Previous Quarterly Editions
Expropriation Risk: 66 66 66 66 ►Political Violence Risk:67 67 67 68 ►Terrorism Risk:65 65 67 67 ▲Exchange Transfer and Trade Sanction Risk: 64 55 55 55 ►Sovereign Default Risk:66 66 66 65 ►
TREND ►
Geopolitical alignmentEast 1 2 3 4 5 West
Alignment five years agoEast 1 2 3 4 5 West
Degree of contestationSettled 1 2 3 Contested
A former French colony, Cameroon is largely aligned with Western governments while simultaneously courting China for trade and loans and Russia for military support.
In April 2022, Cameroon and Russia signed a military cooperation agreement covering international defence and security policy, training troops, and military education, among other areas. The signing of the agreement came almost a month after Cameroon decided to leave a session at the United Nations during a vote for a resolution to condemn the escalation of conflict in Ukraine, which began in February 2022. Cameroon’s decision to leave without voting or abstaining is indicative of the country’s dilemma of not upsetting Russia, any new partner or traditional Western allies.
In July, France's President Emmanuel Macron visited Cameroon and two other African countries around the same time Russia’s Foreign Minister Sergey Lavrov’s trip to four African countries. Macron’s trip was to seek support for Western efforts in support of Ukraine and to counter Russia’s narratives of a global food crisis exacerbated by Western sanctions on Russia.
Cameroon’s pivot to Russia for military support has largely been driven by condemnation of President Paul Biya’s poor human rights record in prosecuting a military campaign against separatist groups in the English-speaking region of the country.
Overall, the country’s policy outlook appears to be moving away from being strongly pro-Western towards non-aligned, as Cameroon’s government seeks to play a balancing act by maintaining diplomatic relations between competing countries. This will afford the government leeway to decide which side to turn to for support at its own choosing. This policy outlook appears to be largely settled, and it will remain so unless Moscow loses some of its international clout and ability to provide financial and military aid.
TREND ►Incidents of expropriation are few and, when they occur, mainly relate to infrastructure projects. In most instances, the government uses threat of contract cancellation to put pressure on contractors for timely delivery. For instance, a formal warning of contract cancellation was served by the government to Chinese construction firm Sinohydro for its delays in the construction of a new headquarters for the Ministry of Public Works and the rehabilitation of some roads.
President Biya is serving his seventh term following his re-election in November 2018. In power since 1982, 89-year-old Biya’s political longevity comes from his ability to consolidate power and maintain control over state institutions and the military. The president is showing no sign of stepping down and is eligible to run again in 2025 after the 2008 constitutional amendment removed term limits.
Biya’s administration remains firmly in control, including occupying 148 of the National Assembly’s 180 seats and 81 of the 100 Senate seats. The president’s Cameroon People's Democratic Movement (CPDM) party also won nine of the ten administrative regions after the first ever regional elections were organised in December 2020. However, those elections were boycotted by the two main opposition parties, the Cameroon Renaissance Movement and the Social Democratic Front.
Without a clear successor, a sudden Biya departure is almost certain to trigger a succession battle within the CPDM. This could cause policy paralysis and severe disruption to executive branch operations. A messy transition could lead to a military intervention.
TREND ▲
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 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, burning public infrastructure including 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 a member of the Central African Economic and Monetary Community (CEMAC), Cameroon is bound by the foreign exchange regulations and directives coming from the bloc’s Central Bank of Central African States (BEAC). The bank introduced a new foreign currency exchange regulation which took effect on March 1, 2019 and regulates foreign exchange transaction in the bloc’s six member states.
The new foreign exchange regulation has significant implications for commercial transactions and raises a variety of risks, including onshore bank credit risk, exchange rate, convertibility, and transferability risks. The regulation requires companies to seek authorisation from the BEAC before opening offshore current accounts and to renew the permission to maintain foreign currency accounts in the CEMAC region every two years.
However, with the new foreign exchange regulation for the extractive sector, which came into effect on January 1, 2022, the Central Bank has granted several concessions to resident companies operating in the mining and hydrocarbons sectors. These concessions significantly reduce the risk of capital control and exchange transfer for the extractive industry, a major revenue earner for CEMAC countries.
Extractive companies 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, while payments can be made in foreign currency to subcontractors operating in the CEMAC zone.
Cameroon’s sovereign default risk has lowered. The country’s economy is expected to grow further following the 2020 contraction, its first in a decade. In February 2022, Finance Minister Louis Paul Motaze announced a government plan to keep public debt below 50% of GDP in the 2022 fiscal year. Generally, Cameroon’s public debt is well below the CEMAC region’s limit of 70% debt-to-GDP.
Furthermore, the government has reached a preliminary agreement with the International Monetary Fund to restart a new economic and financial programme following the expiration of the last one (2017-20), amounting to about XAF400 billion (USD607.5 million). In addition, local media has reported the government was considering options including refinancing its 2015 Eurobond, of which amortisations are scheduled to start in 2023.
Return to contents Next Chapter
