Abstract
Since the devaluation of the CFA franc in January 1994,2 Cameroon has experienced a major upturn in economic activity. After nearly a decade of economic decline, real GDP grew by more than 3 percent in 1994/95 (July/June) and by an estimated 5 percent in 1995/96. The turnaround in economic activity resulted from improvements in the country’s external competitiveness and was most pronounced in the export-oriented sectors (i.e., cash crops, wood processing and agro-industry), as well as in the import-substitution sectors. After an initial surge in consumer prices in the wake of the devaluation, inflation, on an end-of-period basis, decelerated to 13 percent in 1994/95 and to 4 percent in 1995/96, reflecting an abundant food supply and a strict containment of unit labor costs. Fiscal performance strengthened considerably, with government revenue rising by about 4 percentage points of GDP between 1993/94 and 1995/96, and total expenditure declining by 6 percentage points, to 17 percent of GDP in 1995/96. During the last few years, the authorities have embarked upon a broad agenda of structural reforms, including civil service and administrative reform, privatization, and financial sector restructuring, but progress in these areas has been considerably slower than originally envisaged.
A. Introduction
Since the devaluation of the CFA franc in January 1994,2 Cameroon has experienced a major upturn in economic activity. After nearly a decade of economic decline, real GDP grew by more than 3 percent in 1994/95 (July/June) and by an estimated 5 percent in 1995/96. The turnaround in economic activity resulted from improvements in the country’s external competitiveness and was most pronounced in the export-oriented sectors (i.e., cash crops, wood processing and agro-industry), as well as in the import-substitution sectors. After an initial surge in consumer prices in the wake of the devaluation, inflation, on an end-of-period basis, decelerated to 13 percent in 1994/95 and to 4 percent in 1995/96, reflecting an abundant food supply and a strict containment of unit labor costs. Fiscal performance strengthened considerably, with government revenue rising by about 4 percentage points of GDP between 1993/94 and 1995/96, and total expenditure declining by 6 percentage points, to 17 percent of GDP in 1995/96. During the last few years, the authorities have embarked upon a broad agenda of structural reforms, including civil service and administrative reform, privatization, and financial sector restructuring, but progress in these areas has been considerably slower than originally envisaged.
B. Production and Prices
During the past two years, real GDP grew by a cumulative 8 ½ percent, led primarily by strong performance in the primary sector. Agricultural growth was broad based. Food crops grew by a cumulative 16 percent and cash crop production (primarily coffee, cocoa, and cotton) rose by 27 percent. Strong gains were also recorded in the forestry sector, with logging increasing by 24 percent. In the secondary sector, non-oil real output grew by 12 percent, owing to the pickup of manufacturing and the continued growth in the utility and housing subsectors. Manufacturing output, which declined by 16 percent in 1993/94, rose by a cumulative 7 percent in 1994/95-1995/96, led principally by expansion in textile and leather production, as well as food processing. The tertiary sector also exhibited firm growth, with output rising by a cumulative 7 percent.
Real Sector Developments, 1993/94-1995/96
Real Sector Developments, 1993/94-1995/96
| 1993/94 | 1994/95 | 1995/96 | ||
|---|---|---|---|---|
| (Percentage change) | ||||
| Real GDP | -2.5 | 3.3 | 5.0 | |
| Consumer prices (end of period) | 33.8 | 13.4 | 4.4 | |
| (In percent of GDP) | ||||
| Consumption | 82.1 | 81.4 | 81.9 | |
| Investment | 15.3 | 14.5 | 16.0 | |
| Private | (14.0) | (13.3) | (15.2) | |
| Government | (1.3) | (1.2) | (0.7) | |
Real Sector Developments, 1993/94-1995/96
| 1993/94 | 1994/95 | 1995/96 | ||
|---|---|---|---|---|
| (Percentage change) | ||||
| Real GDP | -2.5 | 3.3 | 5.0 | |
| Consumer prices (end of period) | 33.8 | 13.4 | 4.4 | |
| (In percent of GDP) | ||||
| Consumption | 82.1 | 81.4 | 81.9 | |
| Investment | 15.3 | 14.5 | 16.0 | |
| Private | (14.0) | (13.3) | (15.2) | |
| Government | (1.3) | (1.2) | (0.7) | |
Domestic demand expanded by 10 percent in real terms on a cumulative basis during 1994/95-1995/96, reflecting strong increases in both consumption and investment, which rose in real terms by 11 percent and 5 percent, respectively. Private consumption increased by 2 percentage points of GDP between 1993/94 and 1995/96, while public consumption declined from 10 percent of GDP in 1993/94 to 8 percent in 1995/96, reflecting budgetary constraints in recent years. The expansion of domestic investment originated primarily from private investment, which rose by more than 1 percentage point of GDP, to 15 percent, during 1994/95-1995/96, while public investment declined by more than half a percentage point.
