Index trend
Previous Quarterly Editions
Expropriation Risk: 66 67 67 67 ►Political Violence Risk:66 66 66 66 ►Terrorism Risk:65 63 63 63 ►Exchange Transfer and Trade Sanction Risk: 64 64 64 64 ►Sovereign Default Risk:73 73 73 65 ▼
Overall Risk Temperature: 65 (Medium high -2) TREND ▼
Special topic: Relationship with the 'global rules-based order'
President Paul Biya has been in office since 1982. He has mostly maintained good diplomatic relations and trade ties with Western partners and has pushed for greater integration of the country into the liberal international order. Cameroon became one of the first former French colonies to join the Commonwealth, which was primarily set up for former English colonies. Part of the motivation to join the Commonwealth was to seek new trading partners outside the sphere of France. Yaoundé is a signatory to many international trade agreements, including with the European Union and the African Continental Free Trade Agreement, demonstrating openness to international trade. Part of the government’s latest trade plans is to lobby Washington to lift Cameroon’s suspension from the tariff-free program, the Africa Growth and Opportunities Act. The Trump administration suspended Cameroon in 2019 over human rights violations.
In addition to its commitment to international trade, Cameroon is part of the international financial system. Yaoundé receives support from the World Bank and the International Monetary Fund as the government is engaged in multiple credit programs to improve its management of public finances.
Relations between Cameroon and France can sometimes be tense. Nevertheless, Biya supports France’s continued backing of the franc, the common currency used by the Central African Economic and Monetary Community (CEMAC). Cameroon is the largest economy in CEMAC and could challenge France’s influence in the community. The fact that Biya maintains monetary ties with France underlines his limited interest in overhauling the status quo.
Growing pressure from Western partners in recent years over the Biya administration’s appalling human rights record has prompted Cameroon to seek a partnership with Russia. In April 2022, Cameroon and Russia signed a military cooperation agreement covering international defense and security policy, troop training and military education among others. Despite the agreement, Cameroon has stopped short of supporting Russia at the United Nations, which indicates the country’s reluctance to hurt its relationship with its traditional Western allies. In essence, Cameroon relies on the rules-based order, and a collapse of the order would heighten the country’s vulnerability to external shocks and political instability.
TREND ►The expropriation risk in Cameroon is moderate. Incidents of expropriation are few and, when they occur, mainly relate to land and infrastructure projects. By law, land can be expropriated for public utility, with compensation paid to the affected parties.
Regarding business assets, the government typically uses the threat of contract cancellation to compel contractors to expedite delivery when they are behind schedule.
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Biya seems poised for another term in office. The 91-year-old, who has been in office for over four decades, is showing no sign of stepping down ahead of the presidential elections in 2025. His ruling party, the Cameroon People's Democratic Movement (CPDM), has launched a campaign urging party supporters to implore the president to contest the elections.
A 2008 constitutional amendment removed term limits, allowing Biya to stay in office indefinitely. Constitutionally, if the presidency falls vacant, the president of the Senate must organize an election within 120 days (in which the Senate president cannot participate). Without a clear successor, a sudden departure from office by Biya would almost certainly trigger a succession battle within the CPDM. That could cause policy paralysis and severe disruption to the government. An uncertain transition could lead to a military intervention.
Nigeria-based Islamist group Boko Haram and its offshoot, the Islamic State of West Africa Province, continue to pose security threats to Cameroon’s north, where they have been waging an armed campaign in this region since 2014. Although attacks decreased in 2022, there was a rise in violence in 2023. In August, an attack in Darak, a fishing island on Cameroon's northern border with Chad and Nigeria, left 12 people dead. The Islamist groups have not expanded their attacks beyond this region yet, posing a limited threat to the political and commercial capitals of Yaoundé and Douala, respectively.
In the southwest of the country, separatist Anglophone militants are engaging in indiscriminate attacks on civilian, business and military targets. These attacks include stealing cargo and burning public infrastructure, such as schools, markets and post offices.
Increasingly, the militants are copying Boko Haram’s tactics. They are targeting school children; using improvised explosive devices; and kidnapping civilians, state officials and local businesspeople for ransom in a bid to raise funds and recruit new members. Nonetheless, collaboration between Anglophone militants and Boko Haram remains unlikely, due to their different religious beliefs and ideologies.
The risk of trade sanctions risk in Cameroon remains low. In terms of exchange transfer risk, Cameroon is obligated to follow the foreign exchange regulations and directives issued by the Bank of Central African States (BEAC). A new foreign currency exchange regulation, which took effect in March 2019, requires companies to seek authorization from the BEAC before opening offshore current accounts and, every two years, to renew the permission to maintain foreign currency accounts in the CEMAC region.
This regulation has significant implications for commercial transactions and raises a variety of risks, including around onshore bank credit risk, exchange rate, convertibility and transferability.
However, the new regulation also granted several concessions to resident companies operating in the mining and hydrocarbons sectors. They can maintain foreign currency accounts both in and outside the CEMAC region and can transfer abroad the salary of expatriate workers from onshore foreign currency accounts. These concessions significantly reduce the risk of capital controls and exchange transfer for the extractives industry — a major revenue earner for CEMAC countries.
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Cameroon’s public debt is among the lowest in the CEMAC region and is projected to remain stable until 2027. The debt is expected to remain below 45% of GDP until 2027, which is well below the 70% debt-to-GDP limit set by the Central Bank of CEMAC.
Despite Cameroon’s low debt-to-GDP ratio, the country has missed a few small payments in 2022 and 2023, indicating underlying weakness in public finance management. In 2022, the government was late four times in making debt service payments to Deutsche Bank Spain. This was revealed in July 2023, leading to a downgrade by rating agency Moody’s. Fitch Ratings did not consider the late payments as a default since the delays did not exceed a 30-day grace period. Late payments to the European Investment Bank in August and September 2023 were not significant enough to warrant further downgrading. The main threat to Cameroon’s ability to repay its debt is the risk of political destabilization from the lack of a credible succession plan for Biya. Cameroon has not seen a peaceful transfer of power in over four decades.
