen internal co-ordination. The GESP contributes by focusing ministerial departments on a number of strategic priorities, obliging them to act in line with the strategy.
Efforts to increase transparency have continued, with monthly publications of public finance indicators (called TABORD). Local public project monitoring committees produce quarterly reports in a number of localities. A report on the physical and financial execution of the public spending budget summarises both these local reports and ones on centrally managed projects. All the same, in 2012, a few irregularities came to light in the course of this summarising activity.
While Cameroon signed up to the Extractive Industries Transparency Initiative (EITI) in 2005, the country is struggling to raise itself to the level of compliant countries. It runs a risk of being expelled if corrective measures are not undertaken before August 2013 – a scenario which could lead to a loss of confidence in international donors who support EITI. In May 2012, Cameroon thus adopted a three-year plan that should enable it to become compliant by the deadline.
Natural Resource Management & Environment
Located adjacent to Lake Chad and part of the Congo basin, Cameroon is very sensitive to environmental issues and it has signed numerous international agreements on the subject. The country has several action plans and national programmes in place aimed at improving management of the environment, forests and fauna and of the forestry sector. Recent floods and their socio-economic impact have also increased awareness of environmental issues amongst the authorities. The framework law for the environment moreover is in need of revision.
Forestry sector reform has advanced greatly recently. A new code has been drawn up and will be discussed in Parliament shortly. The draft provisions reinforce transparency in access to forestry concessions, which will be granted interdepartmentally, with civil society and the private sector participating when concessions are opened up.
In the mining sector, the code has been revised to comply with international standards, particularly in terms of transparency in granting permits and, more importantly, in obliging mining operators to compensate and mitigate the impact of mining activities.
Lastly, measures have been taken to reinforce synergies between the natural resources sector and other sectors. The management of these resources is thus no longer the prerogative of the ministries in charge of forests and the environment, as interdepartmental management has become more widespread, with civil society increasingly involved.
The year 2012 was marked by socio-political stability. The President Paul Biya, in power since 1982, was re-elected in October 2011. Under the guidance of the current Prime Minister, Philémon Yang, re-elected to his post, a new government was appointed in December 2011 with none of the opposition parties included. The only noteworthy change concerned the creation of a Public Procurement Ministry.
In April 2012, having been proposed by the government, a law extending the mandate of parliamentary members was adopted. The text provides for a renewable six-month extension of the current legislature. This change has resulted in the postponing by one year of legislative elections, initially scheduled for 2012.
The ‘Épervier’ plan to improve governance and bring high-ranking officials accused of various forms of embezzlement to justice has been in operation for several years. It has brought about the arrest and conviction of several political figures. For several observers however, these trials are only the shadow of a battle that will offer up the possible successors of the current head of state.
Thematic analysis: Structural transformation and natural resources
The structure of the Cameroonian economy has changed over the past decade, with a relatively large fall in the contribution of the primary sector to GDP, to the benefit of the tertiary sector. Every sector has experienced structural changes: thus, the contribution of agriculture (food or industrial agriculture, livestock, fisheries and forestry) has gradually but drastically diminished, falling from 33% to 17% between 1998/99 and 2012. Inversely, the oil sub-sector rose although to a lesser extent, with a 9% contribution to GDP in 2012, versus 5% at the end of the 1990s. In the service sector, trade, hotels and restaurants experienced major development while, over the same period, transportation and communication fell significantly.
Cameroon has plentiful natural resources – oil, wood, coffee, cotton, cocoa, rubber and aluminium – which drive exports. It also has enormous untapped potential in natural gas, iron, bauxite and cobalt.
Oil has an important place in the economy: over the past decade, it has represented on average 40% of exports in terms of value and contributed 25% of budget income. Since the 1994 devaluation and until the recent recovery of the sector, Cameroon has experienced weak growth, specifically reflecting the gradual depletion of oil resources. But the sector continues to play an important role in public finances and in the balance of external accounts.
