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FY 1999 Country Commercial Guide: Cameroon

Report prepared by U.S. Embassy Yaounde, released July 1998. (*).

I. EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at Cameroon's commercial environment using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government Agencies.

Cameroon, just larger than the ten states northeast of Maryland, is located on the West Coast of Africa in the Gulf of Guinea. Its population, estimated at nearly 14 million, comprises some 250 ethnic groups and represents more than half of the total GNP of the six nation Central African Economic and Customs Union (UDEAC) scheduled to be replaced this year by the nascent Central African Economic and Monetary Community (CEMAC). Political opposition is permitted and Cameroon is now a multi-party state of more than 150 (five major) parties. The May 1997 legislative and October 1997 presidential elections, while considered less than transparent in certain respects, make five such election exercises held since the introduction of a multi-party political system and reflect Cameroon's progress toward non-violent democratization. A sixth such test is anticipated with the first senatorial elections under the revised constitution.

In the late 80s and early 90s a mounting liquidity crisis, declining oil and other revenues, sporadic strikes and boycotts damaged what was for more than a quarter century one of Africa's more prosperous and successful economies and brought on a decade-long recession. The Cameroonian economy is reviving following the 1994 change in parity with the French franc or devaluation of the CFA franc and a 1997 structural readjustment program concurrent with rising expectation of the Chad/Cameroon pipeline project. A 3.3 percent growth of GDP in FY95 was stabilized around 5% in FY96 and FY97, also forecast for the current fiscal year. Inflation is expected to be held in check at 3%, having fallen in November 1997 to 2.8% from an average of 9.9 as a result of a food shortages in the first four months of FY98 (July-September). This success comes after a 33.8% inflation rate in 1994 declined to 4.4% in 1996. Total investment in 1997 rose one point to 16.5% of GNP while public and private investment rose two points to 15.5%. Cameroon's per capita income, nearly $900 in 1992 before devaluation, was $610 in 1997. Today, the economy is one of the most diversified in Central Africa and the second largest in the 14-nation CFA franc zone.

A serious commitment to meet International Monetary Fund (IMF) conditionalities resulted in the successful conclusion by the Government of the Republic of Cameroon (GRC) of a three-year (1997-2000) Enhanced Structural Adjustment Facility (ESAF) program worth $225 million with the IMF in August 1997. Since then the World Bank has released structural assistance credits (SAC) which have helped to bolster confidence in the nation's economic resilience. In October the Paris Club rescheduled Cameroon's multilateral debts under "Naples Terms" with forgiveness of up to fifty percent of the debt provided the GRC's strong adjustment efforts and superior performance are maintained. The ESAF has already attracted substantial assistance support from the international financial community in the form of additional loans (European Union and French Development Funds, Islamic Development Bank, African Development Fund, etc.). London Club rescheduling of private debt is anticipated in the second half of 1998.

Cameroon's attractive investment code and rate of return has drawn few U.S. investors to complement the long standing investments in oil production, security services, oral care/hygiene products manufacturing and fresh fruit production. New ventures have been dominated by the pipeline project. Recent licensing of a major U.S. bank should encourage more investment and facilitate exchanges between the U.S. and Cameroonian business communities.

Bilingual Cameroon represents half of a regional market of nearly 27 million inhabitants in six countries of central Africa where French, Spanish and English are spoken. With well over 60% of the area's business activity, Cameroon merits consideration as a regional base for U.S. firms interested in expanding on the continent.

American Business Services Centers located in the United States Embassy in Yaounde and at a branch office in Douala are connected by Internet. In addition, a Regional Counselor for Commercial Affairs of the Foreign Commercial Service located in Abidjan, Cote d'Ivoire and an Agricultural Attaché of the Foreign Agricultural Service located in Lagos, Nigeria provide expertise to those looking to do business in Cameroon.

II. ECONOMIC TRENDS AND OUTLOOK

A. MAJOR TRENDS AND OUTLOOK

Cameroon's abundant natural resources, favorable climate and well-educated and skilled work force render it one of Africa's most competitive economies. Following independence in 1960/1, the country embarked upon a quarter of a century as one of Africa's more prosperous and successful economies. The drop in commodity prices of its principal exports (oil, cocoa, coffee and cotton) in 1985/6, coincident with adverse currency exchange rates and economic mismanagement, started Cameroon on a decade-long recession. Investment and trade slumped and real per capita GDP declined by more than 60%. Typical of that era was state involvement in marketing which raised the selling price of cocoa by 60%. Although political maneuvering, economic uncertainty and managerial weaknesses continue to plague the government's efforts to implement the reforms required to overcome the country's low confidence rating, sustainable growth and control of inflation are making significant inroads in the reformed and liberalized Cameroonian economy. The GRC professes willingness to address fiscal, judicial and political weaknesses which significantly hamper full economic revival and restrict the confidence of foreign investors. Cameroon is unusual among francophone countries in that the vast majority of its entrepreneurs are indigenous rather than expatriate. Indeed, Cameroonians are the major commercial force in some neighboring countries, giving traditional Cameroonian entrepreneurship expanded meaning.

In 1990, Cameroon created a free trade zone to promote internationally competitive export industries. Quantitative restrictions on imports, non-tariff protection and many import licensing requirements were lifted when a new tariff code was enacted in January 1994 to conform to the uniform UDEAC/CEMAC customs regulations. In January 1998 the code was further liberalized to facilitate regional trade by eliminating duties on manufactured goods, leaving only a yet to be standardized value added tax. At the same time, the Organisation pour l'Harmonisation du Droit des Affaires en Afrique (OHADA) treaty harmonizing business practices and law in 15 African countries entered into force. With a secretariat in Yaounde, OHADA aims, inter alia, to guarantee international arbitration in trade and business disputes. One goal of the new (December 1997) government is implementation of provisions of the 1996 Constitution to address corruption which is depriving the government of significant customs and tax revenues. Assessment and collection of customs duties in Cameroon have become more efficient since preshipment inspection procedures were contracted to a private company in 1996. Cameroon's policies, as defined by law, meet most elements of an open, liberal investment climate. Recent improvements to the country's privatization law, laying specific emphasis on the simplification of approval procedures, make it one of the best on the books and guarantee equity to both Cameroonian and foreign investors.

Tax and tariff reforms simplified rates and eliminated some unfair exemptions. Trade reforms abolished all remaining qualitative restrictions on merchandise imports. A new labor code makes employer-employee relations more flexible, and the new investment code streamlines tax exemptions and provides guarantees and benefits to investors. Price controls were lifted in 1994 with the exception of those on water, electricity, collective passenger surface transport, pharmaceuticals, petroleum products, textbooks and manuals. In December 1997 auxiliary maritime and ports authority services including maritime transportation of Cameroonian exports and imports were liberalized. Maritime transport is now open to any transporter who is registered under Cameroonian or foreign law serving Cameroonian ports. Cargo sharing in international maritime traffic and freight charges and contributions for handling cargo-sharing operations received by the Cameroon National Shippers' Council (CNCC) for loading and unloading activities were abolished with the new year.

The World Bank Group, African Development Bank (AfDB) Group, European Community (EU) and Government of France have provided substantial external financing to Cameroon since 1989 in order to help reform the economy and restore sustainable economic growth. In 1997, the Agence Francaise de Developpement (ex-CFD) group (including PROPARCO private sector guarantees and interventions) accorded Cameroon the greatest amount of structural adjustment grants, loans and aid projects in its assistance program (over 1 billion FF or USD 177.2 million). World Bank and AfDB projects, which have begun again and should continue to multiply so long as Cameroon continues to meet obligations it established with the IMF under its ESAF, create additional contracting and investment opportunities for U.S. investors. After years of criticizing Cameroon for its lack of economic resolve, the IMF, in its February 1998 Article IV Consultations, commended the GRC on coming up with both its own money-not that of foreign donors-and political will to meet IMF requirements, despite little understanding and support for accompanying sacrifices among the population. In real terms, this has meant dedicating roughly half of GRC revenues to reimburse foreign debt. The Enhanced Structural Agreement Facility (ESAF) allows future revenues to be used for internal investment, which the country desperately needs, and should produce real growth. It also provides Cameroon the possibility of purchasing private debt carried in the London Club and eligibility for an IDA debt buy-back program.

Available statistics for CY97 reported sales of 134 of Cameroon's major enterprises as 1,415 billion CFA francs which represents a net increase of 7.8% in value over CY96 and a 12.2% increase in total sales. Statistics from the same source reported a rise in industrial production of 11%. Industrial sales rose by 12.1% of which 11.1% were realized on the internal market, 38.4% for regional exports and 10.5% for exports outside the CEMAC region. Rises were noted in beverages, chemicals and cement as well as for local tobacco sales. Declines were noted in rubber, cocoa derivatives and agro-industries. In commerce, sales increased by 16.7% thanks to automobiles, heavy equipment and general commerce. Services increased by 3.8 percent because of maritime transports and hotels (75-80% occupancy in Douala) and banking activities, which rose an average of 14.4%. Tonnage handled at the port of Douala rose by 20% to 5,270,000 tons, thanks primarily to exports of wood and bananas and import of rice and agricultural inputs. This increase was not as sharp in air and surface transport; thus the overall increase in the transportation sector was only 1%. Construction starts were on the rise principally because of FED, AfDB, IBRD and Chad Pipeline projects. A professional business organization reports that this general increase in economic activity continued through the first quarter of CY98.

B. PRINCIPAL GROWTH SECTORS

Cameroon's prospects for continued economic growth are mixed. The fragility of the economy is complicated by factors which threaten further growth such as a plateau in oil production and a massive external debt. The river port of Douala which handles the vast majority of trade with the country, as well as with the region is in need of constant dredging and major refitting. Recent improvements in Cameroon's macroeconomic situation are encouraging. Genuine efforts by Cameroon to meet its obligations have resulted in a reduction in excessive public sector employment and some increase in the collection of revenues. Cameroon's economy is relatively varied and includes petroleum and gas (26% of exports), tropical woods exports (15%) and an industrial base of aluminum production (9% of exports) and other light industry. Cotton, coffee, cocoa, rubber, bananas, pineapples and soon tobacco (2,500 tons in 1997/8) provide an exceptional agricultural base. A yet-to-be-exploited mineral wealth (bauxite, cobalt, chromium, gold, iron, nickel, sapphires, tin, titanium and uranium), limestone, an under developed hydroelectric potential and an under performing tourist market which has declined by 80% since the mid 80s attest to Cameroon's being uniquely endowed as a potentially lucrative market in the region. The GRC has revised and rationalized hydrocarbons and forestry exploration codes and is presently developing a code for industrial mining exploitation that is to be completed by the end of 1999 and will be utilized to encourage investors to enter the mining sector.

Cameroon's economic growth will continue to depend on its commodity export sector of which the best prospects are coffee, cocoa, cotton, rubber, timber, bananas and pineapples. The government marketing board for coffee and cocoa was dramatically restructured and most restrictions on marketing and exporting those products were eliminated. The higher commodity prices prevalent in 1996 for coffee, cocoa and cotton started a positive trend. Although cotton and coffee prices are still on the rise, the price for cocoa is expected to drop as a result of the European Union's regulation decreasing the percentage of cocoa necessary for chocolate products. In August 1997, the GRC licensed Société Générale de Surveillance (SGS), La Cordeler Cameroun, SA and L'Observatoire Camerounais de la Qualite (OCQ) to control the quality of Cameroonian coffee and cocoa. The recent crisis in Asian markets has resulted in an estimated 20% decline in demand for Cameroon's cotton--65 percent of which is destined for six primary Asian buyers. Rubber prices have fallen dramatically (an estimated 30-50%) in the past year and the new Asian competitive edge threatens a decline in Cameroon earnings. Unless more stringent measures are implemented to control and rationalize use of the forests, stop concession grants that do not conform, collect export revenues and stay the relative regression in forest earnings for the state, Cameroon's profitable trade in timber could be jeopardized. The crises in the Asian markets have already had a negative effect on the sales of Cameroon wood products (38% destined for Asia) as sales plummeted by an estimated 35% in early 1998. With the recent decision by the WTO (World Trade Organization) concerning the ACP-EU (Africa Caribbean Pacific-European Union) banana agreement and limits on Cameroon bananas, problems loom. Nonetheless, the volume and value of agricultural export commodities (despite recent decreases in some prices) and livestock, upon which Cameroon's long term well being depends, are likely to increase during the coming years.

