CAMEROON: An Introduction
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COUNTRY OVERVIEW (CAMEROON)
Cameroon is blessed with enough natural resources, progressive economic growth and a key location in Central Africa. There are enormous opportunities for economic investment in Cameroon, ranging from agriculture to mining, infrastructure, forestry, and the oil and gas sectors. Cameroon has the largest and most diverse economy of the six countries in the Central African Monetary and Economic Union (CEMAC) sub-region, which counts over 50 million people.
The legal regime applicable to investment activities in Cameroon was instituted by ordinance number 90/007 of 9 November 1990 amended by Law No. 2002-004 of 19 April 2002, then known as the Investment Charter. Cameroon’s legal environment for investment was updated with a piece of legislation enacted on 18 April 2013 laying down the Private Investment Incentives in the Republic of Cameroon. Among the incentives are some of the following;
- Common Fiscal and Custom Incentives during the setting-up phase and the operation phase: during these phases (which are limited to 5 years for the setting-up and 10 years for the operation phase), investors can benefit from various incentives such as (i) an exemption from registration duties (on leases, creation or increases in capital), and from VAT (e.g. on provision of services contracted from abroad related to the implementation of the project); and (ii) an exemption from various taxes or a reduction in the amount of said taxes (corporate income tax, tax on profits, etc...)
- Administrative and Financial Incentives: Investors can also benefit from this type of incentives, notably (iii) the right to open a bank account in local or foreign currency, in the Republic of Cameroon or abroad, and (iv) the right to cash and keep revenue derived from their transactions abroad.
- Special incentives are applicable to companies that invest in certain Government priority sectors (e.g., integrated agriculture, real estate development, energy and water supply projects).
Also noteworthy is the setting up of one-stop-shops within the investment promotion agency, and the agency for promotion of SMEs, which handles all the approval process.
The government has consciously improved the investment climate so as to attract Foreign Direct Investment (FDI). The road map for Cameroon to become an emerging nation by the year 2035 makes reference to large scale infrastructural development and foreign direct investment as the main ways to reach the objective by the year 2035. The Cameroonian government has targeted certain sectors as priority sectors for investment: transport, food industry, tourism and rural development. In order to attract more investors, significant programs are being implemented by the public authorities; to improve judicial decisions, increase energy supplies, reinforce economic information, simplify procedures, support companies and ensure the protection of the economic area against illegal threats.
The Investment Promotion Incentives law provides liberal incentives for FDI so as to enable foreign investors to invest in Cameroon. It lays out tax exemptions, duties, and other non-tax related benefits. It promises assistance with obtaining the issuance of visas, work permits, environmental compliance certificates, land titles, and long-term leases if certain conditions are met. The government of Cameroon aims for the country to be seen as a free-market economy and has signed numerous bilateral and multilateral trade and investment cooperation agreements which provide basic international legal frameworks to foreign investors. The signing of the African Continental Free Trade Area agreement positions Cameroon further as a hub for investment in Central Africa. Cameroon as a member of the Franc zone benefits from the stability of the CFA Franc (XAF) and also a central bank which regulates financial transactions.
The bilingual nature of Cameroon with notably English and French as official languages which are used in all business spheres makes it even easier for foreign investors to do business in the country. Also, Information Technology is one of the fastest growing sectors of the economy and it has been widely integrated in most sectors, especially in the Banking and Finance industry. Both the government and the private sectors are constantly introducing Information Technology services in their activities.
The political climate of Cameroon with a long period of stability under the current regime reassures foreign investors of the continuity and sustainability of their investments. There is an abundance of natural resources (agricultural, oil, mining and so on...), a diversified export economy, ongoing infrastructural modernisation projects, low cost of labour, as well as equity participation which allows foreigners to own up to one hundred percent of a company’s share capital. The low cost of labour is one of the factors which triggers foreign investors especially in the agricultural sector which is still largely being carried out locally. The Cameroonian population is made up of a vast majority of youths of working age which is an additional advantage in terms of available work force.
Although the government is making significant steps towards improving the business climate in Cameroon, there is still much to be done when it comes to the realities on the ground. The level of current infrastructure is a substantial roadblock to growth. The investment climate in Cameroon does not reflect its potentials due to poor infrastructure, corruption, slow administrative procedures, bureaucracy, and a bi-jural legal system made up of common law and civil law. The slow judicial system makes it very difficult for foreign investors to do business in Cameroon. The private sector in Cameroon is, to an extent, not liberal since the influence of the government can be seen via government policies. A rapidly evolving tax and regulatory regime that lacks transparency poses enormous challenges to small and medium-sized enterprises attempting to enter the market. As a result, it is imperative for companies hoping to do business in Cameroon to have a local partner.
The complex regulatory environment and corruption through the government has led to delays in project completion. Almost all business transactions require senior-level government approval, making for a cumbersome process susceptible to political influences and corruption.
The advent of COVID-19 has brought about a shift in the traditional way of doing business, with outsourcing and remote working being the most used methods by a majority of businesses now. Recently, the lifting of measures put in place to fight the sanitary crisis has made movement easier, with foreign investors travelling in and out of Cameroon.