Improved infrastructure and business conditions to boost growth of resource-rich African nation
By Yvan Huneault
Editor, Africa Trade Magazine
An emerging nation is, by definition, on the path to becoming a fully industrialized state, and the government of the Republic of Cameroon has announced its intention to reach this milestone by 2035. While some external analysts suggest that it would be miraculous for this African nation to achieve emergence in two decades, internal potential and resolve act as powerful drivers of growth.
Cameroon, which is roughly the size of Sweden, lies in the elbow of the Gulf of Guinea on the western coast of Africa and is often described as “Africa in miniature” since its topography, flora and fauna, its demography and, of late, its economic growth, mirror those of much of the Sub-Saharan continent.
The Portuguese explorer Fernando Pô is credited with giving Cameroon its name. Arriving there in the early 1470s, he found a river overflowing with prawns. He named it Rio dos Camaroes. The Portuguese word for prawn became Cameroon in English and Cameroun in French. The two languages have official status, owing to former colonial affiliations with the United Kingdom and France. As well, some 230 regional tongues and dialects are spoken in the country.
Cameroon’s gross domestic product (GDP) growth reached 5.5 per cent in 2013, and analysts expect it to remain in this range this year and next. As in many African countries, Cameroon’s GDP growth has been driven by domestic demand, which has increased by some 5.9 per cent. External demand has been flat to negative, due to depressed prices for commodities, but observers from the African Development Bank (AfDB), the United Nations Development Programme (UNDP) and other sources say the outlook for 2014 and 2015 is good.
Cocoa, cotton and timber are among the leading exports, and extractive industries other than timber (mostly oil and gas) are on the upswing. Investments in petroleum and mineral exploration are expected to increase since Cameroon has been declared compliant with the Extractive Industries Transparency Initiative, an international standard ensuring that extractive industry activities are properly monitored and reported to the public.
It’s estimated that the mining sector alone represents more than half of the investments required for Cameroon’s emergence. Proposed enhancement of iron ore extraction operations in the area of Mbalam, on Cameroon’s southern border, would produce some 35 million tonnes of ore per year, for 25 years. Investments of around $5-billion are projected for the site, construction of roads, rail connections and other facilities. In Nkamouna, to the north of Mbalam, lie important reserves of cobalt, nickel and manganese. To the east, in Mobilong, there are diamonds – preliminary studies estimate 420 million carats of the precious gem. Interest in this resource has grown since 2012, when Cameroon became a member of the Kimberley Process Certification Scheme, an initiative designed to certify that diamonds are not used to finance insurgencies, terrorism or other violent activities.
Prospects for growth in industrial agriculture are evident in new cocoa, coffee, cotton, rubber, palm oil, maize and rice farms, as well as in improvements in mechanization, seeding and fertilization. Cameroon’s agricultural exports rose by 3.6 per cent in 2013. Rising oil and electricity production has contributed to a boost in construction and manufacturing activity, with transport and communications benefiting accordingly.
Cameroon is also taking steps to keep up with the demand for electricity. Some 2,000 megawatts will be required by 2015, compared to a peak production of 615 megawatts in 2004. A natural gas electrical plant at Kribi came online in June of 2013 with 216 megawatts. Lom Pangar, a hydroelectric dam, is scheduled to be operational by late 2015. Named for two rivers that meet upstream, the Lom and the Pangar, the project will add 30 megawatts to the regional grid and act as the head end for installations that will marshal the hydroelectric potential of the Sanaga River basin, estimated to be about 12,000 megawatts. A hydroelectric dam at Mékin, in the south of the country, will be online by 2015 with 12 megawatts, and a dam at Memve’ele, in the southwest, is scheduled to produce 200 megawatts by 2017.
“The growing spending power of Cameroonians – estimated by economists to be in the hundreds of millions of dollars – presents countless opportunities...”
Yvan Huneault is a writer and editor who recently travelled to Cameroon as a reporter
Cameroon’s membership in Central African Economic and Monetary Community (CAEMC) – whose member states include the Central African Republic, Republic of the Congo, Gabon, Equatorial Guinea and Chad – has facilitated the establishment of some common trade rules. During the first decade of the millennium, Cameroon accounted for 40 per cent of the region’s GDP and 39 per cent of its exports.
Conditions for doing business are also improving. At one time, the AfDB reported that private-sector development was held back by expensive capital and poor infrastructure quality, among other things. In response, the government of Cameroon has taken measures to stimulate agri-business, formulate a more attractive mining code, make foreign trade operations paperless and make land transactions easier. It has earmarked $45-million to set up two new financial institutions: The Cameroon Rural Financial Corporation and la Banque camerounaise des PME (Cameroon Small and Medium Enterprise Bank). Registering a company in Cameroon once took more than three months – it now takes about three days.