Since 1985 oil production has declined. Cameroon is currently the fifth largest producer of petroleum in sub-Sahara Africa (following Nigeria, Angola, Gabon and Congo-Brazzaville) with well over 100,000 barrels per day. Petroleum development activities were revived in 1996 following government approval of new financial incentives for oil production from marginal fields with less than 20 million recoverable barrels over a 3-5 year economic life. In 1998 legislation was passed to encourage foreign investment in petroleum and gas exploration and production in joint venture with the GRC. Incentives link taxes to the risk taken in prospecting for new fields. These recently opened oil and gas fields compensate for the 10-15% decline in traditional sources. Consequently, existing petroleum production levels have been sustained at about 110,000 barrels/day and even risen with new exploration and increased lifting. Thus, the steady decline in known oil reserves is now predicted to rise slightly, temporarily boosting government income. Although the fall in oil prices following the 1998 Iraq crisis does not favor GRC earnings, sales of refined petroleum products rose by 15% last year primarily because of need in the transport and forest sectors, but also because of the disruption in Nigerian refinery activities. Distributors have doubled their delivery capabilities in the north where previously they did little marketing. Another major impetus to the current economic euphoria is the agreement to construct an oil pipeline from Chad through Cameroon, giving rise to renewed exploration in areas near the pipeline route such as the Logone Birni basin on Lake Chad. Upgrading of the necessary infrastructure is already underway and had cost $60 million up to mid-1998, while the two-year construction of the pipeline itself is supposed to start in the last quarter of 1998 and expected to total about $3.5 billion.

C. GOVERNMENT ROLE IN THE ECONOMY

Although progress has been made toward reducing the government's role, the public sector is still the predominant force and sometimes barrier in the country's economic development. Nevertheless, the Cameroonian Government has undertaken a number of reforms since 1989 to reduce its own stake in the economy and to promote private sector development. Beginning in early 1997, the GRC initiated meaningful dialogue with the private sector through a series of town meetings. Subsequently, several ministers concerned with commercial, economic and financial issues responded candidly to questions put to them by the Cameroonian Association of Economic Journalists (AJAC) at public press conferences sponsored by them and the Groupement Inter-Patronal du Cameroun (GICAM), which is an association of 145 enterprises and 14 professional associations representing 70% of all formal sector business activity in the country. For the first time in April 1997, the president of GICAM was invited to participate in GRC negotiations with the International Monetary Fund and the World Bank in Washington. This initiated a new partnership to help support privatization and promote initiatives between government and the private sector, most recently evidenced in a joint mission to France in April 1998 in search of investment. A long awaited reform of the Cameroon Chamber of Commerce, Industries and Mines (CCIM) under new leadership is expected to reinvigorate the presently government controlled and largely ineffective Chamber.

Although a General Statute of Public Enterprises was enacted in 1995 launching the GRC's privatization process, progress toward privatization of Cameroon's remaining public sector enterprises has been slow. The World Bank and IMF continue to press for speedier and more transparent action through IBRD-monitored investment bidding opportunities in response to studies on the viability of specific industries. The disengagement of the State from the productive sector through the announced privatization of most of the country's parastatals could be a precursor of excellent investment opportunities in the near future. In 1997, the successful and transparent privatization of a rubber plantation, the national shipping company and this year the national railroad portend an expanded list for 1998. Over a dozen more parastatals and public enterprises are scheduled to be privatized by 30 June 1999. Companies still scheduled for privatization are primarily in the agro-industrial sector--the country's largest agricultural plantation complex (rubber, palms, bananas, tea), a sugar complex, a palm oil company, the cotton development parastatal, and a tobacco development project. A freight forwarding company and a publishing house are also on the list and, in January 1998, the national insurance parastatals were added, reportedly at the insistence of the World Bank. The long process of privatizing the national airline and shipping line (already partially privatized) as well as the cotton industry and public utilities (water and electricity) is expected to be completed before mid-1999.

The Government's role in the troubled banking system has been reduced considerably since 1989 by a series of structural and legal reforms. Currently, there are eight licensed (seven operating) banks in the country, with a ninth bank soliciting licensing. The GRC currently retains interests in only three of the banks and that interest has been reduced to less than controlling except in the one scheduled to be privatized in 1998. The persistent factor in the banking crisis had been the large amount of the bad non-performing debt that the Cameroonian Government and public enterprises owe the banking system. The completion of the banking sector rehabilitation program provides hope that the banking system's credibility can be restored. External interest rose to 114 billion CFA over past years, and bank deposits (of which 83% were private) rose from 552 billion CFA to 564 billion, an increase of 2.2%, having fallen by 21% the previous year. Money supply rose by approximately 14% while credit movements increased by 24.1%. The GRC intends to emphasize solidification of the recent successful banking restructuring by increasing competitiveness and fiscal efficiency in the second phase of the ESAF program.

D. BALANCE OF PAYMENTS SITUATION

For the fourth consecutive year, the volume and value of Cameroon's major exports increased by 12% in FY1997, resulting in an overall trade surplus. Primary budget excess rose by half a point to 5.8% of GNP in FY97. Non-petroleum receipts, however, did not meet expectations and an overall budget deficit of .4 percent of GDP persisted. The budget proposed for FY99 (July 1998 to June 1999) reflects the shortfall and was reduced by 26 billion francs (USD 43.3 million) to 1,230 billion francs (USD 2,050,000,000). This budget attempts to bring more of the informal economy into the revenue producing GRC mainstream. Non-petroleum exports rose 12% over FY96. Wood, coffee, cotton, rubber and finished products were the most productive sectors. Petroleum receipts rose 42.6% primarily due to favorable international rates. Total imports rose 19% over the 708 billion CFA level of FY96; nevertheless, Cameroon's trade deficit dropped by a point to 1.2% of GNP. Private capital investment (non-petroleum) was estimated at one% of GNP, positive for the first time in the 1990s. It was estimated at 1.4% in 1997 and projected at 3.6% for the end of the ESAF in the year 2000. Capital input into the Cameroonian economy is limited as it is in most of Africa by the three scourges of an inadequate judicial environment, the lack of infrastructure and market limitations. According to the IMF "vigorous economic activity" has returned to Cameroon after two years of slow recovery following the decade of decline.

Despite Paris Club debt rescheduling in 1994 and 1995, Cameroon has been able to meet minimal external payment obligations only since June 1997. As a result, Cameroon's official debt with the United States and other creditors was rescheduled in October 1997. Cameron's external debt, which averaged $7.86 billion between 1991-1995, was estimated at $9.5 billion in 1996 and represented 4.2% of all of Sub-Sahara Africa's debt and 17.4% of the CFA franc zone's debt. Debt service was estimated at $528 million (25% of exports and 46% of revenue) and interest at $265 million. The ratio of Cameroon's external debt to the GNP is 124%. Multilateral debt arrears reached 16.5 billion francs at the end of June 1997 which, together with current maturing multilateral debt amounting to 4.5 billion francs, meant that Cameroon owed multinational institutions 21 billion francs (USD 42 million). Paris Club arrears amounted to 15.7 billion francs which, with 1.2 billion in maturing debt due, total 16.9 billion francs (USD 33.8 million). Cameroon's external debt is down from 4,366 billion francs in FY96 to about 3,900 billion (USD 6.5 billion) in July 1998, the beginning of FY99. Cameroon has expended great efforts to regain international confidence by paying debt service to the detriment of development projects and payment of its internal debt (about 1,100 billion francs). Cameroon paid off 12.4% of its external debt and only 1.5% of its internal debt in the past year. A combination of the IMF's ESAF and World Bank structural adjustment credits (SAC), Paris and London Club debt relief, and substantial financial assistance from bilateral donors is being put in place to deal with Cameroon's unfunded balance of payments deficit. The GRC established the Development Aid Coordination Committee (CCAD), in September 1995 to promote more effective dialogue between donors.

The European Union remains the main Cameroonian trading partner, with recent changes in places of origin. Italy imports 25.5% of Cameroonian exports, followed by Spain with 20.4%. In 1997 France again reduced its imports by 5.9% over 1996 and fell from first place to third with 16% of Cameroonian exports worth 1,954,000,000 FF (USD 338.3 million at 5.77 FF/USD-down 21.1% over the previous year's value. Cameroon was the fourth source of African imports into France following South Africa, Cote d'Ivoire and Nigeria). The U.S. is in sixth place purchasing 2.19% (valued at $57.1 million) of Cameroon's exports following the Netherlands and China. France is still the major supplier of Cameroonian imports satisfying 25% of Cameroon's total needs. The U.S. and Nigeria both sell an 8.4% share of Cameroon's imports. Germany follows with a 6.7% share while Japan has ceded fifth place to Belgium with 4.8%. While Cameroon produces and exports heavy crude, it imports light crude oil suitable for refining in its refinery from Nigeria (55%, valued at 56.8 billion francs), Equatorial Guinea (25%), Ivory Coast (12%), Angola (5%) and Italy (3%).

E. INFRASTRUCTURE

Cameroon's infrastructure for the distribution of goods is not fully developed, but permits limited access to all ten provinces. Cameroon's main industrial and commercial port city, Douala, is linked to major cities in the seven southern provinces by good roads. It is also linked to Yaounde, the capital and second major city, and to Ngaoundere in the north by rail. The port of Douala is in need of general refitting and constant dredging. It is a bottleneck to trade and will not be able to handle the new vintage of post panamex ships. The port's management problems should be solved by the new management team appointed early in 1998. Distribution to northern provinces is mainly through the railhead at Ngaoundere where regional warehouses stock goods for onward road delivery to other northern cities and Chad. The railway line also links Douala to the East province, which serves as a transit point for goods bound for the Central African Republic. Three international airports at Douala, Yaounde and Garoua have facilities for airfreight. There are over 50 small airports and airstrips, of which only nine have permanent surface runways. Due to CAMAIR's economic weakness, only two of those airports (Maroua and Ngaoundere in the Grand North) are currently in use.

Few major infrastructure projects have been initiated in Cameroon in recent years. However, infrastructure privatization projects offer opportunities for U.S. investors. Due to major degradation during the years of economic crisis many investment possibilities in maintenance and infrastructure rebuilding will be necessary. Road projects financed by the European Union, Agence Francaise de Developpement and the World Bank to link Cameroon, C.A.R. and Equatorial Guinea by paved road will continue during 1998. Substantial road rehabilitation and road construction is also expected in conjunction with construction of the Chad/Cameroon pipeline. Electricity, telephone and water services are available in Cameroon's cities, larger towns and some villages and rural areas. Utility and telephone services are good in the two largest cities, Yaounde and Douala, but are not always reliable because of poor maintenance and mismanagement. The international telephone company, INTELCAM, was connected to the Internet in April of 1997. The GRC has constituted a committee to address and monitor progress on the Year 2000 computer issue, and claims that the public sector will enter the next millenium smoothly.

III. POLITICAL ENVIRONMENT

A. NATURE OF POLITICAL RELATIONSHIP WITH THE UNITED STATES

Present US-Cameroon relations are good and continue to improve. The two governments are making progress on bilateral issues and in multilateral fora. Principal U.S. concerns center on lapses in the observance of human rights, slow implementation of quality governance which does not contradict the rule of law and fiscal irregularities which hinder sustainable economic viability. Cameroon chooses to consider such concerns as undue pressure on its political evolution, flowing from a superficial understanding of its complex society and resulting in a simplified rationalization for withholding development assistance. This decade has already seen a drastic reduction in U.S. presence in Cameroon with the closing of the U.S. Information Service's (USIS) American Cultural Center in Douala (1990), the U.S. Foreign Commercial Service's operations (1992), the U.S. Consulate in Douala (1993) and the Agency for International Development (USAID) mission (1994) because of budget reductions.

