The business landscape in Cameroon is as vast and varied as it is densely scattered with actual and potential opportunities. It is vast because the business opportunities are myriad. Varied because these opportunities are spread over the different sectors of activity, though unevenly. Cameroon being a developing country, the primary sector is largest while the tertiary sector is most modest. This pattern of relationship between the sectors is shifting, and shifting in favour of the primary sector.
The government regulates all the sectors. These regulations vary accordingly to activity. And, depending upon the specificity of the sector, some administration may be involved. For instance, the Ministry of Health for dealers in medicaments and pharmaceuticals ; the Ministry of Agriculture for dealers in food items ; the Ministry of Forestry for dealers in timber. The Ministry of Industrial and Commercial Development has a general trade schedule which all business concerns, whether in the industrial or commercial sector, goods or service industry, have to follow. In addition the Cameroon Labour and Social Insurance Law is in force. There are also exigencies such as general taxation, customs, business licences, and other forms of licence to reckon with when doing business in Cameroon.
This subject is very broad and it is important for us to indicate in advance the angles from which we shall approach it. We shall mention the law applicable when doing business in Cameroon, enumerate the sundry facts and figures that would bear on business in Cameroon, examine the investment code lay emphasis on the liberal spirit of the code and the effort of the legislator to promote export trade, visit the free trade zone, shed light on the salience of the banking sector, view the telecommunications state of the art in Cameroon, state the conditions for setting up a business, present the physical environment under which you do business in Cameroon, look at the intellectual property aspect, weigh the importance of maritime transportation and conclude with one or two statements on the political environment.
From a rather general perspective, doing business in Cameroon, the principles of Commercial Law (involving agency and sale of goods), Contract Law, Maritime Law (involving the Hamburg Rules, 1978), Industrial and Intellectual Property Law, the Law of Financial Institutions, the Law of International Trade, Company Law, Insurance Law (where the CIMA code would be in reference), Land Law and Conveyancing Practice, and Business Law (of all) would be applicable only with adaptations here and there to local legislative realities.
Doing business in Cameroon reference to Foreign Law would also be made. It would however need to be proved. It is trite that Cameroon is made up of two countries in Private International Legal jargon.
BASIC FACTS AND FIGURES THAT WOULD BEAR ON BUSINESS IN CAMEROON
Doing business in Cameroon, the investor, foreign or local, would have to bear in mind a number of factors including: Demographic, Geographical, Economic, Educational and Training, Financial, Socio-cultural, Politico-environmental and Regulatory factors.
With a population of more than 12,800,000(see endnote 1) inhabitants, Cameroon is amongst the 13 most thickly populated countries in an Africa of 53 countries. Cameroon in customs and economic terms is co-extensive with UDEAC ( The Central African Customs and Economic Union). (see endnote 2) Therefore the potential and indeed actual consumer population is upwards of 25 millions. This would provide motivating demand for any product.
Cameroon has a coastal location in the elbow of Africa. This makes it an important crossroad in UDEAC. Extending from the Gulf of Guinea to Lake Chad, Cameroon cuts across the vegetation of Africa, i.e., rain forest, Savannah, sahel. It is an agricultural nation which is finding a foothold in industry. The country is rich in timber, cocoa, coffee, bauxite, gold, iron, nickel, chromium, uranium, petroleum, fisheries, game, textiles and tourism amongst others.
Cameroon has a pace-setting school enrollment rate in the sub-region. With a high degree of food self-sufficiency, about one-third of its population is active. Compared with international standards, minimum wage is low.
Cameroon has a stable currency (the F.CFA) in the Franc zone. This currency has a fixed parity with the French Franc as its nominal value does not change with the economic wind. Indeed, since 12th January 1994 1FF has always been equal to 100 FCFA.
Made up of a hospitable yet business-like people, Cameroon is a bicultural state with two official languages (English and French), the former being the main Lingua Franca in the business community of the world. The religious life of the people of Cameroon is animated by Christianity and Islamism in the main.
