CAMEROON ECONOMIC UPDATE January 2011 l Issue No.1
TIME FOR THE LION TO WAKE UP? AN ECONOMIC UPDATE ON CAMEROON With a Focus on Telecoms
Poverty Reduction and Economic Management Unit Africa Region
January 2011
Time For The Lion To Wake Up? An Economic Update On Cameroon With a focus on Telecoms
Poverty Reduction Economic Management Unit Africa Region
Table of Contents ABBREVIATIONS AND ACRONYMS ....................................................................................I TIME FOR THE LION TO WAKE UP? ................................................................................... 2 Introduction ...................................................................................................................................... 2 Background ....................................................................................................................................... 3 Recent Economic Developments ...................................................................................................... 8 Outlook for 2011 ............................................................................................................................ 13 Telecoms sector .............................................................................................................................. 14
REFERENCES .................................................................................................................. 20 List of Figures Figure 1: Comparative Indicators and Economic Structure, 1980-2009 ............................................. 4 Figure 2: Fiscal and Poverty Developments, 1996-2009 ..................................................................... 5 Figure 3: Potential Contribution of Infrastructure .............................................................................. 7 Figure 4: Sectoral Contribution to GDP Growth, 2005-10 (In percent).............................................. 8 Figure 5: Contribution to Credit Growth by Sectors, 2010 (In percent) ............................................ 8 Figure 6: Oil Production, 2002-10, ...................................................................................................... 8 Figure 7: Production of Selected Food Crops. 2005 – 10 (Index 2005=100)....................................... 9 Figure 8: Number of Subscribers, 2008-10 ....................................................................................... 10 Figure 9: Selected Price Indices, 2006-10 ......................................................................................... 10 Figure 10: Non-Oil Revenue Mobilization (average 2007-09, in percent of non-oil GDP) ................ 11 Figure 11: Non-Oil Revenue, 2005-10 (In percent of non-oil GDP) .................................................... 11 Figure 12: Budget Allocations for Priority Sectors, 2005-09 ............................................................... 12 Figure 13: Budget Allocations for Priority Sectors, 2010 .................................................................... 12 Figure 14: Budget Allocations for Priority Sectors, 2011 (In percent of the budget) ......................... 13 Figure 15: Real Per Capita GDP, 2009-35 ............................................................................................ 14 Figure 16: ICT Development Index Countries Rank, 2008 .................................................................. 16 Figure 17: Evolution of Herfindahl-Hirschman Index in Cameroon, 2005-09..................................... 16 Figure 18: Mobile Cellular Sub-Basket, 2009 ...................................................................................... 17 Figure 19: Fixed Broadband Sub-Basket, 2009 ................................................................................... 17 Figure 20: International Internet Bandwidth, 2008 ............................................................................ 17 Figure 21: Mobile Market Penetration, 2008 ..................................................................................... 17
List of Tables Table 1: Infrastructure Access in Cameroon ........................................................................................ 6 Table 2: Cost of Infrastructure Services in Cameroon ......................................................................... 6 Table 3: Fiscal Performance, 2009-10 ................................................................................................ 12
ABBREVIATIONS AND ACRONYMS ACE
Africa Coast to Europe
ANTIC
Agence Nationale des Technologies de l’Information et de la Communication (national agency for information and communication)
ART
Agence de Régulation des Télécommunications (telecommunications regulatory agency)
ASYCUDA
Automatic System for Customs Data
BEAC
Banque des Etats d’Afrique Centrale (Central Bank of Central African States)
CAMTEL
Cameroon Telecommunication
CAR
Central African Republic
CEMAC
Economic and Monetary Community of Central Africa
CFAF
CFA Franc
CIMENCAM
Cimenteries du Cameroon (Cameroon’s cement company)
COBAC
Commission Bancaire de l’Afrique Centrale (Central Africa Banking Commission)
CPI
Consumer Price Index
DSCE
Document de Stratégie pour la Croissance et l’Emploi (Growth and Employment Strategy)
GDP
Gross Domestic Product
GNI
Gross National Income
HIPC
Heavily Indebted Poor Countries
HHI
Herfindahl-Hirschman Index
ICT
Information and Communication Technology
IMF
International Monetary Fund
MDG
Millennium Development Goals
MDRI
Multilateral Debt Relief Initiative
MINPOSTEL
Ministry of Posts and Telecommunications
PPP
Public Private Partnership
SAT3
South Atlantic 3
SDR
Special Drawing Rights
SNH
Société Nationale des Hydrocarbures (national oil company)
SONARA
Société Nationale de Raffinage (national refinery)
SSA
Sub-Saharan Africa
WACS
West Africa Cable System
WASC
West Africa Submarine Cable
WiMAX
Worldwide Interoperability for Microwave Access
January 2011 l Issue No.1
Cameroon Economic Update
TIME FOR THE LION TO WAKE UP?
Introduction With this Cameroon Economic Update, the
made in mobilizing greater non-oil revenues. In
World Bank is launching a program of short,
this regard, the recent successful issuance of
crisp and more frequent country economic
Cameroon’s first government bond to finance
reports. These Economic Updates will analyze
key infrastructure projects may be the harbinger
the trends and constraints in Cameroon’s
that the lion may be waking up.
economic development. Each issue, produced bi-annually, will provide an update of recent economic developments as well as a special focus on a selected topical issue.
