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Cameroon Economics

Because of its modest oil resources and favorable agricultural conditions, Cameroon has one of the best-endowed primary commodity economies in sub-Saharan Africa. Offshore oil deposits exploited since the early 1970s have made Cameroon one of the most prosperous nations in tropical Africa. Oil refining and the production of crude oil products lead the nation's industries.


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--oil, 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 gross domestic product (GDP) fell by more than 60% from 1986 to 1994. The current account and fiscal deficits widened, and foreign debt grew.

Still, it faces many of the serious problems facing other underdeveloped countries, such as a top-heavy civil service and a generally unfavorable 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.

Cameroon has for decades relied on agriculture and timber for its export earnings, including extensive cocoa and rubber plantations in the south of the country. Petroleum has been exported from the 1970s and now accounts for 49% of export earnings.

In the 1980s, it had one of the strongest economies in Africa, but a drop in world market prices for its main exports created an economic downturn and the World Bank reported that this had translated into a 60 percent decline in foreign trade.

This economic crisis led to an accumulation of public debt, the deterioration of living standards and a rise in poverty. Although the economy has recovered, social indicators have been slow to climb, and 40 percent of the population lives below the national poverty line.

According to the World Bank, economic growth in the non-oil sector has remained strong, averaging 4.9 percent per year and inflation has remained stable.

The government embarked upon a series of economic reform programs supported by the World Bank and International Monetary Fund (IMF) beginning in the late 1980s. Many of these measures have been painful; the government slashed civil service salaries by 65% in 1993. The CFA franc--the common currency of Cameroon and 13 other African states--was devalued by 50% in January 1994. The government failed to meet the conditions of the first four IMF programs.

International oil and cocoa prices have a significant impact on the economy./usa

In December 2000, the IMF approved a 3-year Enhanced Structural Adjustment Facility (ESAF) program worth $133.7 million to reduce poverty and improve social services. The successful completion of the program will allow Cameroon to receive $2 billion in debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.

The IMF is pressing for more reforms, including increased budget transparency, privatization, and poverty reduction programs.

Pursuant to the initiative, the IMF is requiring the Cameroonian Government to enhance its macroeconomic planning and financial accountability; continue efforts to privatize the remaining non-financial parastatal enterprises; increase price competition in the banking sector; improve the judicial system; and implement good governance practices.

In January 2001, the Paris Club agreed to reduce Cameroon's debt of $1.3 billion by $900 million; debt relief now totals $1.26 billion.

In 2003, Cameroon adopted a comprehensive poverty reduction strategy and in 2006 reached the completion point under the enhanced Highly Indebted Poor Countries Initiative, which made Cameroon eligible to receive debt relief worth over US$1 billion from the International Monetary Fund.

In late August 2003, the Board of Directors of both the IMF and World Bank approved Cameroon's Poverty Reduction Strategy Paper (PRSP) with high marks. The paper integrated the main points of the Millennium Development Goal, which outlined Cameroon's priorities in alleviating poverty and undertaking strong macroeconomic commitments in the short and long term. By late summer 2004 Cameroon had met most of its PRGF targets.

A lackluster performance in the fiscal arena, however, led the country off track and resulted in Cameroon not achieving the HIPC completion point. Negotiations are currently underway to create a new program so Cameroon can eventually qualify for HIPC debt forgiveness.

The privatization program has lagged because of legal and political obstacles; difficult negotiations with the government on issues such as sale price, financial disclosure, tax arrears, and overlapping debts; and in some cases, a lack of willing buyers.

The most noticeable recent problem involves the privatization of CamAir, the government-owned airline. In the response to a public request for proposals, a willing buyer which met the published criteria was in fact available, but the government decided it wanted to adopt a totally different approach, and selected another firm which did not meet the original specifications.

This new proposal, if ultimately adopted, might well result in better service and more revenue, but the procedures for changing the requested proposals were anything but transparent.

France is Cameroon's main trading partner and source of private investment and foreign aid. Cameroon has a bilateral investment treaty with the United States. In addition to existing investment in the oil sector, U.S. investment in Cameroon, estimated at over $1 million, is progressively growing due primarily to both construction of the Chad-Cameroon pipeline and cobalt and nickel mining.

Before the advent of the petroleum business, agriculture was the country's economic mainstay, and it still contributes nearly a third of the country's gross domestic product. The north, where cattle raising is the chief occupation, is the least economically developed part of Cameroon, whose regional disparities pose a major problem for the government.

Cameroon remains one of the world's leading cocoa producers; coffee, bananas, palm products, tobacco, peanuts, and rubber, all grown mainly on plantations, are also commercially important. Cotton production is centered in the Bénoué River valley.

In spite of this diverse agricultural production, only a small percentage of the country's land is cultivated. The principal subsistence crops are bananas, cassava, yams, plantains, peanuts, millet, and sorghum. Food production in Cameroon meets domestic demand despite the occurrence of periodic droughts.

Fishing and forestry follow oil and agriculture as leading occupations. Cameroon's mineral resources include bauxite and iron ore. The Edéa Dam on the Sanaga River provides the bulk of the country's electricity and powers a large aluminum smelter; all the finished aluminum is exported. Food processing, sawmilling, and the manufacture of light consumer goods and textiles are important industries. In the 1980s the nation's roads and railways were improved, allowing further industrialization.

Cameroon's exports consist mainly of petroleum, agricultural, and forest products. France is the major trading partner, followed by other members of the European Union, African countries, and the United States. The country is a member of the Commonwealth and the Franc Zone.

Cameroon & the Millennium Development Goals (MDGs)

Whilst Cameroon is committed to meeting the eight MDG targets, progress has been slow. However, encouragingly, the most recent survey from 2003 showed that the percentage of Cameroonians living below the poverty line has dropped from 50.5 in 1996 to 40.2 in 2001.

