CAMEROON

OIL SECTOR GROWTH

After declining for some fifteen years, oil production recovered in 2012 with new wells coming onstream, following successful exploration efforts. The growth of this sector leapt in 2012 and is likely to continue to be fuelled in 2013 by production reaching about 74,000 barrels a day.

The non-oil sector (about 95% of GDP), for its part, is expected to continue to expand, stimulated by increased agricultural productivity and the start of some big infrastructure projects. However, the country’s north and east suffered flooding in July-August 2012, and the fall-off in demand from the eurozone, which, despite diversification efforts, still accounts for half of exports, is holding back growth.

VULNERABILITY TO SHOCKS

The recovery of the oil sector and the modernisation of infrastructures in the energy and transport (road and sea) sectors is expected to increase the country’s growth potential, until now strongly constrained by the weakness of investment and of the business environment, as well as by the economy’s dependence on climatic conditions and price changes in the commodities exported (oil, cocoa, wood etc…). Oil exports are expected to have doubled between 2010 and 2017. But in the longer term (between 2018 and 2032), oil reserves are expected to become progressively exhausted. Moreover, the current revival of oil production should not make us forget the weakness of refining capacity and a technology unsuited to Cameroonian oil, obliging the country to import crude from neighbouring countries. The business environment is unattractive because of the high level of corruption, burdensome taxation, red tape and weak infrastructures, particularly in the electricity sector.

DETEORIATING FISCAL POSITION

Thanks to the debt relief agreed in 2006 under the HIPC and MDRI initiatives, public debt has been brought down to a manageable level. However, the public accounts are deteriorating as a result of increased fuel subsidies and the country is accumulating arrears. Government debt is rising again, because of the securitisation of part of the arrears and the increase in government bond issues to cover the deficits, which could threaten its sustainability in the long term.

WEAK BANKING SECTOR

The sector is dominated by big international banks. However, the growing number of institutions in difficulty and the delay in their restructuring, the repercussions of mounting government arrears and the concentration of credit on a small number of public borrowers is weakening it further. The recapitalisation of certain banks by the state, moreover, risks putting a strain on public finances.

UNCERTAIN POLITICAL CLIMATE

The head of state, re-elected in October 2011, is expected to remain in power until 2018, if his health allows it. President Biya’s age (79), however, raises many questions concerning his ability to ensure his own succession and to fulfil a mandate. His departure could unleash an internal power struggle and threaten relations between different ethnic and linguistic communities.

—–  COFACE Country Risk Report