The Cameroon Economic Updates are produced by the Poverty Reduction and Economic Management Unit of the World Bank Country Office in Cameroon by a team led by Raju Jan
The Economic Updates aim to share knowledge
Singh. The report’s special focus on the
and stimulate debate among those interested in
telecommunication sector was prepared by
improving
the
of
Jerome Bezzina. The Team also included James
Cameroon
and
enormous
Acworth, Simon Davies, Herminie Delanne,
potential. The notes thereby offer another voice
Amadou Nchare, Emeran Serge Menang Evouna,
on economic issues in Cameroon, and an
Menachem Katz, Faustin Koyassé, Peter Osei,
additional platform for engagement, learning
Gael Raballand, Rupa Ranganathan, Manievel
and change.
Seme, and Paula White. Mary Barton-Dock
economic unleashing
management its
This first edition of the Cameroon Economic Update is titled “Time for the Lion to Wake up? – An Economic Update of Cameroon, with a special focus on telecoms”. This title reflects the
(Country Director for Cameroon) and Jan Walliser (Sector Manager) provided guidance and advice, and have been an invaluable source of encouragement to the Team.
country’s difficulties in translating its huge
The
economic potential into faster growth and
consultations with Cameroon’s key policy
poverty reduction. An unfavorable business
makers and analysts, who provided important
environment,
inappropriate
insights, in particular the following institutions:
infrastructure and weak governance, still holds
the BEAC, the Ministry of Finance, the Ministry
the country back. Despite the fiscal space
of Economy and Planning, the Ministry of Posts
provided by debt relief, budgetary resources
and Telecommunications, ANTIC, ART and the
remain constrained by the limited progress
National Statistical Institute.
particularly
Team
also
benefited
greatly
January 2011 l Issue No.1 /
from
Page 2
Cameroon Economic Update
Background Cameroon is a linguistically and ethnically
Indeed, poverty rates have not declined in
diverse country whose geography ranges from
recent
Sahelian semi-desert in the north through
reductions obtained in 2006 under the HIPC and
grassland to equatorial forest in the south.
MDRI which have significantly improved the
While this diversity favors varied economic and
country’s debt sustainability and provided
agricultural activities, in reality, 70 percent of
additional fiscal space for focusing spending on
the population depends on agriculture and
poverty-reducing measures (Figure 2). Poverty
pastoral activities for their livelihood. Cameroon
rates in Cameroon virtually stagnated between
has one of the highest proportions of land area
2001 and 2007 – at close to 40 percent.
devoted to conservation in Africa, with some 14
Available data also illustrate large geographic
percent of the country’s territory designated as
and socio-economic disparities: while there was
national parks, reserves, sanctuaries, and
an improvement in poverty rates in urban areas,
conservation concessions.
the incidence of poverty in rural areas has
Cameroon is endowed with significant natural resources, including oil, high value timber species, and agricultural products (coffee, cotton, cocoa). Untapped resources include natural gas, bauxite, diamonds, gold, iron, and
years,
notwithstanding
the
debt
increased. According to the latest household survey conducted in 2007, some 55 percent of rural households are poor – compared with 12 percent of urban households – and about 87 percent of the poor live in rural areas.
cobalt. The Cameroonian economy is relatively
On its current trajectory, Cameroon is not likely
diversified, with services accounting for 44
to meet the Millennium Development Goals
percent
and
(MDGs), with the possible exception of universal
manufacturing 19 percent each, and oil and
primary education and gender equality. While
mining 7 percent.
primary education has improved, most key
of
2009
GDP,
agriculture
Nonetheless, economic growth has been lagging behind the average growth rate for sub-Saharan countries (Figure 1). Poor infrastructure, an unfavorable business environment, and weak governance hamper economic activity and make it difficult to reach the growth rates needed to reduce poverty in a sustainable manner.
indicators relating to child health and nutrition, however, have worsened since 1990. The Northern
regions
are
currently
reporting
exceptionally high levels of child malnutrition and
have
experienced
a
recent
cholera
epidemic. Nearly 70 percent of the urban population, and all of the poorest urban inhabitants, have limited access to public utilities or basic services.
January 2011 l Issue No.1 /
Page 3
Cameroon Economic Update Although Cameroon improved its ranking in the
(including Cameroon’s) is the poorest in all of
2010 Doing Business Indicators, following the
Africa. Despite major hydropower resources,
simplification in the procedures for creating new
Central Africa has the least developed power
enterprises, the country’s business environment
sector on the continent. At 4 kilometers per 100
remains difficult. On several key infrastructure
square kilometers of land, paved road density is
parameters,
a fraction of already low levels in West Africa.
Central
Africa’s
infrastructure
Figure 1: Comparative Indicators and Economic Structure, 1980-2009
Figure 1. Cameroon: Comparative Indicators and Economic Structure, 1980-2009 ... at the same time, the country has been relatively well diversified in recent years ...
Cameroon is one of the largest economies in Africa ...
Manufacturing, 19.2 %
South Africa Nigeria
Services, 44 %
Angola
Construction & utilities, 4.7 %
Ethiopia Kenya PPP valuation of country GDP, US$ billions, 2009
Tanzania
Oil & mining, 7.3%
Cameroon Ghana
Agriculture, 18.9 %
Côte d'Ivoire
Forestry & livestock, 5.9 %
Equatorial Guinea 0
100
200
300
400
500
600
... and oil still plays an important role…
(End-2009)
100
2009 GDP breakdown, percent of total … however its growth has lagged increasingly behind comparator countries.
100
1500
1500 Per Capita GDP, 1980--2008 (2000 US $)
Nonoil Oil
80
80 1200
60
60
40
40
20
20
1200 Lower-middle-income countries
900
600
600
Cameroon
0
2008
2004
2000
1996
300
1992
300
1988
Government Export earnings revenues
1984
GDP
1980
0
900
Sources: Cameroonian authorities; IMF staf f estimates, and World Bank (WDI Indicators).