Despite the underlying fall in oil production over the past ten years, the price of Cameroonian crude has continuously increased (except in 2009), explaining the good performance of oil revenues. Investment spending however was stuck at very low levels, at around 2.8% of GDP until 2006, the date at which the Heavily Indebted Poor Countries (HIPC) Initiative completion point was reached. Economic growth has increasingly suffered from the negative performance of transportation, a decline in forestry activities and breakdowns in the energy sector. Since the 1990s, the falling off of efforts at upkeep, maintenance and expansion of roads, ports, airports and railways became a major factor in the decline in the stock and quality of infrastructure. In energy, this disinvestment led to recurring power cuts and electricity rationing for companies. Lastly, in the forestry sector, formerly the largest source of jobs, a decline in activity has led to the closure of numerous companies.
Given these challenges and thanks to lesser budgetary pressure resulting from debt relief, since 2006 the Cameroonian state has committed to a new initiative aimed at upgrading and extending energy, port and transport infrastructure. It also sought to revive oil production by opening new fields and reopening a number of wells. Thus 2012 marked the revival of oil production, with an estimated rise of 9.7%. This trend should continue in 2013, with production expected to grow by 15.6%. Lastly, scheduled liquefied gas production in 2015 opens new and important prospects in the hydrocarbon sector.
In an attempt to maximise oil profits, the authorities have concentrated on producing broad regulatory texts, including: i) the mining code; ii) a national investment code; iii) the community investment charter; iv) EITI standards; and, v) the GESP. The mining code regulates all extractive activity and invested the SNH with the task of promoting the oil sector. In addition to granting prospecting licences and permits, the SNH must both attract investors and enjoin them to respect current regulations.
The State does not have a stabilisation fund as such to invest oil and gas revenues in long-term assets. Oil receipts are generally injected into the overall budget. When a surplus exists, a specific budget line is adopted or the money is allocated to building up central bank reserves.
Natural resource revenues have not been channelled sufficiently towards structural investments in infrastructure or productive sectors. However, for some time now the State has been involved in a programme to revive the productive sectors, specifically via strengthening key infrastructure. At the same time, it is attempting to increase the mobilisation of non-oil resources and thus to improve the budget structure. Overall, while the authorities have succeeded in maintaining a degree of macroeconomic stability, administrative dysfunctions persist reflecting governance failings – which hamper the optimal use of public resources towards the country’s socio-economic development.
Drawn up in 2009, the GESP reflects the government’s ambition to make Cameroon an emerging economy by 2035. With this strategy, which amplifies the political will to diversify the economy, the public authorities intend to work towards a deep transformation of the structure of the productive industries. The share of manufacturing in GDP should thus reach at least 23%. This policy also aims at boosting the role of manufacturing products in foreign trade, to the detriment of primary materials. This underlies the importance placed on activities relating to industrial transformation in general and the extractive industry in particular in the GESP.
Logically, the local transformation of hydrocarbons is key in the country’s investment code. This code clearly states the multiple advantages – administrative, economic, customs and tax – from which local and foreign companies transforming the sector’s products in situ will benefit. The main changes introduced these past years focus primarily on giving local companies access to distribution activities of petrol products. These henceforth will compete strongly with Western multinationals, which traditionally monopolised distribution.
The PACD/PME programme also aims to support the creation and development of small- and medium-sized enterprises (SMEs) through more efficient processing and conserving of local mass market goods. The Ministry for Small and Medium Enterprises, the Social Economy and Crafts has been active in this task. Through a multipronged approach of direct and indirect support, the PACD/PME facilitates SME access to technology, finance and essential services (including feasibility studies, incorporation, training, drawing up technical construction plans, and technical and administrative support, etc.).
Regionally, the authorities are also focused on promoting local processing through the creation of the ‘CEMAC product’ label under the Community Investment Charter. Products originating in the CEMAC are given substantial tax advantages over other foreign goods.
1. According to the Independent Amortisation Fund (Caisse autonome d’amortissement), the body charged with debt management, this undertaking resulted in new financing agreements being signed in 2011 amounting to XAF 618 billion. Negotiations are underway for nine other projects (airports, roads, water, sanitation, energy and telecommunications), valued at XAF 1 658 billion.