Dbi cameroon for issuu 17sept2014 by Rohit Juneja

doing business in

Cameroon The key to Central Africa

Austria Austria

National capital Provincial capital Town, village Major airport International boundary Provincial boundary Main road Secondary road Railroad 50

100

Fotokol

Bama Kari

Mokolo

Biu Mubi

Gombe

Numan

Touroua

Jalingo

Abakaliki

Ikom

Calabar

Yabassi

LITTORAL

Buea

Luba

Douala

Limbe

Lolodorf Kribi

The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations.

Map No. 4227 UNITED NATIONS September 2004

Eséka Ny

Mbalmayo

Minta

Lom

Akonolinga

Batouri

Ntem

EQUATORIAL Bata GUINEA

Ambam Ebebiyín Oyem

Berbérati Gamboula

Nédélé

Ka de i

Yokaduma

Nola

Ngato

Ebolowa

U D

Bozoum

CENTRAL AFRICAN REPUBLIC

Lomié

Sangmélima

Baïbokoum

Bouar

Baboua

Bélabo

Moundou

Meiganga

Ndokayo

Bertoua

Bocaranga

Bélel

Abong Mbang

on g

Ngoulemakong

Touboro

en t

Djoum

GABON

Campo

Yaoundé

cid Oc

Bight of Biafra

ga Sa n a

Lai

Bo u

EQUATORIAL GUINEA

Nanga Eboko

Monateve

Monatéle

Edéa Mésondo

Isla de Bioko

C E N T R Eanaga

Bafia

go ne

éré mb Ma

Nkongsamba

Ngaoundéré

Garoua Boulaï

Matsari

Pala

Lac de Mbakaou Mbakaou

Yoko

OUEST

Mundemba

Vin a

Ngaoundal

Tibati

Mbouda Bafoussam Dschang OUEST SUDBafang Bangangté

Fianga

Sorombéo

ADAMAOUA

Banyo

Nkambe

Bankim am Mbengwi Bamenda Mb Sangbé L. Bamendjing Mamfe Foumban

Kumba

Malabo

Sambolabbo

NORDOUESTKumbo

é bb

Tcholliré

Mbé

Tignère Abong

K M ayo

Reservoir de Lagdo

Kontcha

Takum

Wum

Laro

Tungo

Bali

Léré

a ri

Bongor

Yagoua Kaélé

N O R D Poli

Ganye

Wukari

Maroua

NORD

Garoua

Yola

Ben

CAMEROON

Bourrah Guider Figuil

Ogoja

CHAD

Mora

N I G E R I A

Gboko

Waza

EXTRÊME-

100 mi

Markurdi

N'Djamena

Kousséri

Dikwa

Maiduguri

Gombe

Potiskum

200 km

150

Makari

Gana ugu ad

Logon e

Lake Chad

Damask

Kom ad u g u

Nguru

Ko m

CAMEROON

Ngoila Souanké

Dja

Moloundou

REPUBLIC OF THE CONGO

Ouésso

Department of Peacekeeping Operations Cartographic Section

Cameroon

Contents Top 8 Reasons �� 4

Top Companies �� 32

Country Overview �� 6

Banking Overview �� 34

CEMAC �� 8

Microfinance �� 36

Economic Outlook �� 10

Mergers & Acquisitions �� 38

Setting up Business & Taxation �� 12

Transfer Pricing �� 40

Special Economic Zones �� 16

Transport Infrastructure �� 42

Agriculture Upstream �� 18

Social Infrastructure �� 44

Agriculture Downstream �� 20

Mining �� 46

Forestry Upstream �� 22

Telecoms �� 48

Forestry Downstream �� 24

Fisheries �� 50

Oil & Gas Upstream �� 26

Tourism �� 52

Oil & Gas Downstream �� 28

Memoir �� 54

Power �� 30

Practical Information �� 56

Dear reader:

decade. That is about to change, as we introduce better incentives and open further market opportunities. We already host many foreign companies: Total, Perenco, Sinopec, Nestlé, Ferrero, Olam are just a few of our partners.

My country Cameroon is the anchor tenant of the Central African CEMAC region, with the largest population and GDP of all six CEMAC countries. This short publication gives you an introductory perspective. Believe me, Cameroon offers many reasons for you to invest, and we explain these grounds in the following pages. Cameroon is politically stable, has an excellent growth pedigree, abundant resources, fertile agriculture, improving infrastructure, and offers a range of incentives for foreign investors. Despite these strengths, Cameroon has not attracted its fair share of foreign direct investment in the past

My entire team and myself are at your disposal to help you. Please do not hesitate to contact us for assistance (see page 58 for contact details). We look forward to greeting you in Cameroon. Best regards, Marthe Minja Managing Director, Agence de Promotion des Investissements API

Austria Austria

Top 8 reasons to invest in Cameroon

Gateway to CEMAC area Cameroon offers many advantages as a gateway to the large CEMAC economic area, which regroups six countries sharing a currency, the CFA franc. Africa is oft described as a mosaic of countries, 54 at last count. Equatorial Africa offers a small-scale version of this larger mosaic, with its economic and monetary community called CEMAC, standing for Communauté Economique et Monétaire d’Afrique Centrale. Overall, CEMAC represents a market of almost 45 million inhabitants, and annual GDP of roughly $100 billion. The economic drivers of the CEMAC zone are based on natural resources. For Gabon and Guinea, it is oil. For Congo and Chad, it is mining. For Cameroon and Centrafrique, it is agriculture. But for all six countries, the path leads down the transformative, higher value-added chain, meaning the flow of finished goods between countries and for export beyond the CEMAC walls will increase progressively over the years.

Political stability President Paul Biya is now in his sixth seven-year term, ensuring political continuity and stability. Cameroon's political system is a multi-party democracy, with upper and lower chambers of congress. The judiciary is independent, using a mixture of British, French and local laws. Country risk for Cameroon is relatively good, with a 30.2 credit rating from Euromoney (Nigeria stands at 42.05 and Chad at 13.72).

Large domestic consumer market With a population exceeding 20 million people, and access to the 45-million strong CEMAC markets, Cameroon is a substantial market with sufficient domestic demand to provide critical mass for foreign investors. Cameroon's role as a regional light manufacturing player is bound to grow as it expands its “big brother” role for smaller neighboring countries such as Chad, Gabon, Equatorial Guinea, Congo-Brazzaville and other francophone countries. Cameroon's relatively good infrastructure (roads and rail) provide the backbone for trade growth.

Special economic zones Cameroon is counting on economic zones to help develop foreign direct investment and attract investors. The country enacted laws and incentives in 2013 to boost the creation of these zones. The first economic zone is being built near the deepwater harbour of Kribi, which will be key to the export of raw and transformed minerals, namely iron ore from the massive Mbalam deposit, which straddles the border with Congo-B (and Gabon). Other economic zones are planned, namely in sectors such as tourism, agro-processing, light manufacturing, technology, and others.

Doing Business in Cameroon

Top 8 Reasons

Downtown Douala, the business capital of Cameroon.

Strong banking and finance sector Cameroon possesses a strong and dynamic banking sector, with thirteen commercial banks having assets of about $9.3 billion. As member of the CEMAC zone, Cameroonâ&#x20AC;&#x2122;s central bank is closely linked to the Central African central bank, BCEAC. Cameroon uses the Central African CFA franc (FCFA or XOF), the common currency for the six CEMAC member countries. There is widespread agreement that the FCFA, with its peg to the euro (â&#x201A;Ź1 = FCFA 656), has been of substantial benefit to the CEMAC members, namely by reassuring foreign investors. Active since 2001, the Douala Stock Exchange trades both stocks and bonds, representing a market capitalization of about $587 million at the end of 2013.

Strong economic growth Cameroon has seen healthy economic growth over the past years, thanks to conservative management of government wealth from oil revenues. From a nadir 2% GDP growth in 2009, annual growth rates have exceeded 4% per annum for the past three years. The World Bank and the AfDB both believe Cameroon could reach 5 to 6% growth rates with even better governmental policies. Long-term investment in infrastructure has been one of the key ingredients for sustainable growth. The general view is that positive trends will continue for CEMAC members, where substantial investments in transformative industries are planned. Investors are not just from traditional European areas, but are increasingly geographically diversified: companies from Asia, North Africa, and the Americas are also active players.

Balanced economic fabric Unlike many other African countries, Cameroon is not a mono-source economy. In addition to its oil wealth, Cameroon also has important agricultural, manufacturing and financial sectors. Primary, secondary and tertiary segments of the economy are well-balanced, at 21%, 27% and 52% respectively. Cameroon is the sole CEMAC country to have substantial manufacturing capacities. In addition to oil refining, the country also has a large aluminum smelter, several large food processors, ship repairs, wood processing, paper and pulp production, textiles, and pharmaceuticals, just to name a few of its activities.

Foreign Direct Investment needed Overall in 2013, UNCTAD estimates that a total of $360 million of inbound FDI entered the Cameroon. Cameroon should do far better than this. For example its much smaller neighbors Gabon and Equatorial Guinea hosted $728 million and $1,369 million respectively, double or triple the Cameroon take. Doing Business in Cameroon

The hinge of Africa

ameroon is Africa's 25th largest country by area and 17th largest by population, with an estimated 22.5 million inhabitants. Sometimes referred to as the “hinge” of Africa, it lies at the juncture where the Atlantic coastline shifts from its east-west orientation to head south toward the Cape Horn. Also referred to as “pocket Africa” containing samplings of Africa’s diversity, Cameroon extends over 1,400 kilometers from south to north, lending it varied landscapes: tropical forest in the south, savannah in the center and semi-desert in its north. First discovered by the Portuguese explorer Fernão do Po in 1472, Cameroon was named after the shrimp (camarões in Portuguese) that abounded in the Wouri estuary. Cameroon became a German colony in 1884, until shortly after the end of the First World War (1919), when the country was divided into French and British parts. The British held what are now the two westernmost regions bordering Nigeria, whereas the French held the remainder of the land. Cameroon was the first African country to become independent, in 1960. The French and British parts were reunited in 1961.

Cameroon could be described as an African democracy, in other words a country having elections, a parliament, and a president with authoritarian power. The present one, Paul Biya, 81, has been in power

Percentage of GDP by sector of the economy Other services 1% Construction 6%

Electricity, gas, water 1%

Trade, tourism 7% Public administration 8%

Agriculture, forestry, fishing 24 %

Mining, oil & gas 8%

Transport, storage 20 %

Finance, real estate 11% Manufacturing 14 %

Total GDP 2013: $27.9 billion Source: African Economic Outlook (AfDB)

Doing Business in Cameroon

since 1982, and was re-elected for his sixth sevenyear term in 2011. The parliament has two chambers. The lower chamber, Assemblée Nationale, has 180 representatives directly elected for five-year terms. The upper chamber, or Senate, has 100 members and is a recent novelty. It was first convened in 2013, although its creation dates back to 1996. The long innings of the current president, although contested politically, have also vouchsafed the country’s relative stability. The majority political party is president Paul Biya’s RDPC (Rassemblement Démocratique du Peuple Camerounais). The largest opposition party is the SDF (Social Democratic Front) which derives much of its support from the two anglophone regions. Slightly larger than California but slightly smaller than France, Cameroon is divided into 10 regions, or 58 departments. The main cities are Yaoundé (the political capital), and Douala (the economic capital and main harbor). Unlike some of its heavily oil-dependent neighbors, Cameroon has a diversified economy, in which the primary sector accounts for 20.6% of GDP, industry & manufacturing for 27.3%, while the tertiary services make up the rest (52.1%). Petroleum is the main export and constitutes the country’s principal revenue. Overall, Cameroon boasted a 2013 GDP of $27.9 billion, which represents the largest CEMAC area economy, but only about one-fifteenth of neighboring Nigeria’s. Food production is keeping pace with the increase in population. Unemployment stood at 30% but hasn’t been accurately measured for some 20 years, which may be understandable in a country that is ‘statisticophobe’. Of course, there have also been bad times, namely in the mid-eighties when the economy imploded due to a slump in commodity prices. The IMF and World Bank had to step in and get tough. Among other measures they caused 65% of the civil service to be trimmed. There was starvation in parts of the country. As commodity prices slowly recovered, so did Cameroon. It helped that it opened up to foreign business. and privatized some 100 state or para-statal outfits, thereby making room for more effectively managed private businesses. It also devalued and thus helped the financial sector reorganize itself. At present the state banks are strong and private ones have multiplied and in the process are competing for growth. •

Country Overview

Central Africa at a glance Nigeria Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

Morocco

158 384 2,427 9.10% $8,915

Algeria Cameroon Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

Equatorial Guinea Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

Libya 22.5 27.9 1,180 2.73% $360

0.7 19 19,041 9.58% $1,369

Egypt

Niger

Sudan Chad

Benin Nigeria

Equatorial Guinea

Ethiopia

Central African Republic

CAMEROON

Kenya

Gabon

Congo (Brazzaville)

Gabon Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

D.R. Congo

1.5 17 7,740 3.25% $728

Angola Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

19 116 6,097 12.3% $5,586

South Africa Population*: GDP*: GDP per capita*: Avg. GDP growth*: FDI*: Sources: World Bank for FDI AfDB for all others.

Angola

Congo (Brazzaville) Population*: Tanzania GDP*: GDP per capita*: Avg. GDP growth*: FDI*:

4 16 2,150 5% $2,931

Zambia

South Africa 50 522 10,334 3.6% $5,807

* Population in millions * GDP 2011 $ Billions * GDP per capita 2011 in $ * Average GDP growth 2002-10 * FDI net inflows 2011 $ Millions

Doing Business in Cameroon

Heart of Africa Cameroon offers many advantages as a gateway to the large CEMAC economic area, which regroups six countries sharing the CFA currency.

frica is oft described as a mosaic of countries, 54 at last count. Equatorial Africa offers a smallscale version of this larger mosaic, with its economic and monetary community called CEMAC, standing for Communauté Economique et Monétaire d’Afrique Centrale. In actuality, the founding stone was laid in 1964 by the Brazzaville Treaty, which envisioned a customs union called UDEAC, including five francophone members. Thirty years on, in 1994, CEMAC then arose from the desire to foster greater connections between five ex-French colonies (Cameroon, the Central African Republic, Chad, Congo, and Gabon) and one exSpanish colony in their midst, Equatorial Guinea. Although it name would imply strictly economic instruments, CEMAC’s mission goes beyond. CEMAC hosts both a parliament and a court of justice, in addition to its necessary banking institutions that oversee the common currency. CEMAC also has a military component, which has proven useful for operations in the less stable Central African Republic. Overall, CEMAC represents a market of almost 45 million inhabitants, and annual GDP of roughly $100 billion (see table). The economic drivers of the CEMAC zone are all natural resources-based. For Gabon and

Principal characteristics of CEMAC countries Population GDP Main Economic Driver (millions) ($ bill.) (and % GDP) Cameroon

27.9 Agriculture (24%)

Central African Rep.

5.2

3.8 Agriculture (54%)

Chad

11.2

21.3 Mining (30%)

16.0 Mining (63%)

Congo Equa Guinea Gabon Total

0.7 1.5 42.6

19.0 Oil (90%) 17.0 Oil (45%) $105.0

Notes: GDP: PPP for 2012; Sources: CIA World Factbook: for population, GDP; African Economic Outlook: Main economic driver

Doing Business in Cameroon

Guinea, it is oil. For Congo and Chad, it is mining. For Cameroon and Centrafrique, it is agriculture. But for all six countries, the path leads down the transformative, higher value-added chain, meaning the flow of finished goods will increase progressively over the years. Although CEMAC has long been a stable monetary union using the Central African CFA franc as its single currency, the community is not yet a customs union. Substantial infrastructure investments, namely in the road network, will improve transit times and lower costs for intra-CEMAC trade. Add statistics on intraCEMAC trade and on customs duties. Cameroon Cameroon can be considered the cornerstone of the CEMAC, with both the largest population and the biggest GDP of the six members. With its 20 million inhabitants, the country is also one of the biggest markets for CEMAC-produced goods. The country has a balanced economic profile, with strong primary, secondary and tertiary sectors. Oil represents only 10% of GDP, and the strong agricultural sector stands on three export legs: coffee, cocoa and cotton. The secondary sector is mostly agri-business and wood transformation industries. Economic growth is expected to reach 5.4% in 2013. Central African Republic (CAR) In some ways the ugly duckling of the CEMAC, the CAR has suffered from decades of political turmoil after its independence from France in 1960. Even now the country is under transitional leadership, pending fresh elections in late 2014. Nonetheless, GDP growth for 2013 is predicted at 4.3%, despite difficulties in cotton prices, one of the principal exports. The privatization programs underway, namely for the telecoms and power sectors, have stimulated growth. Mining also shows potential, namely for gold, uranium and oil, and will evolve away from the predominant small-scale, artisanal mining. Lastly, substantial infrastructure projects, partly financed by the World Bank, will help the landlocked country. Chad Although the most spacious of the CEMAC countries, Chad also had post-independence strife which hampered development. Recently, oil production has been the main economic driver, and this helps explain that the country is the second largest sub-Saharan FDI recipient (after Guinea). A substantial portion of this investment is from China (oil refinery, roads, cement). On the agricultural front, Chad is mostly subsistence production, although cattle is also an export driver.

CEMAC CHAD

Chad expects economic growth of 8.1% in 2013. Congo Like its neighbors, Congo suffered post-independence difficulties as of 1960. About 40 years of economic unrest followed, first under Marxist rule until 1992, then with civil war until 1997. GDP growth for 2013 is expected at 6.4%. The Congolese economy relies heavily on oil, which accounts for about 85% of exports. Diamonds are also a source of export Cameroon earnings, and other mining projects are under study. Iron ore could add Euro 800 million to annual GDP. Lastly, new forestry projects are under analysis. Equatorial Guinea This small country, split between the island capital of Malabo (on Bioko island) and the continental

Central African Rep.

Setting up business There is widespread agreement that the single CFA franc currency, with its peg to the Congo euro, has been of substantial benefit to the CEMAC members. In particular, the pegged CFA franc is reassuring to foreign investors. Overall in 2011, UNCTAD estimates that a total of $6.7 billion of inbound FDI entered the CEMAC area.

Equa Guinea

Gabon

portion of Rio Muni, catapulted to the position of richest African country per capita, based on its fabulous oil wealth. Equatorial Guinea is Africa's fourth largest oil producer. The country was colonized by Spain until its independence in 1968. In preparation for the post-oil period, Guinea is pushing to revive its agricultural production (coffee, cocoa, rice), both for export and domestic demand. Foreign investment is also desired for mining projects, including gold, zinc, diamonds, base metals, and others.