In the wake of the devaluation, inflation, as measured by the consumer price index (CPI), surged to 34 percent on a year-on-year basis in 1993/94, but decelerated to 13 percent in 1994/95 and to 4 percent by the end of 1995/96. The sharp deceleration in inflation, which was aided by the relatively abundant supply of domestic goods and services in the economy, as well as a strict containment in unit labor costs,3 4 suggests that corrective price adjustments following the devaluation have worked themselves through the economy.
C. Fiscal Developments
Fiscal performance in 1994/95-1995/96 represented a major improvement over 1993/94 and marked a reversal of the sharp deterioration in the fiscal situation during the 1988/89-1993/94 period. Prior to the January 1994 devaluation of the CFA franc, Cameroon experienced a secular decline in the revenue/GDP ratio and, in spite of significant reductions in noninterest spending, and, in particular, drastic cuts in government wages in 1993, the primary budget balance and the overall fiscal deficit worsened considerably. In 1994/95, the government introduced a number of tax measures in the aftermath of the devaluation. It implemented the indirect tax and customs tariff reforms adopted by the UDEAC,5 raised the normal turnover tax (TCA) rate from 12.5 percent to 15 percent; introduced two specialized units in Douala and Yaoundé for the collection of the TCA from the largest enterprises, and extended the common tax and tariff regime to include public enterprises. As a result of these measures and reflecting the economic recovery that followed the devaluation, non-oil government revenue rose by 58 percent in 1994/95. This performance was achieved in spite of pervasive tax evasion and discretionary tax exemptions, which continued to plague customs duty collection. In addition, government oil revenue reached 2.6 percent of GDP, substantially higher than in 1993/94 (2.2 percent), as the entire surplus of the national oil company (SNH) was transferred to the central government budget. Thus, total revenue increased as a share of GDP from 10 percent in 1993/94 to 13 percent 1994/95.
Fiscal Developments, 1993/94-1995/96
Excluding foreign-financed investment.
The negative sign indicates a deficit.
Fiscal Developments, 1993/94-1995/96
| 1993/94 | 1994/95 | 1995/96 | ||
|---|---|---|---|---|
| (In percent of GDP) | ||||
| Revenue | 10.1 | 12.9 | 14.3 | |
| Oil | 2.2 | 2.6 | 3.1 | |
| Non-oil | 7.9 | 10.3 | 11.2 | |
| Noninterest expenditure 1/ | 11.6 | 9.2 | 9.0 | |
| Primary balance 1/2/ | -1.5 | 3.7 | 6.6 | |
Excluding foreign-financed investment.
The negative sign indicates a deficit.
Fiscal Developments, 1993/94-1995/96
| 1993/94 | 1994/95 | 1995/96 | ||
|---|---|---|---|---|
| (In percent of GDP) | ||||
| Revenue | 10.1 | 12.9 | 14.3 | |
| Oil | 2.2 | 2.6 | 3.1 | |
| Non-oil | 7.9 | 10.3 | 11.2 | |
| Noninterest expenditure 1/ | 11.6 | 9.2 | 9.0 | |
| Primary balance 1/2/ | -1.5 | 3.7 | 6.6 | |
Excluding foreign-financed investment.
The negative sign indicates a deficit.
Tight spending policies resulted in a fall of noninterest expenditure (excluding foreign-financed investment) to the equivalent of 9 percent of GDP in 1994/95, from 12 percent in 1993/94, owing partly to the effects of the substantial wage cuts in 1993 and to the decline in restructuring expenditure. However, the overall composition of expenditure remained unbalanced. Domestically financed investment did not increase in 1994/95 and the lack of counterpart funds, together with the poor record in project implementation, continued to hamper disbursements of external project assistance. Yet there was an overall strengthening of the fiscal position in 1994/95, reflected in the improvement of the primary fiscal balance, which turned from a deficit of about 2 percent of GDP in 1993/94 to a surplus of 4 percent in 1994/95.
