INVESTING IN CAMEROON: ECONOMIC ENVIRONMENT, OPPORTUNITIES AND THREATS

Reads: 929  | Likes: 1  | Shelves: 0  | Comments: 0

More Details
Status: Finished  |  Genre: Other  |  House: Booksie Classic
This project is an attempt to prove that there are great investment opportunities in sub-saharan Africa and in Cameroon in particular. In order to achieve this noble goal, the analysis starts with a research scheme (named Introduction) which details the research methods employed, the objectives, purposes of the research, the hypothesis, the theoretical framework, etc so that the readers will be aware of how and where the information contained in this report was gathered. Then I moved to present briefly the Republic of Cameroon from an economic perspective; later in the analysis there is a lengthy discussion about Foreign Direct Investments in Cameroon. Next, I developed some particular sectors which are of interest to me to show how profitable it could be to invest in any of them then finally there is the conclusion and some recommendations.

Submitted: August 15, 2012

A A A | A A A

Submitted: August 15, 2012

A A A

A A A


 

GIRNE AMERICAN UNIVERSITY

 

INVESTING IN CAMEROON:

ECONOMIC ENVIRONMENT, OPPORTUNITIES AND THREATS

 

A Research Project by:

Marc Cedric Ngaha Mbitcha

 

In partial fulfillment of the requirements for obtaining the degree of

MASTER OF BUSINESS ADMINISTRATION (MBA)

Specialization:

Financial Management

 

Supervisor:

Assoc. Prof. Dr. Serdar Saydam

 

Spring 2012

 

 

 

 


To my beloved family

Marc Ngaha

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


TABLE OF CONTENTS

Page #

LIST OF ACRONYMS …………………………………………………………………………8

ACKNOWLEDGEMENTS …………………………………………………………………...11

ABSTRACT …………………………………………………………………………………….12

INTRODUCTION ……………………………………………………………………………..13

CHAPTER 1: RESEARCH METHODS

1.1. Background Of The Study ………………………………………………………….16

1.2. Research Points ………………………………………...……………………………16

1.2.1.Research Question ……………………………….………………………....16

1.2.2.Research Objectives …………………………………………………..…….16

1.3.Rationale ……………………………………………………………………………..17

1.4.Hypothesis ……………………………………………………………………………17

1.5.Literature Review ……………………………………………………………………17

1.6.Research Methodology ………………………………………………………………19

1.6.1.Overview of Approach …………………………………………………..….19

1.6.2.Data Collection …………………………………………………………...…20

1.6.3.Data Analysis ………………………………………………………………..20

1.6.4.Validity & Reliability …………………………………………………...…...21

1.6.5.Interpretation …………………………………………………………….….21

CHAPTER 2: CAMEROON’S ECONOMIC PROFILE

 

?

2.1.Recent Economic Developments …………………………………………………..22

2.2.Macroeconomic Policies …………………………………………………………...27

2.2.1.Fiscal Policy …………………………………………………………...…….27

2.2.2.Monetary Policy ………………………………………………………….....29

2.2.3.External Position …………………………………………………………....30

2.3.Structural Issues …………………………………………………………………...32

2.3.1.Recent Developments …………………………………………………….....32

2.3.2.Technical and Vocational Skills Development ……………………………34

2.4.Political Context …………………………………………………………………...37

2.5.Social Context and Human Resources Development ……………………………39

CHAPTER 3: CAMEROON’S INVESTMENT GUIDE

3.1.Openness to Foreign Investment ………………………………………………...40

3.2.Currency Conversion and Transfer Policies ……………………………………42

3.3.Expropriation and Compensation ……………………………………………….42

3.4.Dispute Settlement ………………………………………………………………..43

3.5.Performance Requirements and Incentives ……………………………………..44

3.6.Private Ownership Rights ………………………………………………………..45

3.7.Protection of Property Rights ……………………………………………………45

3.8.Transparency of Regulatory System …………………………………………….46

3.9.Political Violence ………………………………………………………………….46

3.10.Corruption and Crime ……………………………………………………………46

 

??

