Transparency of the Regulatory System
Cameroon laws are consistent with international business and legal norms. Cameroon legal architecture is made of national, regional (CEMAC), and supra-national regulations, most of which are applicable to domestic and foreign businesses. Weak implementation and investigating capacity, a lack of understanding of international business practices, and corruption in the judiciary limit the effectiveness of the rule of law. In many circumstances, judicial loopholes persist, leading to arbitrary interpretations of the texts.
Some government ministries, though not all, consult with 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, but there is no evidence that such processes disadvantage U.S. or other foreign investors.
Cameroon’s National Assembly and Senate pass laws. The Executive proposes bills and then executes laws. Though there is technically a separation of powers, the Presidency is the supreme rule-making and regulatory authority. Decentralized institutions in the regions and municipalities have little additional regulatory authority. Draft bills and regulations are not made available for public comment. The website for the Office of the Prime Minister (www.spm.gov.cm) contains PDF versions of most new regulatory actions published in the Cameroon Tribune, the country’s newspaper of record.
Ministries and regulatory agencies do not have a 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 set by law for the text of the proposed regulations to be publicly available. There is no specialized government body tasked with reviewing and monitoring regulatory impact assessments conducted by other individual agencies or government bodies.
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. There have been no new regulatory or enforcement reforms announced since the 2020 Investment Climate Statement.
Cameroon does not meet the minimum standards of fiscal transparency. This is partly because many of the state-owned enterprises do not have public accounts. But companies that are listed or aspire to be listed on the Central African Stock Exchange (CASE) have more stringent transparency requirements. There are only four publicly listed companies on the CASE. All four use the Organization for the Harmonization of Business Law in Africa (OHADA) accounting system, which does not align completely with International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) standards. Cameroon is a member of CEMAC and is thus subject to its regulations, though implementation remains weak. CEMAC’s central bank, BEAC, controls monetary policy and is the de facto finance sector regulator, in coordination with the Ministry of Finance.
The National Institute of Statistics (INS) conducts surveys and produces statistics, which are meant to inform policy decisions. Some of these statistics are cited in government documents when ministries are drafting legislative proposals or during parliamentary debates. Quantitative analysis conducted by the INS have often been used by multilateral lenders such as the IMF, the World Bank, and the African Development Bank. However, empirical evaluation and data-driven assessments of the impact of new and existing regulations are limited. Similarly, public comments are not the main drivers of regulations. However, some consultations take place for the national budget, which is produced each year, but there is little oversight to ensure adherence to the document. The framework of the IMF’s 2017 Extended Credit Facility has induced the publication of more information on public debt by the Debt Management Office (better known by its French acronym CAA).
International Regulatory Considerations
Cameroon is a CEMAC member. CEMAC regulations supersede those of individual members, though areas such as the free movement of people, goods, and services are not respected by some states. Recent reforms by CEMAC’s central bank, BEAC, have met stiff resistance and delays in their application by individual member states, including Cameroon.
The government requires use of OHADA accounting standards, which is used by 14 African nations. No other norms or standards are referenced in the country’s regulatory system.
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 180 million CFA (USD 308,000) 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), English (Common law), and domestic national customs, 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 to reduce the need to navigate different legal opinions. This project, however, is being met with stiff resistance from English-speaking lawyers, who believe that the initiative will undermine the English system to which they are accustomed.
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. Generally Accepted Accounting Principles (GAAP) or suitable international standards, and another set to address the OHADA standards and government reporting requirements.
The judicial system is not independent of 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 makes the courts unable to function as independent arbiters of disputes.
Arbitration is becoming the solution of choice to solve business disputes in Cameroon. Arbitration is in the OHADA corporate law. Since OHADA is a supra-national law, Cameroon is bound by its decisions. In OHADA, regulations and enforcement actions are appealable, and they can also be adjudicated in the national court system. Due to the court’s lack of objectivity, few businesses attempt to appeal unfavorable rulings.
Laws and Regulations on Foreign Direct Investment
Foreign direct investments are governed by Law No. 2013/004 of 18 April 2013, which defines incentives for private investment in Cameroon, while proposing generic and special incentives and affirming the government’s responsibilities towards private investors. The law remains valid for domestic and foreign investors. Additional laws and regulations that refer to specific economic sectors are available on the website of the Ministry of Finance (http://www.minfi.gov.cm/index.php/en/documents ).
The 2021 finance law is the main new legal instrument to have been published in the past year. The new finance law has created new taxes, while maintaining some existing exonerations, notably on value-added taxes and life insurance savings. Full implementation started on February 2021. The Cameroon Investment Promotion Agency maintains a list of relevant laws, rules, procedures, and reporting requirements for investors ( https://investincameroon.net/en/ ).
Competition and Antitrust 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. State-owned companies tend to have quasi-monopoly or monopsony status in their markets.
Expropriation and Compensation
Decree N°.85-9 of 4 July 1985 and the subsequent implementation of Decree N°.87-1872 of 16 December 1987 outline 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 29 December 2005. Essentially, for the public interest the state may expropriate privately-owned land. The laws also explain the formalities to be observed within the context of the procedure, both at the central and local levels.
In recent years, the government of Cameroon has expropriated 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 meet the losses of those affected by such decisions.
Despite weakness in the actual implementation and execution of laws on the ground, compensation after expropriation generally follows a due process. There are no cases of indirect expropriation, confiscatory tax regimes, or regulatory actions that deprive investors of substantial economic benefits from their investments. However, serious allegations of corruption have plagued compensation procedures over the last decade. These incidents, often carried out by civil servants, have undermined trust in the process.
ICSID Convention and New York Convention
Cameroon ratified the “International Centre for Settlement of Investment Disputes” (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 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. While there have been disputes between Cameroonian partners and U.S. companies, few have risen to the level of requiring arbitration. Misunderstandings between partners have led to 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. Post is aware of several such awards against state-owned companies that have not been enforced. In general, foreign investors complain more about administrative harassment or bottlenecks, and less about extrajudicial actions.
International Commercial Arbitration and Foreign Courts
The OHADA system serves both as domestic and primary reference legislation for alternative dispute resolution but is rarely used. GICAM, the country’s largest business lobby group, has an arbitration center based in Douala. 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, OHADA standards prevail over domestic laws. An international arbitration award can prevail especially if operating through the OHADA framework. The Common Court of Justice and Arbitration (CCJA) enforced under OHADA are both an arbitration institution and a judicial court, with jurisdiction overall OHADA states.
Judicial processes are bureaucratic, expensive, time-intensive, and lengthy. 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.
In a prominent November 2019 case, the general manager of a state-owned hydrocarbon distribution company complained that debts owed by the state-owned electricity company, in combination with frequent power cuts, had caused millions of dollars in financial losses. Instead of addressing the issue or seeking arbitration, the company fired the manager.
Cameroon has bankruptcy laws, which recognize the right of creditors, the equity of shareholders and other types of liabilities. Bankruptcy is not criminalized unless it can be proven that it is a deliberate collusion to avoid tax or mislead investors. In 2020, Cameroon ranked 167th out of 190 economies in the World Bank’s ranking of the ease of doing business and 129th on its ability to resolve insolvency. In bankruptcy situations, it 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 piecemeal. The average recovery rate is 15.8 cents on the dollar.