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Country Commercial Guides for FY 2000: Cameroon Report prepared by U.S. Embassy Yaounde, released July 1999

CHAPTER I:    EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at the Republic of Cameroon's commercial environment using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government Agencies.

Cameroon, just larger in size than the ten states northeast of Maryland, is located on the West Coast of Africa in the Gulf of Guinea. Its population, estimated at about 14.6 million, comprises some 250 ethnic groups and represents more than half of the total GNP of the six nation Central African Economic and Monetary Community (CEMAC). Political opposition is permitted and Cameroon is now a multi-party state of more than 160 (five major) parties. The May 1997 legislative and October 1997 presidential elections, while considered less than transparent, make five such election exercises held since the introduction of a multi-party political system and reflect Cameroon's progress toward non-violent democratization. Speculation continues concerning a sixth and indirect electoral test with the yet undated future elections for a Cameroonian Senate, an institution envisioned in the 1996 constitution.

Following nearly a decade of economic decline, economic growth resumed in 1994 and has subsequently continued, due to a reduction in excessive public sector employment, a 50 percent currency devaluation, stabilization of terms of trade, and increased external preferential financing and debt relief. Growth in Cameroon has also been boosted by a 1997 enhanced structural adjustment program, which came concurrent with rising expectations of the Chad/Cameroon pipeline project. A 3.3 percent growth of GDP in FY1995 increased to around five percent during each of the past three years. The late 1998 slump in international oil prices, as well as the continuing Asian crisis, has led the IMF to revise the current fiscal year growth forecast downward to 4.4 percent. Inflation is expected to be held in check at less than three percent for three reasons, including the Central Bank (BEAC) monetary policy, the continued depletion of currency reserves for prompt repayment of external debt, and the decreased cost of inputs, resulting from cheaper importation of inputs and stable labor costs. Total investment in FY1999 (from July 1, 1998 to June 30, 1999) rose from 16.2 percent to 18.4 percent. Cameroon's per capita income, nearly $900 in 1992 before devaluation, was $656 in 1998. The majority of the population is rural, and agriculture accounts for 25 percent of GNP. Principal exports include timber, coffee, cocoa, cotton, bananas, and rubber. Today, the economy is one of the most diversified in Central Africa and the second largest in the 14-nation CFA franc zone.

Following four failed International Monetary Fund (IMF) one-year structural adjustment programs since 1987, the Government of the Republic of Cameroon (GRC) made a serious commitment to meet IMF conditionalities. As a result, in August 1997 the Government of the Republic of Cameroon (GRC) signed a three-year (1997-2000) Enhanced Structural Adjustment Facility (ESAF) program worth USD 225 million. Since then the World Bank has released structural assistance credits (SAC) which have helped to bolster confidence in the nation's economic resilience. In October 1997, the Paris Club rescheduled Cameroon's multilateral debts under "Naples Terms" with forgiveness of up to fifty percent of the debt provided the GRC's strong adjustment efforts and superior performance are maintained. In February 1999, a team of IMF experts came to Cameroon to review the ESAF program at its half way mark. Taking into account the international economic situation, IMF conditionalities were reformulated, and Cameroon received a second disbursement worth CFA francs 22 billion . The ESAF has already attracted substantial assistance support from the international financial community in the form of additional loans (European Union and French Development Funds, Islamic Development Bank, African Development Fund, etc.). The GRC's difficulties to meet its commercial debt payments have made it difficult for lenders to accept an arrangement for a London Club debt rescheduling. The negotiations are still underway and are expected to be completed at the end of December 1999.

Economic growth in Cameroon continues to be inhibited by a large inefficient parastatal sector, excessive public sector employment, growing defense and internal security expenditures, and by the Government's inability to collect internal revenues effectively, especially in economically important pro-opposition regions. Widespread corruption in government and business also impedes growth. For these reasons, Cameroon's attractive investment code and rate of return has drawn few U.S. investors to complement the long standing investments in oil production, security services, oral care/hygiene products manufacturing and fresh fruit production. New ventures have focused on the pipeline project. The recent licensing of a major U.S. bank, Citibank, could encourage more investment and facilitate exchanges between the U.S. and Cameroonian business communities.

Bilingual Cameroon represents half of a regional market of nearly 27 million inhabitants in the six countries of Central Africa where French, Spanish and English are spoken. With well over sixty percent of the area's business activity, Cameroon merits consideration as a regional base for U.S. firms interested in expanding on the continent.

American Business Services Centers located in the United States Embassy in Yaounde and at a branch office in Douala are connected by Internet. In addition, a Regional Counselor for Commercial Affairs of the Foreign Commercial Service located in Abidjan, Cote d'Ivoire and an Agricultural Attaché of the Foreign Agricultural Service located in Lagos, Nigeria provide expertise to those looking to do business in Cameroon.

Country Commercial Guides are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at http://www.stat-usa.gov; http://1997-2001.state.gov; and http://www.mac.doc.gov. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRAD(E) or by fax at (202) 482-4473.