January 2011 l Issue No.1 /
Page 4
Cameroon Economic Update Figure 2: Fiscal and Poverty Developments, 1996-2009 The HIPC/MDRI initiative reduced public debt substantially in terms of GDP… 70
… allowing for an increase in public investments
CFAF billions 700
60
600
50
500
40
400
30
300
20
200
10
100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0
0 2004 2005 2006 2007 2008 2009
… but overall poverty has not fallen as a share of population,
… and the gap between different regions has even increased.
70 Percentage Change in Poverty Rates
60
15
50
10
40
5
30
0
20
-5 -10
10
-15
0 1996
2001
Cameron
Urban
2007 Rural
January 2011 l Issue No.1 /
Page 5
Cameroon Economic Update Table 1: Infrastructure Access in Cameroon CEMAC Indicator
Units
Cameroon
SSA Benchmarks LICs
Resource Rich
MICs
Kms per 1,000 Classified road network density
people
Classified road network in good condition
%
1.2
2.4
1.3
2.3
7.1
36.0
32
35
29
48 799
MW per million Installed generation capacity
people
12.6
16
20
43
Access to electricity
% of population
46
30
33
46
50
Internet subscribers
Per 100 people
3.8
2.8
5.7
11.8
8.9
Mobile telephone subscribers
Per 100 people
32.3
28.9
25.6
37.4
57.3
Main telephone lines
Per 100 people
1.0
0.7
0.8
0.8
4.8
Access to piped water
% population
12.9
12
10.5
12
52.1
Access to flush toilet or septic tank
% population
8.1
6
4.9
11.2
40.8
Sources: Africa Infrastructure Country Diagnostic; US Department of Energy; World Bank IC4D. Roads and ICT data for 2008; energy and water data for 2004/5; electricity access for 2001. Benchmarks are for latest year available in the period 2000/05.
Table 2: Cost of Infrastructure Services in Cameroon Indicator
Units
Cameroon
Power tariff rates
US cents per Kwh 0.11
Container cargo handling charge
US$ per TEU
120-320
100-320
80-150**
Road freight tariff rates
US$- per tonne km 0.13*
0.13
0.04-0.13
0.01-0.04
Monthly mobile basket
US$
14.4
13-18
2.6-21.0
9.9
Monthly Internet basket
US$
48
48-110
6.7-148.0
11
220
CEMAC 0.11-0.30
SSA
Other DC
0.03-0.43
0.05-0.10
Sources: Banerjee et al. (2008); Eberhard et al. (2008); Minges et al. (2008); Teravaninthorn and Raballand 2008. Note: Ranges reflect prices in different countries and various consumption levels. Prices for telephony and Internet represent all developing regions, including Africa. * represents average for Central Africa; ** represents global best practice
The two ports in Central Africa – Douala and
due to cartelization and restrictive regulations in
Pointe Noire – which serve as transshipment
the trucking industry. In Cameroon, road
hubs for the
transport tariffs are in the order of US$ 0.13 per
region lag
significantly
in
performance well behind global port standards. By global standards and when compared with other parts of Africa, Central African consumers also
pay
exceptionally
high
rates
for
infrastructure services. The monthly internet basket in Cameroon is, for instance, four times higher than that in other developing countries. Surface transport in Central Africa is the most expensive in Sub-Saharan Africa, in large part
ton-kilometer, compared with US$ 0.05 per tonkilometer in southern Africa and well below US$ 0.04 per ton-kilometer in much of the rest of the developing
world.
High
freight
charges,
however, do not reflect high transport costs so much as high trucking profits that can be traced to the lack of competition in the industry. Infrastructure could contribute much more to economic growth in the future than it has in the
January 2011 l Issue No.1 /
Page 6
Cameroon Economic Update past. Simulations suggest that if Central Africa’s
croissance et l’emploi, DSCE). The principal
infrastructure could be upgraded to the level of
objectives of “Vision 2035” are to reduce
the
Africa
poverty to less than 10 percent, for the country
(Mauritius), the impact on real per capita
to become “a middle-income, industrialized
economic growth would be in the order of 5
nation, and to consolidate democracy and
percentage points of GDP. Improvements in
national unity”.
best
performing
country
in
power can impact growth by around 2 percentage
points.
Roads
and
telecom
infrastructure upgrades could contribute 1.5 percentage
points
each
to
growth.
For
Cameroon more specifically, the impact of improved infrastructure on real per capita GDP growth would be about 4½ percentage points (Figure 3).
The DSCE identifies weak productivity, a looming energy crisis, the adverse effects of the global financial crisis, food insecurity, stagnating poverty, and high unemployment as key challenges over the 2009-2019 period. It envisions significant investment in infrastructure to stimulate growth, notably in energy, roads, port
Figure 3: Potential Potential Contribution of Infrastructure Contribution of Infrastructure (in percent of annual per capita GDP growth) 6
infrastructure,
water
supply,
and
information technology. Productivity increases are sought in agriculture and livestock farming, mining, key value chains (timber, information
5 4
and communication technology, tourism), and in
3 2
the business climate. It looks to strengthen
1
human development and create more robust
0
Africa
North Africa
West Africa
East Africa Southern Africa
Central Cameroon Africa
formal sector employment. The DSCE also places
Source: Calderon (2009)
important emphasis on regional integration and Against this background, Cameroon’s main
on improving governance, including specific
development challenges are to stimulate growth
initiatives
and ensure its benefits are shared more
procurement,
equitably among the different income groups in
participation.
order to reduce poverty sustainably. The Government’s
development
objectives
are
outlined in “Vision 2035” – an ambitious document that serves as the long-term anchor for the country’s 2009 Growth and Employment
related
to
business
corruption, climate,
public
and
civic
As the country issued its first government bond in December 2010, the question remains: will Cameroon’s
new
strategy
have
a
more
successful fate than past plans? Is it time for the lion to wake up?
