2013 Investment Climate Statement
Bureau of Economic and Business Affairs
April 2013
Report

Openness to Foreign Investment

The Government of Cameroon (GRC) actively seeks to attract foreign investment in order to create much-needed economic growth and employment. It is less effective, however, at following through with interested investors in order to ensure that investments move forward in a timely manner.

Since 2012, numerous trade delegations have visited Cameroon exploring investment opportunities, including delegations from China, Singapore, India, Thailand, Brazil, and Turkey. China is emerging as Cameroon’s largest foreign investor, with significant activities in the areas of infrastructure, extractive industries, and energy. According to the Ministry of Economy, the BRICS (Brazil, Russia, India, China, and South Africa) invested USD 1.42 billion in Cameroon in 2012.

Amongst African investors, Nigeria and Morocco are present in a variety of sectors, including manufacturing, oil and gas distribution, utilities (water) and financial services. Nonetheless, prospective U.S. investors should be aware that Cameroon is still beleaguered by endemic corruption that makes it a challenging business environment.

Investment Charter

Cameroon’s legislative body, the National Assembly, adopted an Investment Charter in 2002 to attract international investors and replace the existing Investment Code of 1990. However, the GRC has not fully implemented the 2002 Investment Charter. In May 2009, President Paul Biya signed a decree postponing to 2014 the deadline for implementation of some provisions of the investment charter.

When the 2002 Investment Charter becomes operational, some foreign and domestic investments will become subject to GRC approval, depending on which “regime” the investment falls under. The “automatic regime” permits investment without prior government approval. The “returns regime” permits investment after an application and the passage of two days without government objection, while the “approval regime" permits investment after an application and the expiry of fifteen days without government objection. The Charter is unclear, however, on how to classify investments (i.e. which regime to use).

In an attempt to render the Investment Charter operational, the GRC put in place 23 committees to draft separate sector codes. The GRC has already adopted some of the codes, such as the Forestry Sector Code (1994), the Petroleum Sector Code (1999), and the Mining Sector Code (2001). In late 2011, the GRC adopted an Electricity Sector Code. The other remaining sector codes, including the Telecommunications Sector Code, are yet to be presented to the National Assembly. The natural gas code was adopted in April 2012.

Although the 1990 Investment Code places some restrictions on foreign ownership, the 2002 Investment Charter permits 100 percent foreign equity ownership. In practice, substantial local equity ownership may help facilitate the investment approval process. Investors who intend to make direct investments of greater than 100 million CFA francs (approximately USD 200,000) or more must declare their intent to do so to the Ministry of Finance (MINFI) 30 days in advance.

One-Stop Shop

In 2010, Cameroon piloted its “One-Stop-Shop” in Yaounde, which aims to simplify the process for registering a business. In 2011, Cameroon added “One-Stop-Shops” in the cities of Bafoussam, Douala, Garoua, and Bamenda. Theoretically, registration time should have decreased from 30 days to 72 hours, although in practice the process takes one to two weeks.

Business Forum

Cameroon is working to improve the business climate through the Cameroon Business Forum. The Forum meets twice a year and is chaired by the Prime Minister. The participants include key ministers, representatives of other business associations, and NGOs.

Privatization

Cameroon is still in the process of privatizing its state-owned companies. Institutions such as the World Bank and the IMF have long called for the privatization of the national telephone company, CAMTEL, which holds a monopoly on the international gateway as well as the landline network infrastructure.

In October 2012, the Vice President of the Cameroon Chamber of Commerce announced that CAMTEL, cotton producer SODECOTON, gas storage and distribution company Société Camerounaise des Depots Petroliers (SCDP), and the agricultural firm Cameroon Development Corporation CDC are likely to be privatized in 2013.

Pending confirmation from the government, U.S. bidders are eligible to compete for tenders related to the privatization process, regardless of whether the financing originates from the public budget or from multilateral banks. The privatization process may include calls for tenders from consulting firms to help the government build terms of reference for the privatization.

Full privatizations are rare, as the GRC generally continues to hold shares of “privatized” companies. In strategic sectors, such as the railway, air transportation, or electricity, foreign buyers retained market privileges provided for in previous lease contracts.

