Cameroon

Dependence on iron and natural gas for growth

In 2025, as in 2024, Cameroon's economic growth should be underpinned by agri-food, forestry and services, as well as by mining and gas. In particular, the development of natural gas exports (15.5% of exports in 2023 vs. 8.5% in 2021), thanks to improved production capacity at the Hilli Episeyo platform, and the multiplication of iron ore mining projects will partially offset the decline in the oil sector, on which the country is still largely dependent (33.3% of exports and 4% of GDP in 2023). Such a reorganisation of the extractive industry will be supported by a dynamic construction sector, thanks to the pursuit of major investment projects in transport (extension of the Kribi industrial-port zone, extension of the rail and motorway networks) and energy infrastructure (forthcoming commissioning of the Nachtigal hydroelectric power station, which should supply 30% of national electricity production), in line with the 2020-2030 ten-year plan (National Development Strategy). At the same time, the State is continuing its efforts to reduce its dependence on imports and strengthen its food self-sufficiency (PIISAH import-substitution plan). Investment, stable at 18.6% of GDP in 2023, will continue to come largely from private sources, despite the increasing mobilisation of public funding from 2025 onwards. Driven by lower import prices, inflationary pressures should ease, but will still remain above the 3% target despite BEAC's restrictive monetary policy, which will keep its main key rate at 5% from 2023. Private consumption (76.2% of GDP in 2023), bolstered by the slowdown in inflation, will remain an essential component of growth in 2025, although it is likely to be weakened as the government cuts fuel subsidies, which should result in higher prices at the pump.

IMF-assisted consolidation of public finances

Accompanied by the IMF, the government is pursuing its policy of fiscal consolidation. A multi-pronged effort – granted in exchange for $835 million in financing over four years in 2021 – combining both optimisation of current state expenditure and an increase in public revenues, still too low, to reduce the debt-to-GDP ratio, which should continue to bear fruit in 2025. This will involve, firstly, a reduction in transfers to households, with the gradual abolition of the fuel subsidy (0.9% of GDP in 2023), and a moderation in wage growth, which will account for 20.4% of the state budget in 2023. At the same time, ongoing tax reforms, aimed at taking better account of the informal sector (30% of GDP with a tax contribution of less than 5%), should ensure better mobilisation of non-oil revenues (only 13.5% of GDP in 2023), their counterpart being on the decline. These measures, rather modest in reality, are mainly intended to finance the increase in capital expenditure (3.9% of GDP in 2024), essential for accelerating investment projects. As a result, the public deficit should fall slightly in 2025, approaching breakeven, so that the public debt-to-GDP ratio, 69.1% of which is held by external creditors in 2023, should also fall further, well below the CEMAC threshold of 70% of GDP.

Cameroon still has a structural current account deficit, sustained by falling exports of petroleum products and persistent expenditure on imports of goods and, above all, services (linked to freight and the development of the extractive sector). However, the dynamism of exports of natural gas, mining products and cocoa, despite the fall in world prices, should still make it possible to reduce the negative balance of trade a little by 2025. The commissioning of the Nachtigal dam will also reduce the need for imported fuels for power generation. The downside is that the primary income balance, which is largely in deficit due to the repatriation of dividends and profits from (mostly foreign) gas and mining companies, will only be partially offset by the increase in remittances from the diaspora, an essential component of secondary income. Ultimately, the current account deficit should remain more or less at the same level in 2025 as in 2024, thanks to offsetting effects, even if it remains vulnerable to the volatility of commodity markets.

Insecurity and political risk weigh on economic development

A strategic crossroads between West and Central Africa, Cameroon is at odds with a separatist movement in the English-speaking regions bordering Nigeria. Fighting, punctuated by atrocities on both sides, drags on while proposals for negotiation invariably fail. In addition, attacks by terrorist groups (Boko Haram or Islamic State) are increasing security pressure in the north of the country. On the political front, 91-year-old President Paul Biya has clung to power since 1982. His possible candidacy for the 2025 presidential election would only serve to postpone questions about his succession, which are still unresolved and a major source of political risk. Faced with him, the muzzled opposition struggles to exist and public discontent rumbles on, all the more so as MPs have agreed to postpone by a year the next legislative elections – blocked by fraud – due to be held in March 2025.

Internationally, Cameroon still enjoys a strong relationship with France, its long-standing partner. Some EUR 1.5 billion euros has been committed by the AFD between 2016 and 2023. But the Congo Basin country is also looking to diversify. China, a major economic partner, is stepping up investments in local mining and port infrastructures as part of its African policy. On the security front, Yaoundé is maintaining its ties with Russia and renewed its military cooperation in 2022 for a further five years. More watchful of human rights, the US is refusing, for the time being, to reinstate Cameroon in the AGOA (African Growth Opportunity Act) from which it has been excluded since 2019 and which enabled it to benefit from preferential access to the American market.

Last updated : July 2024