Strategy (Document de stratégie pour la
January 2011 l Issue No.1 /
Page 7
Cameroon Economic Update
Recent Economic Developments Growth Cameroon has been hit by the global economic and financial crisis over the past two years, as
Figure 5: Contribution to Credit Growth by Sectors, 2010 (In percent)
reflected in steep declines in the price and demand for its export commodities including oil, timber, rubber, cotton and aluminum (Figure 4).
Contributions to GDP Growth, 2005-10 FigureSectoral 4: Sectoral Contribution to GDP Growth, 2005-10 (In percent) (in percent) 5 4 3 2
Cameroon is a relatively small and mature oil
1
producer, where oil production is declining
0
-1
2005
2006
2007
2008
2009
(Figure 6). Depleting reserves, aging equipment,
2010
-2
and – more recently – postponements of some Primary
Secondary (excl. oil)
Tertiary
GDP Growth
Oil
Sources: Cameroonian authorities and staff calculations
development projects and investments because of the financial crisis explain this profile. The contribution of this sector to GDP growth has
However, following the upturn in the global
been mostly negative in recent years: oil
economy and measures taken by the authorities
production is estimated to have contracted by a
to stimulate domestic production, preliminary
further 16 percent in 2010 (to 23.2 million
indications suggest that economic activity is
barrels).
recovering. GDP growth in 2010 is estimated to Figure 6:OilOil Production, Production, 2002-102002-10, (In million barrels) (in mio barrels )
have reached 3 percent on the back of stronger non-oil activities, which expanded by about 4 percent (particularly
food crops, forestry,
construction, transport, and telecoms). Data on private
credit
growth
corroborate
this
40 35 30 25 20 15
assessment (Figure 5).
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: SNH
January 2011 l Issue No.1 /
Page 8
Cameroon Economic Update
Turning to non-oil activities, 2010 marks a rebound in the primary sector, with growth projected at about 3¾ percent. The recovery is led by strong growth in the timber sector, as
Figure 7: Production of Selected 2005 – 10 Production of Selected Food Food Crops,Crops. 2005-10 (Index 2005=100) (Index 2005=100) 180 160 140 120
100
well as in food crops. Timber was the sector
80 2005
most affected by the financial crisis. With the global
economy
recovering,
demand
2006 Soya
Rice
2007 2008 Sweet potato
2009 Maize
2010 Mil/sorgho
Sources: Cameroonian authorities and staff calculations
is
increasing both in traditional markets in Europe and North America, as well as the opening up of
The non-oil secondary sector is estimated to have grown by about 3¾ percent in 2010, driven
newer markets. Asian countries import mainly
by a continued expansion in construction
logs (around 25 percent of Cameroon’s timber
activities and a rebound in food processing.
exports), while the EU imports mostly processed wood (about 55 percent). This pick-up in the timber industry has translated into stronger activity in transport services, which are heavily
Construction is expected to be stronger for the second year in a row with growth expected at 9 percent. The slowdown in construction activities in 2008, due to a shortage in the supply of cement
reliant on logging.
has
CIMENCAM’s The production of food crops such as rice, soya,
been
reversed
(Cimenteries
du
following Cameroun)
creation of three additional production units.
sweet potato, and sorghum has increased – mainly a result of three factors (Figure 7): First, areas where these crops are produced have experienced
favorable
weather
conditions.
Second, higher prices for food crops have
Finally,
services
–
the
most
important
contributor to GDP growth in 2010 – have benefitted from a pick-up in timber-related transport and continued strong activities in
encouraged farmers to expand production. For
mobile telephony. Following a slowdown in
instance, rice fields have been rehabilitated in
2008, the sector rebounded in 2009 registering a
Yagoua, Lagdo, and Ndop. Finally, following the
growth rate of about 3½ percent, with 2010
2008 food and fuel riots, the government has implemented a number of supply-side measures to assist with the production of crops such as
growth at about 4 percent. In mobile telephony, greater
use
of
fiber
optic,
promotional
campaigns during the Soccer World Cup, and the
rice, corn, or potatoes. Increased efforts have
roll-out of new products are expected to have
been made to help farmers take advantage of
led to a 14 percent increase in subscribers in
business opportunities offered by sub-regional
2010 (Figure 8).
markets and allow a greater involvement of the private sector.
January 2011 l Issue No.1 /
Page 9
Cameroon Economic Update Selected Price Indices, 2006-10 (12 month average) Figure 9: Selected Price Indices, 2006-10
Figure 8:Number Number of Subscribers, 2008-10 of Subscribers, 2008-10 20%
10,000,000
15% 8,000,000
10% 5%
6,000,000
0%
4,000,000
-5% 2,000,000
Mainline
Mobile
Total (Headline) CPI
Food Price Index
Jun-10
Apr-10
Feb-10
Oct-09
Dec-09
Jun-09
Aug-09
Apr-09
Feb-09
Oct-08
Dec-08
Jun-08
Aug-08
Apr-08
Feb-08
Oct-07
Dec-07
Jun-07
2010 Sources: CAMTEL, Orange, MTN
Aug-07
2009
Apr-07
2008
Feb-07
Dec-06
-10%
0
Fuel Price Index
Sources: Cameroonian authorities and Staff calculations
Inflation
Fiscal performance
Price pressures remain contained (Figure 9).