The privatization in 2001 of Cameroon’s electricity distribution company, SONEL, resulted in a major U.S. direct investment. U.S.-based AES Corporation acquired 56% of SONEL to create AES Sonel which received an operating license to generate up to 1,000 MW of installed capacity.

Kribi Deep Sea Port

The beach and tourist resort of Kribi is emerging as a regional industrial hub, making it a more attractive investment destination. Kribi is the terminus of the Chad-Cameroon oil pipeline. In 2011, President Biya inaugurated a project to build a deep sea port near Kribi. Cameroon’s first natural gas fired power plant will go online in the first quarter of 2013. A new road under construction from Yaounde to Kribi will reduce congestion on the principal Yaounde to Douala route and reduce vehicle travel times. Finally, several iron mining projects in southeastern Cameroon envision a new railroad with its terminus at the deep sea port at Kribi.

Incentives

The 2012 budget and finance law introduced new stamp duties on advertizing and a new basis for the equalization of council stamp duties. The same law reduced the tax burden on certain sectors, such as pharmaceuticals and renewable energy, by eliminating the Value Added Tax for products in those sectors. Provisions of the 2010 budget and finance law, which eliminated the tax on registering for incorporation and the tax on corporate equity offerings remains.

Cameroonian legislation also provides incentives to infrastructural projects worth more than USD 200 million, including exemption on the Value Added Tax (VAT). The relevant portions of the 1990 Investment Code -- notably the provisions regarding the free trade zone -- remain in effect until the full implementation of the 2002 Investment Charter.

Ranking

Cameroon’s rankings in selected surveys are as follows:

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.

Measure

Year

Index/Ranking

TI Corruption Index

2012

144

Heritage Economic Freedom

2012

135 (World), 29 (Regional)

World Bank Doing Business

2012

161

MCC Government Effectiveness

2013

49%

MCC Rule of Law

2013

38%

MCC Control of Corruption

2013

45%

MCC Fiscal Policy

2013

77%

MCC Trade Policy

2013

54.9%

MCC Regulatory Quality

2013

45%

MCC Business Start Up

2013

61%

MCC Land Rights Access

2013

34%

MCC Natural Resource Mgmt

2013

61%

Conversion and Transfer Policies

The unit of currency used in Cameroon is the Communauté Financière Africaine (CFA) franc. It is issued by the regional central bank, the Bank of Central African States (BEAC in French), and is shared with the other members of the Central African Economic and Monetary Community (CEMAC, the regional grouping of Cameroon, Chad, Central African Republic, Gabon, Equatorial Guinea, and the Republic of Congo). Although it is at par with the West African CFA franc, the two currencies are not usually accepted for payment in each other’s zones. France’s treasury guarantees full convertibility of both currencies to the euro. Since 1999, the CFA franc has been pegged to the euro at a fixed exchange rate of 1 euro to 655.957 francs.

Dividends, capital returns, interest and principal payments on foreign debt, lease payments, royalties and management fees, and returns on liquidation can be freely remitted abroad. Liquidation of a foreign direct investment, however, must be declared to the Minister of Finance (MINFI) and the BEAC 30 days in advance. Commercial foreign exchange transfers also must be cleared by MINFI for business deals amounting to more than 100 million francs (about USD 200,000). The BEAC has a centralized computer system for electronic transactions within the banking network.

Expropriation and Compensation

The 1989 Bilateral Investment Treaty (BIT) protects U.S. investments in Cameroon. Foreign and domestic investors receive legal guarantees that substantially comply with international norms, including full and prior compensation in the event of expropriation on the basis of public interest. American investors should seek GRC approval to protect their investments under the BIT. Undeveloped land is more at risk for local expropriation than developed property. There are no confiscatory tax regimes or laws that could be considered detrimental to American or other foreign investments. The 2002 Investment Charter recognizes property rights and facilitates land acquisition. Cameroonian law does not prohibit foreign ownership of land.

Dispute Settlement

Prospective foreign investors who wish to avoid entanglement in the court system should consider arbitration as a form of dispute settlement. The 1990 Investment Code states that, at the time of incorporation or application for Investment Code benefits, a firm may choose one of several options in the eventual need for dispute resolution: adjudication by local courts, arbitration by the international courts of justice, or resolution at an international arbitration center, according to Cameroonian law and the arbitration regimes of which Cameroon is a member (described below).