Fiscal performance improved further in 1995/96, with the primary budget surplus rising more than 6 percent of GDP and the overall fiscal deficit narrowing by 2 percentage points. Non-oil revenue increased by 20 percent, partly reflecting the implementation of a number of new tax measures. Beginning in February 1996, the authorities expanded the responsibility of the private import certification company to include the assessment and collection of duties at the two largest customs offices of Douala and Yaoundé, which allowed for a rise in international trade taxes of some 28 percent. In addition, on July 1, 1995, the reduced and normal rates of the turnover tax (TCA) were raised from 5 percent and 15 percent to 8 percent and 17 percent, respectively. However, a loophole in the regulations governing the TCA and excise taxes permitted certain industrial companies (i.e., the breweries) to exclude their distribution activities from taxation and the performance of these taxes fell short of budget forecasts by CFAF 50 billion. In spite of a slight decline in production, oil revenue increased in 1995/96 to 3 percent of GDP, as world prices picked up. The transfers to the budget from the oil sector could have been even higher if the national oil refinery (SONARA) had not accumulated arrears in the amount of CFAF 32.5 billion to the SNH. Overall, total government revenue increased by 23 percent to reach over 14 percent of GDP.
While the wage bill declined further in 1995/96, reflecting the implementation of the organizational and staffing plans (POEs), total noninterest current expenditure exceeded budget appropriations on account of higher outlays on defense (triggered by the conflict in the Bakassi peninsula), the hosting of the Thirty-Second Summit of the Organization of African Unity, and higher transfers to the education sector. In addition, about CFAF 6 billion is believed to be related to the holding of the municipal elections and to statistical discrepancies. Capital expenditure also increased, mainly on account of restructuring expenditures, which reached CFAF 13 billion, while domestically financed investment declined slightly, to CFAF 18 billion. Finally, foreign-financed investment decreased substantially, from about CFAF 25 billion in 1993/94 and 1994/95 to CFAF 14 billion in 1995/96.
D. Monetary and Credit Developments
Monetary developments in 1994/95 were characterized by a recovery in money demand, a modest expansion of credit to the private sector, and a strengthening of the net foreign assets position of the banking system. Following a significant reconstitution of money balances in the second half of 1993/94 in the wake of the devaluation, broad money continued to expand by 6 percent in 1994/95.6 Domestic credit increased by 4 percent in 1994/95, with net credit to the central government and to the private sector both rising by 3 percent.7 The pickup in credit to the private sector reflected not only the easing of lending conditions, but also the general upturn in economic activity. After an initial interest rate increase following the devaluation, the BEAC progressively eased credit conditions by lowering its intervention rate from 14 percent in March 1994 to 7.75 percent in December 1994. The intervention rate was subsequently raised to 8 percent in March 1995 and further to 8.75 percent in June 1995.
Monetary Developments, June 1994-June 1996
Monetary Developments, June 1994-June 1996
| 1994 | 1995 | 1996 | |||
|---|---|---|---|---|---|
| June | June | June | |||
Est. | |||||
| (Annual percentage change) | |||||
| Net foreign assets | -43.3 | 3.9 | -1.8 | ||
| Net domestic assets | -24.6 | 1.5 | -2.4 | ||
| Of which: government credit, net | (14.6) | (8.6) | (-4.5) | ||
| private sector credit | (-9.7) | (3.4) | (5.0) | ||
| Broad money | 17.7 | 6.1 | -5.1 | ||
Monetary Developments, June 1994-June 1996
| 1994 | 1995 | 1996 | |||
|---|---|---|---|---|---|
| June | June | June | |||
Est. | |||||
| (Annual percentage change) | |||||
| Net foreign assets | -43.3 | 3.9 | -1.8 | ||
| Net domestic assets | -24.6 | 1.5 | -2.4 | ||
| Of which: government credit, net | (14.6) | (8.6) | (-4.5) | ||
| private sector credit | (-9.7) | (3.4) | (5.0) | ||
| Broad money | 17.7 | 6.1 | -5.1 | ||
Monetary developments in 1995/96 were characterized by a weakening of money demand, a slight deterioration in the net foreign assets position of the banking system, and a pickup in credit to the private sector. Broad money contracted by 5 percent by end-June 1996, with currency in circulation and deposits falling by IS percent and 4 percent, respectively. In turn, the velocity of circulation increased substantially to 6 in 1995/96 compared with 5 in 1994/95. These developments reflected in part the general lack of confidence in the domestic banking system, given the severe liquidity and solvency problems facing most banks.8 Net credit to the central government and the public sector declined by 2.3 percent and 1.2 percent, respectively, in 1995/96. Credit to the private sector, however, increased by some 6 percent over the period, spurred on by the lower rates of interest and buoyant economic activity. On February 6, 1996, the BE AC introduced a system of weekly auctions of central bank bills, which replaced the special deposits facility for commercial banks.
