Investment Climate in Cameroon
According to the World Bank Cameroon’s economic activity slowed in 2016 resulting from the maturity of the main oil fields, and to the avian flu epidemic that has damaged the local poultry industry, particularly in the West province which represents 80% of production. However, continued implementation of the government’s ambitious infrastructure plan and interventions to boost the agriculture and forestry sectors have significantly contributed to maintain strong growth in public works and construction and services.. GDP growth is estimated to reach 5.6% at the end December 2016, 0.2 point below its level of 2015. This outcome is due to slower growth in oil production (+3% in 2016 against 37% in 2015). Inflation rose to 1.6% at the end June 2016, largely based on the strong 7.4% increase in prices for tobacco and alcoholic drinks and 4.9% increase of services, restaurants and hotels, as a result of the increased tax rate on alcohol in the 2015 finance act. Real GDP growth is expected to average over 4% in 2017-21, supported by investments in power and transport infrastructure and rising oil production, which will partially offset the negative effects of weak global oil prices.
Why invest in Cameroon?
- A liberal political system, multiparty democratic and guarantees basic freedom for all;
- A transparent legal system that guarantees freedom to invest and the protection of investors, ensuring free transfer of income from invested capital;
- A dynamic and skilled labour force and a very liberal and flexible labour code which permits negotiations between the employers and employees;
- Availability of numerous natural resources ;
- An ambitious government move towards economic reforms, aiming at streamlining fiscal and customs procedures;
- Availability of an important electricity network and water supply;
- Modern means of communication include roads , railway and airports;
Cameroon’s peace and stability under multi party democracy and highly diverse population has enabled it to create a conducive investment climate. However, over the past three years new threats have emerged in the Northern part of the country with the activities of the radical, militant Islamist group Boko Haram from Nigeria spilling over into the country. An estimated 7,500 Cameroonians have been displaced internally and Cameroon is also host to an estimated 45,000 Nigerian refugees in the North and 131,000 refugees from CAR in the East.
Cameroon’s population is estimated at 23.3 million, up substantially from the 2002 census population of 17.4 million. By the year 2020 it is estimated that the population will be 26.4 million. The median age in Cameroon is 18.6 years. This makes Cameroon the 54th most populous country in the world. The country is sparsely populated with just 40 people per square kilometre (103/square mile).
58% of the population of Cameroon live in urban areas. The urban population is increasing 3.3% per year.
Doing business in Cameroon
The highlights of World Bank score of doing business in Cameroon is summarised as follows;
|Topics||World Bank 2017 Rank||World Bank 2016 Rank||Change in Rank|
|Starting a Business||149||140||9|
|Dealing with Construction Permits||141||145||4|
|Protecting Minority Investors||137||136||1|
|Trading across Borders||186||186||–|
The country made some improvements in a number of areas.
Cameroon’s Standard & Poor’s credit rating stands at B with stable outlook. Moody’s credit rating for Cameroon was last set at B2 with stable outlook. Fitch’s credit rating for Cameroon was last reported at B with negative outlook.
The unit of currency used in Cameroon is the Communauté Financière Africaine (CFA) franc. It is issued by the regional central bank, the Bank of Central African States (BEAC in French), and is shared with the other members of the Central African Economic and Monetary Community. 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. Foreign investors can remit through convertible and negotiable instruments through legal channels recognized by the regional central bank. Any incidence of currency manipulation tactics is handled by the regional central bank.
The Cameroon legal system is a combination of sometimes parallel English and French laws and some Cameroonian customary laws. On corporate law, Cameroon is a signatory to the “Organization for the Harmonization of Business Law in Africa” (OHADA), a system of business laws and implementing institutions adopted by seventeen West and Central African nations. The starting point for most legal disputes are the first instance tribunals, which have standing to hear intellectual property claims, followed by the Tribunal of Grand Instance on appeals.
Additional alternative dispute resolution may involve mediation and negotiations, also possibly through third-party binding arbitration. The OHADA system serves both as domestic and primary reference legislation. However, the Groupement Interpatronal du Cameroon (GICAM), the country’s most powerful business lobbying group, has an Arbitration Centre (Centre d’arbitrage du Groupement interpatronal du Cameroun), which is based in Douala.
Key development challenges
- High unemployment rates between 40%and 50%
- Lack of skilled manpower
- Deforestation due to rampant cutting of trees
- Lack of clean drinking water
- Weak governance, which affects the country’s development and ability to attract investments.
Cameroon is the 145 least corrupt nation out of 175 countries, according to the 2016 Corruption Perceptions Index reported by Transparency International. In Cameroon corruption is punishable under sections 134 and 134 (a) of the Pena1 code of Cameroon
Cameroon has been secure for over 50 years however a potential source of insecurity is the uncertainty about leadership succession as President Biya has ruled the country uninterrupted for 34 years. Presidential elections are scheduled for 2018. There are also deepening social tensions stemming from the country’s widening generational gap, as Cameroonians under 25 years making up to 50% of the population feel excluded from the socio-economic and political process. These internal risks are exacerbated by the spill-over crisis from Central African Republic and Nigeria. The World Bank notes that this continued influx is putting pressure on natural resources, land, water, housing and health facilities.
