Cameroon is the largest economy in the Central African Economic and Monetary Community owing to its demography (around 20 million inhabitants), a surface area of nearly 476,000 km², its geographical position and a diversified economy.
Modest oil resources and favourable agricultural conditions provide Cameroon with one of the best-endowed primary commodity economies in sub-Saharan Africa. Since 1990, the government has embarked on various IMF and World Bank programmes designed to spur business investment, increase efficiency in agriculture, improve trade, and recapitalise the nation's banks.
The IMF continues to press for economic reforms, including increased budget transparency, privatisation and poverty reduction. Cameroon devotes significant resources to several large infrastructure projects under construction, including a deep sea port in Kribi and the Lom Pangar Hydropower Project.
Cameroon’s energy sector continues to diversify, recently opening a natural gas-powered electricity generating plant. Oil remains Cameroon’s main export commodity, accounting for nearly 40 per cent of export earnings despite falling global oil prices. Cameroon continues to seek foreign investment to improve its inadequate infrastructure, create jobs and improve its economic footprint, but its uncertain business environment can prove to be something of a deterrent to foreign investment.
Strengths of the market:
● As a member of the Franc zone, the country benefits from the stability of its currency, the CFA Franc (XAF), which is pegged to the Euro at a fixed rate
● Economic growth is expected to accelerate over the next five years, to an average of 5.3 per cent, as the country is in the implementation process of the first phase of its long-term development plan, Vision Cameroon 2035
● The country is known as ‘Africa in miniature’ as nearly 90 per cent of the African ecosystems can be seen there
● Cameroon has vast untapped mining resources (eg iron, zinc oxide, gold and diamonds) and rich agricultural potential, with 22 million hectares of forest that contain more than 70 species of wood
● It has great potential for hydroelectric power as it possesses 20 gigawatts, of which less than five per cent is developed, while it has an estimated 110 billion cubic metres of gas reserves that have not yet been exploited
● Its cultural heritage and diversity of its landscape could be used to transform the country into a tourism destination
● Cameroon’s population is young, dynamic and well-trained, with the majority of citizens of work age bilingual in English and French
● Attacks by Islamic extremist group Boko Haram in northern Cameroon are likely to persist, posing a risk to national security and threatening to undermine trade and tourism
● Cameroon’s economy suffers from political and economic factors that often impact underdeveloped countries, such as stagnant per capita income, a relatively inequitable distribution of income, a top-heavy civil service, endemic corruption and the continuing inefficiencies of a large parastatal system in key sectors
● The government of Cameroon provides subsidies for electricity, food, and fuel that have strained the federal budget, diverting funds from education, healthcare, and infrastructure projects
Agriculture was the mainstay of the Cameroon economy until 1995. Its fertile land allows for the cultivation of cash crops such as coffee, cocoa, tobacco and cotton. However, in the 1980s, the price of these cash crops declined drastically. This had a severe impact on the country’s economy, resulting in a decade-long recession. In the 1990s, the IMF and World Bank provided financial assistance for the development of the country’s industrial and service sectors. Also, the economy was liberalised for greater private and foreign investment.
With its large areas of forest, timber is an important export for Cameroon; it is one of the world’s major suppliers of wood (along with Brazil and Indonesia). Around 60 per cent of its raw timber is shipped to China and 80 per cent of processed wood goes to European Union countries. Land for agriculture is also important, although this puts pressure on the forests.
Favourable agricultural conditions existing across much of the country allow for the growing of a range of crops. On the plateau land of the south, coffee, sugar and tobacco are important cash crops. Along the coast, the climate favours the growing of export crops such as cocoa, bananas, palm oil, rubber and tea. Cameroon is one of the top five producers of cocoa. Cocoa beans are the country’s highest-earning agricultural export (bringing in more than $600 million dollars, according to the UN's Food & Agriculture Organisation). Cotton and bananas are the next highest earners.
Key sectors in Cameroon include mining: the country has rich deposits of bauxite; however, it lacks the essential infrastructure to leverage this mineral reserve. The country also has limited reserves of gold and diamond. It produces 12,000 carats of diamonds and 20,000 ounces of gold annually. Cameroon produces approximately 82 thousand barrels a day of oil a day, which equates to 0.1 per cent of the world’s total production. The country has oil reserves of 400 million barrels along the Niger delta basin.
The manufacturing sector is not completely developed in the country. There are only a few notable industries within the manufacturing segment. Most consumer goods are imported from EU countries and China. Pharmaceutical and chemical process industries are gradually emerging and this sector has attracted a major share of foreign investment.
Cameroon’s economy is fuelled by other industry sectors as well, such as automotive, construction, food processing, engineering and real estate. However, these sectors make only a small contribution to the national GDP. To sustain long-term growth, Cameroon has to focus on strengthening its non-mineral sectors.