The general view is that positive trends will continue for CEMAC members. In particular for Guinea, Gabon, Cameroon and Congo, where substantial investments in transformative industries are planned. Investors are not just from traditional European areas, but are increasingly geographically diversified: companies from Asia, North Africa, and the Americas are also active players. • Further information from the national investment promotion agencies: Cameroon – www.investincameroon.net Central African Republic – not available Chad – ANIE – www.anie-tchad.org Congo – API Agence de Promotion des Investissements is being created Equatorial Guinea – www.investinequatorialguinea.net Gabon – APIEX – www.apiex.ga Doing Business in Cameroon

Should grow even faster Although Cameroon’s macro-economic performance is not bad, it could be a lot better, according to the African Development Bank. 2014 should see 4.8% GDP growth, and hopefully stabilization of the country’s debt situation.

lthough the recent economic growth rates – as well as those projected for the next couple of years – have been around 5% or even higher, this has not always been the case. For the five years from 2004 until 2009, growth was less sanguine, typically in the 2.5% to 3.5% range. With such figures, the stated goal of reaching “emergence” by 2035 will be difficult. Cameroon’s growth can be explained by three main factors: higher oil production (which is slotted to continue, contrary to Cameroon’s neighbor Gabon); strong domestic demand; and several large infrastructure projects. For 2014 and 2015 economic growth is expected to be about 5% annually, which will finally place Cameroon in the same league as the African median, but still lower than most of its other CEMAC cousins. Cameroon’s economy shows a balanced mix between sectors. The primary sector accounts for 20.6% of GDP, whilst the secondary sector contributes 27.3%, and services complete the picture at 52.1%. For 2012, inflation was 3%, slightly above the 2.9% of the previous year. Inflation is expected to remain at a 3% level for the next few years. Economic drivers-natural resources Cameroon has abundant natural resources. However, revenues obtained from the exploitation of these resources, and from oil in particular, have not been sufficiently channelled into structural investments. The decline of the agriculture and forestry sectors within the economic mix attest to this.

Douala harbor, the main cargo port, also serving landlocked Chad.

gas side, the new gas-fired power plant at Kribi will also help growth. Economic drivers-agriculture Cameroon has both good agricultural and agroprocessing sectors. In 2012 agricultural output grew by 4.1%, whereas agro-food processing grew by 3.6%. 2013 will show a slightly different picture since the coffee and especially cocoa crops suffered from poor weather conditions, but the government has mobilized resources to re-capture lost ground and further develop the local processing of raw materials such as cocoa, cassava and palm oil. The forestry sector remains strong, although its share of the economic picture has dropped as extractive industries and manufacturing having grown. Wood transformation has developed since the 1999 banning of the export of certain raw log species.

Evolution of GDP growth rates 6% 5% 4% 3% 2% 1%

Crude oil and natural gas production are expected to grow well in 2013, with the new deposits at Dissoni coming online. This means average daily production could jump from its 2012 level of 63,000 barrels-perday (bpd) to 90,000 or 100,000 bpd. On the natural 10

Doing Business in Cameroon

2009

2010

2011

2012

2013

2014

Growth Rate Note: Estimate for 2014; Source: African Development Bank

Economic Outlook

high capital expenditure ratio, so as to absorb the backlog and provide the necessary infrastructure for “emergence”. Another indirect subsidy is Cameroon’s tax exemption status on food imports. The issue of budget laws that support imports of mass consumption items such as rice, wheat, fish or cement also calls for examination. Indeed such priorities mean that local substitution production is not directly encouraged, as it is for example in neighbouring Nigeria.

Construction saw a 11.2% leap in 2012 and is expected to do just as well in 2013. Transportation and telecoms also grew healthily, at 8.8% in 2012. The arrival of new mobile operator Viettel in 2014 and continued expansion of Internet access should support continued growth in the sector. Public debt and subsidies Although Cameroon’s public debt in the third quarter 2013 climbed to FCFA 2,416 billion ($5.1 billion), or 11% more than in 2012, international financing institutions such as the World Bank have noted that the ratio of debt to GDP remains a very reasonable 14.9%, compared to 51.6% in 2006. Most of the national debt (68.6%) is owed to foreign lenders. But there should be no sleeping on laurels. For the French Development Agency (AFD), Cameroon needs to handle certain ‘fragilities’: weak revenue streams, under-investment in public projects, and the accumulation of arrear payments. AFD underlines the amount of arrears owed to Sonara, the national oil refining company. The World Bank estimates that the equivalent of about 1.2% of GDP was owed to Sonara in 2010. The African Development Bank notes that state subsidies and transfers amounted to FCFA 662 billion in 2012, up substantially from their 2011 level of FCFA 550 billion. They represented a whopping 26% of total government spending in 2012. The figure for 2013 is expected to be FCFA 689 billion ($1.4 billion). All international lenders are wondering how sustainable this situation is. As for capital expenditure, it represented 31% of government spending in 2012, unchanged over 2011. Given the backlog of projects requiring capital expenditure, the government should maintain this

Employment Although no national employment surveys are carried out, official statistics tell of 13% unemployment rates, a contested figure. Furthermore, the rate of ‘underemployment’ has been estimated at 70%, although such figures are also open to discussion. Impact of commodity prices On the one hand, crude oil and natural gas, which account for 32.6% of Cameroon’s exports – and a large portion of government revenues – have seen stable prices in 2013 and are expected to remain so in 2014. On the other hand, the prices of several lesser yet important exports have suffered from the economic weakness in the Euro zone: wood, rubber, coffee, cocoa, and cotton. Administrative deficiencies Cameroon suffers from poor absorption capacities, meaning the country has difficulty properly implementing the various programs, namely infrastructural, that it funds or receives funding for. One direct effect? Delays in construction projects. This in turn can impact the overall economic growth rate, in particular for power-generation projects that have direct downstream impacts on energy-intensive, private sector manufacturing projects, such as mineral processing (iron ore, bauxite, etc.). Cameroon also gets poor grades from the World Bank in its 2014 Doing Business In analysis, in which Cameroon ranks 168th out of 185 countries. For the World Economic Forum, Cameroon ranks 115th out of 148 countries. Both rankings agree that Cameroon’s rating is falling, despite a series of measures taken by the government to lighten, simplify and expedite new company creation. • For more information: African Development Bank, African Economic Outlook – www.africaneconomicoutlook.org Ministry of Economy – www.minepat.gov.cm Doing Business in Cameroon

Setting up in Cameroon Cameroon counts about 93,000 registered companies, yet the process to set up a business is not that easy. The World Bank regularly raps Cameroon’s knuckles for its heavy-handed paperwork.

etting up a business in Cameroon is perhaps not quite as simple as in Singapore or the United Kingdom, but it is simple enough, and as many foreign investors can attest, the process can be worth the effort, given the good returns that Cameroon can offer. Despite the difficulties in setting up a company, the good news is that simplification is on its way, with the establishment of economic zones (see page 16) and single-stop windows (guichets uniques in French). These windows will enable foreign investors to accomplich all administrative procedures in one spot, without having to visit different ministries and administrations. These next pages summarize some of the key information on setting up a business and taxation in Cameroon, based on information provided by various locally-established audit firms. Part 1 - Company types The creation of a legal structure follows the provisions of the uniform act on commercial companies and on “groupements d’intéret économique” (Economic Interest Groups). The OHADA (Organisation pour l’Harmonisation du Droit des Affaires, Council for the Harmonization of Corporate Law which groups the 16 countries using the FCFA franc currency) has established a pan-African framework for types of company. The main commercial structures proposed to investors by the OHADA legal framework include: • branch of a foreign company; devoid of separate legal status but must be registered in the

Construction boom, fuelled by new cement plants and market opportunities.

Commercial and Trade Register, as well as with the tax administration. The ‘branch’ status has been the subject of recent amendments to limit its renewal, and its initial duration is limited to two years. • limited liability company (SARL in French for Société Anonyme à Responsabilité Limitée) with one or more partners and a minimum registered capital of FCFA 1 million (€1,520); • public limited company (SA in French for Société Anonyme) with one or more shareholders and a minimum capital of FCFA 10 million (€15,200); • economic interest group (GIE in French), with two or more members with unlimited liability and no capital requirement; • cooperative corporation or partnership (société coopérative in French) incorporated without minimum capital requirement and either a minimum of five partners (simplified form) or 15 partners (with a managing board). The management of the LLC/SARL, the most flexible company form, is typically handled by an appointed director. The public limited company/SA (a larger, more complex structure) can be managed with or without a board of directors, depending on whether the SA is ‘unipersonnelle’ (single shareholder), or

Five steps to setting up a company in Cameroon Step 1 Obtain notarized certificate to open company bank account

Step 2 Deposit initial capital in bank & obtain receipt

Step 3 Draft articles of association Sign company by laws with notary

Step 4 File registration documents with CFE (one-stop-shop) Centre Formalites Entreprises Source: World Bank Doing Business 2014

Doing Business in Cameroon

Setting up Business & Taxation

1.1%, 3.3% or 5.5%, based on company revenues. Various specific tax exemptions apply to companies operating in the agricultural or agro-processing areas, and also in rural development. Capital gains taxes Capital gains taxes are called “Impôt sur le Revenu des Capitaux Mobiliers (IRCM)” in Cameroon, and is applied at a flat rate of 16.5%. Value added tax (VAT) The standard rate is 19.25%. Exports are not subject to VAT. A higher tax, called droit d’accise, applies to luxury goods and is 25%. Among these goods are alcohol and tobacco.

includes at least three shareholders. The public limited company/SA necessarily involves the appointment of an auditor (commissaire aux comptes in French). Setting up a company is best done via the CFE (Centre de Formalités des Entreprises), a sort of singlewindow service center. According to the World Bank (Doing Business, Measuring Business Regulations) the current time to create a company is 15 days. Part 2 - Tax environment Cameroon’s tax framework derives from the General Tax Code (called Code des Impots in French), enacted finance laws, instructions for tax administration, as well as international tax agreements. Corporate taxes Corporate taxes in Cameroon are called “impôt sur les sociétés (IS)”, and apply to any company either carrying out an activity or having a regular office in Cameroon. This applies to an office, factory, construction site, storage or exhibit or shipping facility, or to a representative office having the authority to sign contracts on behalf of the company, etc. The corporate tax rate is 38.5% applied to the profit as calculated using the OHADA accounting standards. OHADA rules apply for depreciation Step 5 of fixed assets. Prepaid instalments Publish incorporation for the IS tax are in oﬃcial journal levied monthly at rates varying from

Personal income tax Personal income tax is called IRPP (impôt sur le revenu des personnes physiques). Unless otherwise stated by international treaties, IRPP is due by all persons residing in Cameroon. IRPP is withheld at source, and is applied according to the following scale: Income bracket (figures in FCFA million) Up to FCFA 2 million

IRPP rate 11%

2 – 3 million

16.5%

3 – 5 million

27.5%

Above 5 million

38.5%

IRPP is also applied to non-cash income sources (payments received in kind), at the following rates: housing-15%; electricity-4%; water-2%; household help-5%; per vehicle-10%; food-10%. Special tax regime for economic zones The decrees specifying the exact tax advantages for economic zones have not yet been voted, but one can expect these to include: • commercial advantages for imports, both for initial company setup, and also for transformation and reexport; • tax exemptions of various kinds, which might include tax holidays, certain VAT exemptions (reexport), tax-free dividend payments, property tax reductions, as well as transfer or stamp taxes; • customs advantages, namely for imports into the economic zone; • social advantages, which might include simplified entry visas, residence or work permits, and so forth.

Doing Business in Cameroon

Setting up Business & Taxation

Part 3 - Legal and social environment The legal environment surrounding the creation of a company refers to various principles and basic standards, including:

5% depending on occupational hazard level). The employee contribution level is 2.8%. CNPS does not provide health coverage, except for occupational hazards.

Openness to foreign investors and guaranteed freedom of enterprise. Cameroon’s investment charter of 1990 (modified in 1994) is designed to encourage and stimulate investment into Cameroon. The Charter states the country’s compliance with international treaties regarding foreign investment, and defines the rights of investors.

Part 4 - Financial environment Exchange regulations Currency exchange is overseen by Decree number 02/00/CEMAC/UMAC/CM, of April 29, 2000. This CEMAC-wide regulation is based on the principle of free movement of capital. However, there exist specific controls for foreign direct investments exceeding FCFA 100 million (ca. $200,000), which require a prior declaration of investment to the Ministry of Economy.

Reliability and regulation of the banking and financial system. As a member of the Economic and Monetary Community of Central Africa (CEMAC), Cameroon provides investors with a safe and secure banking and financial system, linked to the sub-regional monetary and financial markets. Furthermore, as a member of the Inter-African Conference on Insurance Markets (CIMA), in the insurance sector Cameroon guarantees the sector’s viability and the safety of policy holders. Encouraging investment in specific sectors. By the means of specific tax, customs and financial policies and incentives, Cameroon encourages investors wishing to operate in key sectors of the economy: industry, petroleum, mining, agriculture, and tourism. Social environment The current labor law in Cameroon results from the Labour Code of 1992, which governs the use of private sector employees. The employment of expatriates is subject to obtaining individual work permits and employment visas from the labor administration (Economic Zones will surely have specific regimes, once the law is voted). The employment of Cameroonian nationals is encouraged. The social security system is governed by the social security law and its implementation decree. The system integrates various compulsory social security benefits, for which employers and employees must be registered and pay social security contributions to the managing agency (CNPS, French for national social security fund). The employer contributions include three levels: family benefits (from 3.7% to 7%, depending on category of job), retirement benefits (4.2%), and basic health insurance (from 1.75% to 14

Doing Business in Cameroon

Exchange controls As a member of the African Financial Community (CFA), whose currency is the CFA franc (FCFA or XAF), Cameroon applies exchange control regulations based on the principle of free movement of capital. The agreement between France and the CFA Community guarantees the operation of the exchange system, as well as the unlimited convertibility of the FCFA to the euro at a fixed parity, guaranteeing monetary stability and simplifying cross-border operations. Regulation of financial markets The rules applicable to the financial markets of Central Africa are from provisions adopted by the: • CEMAC (Communauté Economique et Monétaire de l’Afrique Centrale); and • COSUMAF (the Commission for the Supervision of Financial Markets of Central Africa). Moreover, Douala hosts a Stock Exchange (DSX) which lists both company stocks and governmentissued bonds. Reliability and consistency of the banking system The banking system in force in Cameroon is governed by: • the regulatory framework of the CEMAC community of 6 member countries; • the regulations imposed by the COBAC (Banking Commission of Central Africa); • and national provisions. • For more information: World Bank Doing Business – www.doingbusiness.org French Wikipedia – Fiscalité du Cameroun Social contributions – either CNPS or www.cleiss.fr (search for Cameroun) Full text (276 pages) of Cameroon tax code is available to download. Search on Internet for “Code des impots Cameroun”. Latest version is 2012.

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Changing your perspectives on where to invest next.

Betting on economic zones To attract further investment, Cameroon has adopted a law creating (special) economic zones. The aim is to concentrate specific activities and companies in these zones, so as to accelerate economic development.

ith last year’s law establishing incentives for private investment, Cameroon has acquired a new instrument to attract more foreign direct investment (FDI). Indeed, on December 16, 2013 president Paul Biya enacted a law governing economic zones in the country. According to this act, “an economic zone is an area consisting of one or more geographical areas serviced, furnished and equipped with infrastructure to allow entities that are installed there to produce goods and services in optimal conditions.” As such, each economic zone “aims to focus on one or more designated areas, those activities and actors involved in projects fostering economic and social development.”

Bridge over the Wouri river, linking Douala to Nigeria in the north.

Although the law is still awaiting to be decreed before being implemented, it already provides the framework for potential investors who are interested in new business opportunities in Cameroon. Foremost, the law provides the list of sectors that can be hosted by the economic zones (see table), and which include agro-processing, crafts, industry, services, technology, and tourism, to name a few.

Under article 5 of the law, foreign companies can even request the creation of an economic zone, provided they have organized themselves within a Adopted by both chambers of parliament during “GIE” (Groupement d’intérêt économique). Applicants their December 2013 sessions, the text sets out the must also justify sufficient financial resources; align modalities for the establishment, development and a portfolio of at least five companies ready to settle management of economic zones and the conditions in the designated zone; and identify “unoccupied” under which companies may set up there. land which is to accommodate the economic zone. However, according to article 18, the Planned Types of Economic Zones economic zone’s site must be either part Category Details of the state’s property, or else part of the national domain. Depending on the case, the Agriculture Sixteen “agropoles” in creation (focus on coffee, land is “rented by the state to the promoter, cocoa, palm oil) either in the form of an ordinary lease, or in Industrial Probably near Limbe for downstream oil; Kribi the form of a long lease (bail emphytéotique for ironworks in French), in accordance with property laws, so as to enable construction of the necessary Logistics Douala, Yaoundé, Ngaoundéré facilities and infrastructure.” Tourism Kribi and Atlantic coast; national parks in south Free zones

Harbours, airports, Nigerian border

Commercial zones

No details yet

Service industry

No details yet

Science & technology

No details yet

Competitive clusters

No details yet

Handicrafts

No details yet

Doing Business in Cameroon

Regarding the facilities, the new law stipulates that they are the promoter’s responsibility. The promoter may either be a public entity (the government or its agencies; regional and local authorities; chambers of commerce; state universities), or a private entity. In the first case, the facility development can be carried out by agencies that have existed for

Special Economic Zones

properties located in the economic zone; • project management of basic infrastructure (water, electricity, roads, telephone); • and performance of all other necessary duties for the proper functioning of the zone’s infrastructure. With this in mind, the law establishes two further tools to simplify the promoter’s life. First, the law creates the “one-stop-shop” (guichet unique in French), which can handle all the administrative formalities and procedures relating to company setup in the economic zone. Next, each economic zone is overseen by an 8-member executive committee, four representatives being appointed by the promoter, whilst four representatives are elected by the companies operating in the zone. For its part, the government grants a number of incentives to economic zone promoters and companies located there. Among these are most many years. The two foremost agencies here are the favorable public service tariffs, for example for public MAGZI (Mission d’aménagement et de gestion des transport, port services, telecoms, energy and water. zones industrielles; Agency for the development and Articles 29 and 30 of the law concede that either the management of industrial zones) and the MAETUR promoter, facility manager or hosted firms can install (Mission d’aménagement et d’entretien des terrains and operate their own equipment urbains et ruraux; Agency for the management and maintenance of The government grants to meet their energy, telecoms and water needs, if desired. urban and rural lands). As for private a number of incentives developers, article 17 of the law says The December law for economic that they can call on these agencies to developers of zones follows in the footsteps of to develop the site if so desired. In the April 18, 2013 law regarding such cases, the private developer economic zones and incentives for private investment in will “make a financial contribution Cameroon. The April text provides a corresponding to its shareholding in to the companies that long series of benefits for domestic the economic zone”, this contribution not exceeding 50% of the total choose to locate there. and foreign investors, on items such as customs tariffs, tax incentives, investment in the zone setup. and administrative requirements. The economic zone law also specifies in its article 26 that: “the promoter As for the management of the economic zone, the and the companies within the economic zone enjoy law states that it is handled either by the promoter all the incentives provided by the legislation on himself, or by an authorized agent, under conditions incentives for private investment in the Republic of to be decided by regulation to follow. However, Cameroon.” article 9 of the law states that “the economic zone manager (…) must necessarily be a legal entity under Now, all eyes are riveted on the government, which Cameroonian law, and possess experience in the must shortly sign the various decrees implementing operational and financial management of economic this law that traders welcomed. It now remains for the zones.” The main tasks of the zone manager include government to decree this. • the following: • installation of approved companies in the economic For more information: zone; • provision of services to companies operating in the www.opencamer.blogspot.com is a site that publishes all Cameroon laws. zone; • security for the area; Economic zones are covered by Law 2013/011, dated December 16, 2013. • collection of fees to be paid by the licensed companies; Incentives for private investment are covered by Law 2013/004, dated April 18, 2013. • leasing, subleasing and maintenance of the Doing Business in Cameroon