Budgetary resources available for 2010 have
Average inflation in the first semester of 2010
fallen short of expectations, despite reform
amounted to 0.4 percent, down from 4.4
efforts. As a result, a presidential decree was
percent observed over the same period in 2009.
signed in September 2010 amending the 2010
This development is partly attributable to the
Budget, mainly reducing the capital budget.
policy measures to improve food supply carried out by the authorities. The stability of retail
Cameroon’s non-oil revenue effort is relatively
prices
also
modest, even when compared with other oil-
contributed to the containment of inflation.
producing countries (Figure 10). While revenues
Food and transport CPI components have
collected at customs have experienced positive
increased on average by 0.4 percent and 0.5
developments, the mobilization of non-oil
percent, respectively, over the first semester of
revenue in general has been disappointing
2010. By year-end, inflation is expected to pick
(Figure 11). The tax effort is expected to have
up on the back of higher food prices but still
continued its downward trend in 2010 on the
remain below the regional convergence criterion
back of increasing tax expenditure and unpaid
of 3.0 percent.
taxes.
for
petroleum
products
has
January 2011 l Issue No.1 /
Page 10
Cameroon Economic Update
Non-Oil Revenue Mobilization Figure 10: Non-Oil Revenue Mobilization (average 2007-09, in percent of (average 2007-9, in percent of nonnon-oil -oil GDP)GDP)
Figure Non-Oil 11: Non-Oil Revenue, Revenue, 2005-102005-10 (In(inpercent of non-oil GDP) percent of non -oil GDP)
25
14.4 14.2
20
14 13.8
15
13.6
10
13.4 13.2
5
13
0
12.8
Gabon
Angola
Congo, Rep.
Algeria
Cameroon
2005
2006
2007
2008
2009
2010
Sources: Cameroonian authorities and staff calculations
The first government bond issue was delayed to
management strategy that will guide budget
late in the year. Cameroon’s debt situation has
execution and debt management for 2011 and
substantially improved in recent years and the
ensure sustainability of public debt. A National
country is working toward accessing capital
Debt Committee has been instituted.
markets. The most recent joint IMF-World Bank low-income country debt sustainability analysis carried out indicates that Cameroon’s risk of debt
distress
remains
low,
opening
the
possibility for some limited non-concessional borrowing.
Despite these efforts, the government signed an agreement
with
three
commercial
banks
(Afriland First Bank, Société Générale du Cameroun, and Citibank) only in October 2010 to prepare the issuance of the first government bond. The subscription for the bond carrying a
Against this background and in light of the
5.6 percent coupon and maturing from 2012 and
country’s infrastructure deficiencies, Cameroon
2015 closed end-December and successfully
has stepped up efforts to strengthen its debt
mobilized the targeted CFAF 200 billion (about
management framework with a view to issue
1.8 percent of GDP). The proceeds from this
government debt to finance public investment.
operation will help the government finance key
The authorities have formulated a medium-term
infrastructure projects.
debt
management
strategy
for
central
government debt, which has been annexed to the 2010 budget law. They have also started producing
their
own
debt
sustainability
analyses. As part of the 2011 Budget, the authorities have elaborated a national debt
Against this backdrop, the overall fiscal balance (including grants and before arrears payments) is estimated to have deteriorated from a near balance in 2009 to a deficit of close to one percent of GDP in 2010 on the back of lower oil revenue and higher capital expenditure (Tab. 3).
January 2011 l Issue No.1 /
Page 11
Cameroon Economic Update The government used its SDR allocation (CFAF
In terms of composition, the recently-released
103 billion) to pay off its obligations to the
final accounts for 2009 indicate that allocations
SONARA,
to
to sectors identified as priority in the DSCE have
losses
seen their weight in the budget regain some
stemming from the government’s policy to
ground (Figure 12). Their shares in the 2010
freeze retail prices of petroleum products. At
budget remain, however, short of the objectives
the same time, new payment obligations are,
presented in the DSCE (Figure 13). Public
however, reported to have accumulated. Hence,
spending in the health sector, for instance,
the overall fiscal balance (before arrears
remains low by international standards: the
payments) is expected to be lower than
share of the health sector in total current
budgeted, with delays in issuing government
spending is estimated at about 8 percent, well
bonds likely to have translated into fewer
below the Abuja norm of 15 percent. It appears
arrears being settled and substantial pressure
that households bear the brunt of the financial
on the remaining government deposits at the
burden of health care, both in terms of out of
BEAC.
pocket and poor value for money.
