Contents 1 Background 2

CAMEROON –
COUNTRY PROFILE
Contents
2
5.9
1.1Map
2
5.10 Competition from state-owned enterprises (SOEs)
9
1.2
2
5.11 Corporate Social Responsibility (CSR)
9
2
5.12 Political violence
1
Background Geographical information
1.3History
2Population
3
2.1
Population figures (2011 estimates)
3
2.2
Population growth rate (2011 estimate)
3
2.3
Age structure (2011 estimates)
3
2.4
Gender ratios (2011 estimates)
3
2.5
Life expectancy (2011 estimates)
3
Efficient capital markets and portfolio investment
9
9
5.13Corruption
10
5.14 Bilateral investment agreements
10
5.15 OPIC and other investment insurance programmes 10
5.16Labour
10
5.17 Foreign trade zones / free ports
11
5.18 Foreign Direct Investment statistics
11
11
2.6Race
3
5.19 Starting a business in Cameroon
2.7Healthcare
3
2.8Languages
3
6
Country Risk Profile
12
6.1
Sovereign risk
12
3Economy
3
6.2
Currency risk
12
3.1Overview
3
6.3
Banking sector risk
12
3.2Currency
3
6.4
Political risk
12
3.3
Sectoral analysis
3
6.5
Economic structure risk
12
3.4
Latest Economic indicators
4
3.5
Two-year forecast
4
7
Country Outlook: 2012 – 2016
12
7.1
Political stability
12
7.2
Election watch
12
7.3
International relations
12
Policy trends
13
7.5
Economic growth
13
3.6Infrastructure
5
4Government
5
4.1
Political structure
5
7.4
5
Investing in Cameroon
6
5.1
Openness to foreign investment
6
7.6Inflation
13
5.2
Conversion and transfer policies
7
7.7
Exchange rates
13
5.3
Expropriation and compensation
7
7.8
External sector
13
5.4
Dispute settlement
7
5.5
Performance requirements and incentives
8
5.6
Right to private ownership and establishment
8
5.7
Protection of property rights
8
5.8
Transparency of the regulatory system
9
Appendix – sources of information
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
13
1
1Background
1.1Map
Beginning in 1884, all of present-day Cameroon and parts of several
of its neighbors became the German colony of Kamerun, with a
capital first at Buea and later at Yaounde. After World War I, this
colony was partitioned between Britain and France under a June
28, 1919 League of Nations mandate. France gained the larger
geographical share, transferred outlying regions to neighboring
French colonies, and ruled the rest from Yaounde. Britain’s territory
– a strip bordering Nigeria from the sea to Lake Chad, with an equal
population – was ruled from Lagos.
In 1955, the outlawed Union of the Peoples of Cameroon (UPC),
based largely among the Bamileke and Bassa ethnic groups,
began an armed struggle for independence in French Cameroon.
This rebellion continued, with diminishing intensity, even after
independence. Estimates of death from this conflict vary from tens
of thousands to hundreds of thousands.
1.2 Geographical information
Cameroon is often referred to as the “hinge” of Africa with many
indications of current and prior volcanic activity across the country. In
the north Mount Cameroon remains an active volcano. Cameroon’s
coastline stretches from the Bight of Biafra bordering Nigeria to
Equatorial Guinea in the south. The country also shares borders
with The Central African Republic, Chad, the Congo, Nigeria and
Equatorial Guinea. Terrain and climate range from tropical coastal
areas characterised by lush vegetation and mangrove swamps to dry
savannah grasslands of the north. Cameroon has a total land area of
475,440 sq km and its natural resources include petroleum, bauxite,
iron ore, timber and hydropower.
French Cameroon became independent in 1960 as the Republic of
Cameroon. The following year the southern portion of neighboring
British Cameroon voted to merge with the new country to form the
Federal Republic of Cameroon. In 1972, a new constitution replaced
the federation with a unitary state, the United Republic of Cameroon.
The country has generally enjoyed stability, which has permitted
the development of agriculture, roads, and railways, as well as a
petroleum industry. Despite slow movement toward democratic
reform, political power remains firmly in the hands of President Paul
Biya.
1.3History
The earliest inhabitants of Cameroon were probably the Bakas
(Pygmies). They still inhabit the forests of the south and east
provinces. Bantu speakers originating in the Cameroonian highlands
were among the first groups to move out before other invaders.
During the late 1770s and early 1800s, the Fulani, a pastoral Islamic
people of the western Sahel, conquered most of what is now
northern Cameroon, subjugating or displacing its largely non-Muslim
inhabitants.
Although the Portuguese arrived on Cameroon’s coast in the 1500s,
malaria prevented significant European settlement and conquest
of the interior until the late 1870s, when large supplies of the
malaria suppressant, quinine, became available. The early European
presence in Cameroon was primarily devoted to coastal trade and
the acquisition of slaves. The northern part of Cameroon was an
important part of the Muslim slave trade network. The slave trade
was largely suppressed by the mid-l9th century. Christian missions
established a presence in the late 19th century and continue to play a
role in Cameroonian life.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
2
2Population
2.1 Population figures (2011 estimates)
Cameroon has a population of 20,129,878 (July 2012 est.).
Estimates for this country explicitly take into account the effects of
excess mortality due to AIDS. This can result in lower life expectancy,
higher infant mortality and death rates, lower population and growth
rates, and changes in the distribution of population by age and sex
than would otherwise be expected.
2.2 Population growth rate (2011 estimate)
2.082% (2011 est.)
2.3 Age structure (2011 estimates)
Total percentage
Male
Female
0-14 years
40.5%
4,027,381
3,956,219
15-64 years
56.2%
5,564,570
5,505,857
65 years and
over
3.3%
300,929
356,335
Source: CIA World Factbook
2.4 Gender ratios (2011 estimates)
Total population
1.01 male / female
Under 15 years
1.02 male / female
15-64 years
1.01 male / female
65 years and over
0.84 male / female
Source: CIA World Factbook
2.5 Life expectancy (2011 estimates)
Total population
54.71 years
Male
53.82 years
Female
55.63 years
2.6Race
Ethnic groups
• Cameroon Highlanders 31%
• Equatorial Bantu 19%
• Kirdi 11%, Fulani 10%
• Northwestern Bantu 8%
• Eastern Nigritic 7%
• Other African 13%
• Non-African less than 1%
Religions
• Indigenous beliefs 40%
• Christian 40%
• Muslim 20%
2.7Healthcare
The health care system in Cameroon is very interesting in the way it
was built. The nation has about one doctor for every 10,000 people,
so most health care providers are nurses. The system is organized in
such a way that most people go through nurses or others who have
been trained when they have basic health problems and go to the
doctors when the problem is really serious or if they have the right
connections.
The Integrated Health Care Centres focus on mostly preventive
medicine and they engage in many community programmes.
The government is pursuing a vigorous policy of public health
improvement, with considerable success in reducing sleeping
sickness, leprosy, and other endemic diseases. The demand for all
types of health services and equipment is high and constant. The
need for modern equipment is especially urgent, with many clinics
using outdated equipment, some of which is imported illegally from
Nigeria.
Malaria is prevalent in the Bénoué River Valley, the basin of Lake
Chad, the coastal region, and the forests of southern Cameroon. A
large percentage of the adult population is affected. Other serious
water-borne diseases are schistosomiasis and sleeping sickness,
which is spread by the tsetse fly.
