Attitude toward Foreign Direct Investment
The government of Cameroon is seeking foreign direct investment to develop vital economic infrastructure. The government estimates that FDI represented as much as 18.5% of the GDP in 2015. According to Cameroon’s ministry of economy, in 2015, incoming FDI was mainly directed to the oil sector, manufacturing, the financial sector and transport. The national policy on FDI is outlined in a country strategy paper “Growth and Employment Strategy Paper” or GESP (2009), in which Cameroon targets an FDI level of 25% of GDP. In another strategy paper: “Vision 2035”, which charts the road map of Cameroon to economic emergence by 2035, the government, seeks FDIs for major industrialization projects. In this context, Cameroon passed a new investment code in 2012, which has provisions to attract and protect foreign direct investment. In December 2015, the government also announced that the 2016 finance law will contain additional tax provisions to attract investment.
Cameroon does not have laws that prohibit, limit or condition foreign investment in specific economic sectors (see below). However, the investment code has a number of general minimum requirements, which qualify the investor for some benefits. The four criteria, though not obligatory, required to benefit from the code are (i) the number of local staff employed, (ii) the percentage of exports, (iii) the use of natural resources and (iv) the contribution to value added.
The Cameroon Investment Promotion Agency (CIPA) is a State-owned institution in charge of the promotion of private investments. The CIPA's mission, in collaboration with ministries, agencies and private companies, is to contribute to the development and implementation of government policy in the field of investment promotion in Cameroon. The CIPA offers assistance and guidance to foreign and domestic investors, at all stages involved in setting up their investment projects. It is committed to connecting investors with relevant institutions, relevant technical services and to simplify administrative procedures for activities required by the investment code.
Cameroon law distinguishes between: very small enterprises (VSEs), small-sized enterprises (SEs) and medium-sized enterprises (MEs).
A very small enterprise, abbreviated as "VSE," shall be an enterprise with no more than 5 (five) employees and an annual pre-tax turnover of no more than USD 25,000.
A small-sized enterprise, abbreviated as "SE," shall be an enterprise with 6 (six) to 20 (twenty) employees and an annual pre-tax turnover of between USD 25,000 to USD 200,000.
A medium-sized enterprise, abbreviated as "'ME," shall be an enterprise with 21 (twenty-one) to 100 (one hundred) employees and an annual pre-tax turnover of between USD 200,000 to 1,500,000.
Other Investment Policy Reviews
The latest economic review containing elements of investment policy review was published in 2015. Cameroon economic outlook for the coming two years is a collaborative work by the African Development Bank, the OECD Development Centre, and the United Nations Development Program (UNDP).
The latest WTO trade policy review was conducted in 2013 and is available at https://www.wto.org/english/tratop_e/tpr_e/s285-00_e.pdf
Cameroon is also cooperating with multilateral, bilateral partners and private companies to produce a report on the investment climate. The Cameroon Business Forum (CBF) is a public-private sector dialogue mechanism, put in place to improve the business climate and support Private Sector development. The CBF was created by the Cameroonian Government with the support of the International Finance Cooperation (IFC) in 2006
Some policy recommendations can be found on the website of the CBF.
Laws/Regulations on Foreign Direct Investment
Foreign direct investment is governed by the Investment Code (Law No. 2002/004 of April 19, 2002) and subsequent texts (for example Law N° 2013/004 du 18 April 2013), which outlines incentives to private investment in Cameroon. While contracts are regulated by ordinary civil law, some sectors are governed by specific laws.
1) Mining code: Law No 001 of 16 April, 2001
2) Oil and Gas code (www.snh.cm/ReglementationDesHydrocarbures/Gas-Code-in-English.pdf)
The web address hosts the French version of Cameroon's petroleum code. The law governs the upstream activities (exploration, production) of the oil sector. http://www.snh.cm/CodePetrolier/codepetrolier.pdf, (see also http://www.snh.cm/index.php?option=com_content&view=article&id=100%3Acode-gazier&catid=58%3Areglementation&Itemid=74&lang=en).This law and its application instruments govern the downstream gas sector.
3) The Law No 2011/022 of 14 December 2011 governing the electricity sector in Cameroon
4) The Forestry code
Other sectors may be subject to specific licenses of government concessions, for example transport and telecommunications. For other aspects of corporate finance, such as mergers and acquisition and financial derivatives, OHADA treaties and accounting norms apply.
In principle, there is no deliberate government interference in the court system, but several dysfunctions, weaknesses, and specifically corruption often lead analysts to question the independence of the judiciary.
The Ministry of Small and Medium Size Enterprises is developing an online business registration platform for Cameroon at www.cfce.cm/. Another online resource for business registration is the https://cameroun.eregulations.org/.
In theory, it takes maximum 72 hours to register a company in Cameroon. The government of Cameroon presents the Centre for Enterprise Registrations (CFCE) as “One Stop Shop” for enterprise creation. But administrative bottlenecks, corruptions and several dysfunctions can extend the duration of the registration process to more than one month. Formalities with a notary remain an important part of the registration process.
