Cameroon

Business outline for Cameroon

Main Industry Sectors

The primary sector contributes almost to a quarter of the GDP and employs approximately 50% of the active population. Before the initiation of the oil trade, agriculture was the country’s economic pillar. Cameroon remains one of the world’s leading producers of certain foodstuffs, namely cocoa, coffee, bananas, palm products, tobacco, rubber and cotton. Fishing and forestry are two of the country’s additional important activities. Cameroon’s mineral resources include bauxite ore and iron.

The secondary sector accounts for almost a quarter of the GDP. The country’s main industries are food processing, sawmill, the manufacture of light consumer goods and textiles.  The tertiary sector accounts for half of the GDP. It benefits from the economic activity created around the Doba/Kribi oil pipeline, which has been in operation since July 2004. The services sector is booming with telecommunications, air traffic and transport.

Economic Overview

The drilling in the offshore oil deposits, since the early 1970s, has made of Cameroon one of the most prosperous nation in tropical Africa; however, economic mismanagement and the overvaluation of the currency have led the country into recession during the last few years. The current account balance has been impaired, fiscal deficits have increased and the foreign debt has grown. The government has committed itself into a series of economic reform programs, supported by the World Bank and the IMF. However, Cameroon’s public resources are still characterized by a strong dependence on its oil income, regardless of the fact that the country’s oil production is diminishing. Furthermore, Cameroon is not yet able to attract enough foreign investment, mainly because of insufficient infrastructures and for having one of the highest levels of corruption in the world.

The international financial crisis has struck heavily on five sectors of Cameroon’s economy: aluminium, wood, rubber, cotton and crude oil. During the fourth quarter of 2008, cotton, rubber and aluminium experienced a drop in their export value of 17.5%, 42.5% and 55% respectively. Orders in the wood sector were all frozen. The International Monetary Fund intervened in 2010 to give support to the country’s economy by offering EUR 106 million in aid to affront the repercussions of the crisis. The country’s budget for 2011 was also analyzed by the delegates from the International Monetary Fund in order to advise the Financial Ministry on the main primary options to put into effect from the economic point of view. It is essential to strengthen Cameroon’s banking system and this will be part of the development issues for 2011.

FDI in Figures

Cameroon receives very little foreign direct investments. Between 2007 and 2008, FDI recorded a net flow of approximately 1.2% of the GDP for each year. The extraction industries remain the most targeted sector, oil drilling in particular. France is the country’s primary investor.

From 141 countries, Cameroon ranked 101st, in terms of FDI attractiveness. Cameroon has to improve and to simplify its administrative procedures in order to boost the creation of new companies. As a fact, the country possesses several natural resources (oil, forestry and fishing) on which it can rely.

The business climate in the country deteriorated in 2008-2009. According to the classification of the World Bank’s “Doing Business 2009″, which rates the countries based on the ease of doing business indicator, Cameroon ranks164th, among 181 economies.  Cameroon needs to attract foreign investors in order to finance its future projects of developing infrastructures and notably, the exploitation of gas. Large French companies are well-placed in these developing sectors. It is important to mention that Cameroon has attracted China’s attention, since China has projects of investing in the African continent and notably in Cameroon.

FDI Government Measures

The Cameroonian government has targeted certain sectors as priority sectors for investment: transport, food industry, tourism and rural development. In order to attract more investors, significant programs are being implemented by the public authorities, with the support of financial backers, in order to improve judicial decisions, increase energy supplies, reinforce economic information, simplify procedures, support companies, and ensure the protection of the economic area against illegal threats. Cameroon also has free trade zones in which all export companies can set themselves up, that is to say, companies that produce goods and provide services meant exclusively for export. There are a many advantages for companies: exemption from all licenses, authorization or quota limitation for both export and import, possibility of being able to open a foreign currency account, no restrictions on sales operations, purchase of foreign currency, right to transfer profits abroad (however 25% has to be re-invested in Cameroon), tax and duty exemption for a period of 10 years from the beginning of operations and taxation at a general rate of 15% on profits from the 11th year.

Country Strong Points

The country’s strong points are:
- A cheap workforce; and
- Abundant natural resources;
The 2009-2010 economic plan contains measures likely to attract direct foreign investments, particularly in high capital areas (mining, food industry, energy and construction). In particulrar, the Cameroonian government is working on the establishment of a one-stop shop for the creation of companies.

Foreign Trade Overview

Cameroon is open to international trade. It is a member of the Commonwealth, the Free Trade Zone and the CEMAC (Central African Economic and Monetary Community). The share of foreign trade in Cameroon in relation to its GDP is around 50%.  Its three main export partners are Spain, Italy and France. The main export commodities are mineral fuels, oil, wood, coal, cocoa, cotton, and aluminum. Its three main import suppliers are Nigeria, France and China. Cameroon mainly imports mineral fuels, oil, cereals, vehicles, machinery, electrical and electronic equipment.

The European Union is Cameroon’s primary trade partner, accounting for more than 50% of its trade (apart from oil). On January 15, 2009, the two entities signed an economic partnership agreement. Consequently, Cameroon has committed itself to liberalize 80% of its imports from this area over a period of 15 years. For some years now, eastern Asian countries (especially China, Japan, India and Thailand) have been reinforcing their trade ties with Cameroon. Today, this zone represents almost 20% of the country’s total trade.

Due to the massive import of food products, the country’s trade balance remains in deficit and Cameroon has to improve its level of openness starting 2011, in order to improve its performance in the foreign trade plan.

 

Source http://www.globaltrade.net/