Cameroon, Central Africa’s second-largest economy, needs to strengthen its tax collection and improve public spending efficiency to boost economic growth, according to the World Bank.

Despite reducing its fiscal deficit by approximately 5 percentage points over six years to just 1.1% of GDP in 2022, largely through cuts in public investment, the World Bank emphasizes that targeted spending is crucial for sustainable growth.

“Cameroon’s fiscal consolidation was expenditure-driven, leading to low levels of public spending that hinder the provision of adequate services and infrastructure investment,” the World Bank noted in a recent report.

To enhance its economic performance, Cameroon needs a medium-term revenue strategy focused on more effective tax collection and improved allocation of resources. Social sectors like health and education have been particularly impacted by under-investment and inefficiencies.

The report also highlights the need to diversify revenue sources, as direct taxation remains low and stagnant. Cameroon’s reliance on value-added tax is compounded by underperforming international trade taxes and levies on property and forests, which cover a third of the country’s territory.

Amid rising global interest rates, borrowing costs in dollars have increased, forcing many governments to seek domestic solutions. However, Cameroon recently secured $550 million through a dollar bond sale with a yield of 10.75%, indicating an urgent need for financing despite challenging conditions.

Cameroon has faced numerous crises, including the impacts of the Covid-19 pandemic and Russia’s invasion of Ukraine. Additionally, internal conflicts have exacerbated poverty in various regions, and a decline in crude oil production has strained government revenue.

Nonetheless, the International Monetary Fund anticipates growth to accelerate from 3.3% in 2023 to 3.9% in 2024, despite a tense political atmosphere. The 91-year-old President Paul Biya, who has ruled for nearly 42 years, is expected to seek re-election in the upcoming February presidential polls, amidst increasing political repression.

Source: Bloomberg

The former French president Nicolas Sarkozy will lead a mission of local entrepreneurs to Cameroon to explore investment opportunities in the African country and promote new projects. The mission, the date of which is not known, was announced in recent days by the former president himself, who met the president of Cameroon on the occasion of the Paris Olympics Paul Biya.

Sarkozy, who led France from 2007 to 2012, included the mission as part of his legal activities, specializing in relations between international investors. Furthermore, the topic was at the center of the 30-minute conversation with Biya, during which the parties reviewed the issues relating to French investments in Cameroon, as well as the details of the aforementioned mission. An initiative intended to shake up relations between private individuals, after French foreign direct investments (FDI) in the African country are declining: in 2022, these had reached 64 million euros, down compared to the 103 million recorded in 2021.

According to the report on Cameroon’s foreign trade published in April by the National Institute of Statistics, in 2023 France is in second place on the podium of Cameroon’s best customers, behind the Netherlands. With the African country, Paris has conquered a market share of 12,3 percent, while on the other hand Yaoundé’s exports to France are led by liquefied natural gas (47,6 percent), followed by products such as oils of crude oil (23,6 percent), cocoa butter (7 percent), fuels and lubricants (6,1 percent), crude aluminum (3,2 percent), aluminum paste and cocoa (3,2 percent) and sawn wood (3 percent). These products, the report specifies, will represent 2023 percent of exports to France in 96,1. In the same year, France ranked third among Cameroon’s suppliers with a volume of goods of 537,7 tons, equal to 7,6 percent of the market share. Around 200 companies work in the African country and over a hundred branches owned or managed by French citizens.

Source: agenzianova

In a statement on July 30, Cameroon’s Minister of Economy, Planning, and Regional Development, Alamine Ousmane Mey, announced the signing of an €122.73 million (CFA80.5 billion) financing agreement with the Islamic Development Bank (IsDB) on July 3. This funding will support the Cameroon-Chad Electrical Interconnection Project (Pirect). This deal follows President Paul Biya’s authorization on May 14 for the minister to finalize the loan agreement with the IsDB.

This new loan adds to a previous €271.3 million (about CFA178 billion) funding from the World Bank in December 2023. The total project cost is CFA557.5 billion and is backed by several international institutions and national contributions. Besides the World Bank (the largest contributor) and the IsDB, the African Development Bank (CFA169.2 billion), the European Union (CFA19.7 billion), and the two countries’ governments, with Cameroon contributing CFA56.2 billion, are also funding the project.

According to Minister Mey, the IsDB funding “will be used to construct four high-voltage electrical substations.” Pirect aims to enhance the energy infrastructure of both countries and integrate them into the Central African Power Pool (Peac). The project, expected to be completed by 2027, will enable Cameroon to become an electricity exporter, supplying 100 megawatts to Chad. Additionally, it will facilitate the construction of 566 km of 225 kV overhead lines and two additional substations in Cameroon. These infrastructures will serve 409 localities in the northern regions of Adamaoua, North, and Far North.

Source: Business in Cameroon

Cameroon has raised 550 million U.S. dollars from its international bond sale, Finance Minister Louis Paul Motaze has said.