The U.S. Government continues to finance projects valued at over half a million dollars through the African Development Foundation and provides substantial funds to International Financial Institutions (IFIs) such as the World Bank Group and the African Development Bank Group, which accord project and infrastructure support to Cameroon. Two regionally funded USAID projects provide limited development assistance in Family Health and AIDS Prevention as well as the Central African Regional Program for the Environment. The Ambassador's Self-Help Fund and the Democracy and Human Rights Funds together finance $265,000 worth of small grass-roots projects. In addition, about 150 Peace Corps volunteers work in the fields of agricultural extension, education, health, environment and (soon) small business promotion. USIS organizes and funds, inter alia, discussions on economic and civic issues and education and cultural exchange programs.

B. MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE

A threat of political strife continues to be a factor in Cameroon. A vocal minority composed of the English-speaking population advocates restoration of the decentralized federal structure comprising separate anglophone and francophone regions that prevailed until unification in 1972. A few anglophone groups support secession of the two English-speaking provinces. Both options are unacceptable to the Government. It plans to implement its own less radical decentralization program. Cameroon's highly controlled and incremental progress toward liberalizing and reforming its economy has engendered some opposition even within the ruling party. Elements of the reform program, including privatization of public enterprises and reduction of civil servants, are points of contention. Corruption and a dysfunctional judicial system severely hamper development of Cameroon's economy and society. Although President Biya first announced an anti-corruption campaign in June 1995 and the September 1996 Government initiated a campaign to fight corruption and abuses by its own leadership and rank and file, those two efforts had limited impact. The new December 1997 Government, at Biya's behest relaunched the anti-corruption campaign with the Prime Minister establishing an ad hoc committee to deal with the fight against corruption. He did this and undertook a month-long sensitization program in March despite some political dissension. The results have been modest thus far.

Cameroon's relations with its Central African partners in the Economic and Customs Union (UDEAC) of 1964 and the Economic and Monetary Community (CEMAC), expected to be ratified by the National Assembly in June 1998, are uneven. Douala is the major entry point for imports to Cameroon, the Central African Republic, Chad, Equatorial Guinea (Cameroon's eighth most important import/export trading partner) and the Republic of Congo. Natural deep water harbors near Limbe and Kribi which could bring these countries to the point of economic take off, have not been developed. Ports in Gabon (Owendo and Port Gentil) and in Congo (Pointe Noire) serve less than 15% of Central Africa's total population. Personal political rivalry between the leaders of Gabon and Cameroon, with over half of the Central African region's population and commerce, retards the development of worthy initiatives such as a viable customs union, a securities exchange, a single market and a genuine economic community. Recently, efforts to revitalize the mineral rich 90 million people strong Economic Community of Central African States (CEEAC), created in 1984, and which encompasses the CEMAC states as well as the three former Belgian colonies and two Lusophone countries of Angola and Sao Tome y Principe, have taken shape.

Sandwiched as it is between two giants -- the huge rich under-performing market of the Democratic Republic of Congo (ex-Zaire) and the Nigerian economic powerhouse -- the Central African region is well placed for expansion and development. The chaotic situation in ex-Zaire had a significant impacted on its Central African neighbors. Cameroon's conflict with Nigeria over the Bakassi peninsula has been described by some observers on both sides of the border as a political red flag to be waved as necessary to turn public attention away from internal problems rather than a case of economic greed by either country over still unconfirmed oil in the area. If the two neighbors resolve their differences they could limit military expenditures and devote more resources to economic development and social integration. The free, if sometimes illicit, exchange of goods and traffic in persons between the two nations is testimony to an already vibrant and natural, if informal, commercial entity of over 125 million consumers.

C. BRIEF SYNOPSIS OF POLITICAL SYSTEM, SCHEDULE FOR ELECTIONS AND ORIENTATION OF MAJOR POLITICAL PARTIES

The 1972 constitution provides for strong executive authority and extends this to control over Cameroon's judicial system. Constitutional revisions ratified in January 1996 call for the creation of a Senate, some decentralization through Regional Councils, and establishment of the judiciary as an independent branch of government. However, no timetable for the implementation of these reforms had been established by mid-1998; the preponderance of political power in Cameroon remains in the hands of the executive branch. A multi-party republic since 1991, most significant decisions are made at the presidential level. The President names and dismisses cabinet members and judges, ratifies treaties, leads the armed forces, and has considerable authority in other areas. He appoints the governors of Cameroon's ten provinces and his government has wide authority to re-organize electoral districts in ways favorable to itself.

National Assembly elections involving opposition parties were held for the first time in March 1992, and again in May 1997 when forty-four parties vied for 180 seats. In the present unicameral National Assembly the ruling Cameroon People's Democratic Movement (CPDM) held on to a solid majority while rejecting 80% of the party's incumbents. According to the final official results of the May 1997 elections, the President's party won 116 seats; one of the country's major opposition parties--the Social Democratic Front (SDF) -- which has strong support in the two anglophone as well as the Littoral and the West provinces, won 43 seats; and the National Union for Democracy and Progress (UNDP), with support mostly in Northern Cameroon, won 13 seats. The remaining seats were divided among four smaller parties. Opposition parties had showed surprising strength in 1996 municipal elections, but lost ground 16 months later in the bitterly contested legislative elections. They unsuccessfully demanded the nullification of those elections which they declared flawed by alleged Government manipulation of voters' registers, distribution of electoral cards, polling station locations and tabulation of results.

In the earlier largely free and fair first multi-party municipal elections, held in January 1996, however, strong support was demonstrated for two of the country's opposition parties, particularly in the North and West. A number of opposition parties were successful in gaining control of many municipalities. This was offset by the Government's decision to appoint Government Delegates to administer some of the larger urban councils. This move was widely criticized as anti-democratic and led two of the main opposition parties to call a general strike. Although such strike actions had won the widespread support of the political opposition in the early 1990s, they proved unsuccessful and were abandoned by opposition leaders. The first multiparty presidential elections were held in October 1992. These were highly criticized by independent observers and regarded by many in Cameroon as rigged. Presidential elections were again held in October 1997 and resulted in a boycott by major opposition parties and an equally controversial reelection of President Biya for a seven year term to add to the fifteen already served. He is eligible to run for one more 7-year term in 2004.

1. U.S. PRODUCTS AND SERVICES

A. DISTRIBUTION AND SALES CHANNELS

Cameroon has an estimated population of 13.5 million, of which about 35% lives in urban areas. Douala is Cameroon's main port and industrial center. Cameroon's capital city, Yaounde, is the political and diplomatic center of the country. Yaounde (pop. c900,000) and Douala (pop. c2 million) contain about 60 percent of Cameroon's urban population and 20% of its total population. Europeans, Lebanese and the indigenous Bamileke of Western Province dominate large trading firms in Cameroon. Most have developed very efficient distribution systems and several have established stores and supermarkets for retail sales. In smaller towns, mainly indigenous or Nigerian traders control retailing. Vendors, who sell their wares from rented stalls at the main markets of cities, occupy about 35% of the retail market in Cameroon. Due to Cameroon's economic crisis, hawkers are rapidly increasing their share of retailing activities. They generally sell on a commission basis for established storeowners, but some are independent and buy directly from wholesalers.

B. USE OF AGENTS AND DISTRIBUTORS; FINDING A PARTNER

U.S. businesses planning to enter the Cameroonian market are best

advised to secure the services of a local agent. It is advantageous to use local agents because they sell directly to wholesalers and can help new firms obtain market knowledge at relatively low cost. For products requiring after­sales service and spare parts, the appointment of a distributor is recommended. Agents and distributors must register with the Government and their contracts must be notarized and published in the local press.

C. FRANCHISING

Franchising is rare in Cameroon. Large international oil companies retail petroleum products and international car rental companies operate through franchise dealers. There are few, if any, other franchise operations in Cameroon.

D. DIRECT MARKETING

The only U.S. company currently involved in direct marketing in Cameroon is an American life insurance company.

E. JOINT VENTURES/LICENSING

Seeking professional assistance in negotiating agreements, selecting partners and controling resources is a strongly recommended first step in establishing a presence in the Cameroonian market. Caution is required for joint ventures and licensing arrangements as the investment climate presents high risk as well as high gain factors for foreign as well as local investors who often complain of undue influence from entrenched French interests. Few internationally known American products other than oil and gas are produced in Cameroon under licensing agreements.

F. STEPS TO ESTABLISHING AN OFFICE

The Investment Code Management Unit (ICMU) was established in 1991 to assist foreign and domestic investors in starting businesses in Cameroon. It provides investment authorization and a variety of other services through a network of official correspondents in all relevant Ministries. Contact
Ms. Marthe Angeline Minja, Director,
ICMU, P.O. Box 15438, Douala,
Tel: 237­42­59­46/43-31-11,
Fax: 237­43­30­07.

The National Office for Industrial Free Zones (NOIFZ) is a non-profit organization to promote the development of exports, attract new investments and supervise and administer the Industrial Free Zone Program for those who wish to invest in Cameroon with the intention of exporting at least 80% of produce. Contact Mr. Michael Tomdio, Managing Director, NOIFZ, P.O. Box 673, Douala, Tel: 237-43-33-43/45, Fax: 237-43-33-17.

G. SELLING FACTORS/TECHNIQUES

Seller's credit, such as lay­away plans, is not yet practiced in Cameroon. Commercial banks offer consumer loans for large individual purchases.

H. ADVERTISING AND TRADE PROMOTION

Advertising is available in Cameroon through a wide variety of media including newspapers, magazines, billboards, theatres, radio and television. See lists in Appendix E. Newspaper and magazine advertising may be placed at reasonable rates with the government­owned daily, Cameroon Tribune, or with a growing number (over 20) of private publications. Major newspapers and magazines include:

Cameroon Post (English­language weekly)
P.O. Box 1981, Yaounde, Cameroon,
Tel: 237­32­27­42
Fax: 237­32­27­69,
Chicago office: Mr. Tande Debussi,
P.O. Box 268258, Chicago, Illinois,
Tel/fax: 312­878­3584);

Cameroon Tribune (government bilingual daily)
P.O. Box 1218, Yaounde, Cameroon,
Tel: 237­30­26­40 or 30­36­89
Fax: 237­30­43­62);

L'Expression (French­language weekly)
P.O. Box 15333, Douala, Cameroon,
Tel: 237-42-22-27 Fax: 237­43­26­69);

The Herald (English­language biweekly)
P.O. Box 3659, Yaounde, Cameroon
Tel/Fax: 237­31­84­97);

Le Messager (French­language weekly) P.O. Box 5925, Douala, Cameroon,
Tel: 237­42­02­39 or 42­04­39
Fax: 237­42­02­14);

La Sentinelle (French-language monthly is the only economic magazine published in Central Africa)
P.O. Box 24079, Douala, Cameroon, Tel: 237-39-16-27
Fax: 237-39-11-63).

Billboards and signs are no longer a monopoly of Cameroon Publi­Expansion (CPE), a government­owned publicity parastatal. Private advertising firms may be contacted for publicity assistance. A monthly information guide for Douala (Night & Day) published by Synergie is distributed free. Advertising via slides and short films in theatres can be effective especially in Yaounde, Douala and Bafoussam, which have large film-going publics. Radio and television advertising at reasonable rates is available through the government­owned Cameroon Radio Television (CRTV) which broadcasts in French and English. Radio advertising may also be placed through "Africa Number One," which broadcasts from Gabon between 5:00 am and 11:00 pm.

The only regularly scheduled trade fairs in Cameroon are the Bafoussam fair in February and "Promo," a general trade fair organized at the end of each year by the Cameroon Chamber of Commerce. The Embassy's American Business Services Centers plans to organize a "Made in USA" pavilion featuring American companies, products and services at the November "Promo '98." Individual companies sometimes organize expositions in Douala and Yaounde.

I. PRICING PRODUCT

If U.S. exporters can price in French francs, especially for deliveries over a six to 12 month period, this will help them to penetrate the market. Costs should be computed on a C.I.F. basis. The major factors in penetrating the Cameroonian market may be price and credits.

J. SALES SERVICE/CUSTOMER SUPPORT

After sales service and customer support is weak or non-existent in Cameroon's bazaar-like market distribution system. It has been a principal reason for limited U.S. marketing success in Cameroon. It is especially critical for high-tech or heavy industrial equipment. French language service manuals, frequent personnel training and reasonable inventory of spare parts are also crucial.

