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Cameroon

Executive Summary

Cameroon, the largest economy in the Central African Economic and Monetary Union (CEMAC), continues to face the repercussions of the COVID-19 pandemic; however, growth has started to recover from a 2020 recession. The International Monetary Fund (IMF) projects Cameroon’s gross domestic product (GDP) to increase by 4.6 percent in 2022. Cameroon’s current account balance also improved in 2021 and early 2022. The government continues to implement its 2020-2030 National Development Strategy and development projects, especially in road infrastructure, transport, energy, and health, albeit with delays. Cameroon utilized its hosting of the Africa Cup of Nations soccer tournament in early 2022 to hasten the completion of some long-awaited projects and promote Cameroon to investors.

Cameroon maintains strong competitive advantages because of a bilingual population, a relatively diversified economy, and its location as a gateway to the Central African region. It offers immense investment potential in infrastructure, extractive industries, consumer markets, and modern communication technology (for example, internet broadband, fiber optic cable, and data centers). However, Cameroon’s telecommunication infrastructure is overutilized and in need of upgrades, which often results in network outages. Agricultural processing and transport infrastructure, such as seaports, airports, and rail, need investments, especially for modernization and maintenance. More investment opportunities exist in the financial sector as only 15 percent of Cameroonians have access to formal banking services.

Corruption and weak governance structures continue to hamper Cameroon’s business climate.

The IMF approved a three-year, $689.5 million hybrid Extended Credit Facility-Extended Fund Facility arrangement in July 2021 to advance structural fiscal reforms, improve governance, and continue mitigating the health, economic, and social consequences of the pandemic while ensuring domestic and external sustainability. Cameroon’s 2022 budget aligns with its National Development Strategy and IMF program and sets a target to reduce the budget deficit from -3.2 percent in 2021 to -2 percent in 2022.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 144 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 123 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $-19 million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $1,520 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

8. Responsible Business Conduct

U.S. Embassy Yaoundé officials are unaware of a formal definition of responsible business conduct (RBC) within the Cameroonian government. It does not have a national ombudsman for stakeholders to get information or raise concerns about RBC.  The government has not conducted a national action plan on RBC nor does it factor RBC into its procurement decisions. U.S. Embassy Yaoundé officials are not aware of any recent high-profile instances of private sector impact on human rights. Cameroon does not have laws that regulate responsible business conduct. However, the government of Cameroon has enacted laws that cover issues related to what is locally considered corporate social responsibility. There are additional initiatives in the private sector to foster a corporate social responsibility culture.

All major infrastructure projects in Cameroon are compelled to conduct an Environmental and Social Impact Assessment (ESIA) to establish the impact of projects on people and nature. Cameroon’s ESIA law strives to follow World Bank standards. An August 1996 master law related to environmental management prescribes an environmental impact assessment for all projects that can cause environmental degradation.

The Cameroonian government struggles to enforce laws in relation to human rights, labor rights, consumer protection, and environmental protection. There is little corporate governance law in Cameroon, mostly since very few companies are open to portfolio investment. The Business Council for Good Governance, the American Chamber of Commerce, Rotary International, and Transparency International promote RBC in Cameroon, though their ability to monitor RBC is limited. U.S. Embassy Yaoundé officials are unaware of any government efforts to adhere to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas. Cameroon participates in the Extractive Industries Transparency Initiative. Domestic transparency measures requiring the disclosure of payments made to governments are lacking.

The economy of Cameroon is modernizing, but most sectors experience disruptions from informal activities. The informal sector provides crucial livelihoods to the most vulnerable in urban environments; however, labor conditions are generally precarious. In the agricultural sector, the government estimates that 70 percent of labor is informal with instances of child labor in subsistence agriculture. In other sectors, for example mining, allegations of human or labor rights abuses by Chinese mining companies have surfaced in the recent past. Indigenous forest communities also complain the government does not enforce logging concession laws.