Under the 2002 Charter, claimants should forward petitions for redress or non-compliance with the provisions of the Charter to the Regulation and Competition Board. Cameroon accepts binding international arbitration on investment disputes between foreign investors and the government. In tax-related disputes, the new 2012 finance law stipulates that decisions rendered by the Ministry of Finance can be challenged before the Administrative Court within 60 days.

Difficulty in resolving commercial disputes, particularly the enforcement of contractual rights, remains one of the serious obstacles to promoting investment in Cameroon. Foreign corporate plaintiffs are often frustrated with the slow pace of the Cameroon legal system. Local businesses routinely exert pressure on the courts, which may be swayed by bribes or by the clout of a political heavyweight. Some foreign companies have alleged that judgments against them were obtained fraudulently or as the result of frivolous lawsuits. The enforcement of judicial decisions is also slow and fraught with administrative and legal bottlenecks.

Cameroon's bankruptcy law is an integral part of its commercial law. In case of bankruptcy, negotiable and enforceable guarantee instruments cover creditors.

Cameroon is a member of the International Center for the Settlement of Investment Disputes (ICSID, also known as the Washington Convention), and is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention). In May 1997, Cameroon’s Council of Business Managers and Professional Associations (GICAM), an association of 207 companies and 15 professional associations representing 70 percent of all formal sector business activity in the country, created its own arbitration center to handle business disputes. In 2011, however, approximately half of GICAM’s members separated to form a competing business association called “eCAM.”

In early 2001, CEMAC also established a court in N’djamena to adjudicate regional commercial disputes.

Cameroon is a signatory to the Organization for the Harmonization of Corporate Law in Africa Treaty (OHADA in French). Among other things, OHADA provides for common corporate law and arbitration procedures in the 16-member signatory states: (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Côte d’Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal and Togo).

Cameroon is a signatory to the 1985 Seoul Convention that established the Multilateral Investment Guarantee Agency (MIGA), aimed at safeguarding non-commercial risks. Cameroon is also a signatory to the Lome Convention (as revised in Mauritius in 1995), which created an arbitration mechanism to settle disputes between African, Caribbean, and Pacific states (ACP) and contractors, suppliers, and service providers financed by the European Development Fund (EDF).

In July 2008, Cameroon adopted a law on public-private partnership (PPP) agreements, providing more clarity for the administrative, financial, and judicial framework for such arrangements.

Performance Requirements and Incentives

Investment incentives will change when the 2002 Investment Charter is fully implemented, until which time the relevant incentives from the 1990 Investment Code remain in effect. Depending on the size and nature of the investment, investments fall under one of the following regimes of the 1990 Code, each of which has specific eligibility and performance requirements:

--Under the “basic” regime, firms must export at least 25 percent of their annual production, use Cameroonian natural resources for at least 25 percent of the value of their inputs, and create at least one local job for every 10 million CFA francs invested (approximately USD 20,000). Benefits from the regime include an initial three-year tax exemption; customs fees as well as an exemption on purchase taxes relating to production and operational equipment are also exempted. Eligible companies are entitled to a number of exonerations and other exemptions for the first five years of the operational phase.

--Under the small- and medium-scale enterprise (SME) regime, which applies to firms having total assets of less than 1.5 million CFA francs (USD 3,000), there is no requirement for job creation. SME enterprises will receive the same benefits as listed above if they fulfill the SME regime.

--Under the “strategic” regime, firms must export at least 50 percent of their annual production, use natural resources of at least 50 percent of the value of their inputs, and create at least one local job for every 20 million CFA francs invested (approximately USD 40,000). Strategic companies will enjoy the same benefits as above for the first five years. Strategic companies must be operating in sectors that have been earmarked as strategic in the National Industrialization Road Map such as energy and mining.

Additionally, the Industrial Free Zone regime, which applies to any location in Cameroon, grants broad exemptions from taxation and regulation, so long as 80 percent of production is exported. This provision of the 1990 Code is still in force, though it is unclear how the awaited implementation of the 2002 Investment Charter will affect it.

No requirements for technology transfer or restrictions on geographic location exist. Where domestic Cameroonian firms lack technical knowhow in research and development, foreign firms can bid for projects that benefit from GRC subsidies.