Information on programs designed to attract investment into specific sectors is generally advertised through public media, and specific information can be obtained from the following sector ministries:
1) Agro-industry--Ministry of Agriculture (www.minader.cm/)
2) Energy--Ministry of Energy and Water Resources (MINEE) (http://www.minee.cm/)
3) Mining--Ministry of Mines, Industry and Technological Development (http://www.minmidt.net/)
4) Infrastructure (including batiments et travaux public, utilities, http://www.spm.gov.cm/index.php?L=1 )
6) Services (education, health, administration)
7) Manufacturing (http://www.minmidt.net/)
8) Telecommunication--Ministry of Post and Telecommunication (http://www.minpostel.gov.cm/)
9) Financial Services--Ministry of Finance (http://www.minfi.cm)
10) Tourism--Ministry of tourism and leisure (www.mintour.gov.cm)
Limits on Foreign Control and Right to Private Ownership and Establishment
The laws of Cameroon do not discriminate against foreign investors. Apart from basic standard immigration issues such as the residence visa, foreign entrepreneurs and investors are subject to the same rules and regulations as nationals. The government of Cameroon does not have statutory, de facto or indirect restrictions on foreign investors. Similarly, Cameroon laws do not impose outright prohibition on investment, equity caps, mandatory domestic joint venture partner, licensing restrictions, mandatory Intellectual Property (IP)/technology transfer requirements on foreign investors and entrepreneurs. However, internal dysfunctions and a week legal system can create practical obstructions. In strategic areas such as utilities (electricity and water) or oil and gas, the State often participates, through parastatals in oil and gas exploration ventures and electricity production and distribution. However, although the intervention of parastatals in some cases creates virtual state monopolies, they do not preclude the participation of the private sector.
Cameroon enacted major privatization policies in the 1990s and early 2000s with the assistance of the International Monetary Fund and the World Bank. The process has been stalled for over a decade, but market pressures continue to mount for additional privatization efforts. Data shows that Government of Cameroon had stakes in 171 entities in 2004. Since then, 30 companies had been privatized. An additional list of 10 companies have been scheduled for privatization since 2005.
In general, the government is moving away from privatization and towards Public Private Partnership (PPP) or some variation of outsourcing of/contractual management, with the State retaining some ownership of assets or of the business. In some cases, the State also prefers to take participation in ventures, such as mining companies, rather than permitting a wholly privately-owned company. The framework for PPP can be found at http://www.ppp-cameroun.cm/uploads/Telechargements/cadre-juridique-des-PPP-recueil-des-textes-en.pdf.
This is evident in the oil and gas sector, where the government has a dominant presence in extraction, refinement, distribution, and storage of oil and gas. Similar dominant positions exist in other sectors of the economy - particularly transport. The GRC controls the vast majority of transport infrastructure (airports, seaports, and road networks) through companies such as Cameroonian Airline Company (Camair-Co), Cameroonian Shipping Lines (CAMSHIP), Cameroon Shipyard and Industrial Engineering Ltd. (CNIC), and Cameroon Rail Network (CAMRAIL).
Moreover, in addition to the 119 state-owned enterprises featured in a recent survey by the International Monetary Fund (2015), the government of Cameroon has in recent years expanded its foothold in the most important economic sectors. In financial services, the GRC is creating two new banks to fund agriculture and provide finance for small and medium size enterprises. These new State-funded banks will compete with 13 already existing domestic and international private banks. In the energy sector, the government created the Cameroon Electricity Transport Company (SONATREL), a wholly owned State-owned company to manage electricity infrastructure. Similar plans are underway to allow the Electricity Development Corporation of Cameroon (EDC) to become a water marketer for hydroelectric dam operators. In manufacturing, the GRC is setting up a fertilizer plant with a German firm, an agricultural tractor assembly plant with India, and cement factories with Nigerian and Moroccan firms. In some sectors, this dominant position of the State could distort the competitive landscape.
Foreign investors can participate in the privatization programs. According to some analysts, of the 30 State-owned companies privatized by 2004, the majority (22) were won by foreign bidders. The public bidding on tender offers is transparent. They are advertised in the media, but the actual process of awarding contracts may still be tainted by corruption, particularly on very large scale projects. The listing of public tenders in the Cameroon Tribune newspaper and publication of which firms received the contract will not, in and of themselves, result in a fully transparent process of awards. Many other practical problems may continue years after the contract has been granted. This is the case in some large government projects where the government has accumulated arrears payments to major road construction companies causing delays and in some cases severe financial stress to the contractors.
Screening of FDI
The government of Cameroon examines incoming private foreign direct investment to ensure compliance with incentive requirements.
The National Competition Commission (of the Ministry of Commerce) is the official body in charge of competition regulations.