More than two-thirds of the stock of commercial bank credit in Cameroon in 1994/95 and 1995/96 was short-term in nature. As a share of total credit outstanding, short-term credit averaged 70 percent at end-June 1994 and end-June 1995, and declined slightly to 67 percent by end-April 1996. More than one-half (56 percent) of the stock of short-term credit was for manufacturing and commercial activities. Medium- and long-term credit constituted the remaining one-third of the stock of credit, with almost 60 percent of these loans being directed to the services sector.9 Manufacturing, commerce, and loans to individuals each consumed 10 percent of the remaining stock of medium- and long-term credit.
E. External Sector Developments
Cameroon’s external position strengthened in 1994/95 arid 1995/96, owing to an improvement in external competitiveness, as measured by the evolution of the real effective exchange rate, and in the terms of trade.10 The current account deficit (excluding official grants) declined from 5.1 percent of GDP in 1993/94 to 2.5 percent in 1994/95, before increasing marginally, to 3 percent of GDP in 1995/96. During the same period, the overall balance of payments deficit narrowed from 12.4 percent of GDP to 7.2 percent of GDP. This overall improvement was due in large part to the strong recovery in non-oil exports, which benefited from the restoration of external competitiveness resulting from the January 1994 devaluation, along with generally favorable trends in the world prices of the country’s key commodities. Non-oil exports rebounded strongly, with timber playing a dominant role in 1994/95, and cocoa, coffee, and cotton all rising substantially in real terms in 1995/96. Oil exports increased in volume terms by 32 percent in 1994/95, but declined by 5 percent in 1995/96, reflecting a reduction in available reserves. As a result of the pickup in economic activity, imports grew by 2.5 percent in volume terms in 1994/95 and by a further 8.0 percent in 1995/96. Food imports declined over the period in real terms, reflecting the increased competitiveness of locally produced foodstuffs. Imports of capital goods and equipment registered strong real rates of growth, rising by 56 percent and 64 percent in volume terms in 1994/95 and 1995/96, respectively. This, along with the increased demand for semifinished goods, reflected increased private sector investment in support of the new economic opportunities.
External Sector Developments, 1993/94-1995/96
Excluding grants.
In percent of exports of goods and services.
External Sector Developments, 1993/94-1995/96
| 1993/94 | 1994/95 | 1995/96 | |
|---|---|---|---|
| Est. | Est. | ||
| (In percent of GDP) | |||
| Current account balance 1/ | -5.1 | -2.5 | -3.0 |
| Overall balance of payments | -12.4 | -12.0 | -7.2 |
| External debt stock | 122.7 | 116.2 | 104.3 |
| External debt service 2/ | 55.0 | 60.9 | 54.5 |
Excluding grants.
In percent of exports of goods and services.
External Sector Developments, 1993/94-1995/96
| 1993/94 | 1994/95 | 1995/96 | |
|---|---|---|---|
| Est. | Est. | ||
| (In percent of GDP) | |||
| Current account balance 1/ | -5.1 | -2.5 | -3.0 |
| Overall balance of payments | -12.4 | -12.0 | -7.2 |
| External debt stock | 122.7 | 116.2 | 104.3 |
| External debt service 2/ | 55.0 | 60.9 | 54.5 |
Excluding grants.
In percent of exports of goods and services.
The services account deteriorated during 1994/95-1995/96, owing principally to the growing burden of external interest obligations on public debt. The capital account deficit widened in 1994/95, reflecting primarily lower external financial assistance and higher external debt amortization. However, in 1995/96, the capital account deficit narrowed substantially, to CFAF 84 billion, compared with CFAF 343 billion in 1994/95, mainly as a result of the significant increase in private sector capital inflows.11
Cameroon’s major trading partners did not change substantially in 1995 and 1996. Over that period, the bulk of exports was destined to the European Union (82 percent), of which France, Italy, Spain, and the Netherlands were the main markets. Exports to partner countries within the UDEAC declined slightly, from an average of 7 percent in 1993-94 to about 5 percent in 1995-96, while the share of China, Taiwan, and Korea remained at about 2 percent for each country. As regards principal import markets, France supplied about 41 percent of total imports, followed by Germany and the United States, each with a 9-10 percent share. Japan also represented a significant source of imports, with 7 percent of the total. Brazil, China, C ôte d’lvoire, Mauritania and Taiwan represented the primary sources of imports from developing countries, each with a share of less than 2 percent.12 Imports from the UDEAC region were negligible (0.5 percent).