the
compensate
national
the
oil
company
refinery, for
its
Fiscal Performance, 2009-10
Table 3: Fiscal Performance, 2009-10 (in CFAF Billions)
Revenue and Grants Revenue Oil revenue Non-oil Revenue Grants Total Spending Current Spending Capital Spending Overall Balance Arrears Overall Balance on a cash basis
2009 Est. 1926 1839 507 1332 87 1937 1496 441 -11 -17 -28
2010 LFR Jan.-Sept 1932 1399 1842 1346 407 340 1435 1006 90 53 2151 1447 1552 1134 599 313 -219 -48 -172 -153 -391 -201
Proj. 1936 1845 461 1384 91 2044 1545 499 -108 -158 -266
Sources: Cameroonian authorities, Staff's calculations
Figure 12: Budget Allocations for Priority Sectors, Allocations for2005-09 Priority Sectors, 2005-09
Figure 13: Budget Allocations for Priority Sectors, 2010
Allocations for Priority Sectors, 2010 (in percent of the budget)
(in percent of the budget) 30
50
25
40
20
30
15
20
10 5
10
0
0 2005
2006
2007
Education, Training, and Research
2008 Health
2009 Infrastructure
Sources: Cameroonian authorities and staff calculations
Education, Training and Research
Health
DSCE
Rural Development
Infrastucture
2010 Budget
Sources: Cameroonian authorities and staff calculations
January 2011 l Issue No.1 /
Page 12
Cameroon Economic Update
Outlook for 2011 It is expected that most of the developments
government bills and bonds in the amount of
observed in 2010 will carry over into 2011. The
CFAF 200 billion.
economic recovery would continue with growth reaching about 4 percent. The main drivers would
come
from
the
non-oil
economy
Figure 14: Budget Allocations for Priority Sectors, Allocations for Priority Sectors, 2011 2011 (In percent of the budget) (in percent of the budget)
20
(expanding by about 4½ percent), while oil
15
activities would continue to decline (by about 11
5
percent). More particularly, growth in the secondary (excluding oil) and tertiary sectors is
10
0 Education, Training and Research
Health
Rural Infrastucture Development
2010 Budget
expected to remain strong.
Energy
2011 Budget
Sources: Cameroonian authorities and staff calculations
Concerning the country’s fiscal position, the
A continued high stock of unsettled payment
2011 Budget aims at returning to a near balance
obligations will weigh on the execution of the
(including grants and before arrears payment).
2011 budget. The reduced level of remaining
This would imply an increase in the revenue
government deposits at the BEAC – although
effort, reversing the recent erosion in non-oil
somewhat replenished by the proceeds of the
mobilization. On the expenditure side, there
government bond – will provide a limited buffer
would be a substantial decrease in current
to revenue shortfalls or delays in tapping capital
spending with respect to the 2010 expected
markets.
outcome, only partly offset by higher public
elections approaching, pressure on spending
investment. On the composition of expenditure,
may become hard to resist. This implies that for
health, rural development, infrastructure, and
the coming year, the authorities should give
energy see their weight in the budget increase,
particular attention to (i) non-oil revenue
while education loses ground (Figure 14). The
mobilization, (ii) timely access to the capital
settlement of payment arrears as well as debt
market, and (iii) control on expenditure
service will, however, require further issuance of
commitments.
Furthermore,
with
Presidential
January 2011 l Issue No.1 /
Page 13
Cameroon Economic Update telecommunication services, cross-border and
Telecoms sector Simulations indicate that if the quality and prices for telecom services in Cameroon were to be brought to the level of Mauritius, real growth in GDP per capita would increase by 1.3 percent
international trade will continue to be very costly and thereby negatively affect job creation opportunities as well as expansion of production of goods and services.
annually. One third of the gap between the
The backbone infrastructure for information and
country’s past economic performance (status
communication technology (ICT) is still at an
quo) and its aspirations (Vision 2035) would be
early stage in Central Africa. Compared to other
covered (Figure 15). The country’s reluctance to
regional economic zones, CEMAC has the lowest
adopt the needed reforms, notably those that
access to internet and voice services in all of
would
is
Africa with Internet subscriptions standing at 2.8
potential
per 100 inhabitants. High tariffs may, in part,
allow
unfortunately
greater
competition,
endangering
those
benefits.
explain the low level of subscribers with the price of a prepaid mobile basket at about US$
Figure 15: Real Per Capita GDP, 2009-35 (In constant US $)
14, which is higher than in any other region.
3500
3000
Relative to other parts of Africa, Central Africa
2500
2000
suffers from not being connected to any
1500
1000
submarine fiber optic cable. At present, only
500
Angola, Cameroon and Gabon have direct access
0 2009
2014
2019
Scenario with Telecom reforms
2024
2029
2034
to the SAT3/WASC (South Atlantic 3/West Africa
Scenario Statu Quo
Scenario 2035 Vision
Source: Staff calculations
Submarine Cable) undersea fiber optic cable
Regional Context
which extends from Malaysia to South Africa
The isolation and high cost structure of Central
and then up the west Coast of Africa to Portugal
African economies have held back the limited
and Spain. The remaining coastal and landlocked
availability of affordable telecommunications
countries are completely bypassed and also lack
infrastructure. Several Central African countries
terrestrial fiber optic connections with the
have started taking steps to reduce the cost of
regional network which otherwise could enable
domestic access through market liberalization
some form of indirect access.
and
policy/regulatory
incomplete
reform.
liberalization
and
However, lack
of
infrastructure has meant that the cost of communication services remains high. Without access
to
affordable
and
high
quality
A number of cables are planned for the region, including Africa Coast to Europe (ACE) and the West Africa Cable System (WACS), which would provide direct access for most of the region’s non-landlocked countries. Several additional
January 2011 l Issue No.1 /
Page 14
Cameroon Economic Update undersea cables are also planned, such that by the year 2012 Central Africa, in all likelihood, will
Perspectives: The Central African Backbone (CAB) Project
be served by several submarine cables. For
The
example: WACS, linking South Africa with the
telecommunications
United Kingdom passing by the west coast of
terrestrial fiber connections to submarine fiber
Africa, and ACE, running from France to Gabon,
optical cable systems which link several Central
are both expected to be operational in 2011.
