This paper provides an overview of the public enterprise sector in Cameroon and the results of the parastatal reform efforts so far. The reform effort, which started in 1986, has frequently experienced delays brought on by an inadequate legal and institutional framework, and by a lack of consensus on the scope and desirability of the withdrawal by the government from involvement in the major sectors of the economy. As a result, limited progress has been made in the liquidation and privatization of parastatals. The paper is divided into four sections. Section A provides an overview of the evolution of the public enterprises sector and of its financial performance. Section B describes the government’s public enterprise reform program and discusses in detail the specific measures that have been undertaken, while Section 3 summarizes the main results of the reform and highlights the public enterprises’ present financial situation. Section D provides some concluding remarks.
Prepared by Brian Ames.
Over the twenty-year period 1965–85, the SNI invested some CFAF 67 billion in equity participation in about 80 companies.
Key examples include Brasseries du Cameroun (brewery), SIC-CACAOS (cocoa processing), ALUCAM (aluminum), ALUBASA (aluminum), SOCATRAL (aluminum), SAFACAM (agriculture), and CIMENCAM (cement).
The export of crude oil from Cameroon commenced in 1977/78.
See Government of Cameroon Decree 86/656, (6/3/86).
SDs are regulated by the Law of 11 June 1968 and the modalities of state control are defined in Decree 68/DF/275 (7/15/68).
SDs were created to play a primarily development role in a specific region of the country and often based on the production of a specific commodity in which the region had a natural advantage. Examples include SODECOTON in the north (cotton) and SODECAO in the center-south (cocoa).
“The Cameroon Privatization Program: Issues and Prospects,” Public Policy Papers, Continental Consulting Partners, (5/94, pp. 14–15).
The study classified enterprises into two categories, public and private. In certain cases, enterprises where the state held equity in excess of 25 percent were still considered to be “private” because the private sector was the majority shareholder and controlled the enterprises’ Board of Directors and senior management.
“Bilan des Operations de Rehabilitation, Privatisation, et Liquidation des Entreprises du Secteur Public et Parapublic: 1986–1993”, Commission Technique, Mission de Rehabilitation des Entreprises du Secteur Public et Parapublic, République du Cameroun, (5/94, p.6).
The World Bank estimated that hidden subsidies amounted to some CFAF 400 billion in 1991, representing roughly 12 percent of GDP. See “Cameroon Public Enterprise Reform Program: Overview and Proposed Action Plan”, op. cit.
The composition of the Interministerial Committee was modified by Decree 90/428 of (2/27/90) and presently consists of the Director General of the SNI, the National Director of the BEAC and five cabinet ministers: Economy and Finance; Industry and Commerce; Civil Service and Administrative Reform; Agriculture; and Labor.
Republic of Cameroon, Decree 86/656 of (6/3/86).
However, the secretariat was not staffed until June 1987 and did not become operational until September of that year.
Republic of Cameroon, Instruction No. 007 (11/4/88).
Republic of Cameroon, “Declaration of Strategy and Economic Recovery,” (5/89).
Republic of Cameroon, Ordonnance No. 90/004, of 6/22/90 (which defines the general framework of the privatization operation) and Decree No. 90/1257, of 8/30/90 (which established the practical modalities regarding privatization).
République du Cameroun, La Déclaration de Politique Générale Relative aux Entreprises du Secteur Public et Para-Public, (5/94).
See Republic of Cameroon, Ordinance No. 95/003 (8/17/95).
World Bank, “Privatization and Private Sector Technical Assistance Project,” Technical Annex, Report No. P-6928-CM (5/22/96, p.4).
Caisse Autonome d’Amortissement du Cameroun (3/6/96).
Even this reporting system suffered from severe limitations regarding the comprehensiveness, accuracy, and comparability of data between enterprises.
Decree 90/1423 (10/3/90).
There were several different laws and regulations regarding the privatization process.
With the exception of OCB (bananas), SOCAMAC (port handling and transit monopoly), SEPBC (Timber handing and transit monopoly) and CHOCOCAM (chocolate), the remaining companies earmarked for privatization were not sound. SEAC (equipment) and CREVCAM (shrimp) were already bankrupt, SODERIM (rice) was not viable, IMPRIMERIE NATIONALE (printing) faced stiff competition and was plagued with antiquated equipment, and GETRAM and SCDM (steel products) were not able to survive in open competition.
The evaluation process was based primarily on asset valuation.
Nine public enterprises fell into this category.
As noted above, there are a variety of liquidation modalities. In the case of judicial liquidations, the existing legislation (the Law of 4 March 1889) is outdated and is subject to multiple interpretations.
Under Presidential Decree No. 94/125 (7/14/94), the following public enterprises were added to the privatization list: CAMAIR (airline), CDC (tea, palm oil, rubber, bananas), C AMSHIP (shipping line), C AMTAINER (cargo containers), SOTUC (public transportation) HEVECAM (rubber), REGIFERCAM (railroad), SCT (tobacco), SOCAPALM (palm), SODECOTON (cotton), SPFS (palm oil), SRL (palm oil refinery), ONAPHARM (pharmaceuticals), SOCATOUR (travel agency), and SEAC (equipment).
Republic of Cameroon, Ordinance No. 95/003 (8/17/95).
The Minister of Finance solely exercises the state’s shareholder rights. In addition, public enterprises are required to publish an annual balance sheet in the official gazette, as well as in the national press. Accounts are to be audited and certified by official auditors and special independent audits can be mandated.
For example, a person cannot be a Director or Chairman in more than three public companies; a Director cannot serve more than three consecutive terms on the same Board; no one can occupy the position of Chairman as well as General Manager; Directors’ direct or indirect personal interest in their companies must be declared; and no civil servant, politician or parliamentarian may serve in any management function.
Public companies are to be run according to the rules of private companies, with strict accountability to their shareholders.
Managers of public enterprises are now punishable for fraud, concealment, falsification, and the like, and, in the case of bankruptcies, can be pursued in the courts. Liquidators and auditors are also to be held liable for their actions.
Liquidators are to be professionals who will now work under the control of the Minister in charge of Finance. Liquidators’ mandates will be limited in time (one year, renewable) and all creditors (including the state) are to be treated equally. The sole exception is with regard to employees’ compensation (i.e., back salaries, severance pay, and the like), which has absolute priority over all other claims. Public tenders are to be used, strict accounting procedures are to be followed, and payments are to be made in order of chronological seniority.