2.8Languages
Cameroon is home to 24 major African language groups. English and
French are the official languages.
3Economy
3.1Overview
Because of its modest oil resources and favourable agricultural
conditions, Cameroon has one of the best-endowed primary
commodity economies in sub-Saharan Africa. Still, it faces many of
the serious problems confronting other underdeveloped countries,
such as stagnant per capita income, a relatively inequitable
distribution of income, a top-heavy civil service, endemic corruption,
and a generally unfavourable climate for business enterprise.
Since 1990, the government has embarked on various IMF and World
Bank programs designed to spur business investment, increase
efficiency in agriculture, improve trade, and recapitalize the nation’s
banks. The IMF is pressing for more reforms, including increased
budget transparency, privatization, and poverty reduction programs.
Subsidies for electricity, food, and fuel have strained the budget. New
mining projects - in diamonds, for example - have attracted foreign
investment, but large ventures will take time to develop. Cameroon’s
business environment - one of the world’s worst - is a deterrent to
foreign investment.
3.2Currency
The currency of Cameroon is the Communaute Financiere Africaine
franc. For currency conversions, please visit www.xe.com.
3.3 Sectoral analysis
3.3.1 Main imports and import origins
Cameroon’s main imports are machinery, electrical equipment,
transport equipment, fuel and food. The origins of Cameroon’s
imports include France, Nigeria, Japan, US, China, and Germany.
3.3.2 Main export and export destinations
Cameroon’s main export commodities are crude oil and petroleum
products, lumber, cocoa beans, aluminum, coffee and cotton. Main
export destinations are Spain, Italy, France, the Netherlands 10.6, the
US, and China.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
3
3.4 Latest Economic indicators
2010
1 Qtr
Prices
Consumer prices (2000=100)
Consumer prices (% change, year on year)
Financial indicators
Exchange rate CFAfr:US$ (av)
Exchange rate CFAfr:US$ (end-period)
Deposit rate (av; %)
Discount rate (end-period; %)
M1 (end-period; CFAfr bn)
M1 (% change, year on year)
M2 (end-period; CFAfr bn)
M2 (% change, year on year)
Foreign trade (US$ m)
Exports fob
Imports cif
Trade balance
Foreign reserves (US$ m)
Reserves excl gold (end-period)
2 Qtr
2011
3 Qtr
4 Qtr
1 Qtr
2 Qtr
3 Qtr
4 Qtr
115.6
0.7
115.7
0.1
116.8
1.6
118.3
2.7
118.9
2.9
119
2.8
120.6 121.6
3.3 2.8
473.9
486.7
3.3
4.3
1,340
6.6
2,286
8.6
516.3
534.6
3.3
4.3
1,409
11.3
2,357
12.3
508
480.6
3.3
4
1,486
16.1
2,492
16.5
482.9
490.9
3.3
4
1,602
10.4
2,623
12.9
480.1
461.7
3.3
4
1,561
16.5
2,548
11.4
455.8
453.9
3.3
4
1,573
11.7
2,589
9.8
464.9
485.8
3.3
4
1,668
12.2
2,702
8.4
1,209
1,057
152
1,106
1,082
24
1,015
1,031
-16
1,165
1,268
-102
1,286
1,209
76
1,510
1,501
9
1,168 n/a
1,388 n/a
-220 n/a
3,467
3,079
3,516
3,643
3,748
3,488
3,239 3,199
486.7
507
3.3
4
1,782
11.2
2,869
9.4
Source: Economist Intelligence Unit
3.5 Two-year forecast
(% unless otherwise indicated)
Real GDP growth
Oil production ('000 b/d)
Gross agricultural production growth
Consumer price inflation (av)
Lending rate (av)
Government balance (% of GDP)
Exports of goods fob (US$ m)
Imports of goods fob (US$ m)
Current-account balance (US$ m)
Current-account balance (% of GDP)
External debt (year-end; US$ bn)
Exchange rate CFAfr:US$ (av)
Exchange rate CFAfr:US$ (end-period)
Exchange rate CFAfr:€ (av)
2011 (a)
4.1
59.5
2.8
3
14
-1.3
5,668
5,908
-1,048
-4
3.3
471.2
499.2
656
2012 (b)
4.4
83.4
3.9
3.2
14
-0.6
6,424
6,121
-593
-2.3
3.6
518.5
526.9
656
2013 (b)
4.6
102
4
3.3
14
0.7
7,273
6,900
-579
-2.1
3.9
529
533.3
656
2014 (b)
4.8
108.2
4.4
3.4
14.5
0.9
7,873
7,513
-636
-2.2
4.3
534.4
529
656
2015 (b)
4.5
106
4.1
3.6
15
-0.3
7,822
8,029
-1,127
-3.5
4.7
530.1
522.7
656
2016 (b)
4.2
103.9
4
3.9
15.5
-0.8
8,156
8,502
-1,206
-3.5
5.2
520.6
521.1
656
a) Economist Intelligence Unit estimates; b) Economist Intelligence Unit forecasts
Source: Economist Intelligence Unit
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
4
Key ministers
• Prime Minister: Philemon Yang
3.6Infrastructure
3.6.1 Highways (2011 estimates)
Total
Paved
Unpaved
50,000 km
5,000 km
45,000 km
• Vice-Prime Minister and Relations with Assemblies: Amadou Ali
• Justice: Laurent Esso
• Secretary-General at the Presidency: Ferdinand Ngo Ngo
Source: CIA World Factbook
• Territorial Administration and Decentralisation: René Sadi
3.6.2 Railways (2011 estimates)
• Tourism and Leisure: Bello Bouba Maigari
Total
987 km
• Agriculture and Rural Development: Lazare Essimi Menye
Narrow gauge
987 km
• Commerce: Luc Magloire Mbarga Atangana
Source: CIA World Factbook
• Communication: Issa Tchiroma Bakary
3.6.3 Airports (2011 estimates)
• Defence: Edgar Alain Mebe Ngo’o
Total
34
With paved runways
11
• Economy, Planning and Regional Development:
Emmanuel Nganou Djoumessi
With unpaved runways
23
• Employment and Vocational Training: Zacharie Perevette
Source: CIA World Factbook
• Energy and Water: Basile Atangana Kouna
3.6.4 Ports and harbours
Douala, Garoua, Limboh Terminal.
• Environment: Pierre Hele
• External Relations: Pierre Moukoko Mbonjo
• Finance: Alamine Ousmane Mey
4Government
• Health: André Mama Fouda
• Higher Education: Jacques Fame Ndongo
4.1 Political structure
Official name
République du Cameroun
• Industry, Mining and Technology: Emmanuel Bonde
Form of state
Unitary republic
• Post and Telecommunications: Biyiti Bi Essam
Legal system
The Cameroon legal system is based on English common law and
the Napoleonic Code.
• Public Works: Ambassala Patrice
National legislature
National Assembly with 180 members; elected by universal suffrage;
members sit three times a year, in March, June and November, and
serve a term of five years.
• Labour and Social Security: Gregoire Owona
• Livestock and Fisheries: Dr Taiga
• Public Service and Administrative Reforms:
Angouen Michel Ange
• Transport: Robert Nkili
• Governor of Banque des Etats de l’Afrique central: Lucas Abaga Nchama
International organisation participation:
• ACP
• AfDB
• AU
• BDEAC
• CEMAC
• FA
•
FZ
• G-77
• IAEA
• IBRD
•
ICAO
• ICC
• ICRM
• IDA
•
IDB
• IFAD
Head of state
The Head of State is the President; elected by universal suffrage.