Growth seeds Cameroon can feed itself but its agriculture must now learn to fulfill its potential.

or a country that is partly hardscrabble desert, Cameroon at least produces enough food to be able to export more than it imports. According to the AfDB, agriculture represented 23.6% of Cameroon’s GDP in 2012, up slightly from the 2007 figure of 22.9%. Yet agriculture represents a diminishing part of the economy’s added-value. According to the World Bank, the share of ‘value added’ by agriculture to the Cameroon economy is declining steadily, from about 30% in 1992 to about 20% in 2007. Yet agriculture continues to provide the bulk of employment in Cameroon. According to the Ministry of Agriculture, in 2013 almost 3.8 million people earned their living by the hoe. In all, Cameroon has at its disposal 47.3 million hectares of land, but only 6.2 million (13.1%) are arable, and on top of that only 1.4 million hectares are devoted to permanent crops (3%). The good news is that both the pool of arable lands and lands for crops have been increasing, but not very fast. In the fifteen years from 1996 to 2011, a mere 204,000 hectares of arable lands were added, and a mere 200,000 hectares for permanent crops. In the same period forest cover dropped by 3.3 million hectares, and it is lamentable that land vacated of trees was not transformed into farm land, where feasible. Moreover, only a small portion of lands are irrigated. In 2011 it was 29,000 hectares, more or less stable since 1996, when the amount was 24,000 hectares. Cameroon’s staple crops remain African favorites: cassava, plantains, maize, and taro (see table). These are followed by vegetables and fruits, including

Cameroon's top export crops Export Value (2011, $ millions)

Crop Cocoa beans

$512.2

Cotton lint

$113.9

Rubber (natural dry)

$105.6

Bananas

$88.7

Coffee, green

$72.2

Cocoa butter

$30.6

Cocoa paste

$27.4 Source: FAO Food & agriculture organization

Doing Business in Cameroon

Agriculture is already the top economic driver, and is set to grow.

tomatoes, banana and sugar cane. In terms of their production value (as opposed to volume), some new crops enter the top ten list, namely cocoa beans, beans, and cattle. What else needs fixing? The use of fertilizers and machinery needs mentioning. Fertilizers and phyto-sanitary products are ignored by most farmers, with only 35.4% using fertilizers and only 32.5% using phyto-sanitary products. Among the fertilizers used, the vast majority were mineral-based (78%), whilst 22% were organic manures. Cameroon remains true to its old farm equipment. In 2010, only 9% of farm households had plows, 30% had sprayers, 4% had moto-pumps, and 24% had wheelbarrows. Cameroon receives most of its agricultural imports from France, Brazil, Belgium, Argentina and South Africa (2011 statistics). The main imports by value were wheat, refined sugar, malt, prepared foods and dried milk in 2011. As for exports, the main customers were the Netherlands, France, China, Germany, and Malaysia, once again in 2011 (FAO). The main export products by value in 2011 were cocoa beans, cotton, natural rubber, bananas and coffee. Note that coffee exports in 2011 amounted to $72.2 million, a drop in the bucket compared with Ethiopia’s $3.1 billion! Cocoa in its various forms (beans, butter, paste and powder or cake) amounted to exports of $592 million in 2011 (the Ivory Coast exports about $2.3 billion of cocoa annually). On the trade scale, food exports beat out imports by a small margin, since exports represent about 20% of total trade value, while imports account for 15%. Despite its shortcomings, Cameroon’s agriculture can nonetheless point to some positive performance. The prevalence of malnutrition has dropped significantly, from 29% in 1999 to 16% in 2012, according to the FAO. This

Agriculture Upstream

Model project for Cameroon? For the African Development Bank (AfDB), the Grassfield agricultural project in Cameroon's dry northeast has been a model project since 2004, when it began. The project is now entering its second phase, after the successful completion of Phase 1, from 2004 to 2011. In its first phase, that ran from 2004 to 2011, it trained some 250,000 farmers to produce an estimated additional FCFA 5 billion ($10.5 million) per year, from 60% higher agricultural production (mainly consisting of more yams, rice, potatoes, cassava and beans, along with livestock: poultry, pigs, rabbits, goats and beef). More efficient access to markets to so as to reduce product waste in transit – a longtime scourge – was another result. The rehabilitation of 300 kms of dirt track was critical to this result.

reflects the availability of core foodstuffs such as cassava, maize, rice, sorghum, plantain, wheat, palm oil, and beans for the average Cameroonian’s plate. The value added per agricultural worker has almost doubled, from about $400/worker in 1992 to almost $750/worker in 2007. Labor force in agriculture is on a slow rise, from 3.45 million people in 1998 to 3.8 million in 2013. Yet, as a proportion of the total work force, the number has dropped from 62.2% in 1998 to about 44% in 2013. This reflects the rising difficulty of keeping the younger generations down on the farm. Agriculture nonetheless still represents the largest employment sector in Cameroon. Yet Cameroon faces many issues to reach the level of agricultural productivity of say a South Africa or even a Ghana. One major issue is the small family plots versus industrial agriculture. Family farming does ensure employment, but its small scale prevents efficiency-boosting measures such as mechanization, use of fertilizers or irrigation. This is where industrial agriculture plays an important role, namely for exports or for supplying produce to industrial-scale transformation plants (e.g, Nestlé, Ferrero). Cameroon’s small farms lack the means to invest in anything beyond very simple equipment. Traditionally this hurdle has been overcome by agricultural cooperatives. Unfortunately for Cameroon, the vast majority of its farmers do not belong to any form of agricultural organization or cooperative. Such entities would enable them to share equipment, funding, training, and thus increase their productivity by learning the basics of modern farming. In 2009, only 1.3% of farmers belonged to an agricultural organization.

Phase 2, which was signed in December 2013 by the AfDB and the Ministry of Economy (Minepat), aims to create 610 hectares of freshly irrigated land. In addition it will retread 278 kms of dirt track, and create the requisite infrastructure alongside it (hangars, drainage ditches, water retention pools). All told, Phase 2 should lead to an additional 37,000 tons of products annually. The AfDB is expecting a healthy return on investment of 19.3%, an additional FCFA 15.7 billion in annual economic value-added, as well as a doubling in average household income, from FCFA 250,000 in 2013 to FCFA 475,000 in 2025 ($525 to almost $1,000). In all, AfDB is providing FCFA 12.6 billion in funding, of which 81% in the form of a loan, the rest being donated. Is the Grassfield project scaleable to other parts of Cameroon? The project coordinator at the Ministry of Economy, Muluh Gregory Nguh could only give a sibylline answer: “Given the positive results of Phase 1, and the fact that many regions face the same agricultural development issues, this cannot be excluded.” All the more so that the funding for Phase 2 was below the requested amount, meaning other projects will come up.

Which brings us to the last issue, that of training the farmers so that they can make better judgments on what to plant, when, how to irrigate, what fertilizer to use, and so forth. The Grassfield project (see sidebar) is a good example of how the African Development Bank invested a substantial portion of project funding into “capacity-building”: teaching farmers to become better farmers. • For more information: Ministry of agriculture – www.minader.cm FAO (United Nations) Cameroon data – www.fao.org www.cemacbusiness.com Doing Business in Cameroon

Using the local kitchen Cameroon is on its way up the value chain, transforming a greater portion of its raw agricultural output.

griculture and agro-processing (into finished or semi-finished products) are both key sectors and key priorities for Cameroon’s economy. For decades, both agricultural production and its transformation on site have suffered from lack of funding and inadequate technical skills. The sector of agro-processing therefore remains largely virgin territory, with many business opportunities. Recent years have seen developments in specific segments: products such as coffee, cocoa, tobacco, cotton, palm oil are being processed either into semifinished or even finished products by companies such as: Camlait and Nestlé for dairy products; Chococam and Ferrero manufacture chocolate and cocoa powder; Socapalm produces palm oil; Maiscam processes maize and corn; Sodecoton extracts cottonseed oil. A prototype incubation center established by the Chamber of Commerce near Douala transforms manioc tubers into starch and grain semolina. The government has been a promoter of small and

Increased local processing of crops is a priority (here palm oil).

medium enterprises (SMEs), and this has spawned several agro-processing companies. For example New Food SARL, based in Yaoundé, produces tomato paste and purée, both canned and packaged. Palm oil derivatives such as soap, are also being manufactured, usually on small scales. The same holds true for fruit processing, where religious communities produce jams and compotes, but with limited resources and therefore very small production runs. Many of these foods have short shelf lives, given the lack of conservation methods. Obstacles in the way Overall, there is a problem in preserving key foods for nationwide consumption. Since many of the companies are small-scale, there are regular shortages as locally processed foods sell out. This leads to imports of goods that could have been sourced locally, and thus to inflation.

Cameroon’s top agro-processing companies Company

Raw material

Finished/semi-finished outputs

Sodecoton

Cotton/cottonseed

Cloth, cottonseed oil

Socapalm

Palm trees

Palm oil, palm kernel

Nestlé

Milk & grain

Dairy products, breakfast foods

Camlait

Milk & fruits & grains

Dairy products, fruit juices

Cicam

Cotton

Traditional cloth, bath towels

CDC

Tea & bananas & plam trees

Palm oil, tea bags, bananas for export

Chococam

Cocoa beans

Chocolate, cocoa powder, sweets

Maiscam

Corn, maize, sorgho, etc.

Flour, grain conservation

Brasseries du Cameroun Grain, starch, fruit aromas

Beer, soft drinks

New Food

Tomatoes

Canned and preserved tomatoes

Nosa

Palm oil

Household soaps

Doing Business in Cameroon

Another problem is the lack of scale in agricultural production. Family farms coalesce into collectives (GIC for Groupes d’Initiatives Communautaires) to produce for their own needs, but often not for outside sale. They employ traditional methods for product conservation: for example, sun drying of cocoa and coffee, firesmoked meat and fish, and manual pressing of palm seeds or groundnuts to eke out cooking oil.

Agriculture Downstream

as well as downstream processing requirements. For plantain, the French government is supporting agricultural research via a FCFA 5.4 million debt reduction plan. For cocoa beans, a company called Fapam SARL was launched in the town of Mbalmayo in January 2014 to produce cocoa butter and powder, two semi-finished products that go into the making of chocolate. With a total investment of FCFA 4 billion ($8.4 million), a quarter of which was provided by the Cameroon government and the rest by private developers, the company will process 16,000 tons of cocoa annually, meaning 5,000 tons of cocoa butter and powder sold on international markets.

Yet perhaps the biggest hurdle remains the lack of funding, or rather the difficulty in releasing funds. Cameroon actually has abundant financial liquidity available, but entrepreneurial business plans face some daunting difficulties: power supply can be uncertain; roads to get raw materials in and ship finished products out are lacking; and of course the small farm sizes mean that supply can be disrupted. Government’s role In short, the food industry is one of the branches of industrial production that the Cameroonian government wants to promote by prioritizing certain products. Since 2007, a government initiative to transform local produce for mass consumption has been operating. By supporting craftsmen and SMEs, the Ministry of Small and Medium Enterprises (Minpemesaa) is focusing on four priorities: • processing tubers (cassava, yams, sweet potatoes) • packaging fruit juices and jams; • preserving meat and fish; • transforming cocoa beans. Because agriculture can become a much stronger economic pillar, Cameroon is implementing ‘second generation’ farming, a modernized form that uses international standards for machinery, seeds, and fertilizers. This move away from traditional subsistence farming can be seen with cassava, plantain, corn and other cereals. The state is setting aside vast areas for the cultivation of corn, cassava, sorghum, soy beans, and plantains. Just to take the example of corn, Cameroon is spending an estimated FCFA 873 million ($1.8 million) of which 35% for inputs (seeds, fertilizer, etc.) and another 35% for appropriate machinery. Annual maize production is expected to leap from 1,545 to 4,670 tons, serving both immediate needs

Investment opportunities Fapam is not the only arrow in the government’s quiver. Through its “agropole” program that invests in the creation of large-scale farms and industrial processing units, the state is planning sixteen centers. This is all part of the DCSE strategic plan, which expects to generate at least 300 direct and 400 indirect jobs per agropole. Some foreign companies have already heeded the siren song of Cameroon’s agricultural opportunities. Swiss company Nestlé, Italian Ferrero, French Compagnie Fruitière and drinks producer Castel Groupe are at the front of the line-up. There are also vertically-integrated foreign investors: Olam from Singapore for palm oil, or Herakles Farms from the USA, also in palm oil. These two both grow the palm nuts and then refine the vegetable oil. Case study: cassava Sometimes called white gold for its starch content, cassava can be of use in multiple industries: textiles, pharmacology, cosmetics and more. In the south of Cameroon a company called Sangmélima is being established for cassava processing. The factory has already been built, to produce huge amounts of both of starch and flour. With Sangmélima able to process 120 tons of cassava daily (48,000 tons per year), the government has promoted an initiative to plant 4,000 hectares in 5 years for cassava production. With high demand for starch on global markets, financing through heavily indebted poor country loans was readily available. As for the cassava flour, in the coming years it will progressively replace wheat flour for making pasta, biscuits and pastries, as is done in neighboring Nigeria. • For more information: Ministry of agriculture – www.minader.cm Doing Business in Cameroon

Money grows on these trees Intense logging co-exists alongside multiple reforestation programs, so as to preserve the green canopy.

s in most Central African countries, forest occupies much of the Cameroonian territory. According to the Regional Strategic Action Plan (PAS in French for Plan d’Action Stratégique) for environmental resources and biological diversity of ecosystems in the Congo Basin, forests cover a total of 30 million hectares of the country’s 475,000 km² area, meaning about 63% of national territory. Cameroon’s forests are rich and varied. According to the PAS, the forest is home to some 8,260 species of plants, 409 mammal species, and 690 bird species. Cameroon is thus in second position in Central Africa for its rich ecosystem. The forests are classified in two main categories by Decree 94/01, dated January 20,1994, covering forestry, wildlife and fisheries: permanent and nonpermanent forests. Permanent forests include state and community forests (forêts domaniales and communales in French). State forests belong to the government, and consist mainly of protected wildlife areas (national parks, wildlife sanctuaries and reserves, etc.) and of forest reserves (reforestation areas, botanical gardens, etc.). According to the 2011 National Statistical Yearbook, in 2010 national parks accounted for 31% of the protected areas in Cameroon, whereas wildlife reserves covered 8% of all protected areas in the country. Communal forests for their part are the responsibility of the municipalities that carry out development programs under the supervision of the national forestry administration. Non-permanent forests are simply all those not classified as permanent forests. They include community forests, private forests and even portions of national domain forests. Community forests are exploited and managed after signing an agreement with the forestry administration. Private forests are planted by either individuals or legal entities, and are 22

Doing Business in Cameroon

A log park near Douala. Most wood is processed locally before export.

established on private land. As for the national domain forests, they do not belong to any of the categories mentioned. Logging in Cameroon is covered by either of two concessions: sale of standing volume (“vente de coupe”) or operating agreement (“convention d’exploitation”). According to Cameroon’s Forestry Law, “vente de coupe” is an operating license for a limited period and a specific volume of timber sold standing, subject to an annual logging quota. An operating agreement, covered by specific terms of reference, “gives the right to obtain a given volume of wood from a forest concession, to provide longterm supply to wood transformation units” explains the law. The forest concession refers to “the land territory covered by the operating agreement. It may consist of one or more operating areas.” The law does not however allow the total area granted to a single operator to exceed 200,000 hectares. In Cameroon logging is done in the form of forest

Top export markets in 2012 – Raw logs (grumes) Country

Export volume

Market share 57%

China

321 000 m

Vietnam

111 000 m

27%

India

25 000 m3

Italy

14 000 m

Turkey

11 000 m

France

9 000 m

1.7%

Total

3 3 3

530,000 m

Source: Cameroon Customs Office - 2012 Annual Report

Forestry Upstream

Ending the export of raw wood Paragraph 1 of article 71 of the January 20, 1994 law regarding forestry, wildlife and fisheries is explicit: “For each species, at least 70% of logs are to be processed by local industry for a transitional period of five years from the date of enactment of this law. Beyond that period, the export of raw logs will be prohibited and all domestic production is to be processed by local industry.” However, large quantities of raw logs can still be seen at the port of Douala, ready for export. The loophole? It is provided by paragraph 2: “The export of unprocessed special forest products, on terms laid down by decree, can be granted subject to an annual authorization issued by the forestry administration, and the payment of the progressive surtax based on export volume.”

concessions via 114 forest management units (UFA for Unité Forestiere d’Amenagement), representing 7 million hectares of exploitable forests. According to the President’s civil cabinet (Agenda 2014), 89 UFA’s are currently underway, representing a total area of six million hectares. These are being operated by three types of companies: industrial logging companies (usually subsidiaries of large foreign companies); joint ventures between local and foreign companies; and individual operators. In 2013, according to the Cameroon Investor’s Guide, industrial logging companies held 36% of the land grants, against 16% for joint ventures and 48% for individual operators. Yet from a productivity point of view, the picture shifts: industrial operators account for 65% of total volume, vs. 25% for joint ventures and only 10% for the individual operators. Timber production is still struggling to recover from the effects of the 2008 financial crisis, which caused a decline in demand from developed countries. In turn, logging employment in Cameroon suffered. Thus, in 2012, the volume of felled timber was about 2.3 million m3, a decrease of 1.7% over 2011. The drop was also felt in the export of logs. According to the customs department, the volume of timber exported declined from 575,000 m3 in 2011 to 519,000 m3 in 2012, a decrease of almost 10% in one year. Revenues were also hit: the various taxes in this sector amounted to FCFA 13.2 billion ($26.4 million) in 2012, down 14% compared to 2011. “A drop due to non-renewal of 23 standing volume agreements, the abandoning of three forest concessions and the high number of debtors,” explains the President’s civil cabinet. The main challenges for Cameroon’s forestry are

As a result recent years have mostly seen log exports in the direction of Asian countries. The customs department shows that in 2012, 57% of exported raw logs were headed to China (321,000 m3), followed by Vietnam (111,000 m3), and then India (25,000 m3). The leading European country is Italy, which logged in at fourth place with 14,000 m3 of logs imported from Cameroon in 2012.

illegal logging and the need for reforestation. To curb the sale of illegal timber, the European Union and Cameroon have, since 2010, enforced the Voluntary Partnership Agreement. Yet the Centre for Environment and Development, a non-governmental organization, listed in 2013 several cases of violations: concessions granted on illegal terms, operators holding more than 200,000 hectares, wood extracted from areas not open to logging under the agreements in force, etc. Although the deforestation rate is only 0.19% per year according to the Ministry of Forestry and Wildlife (Minfof), reforestation campaigns are underway across the country. According to Minfof, a campaign that was officially launched in 2006 has helped to plant some 2,333,706 trees across the country in 2008, covering some 7,776 hectares. For its part, the National Agency for Forestry Development (ANAFOR) encourages the creation of community, municipal and private forests. The campaign has so far enabled to plant some 1.1 million seedlings representing some 970 hectares. Similar programs exist throughout the country's municipalities. And yet one is still far from the provisions of the law that specify that “urban municipalities are obliged to respect, in the cities, a forestation rate of at least 800 mv of woodland per 1,000 inhabitants.” • For more information: www.cemacbusiness.com Doing Business in Cameroon