3.11.Labor ………………………………………………………………………………47

3.12.International Investment Agreements …………………………………………..48

3.13.Foreign Trade Zones ……………………………………………………………...48

3.14.Taxation …………………………………………………………………………...49

3.15.Stock Market ……………………………………………………………………...49

CHAPTER 4: FOREIGN INVESTMENT

4.1.Transfer of Dividends and Profits ………………………………………………50

4.2.Borrowing ………………………………………………………………………...50

4.3.Residence Permit …………………………………………………………………50

4.4.Customs Duties, Excise Duties and the Taxation System ……………………...51

4.5.FDI in Figures ……………………………………………………………………53

4.5.1.Country Comparison for the Protection of Investors ………………..….54

4.5.2.Why You Should Choose to Invest in Cameroon ………………………..55

4.5.2.1. Strong Points …………………………………..………………….55

4.5.2.2.Weak Points ………………………………………...……………...56

4.5.3.Government Measures to Motivate or Restrict FDI …………………....56

4.5.4.Procedures Relative to Foreign Investment ………………………...…..56

4.5.4.1. Freedom of Establishment ……………………………….……….56

4.5.4.2. Acquisition of Holdings ……………………………………..…….56

4.5.4.3. Obligation to Declare ……………………………………..……….57

 

???

 

CHAPTER 5: SECTORS WORTH INVESTING IN

5.1.Tourism …………………………………………………………………………..57

5.2.Transport Infrastructures ………………………………………………………59

5.2.1.Road transport ………………………………………….………………….60

5.2.2.Rail transport ……………………………………………………….……...61

5.2.3.Sea transport …………………………………………………………….....63

5.2.3.1. Douala-Bonaberi Port ……………………………………….……63

5.2.3.2.Kribi Port ……………………………………………..…………...65

5.2.3.3. Limbe-Tiko Port …………………………………………….…….65

5.2.4.Air transport ……………………………………………………….……….65

5.3.Housing Sector In General ………………………………………………………..67

5.4.Business opportunities in the Energy Sector …………………………………….68

5.4.1.Energy sector …………………………………………………………...…...69

5.4.2.Downstream Oil and gas …………………………………………………...70

5.4.3.Renewable Energy ……………………………………………………….....70

5.4.4.Energy Efficiency ………………………………………………………..…70

5.4.5.Water Resources …………………………………………………………....70

CHAPTER 6: QUESTIONNAIRE & INTERVIEW

6.1.QUESTIONNAIRE ……………………………………………………………….71

6.2.INTERVIEW ………………………………………………………………………74

 

?V

 

CONCLUSION ………………………………………………………………………………...77

RECOMMENDATIONS ………………………………………………………………………79

REFERENCES …………………………………………………………………………………81

 

APPENDIX ……………………………………………………………………………………..84

 

GLOSSARY ……………………………………………………………………………………87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

V

 

LIST OF ACRONYMS

N.B.: Most of the abbreviations below are for organizations named in French.

 