Progress has been made against MDGs in education, with the combined enrolment rate for primary, secondary and tertiary schools increasing to 55% (2002/3).

Between 1990-2000 HIV/AIDS prevalence in Cameroon rose from 2% to 11%. In response to this, Government support increased from 53,000 in 1988 to 1.6 million in 2000.

Huge challenges evidently remain. Infant mortality rates have increased from 85 per 1000 in 1990 to 95 per 1000 in 2003 and extreme poverty is evident in rural and isolated provinces. The adoption of the Poverty Reduction Strategy Paper prepared by the Government in 2003 is therefore crucial to progress in tackling these challenges.

Development

Cameroon faces significant development challenges. 50% of the population live on $2 a day or less and life expectancy at birth is 46. According to the 2005 UNDP Human Development Index, Cameroon ranks 148 out of 177 countries.

Crop failure, especially in the north, often leads to food shortages. The major urban centres, especially Douala, suffer from serious problems of overcrowding and sanitation. Cameroon is a major recipient of donor funds, from both multilateral and bilateral donors, of which the biggest is France.

The UK has a long standing bilateral development programme in the forestry sector, and contributes to Cameroon’s development through the European Union and UN agencies. Details of further UK funded projects can be found on the High Commission website, the link to which is below.

Development indicators

Cameroon is ranked 144 out of 177 countries on the UN Development Programme (UNDP) Human Development Index.

According to the UNDP’s Human Development Report, life expectancy at birth in Cameroon is 45.7 years and the probability of not surviving past the age of 40 is 43.9 percent.

The country’s literacy rate stands at 67.9 percent and the combined primary, secondary and tertiary enrolment ratio is 62.3 percent.

Access to an improved water source is limited to 34 percent of the population and 18 percent of children under five are underweight.

The World Bank noted that income inequities persist across the country. It found that four out of 10 households where the head of family has no education live in poverty compared to 0.5 out of 10 households where the head of family is college-educated.

The incidence of poverty is highest for households headed by farmers and agricultural wage earners, and households in the rural parts of West Province are twice as likely to be poor than households in urban areas.

Economic overview

  • GDP (purchasing power parity): $39.37 billion (2007 est.)
  • GDP (official exchange rate): $20.65 billion (2007 est.)
  • GDP - real growth rate: 3.3% (2007 est.)
  • GDP - per capita (PPP): $2,100 (2007 est.)
  • GDP - composition by sector:
    • Agriculture: 43.9%,.
    • Industry: 15.8%
  • Services: 40.3% (2007 est.)
  • Labor force: 6.674 million (2007 est.)
  • Labor force - by occupation:
    • Agriculture: 70%
    • Industry: 13%
  • Unemployment rate: 30% (2001 est.)
  • Population below poverty line: 48% (2000 est.)
  • Household income or consumption by percentage share:
    • Lowest 10%: 2.3%
    • Highest 10%: 35.4% (2001)
  • Distribution of family income - Gini index: 44.6 (2001)
  • Inflation rate (consumer prices): 0.9% (2007 est.)
  • Investment (gross fixed): 17.3% of GDP (2007 est.)
  • Budget: Revenues: $4.178 billion, expenditures: $3.297 billion (2007 est.)
  • Public debt: 15.4% of GDP (2007 est.)
  • Agriculture - products: Coffee, cocoa, cotton, rubber, bananas, oilseed, grains, root starches; livestock; timber
  • Industries: Petroleum production and refining, aluminum production, food processing, light consumer goods, textiles, lumber, ship repair
  • Major Industries: Crude Oil, timber, cocoa, coffee, aluminium, rubber
  • Industrial production growth rate: 3.5% (2007 est.)
  • Electricity - production: 4.09 billion kWh (2005)
  • Electricity - consumption: 3.435 billion kWh (2005)
  • Oil - production: 82,670 bbl/day (2005 est.)
  • Oil - consumption: 24,200 bbl/day (2005 est.)
  • Oil - exports: 107,400 bbl/day (2004)
  • Oil - imports: 63,710 bbl/day (2004)
  • Oil - proved reserves: 95 million bbl (2007 est.)
  • Natural gas - production: 0 cu m (2005 est.)
  • Natural gas - imports: 0 cu m (2005)
  • Natural gas - proved reserves: 105.9 billion cu m (1 January 2006 est.)
  • Current account balance: $85 million (2007 est.)
  • Exports: $3.82 billion f.o.b. (2007 est.)
  • Exports - commodities: Crude oil and petroleum products, lumber, cocoa beans, aluminum, coffee, cotton
  • Exports - partners: Spain 21.4%, Italy 15.4%, France 11.6%, South Korea 7.3%, Netherlands 7.2%, US 5.7%, Belgium 4.2% (2006)
  • Imports: $3.714 billion f.o.b. (2007 est.)
  • Imports - commodities: Machinery, electrical equipment, transport equipment, fuel, food
  • Imports - partners: France 23.6%, Nigeria 13.2%, China 7.2%, Belgium 6.1%, US 4.5% (2006)
  • Economic aid - recipient: $413.8 million (2005)
  • Reserves of foreign exchange and gold: $2.934 billion (31 December 2007 est.)
  • Debt - external: $2.555 billion (31 December 2007 est.)
  • Market value of publicly traded shares: $NA
  • Currency (code): Communaute Financiere Africaine franc (XAF); note - responsible authority is the Bank of the Central African States
  • Exchange rates: Communaute Financiere Africaine francs (XAF) per US dollar - 493.51 (2007), 522.59 (2006), 527.47 (2005), 528.29 (2004), 581.2 (2003).

 

Last Updated on Friday 13th November 2009