Local added value For 15 years now, raw log exports have given way to exports of sawn and processed wood products. Yet more refined transformation is down the road.

s mentioned in our article on upstream forestry (see preceding pages), the export of raw logs was banned in Cameroon as of 1999, with a few caveats. An analysis conducted in 2005 on “Stage 2” wood processing (see chart) by JMN Consulting, in collaboration with the Ministry of Forestry and Wildlife (Minfof) underlines that measures have been taken to implement the law: “Some species are prohibited from exploitation, while others are subject to additional taxation before export. The only logs that can be exported without special conditions are those of certain lesser-known species, if subject to government promotional efforts. Another important aspect of the transformation incentive policy is that logging rights are allocated in consideration of the processing capacity, judging applicants based on technical criteria.” Based on the drastic drop in export of raw unprocessed logs, wood transformation has definitely exploded in Cameroon. Exports of raw logs (grumes in French) dropped from about 1.6 million tons in 1996/1997 to 400 000 tons in 2003, and further to only 200 000 tons in 2004. In 2007 the forestry ministry conducted a study on the traceability of timber exploited in Cameroon and wood exports, which concluded: “Cameroon annually processes an approximate

Top export markets in 2012 – Sawn timber Country

Export volume

Belgium

110,000 m3

Market share 20%

Italy

84,000 m

15%

China

67,000 m3

12%

France

39 000 m3

Netherlands

28 000 m

Spain

26 000 m

4.7%

Total

553,000 m

Source: Cameroon Customs Office - 2012 Annual Report

Doing Business in Cameroon

A sawmill near Yaounde. Sawn timber ranks fifth in exports.

volume of 2 million m3 of timber, of which over 90% is processed locally. The remaining fraction is exported as raw logs. For the processed wood, 87% consist of sawn lumber, 9% is veneer, and 3% is plywood. Other products (1%) are mainly flooring.” The bulk of processed wood is exported to Europe, mainly to Italy, Spain, France, the Netherlands, Belgium and Ireland. According to analysis from GFBC, the federation of wood industries, the sawn lumber exported from Cameroon heads mostly to Europe (75%) and then Asia (10%). Raw logs follow the opposite trend: 85% are sold to Asia, with the rest of the world, including Europe, taking 15 %. According to the Cameroon customs department, in 2012 the country exported 544,000 m3 of sawn timber as opposed to 519,000 m3 of raw logs, representing respectively FCFA 142.8 billion ($285.6 million) and FCFA 62.2 billion ($124.4 million) in export values. This places sawn timber in fifth place in the ranking of Cameroon exports, at about 8% of total exports by value. Local wood processing in Cameroon is done either on an industrial scale, or the traditional way. According to a recent study by the Center for International Forestry Research (CIFOR) on the importance of forestry and wildlife sector in Cameroon, industrial wood processing is done in two ways: either by exploiting natural forests, or by logging man-made forest plantations. For the former, 89 forest concessions covering approximately 6.3 million hectares are in operation. As for the latter (plantations), this is exclusively done on eucalyptus trees planted in the Northwest and West regions. The eucalyptus make for excellent wooden poles, which are treated

Forestry Downstream

and processing), these activities are authorized by law, provided that one possesses a logging license. However, in practice, the majority of small-scale operators have not gone to the trouble of getting a permit. Another CIFOR study, dated 2011, identified three main factors contributing to the development of small-scale, non-licensed operations. First is the relatively easy access to chainsaws, their number having increased significantly in recent years. Second is the availability of accessible woods in nonprotected forests, which can be logged according to local custom. And finally, the lack of effective on-site regulation means loggers can act quite freely.

in three plants based in Bafoussam and Douala, and then carry overhead power or telephone lines. According to the CIFOR study: “The total revenues from industrial wood processing is estimated at FCFA 370.5 billion ($741 million) per year, of which the vast majority (99.4%) is from natural forests, and only 0.6% from the eucalyptus stands.” Industrial wood processing employed nearly 23,000 people in 2013, and created an average economic value-added of FCFA 168.8 billion ($337.5 million) per year between 2008 and 2011. As for the traditional, small-scale exploitation (logging

In any case, the products of these small-scale sawmills go for the most part (90%) into construction uses, namely for formwork, as rafters or as boards. An estimated 41% of the output of all small-scale sawmills is to produce simple boards. Some 450,000 people are at work in this traditional wood processing branch, accounting for FCFA 65.2 billion ($130.4 million) in revenues. These sawmills have also spawned dozens of lumberyards in Cameroon’s towns, which have also meant additional local taxes for municipalities: about FCFA 49 million per year. Another positive side effect has been the multiplication of other downstream manufacturing operations: furniture, doors, windows, even works of art. • For more information: Ministry of Forests (Minfof) – www.minfof.cm www.cemacbusiness.com

Main wood processing companies in Cameroon Company

Year of creation

CEO

Concession size (ha)

Revenues (FCFA billion)

SFID (Société forestière et industrielle de la Doumé) – Rougier Group

1969

Philippe Jean

625 000

22,8

SEFAC (Société d’exploitation forestière et agricole du Cameroun)

1968

Eduardo Annunziato

400 000

Alpicam Industries

1975

Alpi Pietro et Fils

364 325

Pallisco

1972

Michel Rougeron

341 708

8,5

TRC (Transformation Reef Cameroun SA)

1999

Paul Reef

286 212

SFIL

n.a.

209 852

n.a.

CUF (Cameroon United Forest)

1991

Antoine Darazi

198 000

4,7

CFC – Groupe Vicwood – Thanry

1990

Giancarlo Mirani and Michèle Roucher

193 105

Wijma Cameroun S.A.

1968

Jacky Rivière

179 268

Panagiotis Marelis SARL

1996

Panagiotis Marelis and Théodore Voutsas

160 000

2,6

Doing Business in Cameroon

Immense untapped potential? Cameroon’s oil production has slowly climbed, but after experiencing its heyday in the 1980s, domestic crude production has been in slow decline. However, since 2012, it is slowly climbing back up the slope, thanks to new wells. Although Cameroon is a small oil producer, its output is rising again.

t was in 1947 that oil exploration started in Cameroon. It then took 25 years for the first commercial oil strikes, at the Rio del Rey basin, to gain worldwide attention. In 1977, thanks to pumping in the Kole oilfield, located in this basin, the country finally gained acceptance in the select circle of oil producing countries. Very quickly crude oil production soared, to even reach a record level of 186,000 barrels a day. The year was 1985. But, true to the saying, it turned out to be more difficult to stay on top than to get there. And so, as of 1986, a slow decline set in. The Cameroon National Oil Company (SNH for Société Nationale d’Hydrocarbures), the government-owned institution that manages the country’s oil sector, explains that the decline was due to the global oil

glut and the resultant disinterest in new exploration. Yet the government was dependent on oil revenues and had to react. It passed two laws which it hoped would lift production to acceptable levels. The first law, dated December 12, 1991 prescribed incentives for exploration and production in the Douala basin. The other law, enacted August 8, 1995, was less specific. It sought to promote production in “marginal fields”. Owing to these government measures new oil fields at Ebomé, Kribi, and Campo in the Douala basin came online within a space of two years. A further law – of December 22,1999 (also called Petroleum Code) – made regulation more flexible as an incentive for investment. And so, quite predictably, between 2008 and

Upstream oil producers in Cameroon Oil Production Company Share

Gov't Share (SNH)

U.K. + France

9.42

4.45

Dissoni

U.K. + France

0.73

1.74

Moudi

U.K. + France

0.33

Ebome

U.K. + France

0.55

Company

Area

Country

Perenco Rio del Rey

Rio del Rey

Perenco Cameroon

Sanaga South

U.K. + France

0.02

0.05

Addax (Sinopec)

Lokele

China

4.23

1.86

Rodeo (Victoria Oil & Gas)

Logbaba

U.K.

0.00

0.01

SNH (gov't)

Mvia

Cameroon

0.00

0.01

15.28

9.00

Total Notes: Production figures for 2013; oil in milions barrels; gas in billions SCF

Doing Business in Cameroon

Production Natural Gas Company Share

Gov't Share (SNH)

1.29

3.421

0.08

0.575

1.37

4.00

Source: Ministry of mines, petroleum

Oil & Gas Upstream

production has been on the rise. And the government is counting on this trend continuing. Indeed, for 2014 in its budget, the state is planning on production of more than 30 million barrels, representing revenues of FCFA 718 billion ($1.43 billion). Anticipating this pressure from its shareholder, SNH announced at the end of 2013 that new oil well exploration would take place in 2014. Note that the oil sector revenue projections also include income from the production and marketing of natural gas, as well as revenue from the downstream petroleum sector (refining and distribution to end users). However, it is unclear whether new licenses will have to be issued to reach the production targets. According to the SNH on June 30, 2008, Cameroon had granted 11 exploration permits and authorizations covering an area of 14,522 km²; and 14 operating concessions and licenses for an area of 2,249 km². 2013 bigger operators started moving in. As a consequence, a total of 65 exploration and appraisal What is certain is that Cameroon's untapped deposits wells across the country were drilled. In October 2012 are considerable. Three important geological basins one of the operators, Addax Petroleum, announced have been explored but are not yet tapped to produce the discovery of new oil in the Rio del Rey basin. It either crude or natural gas. The first is the Logone Birni basin in the far north, having estimated the reserves at more than an area of 27,000 km². Seismic 20 million barrels. That same month Cameroon's untapped surveys of it have been completed, Bowleven reported the discovery of the Etinde deposit (Douala basin) deposits are considerable. according to the government. Then there is the Mamfe Basin in the estimated at 100 million barrels. Three important southwest, measuring 2,400 km². has also been surveyed. Lastly, A bit earlier, in the wild north near geological basins have Itthere is the northern Garoua basin. the Chad border, it was a Chinese wildcatter, Yang Chang Logone, been explored but are not Seismic and geological studies have been carried out there only who doggedly labored and finally on part of its 7800 km² area. So far came up lucky with a deposit at yet tapped. experts who have had access to the Logone Birni. The success of this primal drilling in the North moved Adolphe Moudiki, relevant data have qualified Cameroon’s untapped administrator and CEO of SNH, to react as a careful underground as “promising”. official should: “These results are encouraging when the state makes every means to increase domestic Investors who are interested in the exploitation of the rich potential may take advantage of the April 18, 2013 production of oil.” law that includes incentives for private investment in Cameroon. This law provides administrative, tax Ying and yang But exploration is one thing. Production quite another. and customs benefits to new investors that fulfill This is where established international companies certain conditions. The incentives aim particularly such as Perenco, Addax Petroleum, Total E & P or at heavy industry and energy. Since the American Pecten come in. It is due to them that between 2004 Energy Information Administration places Cameroon and 2008, production stayed above 30 million barrels. at 11th position in terms of African reserves, with National oil company SNH blamed the temporary an estimated 200 million barrels, investors may look drop-off on the depletion of some wells or the aging forward to many years to recoup their investment. • of entire production fields (see chart). But resulting measures taken by the government also spurred For more information: activity enough to turn the negative trend around. Societe Nationale d'Hydrocarbures - www.snh.cm Regardless of past productions blips, since 2011 total

Ministry of Energy - www.minee.cm Doing Business in Cameroon

Local distributors take over Cameroon’s sole oil refinery produces 2.1 million tons of oil annually, distributed mainly by three multinational companies, despite slow inroads by national competitors.

he downstream oil sector is dominated by three companies in Cameroon: the National Refining Company (Sonara for Société Nationale de Raffinage), an oil price stabilization fund (Caisse de stabilisation des prix de hydrocarbures, CSPH), and the Cameroon Oil Storage Company (SCDP for Société Camerounaise des dépots pétroliers). Distribution companies then complete the picture with their retail networks for gasoline and butane sales to consumers. Created in 1973, Sonara operates a crude-oil refinery in order to meet Cameroonian market demand for finished products: butane gas, gasoline, kerosene, diesel and bunker, etc. Domestic demand is estimated at approximately one million tons per annum. Based in the coastal town of Limbé, Sonara faces a paradoxical dilemma. Although Cameroon produces considerable amounts of crude oil, the local variety is too heavy for Sonara to refine. So, Cameroon crude is exported, while lighter crude oil for Limbé is imported. The lighter crude is then refined and distributed nationwide. To carry out its work Sonara employs about 720 persons to refine 2.1 million tons of oil per year. Its turnover was FCFA 928 billion ($1.85 billion) in 2012, sightly below the 2011 level of FCFA 1,003 billion (just over $2 billion). 2010 revenues were FCFA 718 billion ($1.43 billion). Sonara’s shareholders include both the Cameroon government (82%) and the French oil giant Total (18%). The opening of the new port of Limbé on the Atlantic coast, has greatly facilitated the import operations and oil exports. The task now is to expand the refinery and fit it with new equipment in order to refine Cameroon’s own heavy crude, thus lowering the price of refined products. At the moment, crude oil imports

Doing Business in Cameroon

One oil refinery provides national needs, but using imported crude!

come mostly from Nigeria (90%) and Equatorial Guinea (5%). According to Sonara, the first phase of the refinery expansion, representing an investment of over FCFA 200 billion ($400 million), is completed and the company is now in the final phase. Once that is done, the Limbé refinery will be able to treat up to 4 million tons of crude oil annually, or more, or more than enough for local demand. Sonara’s new CEO Ibrahim Talba Malla, appointed in 2013 to replace Charles Metouck plagued by legal troubles, has his work cut out for him. Meanwhile, Limbé satisfies more than 80% of local demand. Government subsidies The second major player in the downstream oil sector

Oil producers in the CEMAC area, 2011 Cameroon Chad Gabon Congo Equatorial Guinea 0

100

150

200

250

300

350

Production (Bpd, '000s) Source: KPMG, Oil & Gas in Africa

Oil & Gas Downstream

Cameroon's oil and gas storage depots Depot

Oil capacity (m3)

Natural gas capacity (in tons)

Douala

156 725

1500

Yaoundé

55 885

500

Bafoussam

18 520

300

Belabo

6 080

n.a.

Ngaoundéré

5 400

140

23 600

n.a.

Garoua Maroua TOTAL

n.a.

266 210

2 510 Source : SCDP

is the CSPH fund, an entity founded in 1974 whose main purpose is to “regulate the price of oil products to avoid increases, through partial or total subsidies of prices, to the extent of its financial capabilities.” Since 2008, Cameroon has not aligned its prices on fluctuating world prices. At a price. For, according to a May 2012 analysis by the International Monetary Fund (IMF), the total cost of these energy subsidies over 2009-2012 is estimated at a nervous-making FCFA 944 billion ($1.88 billion). The analysis revealed that the margin of subsidy to Sonara almost doubled. Without state subsidies, one liter of unleaded gasoline would cost FCFA 820 as opposed to the FCFA 569 currently charged. The subsidy on unleaded fuel jumped five-fold from 47 FCFA/liter to 260 FCFA/liter over the three years from January 2010 to 2013. The same holds true for bunker fuel and cooking gas whose prices have remained unchanged since 2006. This continued strong state subsidy for oil products is severely criticized by international donors, in particular the IMF, that believes that these funds could be used for more productive purposes. Oil distribution For its part, the SCDP oil storage company was created in 1979 to solve problems of oil supply nationwide. Its main functions are threefold: storing petroleum products for domestic consumption; maintaining a safety stock for state emergencies; and covering the territory with a network of local oil depots. Hydrac (standing for Hydrocarbons analysis and control) is another important player in the downstream chain. Its mission is to examine the products brought to market, to ensure that they are of good quality.

Finally, covering the “last mile”, are distributors or marketers, companies distributing oil products across the country through their networks of filling stations. Among the best known operators are the French group Total, which is also the minority shareholder of Sonara. Until a few years ago, Total shared the market with Americans Mobil and Texaco, as well as AngloDutch company Shell. But these latter two were acquired by the Nigerian company Corlay, Under the brand MRS, Corlay operates the most extensive network of gas stations in the country. As for Mobil, it was taken over by the Libyan company Oilibya. As for British Petroleum (BP), it had already exited Cameroon by selling its assets to Shell. This “last mile” of oil distribution was marked by a flurry of changes when liberalization occurred in 2000 by presidential fiat. Since that date, a bevy of new market entrants have buzzed in, some of whom operate only a handful of stations. Overall, no less than fifteen new companies were active on the market by mid-2012. One of the most visible is Tradex which is jointly owned by the SNH (see previous article on upstream oil), and a group of private investors. In a decade, it has managed to establish about thirty gas stations around Cameroon, and has already invested in neighboring countries such as the Central African Republic and Chad. Mind you, the three multinationals Oilibya, Total and MRS still control most of the market. • For more information: Sonara - www.sonara.cm Caisse de Stabilisation – www.csph.cm Federation of companies – www.legicam.org

Doing Business in Cameroon

Betting on hydro-electricity Cameroon leverages the potential of its rivers to keep up with workaday energy needs as well as those of industrial development.

lthough it has several thermal power plants scattered across its territory, Cameroon has always relied on hydropower for its industrial activity. Yet, although experts unanimously award Cameroon second place in hydroelectric potential in Africa (the Democratic Republic of Congo taking gold), the country currently has only three hydroelectric dams, located on two of its major rivers. These include the Lagdo hydroelectric dam on the Benue river (a tributary of the Niger), and the Songloulou and Edea dams, both on the Sanaga river. Locals say that the crocodiles know better than to get near them. With an installed capacity of 72 MW, the Lagdo dam feeds Cameroon’s dry northern provinces. Both the Edea and Songlouglou dams – they are just a few kilometers apart – are far larger, with respectively 263 and 384 MW of capacity. In its 2010 report on national energy, the Ministry of

Kribi thermal plant uses natural gas from Cameroon’s offshore fields.

Water and Energy states that “electricity production is heavily dominated by hydropower (69%), … but the weight of hydroelectricity dropped by 7 percentage points compared to 2008, to the benefit of thermal plants and off-grid self-production.” Since 2008 two large-scale thermal power plants have joined in the power play: the Dibamba thermal power plant (85.4 MW) opened in 2009 in the suburbs of Douala; and Kribi natural gas plant (216 MW) on the Atlantic coast of the country, inaugurated in March 2013. The government explains its sudden swing to thermal plants for their relatively short construction

Overview of existing and planned power plants Status Existing

Under Construction

Projected (top five)

Name/Location

Type

Capacity (MW) Expected cost Contractor

Lagdo

Hydro

n.a.

Edea

Hydro

263

n.a.

Songloulou

Hydro

384

n.a.

Dibamba

Thermal (bunker oil)

n.a.

Kribi

Thermal (natural gas)

216

n.a.

Memve'ele

Hydro

201

FCFA 365 bill.

Sinohydro China

Lom Pangar

Hydro

FCFA 238 bill.

China Intl Water & Electric

Mekin

Hydro

FCFA 25 bill.

China Natl Electric Eng.

Noun-Wouri

Hydro

1200

n.a.

Song Mbenge

Hydro

950

n.a.

Kikot

Hydro

550

n.a.

Ngodi

Hydro

475

n.a.

Bayomen

Hydro

470

n.a.