K. SELLING TO THE GOVERNMENT

Government procurement is made by the "Direction Générale des Grands Travaux" (DGTC), or the Public Works Directorate which is under the direct supervision of the Presidency of the Republic. Cameroonian companies are granted preferential price margins and other preferential treatment for bids on all government procurement and development projects. DGTC's calls for tenders, especially when they are financed by the International Financial Institutions, are mailed to the American Embassy in Yaounde which sends them to the U.S. Department of Commerce for dissemination to the American business community. Restricted calls for tenders are also directed to U.S. bidding candidates by the Embassy. The Government of the Republic of Cameroon has a low credit rating because of its continuing inability to pay its debts. The Government's direct purchases are now made through domestic middlemen who require cash up front on behalf of their foreign correspondents.

L. PROTECTING YOUR PRODUCT FROM IPR INFRINGEMENT

Cameroon is a founding member of the African Intellectual Property Organization (OAPI) with headquarters located in Cameroon's capital city. Registration of patents with OAPI would, in theory and legally, provide protection from product patent infringements in Cameroon. In practice, companies may not always be able to defend themselves against product patent infringements through Cameroon's judicial system.

M. NEED FOR A LOCAL ATTORNEY

Incoming American investors should seek the services of a local attorney to deal with Cameroon's slow moving, complex and sometimes corrupt legal system. A list of local attorneys can be obtained from the U.S. Embassy in Yaounde.

N. PERFORMING DUE DILIGENCE/CHECKING BONA FIDES OF BANKS/AGENTS/CUSTOMERS

Investors are advised to select their Cameroonian partners carefully through the Embassy or through professional assistance from one of those listed in Chapter XII below. The U.S. Embassy offers International Company Profile (ICP) service to verify the bona fides of Cameroonian partners. Contact the Department of Commerce District Office of your locality for further details. Gold Key services at $150 for the first day and $125 for subsequent days can be arranged through the embassy. Fifty% payment is due two weeks in advance with ten (10) sets of product literature. Escort/Interpreter services can be arranged for $100-$150/day.

V. LEADINGSECTORS FOR U.S. EXPORTS AND INVESTMENT

The United States provided 8.4% of Cameroon's total imports in 1997. It ranked second along with Nigeria, which provides Cameroon with most of the high grade crude used in its national refinery (SONARA), and after France which provided 25%. Cameroon will continue to be an importer of wheat and flour, petroleum coke and pitch additives for aluminum smelting, used clothing and gross lot discounted/discontinued consumer products, paper products, fertilizers and chemicals, lubricants and trucks and heavy equipment from the U.S. The anticipation of a multi-billion dollar investment to develop oil fields in Chad and build an oil pipeline through Cameroon, has dramatically increased the potential for U.S. exports to Cameroon. The U.S. Embassy has identified the best prospects for U.S. exports to Cameroon as:

• heavy machinery, equipment and material for transport, agriculture, road construction/maintenance and oil and gas fields exploration/production services and pipeline construction because of renewed activity;
• wood and materials handling machinery (skidders, harvesters, stackers, dozers, cranes, winches, trucks, trailers and buses) because of continuing timber industry expansion;
• sawmill equipment and machinery to meet the requirement that all wood products exported from Cameroon be processed by the year 2000
• agricultural inputs including fertilizer and chemicals because of anticipated export crop production;
• textiles and apparel because of the growing market for used clothing and shoes.
• raw materials and other inputs for light industry which continues to grow and
• related services such as security, communications, and computer and electronic equipment.

The Cameroonian market for U.S. exports is small but has grown rapidly in the past two years from 45.7 million dollars in 1995 to 70.6 million dollars in 1996 and 122 million dollars in 1997, representing 54% and 72% increases respectively over the previous year. This growth is largely due to substantial new orders for aircraft equipment and parts, wheat, heavy machinery and parts for lifting, handling and loading, road tractors and semi-trailers, drilling and production platforms, petroleum coke, and oil and gas field machinery and equipment.

A. BEST PROSPECTS FOR NON-AGRICULTURAL GOODS AND SERVICES

1. AIRCRAFT/PARTS (AIR)

The Cameroonian government announced a project to renew the fleet of its national airline (CAMAIR) in 1997 and leased two aircraft, including a Boeing 737-300. Observers estimate that CAMAIR purchased a great deal of spare parts for its aircraft last year thereby accounting for the great increase in imports from the U.S.

IMPORTS FROM THE U.S. (AIR)	1995	USD 145,000
	1996	USD 169,000
	1997	USD 38,784,000

2 - OIL/GAS FIELD MACH., OIL, GAS MINERAL PROD/EXPLOR SERV. (OGM, OGS)

The Government and foreign oil companies plan to move forward with additional offshore oil production platforms in the Rio del Rey Basin and in the Kribi area as well as with increased exploration. Recent incentives that the Government has granted for exploration and production of marginal and new oil fields will spur additional exploration and production activities in Cameroon during the next years.

IMPORTS FROM THE U.S. (OGM, OGS)	1995	USD7,300,000
	1996	USD 27,205,000
	1997	USD 28,609,000

3 - TRUCKS, TRAILERS/BUSES (TRK)

Expansion of timber operations in Cameroon should increase the market for heavy duty trucks and trailers and, even more recently, sawmill equipment and machinery. European manufacturers have dominated the market, but new entrants to the industry appear willing to try new and used American trucks and trailers when the price is right. In 1995 and 1996, a surge in the import of road tractors for semi-trailers; parts for lifting, handling, loading/unloading machines; and track-laying tractors was observed. The decrease noted in 1997 should be temporary.

IMPORTS FROM THE U.S. (TRK)	1995	USD 9,600,000
	1996	USD 15,500,000
	1997	USD 11,582,000

4 - MINERAL ADDITIVES FOR THE ALUMINUM INDUSTRY (CMT)

One of the oldest industries in Cameroon is the aluminum processing plant which imports bauxite from Guinea because Cameroon's reportedly fifth largest deposits of bauxite in the world near Ngaoundal at Minim/Martap in Adamawa and at Fongo Tonogo in the West is too expensive to exploit. Aluminum represents nine% of Cameroon's exports. The plant has increased its imports of petroleum coke and pitch. Given the competitive price of American suppliers, the factory should continue to import from the U.S. In 1996, the market more than doubled that of the previous year, and now appears to have stabilized at USD 6,000,000.

IMPORTS FROM THE U.S.	1995	USD 2,826,000
	1996	USD ,181,000
	1997	USD 6,042,000

5 - TEXTILE MACHINERY AND PRODUCTS - MADE-UP (TXM, TXP)

The small market for U.S. exports of used clothing in Cameroon has increased dramatically during the past six years. U.S. exports for 1991 were USD 140,000. In 1996, U.S. exports of used clothing totaled USD 2,024,000. Due to the economic downturn, the market for used clothing and footwear is again growing rapidly; this year the market has been supplemented by heavy imports of machinery and parts (USD 2,418,000). Major competitors in this sector are from Belgium, Britain, and Germany.

IMPORTS FROM THE U.S. (TXP)	1995	USD ,342,000
	1996	USD 2,024,000
	1997	USD 3,864,000

6 - AGRICULTURAL CHEMICALS (AGC)

Cameroon lifted most restrictions on the marketing of coffee and cocoa during 1994 and world market prices for these commodities have been relatively favorable, if declining recently. Coffee production rose 22.8% and cocoa production went up 15.2 percent in FY96. Production increases are also recorded for other cash crops in Cameroon such as bananas, cotton (down 15 % in 1998), tea, tobacco and rubber, while palm oil and sugar stagnated. The market for fertilizers and insecticides should increase substantially during the coming years. Following cancellation of subsidies, most imports from American sources stopped and today a single company controls about 90% of the importation of chemical inputs and additives. European products dominate the market, but nascent medium-sized companies that represent U.S. firms are making inroads through extensive advertising campaigns, seminars and site visits.

IMPORTS FROM THE U.S. (AGC)	1995	USD 1,443,000
	1996	USD 565,000
	1997	USD111,000

B. BEST PROSPECTS FOR AGRICULTURAL PRODUCTS

Cereal, including corn and wheat, imports into Cameroon have increased by more than five times in the past three years.

IMPORTS FROM THE U.S.	1995	USD 2,026,000
	1996	USD 2,058,000
	1997	USD 11,986,000

1 - WHEAT

Cameroon has five major flourmills. All use a mixture of American and European wheat but in differing proportions. American wheat, highly favored by local flourmills, is currently quoted as more expensive when bought through American dealers rather than European intermediaries. U.S. wheat exports to Cameroon for 1996 were at 2 million dollars in 1996 and increased to 9,604,000 dollars in 1997.

IMPORTS FROM THE U.S.	1995	USD 1,781,000
	1996	USD 2,058,000
	1996	USD 9,604,000

2 - CORN

One of Cameroon's main animal feed manufacturers has started buying corn from the U.S. Given the importance of the industry in Cameroon, it is likely that imports from the United States will increase. The actual needs of this animal feed manufacturer are 12,000 tons per year, indicating a growing market potential.

IMPORTS FROM THE U.S.	1995	USD N/A
	1996	USD 400,000
	1997	USD 2,382,000

All of the above U.S. import statistics are based on information received from the U.S. Department of Commerce and incorporate Embassy estimates.

C. SIGNIFICANT INVESTMENT OPPORTUNITIES

The Cameroonian Government is pursuing a program of privatization of public sector industries. This offers U.S. firms an opportunity to bid on World Bank monitored privatization of specific industries. U.S. firms may submit purchase bids on the public enterprises that are scheduled to be privatized. Companies still scheduled for privatization are primarily in the agro-industrial sector--CDC, the country's largest agricultural plantations project; CAMSUCO, the sugar complex; SOCAPALM, a palm oil company; SODECOTON, the cotton development project; and SCT, a tobacco development project. CAMTAINER (freight forwarding) CEPER (publishing), SOCAR (insurance), CNR (reinsurance) and BICEC (banking) are also on the list. Eight companies (CREVCAM in shrimp, GETRAM in metal construction, ONAPHARM in pharmaceuticals, SEAC in machinery, SEDA in sectoral studies, SOCATOUR in tourism, SODERIM in rice production and SOTUC in urban transportation) are being liquidated.

During fiscal year 1997 HEVECAM, a rubber parastatal, CAMSHIP, a shipping/container parastatal, were successfully privatized and the Laiterie de Ngaoundéré milk processing parastatal was leased to a group of private investors for a two year trial period. In the transport sector the national railroad corporation, REGIFERAM, was privatized in an inventive mixed manner in May 1998 and the national airline, CAMAIR, is still scheduled for privatization, as are the public utilities in water (SNEC) and electricity (SONEL) for this year. A major study of the public sector's communications industry is underway and TELECOM/INTELCAM is also scheduled to be put up for bid. American companies should be particularly well placed to bid in this sector. A French/Canadian consortium has completed the long awaited Internet hookup and the future of the sector is dependent on the development and accessibility of microcomputers and expansion in the telecommunications network. A list of Internet coffeehouses is provided in Chapter XI. In January 1998, a national committee to monitor the transition of computers for the year 2000 was established.

The Government of the United States acknowledges the contribution that outward foreign direct investment makes to the U.S. economy. U.S. foreign direct investment is increasingly viewed as a complement or even a necessary component of trade. For example, roughly 60 percent of U.S. exports are sold by American firms that have operations abroad. Recognizing the benefits that U.S. outward investment brings to the U.S. economy, the Government of the United States undertakes initiatives, such as Overseas Private Investment Corporation (OPIC) programs, investment treaty negotiations and business facilitation programs, that support U.S. investors.

VI. TRADE REGULATIONS AND STANDARDS

A. TRADE BARRIERS, INCLUDING TARIFFS, NON-TARIFF BARRIERS AND IMPORT TAXES

In January, 1994 Cameroon became the first state of the six­member Central African Customs Union to implement a new Regional Reform Program which includes a new custom code and amendment of the new investment code. The new code eliminates most quantitative restrictions on external trade and simplifies custom's assessments. Beginning on 1 January 1998, the generalized preferential tariff was eliminated completely on goods being shipped to other UDEAC/CEMAC countries and now only the TVA--value added tax--(scheduled to replace the TCA--sales tax--in 1999) will be collectable on intra-regional goods. The GDP growth of the CEMAC region stood at 5.4% in 1997 and is running at 6.3% for the current year. A functioning, stable UDEAC/CEMAC customs code may ultimately facilitate shipments within Central Africa. In early 1996, the Government moved to intensify the collection of customs revenues by granting a monopoly to a private company, Société Générale de Surveillance (SGS), to assess and collect customs duties.

