The government is enacting tax cuts and redefining its policies to withstand the world’s worst economic crisis since 1929.
The Cameroon Chamber of Commerce says 40 companies in the commodity exports sector have lost a total of about 630 million US dollars in revenue as a result of the global economic downturn. The information comes from a survey it conducted recently.Some 3,500 jobs have been frozen and 10,000 others are at risk in the timber, aluminum, cotton, rubber sectors and in transport related to those commodities
Experts predict the banana industry and tourism will be next. They say Cameroon is again at risk of countrywide social unrest if these problems lead to extensive hardship. Rising living costs sparked nationwide riots last year. The government said 40 people died but human rights watchdogs claimed over a hundred were killed by government troops.
And that’s just the beginning of the bad news for Cameroon’s economy says the largest in the six-member Central African Economic and Monetary Community, CEMAC. A recent IMF delegation has projected a growth slowdown to one percent – down from 3.8 expected when the country’s budget was passed last year.
Prime Minister Ephriam Inoni says the country is at a crossroads. He says Cameroon will witness deficits in its trade balance which will also mean a 1 percent drop in its GDP. He says the budgetary revenue which is indispensable for public infrastructure development will also take a big hit until the end of the current fiscal year and perhaps up to 2010.
Under instructions from President Paul Biya, Prime MinisterInoni has set up a think-tank made up of some of the country’s finest economists. The group says Cameroon must redefine its economic policies in the short and long terms to withstand the recession. It has suggested a number of steps, including more infrastructure development, increased investment in agricultural production and incentives for both local and foreign investors.
The government is taking urgent steps to cushion the impacts of the crisis and save some of the worst-hit sectors from collapse.
Essimi Menye is Cameroon’s minister of finance. He says the government has reduced taxes, notably in the timber sector. There are also plans to encourage consumption by eliminating the value added tax for all wood products sold locally. More measures are in the pipeline. He says external demand for exports like rubber and timber has continued to plunge and have even disappeared in some sectors.
Just before the crisis, Cameroon’s dismal economy was about to turn the corner to enjoy robust growth. The government had targeted over 10 billion US dollars in new mining projects, designed blueprints to develop its huge hydroelectricity potential and increased investments in agro-production.
But those projects now appear in jeopardy. Most have been delayed or scaled back, diminishing prospects of employment and poverty alleviation for thousands.
Meantime, experts say Cameroon’s unexploited natural resources provide a wealth of potential. But they say a combination of bad governance, corruption, graft, and lack of foresight has stalled growth and increased debt. The U.S. Central Intelligence Agency says Cameroon, with an estimated 18 million inhabitants, has one of the best-endowed commodity markets.But it notes that only 10 percent of the roads are paved and unemployment is over 30 percent.
The IMF initially projected growth rate of more than six percent in sub-Saharan Africa this year. But it’s now cut the figure to 3.25 percent. It has pledged to help Africa survive the crisis amid tighter conditions for external financing.
But the IMF says Cameroon must make a number of improvements, including increasing its energy supply, improving infrastructure, perking up its weak business environment and ensuring better governance.