Doing Business in Cameroon

Power

China is at work, with China International Water and Electric Corporation in charge. Funding (FCFA 238 billion; ca. $498.5 million) is from an alphabet-soup of donors: IDA, EIB, AfDB, AFD, BDEAC and GDC. Lom Pangar will be a game-changer for Cameroon’s hydro-electric power. First, because the new water reserves will increase the power-generating capacity at Songloulou and Edea by nearly 200 MW in total (170 and 30 MW respectively per plant). Secondly, because Lom Pangar will pave the way for the construction of several other hydroelectric works downstream on the Sanaga river.

periods, compared to hydroelectric dams. The coming years may belie this, since three hydroelectric dams are currently under construction in different parts of the country. The first to come online, in 2016, will be the Mekin dam on the Dja River in the south. China National Electric Engineering is building the small plant, which will produce 15 to 16 MW of power. The project is funded by the government (15%) and China Eximbank (85%) for a sum of about FCFA 25 billion (ca. $52.4 million). The two other dams are scheduled for 2017. The Memve'ele dam on the Ntem river, also in the south, is expected to produce 201 MW, and is being built by Sinohydro Corporation. Construction started in 2012 and is expected to cost about FCFA 365 billion (ca. $765 million), jointly funded by the government, China Eximbank and the African Development Bank (AfDB). Last but not least is the reservoir dam at Lom Pangar in the Eastern Province. Lom Pangar is not so much a power plant (it will only produce 30 MW for the local use), as a massive water retention project fed by the Sanaga river. As the mian river in Cameroon, the Sanaga already has two dams (Edea and Songloulou). During the dry season, the water flow drops drastically and the existing upstream retenue reservoirs at Mbakaou, Bamendjin and Mape no longer suffice to deliver enough water for the downstream hydropower plants. According to Theodore Nsangou, managing director of the Electricity Development Corporation (EDC), the Lom Pangar dam will hold 6 billion m3 of water, equivalent to the other three dams combined. Again

Among the other projects on the government’s planning boards, according to the DCSE strategic plan, are massive hydro-plants at Nachtigal (330 MW) and Song Mbengue (950 MW). These new plants should produce enough energy to enable multinational Rio Tinto Alcan to finally proceed with the extension of the Alucam (Aluminum Company of Cameroon) smelter plant, which currently runs below full capacity due to energy shortages. Energy demand The DCSE sums it all up: “Electricity demand in the public sector (low and medium voltage customers) is increasing by an average of 6% per year. In 2015 demand is estimated at 4,700 GWh (corresponding to power generation capacity of about 842 MW), but is expected to grow to 7600 GWh (i.e. about 1370 MW of production capacity) by 2025.” It adds that “industrial demand, in turn, strongly influenced by the energy needs of the aluminum industry, is currently around 1,315 GWh (150 MW of power capacity). The extension of the aluminum smelter at Edea would increase demand to about 500 MW by 2015.” The strategic plan also foresees additional demand from the future deep-water port at Kribi, where total demand could jump by 13,000 GWh (1500 MW) from 2016 to 2025. To meet the expected enormous future demand, the government is relying more heavily on hydroelectric power than on other energy sources. The extensive program of new hydroelectric facilities (see chart) includes many projects having approved feasibility studies, but now seekingv financing. • For more information: Electricity Development Corporation – www.edc-cameroon.org Ministry of Energy – www.minee.cm www.cemacbusiness.com Doing Business in Cameroon

Cameroon’s top Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Company SNH Soc Natl Hydrocarbures Sonara (refinery) Perenco Brasseries du Cameroun Addax Petroleum Cameroun AES Sonel Orange Total Cameroun (gas stations) CFAO Bolloré Africa Logistics Corlay (ex-Texaco) MTN Cameroun Tradex Cimencam (cement) Cameroon Development Corp. Feicom Olam Cam Soacam Alucam Camrail Sodecoton Sosucam (sugar) Oilibya Plantation Haut Penja CAMI Toyota Socatral Transf. Aluminium Cam. des Eaux Nestlé Cameroun Cacaos ADER Hevea Cameroun Socapalm Palmeraies Port Autonome Douala Raffinage Maya Guinness Cameroon Soc Moderne Pneumatique Cadyst (La Pasta) Azur Forest. Doume/Rougier Alpicam

Revenues ($ Mill.) $1,713.0 $1,440.4 $1,030.0 $566.4 $423.0 $403.4 $300.4 $287.9 $265.7 $247.5 $204.5 $203.7 $198.9 $183.7 $144.9 $135.6 $134.3 $129.8 $128.7 $119.5 $117.5 $103.6 $102.2 $100.5 $99.4 $98.3 $96.7 $94.0 $87.1 $81.9 $77.9 $74.4 $74.2 $70.0 $65.8 $65.3 $61.8 $57.8 $48.2 $46.5

Note JA JA Est. JA Est. JA JA Est. JA JA JA JA JA JA Est. JA JA JA JA JA JA JA Est. JA JA JA JA JA JA JA JA JA JA JA JA JA JA JA Media Media

Sector Oil & gas Oil & gas Oil & gas Agro Oil & gas Energy/Utility Telecoms Oil & gas Retail/Import Transport Oil & gas Telecoms Oil & gas Construction Agro Services Agro Agro Manufacturing Transport Agro Agro Oil & gas Agro Retail/Import Manufacturing Energy/Utility Agro Agro Retail/Import Agro Agro Transport Manufacturing Agro Manufacturing Agro Manufacturing Forestry Forestry

CEO Adolphe Moudiki Ibrahim Malla Denis Clerc Renaud Francis Batista Yi Zhang (Sinopec) Jean-David Bilé Elisabeth Madang Pierre Bang Richard Nouni n.a. Emmanuel Forson Karl Toriola Jean Perrial Nyodog Ravi Iyer Henry Njalla Quan Philippe Akoa Anirban Deb Oumarou Maloum Alain Malong Quentin Gérard Mohammed Iya Louis Yinda Abdel Kader Armel Francois Emmanuel Ugolini n.a. Driss Essaoubi Bruno Olierhoek Bart Willems Christophe Lejosne Alain Young Yannick Vernet Emmanuel Oyono Olivier Schiano Steve Gannon Francois David Célestin Tawamba n.a. Philippe Jean Pietro Alpi

Website snh.cm sonara.cm perenco.com lesbrasseriesducameroun.com addaxpetroleum.com aessoneltoday.com orange.cm total.com cfao-technologies.cm bollore-africa-logistics.com mrsholdings.com mtncameroon.net tradexsa.com no website cdc-cameroon.com feicom.cm olamonline.com soacam.cm no website camrail.net no website somdiaa.com oilibya.com assobacam.com cfao-automotive.cm no website la-cde.com nestle.com barry-callebaut.com adercam.com (inactive) no website no website portdedouala-cameroun.com no website guinness.com no website cadyst-invest.com azur-sa.com rougier.fr gfbcam.com

Revenue information is indicative only, and gathered from various sources. Publisher not held responsible for errors. Notes: JA - Jeune Afrique; Est - Estimate; Media - press or Internet; INS-2010 ranking of companies by Institut National Statistique Source: Mediaside analysis

Doing Business in Cameroon

Top Companies

companies at a glance Rank 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Company Grand Moulin Cameroun Union Trading Int'l TRC Transformation Reef Wijma Camlait COTCO (pipeline) Congelcam Camtel SHO Cameroun Granites du Cameroun Fokou-Foberd Laborex Cameroun Chococam Razel Cameroun UC Pharm

Revenues ($ Mill.) $40.8 $40.8 $35.9 $23.3 $18.8 $17.9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Note JA JA Media Media Est. Media INS INS INS INS INS INS INS INS INS

Sector Agro Retail/Import Forestry Forestry Agro Oil & gas Agro Telecoms Retail/Import Construction Retail/Import Retail/Import Agro Construction Manufacturing

CEO Jean-Sebastien Vilgrain Ephreim Tchakounte Paul Reef Jacky Riviere Paulin Zuko Christian Lenoble

Website somdiaa.com uticameroun.com greenwoodtrc.webs.com wijma.com camlait.com no website Sylvestre Ngouchinghe congelcamsa.com David Emane camtel.cm Frederic Morsing tractafrictmc-cameroun.com n.a. somarc.net Bernard Fokou fokou.com n.a. laborex-cameroun.com Ndiaye Mouhamadou tigerbrands.co.za Jean Daniel Marilly razel-bec.com Francis Djomou Nana ubipharm-cameroun.com

Cameroon's top banks Rank Name

Founded

Total Assets *

Profit

CEO/Chairperson

Afriland First Group

1987

$3,151

$219

Paul Kammogne Fokam

Societe Générale de Banque Cameroun

1947

$1,183

$90

Jean-Philippe Guillaume

Banque Int'l Epargne et Credit

1997

$1,169

$94

Pierre Mahe

Afriland First Bank

1987

$1,153

$50

Alphonse Nafack

Standard Chartered Bank Cameroon

1986

$809

$48

Ebenezer Essoka

SCB Societe Comm. de Banque Cam.

1945/62

$757

$58

Jamal Ahizoune

Ecobank Cameroon

n.a.

$611

$45

United Bank Africa Cameroon

2008

$297

Georges Wega

BGFI Bank Cameroon

2011

$196

$15

Edgard Anon

Notes: Figures in $ millions; Afriland First Group includes activities outside Cameroun (Eq Guinea, etc.)

Andre Fotso

Source: Jeune Afrique Finance, Edition 2013

Top Insurance Companies Rank

Company

Revenues ($ Mill.)

CEO

Website

Allianz Cameroun

$47.30

Bernard Girardin

allianz-africa.com

Chanas Assurances

$45.33

Jacqueline Casalegno

chanas-assurances.com

SAAR Soc Africaine Assurances

$29.50

Georges Kagou

saar-assurances.com

AXA Assurances

$22.40

Thierry Kepeden

axa.com

Activa Assurances

n.a.

Richard Lowé

group-activa.com

Saham/Colina Insurance

n.a.

Protais Ayangma Amang

sahamassurance.com

Sources: Jeune Afrique 2013 and company websites

Doing Business in Cameroon

No lack of banks Although Cameroon’s banking scene is dominated by commercial banks, there are also active side markets for long-term lending, and increasingly SME lending, in order to help the next wave of Cameroon’s private companies.

he Cameroonian banking market today includes 13 banks (see previous article), most of which are subsidiaries of large foreign groups. This is the case of the French Banque Populaire and Société Générale, the American Citibank, British Standard Chartered Bank, Moroccan Attijariwafa, or the panAfrican banks Ecobank and Union Bank for Africa (UBA). Fortunately, one local Cameroonian bank is one of the commercial banking leaders: Afriland First Bank, which also has branches in other African countries, like Equatorial Guinea. As Mathieu Mandeng, president of the APECCAM association of professional credit institutions of Cameroon and also head of Standard Chartered Cameroon, explained in an October 2013 interview: “85% of the assets and liabilities in the Cameroonian economy are managed by commercial banks.” This means it is ultimately a small proportion of the market that is actually devoted to long-term investment, for example on transport or social infrastructure. Long-term, or structural, investment is provided and

Cameroon's top banks Rank Name

Founded

Afriland First Group

1987

Societe Générale de Banque Cameroun

1947

Banque Int'l Epargne et Credit

1997

Afriland First Bank

1987

Standard Chartered Bank Cameroon

1986

SCB Societe Comm. de Banque Cam.

1945/62

Ecobank Cameroon

United Bank Africa Cameroon

2008

BGFI Bank Cameroon

2011

n.a.

Source: Jeune Afrique Finance, Edition 2013

Doing Business in Cameroon

Douala’s Bonanjo district, where the main banks are clustered.

controlled locally by a smaller number of financial institutions. Among the best known is SNI (Societe Nationale d'Investissement, or national investment corporation). Established in 1964, this 100% government-owned company has a large remit. It aims to “mobilize and invest both domestic savings, as well as other international or national financial means.” So SNI plays on both tables: it both gathers funds, and it then re-invests them. SNI provides various services, including lending, venture capital, growth capital through the advice and assistance, and more. With a turnover of FCFA 5.47 billion ($10.95 million) in 2012, SNI declared net income of FCFA 1.33 billion ($2.67 million). On the portal of this institution, we learn that on 31 December 2010, the portfolio included SNI thirty-two companies with twenty-seven in normal operation, one company in liquidation and four companies with suspended activity. However, the real long-term investment money comes from other, non-Cameroonian structures. These international institutions play an important role in the development of Cameroon's economy. Let us start with AFD (Agence Francaise de Developpement, or French development agency), which is one of the main lenders to Cameroon in financing its structural projects. AFD is involved in funding most of the developmental projects implemented across the country, such as the reservoir dam at Lom Pangar. AFD's subsidiary Proparco, which is active in lending to the private sector, announced in 2013 plans to invest some FCFA 65 billion ($130 million) in Cameroon over the next three years, including FCFA 26 billion ($52

Banking Overview

Helping small and medium enterprise Alongside SNI, a limited number of other national private financial institutions are active in the market, although their involvement is more targeted at SMEs. Here the actors are generally small to mid-size, going from the tiny micro-finance lenders (see previous article), to a few private equity players, not to mention a few government-backed ventures.

million) for the benefit of SMEs. In the end, banks specialized in investment are mainly international institutions like the African Development Bank (AfDB), the World Bank, the Development Bank of Central African States (BDEAC), the Arab Bank for Economic Development (BADEA) or China Eximbank. These are all very different institutions involved in the financing of major projects that the government has undertaken in recent years, work that is expected to lead the country to the status of an emerging country by 2035. Namely transport infrastructure and energy supply. For example, since its inception in 1973 until 2013, BADEA has already funded or helped fund development projects in Cameroon for a total of $120.8 million (ca. FCFA 60.5 billion). As for the AfDB, since its birth in 1972, it has already injected some FCFA 1000 billion (about $2 billion) in the Cameroonian economy. Currently the AfDB is funding 16 projects in Cameroon. Cameroon has made past attempts at setting up its own development bank. Alas, several attempts failed, mostly due to management difficulties, and even outright fraud. Case in point, the BCD (Banque Camerounaise de Développement), created and 82% held by the state. The aim of the BCD was to provide financial and technical assistance, so as to promote economic and social development within the framework of the national plan. The disappearance of the BCD following mismanagement, remains a difficult pill to swallow for government officials and private companies.

The FOGAPE (Fonds d’aide et de garantie des crédits aux petites et moyennes entreprises, or assistance fund and loan guarantor for SMEs) was founded in 1983 in order to provide both advisory services and financing to Cameroonian SMEs. Alas, FOGAPE also suffered from poor management, and granted loans without sufficient guarantees. Many of these funds were never repaid, resulting in the failure of the institution. Yet the FOGAPE initiative had begun well enough: by June 1984, it had already guaranteed credit to 268 projects, representing funding of just over FCFA six billion ($12 million). A third unfortunate lending venture was Banque Agricole, created in 1990 to help agricultural production and agro-processing, but it shuttered in 1999, a victim of its number of nonperforming loans. Despite repeated failures, and the growing role of micro-finance in much of this small-scale lending, the government has not given up. It continues on multiple projects and initiatives. In 2007, Fondecam-PME (a fund for SME development) was about to see the light of day, when its foreign backers, among which German giant Deutsche Bank, withdrew because of persistent government delays and administrative burdens, making this project stillborn. Two more recent projects show the government's resolve. In 2013, the Banque Camerounaise-PME (Cameroon SME Bank) was initiated. Although this entity has already received the approval of the COBAC (Central African Banking Commission), it only plans to start operations in late 2014. Also in the pipeline is a resurrected agricultural bank, which is viewed as critical for primary sector activities, themselves seen as the foundation for Cameroon's economic emergence. Needless to say, the government has vowed to prevent any recurrence of the mis-management or poor lending supervision that plagued previous initiatives. • For more information: Association credit institutions APECCAM – No website; do search or via GICAM National Investment Company SNI – www.sni.cm www.cemacbusiness.com Doing Business in Cameroon

Bottom of the finance pyramid Tontines and microfinance provide basic financial services to millions of Cameroonians, far more than in the formal banking sector. Both services are stepping stones for economic growth.

ith commercial banking still only addressing the needs of the minority of Cameroonians, informal banking services have filled the void. Microfinance is the queen of this entire informal sector, but a word should first be written about so-called ‘tontines’, which often lead customers to microfinance, itself leading to formal banking services. A tontine can be described as a cross between a lottery and a savings pool. The basic functioning of a tontine is as a rotating savings pool among a group of individuals. Each member contributes a monthly amount. The pooled tontine amount is then given as credit to one member for his/her use. The beneficiary changes on a rotating basis. The tontine is dissolved after the last member has had her turn. Tontines are particularly popular among women, both in rural and urban areas, throughout Cameroon. In terms of numbers of participants, tontines are the second-most relied upon financing source in Cameroon, after personal savings, but well before microfinance and formal banking. An estimated FCFA 190 billion (ca. $400 million) of savings are circulated via tontines, which represents about 4.3% of the commercial banking assets. Microfinance to the rescue Yet tontines cannot provide the simple financial stability of microfinance. As in many emerging markets, microfinance is a runaway success since it provides two basic financial needs. First, customers can deposit their savings and earn interest; secondly, customers can take out small loans. In 2009 microfinance counted about 880,000 active clients, which jumped to 1,195,000 active clients in 2011, representing a 36% jump in just 2 years. The outstanding loan amounts 36

Doing Business in Cameroon

Microfinance reaches areas and segments untouched by commercial banking.

saw an even more impressive jump, from FCFA 168 billion to FCFA 231 billion ($351 to $483 million), or a 38% rise in the two-year period. In terms of its market structure, there were 438 active microfinance companies (referred to as EMFs for Entreprises de Microfinance in French) in Cameroon at the end of 2012. The industry has six larger players that are organized in networks, having a total of 251 affiliates (see chart). As implied, only 187 EMFs operated as independent agencies, not adhering to one of the networks. Overall, the EMFs operate out of over one thousand locations, be it agencies or offices, dispersed across the land. Regarding their geographic distribution, the highest proportion of agencies were located in the Centre region, with 316 agencies, followed by the Littoral

Table of top EMFs in Cameroon Number of agencies

Name CAMCCUL (Cameroon Cooperative Credit Union League)

176

CVECA (Caisse Villageoise d’Epargne et de Crédit Autogérée) Centre

CVECA Nord

CMEC (Caisse Mutuelle d’Epargne et de Crédit) West

CMEC Northwest

MUCADEC (Mutuelle Camerounaise d’Epargne et deCrédit)

6 Source: Ministry of Finance

Microfinance

companies are entering the market, and existing players are expanding their branch networks. Another growth driver is that Cameroonians are attracted to depositing their savings within the EMFs since they receive interest payments that they would not at commercial banks or the postal bank Campost. Also of importance is the impact of “push” marketing. As EMF companies expand, they hire new sales representatives or agents, often paid on a commission basis, and their motivation is to sell new loans to customers. Microfinance also stands to grow from the whole area of rural financing. There has been a systematic lack of proper offers for the rural sector, which for the most part has no access to commercial banking. In fact, in an extensive survey carried out by the Cameroon government and UNDP, over 40% of respondents claimed not to have access to microfinance services. province with 262, and then the West region with 155 agencies. EMF companies employed in the aggregate about 8,800 people in 2011, up from 6,800 two years earlier.