Cameroon’s external public debt remained burdensome and the service of this debt will continue to represent a major challenge to both external and fiscal viability. Total external public debt increased from CFAF 4,192 billion (123 percent of GDP) in 1993/94 to CFAF 4,766 billion (104 percent of GDP) in 1995/96. The bulk of the outstanding debt at end-June 1996 is owed to bilateral official creditors (69 percent), with France and Germany constituting 25 percent and 15 percent, respectively. Debt to multilateral institutions accounted for 18 percent of total debt, with the major creditors in this category being the World Bank (10 percent) and the African Development Bank (3 percent). The stock of debt owed to commercial banks accounted for 10 percent of the total debt stock, most of which (80 percent) constituted arrears, as Cameroon has virtually not serviced its debt to commercial banks since 1988/89. The remaining stock of debt (3 percent) consisted of suppliers’ credits and other short-term debts.
Cameroon’s scheduled external debt service increased from CFAF 431 billion (55 percent of exports of goods and services) in 1993/94 to CFAF 515 billion (61 percent) in 1994/95 and further to CFAF 631 billion (55 percent) in 1995/96. Despite significant debt relief (Paris Club rescheduling, debt cancellation by France, and rescheduling of short-term debt due to the French Post Office), Cameroon continued to face substantial difficulties in meeting its debt-service obligations, largely as a result of insufficient domestic revenue mobilization. The stock of external payments arrears increased initially from CFAF 471 billion (13.8 percent of GDP) at end-1993/94 to CFAF 790 billion (19.1 percent) at end-1994/95, before declining to CFAF 527 billion (11.5 percent) at end-1995/96.13
F. Structural Reforms
In the past few years, structural reforms have focused on downsizing the civil service and improving efficiency, rationalizing the public enterprise sector, and restructuring the domestic financial system.
Civil service reform
The civil service in Cameroon consisted of 167,269 employees at end-June 1994. To increase efficiency in public administration, the authorities embarked upon a civil service and administrative reform (strategic d’organisation des ministdres—SGOM), including the development of an organizational and staffing plan for each ministry (plan d’organisation et d’effectifs—POEs), and an integrated computerized personnel management system (système informatique de gestion intégrée des personnels de l’Etat et de la solde—SIGIPES). The SGOM was completed in 1995 and the implementation of the POEs started in June 1995.14 The POEs were completed for nine ministries during the period June 1995-July 1996.15
The implementation of the POEs in the first group of nine ministries resulted in the retrenchment of about 3,200 personnel through either voluntary or forced departure schemes. The size of the civil service is projected to be reduced to 156,000 upon completion of the POEs in all ministries. The cost of the civil service reform to date has been approximately CFAF 13 billion, the bulk of which has been financed by external assistance from France and the European Union.
The implementation of the SIGIPES has incurred significant delays, partly related to the complexity of the computerization scheme and the acquisition of computer hardware and software.
Public enterprise reform and privatization
In 1986, there were 243 enterprises employing some 150,000 workers (equivalent to 20 percent of the formal sector labor force) and generating roughly 18 percent of non-oil GDP. Net of the CFAF 68 billion in direct government budgetary subsidies provided during that year, these enterprises generated cumulative losses of CFAF 33 billion and accumulated a debt of about CFAF 1 trillion. The public enterprise reform program aimed at: (a) reducing the burden of public enterprises on public finances and on the rest of the economy; (b) improving the performance of those public enterprises to be maintained in the government’s portfolio; and (c) rationalizing the government’s policy of direct participation in the production of goods and services.
An initial census of public enterprises and subsequent evaluation studies classified public enterprises into one of three categories: (a) those to be rehabilitated and maintained in the government’s portfolio (109 enterprises); (b) those to be privatized (45 enterprises); and (c) those to be liquidated (89 enterprises). During its first phase (1988/89-1993/94), the public enterprise reform program focused primarily on rehabilitation. The second phase, which focuses on disengagement of the government through privatization and liquidation, was launched in June 1994 with the issuance of a list of 15 public enterprises slated for privatization. The institutional framework for privatization and liquidation was adopted subsequently in 1994/95.