• IFC
• IFRCS
•
ILO
• IMF
• IMO
• IMSO
•
Interpol
• IOC
National government
Consists of the Prime Minister and Council of Ministers; includes
the Rassemblement démocratique du peuple camerounais (RDPC)
and the Union nationale pour la démocratie et le progrès (UNDP); the
cabinet was last reshuffled in December 2011.
• IOM,
• IPU
•
IS
• ITSO
• IT
• ITUC
•
MIGA
• MONUSCO
• NAM
• OIC
•
OIF
• OPCW
• PCA
• UN
•
UNAMID • UNCTAD
Main political parties
• RDPC, 153 seats in the National Assembly
• UNESCO
• UNIDO
•
UNWTO • UPU
• WCO
• WFTU
•
WHO
• WMO
• WTO
National elections
The last legislative elections were held in July 2007 and the last
presidential elections were held in October. The next legislative
elections are due in July 2012 and the presidential elections in
October 2018.
• Social Democratic Front (SDF), 16 seats
• WIPO
• Union démocratique du Cameroun (UDC), six seats
• UNDP, four seats
• Mouvement progressiste (MP), one seat
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
5
5Investing in Cameroon
5.1 Openness to foreign investment
Historically, the Government of Cameroon (GRC) sought to attract
foreign investment in order to create much-needed economic growth
and employment; in his annual speech to the nation on December
31, 2011, President Biya emphasized that 2012 would focus on these
economic priorities fuelled by, among other things, investment from
“friendly nations.”
In 2011, trade delegations from the United States, Thailand,
Singapore, Germany, Holland, and many other nations visited
Cameroon in search of investment opportunities. Nonetheless,
prospective foreign investors should be aware that Cameroon is still
beleaguered by endemic corruption that makes it one of the world’s
most challenging business environments.
Cameroon’s legislative body, the National Assembly, adopted an
Investment Charter in April 2002 to attract international investors and
replace the existing Investment Code of 1990. The GRC has not fully
implemented the 2002 Investment Charter. In May 2009, President
Paul Biya signed a decree postponing to 2014 the deadline for
implementation of some provisions of the Investment Charter.
The 2012 budget and finance law reduced the tax burden on
certain sectors, such as pharmaceuticals and renewable energy,
by eliminating the Value Added Tax for products in those sectors.
The same law attempts to exclude the deductibility of expenses
charged to offshore “tax havens.” The National Assembly preserved
changes made in the 2010 budget and finance law eliminating the
tax on registering for incorporation and the tax on corporate equity
offerings and reducing duties on, imported used cars under seven
years old. In 2008, the National Assembly passed legislation that
grants incentives to infrastructural projects worth more than US$200
million. These benefits include tax incentives, such as an exemption
from VAT. The relevant portions of the 1990 Investment remain in
effect until the full implementation of the 2002 Investment Charter.
In light of the incomplete implementation of existing legislation,
investors must sort through conflicting and sometimes confusing
legal requirements.
When the 2002 Investment Charter becomes operational, some
foreign and domestic investments will become subject to GRC
approval, depending on which “regime” the investment falls
under. The “automatic regime” permits investment without prior
government approval. The “returns regime” permits investment after
an application and the passage of two days without government
objection, while the “approval regime” permits investment after
an application and the expiry of fifteen days without government
objection. The Charter is unclear, however, on how to classify
investments (i.e. which regime to use).
In an attempt to render the Investment Charter operational, the GRC
put in place 23 committees to draft separate sector codes. The GRC
has already adopted some of the codes, such as the Forestry Sector
Code (1994), the Petroleum Sector Code (1999), and the Mining
Sector Code (2001).
In late 2011, the GRC adopted an Electricity Sector Code. The other
remaining sector codes, including the Telecommunications Sector
Code, are yet to be presented to the National Assembly.
On 18 February 2010, Cameroon piloted its “One-Stop-Shop” in
Yaounde, which aims to simplify the process for registering a
business. In 2011, Cameroon added “One-Stop-Shops” in the cities
of Bafoussam, Douala, Garoua, and Bamenda. Theoretically, these
offices should decrease the time it takes to open a business from 30
days to 72 hours, although practice varies, according to sources.
The World Bank’s 2011 Doing Business report showed an
improvement for Cameroon in the area of Starting a Business,
estimating that businesses took an average of 15 days to open.
Although the 1990 Investment Code places some restrictions
on foreign ownership, the 2002 Investment Charter permits 100
percent foreign equity ownership. In practice, substantial local equity
ownership may help facilitate the investment approval process.
Investors who intend to make direct investments of 100 million CFA
francs (approximately US$ 200,000) or more must declare their
intent to do so to the Ministry of Finance (MINFI) 30 days in advance.
Cameroon is still in the process of privatising its state-owned
companies through a tender process. Institutions such as the World
Bank and the IMF have long called for the privatisation of the national
telephone company, CAMTEL, which holds a monopoly on the
international gateway as well as the landline network infrastructure.
The privatisation process may also include calls for tenders from
consulting firms to help the government build terms of reference
for the privatisation. Some privatisation programmes are jointly
managed by the GRC and the World Bank. Some of Cameroon’s
recent international calls for tenders in the privatisation process
(since 2004) have suffered severe setbacks due to lack of interest
from qualified bidders or disappointing bids, and several of them have
had to be postponed, sometimes indefinitely.
Full privatisations are rare, as the GRC generally continues to hold
30-45 percent shares of “privatised” companies. In strategic sectors,
such as the railway, airway transportation, or electricity, the foreign
buyers retained market privileges provided for in previous lease
contracts.
The privatisation of Cameroon’s electricity distribution company,
SONEL, resulted in a major foreign direct investment. For a purchase
price of US$70 million, U.S.-based AES Corporation acquired 56%
of SONEL to create AES Sonel in 2001. The concession agreement
initially granted AES exclusive market access for distribution over a
20 year period. In addition the AES operating license allows it to own
up to 1,000 MW of installed capacity (which approximates its current
production). AES may also bid for additional capacity.
The beach and tourist resort of Kribi rose in potential importance
as an industrial hub in 2011, making it a more attractive investment
destination. Currently, it is the terminus of the enormous ChadCameroon oil pipeline and maintains a small fishing port. In 2011,
President Biya inaugurated a project to build a deep sea port near
Kribi. Cameroon’s first natural gas fired power plant commenced
construction in Kribi and will go online in the first quarter of
2013. A new road under construction from Yaounde to Kribi will
reduce congestion on the principal Yaounde to Douala route and
reduce vehicle travel times. Finally, several iron mining projects in
southeastern Cameroon envision a new railroad with its terminus at
the deep sea port at Kribi.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
6
Cameroon’s rankings in selected surveys are as follows:
Index / ranking
2010
2011
2012
TI Corruption Index
146/178
134/182
n/a
Heritage Economic
Freedom
132
(World) 25
(Regional)
136
(World), 27
(Regional)
n/a
World Bank Doing
Business
172/183
165/183
161/183
MCC Government
Effectiveness
47%
55%
47%
MCC Rule of Law
40%
40%
41%
MCC Control of
Corruption
40%
44%
39%
MCC Fiscal Policy
97%
88%
86%
MCC Trade Policy
17%
14%
7%
MCC Regulatory Quality
47%
50%
54%
MCC Business Start Up
27%
61%
64%
MCC Land Rights Access
49%
34%
35%
MCC Natural Resource
Mgmt
59%
61%
58%
5.2 Conversion and transfer policies
Cameroon uses the Communauté Financière Africaine (CFA) franc
as its currency. The regional central bank, the Bank of Central African
States (BEAC in French), issues CFA for circulation among the other
members of the Central African Economic and Monetary Community
(CEMAC, the regional grouping of Chad, Central African Republic,
Gabon, Equatorial Guinea, and the Republic of Congo). Although it
is at par with the West African CFA franc, the two currencies are not
usually accepted for payment in each other’s zones. France’s treasury
guarantees full convertibility of both currencies to the euro. Since
1999, the CFA franc has been pegged to the euro at a fixed exchange
rate of 1 euro to 655.957 CFA francs.
