Transparency of the Regulatory System
In general, Cameroon has adequate laws, most of which are consistent with international business and legal norms. Weak investigating capacity, a lack of understanding of international business practices, and corruption in the judiciary adversely affect the implementation of the laws. In many circumstances, judicial loopholes lead to arbitrary interpretations of the texts.
Some ministries, though not all, consult with the general public and private sector organizations through targeted outreach to stakeholders, such as business associations or other groups. There is no formal process for such consultations. Ministries do not report the results of consultations. Such processes are not believed to disadvantage U.S. or other foreign investors.
Legal procedures of Cameroon are based on national, regional, and supra-national laws and treaties. Parliament is the nominal source of all regulatory power, though the Parliament is subsidiary to the President, and the Executive Branch originates 98 percent of all laws passed. Public involvement is limited and oversight or enforcement mechanisms are weak and do not ensure that governments follow administrative processes. National regulations, controlled by ministries, control most economic activity and are the most relevant for foreign businesses.
Cameroon does not meet the minimum standards of fiscal transparency. Many of the state-owned enterprises do not have public accounts. There are only three publicly listed companies on the Douala Stock Exchange. All three use the OHADA (Organization for the Harmonization of Corporate Law in Africa) accounting system, which does not conform to IFRS (International Financial Reporting Standards) or GAAP (Generally Accepted Accounting Principles) standards.
Draft bills and regulations are not made available for public comment.
The government is currently working on an online and digitalized database for all legal texts. Until that project is completed, the Official Journal or “Journal Officiel” (in French), is the main repository for all legal texts. Currently, the website for the Office of the Prime Minister (www.spm.gov.cm ) contains PDF versions of all new regulatory actions published in the Cameroon Tribune, the country’s newspaper of record.
Cameroon has administrative courts that specialize in the application and enforcement of public laws. From a strictly legal perspective, the Supreme Court has oversight on enforcement mechanisms, but a lack of separation of powers prevents the judiciary from carrying out its responsibilities.
Cameroon has made tangible progress in the area of fiscal modernization largely with the support of the International Monetary Fund (IMF) and initiatives such as the Extractive Industry Transparency Initiative. Cameroon’s budget was widely and easily accessible to the general public, including online on various government websites. The government published its fiscal year 2019 executive budget proposal in June 2018 and enacted the budget in December 2018. The end-of-year report for the previous year was published in October 2018.
It is too early to tell the impacts of the reforms. The IMF continues to stress that the government must strengthen fiscal governance, improve its fiscal consolidation, implement debt sustainability, enhance private sector-led growth, and expand financial access. Full implementation of these recommendations would have a tremendous impact on the country and economy.
Ministries and regulatory agencies do not develop forward regulatory plans – i.e., a public list of anticipated regulatory changes or proposals intended to be adopted/implemented within a specified period. Ministries do not have a legal obligation to publish the text of proposed regulations before their enactment. There is no period of time set by law for the text of proposed regulations to be made publicly available.
There is no specialized government body tasked with reviewing and monitoring regulatory impact assessments conducted by other individual agencies or government bodies.
There are no scientific or data-driven assessments of new regulation. There are no publicly available scientific studies or quantitative analyses conducted on the impact of regulations. Affected parties do not have the right to request reconsideration or appeal adopted regulations to the relevant administrative agency. There is no existing requirement that regulations be periodically reviewed to see whether they are still needed or should be revised.
Information on debt obligations was publicly available and updated quarterly in the form of brochures, and increasingly via the website of the Cameroon Debt Management Office. For example, the electronic version of the debt data covering the second and third quarters of 2018 was released and can be obtained upon request, although it was not posted on the website as in previous years. However, allocations to and earnings from state-owned enterprises were not identified in budget documents and few state-owned enterprises produced financial statements.
The government maintained items in the budget that may qualify as off-budget accounts and contingent liabilities in debt covenants that are not subject to adequate audit or oversight. There are similar concerns regarding the budget for security operations and what qualifies as “sovereign expenses.” Moreover, the information in the budget is generally reliable, though the execution of the investment budget deviated often significantly from projections because of the low execution rate.
International Regulatory Considerations
Cameroon is a founding member of the Central African Economic and Monetary Community (CEMAC). CEMAC treaties supersede national laws. The economic union has one central bank, one banking ombudsman, and a single regional tariff.
Cameroon is signatory to the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI). In 2009, the EU and Cameroon signed an interim Economic Partnership Agreement (EPA). They are working to bring several Cameroonian products up to EU standards. Cameroon references many international conventions and multilateral treaties such as the UN treaties in its domestic laws.
Cameroon joined the World Trade Organization (WTO) on December 13, 1995 and was previously a member of the General Agreement on Taxes and Tariffs. On March 11, 2019, Cameroon was suspended from the WTO for failure to meet its designated contribution to the organization. The government of Cameroon is expected to notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Legal System and Judicial Independence
The Cameroonian legal system is a legacy of French, German (Codified Laws), and English (Common law) colonization. There is also a patchwork of traditional ethnological legal systems, which varies for each ethnic group. The government wants to harmonize these different legal traditions to equip Cameroon with laws that are applicable across the country and reduce the need to navigate different legal systems. This project, however, is meeting with stiff resistance from English-speaking lawyers concentrated in the Northwest and Southwest Regions, who claim that the initiative will dilute their heritage.
In terms of standards, Cameroon’s commercial legal system follows the OHADA rules, which are supposed to be aligned with International Financial Reporting Standards (IFRS). Enforcement is weak partly because of lack of capacity. Cameroon does not train enough specialized judges in the commercial and economic fields. Consequently, poor enforcement of laws and accounting standards tends to create confusion for foreign investors. Despite efforts to align OHADA standards to international norms, government accounting regulations remain obsolete in the context of rapid developments in international finance and capital markets.