Quantitative restrictions on imports, non-tariff protection, and many import licensing requirements were lifted by the 1994 Tariff Code to conform to CEMAC regional customs regulations. In addition, the GRC abolished many other price controls in 1998, leaving only controls on “strategic” goods and services such as electricity, water, public transportation (roads), telecommunications, cooking gas, palm oil, imported fresh fish, pharmaceuticals, school books, and port-side activities (such as stevedoring).

Right to Private Ownership and Establishment

The government recognizes the right of private ownership. The Ministry for State Property and Land Tenure governs property issues. Although the procedures for obtaining land titles have been simplified, the process is often lengthy and cumbersome. The transfer of land in the public domain above a certain size requires presidential authorization. Foreign and domestic individuals and firms may legally establish and own firms, engage in remunerative activities, and establish, acquire, and dispose of interests in business enterprises. Investors may dispose of their property via sale, transfer, or physical repatriation of moveable property.

Mergers and acquisitions are undertaken through discreet negotiations. Private firms are free to associate with any partner they choose and are free to organize industry associations. Cameroon’s six privatization laws are complete, but have onerous bureaucratic requirements.

Protection of Property Rights

Secured interests in property are recognized although adjudication of property disputes can be lengthy and subject to criticism. The concept of mortgages exists in Cameroonian law, and the title is the legal instrument for registering such security interests, but in practice some lenders report extensive delays in obtaining court rulings to enforce their claims on assets given as collateral. Cameroonian law provides foreign and domestic investors with property rights protections that substantially comply with international norms and do not discriminate between foreign and domestic firms. In practice, however, Cameroonian courts and administrative agencies often issue rulings favorable to domestic firms and have been suspected of corrupt practices.

Cameroon is a member of the 16-nation African Intellectual Property Organization (OAPI in French), which is a member of the World Intellectual Property Organization and offers patent and trademark registration in cooperation with member states. Patents in Cameroon have an initial validity of ten years. They can be renewed every five years upon submission of proof that the patent was used in at least one of the OAPI member countries. Without continued use, compulsory licensing is possible after three years. Trademark protection is initially valid for 20 years with renewal possibilities every ten years.

Cameroon is also a party to the Paris Convention on Industrial Property and the Universal Copyright Convention.

In 2008, Cameroon’s copyright registration system changed from a single body accepting registrations to multiple bodies divided according to field. One such organization, the Cameroon Music Corporation (CMC), charged with registering musical works, was closed by the Minister of Culture and a new structure, SOCAM (Société Civile Camerounaise de l’Art Musicale), replaced it. However, in December 2012, the Cameroonian judiciary ruled against the Ministry of Culture decision, in favor of keeping CMC.

Other registration bodies include the Copyright Corporation for Literature and Dramatic Arts (in French, SOCILADRA) which covers literature and software production; the Copyright Corporation for Visual Arts (in French, SOCADAP) for paintings; and the Copyright Corporation for Audio-Visual and Photographic Arts (in French, SCAAP) for audiovisual and photographic production. The internet and the availability of satellite television have created new challenges for Cameroon copyrights institutions. Despite the existence of a regulator, which supervises the internet and telecoms sectors, the country lacks expertise in oversight and policing of internet downloading and the illegal copying and distribution of foreign television programs.

IPR is constrained by poor enforcement of existing laws, the cost of enforcement, the pervasiveness of infringement, rudimentary understanding of IPR among government officials, and a lack of public respect for copyright laws. Software piracy is widespread; pirated DVDs are common. Cheap pirated materials are believed to originate from Asia and Nigeria. Cameroon is taking steps to implement the World Trade Organization’s TRIPs agreement and the United States Patent and Trade Office (USPTO) provided training on intellectual property rights protection to Cameroonian officials (including customs officers, magistrates, and civil servants) in 2011.

Transparency of Regulatory System

Although Cameroonian business laws exist, implementation of these laws can be challenging. Under the current judicial system, local and foreign investors (including some U.S. firms) have found it complicated, time-consuming, and costly to enforce contractual rights, protect property rights, obtain a fair and expeditious hearing before the courts, or defend themselves against frivolous lawsuits. Implementation of the OHADA law - in force since 2000 - in French-speaking Cameroon has been satisfactory for some investors. The Anglophone regions of Cameroon, with business law inspired from common law, have sometimes shown resistance to implementing OHADA.

