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Overseas Business Risk - Cameroon

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Overseas Business Risk - Cameroon

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Information on how UK businesses can control risks when operating in Cameroon.

1. General Overview

Cameroon is the largest and most diversified economy in the six-nation Central African monetary and economic zone, CEMAC.

Cameroon hosts favourable conditions for agriculture, has huge mineral deposits and significant natural gas and crude oil reserves.

UK businesses are significant players in energy, oil and gas, financial and professional services. Most of the large business entities are located in Douala, which plays host to the Douala Sea Port through which goods enter the country. The Douala Seaport also serves the land-locked countries of the Central African sub-region including Chad and the Central African Republic.

In 2020, the Cameroonian Government launched a 10-year National Development Strategy, deepening its ambition to modernise the economy and increase local transformation of raw materials in a wider drive to become an emerging market economy by 2035. Reducing the country’s dependence on imports, promoting value-added creation and set conditions for the development of a dynamic private sector are critical priorities for the government.

Subsidies for electricity, food imports and fuel significantly strain public finance. Some major debt-funded infrastructure projects including a deep seaport at Kribi, dams and sports stadiums have been completed in the last few years. The economy has been hard hit by COVID-19, with a projected decline in growth in 2020 and 2021, albeit still positive.

2. Politics/ Administration

Cameroon has a highly centralised presidential system of government with much of the executive powers lying in the hands of the Head of State (The President). The country is bilingual. Its two official languages are English and French. Paul Biya is the current president and has been in power since 1982. The President is elected through direct universal suffrage for a mandate of 7 years renewable (no term limit). The President appoints the Prime Minister and all other ministers.

There is a bi-cameral legislative structure made up of the Senate and the National Assembly. The Senate is the upper house and has 100 members with 10 representing each of the country’s 10 regions. 30% of the members are appointed by the President and 70% elected through indirect universal suffrage.

The National Assembly is the lower house and has 180 elected members. The term of office for Senators and Members of Parliament is 5 years renewable. Both houses are charged with enacting laws and controlling government action, although the President of the Republic also has powers to legislate by way of decrees and ordinances as provided for by the constitution of Cameroon.

Cameroon is a multi-party democracy that is, at the same time, dominated by one party. At present, there are more than 250 political parties although many of these parties have very little following. The Cameroon People’s Democratic Movement (CPDM) has been in power since 1985 and has an overwhelming majority in Parliament. The opposition is relatively fractured. The major opposition parties are:

  • the Cameroon Party for National Reconciliation (CPNR)
  • Cameroon Renaissance Movement (CRM)
  • the Social Democratic Front (SDF)

According to the electoral calendar, the next elections in Cameroon are senatorial elections in 2023. This will be followed by 4 major elections in 2025:

  • municipal
  • regional
  • legislative
  • presidential

Cameroon is divided into 10 administrative units called regions. Eight of these regions (Centre, South, East, North, Littoral, Adamawa, Far North and West) are predominantly French speaking while English is the main language in the North West and South West regions. Anglophones make up about 20% of the population (around 5 million people); Francophones thus make up around 80%.

The NW and SW became regions with a ‘special status’ in 2020. In each of the special status regions, the elected President of the Regional Executive Council is the chief executive of the region. The elected President of the Regional Council is the executive in each of the other 8 regions.

In every region, the Regional Governor, appointed by the President, is the supervisory authority of the region. A recent law on regional and local authorities devolved some powers to regional councils. Opinions are divided about whether these will meaningfully devolve authority.

Regions are divided into divisions headed by Prefects or Senior Divisional Officer. Each Division is made up of sub-divisions, headed by Divisional Officers. Yaoundé, the administrative and political capital, is the centre of all government activities. It currently has a population of roughly 4 million people.

3. Justice

The Supreme Court is the highest judicial body in the country. The President of the Republic appoints the President of the Supreme Court.