Dividends, capital returns, interest and principal payments on foreign
debt, lease payments, royalties and management fees, and returns
on liquidation can be freely remitted abroad. Liquidation of a foreign
direct investment, however, must be declared to the Minister of
Finance (MINFI) and the BEAC 30 days in advance. Commercial
foreign exchange transfers must also be cleared by MINFI for
business deals amounting to more than 100 million francs CFA
(about US$ 220,000). For transactions below this amount, regulators
require commercial banks to verify that the operations are genuine
before proceeding with the transfer. Regulators routinely grant
authorisations if the transactions comply with investment and fiscal
regulations.
The BEAC has a centralised computer system for electronic
transactions within the banking network. This system (SYGMA is the
French acronym), reduced financial transfer periods to one working
day from the time of authorisation.
5.3 Expropriation and compensation
Foreign and domestic investors receive legal guarantees that
substantially comply with international norms, including full and prior
compensation in the event of expropriation on the basis of public
interest. Undeveloped land is more at risk for local expropriation than
developed property. There are no confiscatory tax regimes or laws
that could be considered detrimental to foreign investments. The
2002 Investment Charter recognises property rights and facilitates
land acquisition. Cameroonian law does not require local ownership
of land. Historically, there have been no major expropriations or other
disputes involving American investment in Cameroon.
5.4 Dispute settlement
The 1990 Investment Code states that, at the time of incorporation
or application for Investment Code benefits, a firm may choose one
of several procedures: adjudication by local courts, arbitration by the
international courts of justice, or international arbitration centres,
according to Cameroonian law and the arbitration regimes of which
Cameroon is a member (described below).
Prospective foreign investors who wish to avoid entanglement in
the court system should consider arbitration as a form of dispute
settlement. Under the 2002 Charter, claimants should forward
petitions for redress or non-compliance with the provisions of the
Charter to a Regulation and Competition Board, which was created
in September 2004. Cameroon accepts binding international
arbitration on investment disputes between foreign investors and the
government.
Difficulty in resolving commercial disputes, particularly the
enforcement of contractual rights, remains one of the serious
obstacles to promoting investment in Cameroon. Foreign corporate
plaintiffs are often frustrated with the slow pace of the Cameroon
legal system. Local businesses routinely exert pressure on the
courts, which may be swayed by bribes or by the clout of a political
heavyweight. Some foreign companies have alleged that judgments
against them were obtained fraudulently or as the result of frivolous
lawsuits. The enforcement of judicial decisions is also slow and
fraught with administrative and legal bottlenecks.
Cameroon’s bankruptcy law is an integral part of its commercial
law. In case of bankruptcy, negotiable and enforceable guarantee
instruments cover creditors.
Cameroon is a member of the International Centre for the Settlement
of Investment Disputes (ICSID, also known as the Washington
Convention), and is a signatory to the 1958 Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (also known
as the New York Convention). In May 1997, Cameroon’s Council of
Business Managers and Professional Associations (GICAM), an
association of 207 companies and 15 professional associations
representing 70 percent of all formal sector business activity in
the country, created its own arbitration centre to handle business
disputes. In 2011, however, approximately half of GICAM’s members
separated to form a competing business association called “eCAM.”
In early 2001, CEMAC also established a court in N’djamena to
adjudicate regional commercial disputes.
Cameroon is a signatory to the Organisation for the Harmonisation
of Corporate Law in Africa Treaty (OHADA in French). Among other
things, OHADA provides for common corporate law and arbitration
procedures in the 16-member signatory states: (Benin, Burkina Faso,
Cameroon, Central African Republic, Chad, Comoros, Congo, Côte
d’Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali,
Niger, Senegal and Togo).
Cameroon is a signatory to the 1985 Seoul Convention that
established the Multilateral Investment Guarantee Agency (MIGA),
aimed at safeguarding non-commercial risks. Cameroon is also a
signatory to the Lome Convention (as revised in Mauritius in 1995),
which created an arbitration mechanism to settle disputes between
African, Caribbean, and Pacific states (ACP) and contractors,
suppliers, and service providers financed by the European
Development Fund (EDF).
In July 2008, Cameroon adopted a law on public-private partnership
(PPP) agreements, providing more clarity for the administrative,
financial, and judicial framework for such arrangements.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
7
5.5 Performance requirements and incentives
Investment incentives will change when the 2002 Investment
Charter is fully implemented, until which time the relevant incentives
from the 1990 Investment Code remain in effect. Depending on the
size and nature of the investment, investments fall under one of
the following regimes of the 1990 Code, each of which has specific
eligibility and performance requirements:
• Under the “basic” regime, firms must export at least 25 percent
of their annual production, use Cameroonian natural resources
for at least 25 percent of the value of their inputs, and create
at least one local job for every 10 million CFA francs invested
(approximately US$ 20,000). Benefits from the regime include
an initial three-year tax exemption; customs fees as well as
an exemption on purchase taxes relating to production and
operational equipment are also exempted. Eligible companies are
entitled to a number of exonerations and other exemptions for the
first five years of the operational phase. The basic regime applies
when three conditions are met: job creation for Cameroonians
at the above rate, export activities amounting to 25% of turnover
and, finally, use of national natural resources.
• Under the small- and medium-scale enterprise (SME) regime,
which applies to firms having total assets of less than 1.5 million
CFA francs (US$ 3,000), there is no requirement for job creation.
SME enterprises will receive the same benefits as listed above if
they fulfil the SME regime.
• Under the “strategic” regime, firms must export at least 50
percent of their annual production, use natural resources of at
least 50 percent of the value of their inputs, and create at least one
local job for every 20 million CFA francs invested (approximately
US$ 40,000). Strategic companies will enjoy the same benefits
as above for the first five years. Strategic companies must be
operating in sectors that have been earmarked as strategic in the
National Industrialization Road Map such as energy and mining.
Additionally, the Industrial Free Zone regime, which applies to any
location in Cameroon, grants broad exemptions from taxation and
regulation, so long as 80 percent of production is exported. This
provision of the 1990 Code is still in force, though it is unclear how
the awaited implementation of the 2002 Investment Charter will
affect it.
No requirements for technology transfer or restrictions on geographic
location exist. Where domestic Cameroonian firms lack technical
knowhow in research and development, foreign firms can bid for
projects that benefit from GRC subsidies. Visa, residence, and work
permit requirements do not inhibit foreign investors, although the
visa application process can be cumbersome and delivery slow.
