Previous Quarterly Editions
Expropriation Risk: 66 66 66 67 ▲Political Violence Risk:67 68 66 66 ►Terrorism Risk:65 67 67 65 ►Exchange Transfer and Trade Sanction Risk: 55 55 55 73 ▲Sovereign Default Risk:66 65 73 73 ►
TREND ▲
Protest intensity in 2022 and Q1 2023* 2022 Q1 2023Cost of living : Low LowAll protest: Low Low
Cost-of-living protest risk in 2023*Wage protest: Low Food/fuel policy protests: Medium
Cameroon’s economy is projected to grow 3.4% in 2022 and 4.3% in 2023. This comes after the country experienced its first recession in a decade in 2020.
The government expects headline inflation to ease to 3% in 2023, down from 4.6% in 2022, the highest level since 2008. However, the IMF has estimated the country’s inflation to have averaged 6% in 2022 and it could stay at this level throughout 2023. The National Institute of Statistics in Cameroon reported in February 2023 that inflation hit 6.3% in 2022, the highest level in the last 27 years, and expects it to increase further in 2023.
*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 calculations, see the introductory essay.
A shortage of staple goods alongside price increases, fuelled partly by the global impacts of the Russia-Ukraine conflict, were the main drivers of inflation. The government provided fuel subsidies in 2022 to cushion the impact of inflation. However, the government has decided to reduce subsidies for petroleum products in its 2023 budget, after its energy subsidy hit 3% of GDP in 2022.
The government’s fiscal consolidation, with the aim of creating fiscal space for productive investment and social spending, will likely add further pressure on the high cost of living. On March 8, 2023, thousands of women took to the streets in a peaceful protest at the high cost of living and demanded government intervention. Four days later, an opposition group organised a demonstration to protest the frequent power outages.
The high cost of living will likely fuel public sector strikes and protests by civil groups that could turn violent. Nonetheless, 90-year-old President Paul Biya’s grip on power and the continued dominance of his ruling Cameroon People's Democratic Movement (CPDM) party reduces the risk of large-scale unrest that would threaten the country’s stability in the near term.
TREND ▲The expropriation risk in Cameroon is 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.
TREND ►
President Biya’s ruling CPDM continues to dominate the political landscape, including holding a supermajority in the National Assembly. Furthermore, in the March 12, 2023, senate elections the party won all 70 seats in contest. The Constitutional Court, which applies to the government, dismissed lawsuits by the opposition parties seeking to challenge the outcome of the elections.
The president nominates the remaining 30 senators to complete the 100-seat senate. In the outgoing senate, the CPDM and its allies held 93 seats, with the remaining seven going to the opposition Social Democratic Front, one of the two main opposition parties. Biya is likely to allocate some seats to pro-government opposition parties as a way of rewarding their loyalty and consolidating his alliances.
The president is showing no sign of stepping down and he is eligible to run again in 2025, as 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 be almost certain to trigger a succession battle within the CPDM. 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. Islamist militants stage sporadic attacks in the Far North region using improvised explosive devices and suicide bombers. However, the Islamist groups have yet to expand their attacks beyond this region.
In the southwest of the country, separatist militants are engaging in indiscriminate attacks on civilian and military targets. These attacks include 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, in order to raise funds and recruit new members. Nonetheless, collaboration between Anglophone militants and Boko Haram remains unlikely, given their differing religious beliefs and ideology.
As the largest and most diversified economy in the six-nation Central African Economic and Monetary Community (CEMAC), 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). The bank introduced a new foreign currency exchange regulation (which took effect in March 2019) to regulate foreign exchange transaction in the bloc’s six member states.
The foreign exchange regulation has significant implications for commercial transactions and raises a variety of risks, including around onshore bank credit risk, exchange rate, convertibility, and transferability. The regulation requires companies to seek authorisation from the BEAC 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 as the new foreign exchange regulation came into effect. These concessions significantly reduce the risk of capital control and exchange transfer for the extractives industry – an industry which is a major revenue earner for CEMAC countries.
Extractive companies can maintain foreign currency accounts both inside and outside the CEMAC region and can transfer abroad the salary of expatriate workers from onshore foreign currency accounts, while payment can be done in foreign currency to subcontractors operating in the CEMAC zone.
Cameroon’s public debt is on a sustainable path. Generally, the country’s public debt is well below the CEMAC region’s limit of 70% debt-to-GDP. The government planned to ensure its public debt, which stood at 45.1% of GDP at the end of May 2022, does not exceed 50% of GDP by 2025. Cameroon was one of the African countries benefit from China’s debt cancellation of about USD113.8 million.
Additionally, the positive impact of a high oil price in 2022 on government revenue will contribute towards lowering Cameroon’s sovereign default risk in the medium term. The government’s agreement in July 2021 with the IMF to restart a new USD689.5 million economic and financial programme following the expiration of the last one (2017-20) will improve the country’s management of public finances.
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