Efficient Capital Markets and Portfolio Investments

The cost of capital in Cameroon is high and repayment terms are short. Some large lenders to major companies have been able to extend the term beyond five years. Microfinance institutions can charge even higher rates on lending, ranging between 8% and 35%.

Cameroon’s sovereign rating stayed around B and B– over the last several years, according to Standard and Poors and Fitch. Foreign investors are able to obtain loans on the local market, but usually prefer to borrow offshore due to high domestic interest rates and the unavailability of long-term capital in the domestic market.

The Douala Stock Exchange (DSX) opened in April 2003 but few companies are listed on it. According the Organization for Economic Co-operation and Development (OECD), the financial market has become more attractive. Cameroon has over 400 microfinance institutions and 25 insurance companies.

The French treasury closely monitors the regional central bank, BEAC. Cameroon has 13 fully operational commercial banks, a state-owned mortgage company.

Cameroon's financial, legal and regulatory systems are solid but enforcement is inconsistent and often arbitrary. Cameroonian minority partners of foreign firms have occasionally attempted – in most cases unsuccessfully - to take over the operations of joint companies via court action or through harassment and intimidation by government officials.

Competition from State-Owned Enterprises

Private enterprises may compete with public enterprises when marketing products and services in Cameroon. Public companies are not eligible to participate in the bidding process when it comes to public tenders. However, if the government is certain that one of its companies can provide the service, it will typically not call for a tender.

Numerous State-owned companies continue to operate in a variety of economic sectors: telecommunications (CAMTEL), social security (CNPS), oil refining (SONARA), oil and gas exploration (SNH), both upstream and downstream petroleum product distribution (TRADEX), mail delivery (CAMPOST), mortgage finance (Credit Foncier), real estate (SIC), land development and management (MAETURE), cotton production and exports (SODECOTON), textile manufacturing (CICAM), cocoa production (SODECAO), and tea and vegetable oil production (CDC). Cameroon also operates a national airline, Camair-Co.

Each state-owned company has an appointed board of directors and a parent ministry. The most prestigious state-owned company, the National Hydrocarbons Corporation (SNH by its French acronym), operates in the field of oil and gas exploration, mainly by taking production-sharing agreements with private companies. The President of the Republic appoints the managing director, and the chairman of the board of directors remains the Secretary General of the Presidency of the Republic.

Cameroon does not have a sovereign wealth fund.

Corporate Social Responsibility

There is a general awareness of corporate social responsibility (CSR) among both producers and consumers. On a case by case basis, the GRC requires elements of corporate responsibility as part of the permit and project development process. For example, some mining companies invest in social infrastructure, such as health centers or schools, to benefit the local populations in the areas of their mining operations. Although not always mandatory, the GRC increasingly requires investors to take environmental and social impacts into consideration. A common practice for many companies is to build bridges, health centers, and classrooms in villages near the work site. For example, in 2011, the Electricity Development Corporation built an entire new village for an indigenous population displaced by the future Lom Pangar dam project.

The U.S. Embassy is not aware whether the GRC embraces the OECD's CSR principles but the population views CSR favorably and many corporations engage in socially responsible projects. A number of initiatives have been put in place by private companies to promote CSR. The Business Council for Africa for example is a coalition of 60 heads of businesses, which has as one of its aims to clamp down on corruption

Political Violence

In February 2008, Cameroon experienced its worst unrest in 15 years, as a transportation strike expanded into a more general protest against rising food and oil prices and President Biya’s plan to amend the constitution to eliminate presidential term limits. The current political climate is fairly calm and peaceful. Parliamentary and local elections are anticipated in mid-2013.

As a result of UN mediation and the June 2006 Greentree Agreement, Cameroon and Nigeria implemented the International Court of Justice (ICJ) ruling on the Bakassi Penninsula territorial dispute; Cameroon resumed full control of the region on August 14, 2008. Relations with Nigeria are increasingly friendly. In 2009, delegations from both countries travelled to the Far North Region to lay the first boundary pillar to demarcate the Cameroon-Nigeria land border and the parties continued to survey the border without major disputes.