ARV: Antiretroviral

BEAC: Bank of Central African States

Camair: Cameroon Airlines

CEMAC: Economic and Monetary Community of Central Africa

CFA: French-speaking African Countries Financial Community

CSTC: Confederation of Cameroon Trade Unions

EITI: Extractive Industries Transparency Initiative

Elecam: Elections Cameroun

ENSIA: Cameroon’s National Agro-Food Institute

ENSP: Cameroon’s National Polytechnic Institute

EPZ: Export Processing Zones

FDI: Foreign Direct Investment

GDP: Gross Domestic Product

GICAM: Council of Business Managers and Professional Associations

Goc: Government of the Republic of Cameroon

HIPC: Heavily Indebted Poor Countries

ICFTU: International Confederation of Free Trade Unions

ICSID: International Center for the Settlement of Investment Disputes

IFI: International Financial Institutions

IFZ: Industrial Free Zone

IMF: International Monetary Fund

Ipps: Independent Power Producers

IUT: University-Level Technology Institute

MDRI: Multilateral Debt Relief Initiative

MIGA: Multilateral Investment Guarantee Agency

MINEFI: Cameroon’s Ministry Of Economy And Finance

NOFIZ: National Office for Industrial Free Zones

OAPI: African Intellectual Property Protection Board

OATUU: Organization of African Trade Union Unity

OECD: Organization for Economic Co-operation and Development

OHADA: Organization For The Harmonization Of Business Law In Africa

ONEL: former Cameroonian National Elections Supervisory Board

ONEP: Morocco’s National Water Company

ONPC: National Office of Ports of Cameroon

PPP: Purchasing Power Parity

PRSP: Poverty Reduction Strategy Paper

RDPC: Cameroon People’s Democratic Rally

RES: Renewable Energy Supplies

SAP: Structural Adjustment Programme

SGS: National Product Control Agency

SNH: National Hydrocarbons Corporation

SNI: Cameroon’s National Investment Company

SOCINADA: Cameroon’s National Agency for the Protection of Intellectual Property

SONARA: Cameroon’s National Refining Company

TEC: Common External Tariff

TVET: Technical and Vocational Education and Training

UBAC: Union Bank of Africa/Cameroon

UDEAC: Customs and Economic Union of Central Africa

USD: United States Dollar

USLC: Confederation of Free Cameroonian Trade Unions

VAT: Value Added Tax

XAF: ISO currency code for the Cameroonian currency

 

 

 

 

 

 

 

 

ACKNOWLEDGEMENTS

 

I’d like to thank all the people who have contributed to the building up of this project particularly my family, who handled the questionnaire and interviews; the respondents, who gave of their time and ideas and finally to my lecturers without whom my research skills and knowledge wont have been this high.

 

I’d also like to specially thank Richard Nnamdi, Barnabas Maganja and Nadine Mawe who kind of mentored me throughout my graduate studies.

 

Finally I would like to thank the Almighty Jehovah who has always, is and will always be by my side.

 

 

 

 

 

 

 

 

 

 

 

ABSTRACT

Cameroon is the gateway to Central Africa and the Gulf of Guinea. It shares borders with 6 different countries, Nigeria, Chad, Central Africa, Congo, Gabon and Equatorial Guinea. In addition to this Cameroon is a bilingual country (French & English) this facilitates business transactions between English speaking Nigeria in the West and French speaking Chad in the North. For a quarter-century following independence, Cameroon was one of the most prosperous countries in Africa.

The drop in commodity prices for its principal exports (petroleum, cocoa, coffee, and cotton) in the mid-1980s, combined with an overvalued currency and economic mismanagement, led to a decade-long recession. Real per capita GDP fell by more than 60% from 1986 to 1994. The current account and fiscal deficits widened and foreign debt grew. Yet because of its oil reserves and favorable agricultural conditions, Cameroon still has one of the best-endowed primary commodity economies in sub-Saharan Africa.

Key Notes: Local and Foreign Investments – Economic Development – Business Opportunities – IMF Involvement – Cameroonian Business Laws.

 

INTRODUCTION

I

 

nvestment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time. In contrast putting money into something with an expectation of gain without thorough analysis, without security of principal, and without security of return is speculation or gambling.

Cameroon's per-capita GDP (Purchasing power parity) was estimated as US$2,300 in 2008, one of the ten highest in sub-Saharan Africa. Major export markets include France, Italy, South Korea, Spain, and the United Kingdom. Cameroon has enjoyed a decade of strong economic performance, with GDP growing at an average of 4 percent per year. During the 2004–2008 period, public debt was reduced from over 60 percent of GDP to 10 percent and official reserves quadrupled to over USD 3 billion. Cameroon is part of the Bank of Central African States (of which it is the dominant economy), the Customs and Economic Union of Central Africa (UDEAC) and the Organization for the Harmonization of Business Law in Africa (OHADA).