While liquidation was the simplest process to initiate, it has proven to be the most difficult to implement, owing to the absence of a liquidation law in Cameroon, the lack of expertise in the management of liquidation operations, and the lack of funds available to pay severance payments and other liabilities. Out of the 89 liquidations scheduled to occur, only 5 have been completed. Progress has been marginally better regarding the restructuring process. Of the enterprises to be rehabilitated, 16 are operating under performance contracts with the government.16 In addition, the existence of performance contracts has not meant that the firms are operating profitably or efficiently, and the contracts have often not been enforced. Progress in the area of privatization has also been slow. Of the 45 firms to be privatized, 12 enterprises have been privatized,17 8 enterprises were offered for sale but were subsequently liquidated,18 15 enterprises are pending,19 and 10 enterprises, all in the hotel sector, are in the diagnostic stage. Overall, public enterprise reform has progressed much more slowly than originally envisaged, partly because of the weak institutional framework established to manage the process.
Financial sector restructuring
The financial sector in Cameroon consists of eight commercial banks,20 a housing bank, a social security fund, and a series of cooperative credit unions located throughout the country. The commercial banking sector underwent an initial restructuring over the period August 1989-June 1993, which resulted in the liquidation of five banks,21 the rehabilitation of two other banks,22 and the creation of two new banks.23 This restructuring was short-lived because of deteriorating economic conditions, poor management, and the lack of supervision. In 1995, five commercial banks (representing 70 percent of the banking sector’s assets) were technically insolvent.24 Government debt accounted for 31 percent of total credit and about half of the claims on the private sector were nonperforming.
Under the reform efforts that started in 1995, the government was to reduce its share in the capital of financial institutions, withdraw altogether from their management, and take actions to enforce the decisions of the Central African Banking Commission (COB AC) regarding banking supervision. Actions were taken to strengthen the judicial system with regard to improved enforcement of financial contracts and the recovery of nonperforming loans. To this end, the government is restructuring the national recovery agency (SRC),25 including downsizing the staff by laying off inefficient employees, restructuring the portfolio in order to increase the recovery rate, implementing an appropriate incentive framework, and establishing quantitative recovery targets. The government is also restructuring its debt to the commercial banking sector, estimated to be about CFAF 180 billion.26 In the area of bank restructuring, one of the five insolvent banks is being liquidated (BMBC-Meridien), two other banks (SGBC and Standard Chartered Bank of Cameroon) have been restructured, based on an agreement reached between the managing foreign partners and the government,27 and two banks are presently undergoing a cleaning up of their balance sheets with a view to seeking new foreign and/or Cameroonian partners for one of them (Crédit Agricole) and concluding a management contract for the other (BICIC).
Cameroon’s insurance sector is in serious financial disarray, with none of the companies meeting the required prudential norms. There are 10 insurance companies in Cameroon, of which the 3 government-owned companies (AMACAM, SOCAR, and CNR) are insolvent.28 The government launched a reform effort in late 1995, with a view to restructuring the industry and to ensuring that the procedures established under the regional CIMA Code are fiilly respected.29 An insurance division has been established within the Ministry of Economy and Finance to perform on-site and off-site supervision of private insurance companies within the framework of CIMA. Sanctions (including the withdrawal of licenses) are to be taken against companies that do not respond to the directives of the supervisory unit.
Detailed data are contained in the Statistical Appendix.
In collaboration with other member countries of the CFA franc zone, Cameroon changed the parity of the CFA franc from CFAF 50 = IF to CFAF 100 = 1F in January 1994.
Industry data, which show significant increases in turnover despite steep reductions in total employment and average wages, suggest increased productivity and efficiency gains.
While the decline in real wages adversely affected domestic consumption, it improved competitiveness and helped stimulate investment.
Union Douanière des Etats de I’Afrique Centrale.
Currency held outside the banking system declined by 3 percent during the same period. However, this figure may be underestimated, owing to the large backlog of unsorted notes held by the central bank.
Credit to public enterprises, which accounted for only 4.3 percent of total domestic credit, rose by some 26 percent.
At end-June 1995, five of the six major commercial banks were technically insolvent and were in the midst of being restructured.