African countries and provide the region with
In order to benefit from those new projects, coastal countries must establish an international gateway landlocked
to
the
submarine
countries
require
cable
while
fiber
optic
connectivity with their coastal neighbors. Efforts in this regard are already underway. The first phase of the Central African Backbone Project (CAB), involving Cameroon, the Central African
CAB
network
is
network
a
regional
consisting
of
digital broadband access to the global fiber network. In addition to the installation of approximately 2,200 km of new fiber optic infrastructure, the planned broadband backbone would leverage the already existing 1,000 km of fiber optic infrastructure laying along the oil pipeline between Kribi (Cameroon) and Doba (Chad).
Republic (CAR), and Chad, aims to improve
The pre-feasibility study, which provided the
connectivity between the three countries by
basis for the design and framework for the CAB
leveraging fiber optic cables laying along the
project, determined that in order for the project
Chad-Cameroon oil pipeline.
to yield the expected economies of scale and
The arrival of new submarine infrastructure is expected to reduce consumer charges for internet
and
other
international
communications. It will provide access to a cheaper technology and increase competition in the supply of that technology. However, while access to the submarine cable is a necessary precondition for the reduction of prices for
cost efficiencies, the CAB network should be a shared infrastructure promoting an open access regime owned and operated according to PublicPrivate Partnership (PPP) principles. In May 2007, based on the findings of the study, the CEMAC heads-of-states issued a declaration calling for the establishment of the CAB under open-access and PPP principles.
critical ICT services, it alone will not suffice:
The CAB structure calls for the establishment of
increased levels of competition and access to
new regional telecom operator(s) for reselling
competitive gateways are also needed.
international, regional, and national capacity to existing national operators and service providers in the targeted countries at discounted rates in comparison to current pricing. As such, the CAB
January 2011 l Issue No.1 /
Page 15
Cameroon Economic Update Figure 16: ICT Development Index Countries Rank, 2008 ICT Developmet Index Countries Rank, 2008
network will increase competition for the provision of international and national capacity
160
in the form of new alternative infrastructure,
140 120
fiber optic backbone, and competition with
100
satellite and microwave connectivity.
80 60
The role of the government is to provide the
40 20
incentives for infrastructure and services to
0
Botswana
reach areas otherwise unattractive to the
Gabon
Nigeria
Gambia
Congo Cote Ivoire Cameroon
Source: ITU 2010
private sector if adopting a purely commercial approach. The private sector is expected to participate in financing and in installing, maintaining and operating the CAB network.
Due to the strong monopolistic situation in the fixed line market and the duopolistic situation in the mobile market, the market structure has been practically static since 2005, as indicated
Challenges and Opportunities in Cameroon Despite
the
penetration,
expansion of mobile
phone
Cameroon’s
sector
telecom
by the evolution of the Herfindahl-Hirschman Index (HHI Index)3. Evolution of Herfindahl-Hirschman Index in Index Figure 17: Evolution of Herfindahl-Hirschman Cameroon, 2005 09 in Cameroon, 2005-09
continues to face many legal, regulatory and
0.52
operational challenges the impact of which has
0.51 0.50
been to worsen the country’s ranking in the ITU
0.49
1
ICT Development Index (IDI) from rank 132 in
0.48
2007 to rank 138 in 2008 out of 159 countries2
0.47
(Figure 16).
0.45
0.46
2005
2006
2007
2008
2009
Source: Wireless Intelligence
CAMTEL currently retains a monopoly over longdistance service and is the main provider of most international bandwidth. The company is 1
The ICT Development Index (IDI) is a composite index made up of 11 indicators covering ICT access, use and skills. It has been constructed to measure the level and evolution over time of ICT developments taking into consideration the situations in both developed and developing countries. 2 In the case of Cameroon (like all 159 countries included in the index), it should be noted that the latest IDI results show that between 2007 and 2008, the country improved its scores, confirming the ongoing diffusion of ICTs and the overall transition to a global information society.
the only fixed line operator in Cameroon created 3
The Herfindahl-Hirschman Index or HHI, is a measure of the size of firms in relation to the industry and an indicator of the degree of competition among them. It can range from 0 to 1.0, moving from a very large number of very small firms to a single monopolistic producer. Increases in the HHI generally indicate a decrease in competition and an increase of market power, whereas decreases indicate the opposite.
January 2011 l Issue No.1 /
Page 16
Cameroon Economic Update (decree No. 98/198, September 8, 1998) and
subscribers at year-end 2008. The mobile
owned by the government of Cameroon, and
operators also provide broadband Internet
operating under the supervision of the Ministry
services
of Posts and Telecommunications (MINPOSTEL).
Interoperability
CAMTEL benefits from a monopoly on landlines,
protocol that provides fixed and fully mobile
the intercity transmission infrastructure and the
internet access.
international gateway. CAMTEL is a SAT3/WASC Consortium member and controls the SAT3 access point in Cameroon, thereby wielding tremendous power over the market for international bandwidth in the country.
through for
WiMAX Microwave
(Worldwide Access),
a
As a result of this market structure, consumers in Cameroon face high prices for telecom services (Figures 18 and 19). Mobile prices measured by the cost of a mobile cellular subbasket as a percent of GNI per capita are higher
Only two private mobile operators, Orange and
than in other countries with more mobile
MTN, are currently operating in Cameroon,
licenses (Kenya has four licenses, Nigeria nine,
representing more than 96 percent of all
Senegal three, Guinea and Ghana five each).