Its currency is the CFA franc. Red tape, high taxes, and endemic corruption have impeded growth of the private sector. Unemployment was estimated at 30% in 2001, and about a third of the population was living below the international poverty threshold of US$1.25 a day in 2009. Since the late 1980s, Cameroon has been following programmes advocated by the World Bank and International Monetary Fund (IMF) to reduce poverty, privatize industries, and increase economic growth. Tourism is a growing sector, particularly in the coastal area, around Mount Cameroon, and in the north.

Cameroon's natural resources are very well suited to agriculture and arboriculture. An estimated 70% of the population farms, and agriculture comprised an estimated 19.8% of GDP in 2009. Most agriculture is done at the subsistence scale by local farmers using simple tools. They sell their surplus produce, and some maintain separate fields for commercial use. Urban centres are particularly reliant on peasant agriculture for their foodstuffs. Soils and climate on the coast encourage extensive commercial cultivation of bananas, cocoa, oil palms, rubber, and tea. Inland on the South Cameroon Plateau, cash crops include coffee, sugar, and tobacco. Coffee is a major cash crop in the western highlands, and in the north, natural conditions favors crops such as cotton, groundnuts, and rice. Reliance on agricultural exports makes Cameroon vulnerable to shifts in their prices.

Livestock are raised throughout the country. Fishing employs some 5,000 people and provides 20,000 tons of seafood each year. Bush meat, long a staple food for rural Cameroonians, is today a delicacy in the country's urban centres. The commercial bush meat trade has now surpassed deforestation as the main threat to wildlife in Cameroon.

The southern rainforest has vast timber reserves, estimated to cover 37% of Cameroon's total land area. However, large areas of the forest are difficult to reach. Logging, largely handled by foreign-owned firms, provides the government US$60 million a year, and laws mandate the safe and sustainable exploitation of timber. Nevertheless, in practice, the industry is one of the least regulated in Cameroon.

Factory-based industry accounted for an estimated 29.7% of GDP in 2009. More than 75% of Cameroon's industrial strength is located in Douala and Bonabéri. Cameroon possesses substantial mineral resources, but these are not extensively mined. Petroleum exploitation has fallen since 1985, but this is still a substantial sector such that dips in prices have a strong effect on the economy. Rapids and waterfalls obstruct the southern rivers, but these sites offer opportunities for hydroelectric development and supply most of Cameroon's energy. The Sanaga River powers the largest hydroelectric station, located at Edéa. The rest of Cameroon's energy comes from oil-powered thermal engines. Much of the country remains without reliable power supplies.

Transport in Cameroon is often difficult. Except for the several relatively good toll roads which connect major cities (all of them one-lane) roads are poorly maintained and subject to inclement weather, since only 10% of the roadways are tarred. Roadblocks often serve little other purpose than to allow police and gendarmes to collect bribes from travelers. Road banditry has long hampered transport along the eastern and western borders, and since 2005, the problem has intensified in the east as the Central African Republic has further destabilized.

Intercity bus services run by multiple private companies connect all major cities. Although intercity buses rarely depart on schedule but rather wait until all the tickets are sold. They are the most popular mean of transportation followed by the rail service Camrail. Rail service runs from Kumba in the west to Bélabo in the east and north to Ngaoundéré.

International airports are located in Douala and Yaoundé. The airport at Bamenda is now closed. The Wouri estuary provides a harbor for Douala, the country's principal seaport. In the north, the Bénoué River is seasonally navigable from Garoua across into Nigeria.

Although press freedoms have improved since the first decade of the 21st century, the press is corrupt and beholden to special interests and political groups. Newspapers routinely self-censor to avoid government reprisals. The major radio and television stations are state-run and other communications, such as land-based telephones and telegraphs, are largely under government control. However, cell phone networks and Internet providers have increased dramatically since the first decade of the 21st century and are largely unregulated.

