Economic studies
Cameroon

Cameroon

Population 27.2 million
GDP per capita 1,667 US$
C
Country risk assessment
D
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Synthesis

major macro economic indicators

  2020 2021 2022 2023 (e) 2024 (f)
GDP growth (%) 0.5 3.6 3.4 4.0 4.5
Inflation (yearly average, %) 2.4 2.3 5.3 6.0 4.0
Budget balance (% GDP) -3.2 -3.0 -1.8 -1.5 -1.5
Current account balance (% GDP) -3.7 -4.0 -6.8 -5.0 -4.5
Public debt (% GDP) 43.0 45.4 45.0 41.0 39.0

(e): Estimate (f): Forecast

STRENGTHS

  • Relatively diversified resources, with forestry, agriculture (e.g. cocoa and bananas), oil and minerals (e.g. aluminium)
  • Expansion of gas capacity in a favourable short-term environment
  • Hydroelectric potential
  • Efforts to improve infrastructure are under way
  • Member of the Economic and Monetary Community of Central Africa (CEMAC) and the Economic Community of Central African States (ECCAS)
  • The CFA franc is pegged to the euro, but the common reserves of the Bank of Central African States are limited.

WEAKNESSES

  • External and public accounts dependent on commodity prices (breakdown of exports in 2022: 40% oil, 26% gas, 10% cocoa, 10% wood)
  • Low public revenue: 15.5% of GDP in 2022, but up on 2021
  • Oilfields reaching maturity
  • Weak but small banking system
  • Non-inclusive growth (extreme poverty affecting 23.5% of the population in 2021), the business environment remains difficult with poor governance (corruption, smuggling, etc.)
  • Inadequate infrastructure, particularly in the electricity sector
  • Increased political risk: insecurity in the far north of the country and tensions in the two English-speaking regions of the north-west and south-west
  • Succession of President Biya (90, in office since 1982)

Risk assessment

Growth driven by gas exports

In 2024, as for 2023, economic activity should be underpinned by the agri-food, forestry, services and gas industries. Exports of liquefied natural gas (LNG), which more than doubled between 2021 and 2022, should continue to grow thanks to the increase in production capacity at the Hilli Episeyo terminal, which should rise to 5 million tonnes a year in 2026, compared with 1.6 million tonnes in 2023. At the same time, the expansion of the mining sector is supported by the ongoing expansion of the port of Kribi. These developments will partially offset the decline in the oil sector. The share of investment in GDP (17.5% of GDP in 2022) will remain stable in 2024. The 2020-2030 ten-year plan (National Development Strategy) is continuing. It will enable the country to diversify its sources of growth by supporting industrialisation through transport (railways, port of Kribi) and energy (the Nachtigal hydroelectric power station, which should be operational by 2024 and supply the country with a large proportion of its electricity needs). Inflationary pressures, which were mainly fuelled in 2023 by food prices and the reduction in fuel subsidies that drove pump prices up by 15%, should ease slightly in 2024 due to the fall in world agricultural prices, but will remain above the 3% target set by the BCEAC despite the latter's monetary tightening policy. However, uncertainty prevails with the Ukraine-Russia conflict and the threat of the El Niño phenomenon that will weighing not only on price levels but also on food security. Private consumption (72% of GDP) fell slightly in 2023, hit by particularly high prices, but should pick up again in 2024 with the easing of monetary policy and the fall in global food prices. The government is continuing to support private consumption by favouring direct transfers to the poorest households.

Continued consolidation of public accounts in step with the IMF

The improvement in the budgetary situation that began in 2021 should continue in 2024. The programme agreed with the IMF in the summer of 2021, which includes an Extended Credit Facility (ECF) and an Extended Fund Facility (EFF) worth USD 689.5 million over 3 years, is gradually being implemented by Yaoundé, particularly the initiative to broaden the tax base and increase revenue (15.5% of GDP in 2022 compared with 13.7% in 2021). A disbursement of USD 73.6 million was therefore approved in July 2023, bringing the total amount disbursed to USD 493.6 million. Through the reduction of fuel subsidies (from 3.7% of GDP in 2022 to 2.6% in 2023) and other future measures, the programme aims to release the budgetary resources needed to finance productive investment and social spending. The public debt burden should ease by 2024. Multilaterals (42%) and China (26%) stand out from the share of external creditors that hold 69% of the country’s debt. Although it remains well below the threshold of 70% of GDP prescribed by the CEMAC, debt is considered by the IMF to be high but nonetheless sustainable. The ratio of external debt servicing to export and public revenues is particularly vulnerable to commodity prices and growth.
Cameroon maintained its structural current account deficit in 2023, which was driven by lower oil exports and a fall in oil prices. Nevertheless, this deficit should narrow in 2024 as gas exports and the expansion of the mining sector increase export revenues, while import expenditure (20.5% of GDP) will fall with the overall price level.

 

Persistent conflicts are holding back economic development

Fighting by English-speaking separatist rebels continues and is punctuated by atrocities on both sides. Faced with this secessionist movement in Ambazonia, as well as the subversion of Boko Haram and the Islamic State on the Nigerian border, the military response is coupled with detailed proposals such as the autonomy of the two rebel provinces, the development of the "North of the National Triangle", as well as the Presidential Reconstruction and Development Plan, whose deployment remains compromised by the context of violence and instability. President Paul Biya, aged 90, has been in power for over 40 years. His succession at the next elections, scheduled for 2025, is a source of political risk and is likely to reinforce the country's climate of instability. The presidential party won the last legislative elections in 2020 amid allegations of voter fraud. Externally, Cameroon is seeking to diversify its alliances and renewed its military cooperation with Russia via treaty in April 2022, which is due to expire in five years’ time. Western countries remain major partners. France is reasserting its presence, lobbying for aid from the IMF and a €230 million loan from the Agence Française de Développement that was granted in February 2022 for projects running until 2024. In April 2023, the country announced its intention to join the AGOA (African Growth and Opportunity Act), which would give it preferential access to the US market. The country was suspended from the programme in October 2019 due to allegations of human rights violations against armed separatists in the English-speaking regions. Cameroon's reinstatement to AGOA remains unlikely.

 

Last updated: September 2023

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