Figure 18: Mobile Cellular Sub-Basket, 2009 Mobile Cellular Sub-Basket, 2009 (in percent of GNI per capita)
Figure 19: Fixed Broadband Sub-Basket, 2009 Fixed Broadband Sub-Basket, 2009 (in percent of GNI per capita) 100 90 80 70 60 50 40 30 20 10 0
16.0 14.0 12.0 10.0
8.0 6.0 4.0 2.0 0.0
Cameroon
Kenya
Nigeria
Senegal
Guinea
Cameroon Ghana
Ghana
Zambia
Kenya
Angola Cote Ivoire Senegal
Source: ITU 2010
Source: ITU 2010
Figure 20: International Internet Bandwidth, 2008
Figure 21: Mobile Market Penetration, 2008
International Internet Bandwidth, 2008 (Bit/s per Internet User)
Mobile Market Penetration, 2008 (in percent) 100 90 80 70 60 50 40 30 20 10 0
3500 3000 2500 2000 1500 1000 500 0
Gabon
Senegal
South Africa
Ghana
Source: ITU 2010
Cote Ivoire
Rwanda Cameroon
Cameroon Senegal
Kenya
Equatorial Guinea
Rep. Congo
Cote Ivoire Gabon
Sources: Wireless Intelligence, December 2010, and staff calculations
January 2011 l Issue No.1 /
Page 17
Cameroon Economic Update The cost of international bandwidth is especially
Within the frame of the preparation of the
high – due to CAMTEL’s monopoly on access to
second phase of the CAB Program which focuses
the SAT3/WASC system.
on
the
financing
for
the
connectivity
infrastructure of the CAB network (see above), The quality of telecom services is also at stake (Figures 20 and 21). International bandwidth resources are scarce and penetration use is lower in Cameroon than its GDP per capita would suggest. In 2008, mobile teledensity in
Cameroon is currently in discussions with Chad and CAR regarding the establishment of a legal structure which will install and manage the CAB network in accordance with PPP principles and an open access regime.
Cameroon (at 34.53 per 100 people) was below the performance of several Central African
The expected benefits to Cameroon for adopting
countries, such as the Republic of Congo (54.84),
an open access regime under PPP to promote
Equatorial Guinea (49.01), and Gabon (94.35).
competitiveness and maximize the ICT potential so that the country can act as a regional hub
From the legal and regulatory perspective, the
could be the following:
country has also been confronted with many issues including the need to (i) harmonize the
The award of a new mobile license to a private
ICT institutional framework in order to provide
operator should provide significant fiscal
coherence in the operations of the regulatory
revenues for the Government and put
agency
considerable pressure on existing operators to
(ART),
the
national
agency
for
information and communication technologies (ANTIC),
MINPOSTEL
and
all
the
other
stakeholders in the sector, and (ii) overhaul the Telecommunications Act of July 1998 (98/014) in order to incorporate the tremendous changes that have taken place in the sector and provide a forward-looking
legal
instrument
that
lower tariffs. The removal of any form of exclusivity like spinning off the SAT3 unit from CAMTEL and connecting
to
alternative
submarine
international cable systems like ACE and WACS would unleash the industry’s potential.
is
comprehensive, stable and realistic pursuant to
The harmonization of regulatory policies
which the industry can plan, build and develop.
within CEMAC and even getting it to act as a
On December 6, 2010, the parliament adopted a
clearinghouse on telecoms regulation for
new
(Bill
Central Africa just as the COBAC does for the
Regulating the Electronic Communications in
banking sector would provide the country with
Cameroon) that is expected to be promulgated
a leading role at the regional level and greatly
shortly by the President.
enhance the regional integration process.
legal
and
regulatory
package
January 2011 l Issue No.1 /
Page 18
Cameroon Economic Update An active participation with the governments
the financing needed for the implementation
of CAR and Chad in the process to design a
of CAB and the establishment of the special
commonly agreed structure for CAB based on
purpose vehicle to operate, maintain and
PPP principles and open access would
manage the designed network.
facilitate and activate the process to mobilize
January 2011 l Issue No.1 /
Page 19
Cameroon Economic Update
REFERENCES Calderón, C. 2009, “Infrastructure and Growth in Africa”, Policy Research Working Paper 4914, World Bank, Washington, D.C. Eberhard, A., V. Foster, C. Briceño-Garmendia, F. Ouedraogo, D. Camos, and M. Shkaratan. 2008. “Underpowered: The State of the Power Sector in SubSaharan Africa.” AICD Background Paper 6, Africa Region, World Bank, Washington, DC. Banerjee, S., Wodon, Q., Diallo, A., Pushak, T., Uddin, H., Tsimpo, C. and Foster, V. 2007, Access, Affordability, and Alternatives: Modern Infrastructure Services in Africa. AICD, Background Paper, World Bank, Washington, D.C. Teravaninthorn, S. and Raballand, G. 2008. Transport Prices and Costs in Africa: A Review of the Main International Corridors. AICD, Working Paper, World Bank, Washington, D.C. Minges, M., Briceño-Garmendia, C., Williams, M., Ampah, M., Camos, D. and Shkratan, M. 2008. Information and Communications Technology in SubSaharan Africa: A Sector Review. AICD, Background Paper, World Bank, Washington, D.C. http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTINFORMATIONANDCOM MUNICATIONANDTECHNOLOGIES/EXTIC4D/0,,menuPK:5870641~pagePK:6416 8427~piPK:64168435~theSitePK:5870636,00.html
January 2011 l Issue No.1 /
Page 20