This project is an attempt to prove that there are great investment opportunities in sub-saharan Africa and in Cameroon in particular. In order to achieve this noble goal, the analysis starts with a research scheme (named Introduction) which details the research methods employed, the objectives, purposes of the research, the hypothesis, the theoretical framework, etc so that the readers will be aware of how and where the information contained in this report was gathered. Then I moved to present briefly the Republic of Cameroon from an economic perspective; later in the analysis there is a lengthy discussion about Foreign Direct Investments in Cameroon. Next, I developed some particular sectors which are of interest to me to show how profitable it could be to invest in any of them then finally there is the conclusion and some recommendations.

 

 

 

 

CHAPTER 1: RESEARCH METHODS

1.1.Background of the Study

The economy picked up in 2007 despite the continued decline in oil production, which has been undermining growth since 2005.Growth was estimated at 3.6 per cent in 2007, as against 3.2 per cent in 2006. This trend should continue in 2008 and 2009, with 4.8 and 4.6 per cent growth projected respectively. Public investment should be the main driver, fuelled by substantial resources liberated through debt reduction. The implementation of fiscal reform in 2008 should reduce the country’s dependence on diminishing oil revenues.

In 2007, large-scale structural reforms continued, including privatization, a decentralization programme and efforts to improve governance. A preliminary agreement was also signed with the European Union (EU), aimed at liberalizing trade.

In the social sphere, access to basic services – sanitation and drinking water, health, education and roads – has improved. Politically, the electoral system has been improved and efforts have been made regarding human rights. The fight against corruption, however, has produced mixed results, despite measures taken to encourage transparency.

This report won’t have been written if not for the support of my relatives who are businessmen and businesswomen back in Cameroon. They willingly made sure that strategic respondents fill out the questionnaire and give some spontaneous opinions on what will be the best sector to invest in within the borders of the country and the level of investment.

1.2.Research Points

1.2.1. Research Question: Does Cameroon Offer Good Investment Opportunities? Give some Examples.

1.2.2. Research Objectives:

-Prove that Cameroon is a good country to invest in despite the numerous negative reports.

-Give some vital economic and social data about the country that futur investors should consider.

-Suggest some low-risk investment opportunities.

1.3.Rationale

I chose to work on this topic primarily because I’m from a family of experienced merchants. My relatives have always been in the trade business and are always looking for better business opportunities; I’ll ultimately go back to the family business and working on this paper has already provided me with ideas and methods to outperform our competitors.

Secondly, I wanted to clear the reputation of my country and present it as what it is: a good destination for investments to anybody who is looking for a place to invest. Cameroon has a lot of potential and welcomes foreign investments.

1.4.Hypothesis

In answer to my research question I am postulating the following hypothesis: “It is Easier to do Business and Make Good Money in Cameroon than Otherwise suggested by many Foreign Reports”.

1.5.Literature Review

In order to provide a full and detailed analysis on the ways in investing in Cameroon I will need to look for the facts and rely only on the opinions of individuals who are prominent on the issue of investing in the third world. Following is some key texts and how they fit into my research. The literature being used in my research project is ever growing in order to investigate other areas that might be included within the project.

Financial writer David Mataen has published a book that explores the growing investment opportunities in emerging Africa. The book “Africa — The Ultimate Frontier Market: A guide to the business and investment opportunities in emerging Africa” is an investor’s guide to the transformations that have occurred in the African business landscape in the last 60 years and the key areas of interest for the future. 

“Africa — The Ultimate Frontier Market” provides a detailed but lucid look at the changing trends in social life, government and business since the 1960s. It explains the background to consumer market developments and why they have occurred, the enablers that have been laid down within Africa that ready it for business expansion, and the sectors where there is opportunity for investment and growth. By following the long-term developments described by Mataen, investors will understand the pace of change in Africa in the past and gain an appreciation for how its business and economy will progress in the future. At this time of great opportunity, this book is an essential addition to anyone’s investment library.

To clarify the vision of some foreign nations investing in Cameroon, I’ve read the book The new presence of China in Africa.