For a peace-loving people, Cameroon has a stable, liberal and democratic political system. The governments transparent intention to liberalize and democratize the economy even more, is more felt than feigned.
Cameroon made its first stand-by agreement with the IMF in 1988. Since then, the government has succeeded in implementing a stabilization and economic recovery plan as made concrete by the following steps: definition of an industrial master plan which constitutes a coherent instrument for short term control of industrialization, measures aimed at liberalizing the economy, privatization of some public and para-public enterprises, the revision of the tax system, the creation of a free trade zone, the implementation of the new investment code, and the easing of administrative procedures. The investment code has an attractive administrative package for investors. For instance, there is a one-stop shop for concerns involved in business in the free trade zone.
THE INVESTMENT CODE
By ordinance N° 90/7 of 18/11/90 a new investment code was instituted in Cameroon.
Its all-embracing purpose is to encourage and to promote productive investment in the country. To achieve this it aims at stimulating the creation and development of economic activities which are geared toward :
a) Valorization of Cameroon's natural resources as a priority;
b) creation of new jobs ;
c) production of competitive goods and services for the home and foreign markets ;
d) increase in the export of manufactured goods ;
e) transfer and adaptation of appropriate technology ;
f) protection of the environment ;
g) improvement of the quality of life in urban and rural areas ;
This investment code offers alluring conditions to investors in the form of guarantees.
LIBERAL SPIRIT OF THE INVESTMENT CODE
In the very opening chapter of this code the legislator calls on all natural or corporate bodies, of Cameroonian or foreign nationality, irrespective of their place of residence, to undertake and engage in economic activity in Cameroon. It goes further to operationalise this charter of rights in the following feel-at-home terms:
a) Foreign nationals have the right to enjoy the same liberties and protection of the law as those granted Cameroonian natural persons or corporate bodies.
b) Foreign nationals have the right to enjoy the manifold rights governing property ownership, concessions and administrative authorizations.
c) Foreign nationals have a right to compensation in the case of expropriation after proper evaluation by an independent third party.
d) Foreign nationals have the right to enter into and execute any contract that they consider to be in their interest, especially as concerns financial and commercial matters.
e) Foreign nationals have the freedom of entry into residence, movement and exit from the national territory. This includes corporate bodies duly established in Cameroon, their partners and managers and foreign staff with duly approved contracts of employment as well as members of their legitimate families.
f) Foreign investors have the right to hire and fire labour in compliance with the labour and social insurance legislation in force.
g) Foreign investors resident in Cameroon are guaranteed the right to freely transfer proceeds of all kind from the invested capital and, in case they cease to operate, the balance of the liquidation. They are also free to transfer out of Cameroon funds representing normal and current payments for suppliers and services effectively performed, particularly in the form of royalties and sundry remunerations.
Well, all these attractive conditions can only fall into shape when the foreign investor has a residence permit.
EFFORT TO PROMOTE EXPORT
In the attempt to enable Cameroon improve upon its balance of trade, the investment code stipulates that undertakings regularly established in Cameroon whose finished or semi-finished products are processed in Cameroon shall be exempted from export, insurance and transportation charges in respect of their products meant for export. In the same connection, such establishments which export all or part of their industrial products shall be granted export incentives. These concerns shall further be encouraged by being exempted from all duties and taxes on the purchase of national raw material of local or UDEAC origin, or water and electricity for industrial use, and on intermediary products of local or UDEAC origin that are used in whole or in part for the production of finished products, including the raw materials that are meant for the packaging of finished products.
In the same year that the new Investment Code was passed, the government of Cameroon, in ordinance (N° 90/001 of 29/1/90) created an Industrial Free Trade Zone, the lever that lifts the economies of developing countries with a forward-looking aspect.
THE FREE TRADE ZONE
The Law creating the free trade zone in Cameroon is to the effect that firms exporting at least 80% of their products qualify for an extensive package of fiscal, regulatory and customs incentives. Industrial estate developers and operators in Cameroon are also eligible for this same package of benefits.
