Cameroon Transformation Profile
Manufacturing expansion but income stagnation
Cameroon’s rise in the share of manufacturing, which should be good for transformation, did not lead to a rise in GDP per capita. Manufacturing’s share rose from around 14% of GDP in the early 1980s to around 18–19% from the end of the 1980s to the mid-2000s, before falling to 16–17% by the end of the 2000s. But GDP per capita (PPP 2005 US$) hardly changed from 1980 to 2010—it averaged $2,098 in 1979–81 and $2,052 in 2009–11, a clear reminder that there is more to economic transformation than just building up manufacturing.
But the country has many of the ingredients to transform its economy—agricultural resources (bananas, cocoa, coffee, cotton, honey, livestock), forestry products, minerals (bauxite, iron, cobalt, nickel, manganese, diamond), and crude petroleum (which has accounted for more than 40% of exports in most of the 2000s). It is also second to Democratic Republic of Congo in Africa in water resources. Crude oil and dried and roasted cocoa beans dominate exports.
Most Cameroonians operate their economic activities in the informal sector. And as for most Sub-Saharan countries the true size of the sector is unknown. There are no reliable statistics on the labor force. The National Institute of Statistics estimates unemployment at 4.4% in 2005 (against 7.2% for 2001), but this is not believed to reflect severe underemployment.
The incidence of poverty remains high, currently at 39% but down from 53% in 1996 and 40% in 2001. Extreme poverty (share of population living on less than $1.25 a day) declined from 25% in 1996 to 10% in 2007, and the Gini index of inequality from 41 in 1996 to 39 in 2007. Health problems persist, and life expectancy remains low. In 2006–11 the risk of infant mortality was estimated at 62 deaths for 1,000 live births. Generally, the risk of death before the age of five is 12.5%.
Politically stable, Cameroon ranked 34th of 134 countries on the Global Competitiveness Index in 2009 in political and macroeconomic stability. The ruling Democratic Rally of the Cameroon People has dominated Cameroonian politics and controlled the government since independence.
Budget management is a challenge. Although a functional budget nomenclature exists, it is not used in budget implementation. Moreover, the lack of an operational medium term expenditure framework is likely a major reason why Cameroon is unable to reach the goals set in its Poverty Reduction Strategy Paper.
The business climate has improved somewhat since 2000, but Cameroon ranked 161st of 183 countries on the overall Doing Business Index in 2012. Cameroon’s best ranking was on electricity (66th), but it ranked very unfavorably (below 130th) on enforcing contracts, paying taxes, trading across borders, registering property, and resolving insolvency. On the overall Global Competitiveness Index in 2011–12, Cameroon ranked 116th of 142 countries, 114th on basic requirements of doing business, 101st on innovation and business sophistication, and 120th on efficiency enhancers. The poor quality of health and infrastructure as well as the low levels of secondary and tertiary education are seen to be major contributors to Cameroon’s lack of competitiveness.
Constraining private sector development are corruption, poor quality infrastructure, arbitrary judicial system, unfavorable income tax system, and limited financial services. In 2010 Cameroon made some progress on the indicators of starting a business, reducing time (19 days instead of 34), number of procedures (6 instead of 12), and fixed costs (70%), thanks to pilot centers that facilitate the process of firm creation. Cameroon has set the goal of becoming an emerging country by 2035. Cameroon Vision 2035 is part of the Growth and Employment Strategy Paper, which sees higher investment and greater participation of the private sector as prerequisites for transformation.
A National Competitiveness Committee has been created to tackle problems constraining the ability to export, including inadequate basic infrastructure, weak governance, low capacity, and hostility toward the private sector.
Increasing production in the agricultural, forest, and extractive sectors, all high-growth potential areas, is a major challenge for Cameroon but essential for diversifying its oil-dominated exports. Tourism also offers opportunities to bring rapid economic growth and could be an opportunity to diversify exports since, as part of the Congo Basin, Cameroon is endowed with rich cultural and ecological diversity.
Measures to expand agricultural production and productivity and promote agricultural products with high-growth potential should include making land, water, and agricultural inputs (particularly fertilizers and seeds) more easily accessible; promoting access to technological innovation; improving access to markets through better organized domestic market channels and neighboring export markets; and investing in transportation and communication infrastructures (road, rail, sea, air, telecommunication) in agricultural production areas.
Cameroon’s growth with depth
- Transformation—8th of 21. Cameroon ranked 8th on the overall economic transformation index in 2010, after dropping from 6th in 2000, losing ground to Kenya and Uganda.
- Growth. Average GDP growth was 3.5% a year from 1971 to 2010. It was high and volatile in the first 20 years, averaging 4.6% a year, –1.1% a year from 1991 to 1995, and a stagnant 3.4% a year from 1996 to 2010. Real GDP per capita was essentially flat from 1980 to 2010.
- Diversification—4th. Cameroon’s rank on diversification improved from 5th in 2000 to 4th in 2010. The share of manufacturing and services in exports of goods and services rose from 26% in 2000 to 32% in 2010. In 2010 the top 5 exports made up 77% of total merchandise exports (crude petroleum, cocoa, refined petroleum product, and rough wood and other wood), and the top 10, 89%.
- Export competitiveness—15th. Cameroon’s rank fell from 11th in 2000 to 15th in 2010, losing ground to Ethiopia, Gabon, Mozambique, and Tanzania.
- Productivity—8th. Manufacturing value added per worker was $50,489 in 2001 after a sharp increase from $43,856 in 1999. Cereal yields averaged 1,704 kilograms per hectare in the 2000s, up from 851 kilograms in the 1970s.
- Technology—9th. Cameroon ranked 13th on the level of technology in 2000, but gained on Ethiopia, Mauritius, and Mozambique to reach 9th in 2010. The share of medium and high technology in exports grew from 1.6% in 1999 to 15.2% in 2010.
- Human well-being—6th. Cameroon’s average GDP per capita (PPP 2005 US$) over 2009–11 was $2,052, up from $1,855 over 1999–2001. Its rank on human well-being improved marginally from 7th to 6th over the two periods.