At the regional levels, there exist Appeal Courts and Administrative Courts. Divisions have High Courts and Sub-divisions have Courts of First Instance. Judicial delay is commonplace in the justice system in Cameroon. Land disputes are rife and constitute one of the areas where the justice system struggles to resolve issues. The cadastral system is slow. Businesses have been helped by the country’s membership of the OHADA treaty (Organisation for the Harmonisation of Corporate Law in Africa). OHADA is a suite of laws regulating and harmonising the conduct of business in 17 African countries. Its debt recovery and other dispute resolution mechanisms are much more robust than earlier national laws.

4. Human Rights

Cameroon is a signatory to many international human rights conventions. Over all, respect for human rights had been improving over the last 2 decades, but a number of apparent abuses and violations have emerged in the past 5 years, relating to both the conflict against Boko Haram and Islamic State in the Far North, and the separate conflict in the NW and SW regions (the Anglophone Crisis).

According to the US State Department 2019 report on the human rights situation, some human rights abusers continue to act with impunity. Sexual violence against women is significant. A new penal code adopted in 2016 criminalises many acts of violence against women, including Female Genital Mutilation and breast ironing.

5. Freedom of expression

There is a vibrant media in Cameroon with over 200 outlets. Yet, the state-backed outlets dominate. Libel is a criminal offence. Journalists have been sent to prison under defamation laws. Internet was shut down in the North West and South West regions for 230 days between January 2017 and March 2018.

There is a significant level of self-censorship. Press freedom is guaranteed by law but restricted at times in practice. Cameroon is ranked 135/180 in the 2021 World Press Freedom Index.

6. LGBT

Same sex acts are a criminal offence in Cameroon, according to section 347 of the penal code. Individuals have been prosecuted and imprisoned for alleged homosexual acts.

7. Religious freedom

Religious freedom is enshrined in the constitution and upheld by the authorities. Cameroon is a secular state.

Several religions operate in the country in peaceful tolerance of each other. The main religions are Christianity (69.5%), Islam (19.5%), and African Traditional Religions (4.3%).

8. Freedom of association

Freedom of assembly is tightly regulated. There is a reluctance to issue authorisations for some meetings. There have been instances of police and gendarmes interrupting duly authorised civil society, human rights or political party meetings. Labour laws allow employees to constitute themselves into trade unions to better defend their rights.

9. Economics

The COVID-19 pandemic has had negative effects on the Cameroon economy, with a projected drop in GDP growth in 2020 and 2021. The government response to the pandemic was quick and firm, with early signs of resilience in the economy, amid prevailing security and humanitarian crises.

Recent trends in coronavirus cases (since the end of 2020) are more concerning. Future economic growth is expected to be driven by new government projects in the energy sector, roads and a resumption in agriculture production and commodity trade.

Amid tight fiscal space, a drop in external balance and a high risk of debt distress, the Government of Cameroon has maintained good relations with the IMF, setting decent prospects for joint commitment to reform.

Cameroon ranked 145th in the 2020 Economic Freedom Index with a freedom score of 53.6. Cameroon dropped one place to 167th position in the 2020 World Bank Ease of Doing Business Index. In spite of slight amelioration in “access to credit information”, the 2020 classification highlights the need for more effort to improve in “paying taxes” and “trading across borders”.

The 2020-2030 National Development Strategy sets the framework for economic development in Cameroon.

10. Incentives to Private Investments in Cameroon

A law promulgated in April 2013 provides incentives for private investment in the Republic of Cameroon. This law offers 2 main incentive categories: common incentives and special incentives.

The Cameroonian Investment Promotion Agency is the main actor in this space. To benefit from these incentives, prospective applicants must comply with provisions of the April 2013 law. A useful summary is available on the website of the Cameroon High Commission to the UK.