Lack of trust The same survey also underlined that over 60% of the surveyed respondents were not satisfied with microfinance services, and that more than 60% did not trust the EMFs. So is the glass half-empty or halffull?

The EMFs receive most of their funding from individual depositors. In 2011 the average deposit (or savings) placed by each Despite occasional Certainly microfinance suffers customer was almost FCFA 300,000 problems of trustworthiness given ($625). This is well below the hiccups, financiers bankruptcies in recent years and the average deposit in 2009, which was almost FCFA 460,000 ($960). As for expect microfinance to subsequent loss of funds. In 2011 and 2012 several EMFs went belly the uses of funds, in 2011 a total up (Cofinest and Fiffa and Capcol). of FCFA 49.7 billion ($104 million) continue its growth Yet the government and APECCAM of fresh loans were granted to (the Association of Credit Companies) are trying to customers. This was down sharply from 2010, when keep things clean. There are regular governmental FCFA 67.2 billion ($140) was granted. The average shake-downs, to eliminate EMFs that do not meet the loan per customer amounted to FCFA 194,000 ($405). standards. For example in February 2014, the Ministry of Finance suspended 84 EMFs; in July 2013 it had As with microfinance anywhere in the world, one of the done the same for 33 fraudulent EMFs. Oftentimes, main risks is that of bad debt. In 2011 the percentage these were unlicensed operations opened illegally, as of bad debt was 2.4%, although 34% of the loans opposed to mismanaged companies. were in arrears. Yet, the bad debt proportion shows positive signs since it had stood at almost double the Despite its periodic difficulties, microfinance in level (4.7%) in 2009. Payments in arrears (late) also Cameroon will remain an important financial pillar, showed positive trends, with the 2009 figure having providing funding for those at the bottom of the stood at 42%. Late payment and bad debt have an pyramid, and enabling bootstrap financing for microimpact on operational efficiency. EMFs have also enterprises, some of which will surely provide the suffered from this with their operational efficiency economic tissue for sustainable growth. • dropping from 115% in 2009 to 84% in 2011. More growth on the horizon? Despite periodic hiccups, financiers expect the microfinance sector to continue its growth. One of the main growth drivers is simply the profitability of EMF activities. The profits mean that more and more

For more information: APECCAM Association of credit companies – www.legicam.org (search for Apeccam) List of EMFs available from Ministry of Finance – www.dgtcfm.cm (then search) Doing Business in Cameroon

Deals through Privatization? Cameroon remains a small player in the mergers & acquisitions field, with only a handful of deals each year. In 2013 the headline was the sale of energy producer and distributor AES-Sonel to the British.

ith a GDP of approximately $27 billion, Cameroon is the sixth largest economy is Sub-Saharan Africa (excluding South Africa), representing 3.2% of the total. It is in the same order of magnitude as Ghana, Kenya and Côte d’Ivoire, countries with GDPs of $37 billion, $34 billion and $24 billion, respectively. However, when one looks at the number of mergers & acquisitions (M&As) into and out of Cameroon, the volume is significantly lower than other comparable countries. Cameroon accounts for less than 1% of total M&A transactions in Sub-Saharan Africa (excluding South Africa). That is only about one quarter of its potential, assuming M&A volumes track general GDP dimensions. So what is the reason for this? And are we likely to see a change in the near future? Geographical Focus of Private Equity Funds – A significant amount of M&A activity in Sub-Saharan Africa (excluding South Africa) has been driven by the private equity funds that have raised over $8 billion in the past 5 years for investments. Most of these private equity funds are traditionally Anglophone funds, based in London, Johannesburg, Lagos or Nairobi. Cameroon has not been a traditional target market for these funds. Market which Lacks Sufficient Scale – Other markets that have attracted more capital have either been countries with larger populations (such as Nigeria); or countries perceived as part of regional blocks (such as Kenya, Tanzania and Uganda); or containing large valuable natural resources (such as Nigeria or Angola). While there were a few notable large oil & gas transactions in Cameroon, most transactions have been much smaller and attracted less interest. Cultural and Structural Reasons – Cameroon is considered a difficult country among deal makers in

Doing Business in Cameroon

Commercial banking accounts for far more income than investment banking.

Africa. This perception is driven by a relatively closed and secretive business culture among the merchant families in the country. It is compounded by a lack of transparency often associated with tax liabilities and corporate governance. While many countries in Africa present similarities, the perception is that in Cameroon these issues are more prominent. Despite these challenges, we see change taking place. Private equity firms, driven by the need for greater geographic diversification, are looking for new frontiers and are pursuing acquisition opportunities in more francophone countries, including Cameroon. Funds such as Amethis, Tana Africa, AFIG and Duet are frequent visitors to Douala. PwC has worked with several private equity funds on opportunities in Cameroon, so we can attest to the increased interest first hand. Furthermore, increased integration between the CEMAC countries is helping increase perception that it is one market. It is more common to find companies operating across multiple countries such as Cameroon, Gabon, Republic of Congo, Chad and the Central African Republic. Recently for example a Cameroonian engineering company was sold to a strategic foreign buyer. Although based in Douala, this company was operating in Gabon, the Republic of Congo, Sao Tome and Principe, and was expanding into other countries in the region. Finally, as the business community matures, we see greater acceptance of Western-style transparency and management styles. We have been meeting with

Mergers & Acquisitions

Case Study 1 - October 2012 IHS Towers acquires MTN Towers in Cameroon IHS Towers, a pan-African telecommunications towers company agreed to pay to MTN Group $143 million for 827 towers in Cameroon. The deal is part of larger agreement which also includes the acquisition of 931 towers in Côte d’Ivoire for $141 million. IHS is backed by the private equity funds Emerging Capital Partners and Investec. Following this agreement, IHS became a 100% shareholder of new tower companies that have been set up in each country to manage the towers. In line with its plan to expand its operations in other parts of Africa, IHS had earlier entered Ghana, Sudan and South Sudan and is currently managing over 1,500 sites in these countries.

many family businesses who are looking to tap into institutional capital and who are prepared to change their operating model. Recently we worked with a strategic buyer seeking to acquire a Cameroonian company. Within its due diligence, the buyer identified governance-related issues that the target is now in the process of addressing in order to make an acceptable acquisition target. In addition to these trends, we note the increase of inter-African M&A activity. South African and Nigerian companies are expanding into new markets, often financed with private equity capital. In fact, some Cameroonian companies are also looking for expansion abroad. Probably the most visible of these is the insurance company Activa which has recently completed several acquisitions including the purchase of companies in Guinea. As a result of these changes, we have seen several M&A transactions involving Cameroon in the past few years. The larger and most notable transactions have been in the infrastructure sector such as power and telecommunications towers, as well as in the oil & gas sector. The sidebars focus on two of the more visible in-bound transactions in the past two years. •

Douty Fadiga Andrei Ugarov Partner at PwC Cameroon Director at PwC Nigeria d.fadiga@cm.pwc.com andrei.ugarov@ng.pwc.com

IHS has also built over 2,000 base stations all over Nigeria and is currently managing hundreds of sites for various mobile operators. There are over 100,000 towers across the African continent and IHS estimates that the total value of the continent’s tower market was about $50 billion. Experts had earlier predicted that the sale and leaseback of towers would continue to rise in Africa as many telecoms operators realize that it was an excellent way of releasing capital for investment in core telecoms activities such as network management, customer acquisition and retention by the telecoms companies.

Case Study 2 – July 2013 Actis acquires AES's three power plants Actis, a global emerging market private equity investor, signed an agreement with American energy giant AES to acquire the majority interest in three power assets in Cameroon for $220 million. The investment gives Actis a 56% stake in Cameroon’s national integrated utility, Société Nationale d’Electricité (SONEL), and in two independent electricity-generation plants in Kribi and Dibamba. SONEL provides 933 MW of generation, and supplies electricity to over 800,000 customer connections throughout the country, while Kribi and Dibamba contribute a combined 300 MW towards Cameroon’s generation capacity. While Actis will manage SONEL directly, Globeleq, Actis’ wholly owned private power company, will manage and operate Kribi and Dibamba. Actis owns power assets in Uganda and Guatemala and will be able to leverage that experience in managing its new acquisitions in Cameroon. Doing Business in Cameroon

Transfer Pricing

Preparing for transfer pricing As tax authorities strengthen the fiscal system, multinational companies get prepared.

S Nadine Tinen Tchangoum

ince 2007, the tax authorities of Cameroon have included in the national tax code rules governing transfer pricing (TP). Their objective? To improve the revenue mobilization necessary for the promotion of investments, an essential ingredient for faster economic growth.

This decision is consistent with the current global fiscal environment, as governments around the world adjust their tax systems so as to generate expected levels of income. Of particular interest are multinational companies, since the transfer pricing of transactions within multinationals does not necessarily follow arm’s length market rules – as it does for independent companies – but rather internal company rationales, which may affect the distribution of taxable income between the countries involved in the transaction.

Multinationals are already a substantial presence.

pricings or data, given the absence of benchmarking information? Even if found, how can one ensure that the conditions of the respective transactions were similar? Furthermore, how can one reconcile the sometimes conflicting demands of tax vs. customs authorities? So, when preparing transfer pricing backup documentation, companies must keep in mind that they might need to answer queries from the tax administration.

The TP tax rules were clarified and supplemented by the Finance Acts of 2012 and 2014. Companies registered in Cameroon, belonging to a multinational group, and having transactions with other group entities are concerned by the laws. These transactions may consist of purchases or sales of raw materials, finished or semi-finished goods, or services, or financial advances or loans, or the granting of intellectual property, etc.

Multinational companies may want to make use of the so-called APP, Agrément Préalable de Prix de Transfert (prior agreement on transfer pricing), since this constitutes an important tool in setting transfer prices. An APP is an arrangement that establishes, in advance of transactions between companies of the same group, the set of criteria for determining the transfer pricing for those transactions over a certain period. The process leading to an APP is initiated at the request of the company and involves negotiations between the company, one or more companies of the same group, and one or more tax administrations.

Our advice to customers is to comply with the regulations by following a ten-point preparation, including the prior identification of all intra-group transactions in which they participated, the review and constant updating of TP policies and paperwork, and any documents justifying their policies, among other items.

PwC assists multinational enterprises in the implementation of appropriate transfer pricing policies in many countries, including Cameroon. PwC also supports its customers in Cameroon, not only in the creation of the file and negotiations to obtain an APP, but also in defending transfer pricing policies vis-à-vis tax and customs authorities. •

It is very important for multinational companies to prepare and fully justify any arm’s length pricing invoked. Although the principles of arm’s length may seem simple, their implementation may prove far trickier. Indeed, given the regional economic context in Central Africa, where can one find comparable

Further information:

Doing Business in Cameroon

Nadine Tinen Tchangoum PwC, Country director & tax partner Tel: +237 33 43 24 43 (or 44/45); Mobile: + 237 99 96 22 02 / +237 77 93 71 58 nadine.tinen@cm.pwc.com

Versatile mix 4,100 kms of paved roads, three good harbours, two important international airports, a basic rail network, and even a pipeline for crude oil.

hat Cameroon still needs is a solid strategic infrastructure development plan, with strong international financial backing, and most of all, a strongman executive, in order to grow these foundations. With a total of 51,350 kilometers of roads, of which 4,100 are paved, Cameroon already has the basic land network it needs for trade and communication. The main road link is the 245-kilometer stretch between Douala and Yaoundé, which is currently being upgraded from its current two-lane status into a four-lane express road. The other main paved road is the northbound road from Yaoundé to the Chadian border (Maroua and beyond). The road network is denser in the coastal area, where traffic linked to trade with Nigeria occurs. Two other important axes are the roadways to Equatorial Guinea and to Gabon, which are both inland from Yaoundé. The main road projects now under construction include several works around Douala: the ring road which will enable coastal traffic to avoid the downtown congestion, and the eastern entry road, which will enable traffic from Yaoundé and other inland towns to get to the harbor more rapidly. Rail thanks to Germany Thanks to the German colonization period, but in harsh almost slavery-like conditions, Cameroon also has an extensive rail network, for both passenger and freight traffic. The first stretch to have been built was the Douala to Yaoundé trunk line, followed by its northern extension from Yaoundé to Ngaoundere, and a northbound spur from Douala to Kumba, making for about 1,100 kms of railway in all. The monopoly rail operator is Camrail, a company belonging to French logistics group Bolloré, under a 20-year operating contract that was signed in 1999. The rolling stock belongs to Camrail, whereas the track is government property. The country’s 2012 national rail strategic plan included construction of new track as well as overhaul of existing track to bring it up to normal gauge (it still

Doing Business in Cameroon

Congested Douala port will have competition from Kribi and Limbe.

operates on ancient one-meter gauge). The new rail network, when completed, should be able to handle 100,000 tons of ore transport (mostly bauxite and iron ore) per day. The freight component is mostly the mineral link from the iron ore mines in the east of the country (Mbalam). To get the iron ore from Mbalam to the deep water export harbor of Kribi, a major new rail link is being developed. This roughly 600-km link is under analysis, but a construction deadline is not yet set. Another new rail link will be from Edea (about 70 kms from Douala) to Kribi, for both passengers (tourists to Kribi’s white beaches) and freight (to and from the

Main PPP projects under study Type

Project specifics

Roadway

Super-highway Yaounde - Douala

Agriculture

Agrotech technopolis “Hautes Terres”

Construction

Various stone-crushing facilities

Railroad

Douala-Limbe section

Railroad

Edea - Kribi - Lolabe section

Power

Kikot hydro-power plant

Power

Moudour Wang hydro-power plant

Power

Wind farm on Mount Bamboutos

Retail centers

3 shopping centers in Bamenda

Logistics center Road transport hub in Bonaberi/Douala Power

High-tension line Kribi - Yaounde

Industrial park

Wood transformation center southeast area Source: CEMAC Business daily, Feb 27, 2014

Transport Infrastructure

a multi-purpose pier. The port’s development plans first call for its use as a logistical platform for cement manufacturers, and then the role could be expanded for agricultural exports of fruits and vegetables grown in the nearby coastal areas. The country also operates its main oil import and export terminal at Limboh, near Limbe. The Limboh Terminal Port serves for loading supertankers with Cameroonian crude oil. Although Cameroon is well endowed in water resources, especially in its southern and central tropical sections, none of its waterways are navigable on a regular basis. The estuary of the Wouri river at Douala is used for ships docking at that port. The Benue river in the north is navigable for small boats or barges in the summer wet season but since it flows into Nigeria about 50 kilometers downstream of Garoua, it is of little economic interest to Cameroon. deepwater port). Sea: critical for cargo Cameroon has 402 kilometers of coastline, and relies on three main harbors for its sea commerce. Douala is the main harbor, located on the estuary of the Wouri river, about 50 kilometers from the Bight of Biafra itself. Douala harbor sees about 1,200 large vessel movements per year, and about 350,000 TEUs containers handled annually, representing about 3.9 million tons of goods imported and exported (2012, Port Autonome de Douala statistics). Problems at Douala harbor currently include the congestion due to the lack of additional berthing space quayside, and due to the flow of goods to Chad. The landlocked country receives the majority of its imports via Douala harbor. The two other noteworthy harbors are Kribi, the new deepwater harbor being built for iron ore exports and also in order to decongest Douala; and Limbe. Kribi is expected to open fully in June 2014, and its traffic is expected to grow very rapidly. Kribi is also the end point for the Chad-Cameroon pipeline, to export Chadian crude oil via sea. It is also expected that Kribi will play an important part for mineral and industrial exports, via a series of dedicated terminals: bauxite or aluminium, LNG, iron ore and other minerals. Limbe port is being developed by South Korean contractors within the framework of the LIPID (Limbe Port Industrial Development Corporation) structure. LIPID is a public-private partnership, with the South Koreans funding the $220 million project under the BOT model (build-operate-transfer). The first phase of Limbe’s development will be the construction of

Air traffic reaches high As for the export and import of people, air traffic handles most of that. Cameroon has thirty-three airports in all, of which eleven with paved runways. Douala and Yaoundé are the two biggest. Passenger figures have been growing substantially since the 2009 tourism promotion campaign. To illustrate, in 2006 a total of about 627,000 passengers traveled through Cameroon’s airports. By 2012, the number had jumped almost two-fold, to 1,047,000. Of this total, about 268,000 were domestic passengers, and about 178,000 transit passengers. Of the total passengers in 2012, about 58% were on international flights, about 16% on flights to neighboring CEMAC countries, and 26% on domestic journeys. Here Yaoundé-to-Douala is the feeder route for international flights departing Douala. Douala’s airport accounts for two-thirds of the passengers, followed by Yaoundé with 29% and then Garoua with 4%. Overall there were 28,800 aircraft movements in all of Cameroon’s flight facilities. Last but not least, pipelines are important since they are the principal means for the crude oil transit from Chad. The pipeline is operated by COTCO, and has a length of about 1,100 kms. In 2013 (first 11 months), the COTCO pipeline carried a volume of 26.6 million barrels of crude oil, which are produced in Chad’s southern oil fields, and are exported via Kribi harbor. • For more information: Ministry of transport (Mint): www.mint.gov.cm Douala harbour: www.portdedouala-cameroun.cm Kribi harbor and industrial complex: www.kribiport.cm Camrail: www.camrail.net Cameroon Civil Aviation Authority: www.ccaa.aero Doing Business in Cameroon

Preparing the next generation Both health care and education receive substantial annual budgets, yet private investment is also needed.

ne test of the health of a state is the state of its health. That of Cameroon is average for Africa. Men die on average at 52, women at 56. An exception to this is in maternal deaths. So something has to be done. Cameroon placed 5.9% of its annual budget in healthcare â&#x20AC;&#x201C; representing an increase of almost 1% point compared to 2010, or FCFA 7,823 ($15.60) per capita. For the 2014 budget the figure will drop, since health will receive only 5% of the budget. Thus, Cameroonâ&#x20AC;&#x2122;s healthcare still needs development. For example, according to figures from the Ministry of Health (MinsantĂŠ), in 2010 there were about 15,576 healthcare workers, for a population of almost 19.5 million inhabitants. This ratio of 0.8 workers per 1,000 inhabitants is low, given international standards that recommend at least 2.3 doctors, and even more healthworkers (nurses, medics, etc.). The healthcare shortfall includes health facilities, although the number of these is growing. A survey published in 2010 by the national statistical institute (INS) reveals that the number of establishments in all 178 districts of the country rose from 3,039 in 2007 to 3,370 in 2009. These state institutions included four first-category hospitals, four second-category hospitals, and eleven third-category hospitals. Given the lack of public health facilities, the private sector plays an important but often expensive role in the health sector. In 2010, there were 93 private hospitals, 193 private non-profit health centers, 289 clinics or polyclinics, and 384 medical dispensaries. These statistics do not take into account traditional medicine, that is much in demand by patients, often arriving barefoot. The government is giving additional recognition to the role of traditional medicine in the national health system. There is of course a government plan for development of the health sector. Money is thus marked for projects in most of the provinces. The health sector strategy fits with the Millennium Development Goals.

Doing Business in Cameroon

Still large funding needs for social housing, hospitals and schools.