Corruption

Corruption is endemic in Cameroon, which consistently ranks as one of the most corrupt countries according to Transparency International’s Corruption Perceptions Index (see above). Transparency International has an active presence in Cameroon. The government signed the U.N. Convention Against Corruption (UNCAC) in April 2004 and ratified it in 2006. Cameroon gained some high profile corruption trials and convictions, and President Biya continues an aggressive campaign of corruption arrests dubbed “Operation Sparrowhawk.” In 2012 Cameroon’s Anti-Corruption Commission published its second report and Cameroon created a special tribunal to prosecute corruption cases. However, the GRC has still not implemented a constitutional provision voted in 1996 requiring government officials to declare their assets.

Government reforms in the public procurement process began in 2002 when observers were installed to perform systematical ex-post-facto audits on valuable procurements. Nonetheless, governance of the public procurement process remains problematic. In November 2004, the GRC published new anti-corruption measures for public contracts. December 2011, the GRC created a special ministry dedicated to government procurement. Additionally, in 2011 Cameroon’s Anti-Corruption Commission published its first report and Cameroon created a special tribunal to prosecute corruption cases. Corruption is a criminal offense in Cameroon, and carries jail time (five years to life) and a fine (USD 400 to 4,000).

Corruption, including bribery, raises the costs and risks of doing business. Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate. It also deters international investment, stifles economic growth and development, distorts prices, and undermines the rule of law.

It is important for U.S. companies, irrespective of their size, to assess the business climate in the relevant market in which they will be operating or investing, and to have an effective compliance program or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in foreign markets should take the time to become familiar with the relevant anticorruption laws of both the foreign country and the United States in order to properly comply with them, and where appropriate, should seek the advice of legal counsel.

The U.S. Government seeks to level the global playing field for U.S. businesses by encouraging other countries to take steps to criminalize their own companies’ acts of corruption, including bribery of foreign public officials, by requiring them to uphold their obligations under relevant international conventions. A U. S. firm that believes a competitor is seeking to use bribery of a foreign public official to secure a contract should bring this to the attention of appropriate U.S. agencies, as noted below.

Exporters and investors should be aware that generally all countries prohibit the bribery of their public officials, and prohibit their officials from soliciting bribes under domestic laws. Most countries are required to criminalize such bribery and other acts of corruption by virtue of being parties to various international conventions discussed above.

Anti-Corruption Resources

Some useful resources for individuals and companies regarding combating corruption in global markets include the following:

  • Information about the U.S. Foreign Corrupt Practices Act (FCPA), including a “Lay-Person’s Guide to the FCPA” is available at the U.S. Department of Justice’s Website at: http://www.justice.gov/criminal/fraud/fcpa.
  • Information about the OECD Antibribery Convention including links to national implementing legislation and country monitoring reports is available at: http://www.oecd.org/department/0,3355,en_2649_34859_1_1_1_1_1,00.html. See also new Antibribery Recommendation and Good Practice Guidance Annex for companies: http://www.oecd.org/dataoecd/11/40/44176910.pdf
  • General information about anticorruption initiatives, such as the OECD Convention and the FCPA, including translations of the statute into several languages, is available at the Department of Commerce Office of the Chief Counsel for International Commerce Website: http://www.ogc.doc.gov/trans_anti_bribery.html.
  • Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI). The CPI measures the perceived level of public-sector corruption in 180 countries and territories around the world. The CPI is available at: http://www.transparency.org/policy_research/surveys_indices/cpi/2009. TI also publishes an annual Global Corruption Report, which provides a systematic evaluation of the state of corruption around the world. It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption related events and developments from all continents and an overview of the latest research findings on anti-corruption diagnostics and tools. See http://www.transparency.org/publications/gcr.
  • The World Bank Institute publishes Worldwide Governance Indicators (WGI). These indicators assess six dimensions of governance in 212 countries, including Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. See http://info.worldbank.org/governance/wgi/sc_country.asp. The World Bank Business Environment and Enterprise Performance Surveys may also be of interest and are available at: http://go.worldbank.org/RQQXYJ6210.
  • The World Economic Forum publishes the Global Enabling Trade Report, which presents the rankings of the Enabling Trade Index, and includes an assessment of the transparency of border administration (focused on bribe payments and corruption) and a separate segment on corruption and the regulatory environment. See http://www.weforum.org/en/initiatives/gcp/GlobalEnablingTradeReport/index.htm.
  • Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report available at http://www.state.gov/g/drl/rls/hrrpt/.
  • Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which provides indicators for 92 countries with respect to governance and anti-corruption. The report highlights the strengths and weaknesses of national level anti-corruption systems. The report is available at: http://report.globalintegrity.org/.
  • Cameroon’s anti-corruption initiatives:

Bilateral Investment Agreements

Cameroon has investment and/or commercial agreements with the European Union, Canada, China, Japan, Russia, South Korea, and the United States. Similar agreements also exist with other countries in Africa, Asia, Latin America, and Eastern Europe. The U.S. Senate ratified a Bilateral Investment Treaty (BIT) between Cameroon and the United States in 1986, and it entered into force in 1989. While the original time frame for the agreement was 10 years, it renewed automatically under the terms of the treaty. The United States invoked the BIT both in 1997 and 2004, and Cameroon acquiesced in both cases, agreeing not to implement legislation contrary to the treaty and avoiding lengthy dispute resolution.

OPIC and Other Investment Insurance Programs

The U.S. Government signed an Investment Guarantee Agreement with Cameroon in 1967. OPIC has been receptive to American firms seeking war, expropriation, and inconvertibility insurance, and has guaranteed several ventures in Cameroon. The 1990 Investment Code guarantees protection from non-commercial risk, and Cameroon is a signatory of the Multilateral Investment Guarantee Agreement (MIGA).

Labor

Cameroon’s 1992 Labor Code governs labor-management relations, providing for collective bargaining in wage negotiations, eliminating fixed wage scales, abolishing employment-based requirements on education levels, eliminating government control over layoffs and firings, and reducing the government’s role in the management of labor unions. The Labor Code does not apply to civil servants, employees of the judiciary, and workers responsible for national security. In theory, the Labor Code provides a legal framework for the emergence of a flexible and efficient labor market, but such a market has not fully emerged. Cameroon is a party to the ILO Conventions 87 and 98 permitting the freedom to form unions and the right to collective bargaining.

After a long period of dissension between the government and labor unions, a new tripartite approach, including worker and employer unions as well as government representatives, addresses labor issues. This method has substantially improved relations between the parties for the benefit of both the workers and the employers, and the government intends to improve further workers’ rights and establish a new concept of internal discussions within companies before workers resort to strikes. The Minister of Labor and Social Security refers to this policy as “Social Dialogue.” The Ministry of Labor has taken an increasingly broad view of certain aspects of the Labor Code, especially regarding payment of “legal rights” to employees in the event of a restructuring or sale.

Cameroon has a high literacy rate relative to Sub-Saharan Africa and offers a relatively well-educated labor force alongside a surplus of unskilled and non-technical labor. According to a 2005 survey conducted by the National Institute of Statistics in the two major cities, Yaoundé and Douala, the unemployment rates (ILO criteria) in these cities are 14.7 percent and 12.5 percent, respectively. (The ILO defines an unemployed person as one who fulfills three conditions: a) without work, i.e. not having worked a single hour in a referenced week; b) available for work in the coming 15 days; c) actively seeking employment or having found one that will start later). In 2010, the Ministry of Employment and Vocational Training estimated that 75% of the active workforce is underemployed, and less than one million people are employed in the formal sector. Cameroon’s National Statistics Institute cites Cameroon’s unemployment as 4.4 percent, according to 2005 data.

About 50 percent of adult Cameroonians speak both French and English. Due to inadequate vocational and technical training, some industries have difficulties recruiting skilled labor in the domestic market. Also, the ready availability of unskilled labor means that technology used in many sectors, especially construction, remains basic.

An individual raising a discrimination case against an employer may elect to bring the case where he resides or where he works. In practice complainants file most of these cases in their place of residence. This compels the company to dispatch officials to sometimes distant places where the individual might have better local contacts than the company.

In recent years, Section 42 of the Cameroon Labor Code has posed some challenges to foreign companies selling their assets in Cameroon. Section 42(2)(b) allows employees or their labor organizations to demand compensation from the selling entity in advance of the sale of the asset. They may ask for termination of their contract and severance pay prior to the transfer, knowing that the new acquirer would still hire them or would need their acquired experience and service. In sectors where human resources costs are high, the practice can make it difficult for foreign investors to divest.