Quantitative restrictions on imports, non-tariff protection, and many
import licensing requirements were lifted by the 1994 Tariff Code
to conform to CEMAC regional customs regulations. In addition,
the GRC abolished many other price controls in 1998, leaving only
controls on “strategic” goods and services such as electricity, water,
public transportation (roads), telecommunications, cooking gas, palm
oil, imported fresh fish, pharmaceuticals, school books, and port-side
activities (such as stevedoring).
5.6 Right to private ownership and establishment
The government recognises the right of private ownership. The
Ministry for State Property and Land Tenure governs property
issues. The GRC simplified procedures for obtaining land titles and
decentralised some authority, although American companies still
report difficulties obtaining clear title to land. These documents now
remain at divisional levels within a timeframe of one to six months.
Foreign and domestic individuals and firms may legally establish and
own firms, engage in remunerative activities, and establish, acquire,
and dispose of interests in business enterprises. Investors may
dispose of their property via sale, transfer, or physical repatriation of
moveable property.
5.7 Protection of property rights
The law recognises and usually enforces secured interests in
property. The concept of mortgages exists in Cameroonian law,
and the title is the legal instrument for registering such security
interests, but in practice some lenders report extensive delays in
obtaining court rulings to enforce their claims on assets given as
collateral. Cameroonian law provides foreign and domestic investors
with property rights protections that substantially comply with
international norms and do not discriminate between foreign and
domestic firms. In practice, however, Cameroonian courts and
administrative agencies often issue rulings favourable to domestic
firms and have been suspected of corrupt practices.
Cameroon is a member of the 16-nation African Intellectual
Property Organisation (OAPI in French), which is a member of the
World Intellectual Property Organisation and offers patent and
trademark registration in cooperation with member states. Patents
in Cameroon have an initial validity of ten years. They can be renewed
every five years upon submission of proof that the patent was used
in at least one of the OAPI member countries. Without continued
use, compulsory licensing is possible after three years. Trademark
protection is initially valid for 20 years with renewal possibilities every
ten years.
Cameroon is also a party to the Paris Convention on Industrial
Property and the Universal Copyright Convention.
In 2008, Cameroon’s copyright registration system changed from
a single body accepting registrations to multiple bodies divided
according to field. The Minister of Culture liquidated one such
organisation, the Cameroon Music Corporation (CMC), charged
with registering musical works, and attempted to set up a new
structure, Societe Civile Camerounaise de l’Art Musicale (SOCAM).
Cameroon’s Supreme Court invalidated the Minister of Culture’s
decision to liquidate CMC , leaving the status of copyright registration
for music, a prolific industry in Cameroon, in question.
Other registration bodies include the Copyright Corporation for
Literature and Dramatic Arts (in French, SOCILADRA) which covers
literature and software production; the Copyright Corporation for
Visual Arts (in French, SOCADAP) for paintings; and the Copyright
Corporation for Audio-Visual and Photographic Arts (in French,
SCAAP) for audiovisual and photographic production.
IPR is constrained by poor enforcement of existing laws, the cost
of enforcement, the pervasiveness of infringement, rudimentary
understanding of IPR among government officials, and a lack of
public respect for copyright laws. Software piracy is widespread;
pirated DVDs are common. Cameroon is taking steps to implement
the World Trade Organisation’s TRIPs agreement and the United
States Patent and Trade Office (USPTO) provided training on
intellectual property rights protection to Cameroonian officials
(including customs officers, magistrates, and civil servants) in 2011.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
8
5.8 Transparency of the regulatory system
While Cameroonian business laws exist, implementation of these
laws can be challenging. Under the current judicial system, local and
foreign investors have found it complicated, time-consuming, and
costly to enforce contractual rights, protect property rights, obtain a
fair and expeditious hearing before the courts, or defend themselves
against frivolous lawsuits.
5.10Competition from state-owned enterprises (SOEs)
Private enterprises may compete with public enterprises when
marketing products and services in Cameroon. Public companies
are not eligible to participate in the bidding process when it comes
to public tenders. However, if the government is certain that one
of its companies can provide the service, it will typically not call for
a tender.
Implementation of the OHADA in French-speaking Cameroon has
been satisfactory for some investors. The Anglophone regions of
Cameroon, with business law inspired from common law, have
sometimes shown resistance to implementing OHADA.
State-owned companies are active in a number of areas:
American, Cameroonian, and third-country firms complain that the
tax system and its enforcement are predatory and prejudiced against
the formal sector. Under the 2002 Investment Charter, however,
taxation and customs enforcement mechanisms should apply
equally to all taxpayers.
• Oil refining (SONARA)
5.9 Efficient capital markets and portfolio investment
The cost of capital in Cameroon is high. The BEAC has been working
to lower benchmark interest rates from 11 percent in the 1990s down
to four percent in 2011. However, commercial banks in 2011 charged
between eight and 14 percent interest, depending on the risk, with
maximum repayment terms of three years. Some large lenders to
major companies have been able to extend the term beyond five
years. Microfinance institutions can charge even higher rates on
lending, ranging between 8% and 35%.
• Mail delivery (CAMPOST)
Cameroon’s sovereign rating stayed around B and B– over the last
several years, according to Standard & Poors and Fitch. Foreign
investors are able to obtain loans on the local market, but usually
prefer to borrow offshore due to very high domestic interest rates
and the unavailability of long-term capital in the domestic market.
• Cocoa production (SODECAO)
The Douala Stock Exchange (DSX) opened in April 2003. Three
companies are currently listed on the DSX: water bottling company
SEMC, agro-forestry company SAFACAM, and agro-industrial
company SOCAPALM. SOCAPALM’s offering in 2009 was overbid. In
late 2009, the World Bank’s Investment Finance Corporation issued
bonds worth US$ 40 million, one third of which are traded on the
DSX. In December 2010, the GRC issued its first sovereign bond (five
years) to finance development projects, which is also currently traded
on the DSX. On December 14, 2011, the GRC issued one short-term
treasury bill, which investors fully subscribed, and raised CFAF 50
billion (US$100 million).
The French treasury closely monitors the CEMAC central bank,
the BEAC. Cameroon has 13 fully operational commercial banks,
a state-owned mortgage company, which provides medium
term loan finance to home buyers, and 25 insurance companies.
Aggregate assets of commercial banks are over 1,800 billion CFA
francs (approximately US$ 3.6 billion). Commercial banks and a
wide network of micro-finance institutions constitute the largest
part of the financial sector. The amount of non-performing assets
held by these institutions is unknown. Cameroon has more than 430
operational micro finance institutions countrywide, grossing around
500 billion CFA (approximately US$ 1 billion) in deposits.
Enterprises undertake mergers and acquisitions through discreet
negotiations. Private firms are free to associate with any partner they
choose and are free to organize industry associations. Cameroon’s
six privatisation laws are complete, but have onerous bureaucratic
requirements.
Cameroon’s financial, legal and regulatory systems are solid but
enforcement is inconsistent and often arbitrary. The GRC has not
yet established a dedicated court system to protect and encourage
investments. Cameroonian minority partners of foreign firms
have occasionally to take over the operations of joint companies
via court action or through harassment and intimidation by
government officials.