The bonds were issued “on favorable terms” during a three-day operation that ended Wednesday in London, the minister said.

“The funds thus mobilized will make it possible to significantly continue the clearance of domestic debt in order to stimulate the activities of SMEs, consolidate the growth of the economy, strengthen the confidence of the private sector in the state and improve the business climate,” Motaze said in a statement Wednesday.

The bonds were a vote of confidence in the credibility of Cameroon and its ability to attract investors to fund its national development strategy, he said.

Source: Xinhuanet

Between January and April 2024, Cameroon’s public treasury received CFA174.2 billion from the sale of oil and natural gas. This information comes from a statement following the board meeting of the National Hydrocarbons Corporation (SNH) held on July 24, 2024, in Yaoundé. During the same period, the SNH reported paying more than CFA25 billion in taxes and various duties to the state.

The country’s oil and gas production in this period resulted in 12.7 million barrels of oil equivalent, including 7.5 million barrels of crude oil and 922.3 million cubic meters of natural gas.

According to the revised finance law passed by Parliament in June 2024, Cameroon aims to generate a total of CFA801.6 billion from oil revenues in 2024. This figure includes income from hydrocarbon sales and corporate taxes from oil companies operating in the country.

Source: Business in Cameroon

Cameroon’s public debt has reached CFA13, 070 billion ($21.61 billion) at the end of June 2024, according to data from the national sinking fund CAA. This is equivalent to around 43.3% of GDP, up 0.8% compared to the previous quarter and 4.9% compared to the same period last year.

The majority of this debt, 93.5%, is the direct debt of the central administration, divided into 67.5% external debt and 32.5% domestic debt. The remaining portion is shared between public enterprises and institutions (6.4%) and decentralized local authorities (0.1%).

Focusing on the external direct debt of public enterprises and institutions, it stood at CFA493.9 billion at the end of June 2024, marking a decline of 0.4% from the previous quarter and a 2.5% decrease year-on-year. A significant part of this debt, 95.5%, is attributed to the National Refining Company (Sonara) and the Cameroon Airlines Corporation (Camair-Co).

Sonara, the only oil refinery in Cameroon, had an external debt of CFA410.2 billion at the end of June 2024. This figure shows a slight increase of CFA1.8 billion from the previous month when the debt was CFA408.04 billion. This rise highlights the ongoing challenges the refinery faces in meeting its obligations to foreign suppliers. Sonara remains the most indebted public company, significantly ahead of Camair-Co, the national airline, which had an external debt of CFA61.6 billion as of the end of June 2024.

Additionally, the state’s contingent liabilities, mainly composed of public-private partnerships (PPP), are valued at CFA4901 billion, representing 16.2% of GDP. This category of liabilities also includes a small portion of debt guaranteed by the central administration.

Source: Business in Cameroon

President Paul Biya signed a decree authorizing Finance Minister Louis Paul Motazé to secure a total of CFA616 billion in loans for the state. This amount is allocated for “financing development projects included in Cameroon’s 2024 finance law and settling outstanding payments (invoices pending with the Treasury),” according to the presidential decree. Of this total, CFA280 billion is to be raised domestically, while CFA336 billion will be sourced from international markets.

The decree aligns with an earlier ordinance signed by President Biya on June 20, 2024, and approved by Parliament. This ordinance amends certain provisions of the 2024 finance law, which was passed by Parliament in November 2023. The revised finance law increases the state budget by CFA533 billion (+8%), raising it from CFA6,679.5 billion to CFA7,212.5 billion.

A close examination of the budget adjustment reveals that the additional CFA533 billion will primarily be financed through borrowing. The government plans to increase its “loans and other financing” by CFA488 billion, representing 91.5% of the budget increase. Specifically, the allocation for loans and other financing will rise from CFA1,489.4 billion in the initial finance law to CFA1,977.4 billion in the revised budget, with a significant portion coming from international debt.

Debt Breakdown

The 2024 budget adjustment includes a reduction of CFA95 billion in loans from domestic public securities. In response, the government has decided to secure additional “program loans” amounting to CFA240 billion from multilateral lenders, and “initial loans from external private entities” that could reach up to CFA467 billion. Additionally, the government has cut its initial borrowing targets from Paris Club members, non-Paris Club governments, and other private external entities by CFA123 billion.

Overall, the CFA616 billion in authorized borrowing combines the CFA533 billion increase from the revised finance law and the remaining loans needed under the initial budget. This is expected to raise Cameroon’s debt levels throughout 2024.

According to the Autonomous Amortization Fund (CAA), which manages public debt in Cameroon, the country’s public debt reached CFA13,070 billion as of June 2024, up 4.9% year-over-year. Of this total, 93.5% is direct central government debt (CFA12,219 billion, or 40.4% of GDP, well below the 70% threshold set by the Cemac region), while 6.4% is held by public enterprises and institutions, and 0.1% by decentralized territorial authorities.

Source: Business in Cameroon