B. CUSTOMS VALUATION

Customs taxes in Cameroon are levied on the CIF (cost, insurance and freight) value of the imported goods. Customs fraud is endemic in Cameroon and protracted negotiations with customs officers over the value of imported goods not subject to SGS valuation are common. The prevailing practice, however, is to value the goods at list prices of the goods in country of origin and include the cost of freight to Douala for the purpose of determining the value of goods that are subject to import tariffs.

C. IMPORT LICENSES

Import licensing has recently been simplified. Whereas in the past a prospective importer was obliged to obtain both an "agrément" and a "license" in order to import, only the "agrément" is currently required. The "agrément" is a general import license delivered to registered businesses for a duration of two years, renewable, to cover any item that the importer may choose. Special permits are granted to individuals who desire to import items for personal use. Contractors importing equipment and supplies related to public contracts can obtain a special tax-free exception from the Ministry of Economy and Finance.

D. EXPORT CONTROLS

The Government of the Republic of Cameroon eliminated its most onerous export licensing requirement as of July 1, 1994 by deregulating the export of cocoa, coffee and cotton. Coffee and cocoa exports must still obtain a quality grade certification from the Coffee and Cocoa Board prior to exportation. Licenses are also required for "strategic" products such as gold and diamonds and for ecologically sensitive items (governed by the CITES Convention) such as live animals, birds and medicinal plants. Petroleum and hydrocarbons were removed from the list of sensitive products subjected to prior price assessment procedures by the government in January 1998.

Heavy export taxes have penalized exports of agricultural products, and in April 1997, the GRC changed the rates for export taxes on eight agro-industrial products. Although the tax on bananas was lowered from 6,000 CFA francs per ton to 4,000 francs (USD 6.7) as urged by the IMF, the 13.5% tax on cocoa, cotton, sugar, rubber and medicinal plants was increased to 15% and that on coffee to 25% while that on palm oil rose from 25 to 30% (reflecting the virtual cessation of export of a commodity needed for local consumption). Subsequently, the higher taxes on coffee and cocoa were repealed by order and now stand at 10%. Although export taxes on agricultural products are seen as an alternative to taxing farmers, a more efficient mechanism for collecting personal income taxes throughout the society is being explored. This is complicated in an environment in which it is estimated that the informal sector is the most vibrant in the economy with 80% of all goods and services consumed and 64% of all employment created by that dominant sector in Yaounde alone. In 1997, a second year of growth, sales went up by 7.8%, private internal industrial demand increased by 11.7%, commercial profits rose by 7.6%, construction expanded by 12.8% and services augmented by 4.1%.

E. IMPORT/EXPORT DOCUMENTATION

Cameroonian customs officials require a commercial invoice and a bill of lading (or air waybill) for all goods entering the country. Shipping marks and numbers on bills of lading should correspond exactly with those on the invoices and on the goods. Three copies of invoices are requested for surface shipments and four copies for air shipments. In addition, the Cameroonian importer has to present an import license, permit or exception. Documentation on bank transactions concerning the specific delivery is required only if the value of the imported goods is over two million CFA francs ($3,333). Certificates of non-infestation, delivered by the appropriate authority in the country of origin, are also required for certain imports such as used clothing.

F. TEMPORARY ENTRY

Temporary admission has been scaled down to include only a few large importers wishing to sell on the Cameroonian market. A maximum of one year is allowed for storage, and a security bond is usually required. Storage fees are assessed from the date of landing. The importer pays customs duties on each batch of goods removed from storage until the entire stock is cleared. The Government provides warehouses for temporary admission. Some large importers and freight forwarding companies also operate government-supervised warehouses for temporary admission.

Goods in transit to landlocked Chad, the Central African Republic and the northern Republic of Congo are stored in the freight forwarder's warehouse and an amount equal to the value of assessed import tax is held by customs as a guarantee. The guarantee is released when the goods are removed from the warehouse for onward delivery to their destinations. SGS has initiated a new control to verify that goods destined for trans-shipment are indeed delivered since they are free of duty.

G. LABELING, MARKING REQUIREMENTS

Labeling and packaging requirements for canned products destined for Cameroon should have the manufacture and the expiring dates engraved or stamped on top of the container or packaging in clearly legible indelible ink. Dates should be preceded by short comments in French and/or English: "made in" and "to be consumed preferably before." It is recommended that the label, written in both French and English, carry the following inscriptions: country of origin, the name and address of the manufacturer, the product name, the weight (metric system), and all ingredients, including salt. Recent developments to fight contraband of cigarettes make it compulsory to prelabel cigarettes that are to be sold in Cameroon. This label, in the form of fiscal stamps, must theoretically be prepaid by importers of cigarettes months before the shipment is made. Cameroon has granted a contract to SGS to inspect the quality of goods imported in the country. U.S. exporters interested in doing business with Cameroon may also wish to contact SGS for further information on shipping food items into the country.

H. PROHIBITED IMPORTS

Prohibited imports include specific sanitary products, chemicals, toxic waste, some cosmetics, and some food items. The list of prohibited imports can be modified whenever a new item is identified for exclusion. A complete list of prohibited imports is included in the new General Trade Schedule (GTS) that is now available for public distribution. American companies may obtain a copy of the GTS from the Cameroonian Embassy in Washington.

I. STANDARDS

The Department of Price Control, Weights and Measures is responsible for standards administration in Cameroon, but its impact has so far been felt mainly in the area of price control. The metric system is the official standard of weights and measures. The standard electric current used in Cameroon is A.C., 50 cycles, 220­380 volts, but there are regional variations to that norm. Television operates on the PAL standard. Cameroon transformed its telecommunications system from analog to digital technology. A cellular phone service was launched in July 1993 to cover a limited geographical area. It operates on the GSM standard. While both English and French are official languages in Cameroon, French is essential to successful business transactions. The English­speaking part of the country constitutes only 20% of the population.

J. FREE TRADE ZONES/WAREHOUSES

Cameroon's Industrial Free Zone (IFZ) regime is production and export oriented. Only 20% of goods produced in the enterprises in the zones can be sold on the Cameroonian market.

K. SPECIAL IMPORT PROVISIONS

A pre­shipment inspection certificate, the Bill of Clean Findings, delivered by Geneva­based Société Générale de Surveillance (SGS), is required for shipments valued over two million CFA francs (FOB). The SGS, which verifies the quantity, quality and pricing of Cameroonian imports, is headquartered at SGS Control Services, Inc., 42 Broadway, New York, New York 10004 (212/482­8700; Fax: 212/224­9122). A list of SGS field offices in the United States can be obtained from that office.

L. MEMBERSHIP IN FREE TRADE ARRANGEMENTS

Cameroon belongs to all multilateral free trade arrangements except the ATA Carnets Convention. A signatory member of the Lome Convention, Cameroon enjoys special trade advantages within the European Union, its largest trading partner. Cameroon is also a member of the World Trade Organization (WTO) and is one of only six countries in Sub-Saharan Africa to have had its trade policies reviewed through the Trade Policy Review Mechanism (TPRM). Cameroon has established an inter-ministerial committee to monitor and implement its WTO commitments.

VII. INVESTMENT CLIMATE

A. OPENNESS TO FOREIGN INVESTMENT

The GRC has recently outlined several reasons why one should invest in Cameroon: (1) stability in a sea of political turmoil; 2) geo-strategic position entry for Central Africa with a massive Nigerian market next door, 3) highly skilled human resources and an abundance of unskilled workers, 4) natural resources used intelligently, 5) dynamism of the commercial sector with many small and medium enterprises and industries, 6) tax and customs advantages; 7) freedom of transfer of profits. Cameroon has taken numerous initiatives to attract foreign investors to the country and its policies, as defined by law, contain all the basic elements to provide an open liberal investment climate. Nonetheless, arbitrariness in the application of government controls has tended to mitigate that fertile environment. The major law governing investments in Cameroon is the Investment Code, enacted in 1990 and currently pending revision for further liberalization. The code has made investing in the country simpler and established some attractive financial incentives in exchange for minimal eligibility/performance requirements. The Code seeks to attract productive investments through incentives that are identical for both foreign and domestic investors. It provides 14 basic guarantees to investors, including property ownership, ability to repatriate capital and income, prior compensation in case of expropriation, freedom of movement within Cameroon and free egress for personnel.

General benefits of the Investment Code are available to all new and existing enterprises in Cameroon which process goods for export or use inputs from the local or regional markets of the Central African Customs and Economic Union (UDEAC) and the nascent Central African Economic and Monetary Community (CEMAC) that is scheduled to replace it. There are no other eligibility requirements for acquisition of general benefits. In addition to these general benefits, firms may qualify for one of five special investment formulae which offer more advantages. The five are (1) the Basic Regime; (2) the Small and Medium­Size Enterprise Regime; (3) the Strategic Enterprise Regime; (4) the Reinvestment Regime and (5) the Free Zone Regime. The Code sets out in detail the specific criteria a firm must meet to qualify for each regime as well as the benefits accorded thereunder.

The law has established an Investment Code Management Unit (ICMU) within the Ministry for Industrial and Commercial Development (MINDIC), but this is physically located in Douala, the economic capital. ICMU is a "one-stop-shop" for investment approval and dispute resolution which replaces previous procedures requiring investors to seek approvals and permits from, sometimes, dozens of ministries and agencies. Efforts to further streamline the process and to transform ICMU into a virtual investment promotion agency are now underway. Foreign investment is not screened, and foreign equity ownership is subject to limitation only in the Small and Medium Size Enterprise Regime (see Section 5 below.). Programs financed jointly by International Financial Institutions (IFIs) and the Government are open to unrestricted competition. Cameroon currently grants public sector monopolies for petroleum, energy, water, telecommunications, aluminum and cotton; however, all but that for aluminum are scheduled to be privatized before the year 2000. Foreign firms may not invest directly in ventures defined as "strategic" by the Government of Cameroon, but they may provide equipment and services to the parastatals that have jurisdiction over such activity.

B. CONVERSION AND TRANSFER POLICIES

The Communaute Financiere Africaine (CFA) franc, the currency denomination which Cameroon shares with fourteen other African member states of the CFA franc zone, was reduced in 1994 by 50 percent to a fixed parity of 100 CFA francs to one French franc, ensured by the French Treasury. Since the January 1994 change in parity with the French franc there has been no problem in converting money in Cameroon. Central African CFA banknotes are not accepted in the eight countries where West African CFA banknotes are currency (and vice versa) except in Banks. The 1997 decline in the value of the French franc relative to the dollar has helped maintain the gains in competitivity realized since the change in parity with the French franc or devaluation. The regional central bank (BEAC) no longer allows the purchase of CFA notes abroad; travelers from Cameroon are allowed to carry a maximum of 20,000 francs out of the country without prior authorization. Travelers' checks can be drawn on any available foreign currency, but the Ministry of Economy and Finance (MINEFI) authorizes such purchases. No ceilings have yet been placed on how much foreign currency can be purchased per trip. The authorization of MINEFI is required for foreign exchange business transfers. These authorizations are routinely granted if they conform to the specified incentives of the investment and fiscal codes. Dividends, return of capital, interest and principal on foreign debt, lease payments, royalties and management fees, returns on liquidation, etc., can all be remitted abroad. It takes an average of 12 days to obtain a foreign exchange transfer authorization.

C. EXPROPRIATION AND COMPENSATION

Foreign and domestic investors are provided extensive legal guarantees that substantially comply with international norms, including full and prior compensation, in the event of expropriation in the public interest. There are no confiscatory tax regimes or laws that could be considered detrimental to American or other investments. Undeveloped land is more at risk for local expropriation than developed property; Cameroonian law does not require local ownership of land.