• Telecommunications (CAMTEL)
• Social security (CNPS)
• Oil and gas exploration (SNH)
• Both upstream and downstream petroleum product distribution
(TRADEX)
• Mortgage finance (Credit Foncier)
• Real estate (SIC)
• Land development and management (MAETURE)
• Cotton production and exports (SODECOTON)
• Textile manufacturing (CICAM)
• Tea and vegetable oil production (CDC)
Cameroon also ran a national airline, now defunct, called CAMAIR.
In March, 2011, the GRC re-launched its national airline under the
name CamairCo.
Each state-owned company has an appointed board of directors and
a parent ministry. The most prestigious state-owned company, the
National Hydrocarbons Corporation (SNH by its French acronym),
operates in the field of oil and gas exploration, mainly by taking
production-sharing agreements with private companies. The
President of the Republic appoints the managing director, and the
chairman of the board of directors remains the Secretary General of
the Presidency of the Republic.
Cameroon does not have a sovereign wealth fund.
5.11Corporate Social Responsibility (CSR)
There is a general awareness of CSR among both producers and
consumers. On a case by case basis, the GRC requires elements
of corporate responsibility as part of the permit and project
development process. For example, some mining companies invest
in social infrastructure, such as health centres or schools, and other
projects to benefit the local populations in the areas of their mining
operations. While not always mandatory, the GRC increasingly
requires mining and other projects to take environmental and social
impacts into consideration. A common practice for many companies
is to build bridges, health centres, and classrooms in villages near
the work site. For example, in 2011, the Electricity Development
Corporation built an entire new village for an indigenous population
displaced by the future Lom Pangar dam project.
5.12Political violence
In February 2008, Cameroon experienced its worst unrest in 15
years, as a transportation strike expanded into a more general protest
against rising food and oil prices, as well as President Biya’s plan
to amend the Constitution to allow him to eliminate presidential
term limits and extend his rule. The current political climate is fairly
calm and peaceful. Cameroonians re-elected Paul Biya president
for another seven year term in October 2011; he has served in that
capacity since 1982. Cameroon will likely conduct parliamentary and
local elections in July 2012.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
9
As a result of UN mediation and the June 2006 Greentree
Agreement, Cameroon and Nigeria implemented the International
Court of Justice (ICJ) ruling on the Bakassi Penninsula territorial
dispute; Cameroon resumed full control of the region on August
14, 2008. Relations with Nigeria are increasingly friendly. In 2009,
delegations from both countries travelled to the Far North Region to
lay the first boundary pillar to demarcate the Cameroon-Nigeria land
border and the parties continued to survey the border without major
disputes in 2011. The parties expect to complete the 250-kilometer
border survey in 2012.
5.13Corruption
Corruption is endemic in Cameroon, which consistently ranks
as one of the most corrupt countries according to Transparency
International’s Corruption Perceptions Index. Transparency
International has an active presence in Cameroon. The government
signed the U.N. Convention against Corruption (UNCAC) in April 2004
and ratified it in 2006. Cameroon gained some high profile corruption
trials and convictions, and President Biya continues an aggressive
campaign of corruption arrests dubbed “Operation Sparrowhawk.”
In 2011 Cameroon’s Anti-Corruption Commission published its
first report and Cameroon created a special tribunal to prosecute
corruption cases. However, the GRC has still not implemented a
constitutional provision voted in 1996 requiring government officials
to declare their assets.
Government reforms in the public procurement process began
in 2002 when observers were installed to perform systematically
ex-post-facto audits on valuable procurements. Nonetheless,
governance of the public procurement process remains problematic.
In November 2004, the GRC published new anti-corruption measures
for public contracts. On December 9, 2011, the GRC created a special
ministry dedicated to government procurement.
Corruption is a criminal offense in Cameroon, and carries jail time
(five years to life) and a fine (US$ 400 to US$ 4,000). Sectors with
high corruption potential include government procurement, customs,
and public health facilities.
5.14Bilateral investment agreements
Cameroon has bilateral investment and/or commercial agreements
with the following countries: Austria
• Belgium
• Canada
• China
• Denmark
• France
• Germany
• Greece
• Italy
• Japan
• Russia
• South Korea
• Spain
• Switzerland
• United Kingdom
• United States
5.15OPIC and other investment insurance programmes
The U.S. Government signed an Investment Guarantee Agreement
with Cameroon in 1967. The 1990 Investment Code guarantees
protection from non-commercial risk, and Cameroon is a signatory of
the Multilateral Investment Guarantee Agreement (MIGA).
5.16Labour
Cameroon’s 1992 Labour Code governs labour-management
relations, providing for collective bargaining in wage negotiations,
eliminating fixed wage scales, abolishing employment-based
requirements on education levels, eliminating government control
over layoffs and firings, and reducing the government’s role in the
management of labour unions. The Labor Code does not apply to
civil servants, employees of the judiciary, and workers responsible
for national security. In theory, the Labour Code provides a legal
framework for the emergence of a flexible and efficient labour
market, but such a market has not fully emerged. Cameroon is a
party to the ILO Conventions 87 and 98 permitting the freedom to
form unions and the right to collective bargaining.
After a long period of dissension between the government and labour
unions, a new tripartite approach, including worker and employer
unions as well as government representatives, addresses labour
issues. This method has substantially improved relations between
the parties for the benefit of both the workers and the employers,
and the government intends to improve further workers’ rights and
establish a new concept of internal discussions within companies
before workers resort to strikes. The Minister of Labour and Social
Security refers to this policy as “Social Dialogue.” The Ministry of
Labour has taken an increasingly broad view of certain aspects of
the Labour Code, especially regarding payment of “legal rights” to
employees in the event of a restructuring or sale.
Cameroon has a high literacy rate relative to Sub-Saharan Africa and
offers a relatively well-educated labour force alongside a surplus
of unskilled and non-technical labour. According to a 2005 survey
conducted by the National Institute of Statistics in the two major
cities, Yaounde and Douala, the unemployment rates (ILO criteria) in
these cities are 14.7 percent and 12.5 percent, respectively. (The ILO
defines an unemployed person as one who fulfils three conditions:
1 Without work, i.e. not having worked a single hour in a
referenced week
2 Available for work in the coming 15 days
3 Actively seeking employment or having found one that will
start later
In 2010, the Ministry of Employment and Vocational Training
estimated that 75% of the active workforce is underemployed, and
less than 1 million of Cameroon’s 19.5 million people are employed
in the formal sector. Cameroon’s National Statistics Institute cites
Cameroon’s unemployment as 4.4 percent, according to 2005 data.
About 50 percent of adult Cameroonians speak both French and
English. Due to inadequate vocational and technical training,
however, some industries have difficulties recruiting skilled labour
in the domestic market. Also, the ready availability of unskilled
labour means that technology used in many sectors, especially
construction, remains basic.
An individual raising a discrimination case against an employer
may elect to bring the case where he resides or where he works.
In practice complainants file most of these cases in their place
of residence. This compels the company to dispatch officials to
sometimes distant places where the individual might have better
local contacts than the company.
Similar agreements also exist with other countries in Africa, Asia,
Latin America, and Eastern Europe.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
10
In recent years, Section 42 of the Cameroon Labour Code has
posed some challenges to foreign companies selling their assets
in Cameroon. Section 42(2)(b) allows employees or their labour
organisations to demand compensation from the selling entity in
advance of the sale of the asset. They may ask for termination of
their contract and severance pay prior to the transfer, knowing that
the new acquirer would still hire them or would need their acquired
experience and service. In sectors where human resources costs are
high, the practice can make it difficult for foreign investors to divest.