Investors can qualify for exemption from taxes and levies for a period of 10 years, exemptions from customs duties, manufacturing and sales taxes on production inputs, and more. As well, qualifying investors have the right to open local foreign currency accounts with no restrictions on the sale and purchase of foreign currencies and on related commissions.
In March of this year, Ed Fast, Minister of International Trade for Canada, and Emmanuel Nganou Djoumessi, Minister of Economy, Planning and Regional Development for Cameroon, signed the Canada-Cameroon Foreign Investment Promotion and Protection Agreement. The agreement is designed to protect Canadian investment abroad and to promote foreign investment in Canada via reciprocal, legally binding provisions. Canadian companies are very active in Cameroon. For example, in 2012, Canadian mining assets in Cameroon were valued at $61.3-million. Canada has identified Cameroon as an emerging market, and this designation provides for rapid deployment for Canadian businesses in sectors such as infrastructure, education, mining, oil and gas.
Continuing infrastructure improvements are allowing Cameroon to enhance its position in global value chains. In the north, for example, well-established cotton and livestock operations are poised to expand. The tropical climate in the south is ideal for large-scale fruit and vegetable production. On the coast, Cameroon is building a deep-water port at Kribi that will allow the handling of large container ships and the export of mineral resources and natural gas. The country’s strategic position as a point of transit will make it a hub in central Africa, allowing it to expand its diverse trade relationships. Currently, Nigeria is the largest trading partner; France is a close second, followed by China, Germany, the United States, Equatorial Guinea, Belgium, Thailand, Japan and Italy.
Cameroon’s inclusion in the Financial Community of Africa (CFA) zone has given it a highly stable currency. Monetary policy is the responsibility of the Bank of Central African States, which seeks to regulate monetary policies by adjusting interest rates. The country’s macroeconomic stability is strong. Consumer price inflation was about two per cent in 2013 and is expected to remain in this range for 2014. The real effective exchange rate stands at about 101 per cent (2011) and reflects a healthy state of foreign exchange. Total reserves stand at approximately $3.2-billion, and public debt is holding at 13 per cent of GDP (2012).
Timber extraction has changed significantly over time as investments in that sector have gone up and new policies have taken root. A trade agreement between Cameroon and the E.U. aims to ensure the disclosure of all timber sales. Wood products from Cameroon exported to the E.U. must now contain evidence that they were logged legally, reducing the share of exported unprocessed timber that continues to be seen as an unsustainable way of exploiting one of the country’s major export commodities.
In recent years, the tourism industry has experienced significant growth. Cameroon welcomed some 800,000 visitors in 2012. Resorts along the country’s 400 kilometres of coastline are attracting more visitors, as are sites for mountain climbing, hiking and wildlife viewing. Cameroon has 10 national parks, and its Dja Faunal Reserve, established in 1950, is classified a UNESCO World Heritage Site. There are several experienced tour operators in the country, but significant investment in hotels and lodging is needed.
The growing spending power of Cameroonians – estimated by economists to be in the hundreds of millions of dollars – presents countless opportunities, especially in packaged consumer goods, such as food, beverages, household products, etc. Currently, most packaged consumer goods are imported and in limited supply. The market for personal care products, for example, is expected to grow by more than 30 per cent over the next five years. African consumers, including Cameroonians, are known to be very brand loyal, and astute marketers are learning to leverage this phenomenon on the world’s fastest growing continent.
A rising number of expats are returning to Cameroon to start businesses and share the knowledge they have gathered abroad. Jérôme Minlend, senior partner and CEO at management consultancy Cameroun Audit Conseil, was educated in France, and he says he expected to make a life there. “Then, I felt things were changing for the better back home,” he says. “My work here has caused me both great frustration and great elation, but the way forward is irrevocable.”
The miracle belongs to those who will make it happen.
Republic of Cameroon
Cameroon is a Central African nation with more than 400 km of shoreline along the Gulf of Guinea. The country has two official languages: English and French. It is bordered by Nigeria, Chad, the Central African Republic, the Republic of the Congo, Equatorial Guinea and Gabon.
Cameroon’s highest peak is Mount Cameroon, near the coast (4,095 m) and its main rivers are the Benue, the Nyong and the Sanaga.
Land area: 469,440 km2
Total area: 475,440 km2
Population: (2013) 21,143,237
Population density: 44.5/km2
Capital city: Yaoundé (2,565,868)
Largest city: Douala (2,586,741)
Monetary unit: CFA Franc