Cameroon: Economy

Cameroon is endowed with an abundance of natural resources, including in the agricultural, mining, forestry, and oil and gas sectors. Cameroon is the commercial and economic leader in the sub-region, although regional trade, especially with Nigeria, remains under-realized.

Cameroon's economy is highly dependent on commodity exports, and swings in world prices strongly affect its growth. Cameroon's economic development has been impeded by economic mismanagement, pervasive corruption, and a challenging business environment (for local and foreign investors). Cameroon remains one of the lowest-ranked economies on the World Bank's annual Doing Business and similar surveys and regularly ranks among the most corrupt countries in the world. Over the last 3 years, GDP growth has averaged around 2%-3%, which is roughly on par with population growth but not enough to significantly reduce high poverty levels. Despite boasting a higher GDP per capita than either Senegal or Ghana, Cameroon lags behind these two countries in important socio-economic indicators, including health and education. The government has professed a determination to foster urgent economic growth and job creation, and there is a decided uptick in interest in the mining sector and infrastructure development, but it is not yet clear how well these promises will translate into improved performance.

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.

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, including the government’s slashing of civil service salaries by 50% in 1993. The CFA franc--the common currency of Cameroon and 13 other African states--was devalued by 50% in January 1994. The conjunction of these two events meant an overall drop in purchasing power of nearly 65%. The government failed to meet the conditions of the first four IMF programs. A three-year Poverty Reduction and Growth Facility (PRGF) approved by the IMF in October 2005 ended in 2008. Cameroon has not negotiated any new IMF program but is continuing cooperation with the Fund under Article IV consultations. In 2009, the IMF disbursed $144 million to Cameroon under its Exogenous Shocks Facility to help with the effects of the global economic crisis.  In 2010, Cameroon issued its first sovereign bond, raising, approximately $400 million for special projects.

Inflation remains low in Cameroon, as many basic commodities, including fuel and food items, are either subsidized or subject to government price controls. Public frustration over rising prices was partly to blame for an outbreak of social unrest and violence in many Cameroonian cities in February 2008. In March 2008, the government announced a reduction in food import tariffs and other measures designed to reduce the cost of basic commodities. The government also began subsidizing fuel at the retail level in 2008, leading to massive yearly government expenditures. Experts estimate the fuel subsidy will consume ten percent of the government budget in 2011.  The global economic crisis has seriously impacted Cameroon’s oil, cotton, timber, and rubber sectors, depressing exports, growth, and overall consumption.

The European Union is Cameroon's main trading bloc, accounting for 41.1% of total imports and 55.1% of exports (vy value), according to government statistics. France and China are Cameroon's main trading partners, but the United States is a leading investor in Cameroon (largely through the Chad-Cameroon pipeline and energy provider AES Sonel). According to press reports, China recently became the number one importer of Cameroonian exports, especially unprocessed timber.  U.S. exports to Cameroon were approximately $132 million, reflecting approximately 4% of total imports to Cameroon in 2010.  Cameroonian exports to the United States, that same year, were approximately $297 million (or about 5.7% of total Cameroonian exports).

For further information on Cameroon's economic trends, trade, or investment climate, contact the International Trade Administration, U.S. Department of Commerce, Washington, DC 20230 and/or the Commerce Department district office in any local federal building.

Sources:

CIA World Factbook (January 2012)
U.S. Dept. of State Country Background Notes ( January 2012)

Glossary