Beginning in June 1994, the category “services” also included bank claims on public enterprises that have been taken over by the Treasury. These claims increased from CFAF 32.8 billion at end-December 1993 to CFAF 145.8 billion at end-June 1994.
During the period December 1993-June 1996, the CPI-based real effective exchange rate depreciated by some 25 percent. The terms of trade improved by 10 percent in 1994/95 and deteriorated marginally, by 2 percent, in 1995/96, owing primarily to the drop in world prices for cocoa, coffee, and cotton.
Private capital inflows increased by 65 percent in 1995/96, resulting in net positive private capital flows for the first time since 1987/88.
Cross border trade with Nigeria, which is not recorded in the official trade statistics, is believed to account for a significant part of Cameroon’s large informal sector activities and about 10 percent of its external trade.
The stock of arrears at end-1995/96 consisted of CFAF 393 billion to commercial banks, CFAF 39 billion to multilateral institutions, CFAF 10 billion to Paris Club creditors on post-cutoff debt and moratorium interest, CFAF 36 billion to non-Paris Club bilateral creditors, and CFAF 50 billion in short-term debt.
The POEs involve a seven-stage process: (a) study, preparation, and presentation for signature of a new organizational structure; (b) appointment of personnel to job positions; (c) preparation of a list of persons to be retrenched; (d) calculation of the benefits to be received by the departees; (e) approval of the list; (f) preparation of severance payments; and (g) publishing of the list and departure.
These nine ministries included the group of economic ministries (Economy and Finance; Industry and Commerce; and Civil Service and Administrative Reform), the group of social service ministries (National Education; Health; Social Affairs and Women’s Affairs; and Labor and Social Security), and the ministries in charge of Territorial Administration; and Youth and Sports.
The authorities are also currently monitoring the financial performance of the 17 largest public enterprises on a quarterly basis.
Six of the privatizations occurred through a sale of the government’s holding of stock in the enterprises, four through the government’s sale of the enterprises’ assets, and two through sale of shares owned by the SNI.
SODERIM (rice), CREVCAM (shrimp), GETRAM (steel products), SEAC (equipment), SOTUC (urban transport), ONAPHARM (pharmaceuticals), SOCATOUR (tourism), and SEDA (research).
CAMSUCO (sugar), CEPER (book publications), Imprimerie Nationale (printing), CAMAIR (airline), CDC (tea, palm oil, rubber, bananas), CAMSHIP (shipping line), CAMTAINER (cargo containers), HEVECAM (rubber), REGIFERCAM (railway), SCT (tobacco), SOCAPALM (palm oil), SODECOTON (cotton), INTELCAM (telecommunications), SNEC (water), and SONEL (electricity).
BICIC, SGBC, SCB-CL, BMPC, SCBC, CAC, CCEI, and Amity Bank.
Banque Camerounaise de Développement (BCD), Cameroon Bank, Paribas Cameroun, Société Camerounaise de Banque (SCB), and BIAO-Cameroun.
BICIC and Société Générate de Banques au Cameroun (SGBC).
Société Crédit de Banque-Crédit Lyonnais and Banque Meridien-BIAO Cameroun.
BICIC, Meridien-BIAO, Crédit Agricole, Standard Chartered Bank of Cameroon, and SGBC.
The SRC was created in 1989 to help with bank restructuring. It has suffered from an ill-defined mandate, excessive operating costs, political interference, and a lack of judicial support. As a result, of the CFAF 640 billion in nonperforming loans transferred to the SRC, only CFAF 20 billion in recovery, has been made in cash so far, and CFAF 60 billion in deposit-based compensation settlements.
Commercial bank claims on the government are to be securitized at a floating interest rate adjustable annually, reflecting the average cost of funds plus a small margin. One-half of these claims is to be amortized over 12 years, with a grace period of 4 years on principal repayments. The remaining half would be paid off in a single payment at maturity (30 years).
Under the terms of the SGBC agreement, which was signed in December 1995, both parties will share past losses in proportion to their participation in the bank’s capital. The foreign partner will also recapitalize the bank, and the government’s participation will be limited to a maximum of 20 percent of the capital.
The government has also decided to liquidate AMACAM and SOCAR, and privatize CNR.
The insurance industry in the CFA franc zone countries is now regulated and supervised regionally under the terms of a treaty signed under the auspices of the Conférence Inter-Africaine des Marchés d’Assurances (CIMA).