D. DISPUTE SETTLEMENT (INCLUDING ENFORCEMENT)

The Cameroon Investment Code provides for dispute resolution. At the time of incorporation or application for investment code benefits, a firm may opt for one of the various procedures to settle future conflicts. A limited number of investment disputes has come to the attention of the embassy. In one instance a three year long dispute is complicated by competition from a French firm which holds a virtual monopoly of the relevant market and which appears to have convinced local authorities to assist in hampering the American competition. More typically, an unscrupulous Cameroonian partner may either take over the shares of the foreign partner or simply seize control of the joint venture through unorthodox methods. Local business practice includes routinely exerting, or attempting to exert, pressure on the courts which may sometimes be swayed by local financial largess or political status. Foreign companies sometimes claim that judgments against them are obtained fraudulently or as the result of frivolous lawsuits.

In the past, Cameroon's judicial system has been considerably influenced by the Executive Branch which oversees its operations including determining salaries and benefits. Foreign investors, including some U.S. firms, have found it difficult to obtain enforcement of their legal rights, including contract and property claims, through the Cameroonian judicial system. However, this may change once the 1996 constitution establishing the judiciary as an independent branch of government has been implemented. Property rights are ill­defined and inadequately protected in important respects, particularly that of land tenure. The execution of judgments is slow and fraught with administrative and legal bottlenecks. The IMF and the World Bank, through their Structural Adjustment oversight, are trying to assist Cameroon in reforming its judicial system.

Cameroon's bankruptcy law is an integral part of its commercial law. In case of bankruptcy, creditors are not covered except by way of negotiable or enforceable guarantee instruments held by the creditor. Cameroon accepts binding international arbitration of investment disputes between foreign investors and the state and is a member of the International Center for the Settlement of Investment Disputes (ICSID), is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In May 1997, the Groupement Inter-Patronal du Cameroun (GICAM), an association of 140 enterprises and 15 professional associations representing 70% of all formal sector business activity in the country voted to constitute its own Arbitration Center to which business cases can be submitted. On 1 January 1998, the treaty on the Organisation pour l'Harmonisation du Droit des Affaires en Afrique (OHADA) between the 15 states of the CFA franc zone plus Guinea entered into force. The treaty is designed to promote the development of an African economic community, the institution of a common business policy and the guarantee of judicial security and compatibility within that community. Through its regional judiciary in Abidjan, objectivity should be reinforced as the treaty is implemented with the assistance of the Committee of French Investors in Africa (CIAN).

E. PERFORMANCE REQUIREMENTS/INCENTIVES

Cameroon's 1990 Investment Code establishes requirements for at least 35% Cameroonian equity ownership for enterprises under the Small and Medium­Size Enterprise (SME) regime. Even in such instances, foreign investors are not required to reduce their shares over time. Under the Investment Code, an Industrial Free Zone (IFZ) investor can operate virtually outside of the jurisdiction of the country's established legal and regulatory systems; there are no requirements for technology transfer, no requirements to locate in specific geographical areas and foreign exchange privileges are not rationed. Investors can transfer dividends, return of capital, interest and capital on foreign debt, lease payments, royalties and management fees, returns on liquidation, etc. The Ministry of Finance routinely authorizes such business remittances and foreign investors may seek local financing for investment purposes.

The Investment Code has general employment requirements relative to the amount of invested capital. It also links benefits and incentives to the volume of exported goods and to the use of inputs purchased from the local or UDEAC/CEMAC markets. Each of the five special regimes of the Code has its own specific eligibility and performance requirements and accompanying benefits. Such benefits vary in duration from three to twelve years depending on the regime and on whether the investment is classified "start­up" or "operational." Quantitative restrictions on imports, non-tariff protection, and many import licensing requirements were lifted when the new tariff code was enacted in January, 1994 to conform to central African regional customs regulations. In addition, many other price controls were abolished in 1998 and now remain only on "strategic" goods and services such as electricity, water, public transportation (road/rail), telecommunications, cooking gas, pharmaceuticals, school books, and port-side activities (stevedoring, etc.)

The procedures for enforcement of performance requirements of the Investment Code are not clearly defined. The Government has not made any public statements concerning performance requirements. Foreign participation in government financed and/or subsidized research and development programs is restricted to programs which are beyond the technical capacity of Cameroonian firms. Visa, residence and work permit requirements do not particularly inhibit foreign investors.

F. RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT

The right of private ownership is recognized in Cameroon, but is limited in practice by a dysfunctional judiciary, inadequate definitions of property rights and widespread inconsistencies in government decision making. Foreign and domestic individuals and firms are legally entitled to establish and own firms, engage in remunerative activities, and establish, acquire and dispose of interests in business enterprises. The law also permits investors to dispose of their property via sale, transfer or physical repatriation of moveable property. Cameroon has a special preference agreement with France, which has only recently been implemented. The convention, also applicable in the other former French colonies in Africa, accords several advantages to French companies which maintain branches or agents in Cameroon. Among the advantages are exemption from the 15% special tax applicable to other enterprises operating in Cameroon and the right to deduct "technical assistance" charges from the company's tax bill.

G. PROTECTION OF PROPERTY RIGHTS

Secured interests in chattel and real property are recognized and basically enforced. The concept of mortgage (or "hypothèque" in French) exists in Cameroonian law and the title or "titre foncier" is the legal instrument for registering such security interests. Foreign and domestic investors are provided with guarantees that substantially comply with international norms. Cameroonian law does not discriminate and both foreign and domestic firms compete under the same rules. In practice, however, Cameroonian courts and administrative agencies grant preferential treatment to domestic firms and have sometimes been accused of corrupt practices.

Cameroon is the headquarters for the 14­nation West African intellectual property organization, Organisation Africaine de la Propriété Intellectuelle (OAPI). OAPI is a member of the World Intellectual Property Organization. In cooperation with member states, OAPI offers registration for patents and trademarks. 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 14 member countries of the OAPI. In the absence of use, compulsory licensing is possible after three years. Trademark protection is initially valid for 20 years with renewal possibilities every 10 years. Trademark enforcement in Cameroon is weak due to the small size of the domestic market and the costs of enforcement.

Cameroon is also a party to the Paris Convention on Industrial Property and the Universal Copyright Convention. A licensed copyright company, the Societe civile nationale des droits d'auteurs (SOCINADA), registers copyrights for all types of publications, including music, books and periodicals, paintings, theatrical productions, etc. Officially, SOCINADA cooperates with copyright protection agencies in other countries. Steps to implement the World Trade Organization's TRIPS agreement are being undertaken through an Inter-ministerial Technical Committee which convened for the first time in 1997.

H. TRANSPARENCY OF THE REGULATORY SYSTEM

Cameroon's regulatory environment has improved during the past years as numerous sectoral reforms have been made. Most export licensing requirements were removed in July 1994 when the Government liberalized the coffee/cocoa market in lifting most restrictions. The role of the newly established Coffee and Cocoa Board replacing the National Produce Marketing Board has been limited to providing quality grade certification and international market price information to farmers and exporters. New and more liberal regulatory and profit sharing regimes governing petroleum exploration and production are in place since 1995 and 1998. They have stimulated a revival of the development of marginal fields and of exploration and production in new fields. The still to be implemented 1994 forestry code makes incremental progress toward a more rational and managed exploitation of Cameroon's rich forest resources. By the year 2000, all timber cut in Cameroon is to be processed before export. In 1997/8, 3,300,000 cubic meters of wood were cut while less than half that amount (1.3 million m3) was processed and 1,650,000 m3 was exported as logs. The export price for processed wood has increased by 2.3 times, while that for cut logs has risen only 20%.

Under Cameroon's structural adjustment programs, the IMF in the forestry, banking, telecommunications and transportation sectors has proposed even more extensive reforms. A decree of 31 December 1997 established a joint government/private sector competitiveness committee to identify the main obstacles to competitiveness, propose measures aimed at reducing the costs of transactions and to monitor, in the interest of the parties, the implementation of decisions taken. The World Bank has insisted that the work of the committee result in adoption of a revised law on competition. The new and more liberal labor code, passed in mid­1992, relaxed conditions for wage­setting, hiring and firing, making it easier for the employer to do business. This improving regulatory environment does not always produce the desired results due to limited resources, inadequate control and enforcement and corrupt practices.

I. EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENTS

Interest rates are set by the regional central bank (BEAC), which is closely monitored and regulated by the French Government. Foreign investors are able to obtain credit on the local market, but usually borrow offshore due to high domestic interest rates. Cameroon's legal and regulatory systems are inefficient and often arbitrary and the GRC has not yet established a regulatory system to protect and encourage portfolio investments which continue to face high risks. Cameroonian partners of foreign firms have occasionally attempted to take over the operations of local companies via court action or through harassment and intimidation by government officials.

Cameroon has no liquid securities or bond market; however, ongoing discussions between the six member states of UDEAC/CEMAC indicate a desire to create a regional market. Banque Nationale de Paris has been mandated to draw up a model for a small screen based securities market for the Central African franc zone. President Bongo of Gabon, with the support of the head of BEAC, is spearheading this initiative. While on the campaign trail in 1997 and again in his 1998 New Year's speech to the nation, President Biya reiterated his intention to create a Cameroonian stock exchange, leading to GRC assurances that such an exchange would not compromise the proposed regional securities exchange. On the heels of this development, the Minister of Economy and Finance has announced a plan to totally restructure the financial and banking sector by forming a national commission under his oversight. He would create a national securities market using the current national investment office (SNI), the national loan recovery agency (SRC) and the debt redemption sinking fund (CAA) as pillars. Advisors on the exchange market are the Societe de Bourse de Paris, Citibank and the International Finance Corporation.

Mergers and take­overs are currently undertaken discreetly through negotiations. In Cameroon's ongoing privatization program, only 13 enterprises of 33 on the first lists of those to be privatized by the end of 1999 remain to be sold or liquidated. The more than six privatization laws have been described as some of the most complete on the books, but criticized for the heavily bureaucratic process they put in place. Recent privatizations exhibited transparency with high foreign participation and awards to non-Cameroonian entities. Foreign investors, generally treated equally and fully, are limited only in their distance from and unfamiliarity with the local environment.

Restructuring of the financial system began in 1986 and is now considered complete and sustainable, if still fragile. Fourteen commercial banks have merged, closed, been recapitalized or liquidated since 1989, leaving eight functioning (seven licensed) banks in the country. Commercial banks constitute the largest part of the financial sector with total assets of CFA francs 526 billion (USD 911.6 million-577 CFAs equal one dollar) at the end of June 1997. The three institutions that dominate the sector represent more than 60% of total bank assets. The ratio of provision for doubtful loans is low and much of the total asset base of the banks is estimated as non-performing. Private firms are free to associate with any partner they choose and in whatever%age participation they negotiate with such partners. Companies are also free to organize into industry associations.

J. POLITICAL VIOLENCE

There have been a few incidents of civil disturbance or violence during the past few years involving politically motivated damage to installations. Just prior to the May 1997 legislative campaign, a small scale outbreak of violence against government officials and property occurred as armed attackers launched raids against six government sites in the Northwest Province. Security forces killed at least seven people in the raids; three gendarmes died. Since those and the October Presidential elections, things have become quieter. The threat of political violence continues to be a possibility in Cameroon, but is not likely to target foreign firms or projects. A complicating factor is the existence of a nascent English-speaking separatist movement. Cameroon's perennial border problems with neighboring Nigeria turned violent at the beginning of 1994. The armies of both countries remain mobilized in the remote and disputed Bakassi Peninsula. On rare occasions, tensions break into firefights which have caused deaths and injuries. The dispute was submitted to the International Court of Justice (IJC) which ruled that the case should be heard before court, and Cameroon hopes that Nigeria will honor the IJC decision.

K. CORRUPTION

Cameroon's rating on some lists which claim to quantify corruption in various counties is high and in sixth place on at least one of them. Although President Biya announced an anti-corruption campaign in June 1995 and the September 1996 Government initiated measures to combat endemic corruption by civil servants, at customs, in the courts and in regulatory agencies, the efforts have had limited impact. Following formation of his new government in December 1997, the Prime Minister renewed his anti-corruption campaign by creating an ad hoc committee to address the problem. Little practical results have been seen other than an information effort to sensitize the population to the pervasive nature of corruption, with no legal action to back it up or follow-on program announced.

