Previous Quarterly Editions
Expropriation Risk: 66 67 67 67 ►Political Violence Risk:66 66 66 66 ►Terrorism Risk:67 65 65 63 ►Exchange Transfer and Trade Sanction Risk: 55 73 64 64 ►Sovereign Default Risk:73 73 73 73 ►
TREND ►
Protest intensity to date* 2022 2023 Low LowUnrest risk in 2024**Cost of living: MediumAnti-austerity: Medium
Cameroon’s public sector debt stood at 43.8% of GDP as of June 30, 2023, according to official information. The country’s debt is one of the lowest in the six-nation Central African Economic and Monetary Community (CEMAC), which sets a debt limit of 70% of GDP for its members as one of its monetary convergence criteria. In 2022, the government revealed plans to bring its debt level to 50% of GDP by 2025, when the next presidential election is due.
*Note: Protest intensity is calculated based on ACLED. **Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of 'anti-austerity' calculations, see the essays in the introduction; for details of 'cost-of-living' calculations, see the previous edition of the Index.
To avert a debt crisis, the government announced in April 2023 plans to boost export revenues and reduce imports through import substitution policies. Part of the plan is to lobby the U.S. government to lift the country’s suspension from the tariff-free program, Africa Growth and Opportunities Act (AGOA), imposed in 2019 by the Trump administration over human rights violations by Cameroonian security forces. Given the ongoing appalling human rights situation, it is unlikely that Cameroon will be re-joining the AGOA program in the short term.
Other immediate measures taken by the government to honor its debt include revising the 2023 national budget. In June 2023, President Paul Biya signed a decree to revise the 2023 Finance Act and raised the national budget by almost 5.7%. The allocation for debt repayment in the revised budget received the largest increase of 30%, underlying the government commitment not to default.
Ahead of the next presidential elections in 2025, political stability in Cameroon will remain a key concern. There is currently a coup contagion in the West and Central Africa regions. The military takeover in Gabon in August 2023 became the eighth successful coup in both regions since August 2020. The coup led to a sell-off and loss
in value of Gabon’s bonds, with a knock-on effect on the bonds of its neighbor, Cameroon.
The coup, which is the first in Gabon in over 50 years, has raised concerns over the likelihood of a coup in Cameroon to oust the 90-year President Biya, who has been in power for over 44 years. Unlike Gabon, Cameroon has never experienced a successful military coup. A failed coup attempt against Biya in April 1984 resulted in over 1,000 deaths.
A succession crisis is looming in Cameroon as the ailing president is showing no sign of stepping down. A sudden departure of Biya is almost certain to trigger a bout of sell-offs and a spike in interest rates of the country’s external debt that could last for a relatively short or long time depending on whether or not the new leader would repudiate the country’s debt.
TREND ►The expropriation risk in Cameroon remains moderate. Incidents of expropriation are few and, when they occur, mainly relate to lands and infrastructure projects. By law, lands can be expropriated for public utility, with compensation paid to the affected parties.
Regarding assets of businesses, the government uses in most instances the threat of contract cancellation to put pressure on contractors to speed up delivery when they are behind schedule.
Biya’s stranglehold on power is showing no sign of weakening. His ruling party continues to dominate the political landscape, including holding a supermajority in the National Assembly and winning all 70 seats in contest in the March 2023 senate elections. As noted above, eight successful military coups in the West and Central African regions since August 2020 have triggered concerns that the coup contagion could spread to Cameroon. The same day of the coup in Gabon, Biya reshuffled his defense leadership team, which might have a measure to strengthen his position against a possible coup but could equally have simply been a coincidence.
The president looks set to run again in 2025; the 2008 constitutional amendment removed term limits. Constitutionally, the president of the Senate is required to organize an election within 120 days (in which he cannot participate) should a vacancy in presidential power occur. Without a clear successor at present, a sudden departure from office by Biya would almost certainly trigger a succession battle within his party. That could cause policy paralysis and severe disruption to executive branch operations. An uncertain transition could lead to a military intervention.
Nigeria-based Islamist group Boko Haram and its offshoot Islamic State of West Africa Province continue to pose security threats to Cameroon’s north, where they have been waging an armed campaign since 2014. The Islamist groups have yet to expand their attacks beyond this region, posing limited threat to the country’s political and commercial capitals.
In the southwest region of the country, separatist militants are engaging in indiscriminate attacks on civilian, business and military targets. These attacks include theft of cargoes and burning public infrastructure, such as schools, markets and post offices.
Increasingly, the Anglophone militants appear to be copying Boko Haram’s tactics — including targeting school children; using improvised explosive devices; and kidnapping civilians, state officials and local businesspeople for ransom — to raise funds and recruit new members. Nonetheless, collaboration between Anglophone militants and Boko Haram remains unlikely, given their differing religious beliefs and ideology.
Cameroon’s trade sanctions risk remains low. In terms of exchange transfer risk, Cameroon is bound by the foreign exchange regulations and directives coming from the bloc’s Bank of Central African States (BEAC).
A foreign currency exchange regulation (which took effect in March 2019) has significant implications for commercial transactions and raises various risks, including around onshore bank credit risk, exchange rate, convertibility and transferability. The regulation requires companies to seek BEAC authorization before opening offshore current accounts and to renew every two years the permission to maintain foreign currency accounts in the CEMAC region.
However, the central bank has granted several concessions to resident companies operating in the mining and hydrocarbons sectors in light of the new foreign exchange regulation taking effect. These concessions significantly reduce the risk of capital control and exchange transfer for the extractives industry — an industry that is a major revenue -earner for CEMAC countries.
Cameroon’s public debt is well below the 70% debt-to-GDP CEMAC limit. The government plans to ensure that its public debt — 43.8% of GDP at the end of June 2023 — does not exceed 50% of GDP by 2025. Cameroon was one of the African countries that benefited from China’s debt cancellation of about US$113.8 million.
In 2022, the government was late four times to make debt service payment to Deutsche Bank Spain, a fact that came to light in July 2023. The revelation led to a downgrading in July 2023 by rating agency Moody’s, while Fitch Ratings did not consider the late payments as a default, as the delays did not exceed a 30-day grace period.
The government’s revision of the national budget by almost 6% in June 2023 and increase of the allocation for debt service repayment by 30% in the revised budget underlies its commitment to avoid defaulting on its debt obligations.
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