CAMEROON: An Introduction to General Business Law

CAMEROON: Introduction 

Located in Central Africa, precisely at the end of the Gulf of Guinea, the Republic of Cameroon has proved through all the years following its independence its capacity and ability to evolve. Indeed, Cameroon has strong advantages which attract foreign investors: its strategic position being an intermediary between the West Africa and Central Africa region makes it more attractive, the Cameroonian population is fluent in both English and French, and almost half of the population is under 30 years old.

Like most developing countries, agriculture is a major source of income. However, there is immense investment potential in infrastructure, extractive industries, the consumer market and modern telecommunication. Cameroon is home to a plethora of banking institutions as well as international companies such as Société Générale, Citibank, UBA, Ecobank, Standard Chartered, and Total Energies. Still, the financial sector offers an unlimited number of opportunities as only 15% of the population has access to banking services.

Market developments  

The rise of digital currency/cryptocurrency in Cameroon

As a member of the CEMAC (Economic and Monetary Community of the Central African Region), the integration of cryptocurrency was timid at first. In fact, the Central African Financial Market Supervisory Commission (COSUMAF) on 23 October 2020 published a press release warning the population that the activities around cryptocurrency are not subject to a regulatory framework in the CEMAC zone and that any person or entity engaging in canvassing of the public with a view to making investments would be exposed to legal proceedings.

The position of the regulator was drastic until recently, when during the second day of the "CEMAC International Investors' Week" which took place from 12 to 15 October 2021 in Douala, the President of the COSUMAF announced that a new regulation was being prepared and that such regulation shall be adopted by the ministerial committee of Central Africa by the end of 2021. On the same note, the Ministry of Posts and Telecommunications (MINPOSTEL) of Cameroon recently published the summary of the seminar held in Yaoundé on "The challenges, opportunities and risks of crypto-currency in Cameroon.” This document formulates the proposals synthesised by the MINPOSTEL in order to frame the use of this virtual currency in Cameroon. At the end of this seminar, it was requested to extend the regulations that already govern electronic money (Mobile Money, E-cash...) to cryptocurrency; to review and adapt policies to fully integrate changes in the market; to use other tools to identify key determinants of consumer switching behaviour; and to review ex-ante regulatory thresholds to ensure balance between regulation and investment risks.

Thus, it is on the basis of this new text that the regulator (COSUMAF) will grant authorisations for this activity in each Member State of the CEMAC zone, notably in Cameroon, while ensuring its proper functioning. The new regulation will also be able to intensify the trade of cryptocurrencies in Cameroon as well as in the other countries of the sub-region.

The reform of the foreign exchange regulation

CEMAC member states, through the BEAC, have approved new foreign exchange regulations that will restrict payments in foreign exchange by both individuals and businesses.

Effective since 1 March 2019, the COBAC Regulation N°02/18/CEMAC/UMC/CM has raised a number of concerns. The new regulation is targeted at various types of economic actors, including individuals, banking and financial institutions, as well as the extractive industries.

In fact, the New Regulation highlights the objectives of strengthening monetary policy in the CEMAC zone, driven by the governing bodies. In a nutshell, it reinforces the obligation for credit institutions to proceed, with diligence, with the retrocession of currency in their possession; it significantly restricts access to loans by non-residents; it increases the threshold amount that individuals must declare when crossing the border, recognising that border crossing and giving customs officials the power to confiscate; it prohibits the export of coins when the amount exceeds five thousand (5,000); it submits credit institutions to a periodic obligation to communicate statements of correspondent accounts; it reinforces the prerogatives of the monetary authorities in controlling the exercise of foreign exchange activity and it establishes a strict system of sanctions for breaches of foreign exchange regulations.

Concerning extractive industries, the new regulation will be applicable on them starting from 1 January 2022, unlike other economic operators, who have been strictly adhering to the terms of the new foreign exchange regulations since 1 March 2019. Oil and mining companies will be subject to more flexible regulations. For instance, they will have the right to hold foreign currency accounts both in the CEMAC zone and abroad, which will be governed by specific provisions enabling extractive companies to continue their activities while allowing the central bank to carry out the controls required by the regulations in force.

Preeminent key political and legal topics 

Reform of the Finance law 2021 

Each year, the Cameroonian National Assembly promulgates a new financial law. The 2022 Finance Bill will soon be approved by the Government; it is already known that it considers including the introduction of a tax on money transfers nationwide, with the exception of bank transfers and transfers for the payment of taxes. This tax would be set at 0.2% of the amount for transfers and 0.1% for withdrawals. The Government plans to reduce the cost of corporate restructuring from 2022 onwards; this is why it intends to reduce the rate of registration duties on large-scale transfers of corporate rights from 15 to 5%.
In addition, with the advent of the 2021 Finance Bill, entrepreneurs are nowadays granted a unique tax identification number when they open a company in Cameroon. This tax identification number, called the unique identification number, is issued to entrepreneurs as soon as they start the business registration process. Any entity or individual entrepreneur who launches a business in Cameroon is assigned this unique identification number by the Directorate General of Taxes. The number is allocated permanently as soon as the taxpayer is actually localised and only after the taxpayer has submitted an application for the registration of the business.

Policies towards Foreign Investment and foreign control in domestic companies

There are no general economy-wide restrictions (statutory, de facto, or otherwise) on foreign ownership or control. Cameroon has no legislation or regulations that prescribe outright bans on investment, caps on participation, mandatory national participation in joint ventures, licensing restrictions, or mandatory intellectual property (IP) and technology transfer requirements.

Except in particular areas such as national defence, shipping and security, there are no sectoral barriers, limitations or requirements on foreign ownership and control. Private entities, both domestic and foreign, can create and own businesses that engage in all forms of legal income-generating activities. They can also enter into joint ventures and public-private partnerships with the Government.

Cameroon has a screening process, which applies to all, both domestic and foreign investments. This screening process ensures that investors have legitimate businesses registered and are able to meet criteria, such as job creation and export quantities, to qualify for private investment incentives.