11. Financial and administrative incentives

  • the right to open accounts in local and foreign currency in the Republic of Cameroon and carry out transactions
  • the right to freely collect and retain overseas funds, purchased or borrowed from abroad and make free use of such funds
  • the right to freely collect and retain abroad, revenue related to their transactions, dividends and any kind of capital invested as well as proceeds of any nature from liquidation or realisation of their assets
  • the right to directly pay foreign non-resident suppliers abroad for goods and services necessary for conducting their business activity
  • unrestricted transfer of dividends and proceeds from the transfer of shares in case of disinvestment

Expatriate staff employed by the investor and resident in the Republic of Cameroon shall benefit from unrestricted conversion and transfer to their country of origin, all or part of funds owed them, subject to prior payment of taxes and other dues by them, pursuant to the regulations in force.

12. Further government commitments to facilitate private investments

  • setting up of a specific visa and reception desk at all the airports of the country and all diplomatic and consular representations abroad to issue on the spot investment visas to investors
  • to be eligible, the investor only needs to present an invitation letter from the agencies in charge of investment promotion in Cameroon. Provided the latter present a formal invitation from the investment promotion agency or the agency in charge of the promotion of SMEs
  • grant residence and work permits to expatriate staff involved in any investment project and employment contracts of more than 2 years
  • issue environment compliance certificates relating to the relevant investment project
  • issue land titles and long-term leases

13. Simplification of approval process

The government has created one-stop-shops within the country to provide expedient processes for the creation of companies within 72 hours. The Investment Promotion Agency and the Agency for the Promotion of Small and Medium Size Enterprises (APE) both handle issues relating to investment promotion at their respective levels.

A supervisory committee to ensure respect of investment commitments and settle any investment disputes also exists with a clearly defined process for the application of penalties in case of non-compliance and for dispute settlements.

Clear commitment by government to guarantee the stability of incentives provided to investors by the creation of a joint monitoring committee under the supervision of the Prime Minister. The principle of non-discrimination of investors is clearly enshrined in the law.

14. Bribery and Corruption

Bribery is illegal under the UK Bribery Act of April 2010. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national nor resident in the UK.

It does not matter whether the acts or omissions that form part of the offence take place in the UK or elsewhere. Many UK firms operate effectively in Cameroon and are reputed for their anti-corruption stance.

Cameroon ranks 149th in Transparency International’s 2021 Corruption Perception Index. Corruption remains a major concern in the country and significantly increases the cost and risk of doing business. Transparency International highlights the judiciary and public services as high-risk zones for corruption, while other reports cite customs procedures and transactions with the police as vulnerable to corrupt acts.

Business organisations and local media often report cases of bribery, nepotism, abuse of office and embezzlement. Many companies cite corruption as a problematic factor for doing business in Cameroon.

Cameroon criminalises different forms of corruption such as bribery, undue demand and misappropriation of public funds. Corruption-related offences are punishable by prison terms from one year to life imprisonment, with fines too.

A Special Criminal Court was created in 2011 to hear and determine matters relating to misappropriation of public funds and other related offences provided for in the Penal Code and International Conventions ratified by Cameroon where the loss amounts to at least 50,000,000 FCFA (roughly £66,000).

As of 2020, it had registered 211 cases. Many of the convicts are former government ministers and senior administrators. At the time of writing, there is a suggestion of considerable corruption concerning procurement and expenditure relating to the government’s COVID-19 fund.

Insufficient implementation of anti-corruption legislation, coupled with lack of civil service capacity, results to delays in getting contracts rolling.

15. Terrorism threat and protective security

Violent Extremists have publicly threatened Cameroon with attacks and further kidnappings, due to Cameroon’s involvement in the regional fight to counter Boko Haram and Islamic State West Africa Province. There is a heightened threat of kidnap to western nationals in the Far North of Cameroon.

Separatists connected to the conflict in the NW and SW of Cameroon have been linked to the explosions of Improvised Explosive Devices in Yaoundé and Douala in 2020 and early 2021.

These have affected public places such as bars and restaurants, albeit ones unlikely to be frequented by foreigners. Whilst there is no specific threat to UK nationals, in the NW and SW there is a heightened threat of being caught up in Anglophone separatist related violence, including kidnap for ransom.

gov.uk


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