This book, which is supported by the EDC2020 project (7th Research Framework Programme "Socio-economic sciences and humanities" of the European Commission), describes China's growing range of activities in Africa, especially in the sub-Saharan region. The three most important instruments China has at its disposal in Africa are development aid, investments and trade policy. The Chinese government, which believes the Western development aid model has failed, is looking for new forms of aid and development in Africa. China's economic success can partly be ascribed to the huge availability of cheap labor, which is primarily employed in export-oriented industries.

China’s economic and political presence in Africa has expanded drastically over the past decade, especially in the sub-Saharan region. Convinced that Western attempts at providing aid to Africa have failed, Chinese officials have sought new forms of aid and invested billions to push further development in Africa. But some in the United States and around the word fear that China’s interest in sub-Saharan Africa could threaten previous efforts to protect human rights and to promote democracy in the region. The New Presence of China in Africa takes on this controversial issue, offering an overview of the Chinese model and evaluating whether it might serve as an example for future Western endeavors.

In an attempt to describe FDI in Sub-Saharan Africa and Cameroon in particular, inputs from the book Foreign Direct Investment in Sub-Saharan Africa: Origins, Targets, Impact and Potential, from S. Ibi Ajayi, will be mentioned.

The general objective of the work in this volume is to identify the determinants of FDI in Africa, which of them have worked for which countries, and to specify what African countries need to do in order to integrate into the global financial markets. Using appropriate theoretical and analytical frameworks, the studies in the volume assess and analyze the various factors influencing the volume of FDI in African countries, breaking it down along the various components of FDI and analyzing the various determinants. Specifically, the studies in this volume analyze the following issues, among others:

1) The determination of FDI in general and specifically to Africa including emphasizing the determinants of different types of FDI.

2) The institutional structures and others that are necessary for countries to be attractive to different types of FDI.

3) The experience of developing countries (particularly in Asia and emerging economies) that have been successful in attracting FDI and the lessons Africa can learn from them."

Many more reference materials were used for the completion of this paper but the above mentioned influenced me most.

1.6.Research Methodology

The exploratory research design served as the guiding framework for the execution of the entire research project. Exploratory research normally involves open-ended study, unguided by theory and intended to provide a new body of empirical knowledge from which theories might be postulated.[1] As such, the case study research approach provided the most ideal methodology since the study calls for the need to conduct a holistic, in-depth investigation of the topic presented.[2] This contributed to the knowledge of individual, group, organizational, social, political, and related phenomena being studied.

1.6.1.Overview of Approach

My research will mainly be a basic research, one in which I’ll gather information from existing sources to what areas could be the most profitable for investment in Cameroon; considering the extensive amount of research I’ll have to make and because there are conflicting interpretations from famous researchers about the genesis and solutions to financial shocks, my work can also be classified as an exploratory research. Due to the need to filter out the vast amount of personal opinion on the subject, I will be mostly relying on academic sources, books and to some extent websites owned by financial and banking institutions as well as governmental and supra-governmental websites. I will need to be careful of false information so many cross checks between sources will be necessary. A literature study will be undertaken to explain the theory, and address criticism to the theory. This whole paper focuses on Cameroon and there is very limited reviewed/approved academic literature on the topic of investment for the country. For this reason my research should be both qualitative and quantitative to address the most important issues.

1.6.2.Data Collection

Because of the economic side to the research project, both qualitative and quantitative research will be used. In analyzing the various investment options, the proposed study will review and include, where applicable, primary data related to the crisis, and a questionnaires has been sent to Cameroon so that key individuals who deal with investment matters on a daily basis can bring in their inputs. The topic is too sensitive and we won’t get any valuable information from people who are not well acquainted with the issue at hand; this strict selection criterion should provide us with quite accurate data for the research.

We have mainly used a questionnaire to complete this work, to gather information on what people’s views are about my topic; the ultimate goal was to have the respondents give an answer to the research question.

1.6.3.Data Analysis

Ideally, it will be better to study is the entire population. However, it is impossible or unfeasible to do this and therefore one must settle for a sample. Sample is a portion of elements taken from a population[3], which is considered to be representative of the population.