5.17Foreign trade zones / free ports
While Cameroon currently has no designated foreign trade zones or
free ports, it has an Industrial Free Zone (IFZ) regime applicable at any
location through “industrial parks” or “single-factory” zones. Created
in 1990 to promote internationally competitive export industries, the
IFZ regime creates certain broad regulatory and tax exemptions for
investors. It is unclear how the 2002 Investment Charter will affect
the IFZ regime privileges.
To qualify for IFZ status, the goods or services must not have
detrimental effects on the environment, and enterprises must export
80 percent of production. IFZ firms receive a ten-year exemption
from taxes and are subject only to a flat tax of 15 percent on
corporate profits beginning in the eleventh year. They have a right to
tax-free repatriation of all funds earned and invested in Cameroon
and are exempt from foreign exchange regulations. They are also
exempt from existing and future customs duties and taxes, including
those on locally purchased production inputs. The National Agency
for Industrial Free Zones is the regulatory body which oversees and
administers Cameroon’s IFZ program.
Though well-intentioned, the GRC has never really fully implemented
the IFZ regime.
5.18Foreign Direct Investment statistics
Although foreign direct investment (FDI) plays a key role in the
Cameroonian economy, reliable FDI statistics are not available.
Neither the government nor the Chamber of Commerce has
compiled a comprehensive list of foreign investments in Cameroon
or estimates of current values. The 2012 finance law requires
foreign companies to seek the help of a tax advisor for mergers
or acquisitions of a Cameroonian entity. Local affiliates of French
transnational companies carry a large amount of capital formation,
although domestic banks are fuelling some investment.
The Chad-Cameroon pipeline, which runs over 1,000 kilometers from
Chad’s Doba oil fields to the sea at Kribi, is one of the largest U.S.
investments in sub-Saharan Africa, estimated at USD 4.4 billion when
it was constructed in 2000. Exxon/Mobil and Chevron/Texaco jointly
hold a majority interest in the pipeline company; this single project
accounts for the lion’s share of American investment in Cameroon.
France is still a major economic partner in Cameroon. Three
commercial banks are majority French-owned. French interests
are present in sugar production plants, cement production, food
and drink and in the French telecommunications firm Orange,
which operates one of Cameroon’s three GSM mobile telephone
companies. French interests are also dominant in distribution (auto
and machines), logistics, and transportation ventures, ranging from
railway network operation to the port terminal operations. French
exports of pharmaceuticals make up 70% of the Cameroonian
market share. In all, there are more than 100 French branch
companies in Cameroon employing some 30,000 people, and more
than 200 enterprises owned by French nationals.
China, South Korea, South Africa, Morocco and India are increasing
their involvement in Cameroon’s economy. Royal Air Maroc has
regular flights to Douala and Yaounde, a Moroccan investment
bank has opened a regional office, and a Moroccan company
manages the national water utility. Chinese and Korean companies
are exploring mining opportunities and projects to manufacture
cement. South African firm MTN operates one of Cameroon’s three
mobile telephone licenses. A South African group also acquired the
Cameroon Development Corporation’s tea sector and is now known
as Cameroon Tea Estates (CTE). Indian nationals are involved in
retail sales, and Hindalco shares an equity stake in the CAL bauxite
mining project.
5.19Starting a business in Cameroon
No Procedure
Time
1.
A notary public drafts
certificate requesting a
commercial bank to open a
bank account for the new
company.
One day
No charge
2.
Deposit the initial capital in a
bank and obtain a receipt.
1 day
No charge
3.
Have an attorney/notary
or shareholder draft the
memorandum and article of
association; sign company
bylaws before the notary.
2 days
2% of the
share capital,
19.3% of VAT
and FCFA
6,000 of
stamp duties
4.
Obtain a copy of the criminal
4 days
record of company's directors
FCFA 5000
5.
Notary or entrepreneur files
8 days
registration documents to the
One-Stop-Shop.
FCFA
41,500 for
Registration,
FCFA 6,000
for Quittance,
FCFA 2,000
for stamps
(2 of FCFA
1000) and
FCFA 6,000
for stamp
duties
6.
Publish the incorporation
of the company in the legal
journal (Cameroun Tribune
Outside of the petroleum sector, U.S.-based AES Corporation owns
a majority stake in SONEL, the privatised national power producer
and distributor. In 2009, AES launched “African Power Development
Corporation,” headquartered in Douala, as a holding and investment
vehicle for both its operations in Cameroon and planned activities
elsewhere in Cameroon, Nigeria and possibly the Democratic
Republic of Congo.
Dole raises and exports bananas, and Del Monte, which has a U.S.
equity stake, runs a banana production sharing contract with the
country’s leading agro-industrial corporation, CDC. Colgate-Palmolive
manufactures oral care/hygiene products for the local and regional
markets at its Douala plant. In April 2003, the government awarded
a permit to Geovic, a U.S. mining firm, to extract rich deposits of
cobalt and nickel in Cameroon’s East Region. Cameroon Alumina Ltd.
(CAL), a consortium with ten percent American equity, is planning
to develop bauxite resources in Cameroon’s Adamoua region in a
multibillion dollar project that will entail investments in the rail, port
and power sectors. Additionally, several dozen U.S. companies are
currently represented in Cameroon either directly or through agents
or distributors.
Associated
costs
3 days
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
FCFA 76,000
11
6Country Risk Profile
Sovereign Currency Banking Political Economic Country
risk
risk
sector
risk
structure risk
risk
risk
May
2012
B
BB
B
CCC
CCC
B
(AAA=least risky, D=most risky)
6.1 Sovereign risk
Stable. Although domestic borrowing is increasing and debt
management is poor, the debt stock will remain low. The fiscal
position is sustainable and repayment capacity is underpinned by
increasing oil exports and revenue.
6.2 Currency risk
Stable. The CFA franc’s peg to the euro is expected to be maintained,
as any devaluation would damage the Franc Zone’s reputation. Rising
oil revenue will strengthen Cameroon’s external position and foreignexchange reserves.
6.3 Banking sector risk
Stable. Cameroon’s financial landscape is dominated by solid
international banks, but the sector suffers from an over-concentration
of credit, weak regulation and high levels of non-performing loans.
Excessive government payment arrears, if sustained, risk further
weakening the sector.
6.4 Political risk
The government raised expectations of a faster pace of economic
and social development in the run-up to the 2011 presidential
election, which could backfire if it fails to deliver.
6.5 Economic structure risk
Cameroon’s oil dependency leaves it vulnerable to downward
movements in energy prices. The oil sector accounts for more
than one-third of government revenue and more than 40% of the
country’s export receipts.
7Country Outlook: 2012 –
2016
7.1 Political stability
After more than 29 years at the helm, Paul Biya was re-elected as
president in October 2011 for another seven-year term, in an election
marred by reports of widespread irregularities. Mr. Biya remains the
pivot around which the state apparatus in Cameroon turns.
The Economist Intelligence Unit expects him to remain in office
throughout the forecast period, health permitting. However, political
and social stability is fragile, owing to the lack of a clear successor
to the 79-year-old president and the consequent jockeying for
position within the ruling Rassemblement démocratique du peuple
camerounais (RDPC).