On the positive side, recipients of GRC payments are no longer routinely obliged to relinquish 30% of the sum to civil servants who process their vouchers, although some still attempt to apply the measure. Rampant corruption at customs has reportedly diminished since February 1996 when a private company, Societe Generale de Surveillance (SGS), was given an exclusive contract to verify and assess customs duties due for FOB imports valued over $4,000. The reality is that, while customs collections have significantly increased, new modalities for corruption have been initiated. Despite Cameroon's attractive investment code and the favorable laws for private enterprise few foreign investors have initiated operations in the country. Domestic investors remain somewhat restrained in their investment plans despite the exuberance brought on by the Chad/Cameroon pipeline project.

A dysfunctional judicial system severely disrupts development of Cameroon's economy and society. The judiciary is often arbitrary and persons accused of corruption by the local press are seldom called to account before the courts. Under the current judicial system, local and foreign investors, including some U.S. firms, have found it very complicated and costly to enforce contract rights, protect property rights, obtain a fair and expeditious hearing before the courts or defend themselves against frivolous lawsuits. However, the recently implemented "Organisation pour l'Harmonisation du Droit des Affaires en Afrique" (OHADA) treaty offers some hope for more objectivity in the judiciary. The GRC has not signed the OECD Convention on Combating Bribery.

L. BILATERAL INVESTMENT AGREEMENTS

Cameroon has bilateral investment and/or commercial agreements with the following countries: Austria, Belgium, Canada, China, Denmark, France, Germany, Greece, Italy, Japan, Russia, South Korea, Spain, Switzerland, the United Kingdom, and the United States. Similar agreements also exist with other countries in Africa, Asia, Latin America, and Eastern Europe. The bilateral investment agreement between Cameroon and the United States was ratified and entered into force in 1989. The U.S. invoked the BIT in one case in 1997 and Cameroon has ostensibly acquiesced in the case through non-implementation of legislation contrary to the treaty.

M. 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. OPIC is currently assessing the recent record and appears ready to underwrite viable projects in the future. The Cameroon Investment Code guarantees protection from non-commercial risk as per the Multilateral Investment Guarantee Agency (MIGA) Treaty with Cameroon. The Embassy purchased about 8 million dollars and the African Development Foundation 550,000 dollars worth of CFA francs in FY97 at an average rate of 577 CFA to the dollar.

A second devaluation of the 14 country CFA franc has been dismissed as unlikely during the present year by EU and IFI observers. However, many Cameroonians are unconvinced and speculate that a de facto or de jure devaluation may come even before the mechanical devaluation anticipated upon the introduction of the euro and its parity determination with the CFA in 1999. The IMF has written "given its high dependence on the production and export of a limited number of primary commodities, whose world prices are expressed in U.S. dollars, and the modest size of intra-zone trade, the CFA franc zone would remain substantially more vulnerable to exogenous shocks than the EMU countries. But the linking of the CFA franc to the euro offers the CFA franc countries the opportunity to intensify their adjustment efforts, as well as to step up their initiative to enhance regional economic integration."

N. LABOR

Cameroon's labor-management relations are governed by the new labor code enacted in 1992. The code restores collective bargaining and employee­employer primacy in the negotiation of wages; eliminates fixed zonal wage scales; abolishes employment by level of education; eliminates government control over layoffs and firings; and reduces government involvement in the management of labor unions. The code, however, does not apply to civil servants, employees of the penal system, or workers responsible for national security. Its implementing decrees were completed in 1993, but remain open to legal interpretation and labor disputes are still common. Cameroon is a party to the ILO Convention on the protection of labor rights, but government adherence to some of its provisions was seriously questioned in April 1994 when the administration interfered in the functioning of the Confederation of Cameroon Trade Unions (CCTU) through the illegal ousting of its elected Secretary General. After the democratically elected leader was restored to his post by an extraordinary CCTU congress, the government supported the founding of a competing Confederation of Free Cameroonian Trade Unions (USLC), headed by a former CCTU vice president. Both organizations appear to be either dominated or thoroughly intimidated by the government. CCTU is now rife with internal divisions and has become a specter of its former self. The ILO notes that the Government has failed since 1991 to recognize the National Union of Teachers of Higher Education. The CCTU is a member of the Organization of African Trade Union Unity (OATUU) and the International Confederation of Free Trade Unions (ICFTU).

The 1992 code provides a legal framework for the emergence of a flexible and efficient labor market, in theory, but such a market has not yet been allowed to operate. Cameroon has a relatively high literacy rate and offers a relatively well-educated labor force. Unemployment has been estimated at between 30 and 35% in the two major cities of Douala and Yaounde. It has risen recently due to the reduction in civil servants in an effort to cut government spending and to the rising number of school graduates. In 1993/4 there was a decline of about two thirds in civil servant salaries due to cuts and devaluation. At the same time the GRC was unable to pay a number of months of salary and is only now in the process of repaying the back salary. Beginning with FY98, the government has pledged to recruit 1,620 young graduates at 540 per year in a three-year program as secondary school teachers and judicial employees. There is a large surplus of unskilled and non­technical labor. Due to inadequate mechanical and technical training, some industries have experienced difficulties in recruiting skilled labor on the domestic market. The free movement of goods and people, envisaged in the nascent Central African Economic and Monetary Community (CEMAC), is expected to address this problem.

O. MAJOR TAXATION ISSUES AFFECTING U.S. BUSINESS

In January, 1994 Cameroon became the first state of UDEAC to implement a new Regional Reform Program which includes tax reform. The new code reduces the number of taxes applied to imports from over seven to four and reduces the overall rate from a maximum 200 percent to a maximum 70% on the most heavily taxed imports. In July 1994 the rates were reduced to a maximum of 50% on luxury goods and a minimum of five% on necessities. Beginning on 1 January 1998 only the TVA (scheduled to replace the TCA in 1999) will be collectable on intra-regional goods. Foreign investors are required to pay customs duties as well as income, turnover and business taxes.

P. FOREIGN TRADE ZONES/FREE PORTS

Cameroon has no Foreign Trade Zones or Free Ports at this time; however, it does have an Industrial Free Zone Program. An important investment feature of the Code is the Industrial Free Zone (IFZ) Regime which is applicable to all locations through "industrial park" or "single-factory" zones. It creates conditions for the IFZ investor to operate virtually outside of the jurisdiction of the country's established legal and regulatory systems. The only eligibility requirements to qualify for IFZ status are production of goods or services at least 80% of which are export-bound and which do not have deleterious effects on the environment. The National Office for Industrial Free Zones (NOIFZ) is the non-profit regulatory body established to oversee and administer Cameroon's IFZ program. IFZ firms receive a 10-year exemption from taxes and are subject only to a flat tax of 15% 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 exempt also from existing and future customs duties and taxes including those on locally purchased production inputs. A recent Finance Law introduced provisions which require firms with IFZ status to pay import taxes on some categories of goods; however, duty­free status is granted to equipment and materials imported for manufacturing under the IFZ regime and for the execution of public contracts. According to the NOIFZ, 33 enterprises currently have IFZ status, of which 22 are operational throughout the country. This represents an increase in companies of 36% and a total investment increase of 43.6% over the previous year.

Q. FOREIGN DIRECT INVESTMENT STATISTICS

Direct foreign investment (DFI) plays a key role in the Cameroonian economy. However, neither the GRC nor the moribund Chamber of Commerce has compiled a comprehensive list of foreign investments in Cameroon or estimates of current values. Flow data on DFI, disaggregated by country, is not available and there are no statistics on Cameroon's direct investment abroad. France is overwhelmingly the most important foreign investor in terms of the total capital in Cameroonian enterprises and% of the total stock of foreign investment. Cameroon's prime minister led a trade mission composed of nine of his ministers and several prominent Cameroonian business personalities to France in April 1998 to dialogue with French investors interested in Africa. This search for foreign investment has apparently resulted in a number of joint venture and foreign investment projects including the construction of three hotels in Douala and Yaounde. The Committee of French Investors in Africa (CIAN) was instrumental in organizing an April 1998 investment seminar devoted solely to Cameroon and is reportedly favorable to the possibility of joint ventures with U.S. investors who might not have the long standing operational expertise that French investors historically have.

The Commonwealth Development Corporation has a 36,104,000 pounds sterling investment in Cameroon in the CDC, HEVECAM, Printpak, SNEC, and SOCATRAL enterprises. It maintains a dialogue with the GRC in view to participating in privatization for debt so as to reactivate its investment program. China, has concluded an agreement to construct a tractor assembly plant in the south and has signed a convention that will lead to the implantation of a tire retreading plant. Norway is expected to open and operate a fertilizer plant this year. The GRC is anxious to strengthen commercial relations with the U.S. and has invited several American trade missions to the country. U.S. direct foreign investment in Cameroon is significant through five major U.S. petroleum industry companies and a company that produces oral care/hygiene products for the local as well as regional market of Central Africa from its Cameroon plant. Others include fruit production enterprises, communications companies and fertilizer and insecticide producers. Several dozen U.S. companies are currently represented in Cameroon either directly or through agents or distributors. Construction of the multinational Chad/Cameroon pipeline will require a total investment of about 1.5 billion dollars in Cameroon alone, bringing total U.S. pipeline investment in Cameroon to one of the largest in the country.

R. CAPITAL OUTFLOW POLICY

Cameroon does not encourage the export of capital and does not have a policy on Cameroonian investments in foreign countries. Most Cameroonian capital abroad is presumably in European financial institutions and/or real estate, and this increases as fears of a euro-related CFA franc devaluation go unchecked.

VIII. TRADE AND PROJECT FINANCING

A. DESCRIPTION OF THE BANKING SYSTEM

Cameroon's banking system is controlled by the Banque des Etats de l'Afrique Centrale (BEAC), a common central bank also serving the five other member countries of the Central African sub-region. BEAC is monitored closely and regulated by the French Treasury. In 1993, member states of BEAC created a supranational supervisory authority, COBAC (Commission Bancaire de l'Afrique Centrale), over all banking and finance institutions in the Central African UDEAC sub-region and granted it extensive powers to discipline delinquent institutions. The banking authority licensed two new Cameroonian banks in 1997, having withdrawn three other licenses since 1996.

Like all other signatories to a 1948 agreement creating the Communaute Financiere Africaine franc zone, Cameroon is obliged to hold at least 65% of its foreign reserves in an account ("compte d'operation") that is supervised and managed in Paris by the French Treasury. This account is the principal means by which France guarantees the exchange of CFA francs into French francs at a fixed exchange rate (1 FF = 100 CFA). Lending/borrowing base rates are set by the BEAC, and banking institution are not allowed to lend below the floor rate, except by authorization of the National Assembly.

Despite a system-wide restructuring exercise carried out in 1989-1992, Cameroon's banking system remains fragile with liabilities substantially in excess of any realistic valuation of its assets. Since the restructuring exercise began in 1986, seven of the twelve commercial banks then in the country closed and three others were created. The banking crisis intensified during 1996/97 as efforts to restructure the sector through a transparent plan by the GRC and World Bank to achieve a reduced but sustainable banking sector continued. Two of the eight banks were liquidated and a new bank, which opened in late 1997, purchased some of their positive assets.

Cameroon's banking system is currently made up of seven operating full-service commercial banks, with an eighth--an American bank--scheduled to open in mid-1998 and a ninth having applied for licensing. Previously, these banks were obliged to hold non-interest-bearing government bonds equivalent to 10% of their assets. GRC arrears on these bonds have been consolidated at BEAC. Commercial banks are no longer required to purchase new government bonds. The dominant factor in the now normalizing banking crisis was the large amount of the bad non-performing debt that the Cameroonian Government and public enterprises owe the banking system. Weaknesses of the commercial banks in Cameroon include a lack of willingness to take risks and assess good venture; outdated products (no checks, cc, etc.) which reflect the need for modern banking instruments and institutions (methods) and the lack of quality service (lack of bank secrecy). With one exception, commercial banks remain undercapitalized and none meets all the prudential criteria set by the regional Central Bank (BEAC). A comprehensive program that will reorganize the financial sector in two phases has been underway for the past eight years. The first phase builds on the fiscal stabilization program and a debt settlement strategy and the second phase will emphasize financial strengthening involving the development of term lending and equity finance instruments.