In order to collect primary data the questionnaire survey technique will be used. For the purpose of this study random probability sampling is selected. Sample sizes larger than 30 and less than 500 are appropriate for most research.[4] Having these limitations in mind, the sample size will consist of about 100 respondents, most of which are businesspeople. Interview survey technique will also be used and the questionnaire respondents are also the interviewees.

1.6.4.Validity & Reliability

Reliability and validity are the two major criteria for evaluating a measurement tool: “Reliability has to do with the accuracy and precision of a measurement; Validity refers to the extent to which a test measures what actually wish to measure”.[5]

Since a methodology is always employed in the service of a research question, validation of the inferences made on the basis of data from one analytic approach demands the use of multiple sources of information through validation study built into the design. However, content analysis itself is only valid and meaningful to the extent that the results are related to other measures which necessitated the use of triangulation method.

The triangulation research strategy in which the use of multiple sources to enhance the rigor of the research helped in the in-depth case analysis of this paper. Moreover, the interdepartmental ranking of the websites supported the researcher’s aim to present accurate and truthful findings following the principle of triangulation.

1.6.5.Interpretation

The study follows a deductive logic in describing the facts. By applying the selected theory to explain the situation in the country, economic characteristics will serve as empirical facts supporting the validity of the theory. The study will make use of a few selected historical occurrences in discussing and applying the theory to the topic.

 

 

 

 

 

CHAPTER 2: CAMEROON’S ECONOMIC PROFILE

 

2.1. Recent Economic Developments

Economic growth, which stood at 3.2 per cent in 2006, is estimated at 3.6 per cent in 2007 and is projected to reach 4.8 and 4.6 per cent in 2008 and 2009. Some of the most dynamic sectors of the Cameroonian economy are agriculture, forestry, telecommunications and construction.

Agriculture and forestry, which account for 20.4 per cent of GDP, grew by 3 per cent in 2006. The sector should continue to expand, with 3.8 per cent growth forecast in 2007 and 4.5 per cent in 2008. Activity is primarily driven by the forestry and food crops subsectors, which have benefited from extension programmes and the opening of cross-border roads. Log production, up 13 per cent in 2006, increased by 7 per cent in 2007 and should rise by 5 per cent in 2008. Fourteen new forestry management units were opened in 2007, and four main priorities for the sector were identified: forestry management, product upgrading, promotion of new species and local processing of timber.

Food crop production grew by approximately 4 per cent in 2007 and should increase by 4.5 per cent in 2008 if weather conditions are favorable. This level of growth is below the potential of the sector, which is hampered by four major structural constraints: lack of financing, isolation of some producing areas, lack of extension services and the low level of fertilizer use. Several projects and programmes aimed at boosting production are being undertaken with financing from the Heavily Indebted Poor Countries (HIPC) initiative: two national programmes, one supporting the maize sector and the other aimed at developing production of roots and tubers, as well as two projects to revive rice and plantain production.

In 2007, performance of cash crops (which account for 1.4 per cent of GDP) was highly variable. Cocoa production increased by 4.5 per cent, as new plantations reached maturity and world prices recovered. Coffee production stagnated, however, with farmers abandoning it in favor of short-cycle crops, which they regard as offering a better return. Rubber production rose by an estimated 6.9 per cent in 2007. Weather conditions were good and world rubber prices rose by 43.2 per cent in 2007 to XAF 986.3 (CFA franc BEAC) per kilogram, but Cameroon does not benefit fully from this favorable situation because of its ageing plantations and limited supply. Cotton output fell substantially in 2007, by an estimated 21.2 per cent, owing to the fall in world prices, which has reduced the earnings of cotton producers and led them to reduce the area under cultivation. Banana production has also been in decline since 2004, falling by 6.2 per cent in 2007. Some growers have switched to pineapples owing to uncertainty over the opening of the European market to “dollar bananas”, produced by three US multinationals having a dominant 60 per cent share of the world market.

 

With regard to livestock farming, in 2007 the national herd comprised approximately 5.6 million catt


© Copyright 2017 marcngaha. All rights reserved.

Add Your Comments: