カントリーリスク評価
Cameroon

Cameroon

Population 24.3 million
GDP 1,441 US$
C
Country risk assessment
D
Business Climate
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Synthesis

major macro economic indicators

  2016 2017 2018 (e) 2019 (f)
GDP growth (%) 4.6 3.5 3.9 4.4
Inflation (yearly average, %) 0.9 0.6 1.0 1.2
Budget balance (% GDP) -6.1 -4.6 -2.7 -2.4
Current account balance (% GDP) -3.3 -2.7 -3.2 -3.0
Public debt (% GDP) 33.3 38.2 38.7 39.0

(e): Estimate. (f): Forecast.

STRENGTHS

  • Agricultural, oil, gas and mineral resources
  • Diversified economy compared with those of other oil-exporting countries
  • Ongoing modernisation of infrastructures

WEAKNESSES

  • External and public accounts dependent on hydrocarbons
  • Growth not very “inclusive”; difficult business environment
  • Heightened political risk: insecurity in the Far-North of the country and increasing tensions between the English-speaking minority and the regime (mostly French-speaking)

Risk assessment

Gas supports the pick-up in activity

Growth is expected to increase in 2019, thanks in particular to the ramp-up of liquefied natural gas (LNG) production at the floating liquefaction unit (Hilli Episeyo) off Kribi. LNG production is expected to offset the gradual decline in crude oil production, due to lower investment in new projects since 2014. The secondary sector should also benefit from the strong performance of construction, driven by investments in projects such as the extension of the deep-water port of Kribi and the construction of the Nachtigal dam. Nonetheless, after the country was stripped of its role as host of the 2019 African Cup of Nations (CAN) football tournament, some investments are expected to be delayed, although road and sports infrastructure projects will likely continue in order to organise the tournament in 2021. Progress in electricity supply, thanks to the commissioning of several hydroelectric dams (Lom-Pangar, Memve'ele), should support manufacturing industries, particularly wood processing and agro-industry. The latter will in turn support agricultural production, which is also set to benefit from efforts to improve the sector's productivity. Nevertheless, weak protection of land rights and limited access to credit, will continue to weigh on primary sector growth. Coffee and cocoa production, which is concentrated in the English-speaking regions, will likely continue to suffer from political instability. It is also expected to dent consumer and business confidence in these regions, constraining service sectors, which are otherwise likely to remain dynamic in 2019.

Persistent fiscal challenges

Cameroon is expected to continue lowering its budget deficit in 2019, thanks to efforts to improve the collection of non-oil revenues. Collecting property taxes through electricity bills and reducing tax exemptions appear to be key priorities as the country seeks to generate additional revenue. Increased LNG production could also support an increase in government revenues. The authorities additionally plan to continue reducing government spending. Measures to improve budget execution, including legislation establishing a code of transparency and good governance, could help to contain recurrent budget overruns. Security spending related, in particular, to the ongoing conflict in the English-speaking regions should nevertheless continue to put pressure on the budget. Low tax revenue generation and the use of non-concessional external debt to finance some projects have worsened the debt risk profile.

The current account deficit will persist in 2019. In particular, imports of capital goods needed to carry out projects will continue to affect the trade balance, which will remain negative despite the expected progress in LNG and wood exports. The deficit in the services account, is expected to continue to be impacted by technical services. The income account will also show a deficit, due to interest payments on the debt. The surplus in the balance of transfers will depend largely on fluctuations in remittances from expatriate workers. Despite FDI flows, debt will likely still be needed to finance the current account deficit. IMF support under a USD 666 million ECF is also helping to address external financing needs. The IMF's agreements with the majority of CEMAC countries, coupled with the rise in oil prices, have helped to ease pressure on foreign exchange reserves at the regional level.

The “Sphinx” faces a crisis in English-speaking regions

In power since 1982, Paul Biya was re-elected for a seventh consecutive term in the presidential elections of October 7, 2018, securing more than 71% of the vote. Despite accusations of fraud and disputed results, Mr Biya, nicknamed the “Sphinx of Etoudi” for his discreet public profile, retains his grip on power. Even so, the drop in voter turnout to less than 54%, 14 points lower than in 2011, reflects the country's growing fragmentation: for example, fewer than 10% of voters cast their ballots in the English-speaking regions in the Southwest and Northwest of the country. The low turnout is the result of the deteriorating political and security situation in these regions since the end of 2016. Clashes between separatists and the army intensified in 2018 and continue to be a source of destabilisation in the country. Stability is also being undermined by the activity of Boko Haram, an Islamist terrorist group, in the Far-North. The withdrawal of the 2019 CAN, due to these growing security concerns and delays in the preparation work, furher undermines, both domestically and internationally, the image of Paul Biya.

The business climate suffers from a cumbersome and complex institutional and regulatory environment, as evidenced by the country’s 166th place (out of 190) in the Doing Business 2019 ranking, and the prevalence of corruption.

 

Last update: February 2019

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