At the crossroads.

In two years time, Cameroon will be celebrating the 50th anniversary of its independence. Those with long memories will recall that Cameroon became a nation in January 1960 amid a great deal of uncertainty--under new leadership in the capital Yaounde on one hand, and a civil conflict rumbling in the south of the country on the other.

Therefore, the development of the country from such a tough beginning, to its present condition as a united entity with considerable positive prospects, has been a remarkable one.

Although it cannot be denied that the country still faces some political imponderables, there is general general consensus that its economy is sound. Therefore, as the big day approaches, many Cameroonians both inside and outside the country, have high hopes that this vibrant West African country, will not only realise its immense potential, but celebrate its 50th birthday at its apex--both economically and politically.

Cameroon's role in Africa and the world

In its African policy, Cameroon has always been mindful of its unusual colonial heritage. Cameroon became a German colony in 1884. After World War I, the territory was divided between France and Britain under League of Nations mandates.

In 1960, French Cameroon became independent under President Ahmadou Ahidjo. The southern part of British Cameroon merged with it in 1961 to form what is now the Republic of Cameroon.

The German heritage is still loosely found, and Cameroon's triple heritage has made it particularly attached to a relationship with Europe. The fact that the EEC's first agreement with a group of African states was signed in Yaounde was symbolic of this broader vision.

Cameroon became a member of the Francophonie in 1986 and of the Commonwealth 10 years later.

The country is strongly attached to African unity and hosted the OAU Summit in Yaounde in 1996. Two OAU secretary-generals were from Cameroon. The country enjoys relative political, economic and social stability. In terms of Gross Domestic Product (GDP) it is the richest in the six-nation Communaute Economique et Monetaire de I'Afrique Centrale (CEMAC), a putative customs union with a single currency (the Central African CFA). The regional grouping comprises Cameroon, the Central African Republic (CAR), Chad, the Republic of the Congo, Equatorial Guinea and Gabon. Access to the CEMAC market of 35m people has been a selling point in Cameroon's efforts to attract investors.

[ILLUSTRATION OMITTED]

Cameroon, a driving force in CEMAC, wants to target full and free movement of goods and peoples by 2009, but there is uncertainty as to whether this will be achieved on time. Proximity to conflict zones has been a contributing factor. For example, sporadic conflicts in both CAR and Chad have meant that Cameroon has had to offer hospitality to some 100,000 refugees.

Indeed, in its international relationships Cameroon has, with great pragmatism, always given priority to economic relations, which are now dominant. This applies, for example, to its membership of the ACP group as a major beneficiary of the European Development Fund since 1960.

At the end of last year, Cameroon was the only CEMAC country to initiate an interim Economic Partnership Agreement with the EU. As a middle-ranking economy it could not afford to lose the access to the EU market for its agricultural produce, such as cotton, bananas, coffee and cocoa. Cameroon has also always valued its links with the World Bank and International Monetary Fund (IMF), helping it to secure important debt relief under the HIPC process. Relations with the Middle East countries have also developed considerably, and significant strides have been made with Asia.

The Chinese government, in need of new sources of raw materials and markets, is rapidly consolidating its growing trade with Cameroon.

Geographical situation

The Republic of Cameroon is a middle-sized country on the West African coast, just north of the equator. It has many remarkable African microcosms.

[ILLUSTRATION OMITTED]

Cameroon has a population of over 18.5m people, including Christian, Muslims and indigenous religions, in an area of just under 500,000 sq. km, which ranges from dense tropical forest in the south to dry savannah in the north.

The country has substantial wealth, derived from agricultural, human and mineral riches, which potentially give Cameroon one of Africa's great possibilities for massive economic development.

The present political situation

Following independence, Cameroon was faced with a serious problem of governmental authority, which tended to put democracy on the back burner. Even though more democratic practices were permitted in the English-speaking area of the south-west, the regime of the country's first President Ahmadou Ahidjo (1960-82) was better known for its authoritarianism, which made his sudden decision to resign, and hand over to his Prime Minister Paul Biya all the more surprising, especially as this involved a 'power shift' from north to south-east.