9. Corruption

Corruption is punishable under sections 134 and 134 (a) of the Pena1 Code of Cameroon. Despite these rules, corruption remains endemic in the country. In 2021, Cameroon ranked 144 of 180 in Transparency International’s Corruption Perception Index. Anti-corruption laws are applicable to all citizens and institutions throughout the national territory. Article 66 of the constitution requires civil servants and elected officials to declare their assets and property at the beginning and at the end of their tenure of office, but it has never been enforced, since the adoption of the constitution in 1996. Similarly, the Civil Service Statute contains provisions and the procedures to be followed in the event of a conflict of interest. These provisions are enshrined in Law No. 003/2006 of April 25, 2006, which also created the Commission for the declaration of property and assets. Other codes of conduct in different public institutions have created gift registers to prevent bribes, but they are not implemented. In terms of public contracts, Decree No. 2018/0001/PM of January 5, 2018 created a portal called Cameroon Online E-procurement System (Coleps) for the digitalization, including application processing, award, and monitoring and evaluation of all tenders. Since the launch of the portal, technical issues and disregard by civil servants have curbed its effectiveness, leading to the parallel continuation of the bribe-prone paper-based procurement system. U.S. firms indicate that corruption is most pervasive in government procurement, award of licenses or concessions, transfers, performance requirements, dispute settlement, regulatory system, customs, and taxation.

Since its inception in 2006 (Presidential Decree No. 2006/088 of March 11, 2006), the National Anti-Corruption Commission (CONAC) has encouraged private companies to establish internal codes of conduct and ethics committees to review practices. U.S. Embassy Yaoundé officials are unaware of how many companies have instituted either program. Bribery of government officials remains common. While some companies use internal controls to detect and prevent such bribery, U.S. Embassy Yaoundé officials are unaware of how widespread these internal controls are.

Cameroon is signatory to the United Nations and the African Union anti-corruption initiatives, but the international initiatives have limited practical effects on the enforcement of laws in the country. U.S. Embassy Yaoundé officials are unaware of any NGO’s involvement in investigating corruption. The government prefers the National Anti-Corruption Commission (CONAC) to investigate potential cases.  U.S. companies cite corruption as among the top obstacles to investing in Cameroon and report its being most pervasive in government procurement, the award of licenses and concessions, customs, and taxation.

10. Political and Security Environment

Cameroon faces several security challenges. Violence by non-state armed groups against security forces and the local population is in its sixth year in the primarily English-speaking Southwest and Northwest Regions.  Boko Haram and ISIS-West Africa continue to attack civilians and security forces in the Far North Region. In the Adamoua and East Regions, a wave of kidnappings and the presence of refugees from the Central African Republic has led to increased military presence. Terrorists and separatists alike have targeted economic assets and public infrastructure to effect political change.

In the Northwest and Southwest regions, leaders of non-state armed groups have claimed responsibility on social media for the killing of government officials, arsons that destroyed hospitals, schools, bridges, roads, and the seizure of state-run utilities. Non-state armed groups have also posted videos on social media of executions and beheadings of security officers while also claiming responsibility for multiple kidnappings for ransom of persons perceived to be against their cause. Human rights organizations and local citizens have accused soldiers and separatists of grave human rights abuses. In the Far North of Cameroon, Boko Haram and ISIS-West Africa fighters have looted villages and cattle, kidnapped, and abused women. Consequently, several infrastructures projects have ground to a halt.

11. Labor Policies and Practices

COVID-19 has had a significant impact on the labor market. Data from the National Institute of Statistics show that a large proportion of workers have seen a drastic reduction in wages (68 percent) and temporary job suspension (31.6 percent). Also, the unemployment rate reached 6.1 percent in 2021 according to the National Institute of Statistics.  Most of the youth who possess skills that could be used in the economy are under-employed in the informal sector. Under-employment, which is generally under-reported, has continued to hover around 75 percent for youth under 30. Most Cameroonians find occupation in the informal sector, where unskilled labor is prevalent, especially in the agricultural and service sectors, manufacturing, commerce, technical trades, and mid-management jobs.

Other structural problems in the labor market include the chronic shortage of technical trade skills, for example for maintenance and repair of industrial machinery, in every sector of the economy. Truck and automotive maintenance are widely practiced in the informal sector, while

rudimentary or artisanal agriculture, fishing, and textile manufacturing continue to hamper industrialization with unskilled labor.

The government of Cameroon does not require foreign companies to hire Cameroonian nationals. Foreign nationals are required, however, to obtain work permits prior to formal employment. While foreign nationals are automatically issued work permits for companies of the Industrial Free Zones regime, their number may not exceed 20 percent of the total work force of a company after the fifth year of operation in Cameroon.

Although union and contract agreements vary widely from sector to sector, in general, Cameroon functions as an “employment at will” economy, and labor laws differentiate between layoffs and firing. Layoffs are not caused by the fault of the employees and are often considered as alternative solutions to dismissing workers based on performance fault or economic grounds. There is no special treatment of labor in special economic zones, foreign trade zones, or free ports.

