Growth increasingly vulnerable to the politics


SENSITIVE RISK for entreprise

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

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GDP USD 24.2bn (World ranking 100, World Bank 2016)
Population 23.4 million (World ranking 55, World Bank 2016)
Form of state Multiparty Presidential Republic
Head of government Paul BIYA
Next elections Presidential October 2018, legislative September 2018
  • A degree of political stability has been achieved under the lengthy rule of the current leadership, yet some infringements on liberties may have occurred
  • Relatively good relations with donors and international financial institutions
  • Membership of the CFA franc zone provides a relatively stable monetary policy .It also reduces exchange rate and transfer risk
  • Ever more diversified exports boost economic resilience.
  • Underdeveloped infrastructure and lack of decentralization limit service provision.
  • Cameroon’s business environment ranks among the worst in the world.
  • Relations with Nigeria and the Economic Community of Central African states remain uneasy due to border and trade disputes.
  • President Biya’s health has been a concern and there are associated uncertainties over succession.
  • Increased risk of social unrest because of rising public frustration with perceptions of weak improvement in living standards

Lower debt than in other Central African economies is an asset

As many oil exporters, Cameroon’s growth experiences more volatility than regional average. Despite the slump in oil prices and the security crisis, the economy proved more resilient than regional counterparts.

Diversification in the non-oil sector is the key. Large infrastructure works and increased support to the agricultural and forestry sectors drove the performance of the non-oil sectors. This led to a more sustainable economy, which in turn boosted resistance to external shocks.

The country also managed to limit the revenue losses related to the slump in oil price by increasing its supply. As a result, GDP growth came at +3.5% in 2017, when Gabon or Congo Republic experienced recession and debt problems. Overall, Cameroon still exhibits far lower debt (public debt is at 34.5% of GDP in 2018) than the other members of the Central African CFA Franc (61% in Gabon, 115% in Congo Republic).



Poor governance is weighing on the outlook

However, it should not hide the difficulties led governance issues, as well as security concerns related to the situation in the Anglophone part of the country (20% of the population).

The cancellation of Africa Cup of Nations that was supposed to be organized in January just one month before the event is one the best indicators of current difficulties to handle normal business conditions in Cameroon and implement public works correctly. As a result, growth disappointed to +3.2% in 2018.

The country was ranked 166th out of 190 in the last World Bank Doing Business survey (with no change during the last two years), with enforcing contracts (166th) as one of its worst item. Accordingly, the rule of law is also one of the worst items in the governance indicators computed by the World Bank. But the worst item is still trading across borders (186th) showing how deep is the trade closeness in the Central African region.



Policy support translated into policy slippage

Along with increasing difficulties to sustain the growth momentum, the government tried to incentivize credit. Real domestic credit growth accelerated to +8% in 2018Q3, with an inverted yield curve: long-term funding is cheaper than short-term financing, a typical phenomenon in countries where long-term funding is subsidized.

Moreover, the recent credit growth acceleration in Cameroon came at a time where new bank loans dropped by -11.9% y/y in the Cemac region in 2018H1. This increasing risk-taking behavior can generate some risks in the Cameroonian banking sector.

Other rules recently implemented, such as the mandatory repatriation of hard currency held by exporters abroad, show that the government tries to rein in the credit crunch that affects Cameroon, as well as its Central African peers.

During the last years, the non-oil sectors benefitted from large public investments in transport networks, water supply, dams and electrification. These are partly driven by inward investment necessitating capital goods and other imports. Given recent poor completion of projects and uncertainties surrounding growth in Cameroon, this inward investment is at risk, particularly at a time where financing needs increased as a result of a higher current account deficit (-4.5% of GDP in 2018, and -5% in 2019, after -2.7% of GDP in 2017).

Political uncertainty is on the rise

The 20% that make up the Anglophone component of Cameroonian society has been raising claims about exclusion. This crisis that troubles the country since October 2016 has not been solved since then. The continued threat by the terrorist group Boko Haram in northern Cameroon weighs on the agriculture and tourism sectors. Moreover, the election of Paul Biya for a new term in November 2018 was more contested than usual.

It came after some public frustration that living standards had not increased more rapidly, given the country’s rich resources endowment. Perceptions of corruption also increased the anti-government sentiment. The latter was expressed through industrial action and street demonstrations which were violently tamed by the local security agencies.



Trade structure by destination/origin

(% of total)

Exports Rank Imports
China 13%
23% China
India 12%
13% Nigeria
Spain 10%
11% France
Netherlands 9%
4% United States
Italy 6%
4% Belgium

Trade structure by product

(% of total)

Exports Rank Imports
Petroleum, petroleum products and related materials 34%
18% Petroleum, petroleum products and related materials
Coffee, tea, cocoa, spices, and manufactures thereof 20%
9% Cereals and cereal preparations
Cork and wood 15%
8% Road vehicles
Vegetables and fruits 7%
4% Other industrial machinery and parts
Textiles fibres and their wastes 4%
4% Fish, crustaceans, molluscs and preparations thereof

Payment behavior is generally satisfactory, with payments being made within 60 days, despite contract terms typically stating 30 days. Payment terms are at the discrection of the parties, to be agreed in their contract.

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

Financial information cannot always be relied upon, so trading history is often a better indicator of a company’s viability.

It is common to see companies of bad faith proceeding with insolvency in order to avoid paying their debts, as they are able to easily remove goods from the company during audits to present a more difficult picture of their situation. With deep auditing and investigation, it is possible to prove that insolvency has been deliberately created and adequate legal measures can be taken to pursue such deceptive insolvents.​

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Collection complexity Cameroon

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Contact Euler Hermes

Economic Research Team

Contact Stéphane Colliac

Senior Economist for France and Africa 

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