More consideration is being given to what is seen by the WHO to removing the management of healthcare from the central government to the provincial ones. These are closer to those needing both care and cure. With a target date of 2015, the government therefore wishes to ensure proper servicing of 80% of the districts; to reduce by two-thirds infant mortality under 5 years; and reduce maternal mortality by 75%. For example, with regard to malaria, which remains the first cause of morbidity and mortality in Cameroon (40% of all treatments), it is expected that 80% of children under the age of five will be sleeping under specially-treated mosquito nets. To date, extensive campaigns to distribute several million free MILDA mosquito nets (long duration treated mosquito nets) to urban and rural inhabitants. As for AIDS, its prevalence has fallen to around 5% today, although sporadic shortages of antiretroviral pharmaceuticals affects treatment of patients. Education For its part, the Cameroonian educational system consists of two sub-systems: the francophone subsystem and the anlgophone sub-system. Both subsystems offer five levels of education: kindergarten, primary, post-primary, secondary and normal. For higher education (university), the two sub-systems merge into a single curriculum. There is also there split between public and private. The public system is run by the central government, with three ministries handling education. The ministry of basic education (Minedub) handles primary

Social Infrastructure

Now a word about personnel. For primary education, in 2008-2009 there were about 49,043 teachers and 69,804 classrooms serving a total of 3,350,662 students, meaning one teacher for 69 pupils and an average of 48 students per class. Alas, such averages hide wide disparities between rural and urban areas. In some remote areas, there exist schools where a teacher takes care of many different classes. While in some urban areas, one often finds classes with attendances of more than 80 or even 100 students. The above also holds true for secondary education: the 1,013,667 students in 2009 shared 27,323 teachers, meaning one teacher for 37 students.

and nursery education. The ministry of secondary education (Minesec) is in charge of general and technical secondary education, whilst the ministry of higher education (Minesup) handles universities. The ministry of employment and vocational training (Minefop) was also created to facilitate the integration into the labor market of young people leaving the traditional school system. Most often, education is the central government priority, and as such receives the largest share of the budget. In 2009 for example, the state allocated 15.5% of its budget to education, amounting to FCFA 357.6 billion ($715.2 million). This budget was an increase of 1.4% compared to 2008. For 2014, all these different levels of education represent 14.27% of the government budget.

As for higher education, it is handled by eight state universities: Douala, Yaoundé (2), Maroua, Buea, Ngaoundere, Dschang and Bamenda. Several private institutions located primarily in the major cities also operate. State universities also include large schools providing vocational training. Overall in 2009 universities hosted 130,862 students, whereas vocational trainees numbered 20,060 students. In 2008 each university professor taught 48 students on average. The drive for expansion and updating will require private investment, both in terms of facillities and student places. According to the 2013 edition of Cameroon’s “Investor's Guide”, there lacked slots for 53,115 students in 2007, while 20,000 teachers could have been added, as well as 15,000 classrooms. Lately, Cameroonian educational policy emphasizes a shift from the liberal arts to the technical and vocational side, appreciated by the labor market. This recent trend explains why the supply of graduates from these fields still remains insufficient and costly. •

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Test it free for ten days. Contact us now at info@cemacbusiness.com Doing Business in Cameroon

Take-off for mining The industrial exploitation of the national mineral bounty is just starting, at a time when 60% of the underground remains uncharted.

nderground? Cameroon doesn't really need one at present, but according to its Minister of Mines, Industry and Technology the time has come for a major effort to go underground. What he has in mind is cashing in on the resources that that lie there. They range from costly diamonds as luxury items to bargain rocks such as a building materials. Remarking on his country’s hidden wealth, Emmanuel Bonde, the minister, decried it as nothing less than “a geological scandal.” Cameroon mining is merely idling. In fact, there is more than just a bit of artisanal mining going on. This is overseen by the government’s CAPAM (Cadre d’appui à l’artisanat minier). What this organization is calling for now is fuller mechanization of the present small-scale methods – thus preparing the way for larger-scale, industrial exploitation. At a convocation in Yaoundé, December 2011, CAPAM reported on a survey carried out of 40% of the nation’s area. It revealed the presence of 52 sorts of minerals identified as falling into the following five categories: • Precious and semi-precious: diamonds, gold, platinum,...

Mining will grow dramatically with iron ore, diamonds and bauxite.

• Base metals: iron, cobalt, nickel, aluminum, copper, lead, manganese, chromium, tin, etc. • Energy sources: oil, natural gas, uranium,... • Industrial minerals: salt, graphite, phosphate, asbestos,.... • Building materials: stone, clay, marble, limestone, sand and gravel. However, most of these minerals are either completely unexploited or are being mined by informal operations. Yet some of these deposits are subject to industrial exploitation. Diamonds are a case in point. The Mobilong deposit located in the east is operated by C & K Mining of Korea. Regarding the reserves at Mobilong, in 2012 C&K estimated reserves measured on alluvial deposits amounted to over 230,000 carats, whereas conglomerates held over 18 million carats. Since the feasibility assessment for the conglomerate reserves was considered inadequate, that estimate is

Overview of principal mining companies Product

Companies active

Countries

Since

Notes

Iron Ore

Sundance Resources

Australia

2012

Mbalam deposit; 200 MT high-grade; 1,200 MT lower-grade; not active yet, seeking financing for rail infrastructure.

Affero Mining/ Caminex

U.K.

n.a.

Nkout deposit; 2,000 MT average-grade; under development;

China Sinosteel CAM

China

n.a.

Under exploration

Diamonds

C & K Mining

South Korea

2012

Mobilong deposit; exports started in 2013

Bauxite

Pechiney

France?

n.a.

Under exploration

Hidalco

India

n.a.

Under exploration

Geovic

U.S.A.

n.a.

Under exploration

Cobalt & Nickel

Sources: Mediaside analysis, Mining Ministry

Doing Business in Cameroon

Mining

EITI and the Kimberley Process After failing twice, Cameroon finally became EITI-compliant (Extractive Industries Transparency Initiative) in October, 2013. EITI compliancy reassures investors about transparency and lack of corruption in the management of resources from the extractive industries. As for the Kimberley Process – an international certification of regulated diamond trade – Cameroon was admitted in August 2012. Its main aim is to prevent global trade of gems presented by rebel movements to finance military activities.

of British company Affero Mining, called Caminex, is working to develop this project.

being rechecked, whilst the alluvial deposit is being exploited. Effective mining operations were delayed due to the Korean requirement that Cameroon be legally enrolled in the Kimberley process (see sidebar). After Cameroon finally became a Kimberley member in August, 2012, it exported its first carats in January 2013. In December 2013, the Ministry of Mines revealed that, to that date, the country had exported 2,414 carats of diamonds, representing about FCFA 282 million ($564 K). Until the Mobilong deposit reaches cruising speed and employs more than 1,000 people, artisanal diamond production ensures about 5,000 carats of production per year. Iron ore is the largest scale mining activity in the nation. The Mbalam deposit in the southeast of the country is operated by Australian company Sundance Resources. According to the ministry of mines, the iron ore reserves at Mbalam are estimated at over 200 million tons of high-content ore and about another 1.2 billion tons of lower grade ore (requiring enrichment).

Other foreign companies are also active on a variety of projects. They include the United States Geovic (for cobalt and nickel), China Sinosteel CAM (iron) or India Hidalco (bauxite) are also actively exploring in Cameroon. Obviously there is still plenty of room for additional investors. Moreover, the government has identified investment opportunities in the mining sector, beyond the upstream digging activities. The local processing of extracted minerals is of particular interest, as Cameroon moves down the transformation curve. In fact the national mining code stipulates that at least 15% of mineral production is to be processed nationally. For diamonds, this would involve creating local cutting and polishing centers. For other minerals, processing or smelting facilities will be needed. Another axis of development is on-site manufacturing of mining equipment, such as Bokassa shovels and pans, motor pumps and other equipment to wash gold. Sector growth will also derive from improved geological and mining surveys, especially since untold wealth must exist in the unexplored 60% of the territory.

After the signing in late 2012, Sundance set up its local subsidiary Cam Iron, which currently is seeking financing for the project. Extensive infrastructure will be needed to export the iron ore: a 650-kilometer rail link, and the deep water port at Kribi. Since the deposit extends beyond the border with Congo-Brazzaville, Sundance also opened a subsidiary called Congo Iron, based in the Congolese town of Nabeba. Hence the term “Mbalam-Nabeba” iron ore deposit.

According to the CAPAM, Cameroon desperately needs an engineering, geological and mining laboratory to provide services to local companies or wildcatters. In January 2014, the government launched a survey of some regions hitherto unexplored. The World Bank provided funding for the operation, which involves aerial surveillance via specially-equipped aircraft. •

Another iron deposit is located not far away at Nkout in the southern province with reserves estimated at two billion tons of average grade ore. A subsidiary

Ministry of mines - www.capam.cm EITI - www.eiti.org/cameroon www.cemacbusiness.com

For more information:

Doing Business in Cameroon

Growth is in the cards As Viettel enters the mobile segment, the number of operators will jump to four. The fiber optic network will grow from 6,000 to 10,000 kms. But the quality of Internet connections still needs to be improved.

uly 1998 marked the revival of the telecoms sector in Cameroon, when Law 98/014 gave private impetus to the sector, by providing for the withdrawal of the state by separating telecoms operations from their supervision and regulation. In 1999, Cameroon’s historical public monopoly Intelcam (International Telecommunications Limited Company) since 1972, split into two entities: Camtel and Camtel Mobile. Camtel was placed in charge of fixed-line telephony, whereas mobile telephony became Camtel Mobile’s remit, making its entrance for the first time in the country. 1999 also saw the first competitive private mobile license being granted, to the Société Camerounaise des Mobiles (SCM). With three telecoms companies now operating, the government also created a telecoms regulatory agency (ART for Agence de Régulation des Télécommunications), which acts as the sector’s gendarme. The new legal and regulatory framework immediately attracted foreign investors. In February 2000, the government decided to auction its mobile arm Camtel Mobile to the South African group MTN (Mobile Telephone Network). Two years later, SCM was also acquired, this time by the French company Orange. To this date, these two operators dominate the Cameroon’s mobile telephony, with MTN Cameroon well ahead with its 8.2 million subscribers at the end of September 2013, representing more than 58% market share. Orange Cameroon has lost considerable ground over the past four years, especially when

The third mobile operator will shake things up and increase penetration.

considering that SCM and MTN were running neckto-neck in 2010. Mobile telephony shows consistent dynamism, when judged by financial performance. In 2010, MTN Cameroon achieved a turnover of FCFA 203.9 billion ($430 million). As for Orange Cameroon, revenues stood at FCFA 152 billion, whereas fixed line operator Camtel had FCFA 70.4 billion. This dynamism is underpinned by a penetration rate which rose from 0.5 % in 1998 to 12.6% in 2005 and then 45% in 2010, according to figures from the ministry in charge of telecoms (Minpostel) and regulator ART. The entry of mobile operator Viettel (see sidebar) will speed up penetration even more. Internet All three mobile operators also offer internet access, although in this area they have numerous competitors. According the the post and telecoms ministry (Minpostel), about fifty other Internet access providers exist, of which the most influential are: Ringo, YooMee, Saconets, Matrix Telecom, Creolink, Avilyos. What was limited to the RTC and VSAT technologies in 1999 has now diversified considerably, to include ADSL, CDMA, GSM, WiMAX, and fiber optics.

Cameroon's mobile phone operators Name

Owner

Creation Year

Subscribers

CEO

Website

MTN

South Africa

2000

8,200,000

Karl Toriola

www.mtncameroun.net

Orange

France

1999

5,950,000

Elisabeth Badang

www.orange.cm

Viettel

Vietnam

2014

n.a.

Vu Khanh Duy

www.viettel.com.vn

Source: Mediaside analysis, ARSEL regulator

Doing Business in Cameroon

Telecoms

Viettel introduces 3G The year 2014 will see the debut of Vietnamese mobile operator Viettel in the mobile telecom market in Cameroon. In 2012 Viettel won the government auction to operate the country’s first 3G license. To attract fresh blood, existing operators (notably MTN and Orange) were barred from bidding. Shortly after winning, the Vietnamese firm indicated that it planned to create about 6,200 direct and indirect jobs and invest some FCFA 200 billion (€305 million) in the first year, in order to reach 81% territorial coverage. A considerable amount when considering that MTN Cameroon had tallied cumulative investments of about FCFA 348 billion (€530.5 million) in its first ten years after launch in 2000, whereas Orange Cameroon has clocked FCFA 300 billion (€457.4 million) in the eight years since its launch in 2002.

This has helped to increase the number of Internet subscribers rose from 3,547 in 2006 to 15,258 in 2008, and 43,714 in 2009. As in large parts of Africa, the quality of Internet connection is not always satisfactory. Many observers were quick to assign responsibility for this shortcoming to the lack of competition in the sector. Indeed, at present, the law provides stateowned Camtel with the operating monopoly for the installation of fiber optics. Needless to say, private operators resent the closed door, which some have nonetheless tried to force open. Regulatory agency ART has been very exacting in enforcing the law, as other companies such as MTN, Creolink or AES Sonel (a subsidiary of the British company AES specializing in electricity production and distribution) have experienced. In fact, AESSonel’s 700 km fiber optic network “laid without authorization”, might cost it a fine of FCFA 500 million (over €762,000). Expanding fiber network Despite such flutter, the fiber optic network is steadily expanding. To date, Camtel has already laid more than 6,000 kms of it. The latest part, a 3,200 km stretch near Maroua in the far north, was delivered in May 2013. On that occasion, the minister of Minpostel, Jean Pierre Biyiti Bi Essam, noted that the capitals of all ten provinces as well as one hundred ‘secondary towns’ were now linked by optic fiber. What went without such stress was the fact that construction had cost FCFA 30.6 billion (€46.7 million) of which 85% was funded by the China Eximbank. In all, the

For the more than 14 million mobile subscribers in Cameroon (September 2013) the main hope is for lower prices, particularly for calls. In this regard, Viettel has hinted at future rate reductions of up to 20%. Even though prices have fallen considerably in recent years, Cameroonian rates are still considered very high, especially regarding domestic calls from one network to a competing one. For now, customers will have to wait a bit longer for Viettel to start operating. Some of the infrastructure proved harder to install than anticipated, and national launch is now scheduled for September 2014.

installation of the 6,000 kms of optic fiber by Chinese company Huawei required funding of FCFA 99 billion (about €151 million). The government is showing no intention of stopping there. It plans to increase the optic fiber network to 10,000 kms in order to reach penetration rates of 40% for internet and 50% for mobile telephony by 2015. To that end, a contract has been signed with China for the laying of 4,000 additional kms of optic fiber. A loan agreement was also signed in November 2013 between Camtel and Standard Chartered Bank Cameroon for an amount of FCFA 3 billion (about €4.6 million). Spending is now actually beginning to flow to optical-fiber loops around major cities. After Douala, Yaoundé’s loop is underway, and the government has launched a tender for Buea’s loop, capital of the southwest province. The other provincial capitals will then follow. • For more information: All three mobile operators have websites. Ministry of post & telecoms – www.minpostel.gov.cm Telecoms regulator ART – www.art.cm Doing Business in Cameroon

Economies of â&#x20AC;&#x153;scaleâ&#x20AC;? With internal production not meeting demand, and so as to reduce massive fish imports, new emphasis is being placed on aquaculture.

espite its 360-kilometer coastline, and abundant sweet waters, Cameroon doesn't catch enough fish to feed its population. The fisheries sector in Cameroon has been characterized by a steady increase in fish imports in recent years. According to statistics from the Ministry of livestock and fisheries (Minepia) as corroborated by the customs department, the volume of imported fish jumped from a 1989 level of 60,000 tons to 166,000 t in 2010, and further to 212,000 t in 2011. That recent 27.7% jump is well above the average growth of 6% per year, and set the government scrambling. Fish took 5th place in terms of volume of imports in 2011, behind cars, crude oil, rice and wheat. But in terms of import value according to customs statistics, fishery products rank second. In 2011, the 212,000 t of imported fish cost the sum of FCFA 148 billion ($296 million). This represents a 59% explosion in value, given that in 2010 fish imports were valued at only FCFA 93 billion ($186 million). This remarkable surge underscored that something had to be done. But first, as ever, the analysts had to be consulted. Minepia and the consumer organization ACDIC were assigned to do so. Their conclusions were that the growth of fish imports was due to both the increase in domestic demand and the decline in domestic production. Cameroonians love their fish, with annual consumption growing from 14 kg per person in 1989 to more than 21 kg in 2011. Given the stagnation of beef production, households offset their protein needs with fish consumption. In fact, fish has become the main source of protein for the majority of Cameroonians. Although domestic fish production is significant (200 000 tons annually according to Minepia), it is still far from meeting demand, estimated at about 420 000 tons. Domestic fishing is mostly small-scale fishing, which lands 170,000 tons of catch, of which about 95 000 t of sea fish and some 75 000 t of sweetwater fish. Thus artisanal fishing makes up 85% of total

Doing Business in Cameroon

To reduce costly fish imports, priority is being placed on aquaculture.

fish production. What then of industrial fishing? Here, production is in constant decline. After experiencing its peak in 1982 with almost 23,000 tons, industrial fishing went downhill, with only 3,500 tons of catch in 2010. The paltry industrial fishing production is partly blamed on the fact that most fishermen, are from abroad (Nigeria, Benin, China, etc.) and intend most of their catch for export. The immediate consequences of this situation are occasional shortages of certain fish varieties, and increasing prices for local customers. For example mackerel, the most popular fish in the country, is often no longer found in the markets of major cities. So its price has tripled in 20 years, from FCFA 450 per kilogram in 1991 to FCFA 1,300 in 2013 ($0.90 to $2.60). To come to grips with this problem and its consequences, notably the loss of foreign exchange for purchasing imports, the government took steps to boost local fishing. New incentives for Cameroonian entrepreneurs have been offered. There has also been encouragement of foreign investors to try their luck. With some success. For example, not long ago Minepia signed an agreement with Brazil to help in introducing aquaculture and fish farming. The project foresees the training of twenty Cameroonians in Brazil, as well as the construction of a modern production facility for alevin hatchlings. Even if not big, it constituted a start. Along with Brazil, Israel also opted in. A loan of FCFA 28 billion ($56 million) for the development of fish farming at 20 different sites was signed. Cameroon

Fisheries

Place of honor to commercial aquaculture

is now on track to eventually produce 100,000 tons of fish annually. These remedial programs are beginning to bear fruit. In August 2013, the minister of livestock and fisheries, Dr. Taiga, informed the press that “there has been a decline in fish imports from 160,000 t to 140,000 t in 2011.” A decline that can be partly attributed to the increase in local aquaculture production. Minister Taiga remains optimistic, given Cameroon’s undeniable assets. He mentions among other things, a coastline of 360 km with a continental shelf of 14,000 km², and an exclusive economic zone of 25,000 km², as well as 4 million hectares of inland water bodies. Naturally creative businesspeople who have sniffed the opportunity will also help. Investment opportunities in the sector abound: from the

Although the government does not neglect any fish production method, it is now clear that it wishes to place emphasis on the development of commercial aquaculture, which can be done in any area with abundant water resources. “The aim is not fish for self-subsistence, but fish to feed the population, and thus avoid imports,” explain the authorities. On this point, the goals are ambitious. In February 2014, Dr. Taiga, minister for fisheries (Minepia), stated that the target for commercial fish production is 100,000 tons. This is no small task, given that aquaculture is only just making its debut in Cameroon. On February 8, 2014 a prototype catfish farm was inaugurated in Meyomessala, in southern Cameroon. With an annual production capacity of 14 tons, the Meyomassala farm required FCFA 60 million ($120,000) in funding, provided by the Maritime Development Fund. The government has announced the construction of similar fish farms in each of the ten national provinces. Yet to reach the 100,000 ton fish target, three main constraints need to be addressed. First comes the production of fish meal to feed the fish in the farms. Second, the production of enough hatchlings. Lastly, there is the lack of trained human resource: who will manage and work these fish farms? The government has already begun its efforts: the ministry states that a fish meal factory is under construction in Foumban, in the west, whilst a hatchling breeding unit has already been established in Douala.

manufacture of equipment and fishing accessories, to the packaging and distribution of fish, along with the production of hatchlings and fish food. • For more information: Ministry of Fishing - www.minepia.gov.cm

Your refuge

in Douala

Afrique Hotel. Very recent construction. 99 rooms and 9 suites. Restaurant and bar on premises. Conveniently located close to the airport and only 20 minutes from Bonanjo business district.

www.afriquehotels.travel reservation@afriquehotels.travel

Doing Business in Cameroon

Tourists flock to ‘Pocket Africa’ After years of neglect, Cameroon has finally decided to promote its rich tourism potential. From about 600,000 visitors in 2010, this year is expected to exceed the million-tourist mark.

n the space of only three years, Cameroon has rocketed from ‘unrated’ to ‘tourist destination’, as per the United Nations’ World Tourism Organization (UNWTO). The lusty 2010 promotion campaign directed at the moneyed part of the world certainly helped this inpouring of some 500,000 tourists, a symbolic benchmark. In fact 2010 clocked a total of precisely 572,729 people, according to the Ministry of Tourism and Recreation (Mintour). By making the WTO list of tourist destinations, Cameroon is increasingly in demand and its tally of tourists soared (see chart). For 2013, Mintour is expecting about 950,000 visitors, and at this rate, it is likely that 2014 will see Cameroon cap the million tourist mark.