While the Labor Code applies to enterprises of the Industrial Free Zone regime, some matters are governed by special provisions under the 1990 law establishing Industrial Free Zones. These include the employer’s right to determine salaries according to productivity, free negotiation of work contracts, and automatic issuance of work permits for foreign workers. The Ministry of Labor and Social Security monitors labor abuses, health and safety standards, and other related issues, but enforcement is poor. Labor laws are waived within the framework of Industrial Free Zones to attract or retain investment. The waivers include the employer’s right to determine salaries according to productivity, free negotiation of work contracts, and automatic issuance of work permits for foreign nationals.

There are independent labor unions and others affiliated with the government that operate under existing laws and regulations. Over 100 trade unions and 12 union confederations are active in the country. However, the labor union movement is highly fractured and somewhat ineffective in promoting workers’ rights. Some union leaders accuse the government and company managers of promoting division within trade unions to weaken them, as well as protecting non-representative trade union leaders with whom they can negotiate more easily.

Cameroon’s labor dispute resolution mechanisms are outlined in the labor code. The procedure differs depending on whether the dispute is individual or collective. Individual disputes fall under the jurisdiction of the civil court dealing with labor matters in the place of employment or residence of the worker. The legal procedure is initiated after the labor inspector fails to settle the dispute amicably out of the court system. Settlement of collective labor disputes is subject to conciliation and arbitration, and any strike or lock-out started after the procedures have been exhausted and have failed is deemed legitimate. While the conciliation procedure is conducted by the labor inspector, arbitration of any collective dispute that has not been settled by conciliation is handled by an arbitration board, chaired by the competent judicial officer of the competent court of appeal. Workers who ignore procedures to conduct a legal strike can be dismissed or fined.

Strikes occur regularly and are generally repressed by the police, though they are often due to lack of payment by the employer (including when the employer is the government) and are resolved quickly. Recent strikes involved public sector employees. The National Potable Water Employee Union launched a strike in February 2022, citing management concerns of the state-owned water utility, CAMWATER. The union also cited concern about the absence of a plan for the construction of new water infrastructure, and a maintenance and rehabilitation plan for existing networks. In response, the Minister of Energy and Water Resources, who supervises CAMWATER, engaged the union directly in negotiations. In another public sector strike, teachers launched a broad, nation-wide strike in February 2022 to demand better working conditions and compensation for unpaid wages and benefits, totaling hundreds of millions of dollars. The government has called for dialogue and offered to pay a portion of the amount teachers demanded.

Cameroonian labor code lays down principles of labor laws regarding employment, dismissal, remedies for wrongful dismissal, compensation for industrial injuries, and trade unions.  But most jobs do not have binding contracts, and employers generally seem to have the upper hand in labor disputes. There is informality even in the formal sector, which is against the law. Because of this landscape, it is important for U.S. companies to ensure compliance with the local labor laws and to abide by international best practices. There were no new labor-related laws or regulations enacted during the last year.   U.S. Embassy Yaoundé officials are unaware of any pending draft bills.

The Cameroon National Institute of Statistics estimates that every sector has a level of informality. Likewise, the IMF estimates the informal economy contributes 20-30 percent to Cameroon’s GDP every year and provides jobs to 84 percent of the active working population. Additionally, informal employment comprises over 90 percent of the agricultural sector.

Prevalence of informality in the economy of Cameroon
  Key Sectors % of GDP Example of informality
1 Agriculture 19 Unlicensed transport
2 Transportation 5.3 Motorbike taxis/Cross border trade
3 Information, Communication Technology (ICT) 5 Maintenance, repair, retail market
4 Extractive industry (Oil, Gas, Mining) 9 Artisanal mining/cross border trade
5 Banking and Finance 8.5 Informal microfinance institutions
6 Services and consumer retail market 12 Support services/home workers
7 Utilities (Electricity, Water, domestic gas, waste disposal-management) 3.1 Maintenance and repair
8 Real Estate and Infrastructure Construction 10.8 Labor, rental activities
9 Manufacturing 4 Artisanal manufacturing
10 Health services and pharmaceuticals 1 Counterfeit medicine
11 Public Administration 8 Unlicensed institutions and labor
12 Tourism, media, and Leisure Unlicensed institutions and labor

(Source: Cameroon Ministry of Finance, Finance laws 2016-2020)

14. Contact for More Information

Christina Hardaway
Deputy Chief, Political-Economic Section
U.S. Embassy Yaounde
HardawayCED@state.gov 

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