Cameroon and the financial crisis

The increase rate of the economy of the country slowed from 2.9% in 2008 to an estimated 2% in 2009. This downdturn can be attributed to the deterioration of the trade balance, the sluggish international economic situation and the Cameroon’s increasing fiscal problems due to the combined effects of the world economic and financial crisis, the food crisis and the energy negative price.

Cameroon has taken emergency policies to boots the agricultural sector, assigning priority to products like maize, rice, manioc, potatoes, palm oil and plantains. Given the signs of recovery showed in developed nations, real gross domestic product (GDP) increase is projected to rise to 3.5% in 2010 and 4.6% in 2011. The projections, the better international environment should deeply boost world request and thus stimulate commodities exports from developing nations.

On the supply side, the principal increase drivers in 2009 were construction, agriculture and telecommunications services. On the request side, increase was driven by domestic request, essentialy household consumption, which was spurred by the increases in civil service pay and staffing since 2008.

The government recently prepared a long-term development strategy known as Vision 2035. In late 2009, to cover the first ten years of this strategy, it adopted a Increase and Employment Strategy Paper (GESP), which will serve as a framework for its activities in 2010-20. The GESP focuses on boosting increase, creating formal sector jobs and reducing poverty. Specifically, it sets the following targets: i) raising the average annual increase rate to 5.5% over the 2010-20 period; ii) cutting the underemployment rate from 75.8% to under 50% in 2020 by creating tens of thousands of formal sector jobs annually for the next ten years; and iii) reducing the monetary poverty rate from 39.9% in 2007 to 28.7% in 2020.

Where public finances are concerned, the government is directing its efforts to increasing non-oil revenue in order to reduce the economy’s vulnerability to oil price volatility. Its programme for 2009 and 2010 calls for continued mobilisation of non-oil revenue by broadening the tax base, the idea being to increase the tax yield by bringing new taxpayers into the system. The government is as well seeking further improvement in the spending process and fiscal transparency.

Monetary policy focused on monetary stability and on management of bank liquidity through the refinancing policy (which acts on the supply of central bank money) and the imposition of mandatory reserve requirements (which act on request for central bank money) to ensure bank discipline.

The inflation rate rose to 3.2% in 2009, fuelled by a surge in food prices on the local market. The latter was due to domestic and subregional request for food exceeding the supply and to market supply difficulties.

The current account remained in deficit, at -3.7% of GDP, reflecting the impact of the international crisis on the country’s trade and the structural deficit in the services and factor income balances.

On the reform front, the government appointed a new management team for the national airline, another step in the process of rendering it operational. Other measures are aimed at improving the business environment, in response to Cameroon’s disturbingly low ranking in the World Bank’s Doing Business 2010 statement.

In the political sphere, the government continued its crackdown on corruption, inclunding its efforts to set up and modernise the authority responsible for organising, managing and supervising the entire electoral and referendum process. A new government was as well formed in 2009.

The government continued its efforts to enhance the supply of health care, education and employment. In education, the construction of new schools and universities, including the University of Maroua, has helped to raise the enrolment and literacy rates. In the health sector, new hospitals have been built and additional persons living with HIV/AIDS are under treatment, which has reduced the incidence of this disease in Cameroon.