Cameroon is a ‘hot’ tourist destination, set to pass the million tourist mark.

Ndjiddah, Benue, etc.), home to elephants, giraffes, lions. Now imagine these skirted by pristine rain forests populated by genuine, real-life pygmies. Wait, also on offer are some plains, dotted with mountain peaks here and there. Beneath these, lamidats, you know, flourish; little sovereignties run by all-powerful rulers called lamidos.

On the southern plateau, besides capital city Yaoundé with its impressive government buildings, there are The tourism boom in the past few years has led the also the Baka pygmies in the east. The Baka have WTO to classify Cameroon as a ‘hot’ destination, the enviable distinction of being among the least among the countries with the briskest growth between developed peoples in the world, and even today they 2011 and 2012. The jump was almost 35% in one continue to live from hunting and gathering in the year. The economic coffers have also benefited from heart of the dense rain forest, despite government tourism’s boom, with a revenue increase of almost efforts to interest them in modern 27% between 2011 and 2012, from attractions. Parks and nature FCFA 143 billion ($286 million) in The tourism boom in reserves abound: Mbam, Djérem, 2011 to FCFA 181.5 billion ($363 the past few years has Nki, Boumba Bek, Lobéké or the million) in 2012. Dja reserve. Not far from the border led the WTO to classify with Gabon is the gorilla sanctuary Given its tourism potential, such of Mengame, where the primates performance is not surprising. Cameroon as a ‘hot’ are protected within the heart of the In fact, the country could do dense equatorial forest. better if it organized regular destination promotional campaigns worldwide. Snow on the equator? Yes, Cameroon can offer that Appropriately nicknamed ‘Pocket Africa’, Cameroon in its west, where mountain trekkers can have a try is characterized by its unusual geographical and at Cameroon’s highest peak, the second highest in cultural diversity, a mix of modern and untouched Africa after Kilimandjaro – but, for that, its highest wild. active volcano. Despite an altitude of 4,100 meters, Mt Cameroon hosts an annual race in February, in It is partly modern: its administrative capital Yaoundé which many international athletes compete. At the and business center Douala offer all the comforts. In foot of this active volcano, that last erupted in Maycontrast, the country’s north consists largely of mere June 2000, is the city of Buea, the former capital nature, only a little of it gussied up. That is to say, of Cameroon, which still retains some Prussian in the form of national parks (Waza, Faro, Bouba 52

Doing Business in Cameroon

Tourism

Flourishing of new hotels Statistics from the Ministry of Tourism and Recreation showed 2,539 hotels representing 38,778 rooms, and 44,110 beds in 2011 in all of Cameroon. Topping the list are two international hotel chains with established reputations. On the one hand, the Yaoundé Hilton hotel. With 300 rooms, this is Cameroon’s only 5-star hotel. Located in the heart of the capital on the Boulevard du 20 Mai, one of the main arteries of the city, the Hilton offers all the services and comfort of the hotel chain. For Douala, the country’s business capital, there is the Méridien hotel, also part of a large chain. It is located in Douala’s central business district Bonanjo, away from the urban hustle-bustle, and a stone's throw from the city's international airport.

colonial chic. To the south bask the coastal towns of Limbé, Yoyo and Kribi, along beaches of the measureless Atlantic Ocean. These are ideal places to let oneself lay back. Kribi also holds the unique distinction of containing the Lobé falls, the only mighty river that cascades directly into the ocean thereby generating the impressive spume of the falls. It’s a sight that leaves even locals gaping. The same at the magnificence of Limbé’s botanical gardens. But even more so, and close by, lies Korup national park, known to harbor many varieties of plants with renowned pharmaceutical properties. Consider taking your umbrella, since the town of Debundsha is among the rainiest places on earth, with nearly 10,000 mm of precipitation per year. To the north of Mt Cameroon, one enters the Bamiléké country. A seemingly endless chain of mountains offers irresistible views, yet visitors often find distraction in local folklore and handicrafts. In this region, the preservation of ancestral traditions is paramount. During public events such as funerals, wakes and other traditional celebrations, folk dances and ancient rituals of rare beauty and originality are on show. Many of the town chiefdoms are true museums, competing with picturesque decorations, and with their art jealously preserved. The most famous of these chiefdoms is the Foumban royal palace, at the heart of the Bamoun kingdom. Built by King Njoya, the Bamoun chiefdom also invented a writing system whose characters are still preserved in the palace. The rugged terrain of the Bamiléké region resulted in roads with mountain passes and steep cliffsides, giving travelers astounding panoramas.

Novotel used to have a series of five hotels nationwide. But they were eventually taken over by the government and have now become public institutions, of more modest ranking. Located in Douala, Yaoundé, Garoua, Maroua and Bamenda, they are nonethless among the leading hotels of the country. But upward creep in quality is on its way. In 2012 alone, new licenses were granted for 26 new hotels, 8 restaurants, 9 entertainment establishments, and 7 travel agencies. Big cities such as Douala and Yaoundé, and even smaller towns like Bafoussam, are home to many new construction sites.

In 2012 and 2013, the northern part of Cameroon was the scene of terrorist acts and poaching. Thus, in 2012, poachers invaded the Bouba Ndjiddah national park and massacred more than 400 elephants. The following year, a family of French tourists and then a priest were kidnapped by supporters of the Boko Haram islamists. Several weeks of difficult negotiations led to their release. Following these events, France even placed northern Cameroon off limits for travel for a period. Against all odds, these incidents have not affected tourist attendance. Officials of Sofitoul, a leading Cameroon tour operator, explained that the dangers in the north have meant re-directing tourists toward excursions in the southern part of the country. Also to be noted: after the incidents, the government significantly strengthened security in the northern parts of the country. So, enjoy. • For more information: Ministry of Tourism – www.mintour.gov.cm General information - www.cameroun-infotourisme.com www.cemacbusiness.com

Doing Business in Cameroon

Inside

Cameroon

Culture

t a glance, Cameroon may well class as ‘pocket Africa’. It contains so many of its singularities. From Mount Cameroon that rises 4,070 meters above the Atlantic coast the country’s ridge descends from there Pierre Titi Nwel via the Mandara mountains, down to Lake Chad – far away and far below. Landscapes and peoples, a palette of Africa, populate the slopes, the plateau, the forest of the plain, the savanna and finally the desert in the north. But this sheds little light on how these people of the sea, the forest, the savanna and the desert, how these Bantu, these Sudanese and these Arabs (the Choa of the extreme north), have modernized into a nation over the span of fifty years. Cameroon was conquered by Germans, who in thirty years (1884-1916) achieved something rare in the history of colonialism, namely the conversion of an entire people, the Beti, to Roman Catholicism. This folk continue to live in the center of the country, the seat of what is now firmly ensconced as a nation with democratic institutions. At the end of the Great War, German Cameroon was entrusted to the French and British. But World War II distracted these colonizers and weakened their sway. Curiously it was not politics that was instrumental in this, but the Christian religion which posed the challenge. Citing the Bible, African Christian leaders began insisting that only black preachers could transmit the message of Christ to Africans. It was these sermonizers (Kimbanguists and Matsouanists in both Congo’s, Harrismists in Liberia and Cote d’Ivoire, etc.) that kindled what then became a successful revolution. Black Christianity became openly political when, within a small area of Cameroon’s south, a messianic movement called Thonguism (the religion of Nyambebantu, the God of blacks) succeeded in establishing itself. Its prophet, Thong Likeng, proclaimed that each race is possessed by the religion of its ancestors. Just as Jesus stood for the white, 54

Doing Business in Cameroon

and Buddha for the yellow, Thong Likeng claimed to stand for the teachings of Ngakola, the ancestor of black Africans. Among other beliefs, Thong Likeng preached equality between whites and blacks, and mutual cultural respect. In 1945, he toured localities in the Eséka region, passing through Edea and then on to Douala where he died in 1953. It is on Thonguism that the UPC national movement then constituted itself in 1948 while proclaiming a three-point political program: independence, reunification of the British and French Cameroons, whilst also seeking improvements in standards of living. The rise of the UPC brought social unrest and soon Cameroon became the only country in subSaharan Africa to take up arms for its independence (1956-1959). The first president of Cameroon, Ahmadou Ahidjo, though not a UPC follower, endorsed its political program. He proclaimed independence in 1960 and then, in 1961, saw to unification. Following that, he embarked into the pioneering struggle to convince the people to abandon their ethnic tribal bonds. The second president, Paul Biya, completed unification of the country by transforming Ahidjo’s Republic of United Cameroon into the Republic of Cameroon, and successfully seeing to it that the country’s 240 ethnic groups cohabited peacefully. No longer was there any tribal warfare, nor hunting down of foreigners, as continued in other countries of the region. Of course much remains to be done. Better distribution of the fruits of growth will likely consolidate the political situation. Although Cameroonians may not be overly attached to their ethnicity, they do not necessarily adhere openly to the State. They seek their personal interest. Therefore endemic corruption. “Operation Epervier” which tracks down major predators of the common good seeks to return Cameroonians to their patriotism of yesteryear. Alas, everyday corruption has not yet found its remedy.

Memoir

the political and economic performance of the ruling party.

Corruption and politics make for lively national discussion. Everyone has something to say, some “revelation” to air. On the way from airport to city, the taximan will shrug “We suffer, but it’s alright.” He will then confide that he has itv from a “reliable source that a man belonging to the innermost circle of the president” is about to be nailed as a “predator”; he is worth FCFA 25 billion and soon he’ll be thinking about that in jail. The taxi driver also knows of the infighting over power and profit between different clans, and over the succession to the presidency. For him, Cameroon is on the move, so things tick along despite the daily hassle. The taximan is not wrong. People no longer die of hunger in Cameroon and one can travel freely. Yet today’s Cameroonian does not appreciate the extent of progress his nation has made. On average he is too young and did not witness the first thirty years of independence – of the development of freedom of expression, the consolidation of democratic processes. Ask him whether he is a registered voter, he might reply that his electoral card “is like the national identity card”. Or, if he did not vote, he’ll complain of “masquerade elections” of which “the result is known in advance.” Let me not give the impression that Cameroonians have a poor opinion of politics. Overall, they slowly understand the ins and outs of democratic choice, they know that good policy is telling the truth. But politics is also about the struggle for survival or a decent living. This is why in March, 2014, they demonstratively mourned the death of Charles Ateba Eyene, a young member of the ruling party. Facing an untimely death, Eyene cut loose publicly for a program of political rectitude and denounced

Another big topic in Cameroon is soccer. More than politics, soccer fascinates Cameroonians, not only because it passes as the image of the country, but it places Cameroon at the same level as great nations. We play well, Cameroonians will say and go on from there to insist that soccer rewards true value and talent, without having to know someone with pull. We pack the stadiums and heatedly debate the worthiness of Samuel Eto’o son. The father, the great Eto’o, happens to be Cameroon’s best player, as were Milla, Mboma and other former Lions Indomptables (the national team) in their time. But pushing Eto'o jr. into the spotlight has earned the wrath of some: “The country is the country; he should know this like everyone else, and do his job.” Cameroon also has celebrities in the arts: music, cinema, even cooking. A Cameroonian saying recommends never adulating living people. Yet how can one not evoke Manu Dibango, the creator of soul makossa? He mated the makossa, the Cameroon beat, with American soul music. Michael Jackson approved and it even had some Europeans shuffling to it – though lacking knowledge of African dance. Makossa is not the only sound in the lowlit Cameroon joints. The bikutsi is danced to tunes by Lady Ponce, Coco Argenté, Many Bella, Ahidjo Hamadou and General Amma Pierrot. For Pop R & B there’s X Maleya, Stanley Enow, Dedy Eyango, Papillon, Mathematic. Cameroonian cuisine. Of course one does not eat people any longer. Rather, one partakes of salade niçoise and beef bourguignon. But Cameroonians have transformed some regional or ethnic dishes into national dishes, some even reaching international repute. Our cities have modern restaurants where one may order goat ndomba, fish mbongoo, game, koki, ndole and desserts like pistachio or peanut cake. Unlike some other places in Africa, it is easy to bypass hot pepper. With the new paved road section linking Bertoua and Ngaoundere, we can soon expect restaurants to offer millet balls with foléré, a northern specialty. Cameroonians know how to combine the old and the new, the traditional and the modern, because that is what they are in the act of becoming. • Pierre Titi Nwel is socio-anthropologist, associate professor at Yaounde’s Central African Catholic University, and author. Doing Business in Cameroon

Practical Information

Practical information

for Visitors to Cameroon

OFFICIAL LANGUAGE Mostly French is spoken, although Cameroon has two English-speaking provinces. Both languages are official.

• The exchange rate to the Euro is pegged: Euro 1 = FCFA 656 • Exchange rate to the dollar (at April 2014): $1 = FCFA 475

CLIMATE Cameroon extends over 1,400 kms from south to north, and from the Atlantic coast to the Sahara desert, so there are multiple climates. Douala is on the coast and has a hot and humid climate with frequent rains. Yaoundé is 250 kms inland, in a hilly area, and enjoys cooler evenings. The northern parts are hot and dry.

ELECTRICITY Electrical current is 220 volts, 50 Hz. Sockets have two small round pins.

TIME ZONE Cameroon standard time is the same as continental Europe (GMT +1). Cameroon does not apply daylight savings time, so there is a one-hour time difference with continental Europe during that period. TELEPHONE PREFIX • The international country code for Cameroon is 237 • Fixed land lines start with either 22 or 33, but there are no area codes as in other countries. Six digits follow the 22 or 33 prefix. • Mobile phones have prefixes starting with 7 (MTN), 9 (Orange), or 8 (special services). As for fixed lines, the total number of digits in mobile numbers is eight. For example: (+237) 77 58 77 90. CURRENCY • The national currency is the CFA Franc (FCFA or XOF). 56

Doing Business in Cameroon

TAXIS Top hotels usually have private cars available. Otherwise, taxis can be hailed on the street, but are “multi-tasking”, i.e. they pick up other passengers along the way. Taxis do not have meters, so you need to agree on a price before embarking. A typical 30-minute ride will cost about FCFA 2,000. Traffic can be bad in Douala and Yaoundé, so ask local sources for expected travel time and leave yourself some cushion. VISAS All foreign nationals require visas for entry into Cameroon. Check a website in your country of residence for particulars, since requirements vary and can include proof of sufficient funds, hotel reservation, plane ticket, etc. HEALTH REGULATIONS Yellow fever vaccinations are required. Children under the age of one year are exempted. Visitors from Europe and North America should take precautionary steps against malaria which is common in the country.

OPENING HOURS • Office hours: 9 a.m. to 6 p.m. Monday to Friday • Government offices: 8:30 a.m. to 4:30 p.m., Monday to Friday • Post offices: 8:00 a.m. to 6 p.m. M to F, Saturday mornings. • Stores: Monday to Saturday, usually 9:00 am to 19:00 pm. • Restaurants: Lunch from 12:30 to 15:00; dinner from 19:00 to 23:00 USEFUL WEB SITES Cameroon Tribune is the government-owned daily newspaper. www.cameroon-tribune.cm The official government web site is www.spm.gov.cm .spm stands for “Services du Premier Ministre” • AIRPORT TRANSFER Douala: the airport is located about 30 minutes from downtown. Taxis and hotel shuttles are available outside the terminal. Rates from FCFA 5,000 to 10,000 depending on exact destination. Yaoundé: about FCFA 9,000. FOOD & DRINKS Some indicative prices at cafés or restaurants. Expect variations. • Coffee or tea: ca. FCFA 2,000 • Sandwich: ca. FCFA 4,000 • Mineral water: ca. FCFA 2,000 • Beer: ca. FCFA 2,000 SHOPPING • Arts and crafts markets are the best place to find local masks, leatherware, textiles and other handicrafts. • Street hawkers will offer a range of items, including clothing, DVDs, music, snacks, drinks, and the latest range of cheap Asian gadgets.

This publication was produced by Mediaside Austria for API (Agence de Promotion des Investissements). The publishers thank various Cameroonian government agencies and the African Development Bank for their input. Our special thanks to Thierry Ekouti of Le Quotidien de l’Economie for his assistance.

Photos: Charles Beh, Le Quotidien de l’Economie, Shutterstock

Unless otherwise specified, all currencies are in US dollars. A standard exchange rate of 475 CFA/USD was used throughout.

API CEO: Marthe Minja

Publisher: Mediaside Austria Editor in Chief: Christopher Fodor Art director: Rohit Juneja Contributors: Julien Chongwang, Beatrice Mvogo, Pierre Titi Nwel

Doing Business in Cameroon

Mediaside Austria Bärengässchen 10 A-5020 Salzburg, Austria Tel +43 676 708 5066 chris.fodor@dbi-web.com

Deputy director: Donatus Boma B.P. 15304, Douala, Cameroon Tel: +237 33 42 59 16 and +237 33 43 30 08 info@ipac.com

Copyright 2014 Mediaside Austria Printed in India The trademark DBI Doing Business In is deposited by Christopher Fodor and is his intellectual property. All efforts have been made to insure accuracy of information provided. The publishers are not held responsible for mistakes. The opinions expressed in the articles are those of the authors and interviewees and do not necessarily represent the opinion of API or the government of Cameroon.

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