B. FOREIGN EXCHANGE CONTROLS AFFECTING TRADING

Foreign exchange controls exist in Cameroon primarily for statistical purposes and to enable the Ministry of Finance to certify that remittances conform with established regulations. Authorizations for foreign transfers are routinely granted. Foreign exchange rationing is not practiced in Cameroon.

C. GENERAL AVAILABILITY OF FINANCING

The Government does not have an export-import bank program to finance Cameroonian exports. Importers and exporters use internationally accepted methods of settlement. Local sources of commercial credit are extremely limited; therefore, the liberal credit terms usually offered by the competition may in fact outweigh a considerable price differential. Nevertheless, U.S. exporters are advised to utilize an irrevocable, confirmed letter of credit, especially if they are non-resident and new to the Cameroonian market. Foreign competition often grants credits of 180 days for consumer goods and 24 months for small machinery and equipment. European banks often quote liberal terms and may discount paper for their exporters who are pursuing long-term credits.

D. HOW TO FINANCE EXPORTS/METHODS OF PAYMENT

Due to pervasive credit risk, extending even to the banking and public sectors, many U.S. firms exporting to Cameroon find it prudent to insist on irrevocable letters of credit drawn on banks with strong foreign correspondents. The return of a U.S. bank operation to Cameroon in 1998 will facilitate and improve financial transactions between the U.S. and Cameroon. European banks often quote liberal terms and may discount paper for their exporters who are pursuing long-term credits of 180 days for consumer goods and 24 months for small machinery and equipment. Transactions are most frequently settled through guaranteed, irrevocable letters of credit.

E. TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE

Foreign investors can obtain local financing for investment and trade purposes at non-discriminatory terms. However, as a result of Cameroon's comparatively high interest rates, most investors prefer to borrow from foreign sources. The U.S. Export-Import Bank suspended lending to Cameroon in 1992 and rescheduled a substantial part of the country's payment arrears. Currently, EXIMBANK is only willing to consider finance of short-term loans and guarantees for exports to private Cameroonian buyers.

F. TYPES OF PROJECT FINANCING AVAILABLE

Multilateral financial institutions have long been active in project financing in Cameroon. The World Bank has a resident representative in Yaounde and its affiliate, the International Finance Corporation (IFC), maintains regional offices in Douala for Central African and Congo-Kinshasa borrowers. The African Development Bank (AfDB) Group involvement in Cameroon started in 1972 and has thus far financed more than 30 projects valued at over USD 700 million. AfDB closed its Cameroon office when the country moved to the status of being qualified only for concessional resources. Vigorous efforts to initiate a new Cameroon program, particularly through AfDB's Private Sector Unit, are underway. Evidence of this is that Cameroon was the recipient from the African Development Fund of two loans (for poverty alleviation and support for the ESAF program-USD 38 million) and three aid packages (for rural electrification and potable water-USD 41 million) in early 1998. Currently, consideration is being given to a national agricultural research and extension (UA 8.97 million) project. OPIC has guaranteed funding for one project in recent years and has expressed interest in assisting Cameroon, but no new projects have yet developed. These institutions have financed projects in the public and private sectors including agricultural and industrial projects.

List of Banks with correspondent U.S. Banking Arrangements

The following eight of Cameroon's nine commercial banks have U.S. correspondents. The Highland Corporation Bank's approval to operate as a full bank is still under consideration by COBAC.

1. Amity Bank: Citibank, New York, and Bankers Trust, New York.
2. Banque Internationale du Cameroun pour l'Epargne et le Crédit (BICEC): Citibank, New York.
3. Caisse Commune d'Epargne et d'Investissement (CCEI): Republic National Bank, New York, and Citibank, New York.
4. Commercial Bank of Cameroon: Credit Commerical de France, New York, New York
5. Citibank: Citibank, New York.
6. Societe Commerciale de Banque Credit-Lyonnais (SCB-CL): Credit-Lyonnais, New York.
7. Societe Generale de Banque au Cameroun (SGBC): Societe Generale, New York.
8. Standard Chartered Bank: Standard Chartered Bank, New York

IX. BUSINESS TRAVEL

A. Business Customs

Although Cameroon has the largest private sector in French-speaking Central Africa, its business community does not have a fixed western pattern of behavior. Cameroonians appreciate an opportunity to "get to know" a potential partner before beginning concrete discussions. It is helpful in Cameroon to supplement written communications with as many face-to-face encounters as possible. Adherence to western standards of punctuality is not the norm; patience and persistence are needed to do business in Cameroon. Mitigation of culture and language barriers may be addressed by a visit to the American Business Services Centers of the Embassy.

The Cameroonian workweek does not include Saturdays even though businesses are open that day. Holidays falling on Saturdays or Sundays are observed on Fridays or Mondays, respectively. When a working day intervenes between two recognized holidays, the working day is usually, but not always, declared a public holiday. For example, Friday could be declared a non-working day if a recognized public holiday falls on a Thursday. Government offices are officially open from 7:30 am to 3:30 pm without interruption. Businesses generally are open from 8 am to 6 pm with a brief closing for lunch.

1. Travel Advisory and Visa

Visas and return tickets are required for entry into Cameroon. Visas can be obtained from the Cameroonian Embassy in the U.S. (2349 Massachusetts Ave. N.W., Washington, D.C. 20008, tel. 202-265-8790) and in France (17 bis, rue Longchamps, Paris 75016). Visitors who arrive without a visa may be required to leave the country on the next available flight, particularly if they are coming from a country where there is a Cameroonian Embassy. For passengers arriving from countries without Cameroonian diplomatic representation, airport visas are usually available.

American business people considering travel to Cameroon are urged to consult the Department of State's latest Consular Information Sheet (CIS) for Cameroon. The CIS, which is updated periodically, may be obtained by calling the State Department's Citizen's Emergency Center at (202) 647-5225 or 647-0900. American citizens residing in Cameroon are urged to register with the Consular Section of the American Embassy in Yaounde.

C. Holidays

The following Cameroonian national holidays are scheduled on fixed calendar days: January 1 (New Year's Day),
February 11 (Youth Day),
May 1 (Labor Day),
May 20 (National Day)
December 25 (Christmas Day)
Others of Cameroon's Christian holidays falling on different dates of the year include Good Friday, Ascension Day and Assumption Day. Moslem holidays falling on unspecified calendar days include Ramadam and Tabaski.

D. Business Infrastructure

Good roads connect Cameroon's southern cities. Its main business centers, Yaounde and Douala, are easily accessible from Bamenda (North West Province) and Bafoussam (West Province) and from Cameroon's two main seaside towns of Kribi and Limbe. A paved 510-kilometer road links the three major northern cities of Ngaoundere, Garoua and Maroua to each other, but they are cut off from the southern cities by long stretches of unpaved road. Regular bus service is available between Yaounde, Douala, Limbe, Bafoussam and Bamenda, but comfort is often minimal. As accidents are frequent, bus travel, especially at night, should be avoided when possible. Car rental is available in Douala, Yaounde, Ngaoundere and Garoua. Visitors to most of the country's towns and cities can also hire taxicabs.

Cameroon's railway and airline service links the southern and northern zones at a northern terminal in Ngaoundere. Railway service between Douala and Yaounde has deteriorated as delays and derailments are common. The recent privatization of Cameroon National Railways Authority (REGIFERCAM) gives rise to optimism that the service will improve in the coming years. Air service is available, if unreliable, between Douala, Yaounde, Ngaoundere, Garoua and Maroua. There are two carriers for in-country service, Cameroon Airlines (CAMAIR), the national carrier, and Air Affaires Afrique (AAA), a charter carrier with plans to become scheduled. There are sometimes delays, cancellations and overbooking of CAMAIR flights. Passengers should arrive at the airport early to improve their chances of receiving a boarding pass. Cameroon imposes an airport departure tax of 10,000 CFA francs (USD 16.67) for international flights and 500 CFA francs for domestic legs.

French is the dominant business language in Cameroon although approximately 20% of the population and much of the business community speak English, Cameroon's other official language, which can be used in the two English-speaking provinces and the larger cities. Pidgin is a local lingua franca in half of the provinces of Cameroon. The staffs of major hotels and restaurants are usually bilingual. Several hotels of international standing are operated in Douala and Yaounde where the demand for rooms has increased 10% over the previous year and prompted the government to consider building a five-star hotel in Douala and two four-star hotels in Yaounde.

There are many restaurants in Douala and Yaounde that serve a variety of cuisines including Cameroonian, French, Chinese, Italian, Lebanese, Cambodian, Vietnamese, Indian and Japanese. Special precaution should be taken by American visitors to drink only bottled or boiled (and filtered) water in restaurants and hotels. A number of European and American credit cards are accepted in many restaurants and hotels in Douala and Yaounde but, generally cash is required.

All visitors entering Cameroon are required to present evidence of a yellow fever vaccination received within the last ten years on a valid World Health Organization (WHO) international health immunization certificate. The certificate must be presented upon arrival to as well as departure from Cameroon. Medical evacuation insurance is recommended for all travelers visiting Cameroon. Vaccinations against tetanus, typhoid, polio, meningitis, and hepatitis A and B are recommended. A gamma globulin injection is also recommended every four to six months to protect against hepatitis A. Cameroon has chloroquine- and fansidar-resistant malaria. Americans are urged to take appropriate malaria prophylactic medication and to use insect repellents.

Cameroon and the United States have a direct telephone link via satellite. The country code for Cameroon is 237. All telephone numbers have six digits, and there are no city or area codes. Cameroon has fax and telex services, and it was the first country in Central Africa to launch a cellular phone service in 1993. Internet service was established in Cameroon in 1997 and there are now even Internet coffee houses connected to the PDM Internet link of towns and communities of Africa in Douala and Yaounde (See list in Chapter XI).

Many streets in Cameroon do not have names or numbered addresses. Consequently, most businesses, hotels, restaurants, government offices and individuals do not have street addresses. Mail is generally sent to a "boite postale" (B.P.) or post office box (P.O. Box). International Organizations and renowned private businesses often use several express mail services (including Federal Express and DHL Worldwide Express representative) at a greater cost.

Villas and houses are available for rent in most towns in Cameroon. Apartments are available for rent in Douala and Yaounde. Rates have dropped considerably since 1992 but are trending upward, particularly in the two main cities. While real estate brokers (or "agent immobilier") may help in securing housing for American visitors, a good local contact may be more useful. Many newly arrived U.S. businesspersons establish temporary housing and office space at one of the well-known hotels

ECONOMIC AND TRADE STATISTICS

Cameroon's national income, price, balance of payments, trade and fiscal data became increasingly scant and unreliable in the late 1980s as the country's data generation systems deteriorated steadily. With help and pressure from the international financial institutions (IFIs), the situation is improving, especially in the financial sector and data reflected below comes from the IFIs and government sources. Updates of the Country Commercial Guide will contain additional data as it becomes available.

Population:	14.1 million (mid-1998 estimate)
Population growth rate	: 3% (mid-1998 estimate)
Religions:	Animist (40%), Christian (40%), Muslim (20%)

Government System: Independent republic, strong central government dominated by the President. Branches: Executive - president (head of state elected for a seven year term, renewable only once); appointed prime minister head of government. Legislative - unicameral National Assembly (180 members); a Senate and Regional Councils are called for under new constitutional amendments which also create a framework for increased judicial independence. At present, the judiciary remains under the executive's Ministry of Justice. Administrative subdivisions: 10 provinces (to be renamed regions), 56 departments, 276 sub-prefectures.

Languages: English and French (official), more than 250 indigenous African languages and dialects.

Work Week: Monday - Friday, 7:30 am to 3:30 pm; half hour break between 12:00 noon and 1:00 pm.

	1996	1997(est)	1998 (proj)
GDP (in millions of US$)	9,251.9	9,455.4	9,447.2
GDP growth rate	5%	5.1%	5.2%
GDP per capita	682	610	670
GNP per capita	559	578.7	700.0
Government Spending (% of GDP)	15.9	13.8	13.9
Inflation rate (percent)	4.3%	3.0%	2.0%
Unemployment (estimate)