Unemployment and skilled labour
In Cameroon, over 50% of the population is under 25. The official unemployment is around 4%, although youth unemployment may be as much as 75%. The majority of youth who are employed are under-employed in the informal sector. Unskilled labor is prevalent in the agricultural and service sector, and under-employment is prevalent in manufacturing, commerce, technician or technical trades, and mid-management jobs. A 2010 Survey of Employment and the Informal Sector (EESI) by the National Institute of Statistics revealed an unemployment rate of 3.8% based on International Labor Organization (ILO) standards. The study identified underemployment as a real challenge for employment policy makers in Cameroon, with rates of 12.3% and 63.7%, respectively for visible and invisible underemployment.
There are shortages of technical trade skills in every sector of the economy. Truck and automotive maintenance is widely practiced in the informal sector. Rudimentary or artisanal agriculture, fishing, and textile manufacture economic sectors are still in need of significant development, and a lack of skilled workers tends to be the norm across the country. The government of Cameroon does not require companies to hire nationals. However, foreign nationals are required to obtain work permits prior to formal employment. While foreign nationals are automatically issued work permits for companies of the industrial free zones regime, their number may not exceed 20% of the total work force of a company after the fifth year of operation in Cameroon if benefiting from the Industrial Free Zone (IFZ) regime.
Attitude to Foreign Direct Investment
The government of Cameroon is seeking foreign direct investment to develop vital economic infrastructure. The government estimates that FDI represented as much as 18.5% of the GDP in 2015. According to Cameroon’s ministry of economy, in 2015, incoming FDI was mainly directed to the oil sector, manufacturing, the financial sector and transport. The national policy on FDI is outlined in a country strategy paper “Growth and Employment Strategy Paper” or GESP (2009), in which Cameroon targets an FDI level of 25% of GDP. In another strategy paper: “Vision 2035”, which charts the road map of Cameroon to economic emergence by 2035, the government, seeks FDIs for major industrialization projects. In this context, Cameroon passed a new investment code in 2012, which has provisions to attract and protect foreign direct investment. In December 2015, the government also announced that the 2016 finance law will contain additional tax provisions to attract investment.
The Cameroon Investment Promotion Agency (CIPA) is a State-owned institution in charge of the promotion of private investments. The CIPA’s mission, in collaboration with ministries, agencies and private companies, is to contribute to the development and implementation of government policy in the field of investment promotion in Cameroon. The CIPA offers assistance and guidance to foreign and domestic investors, at all stages involved in setting up their investment projects. It is committed to connecting investors with relevant institutions, relevant technical services and to simplify administrative procedures for activities required by the investment code.
Restrictions on Foreign investment
Cameroon does not have laws that prohibit, limit or condition foreign investment in specific economic sectors. However, the investment code has a number of general minimum requirements, which qualify the investor for some benefits. The four criteria, though not obligatory, required to benefit from the code are (i) the number of local staff employed, (ii) the percentage of exports, (iii) the use of natural resources and (iv) the contribution to value added.
The laws of Cameroon do not discriminate against foreign investors. Apart from basic standard immigration issues such as the residence visa, foreign entrepreneurs and investors are subject to the same rules and regulations as nationals. The government of Cameroon does not have statutory, de facto or indirect restrictions on foreign investors. Similarly, Cameroon laws do not impose outright prohibition on investment, equity caps, mandatory domestic joint venture partner, licensing restrictions, mandatory Intellectual Property (IP)/technology transfer requirements on foreign investors and entrepreneurs. However, internal dysfunctions and a week legal system can create practical obstructions. In strategic areas such as utilities (electricity and water) or oil and gas, the State often participates, through parastatals in oil and gas exploration ventures and electricity production and distribution. However, although the intervention of parastatals in some cases creates virtual state monopolies, they do not preclude the participation of the private sector.
Screening of FDI
The government of Cameroon examines incoming private foreign direct investment to ensure compliance with incentive requirements.
Intellectual Property (IP) Rights
Cameroon is a member of the African Intellectual Property Organization (OAPI –Organisation Africaine de la Propriété Intellectuelle), the main organization that ensures the protection of intellectual property rights in most African Francophone countries. OAPI is located in Yaounde. Individuals and companies can register their IP and brands directly at the OAPI.
The legal structure for IPR and corresponding enforcement mechanisms are weak in Cameroon. Infringement on IP rights is especially common in the media, pharmaceutical, software, and print industries.
No new laws have been enacted, and IPR protection remains uniformly weak. The country occasionally seizes and publicly burns counterfeit goods, but these actions are not systematically documented, and no cumulative data exists on the seizures. Imported counterfeit goods, such as fake luxury watches, clothes, copied movies in CDs are prevalent in the local market. Customs officers have authority to seize, store and then eventually destroy these counterfeit goods. National institutions are overwhelmed by the problem and have no influence on the countries of origin for problems.
Cameroon’s major National parks include Bénoué National Park, Bouba Njida National Park, Boumba Bek National Park, Campo Ma’an National Park, Faro National Park, Korup National Park, Lobéké National Park, Nki National Park and Waza National Park among others
Cameroon is endowed with significant natural resources, including oil and gas, high value timber species, minerals, and agricultural products such as coffee, cotton, cocoa, maize, and cassava.
Investment Climate in Cameroon has been summarized to include the following;
Investment Authority of Cameroon
Investment Guarantees in Cameroon
Investment Incentives in Cameroon
Investment Opportunities in Cameroon
Natural Resources of Cameroon
Development Partners of Cameroon
Double Taxation Treaties in Cameroon
Exports of Cameroon
International Trade Agreements with Cameroon
Trading partners of Cameroon
Douala Stock Exchange
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