Foreign-Trade Zones/Free Ports

Although Cameroon currently has no designated foreign trade zones or free ports, it has an Industrial Free Zone (IFZ) regime applicable at any location through “industrial parks” or “single-factory” zones. Created in 1990 to promote internationally competitive export industries, the IFZ regime creates certain broad regulatory and tax exemptions for investors. It is unclear how the 2002 Investment Charter will affect the IFZ regime privileges.

To qualify for IFZ status, the goods or services must not have detrimental effects on the environment, and enterprises must export 80 percent of production. IFZ firms receive a ten-year exemption from taxes and are subject only to a flat tax of 15 percent on corporate profits beginning in the eleventh year. They have a right to tax-free repatriation of all funds earned and invested in Cameroon and are exempt from foreign exchange regulations. They are also exempt from existing and future customs duties and taxes, including those on locally purchased production inputs. The National Agency for Industrial Free Zones is the regulatory body that oversees and administers Cameroon’s IFZ program.

A number of Cameroonian companies, particularly in Douala-Bonaberi Industrial Zone, are currently benefitting from limited tax advantages linked to the IFZ regime.

Foreign Direct Investment Statistics

Although foreign direct investment (FDI) plays a key role in the Cameroonian economy, reliable FDI statistics are not available. Neither the government nor the Chamber of Commerce has compiled a comprehensive list of foreign investments in Cameroon or estimates of current values. The 2012 finance law requires foreign companies to seek the help of a tax advisor for mergers or acquisitions of a Cameroonian entity. Local affiliates of French transnational companies carry a large amount of capital formation, although domestic banks are fueling some investment.

The Chad-Cameroon pipeline, which runs over 1,000 kilometers from Chad’s Doba oil fields to the sea at Kribi, is one of the largest U.S. investments in sub-Saharan Africa, estimated at USD 4.4 billion when it was constructed in 2000. Exxon/Mobil and Chevron/Texaco jointly hold a majority interest in the pipeline company; this single project accounts for the lion’s share of American investment in Cameroon.

Outside of the petroleum sector, U.S.-based AES Corporation owns a majority stake in SONEL, the privatized national power producer and distributor. In 2009, AES launched “African Power Development Corporation,” headquartered in Douala, as a holding and investment vehicle for both its operations in Cameroon and planned activities elsewhere in Cameroon, Nigeria and possibly the Democratic Republic of Congo.

Dole raises and exports bananas, and Del Monte, which has a U.S. equity stake, runs a banana production sharing contract with the country’s leading agro-industrial corporation, CDC. Colgate-Palmolive manufactures oral care/hygiene products for the local and regional markets at its Douala plant. In April 2003, the government awarded a permit to Geovic, a U.S. mining firm, to extract rich deposits of cobalt and nickel in Cameroon’s East Region.

Cameroon Alumina Ltd. (CAL), a consortium with ten percent American equity, is planning to develop bauxite resources in Cameroon’s Adamoua region in a multi-billion dollar project that will entail investments in the rail, port and power sectors. Additionally, several dozen U.S. companies are currently represented in Cameroon either directly or through agents or distributors.

France is still a major economic partner in Cameroon. Three commercial banks are majority French-owned. French interests are present in sugar production plants, cement production, food and drink and in the French telecommunications firm Orange, which operates one of Cameroon’s three GSM mobile telephone companies. French interests are also dominant in distribution (auto and machines), logistics, and transportation ventures, ranging from railway network operation to the port terminal operations. French exports of pharmaceuticals make up 70% of the Cameroonian market share. In all, there are more than 100 French branch companies in Cameroon employing some 30,000 people, and more than 200 enterprises owned by French nationals.

China, South Korea, South Africa, Morocco and India are increasing their involvement in Cameroon’s economy. Royal Air Maroc has regular flights to Douala and Yaoundé, a Moroccan investment bank has opened a regional office, and a Moroccan company manages the national water utility. Chinese and Korean companies are exploring mining opportunities and projects to manufacture cement. South African firm MTN operates one of Cameroon’s three mobile telephone licenses. A South African group also acquired the Cameroon Development Corporation’s tea sector and is now known as Cameroon Tea Estates (CTE). Indian nationals are involved in retail sales, and Hindalco shares an equity stake in the CAL bauxite mining project.

Web Resources

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