The northern reaction to this shift was seen in the failed coup attempt of 1984. But the coup attempt did not deter President Biya. He moved from a slow and calculated transition, to a more open society, introducing a multiparty system. The ruling party, the CDPM (Cameroon Democratic Peoples Movement) previously the only party, has since managed to retain control through all the subsequent multi-party elections; the opposition has not helped itself with its own divisions. The main opposition leader John Fru Ndi, head of the Social Democratic Front, from a seriously challenging position in the 1992 elections, has become an increasingly isolated figure, and elections, both presidential and parliamentary, have tended to become a formality in the belief that Paul Biya represents the best chance of stability in Cameroon.

President Biya has now been in power for 26 years, and recently secured from the National Assembly, where the ruling party has an extremely comfortable majority, a constitutional amendment to permit him to stand again when his present seven-year term expires in 2011. The president's aloofness from the political scene has sometimes been criticised, but there have been moments when it has been seen to be an advantage.

Opposition to the constitution change was said to have been behind the unprecedented rioting in Douala and Yaounde as well as other towns in the south-west in February. But it was generally agreed that what really lay behind the riots was the sharp increase in fuel prices, The fuel increase came at the same time as food price hikes arising from dramatic jumps in prices of wheat and rice on the world market. The riots were also seen as a symptom of the dangerous problem of rising youth unemployment. The situation was calmed after the fuel price increase was halved and salary increases for government workers were promised. The government has also announced a new programme of increasing food production, although Cameroon has traditionally been self-sufficient in food.

[ILLUSTRATION OMITTED]

As part of its policy to promote good governance, Cameroon is committed to the war on corruption, which has seen some major casualties from the highly competitive political elite. Although the anti-corruption moves come partly from donor pressure, it responds to a popular mood, often expressed in Cameroon's quasi-independent media.

An economy on the brink of take-off?

In Cameroon, oil production only began in 1977 which means that the country missed the heady days of the first oil boom in the 1970s. Cameroon suffered from the serious slump in oil prices in the 1980s, which led to a heavy debt burden, and years of run-ins with the World Bank, the IMF and other western donor institutions. When the oil production peaked in 1995, the economy began to recover. But despite a period of decline in production, oil revenues have generally continued to rise because of the unusually buoyant oil prices that have prevailed in recent years. Production rose from 87,000 barrels a day in 2006 to 92,000 barrels a day in 2007. It is estimated that production will increase further this year, stimulated by the current high world oil price.

Studying the correlation between oil revenues and growth rates it is possible to determine that, after years of recession in the 1980s and early 1990s, GDP growth became regular at around 4% between 1995-2003. Although since then growth has been slightly uneven, it is back to over 4% in the current year.

Apart from oil, Cameroon also has a number of other solid minerals, from gold and diamonds to 50 other lesser-known ones that are being developed through small and large scale mining. There are also new investments in cobalt, iron and nickel, as well as in bauxite mining which is partly aimed at feeding the aluminium smelter at Edea.

Doing Business in Cameroon

Ease for ...                 2006 ranking     2005 ranking

Creation of a company                 52                49
Granting of licences                  51                47
Hiring workers                        35                36
Transfer of property                  31                28
Obtaining loans                       17                17
Payments of taxes                     43                40
Foreign trade                         40                35

Source: Doing Business Report 2007. Note: the 2006 rankings have been
recalculated so as to reflect the changes in methodology made in 2006
as well as the inclusion of 20 new criteria.

As part of the necessary reform to put the country into tip-top shape, there has also been a privatisation programme, although this has been slow-moving.

Increased attention is also being paid to improving Cameroon's infrastructure, especially in the transport and energy sectors, in order to create a favourable business climate that will attract the kind of investment needed to help the economic take-off. In terms of its energy supply, the country is fortunate in having massive hydro-electric potential, such as the dam on the Sanaga River which mostly furnishes power to the Edea aluminium smelter. But only 2% of this huge potential is currently being exploited. Thus, apart from plans for further hydro-expansion, oil and gasfired plants have been developed to meet a rapidly expanding energy market.

There has also been further evidence of increased dynamism in the economy, seen in the success of the country's banking sector. In addition, a testimony of Cameroon's thriving informal economy, is in the shape of the famous 'tontines' of the 1960s. Although the informal sector is only calculated at 32% of GDP (against 57% in Nigeria and reportedly more in Ghana), this sector is growing and it is playing an important role in Cameroon's economic well-being.