To circumvent the problem, U.S. enterprises and investors often maintain two sets of accounting records, one in accordance with U.S. GAAP or suitable international standards, and another to comply with OHADA standards and government reporting requirements.
The judicial system is subsidiary to the executive branch. The executive regularly interferes in judiciary matters. The current judicial process is not procedurally competent, fair, or reliable. Endemic corruption, lack of funding, and political considerations make the courts unable to function as independent arbiters of disputes.
Arbitration is becoming the solution of choice to solve business disputes in Cameroon. Arbitration exists in OHADA corporate law. Since OHADA is supra-national, Cameroon is bound by its decisions which follow international norms.
Regulations and enforcement actions are appealable and they are adjudicated in the national court system. Due to the court system’s revealed lack of objectivity, few businesses attempt to appeal against unfavorable rulings.
Laws and Regulations on Foreign Direct Investment
The Law No. 2013/004 of April 18, 2013 defines incentives for private investment in
Cameroon and proposes generic and special incentives while affirming the government’s responsibilities to private investors. The law remains valid for domestic and foreign investors. Additional laws and regulations are available on the website of the Ministry of Finance.
The Cameroon Investment Promotion Agency is the primary or “one-stop-shop” website for investment that provides relevant laws, rules, procedures, and reporting requirements for investors (https://investincameroon.net/en/).
Competition and Anti-Trust Laws
The National Competition Commission handles anti-competition and anti-trust disputes. In some cases, the regulator of a specific economic sector can play the anti-trust role. For example, in July 2018, the courts accused a multinational mobile operator of anti-competitive practices against a domestic money transfer provider when the multinational unilaterally suspended the domestic company’s Unstructured Supplementary Service Data code. The local company complained to the Telecom Regulatory Agency and to the National Competition Commission, which ordered the mobile operator to reinstate the code. The mobile operator ignored the initial injunction, forcing the Cameroonian company to take legal action. The courts ruled against the multinational.
Expropriation and Compensation
Decree N°.85-9 of July 4, 1985 and the subsequent implementation of Decree N°.87-1872 of December 16, 1987 lay down the procedure governing expropriation for public purposes and conditions for compensation. Some of the provisions of these legal texts were repealed by Instruction n°005/I/Y.25/MINDAF/D220 of December 29, 2005. Essentially, for the general public’s interest, the State may expropriate privately-owned land. The laws also lay down the formalities to be observed within the context of the procedure, both at the central and local levels.
In recent years, the government has expropriated property in the context of the construction of large infrastructure projects such as roads and hydroelectric dams. The government has a compensation process in place to try to meet the losses of those adversely affected by such decisions.
Serious allegations of corruption have plagued compensation procedures over the last decade. These incidents, often carried out by civil servants, have diluted trust in the process.
ICSID Convention and New York Convention
Cameroon ratified the ICSID Convention on January 3, 1967 and the New York Convention on February 19, 1988.
There is no specific domestic legislation providing for enforcement under the 1958 New York Convention and for the enforcement of awards under the ICSID Convention.
Investor-State Dispute Settlement
The OHADA-signatory nations adopted a uniform act on arbitration (the Uniform Act) on March 11, 1999. The Uniform Act sets out the basic rules applicable to any arbitration, where the seat of arbitration is located in an OHADA member state. The Uniform Act is based on the United Nations Commission on International Trade Law (UNCITRAL) model law. It supersedes the national laws on arbitration of the OHADA states. Cameroon’s arbitration law is contained in its code of civil and commercial procedure in the third volume, Articles 576 to 601.
Cameroon has a Bilateral Investment Treaty (BIT) with the United States. There have been no claims against the BIT since it came into force in 1989.
There have been cases of disputes between Cameroonian partners and U.S. companies, but they tend to be solved through arbitration. General misunderstandings between partners about contractual commitments tend to cause conflicts, but such cases have been infrequent over the past 10 years.
Local courts may recognize foreign arbitral awards issued against the government, but they are not well equipped to enforce such decisions.
In general, foreign investors complain more about administrative harassment or bottlenecks, and less about extrajudicial actions.
International Commercial Arbitration and Foreign Courts
Additional alternative dispute resolution may involve mediation and negotiations, also possibly through third-party binding arbitration. The OHADA system serves both as domestic and primary reference legislation.
The Groupement Interpatronal du Cameroon, the country’s most powerful business lobbying group, has an arbitration center in Douala. Douala is Cameroon’s largest city and trade hub, and the arbitration center is modern and well equipped. In principle, local courts have the power to recognize and enforce foreign arbitral awards issued against the government if found at fault.
As a treaty, the OHADA prevails over domestic laws. An international arbitration award can prevail especially if operating through the OHADA framework. The Common Court of Justice and Arbitration enforced under OHADA is both an arbitration institution and a judicial court, with a remit covering all the OHADA states.
Judicial processes are bureaucratic, expensive, time-intensive, and lengthy to pursue. This is true even for domestic and state-owned companies, which like their foreign competitors, also suffer from the weaknesses of the legal system and are not guaranteed any better treatment in case of dispute.
Cameroon has bankruptcy laws, which recognize the right of creditors, the equity of shareholders, and other types of liabilities. Bankruptcy is not criminalized, if it is not a deliberate collusion to avoid tax or mislead investors. Globally, Cameroon stands at 127 in the ranking of 190 economies on the ease of resolving insolvency. According to data collected by Doing Business 2019, resolving insolvency takes 2.8 years on average and costs 33.5 percent of the debtor’s estate, with the most likely outcome being that the company will be sold in a piecemeal sale. The average recovery rate is 15.8 cents on the dollar.