The hub of Central Africa

With significant natural resources, the most-diversified economy in the region and a modernised infrastructure, Cameroon is the largest economy in the CEMAC region, and arguably the most-attractive country as a destination for investment. The government is keen to promote it as the hub for central Africa.

Dounia Ben Mohamed reports

In the 2016 rankings published by the American Frontier Strategy Group, Cameroon was considered to be the leading country in the Economic Community of Central African States (CEMAC) in terms of the resilience of its economy to external shocks. It stands out from its regional neighbours, still badly affected by economies that depend too heavily on oil revenues. While as an oil-producing country it has  been hit by the tumbling price of oil on world markets, its economy has proven to be sufficiently resilient to weather the storm.

This was emphasised by the managing director of the IMF, Christine Lagarde, during her first visit to Cameroon in January this year. Lagarde expressed

her satisfaction with the “very good results” achieved by the Cameroonian economy, thanks to its “good level of resilience

in the face of the double shock” represented by the fight against the Nigerian Islamic sect Boko Haram, active in the extreme north, and the decline in world oil prices. Oil revenues contribute 25% of the nation’s annual budget, an important percentage, but much lower than its neighbours Gabon or Nigeria.

The rationale behind the encouraging pronouncements by the IMF and other multilaterals has been a more diversified economy and one that has grown at almost 6% over the past two years. The country attained a growth rate of 5.6% in 2015 and it is expected to be 5.3% in 2016, given the current global economic climate.

 Standard & Poor’s recently maintained its ‘B’ rating for Cameroon, based on an “average real GDP growth of 5.7% per annum for 2015–2018.

In anticipation of a global slowdown and in light of its plan to diversify its economic base, in December 2014 the government launched an emergency three-year plan. It included an injection of capital into the economy through major projects and it addressed structural issues. Its objectives are to address and improve agricultural value chains, develop energy supplies and stimulate the construction industry.

Despite the fall in the price of oil and a potential drop in oil production, it believes other sectors of the economy will help to maintain growth. Among these are capital expenditure on roads and ports, transport and agriculture, as well as an expected increase in gas output. This makes Cameroon one of the more appealing countries, not only in the region but across other frontier markets.

Cameroon was ranked in the top 10 most attractive African countries in terms of investment by Nielsen’s African Prospects Indicators (APi).

Ranked in sixth place on the continent, apart from macroeconomic considerations, the country owes its position to the numerous business opportunities it offers and the potential of its distribution network. Cameroon was considered a sophisticated and diversified market by Nielsen.

In particular, its consumer and retail segment was viewed

as particularly encouraging. In Nielsen’s survey of traders, the respondents were optimistic, seeing an upsurge in retail growth as well as improving conditions to do business.

The only potential downside

risk is inflation. Annualised retail sales in the Nielsen survey showed that value sales had grown in the country, but not unit sales, which reflects the impact of rising prices.

Driving investment

The law governing incentives for private investment in Cameroon, implemented in April 2013, has had the desired effect. Cameroon benefited from debt relief in 2006 as part of a major initiative on behalf of the most indebted poor countries and the Multilateral Debt Relief Initiative (HIPC).

It has been able to start

using funds in an ambitious socio-economic development programme with the objective of achieving full emergence in 2035.

The programme includes increased public spending and the exploitation of the country’s abundant resources (agriculture, oil and mining).

The modernisation of its infrastructure continues apace with phase 2 of the deepwater port in Kribi, the construction of three dams and the second bridge over the Wouri.

However, arguably what gives the most cause for optimism is the number of new businesses that are seeing the light of day in the country.

Cameroon occupies the number one slot in the world in the 2016 Global Entrepreneurship rankings for the creation of businesses. With a rate of company startups estimated at 37.4%, it outstrips Uganda, with a total of 35.5%, and Botswana with 32.8%.

According to figures produced by the Ministry for Small and Medium Sized Enterprises, Social Economy and Crafts (MINPMEESA), between 2010 and March 2015, 42,720 businesses were created in Cameroon – a trend that should be further boosted by ongoing measures being implemented to improve the business climate.

Nevertheless,the country still has some way to go in terms of creating an environment for these businesses to grow and to foster a dynamic private sector environment.

Cameroon was ranked in the top 10 most attractive African countries in terms of investment by the Nielsen African Prospects Indicators.