The free trade zone programme is a concept applicable to locations throughout the country although with headquarters in Douala, the economic nerve center of Cameroon. It provides the opportunity for the setting up of "Industrial Park" free zones and "Single Factory" or "Special" free zones in the country. The opportunity for single factory free zones is granted to agro-industrial firms to enable them to locate near the source of their raw materials.
The scope of activities in the free trade zone ranges from typical manufacturing, through assembly operations to financial and information processing services.
There are other pieces of legislation which go to foster doing business in Cameroon. They include :
- Decree N° 91/215 of May 2, 1991 laying down the terms and conditions for the implementation of the investment code.
- Law N° 90/031 of 10/8/90 organizing commercial activities in Cameroon.
- The Law on the restructuring of public and para public companies.
- The Law on the privatization or liquidation of public and para public companies.
- Law N° 90/007 of 14/8/90 implementing the labour code. This law is of special interest to the investor as it sanctifies the freedom of contract, while favouring the employer in large measure. Here state intervention in labour relation is much reduced.
THE BANKING SECTOR
The banking sector in Cameroon has been restructured to favour the growth of business after the recession of the last more-than-one decade. This has been achieved through legislation which is designed to ensure the stability of the banking sector.
Since the enactment of the 1995 ordinance, there is no restriction on ownership, hence the existence of 100% privately owned banks and other sorts of financial institutions. There is also the possibility of operating offshore banking in Cameroon today.
Moreover, Cameroon is a member of the multilateral Investment Guarantee Agency (MIGA), a division of the world bank created in 1988 to promote the flow of private foreign direct investment to developing countries. This it does by providing political risk insurance coverage against the major non-commercial risks of war and civil disturbance, currency transfer and expropriation. MIGA also provides technical assistance to member countries to enable them attract foreign investment.
All cheques issued by banking institutions in Cameroon are crossed and not endorsable except to a financial institution. This is the gist of the communiqué of December 6, 1996 issued by the Banking and Credit / Finance Association, APECAM. It is actually being enforced. Because it restricts the drawing and issuing of cheques, it breaks the circulation of money. Yet for all intents and purposes it was designed to guarantee security. It does.
Depending upon the business, there are formalities for bank transfers, whether for the purchase of goods or for the payment of dividends to foreign investors.
In sum, Cameroon is a fertile ground for foreign investors to do business if guided by the foregoing indicators and the following :
- Inland transportation of goods is made safe by the fact that the road network is mostly hard surfaced and not covered with bitumen.
- Although located at the estuary of river Wouri thus requiring regular dredging, the capacity of the Douala sea port is not put to question.
- There are three international airports in Douala, Garoua and Yaounde-Nsimalen with regular flights.
- The CIMA code is an instrument of effective insurance coverage for business and allied risks.
- As the judiciary is growing increasingly independent, the delay of justice is becoming more and more an aberration.
- The Private Bar is growing in numerical strength and quality.
- The fourth Estate, the press that is, has been freed.
- The Head of State, His Excellency PAUL BIYA, in his 1998 new year message took a pragmatic turn bringing more hope for economic recovery.
- The present government is headed by a technocrat in politics, a go-getting Premier, Mr. Peter Mafany Musonge.
Yet doing business in Cameroon, the investor would also need a sixth sense. This is where the human factor comes into play, His capacity to master the unknown factor, parasitic variables which cause business fortunes to vary that is, would in large measure depend upon his rating on the reactivity - proactivity continuum.
To the foreign investor especially, due to the limitations impose by length of write-ups this is nothing more than a cursory view of the whole picture of doing business in Cameroon. Nevertheless, feel free to get back to us for details as to aspects which are of particular interest to you.
(1) 1987 general census figures
(2) Including Central African Republic, Gabon, Chad, Equatorial Guinea and Congo Brazzaville.
NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought for specifics.
For further information contact Mr Nico Halle, Tel: +237 42 64 79 or Fax: +237 43 26 34.