Under the 1996 constitution, the leader of the Senate should be
named as interim President, but the Senate does not exist at
present. In his inauguration speech to mark the beginning of a sixth
presidential term, Mr. Biya promised to make the establishment of
a second parliamentary chamber a priority. However, the president
has pledged previously to enact fully the 1996 constitution without
following through on his promise. In the absence of an upper house,
the president of the National Assembly, Djibril Cavaye Yeguié, is Mr
Biya’s official successor, although the legal framework is ambiguous
and he lacks popular legitimacy and support.
7.2 Election watch
In a bill that went to the vote on 2 April, the National Assembly
postponed legislative elections, initially due in July 2012, for at
least six months. The deferral of municipal polls, also due in July, is
expected to be confirmed soon. Although no date has been set yet,
it is likely that the municipal and legislative elections will be held
simultaneously, in mid-2013. The postponement should allow the
national electoral commission, Elections Cameroon (Elecam), to
complete a full overhaul of voter lists using biometric verification,
after opposition parties complained that the existing voter register
was unrepresentative and outdated.
The new voter lists should help to reduce the risk of voting
irregularities, but the RDPC is nevertheless expected to add to
its overwhelming parliamentary majority, as the President has
marginalised the opposition parties and continues to restrict freedom
of expression and association. The largest opposition party, the
Social Democratic Front, which relies on its regional and Anglophone
support base, now holds only 16 parliamentary seats out of 180,
compared with 43 in 1997.
Although the parallel municipal elections allow more space for
smaller parties, the ruling party is still likely to reinforce its grip
on rural areas. The next presidential election is scheduled for well
beyond the end of the forecast period, in 2018, by which time Mr.
Biya will be 85.
7.3 International relations
Although France will remain Cameroon’s main foreign backer,
French support for regime change in Côte d’Ivoire and North African
states has not been well received by Mr. Biya’s administration,
and Cameroon will seek closer ties with other countries that are
interested in its natural resources, which include oil, timber, metals,
diamonds and arable land.
Links with China will continue to strengthen, helped by that country’s
non-interventionist approach; China also promised recently to
increase its military support for the Cameroonian navy.
The US is helping Cameroon’s military to improve maritime security
in the Gulf of Guinea, and the US ambassador has indicated that his
country, already the biggest foreign investor in Cameroon through its
stakes in the Chad-Cameroon pipeline and in the electricity company,
AES-Sonel, is interested in investing more in the African country.
The UK is keen to boost its commercial links with Cameroon, while
Turkey, India and South Korea are also increasing their presence.
Popular discontent and factionalism within the armed forces also
pose serious threats to political stability. Mr. Biya’s age and reportedly
fragile health raise the risk that he could become incapacitated while
in office. The electoral law stipulates that should the presidency
become vacant, an election is to be organised within 120 days.
Nonetheless, disagreements over who should become acting
leader during the transition would spark a power struggle, primarily
between RDPC barons but also involving the country’s generals and
military intelligence.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
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7.4 Policy trends
Economic policy over the forecast period will be guided by a longterm development policy, published in January 2010 as Document
de stratégie pour la croissance et l’emploi (DSCE). The key
objectives of the DSCE are to reduce poverty and to boost growth
and employment. To achieve these goals, the government plans to
increase infrastructure investment, improve private-sector access to
finance and enhance health and education through higher spending.
However, excessive subsidisation and ministries’ limited absorptive
capacity, which stems partly from inefficient public financial
management systems, will cause actual investment expenditure
to fall short of budgeted outlays. Moreover, despite recent reform
efforts the business environment will remain among the most
difficult in the world, owing to bureaucratic bottlenecks, corruption,
poor infrastructure, lack of access to credit and an inefficient
legal system.
7.8 External sector
Exports will be boosted by rising oil production and elevated global
oil prices throughout most of the forecast period. However, the pace
of export growth will slacken towards the end of the forecast period
as oil production starts to dip and non-oil exports expand only slowly.
Despite rising agricultural production, imports will increase as the
public investment programme is ramped up and foreign investment
in the natural resources sector triggers strong demand for imports of
capital goods.
Overall the trade balance will be slightly positive in 2012-14, before
moving to an average deficit of 1.3% of GDP in 2015-16. The services
deficit is expected to average 2.6% of GDP in 2012-14, reflecting
heavy transportation costs, before moderating to 2.1% in 2016. The
income deficit will average 1.5% of GDP, driven by rising profit and
dividend remittances by foreign oil companies.
7.5 Economic growth
Economic growth is expected to accelerate over the forecast period,
from an official estimate of 4.1% in 2011 to 5.2% in 2012 and an
average of 4.5% in 2013-16. Growth in 2012-14 will be underpinned
by a substantial increase in oil and gas production as a number of
new wells come on stream. The Economist Intelligence unit believes
the budgeted forecast of 100,000 barrels/day (b/d) for 2012 to be
slightly optimistic and expect output to average just over 82,000 b/d
during the year and to peak at around 108,000 b/d in 2014.
Inflows of donor funds and a small increase in diaspora remittances
will help to maintain the surplus on the current transfers account
at the equivalent of 0.9% of GDP on average in 2012-16. Driven by
the positive trend in the trade balance, the current-account deficit
is forecast to narrow in 2012 and to fluctuate around an average of
2.8% in 2012-14. A slower expansion in oil revenue will lead to a
renewed widening of the deficit in 2015-16, to an average of 3.9%
of GDP. The current-account deficit will be financed through foreign
direct investment in the country’s growing oil and mining projects, as
well as borrowing from official creditors and commercial banks.
The final two years of the forecast period will witness a modest
decline in oil output as new start-ups fail to offset falling production
at some of the older fields. A number of projects are also under
way in the mining sector. However, bureaucratic delays, as well
as a possible drying-up of funds in the wake of ongoing economic
difficulties in Europe, may mean that some of the mines that were
originally expected to come on stream over the next few years may
not commence production until later in the forecast period.
Appendix – sources of
information
7.6Inflation
Owing to Cameroon’s dependence on imported food, consumer
price inflation is affected by movements in global prices, although the
government’s policy of heavily regulating prices and subsidising food
imports moderates the impact. After last year’s spike in food prices it
is expected that inflationary pressures from this particular source to
stabilise in 2012-13. Nevertheless, a forecast weakening of the CFA
franc against the US dollar will have the effect of pushing up the cost
of imported goods, including capital equipment required to support
the expansion of mining and infrastructure. As a result, inflation will
be very much the same in 2012 as in 2011, with an average rate of
2.9%, and it will edge back up to 3.2% in 2013.
The Economist Intelligence Unit
Doingbusiness.org
The CIA World Factbook
Wikipedia
Cameroon Guide
Infloplease
From 2014 onwards it is believed that the authorities will finally
respond to pressure from the IMF for a reduction in subsidies.
However, as this will be done on a phased basis, the impact on
inflation will be relatively modest, leading to average inflation of 3.5%
in 2014 and 3.9% in 2016.
7.7 Exchange rates
The CFA franc is pegged to the euro at CFAfr655.96:€1 and therefore
fluctuates in line with euro:dollar movements. The sovereign debt
problems in the euro zone have caused the euro to depreciate, as
investors have taken refuge in perceived safe-haven assets, including
the US dollar. From a forecast average of CFAfr502.5:US$1 in 2012, it
is expected that the franc will continue to weaken over the following
three years – to an average of CFAfr530.1:US$1 in 2015 – before
recovering slightly in the final year of the forecast period.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
13