Abstract
This Selected Issues paper examines recent performance and reform agenda for Cameroon's state-owned enterprises (SOEs). Cameroon's SOEs are important providers of formal employment and have a large weight in the economy. The profitability and financial autonomy of SOEs have deteriorated in recent years, draining scarce budget resources. In addition, SOEs have amassed significant contingent liabilities in the form of debt and arrears. Weak corporate governance is a key factor in SOEs' poor performance. The reform agenda should include enhancing the monitoring of SOEs, improving disclosure of their contingent liabilities, and strengthening their governance.
State-Owned Enterprises—Recent Performance and Reform Agenda1
Cameroon’s state-owned enterprises (SOEs) are important providers of formal employment and have a large weight in the economy. The profitability and financial autonomy of SOEs have deteriorated in recent years, draining scarce budget resources. In addition, SOEs have amassed significant contingent liabilities in the form of debt and arrears. Weak corporate governance is a key factor in SOEs’ poor performance. The reform agenda should include enhancing the monitoring of SOEs, improving disclosure of their contingent liabilities, and strengthening their governance.
A. An Overview of Cameroon’s State-Owned Enterprises
1. Cameroon hosts 119 public entities and enterprises, which constitute the public sector. Over 70 percent of state-owned enterprises (SOEs) are non-commercial administrative entities charged with providing a public service. The remaining SOEs are financially autonomous and commercially oriented entities, roughly equally divided between wholly government-owned public corporations and semi-public corporations with joint public/private ownership. This study focuses on the 17 largest commercially oriented SOEs.2 These are either exclusively government-owned or the state holds a majority equity stake in them through holdings via other SOEs. The surveyed companies cover several strategic sectors in Cameroon, including agriculture, energy, and telecommunications. They encompass the bulk of the SOE sector in terms of employment and financial assets. The focus on commercially oriented SOEs is appropriate, since they differ from public agencies in their ability to contract debt and, in so doing, generate contingent liabilities for the state. Key financial and non-financial information for the concerned SOEs for 2009–13 were provided by the Technical Committee for Rehabilitation within the Ministry of Finance (Table 1). The Committee is responsible for the financial surveillance of SOEs.
Cameroon: Summary Data for Key State-Owned Enterprises, 2013
(CFAF billions, unless otherwise noted)
Cameroon: Summary Data for Key State-Owned Enterprises, 2013
(CFAF billions, unless otherwise noted)
| Sectors of activity | SOEs | Workforce (no.) | Capital | Assets | Turnover | Net income | Subsidies | Debt | Arrears |
|---|---|---|---|---|---|---|---|---|---|
| Agriculture | 4 | 30564 | 15.3 | 255.0 | 180.9 | 11.5 | 7.8 | 166.4 | 71.0 |
| Construction | 2 | 672 | 4.5 | 136.4 | 7.0 | −3.1 | 0.7 | 31.6 | 16.6 |
| Electriticity and Water Utilities | 2 | 414 | 11.5 | 351.3 | 15.4 | −1.7 | 57.0 | 128.3 | 6.6 |
| Energy | 2 | 1098 | 26.5 | 942.0 | 879.5 | −28.6 | 0.0 | 853.0 | 83.3 |
| Transport, Storage, and Communications | 7 | 7670 | 119.7 | 833.3 | 178.1 | −6.4 | 35.4 | 661.0 | 151.8 |
| Total | 17 | 40418 | 177.6 | 2518.1 | 1260.9 | −28.1 | 101.0 | 1840.3 | 329.4 |
Cameroon: Summary Data for Key State-Owned Enterprises, 2013
(CFAF billions, unless otherwise noted)
| Sectors of activity | SOEs | Workforce (no.) | Capital | Assets | Turnover | Net income | Subsidies | Debt | Arrears |
|---|---|---|---|---|---|---|---|---|---|
| Agriculture | 4 | 30564 | 15.3 | 255.0 | 180.9 | 11.5 | 7.8 | 166.4 | 71.0 |
| Construction | 2 | 672 | 4.5 | 136.4 | 7.0 | −3.1 | 0.7 | 31.6 | 16.6 |
| Electriticity and Water Utilities | 2 | 414 | 11.5 | 351.3 | 15.4 | −1.7 | 57.0 | 128.3 | 6.6 |
| Energy | 2 | 1098 | 26.5 | 942.0 | 879.5 | −28.6 | 0.0 | 853.0 | 83.3 |
| Transport, Storage, and Communications | 7 | 7670 | 119.7 | 833.3 | 178.1 | −6.4 | 35.4 | 661.0 | 151.8 |
| Total | 17 | 40418 | 177.6 | 2518.1 | 1260.9 | −28.1 | 101.0 | 1840.3 | 329.4 |
2. The SOEs surveyed are significant providers of employment. They range in size from a few employees to Cameroon’s second largest employer—the Cameroon Development Corporation—which employs over 22,000 workers.3 Based on the most recent available data, these 17 SOEs collectively employ about 40,000 workers, which is estimated to amount to about one-sixth of total public sector employment.4 With little formal employment outside the public sector, this indicates the important role that SOEs play in the Cameroon labor market. The annual average total wage bill amounted to about 0.8 percent of annual average GDP in 2009–13 (Figure 1).
Cameroon: SOE Workforce
(2013, or most recent)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: Cameroonian Authorities and IMF staff estimates.Cameroon: SOE Workforce
(2013, or most recent)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: Cameroonian Authorities and IMF staff estimates.Cameroon: SOE Workforce
(2013, or most recent)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: Cameroonian Authorities and IMF staff estimates.3. The SOE sector is highly concentrated. Five of the 17 SOEs account for 80 percent of the workforce, 65 percent of assets, and 90 percent of revenue. In recent years, three of these enterprises generated most of the profits, while four accounted for the bulk of losses.
4. Available data indicate that the 17 SOEs play a modest role in value addition.5 The value added by these SOEs appears modest, averaging less than 2 percent of GDP in 2009–13. Moreover, as economic growth accelerated toward 4–6 percent per annum in the last few years, the value added by these SOEs declined substantially (Figure 2). This being said, these SOEs have important indirect economic impacts as consumers of services in their communities, and as major social contributors in terms of schools and health facilities.
Cameroon: Real GDP Growth and SOE Value Added, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: Real GDP Growth and SOE Value Added, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: Real GDP Growth and SOE Value Added, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.5. This group of SOE’s features in key sectors of Cameroon’s economy (Figure 3). The role of these SOEs is relatively important in agricultural exports (notably cotton, palm oil, and rubber). SOEs also have monopolies in key network infrastructure, notably in energy, transportation, and telecommunications. Cameroon Telecommunications (CAMTEL) holds a monopoly in national telephone landlines, the international gateway, and internet infrastructure. In the oil and gas sector state companies dominate extraction, refining, storage, and distribution.
Cameroon: SOE Value Added by Sector, 2009–13
(average)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Value Added by Sector, 2009–13
(average)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Value Added by Sector, 2009–13
(average)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.6. Surveys indicate that Cameroonian SOEs have not been effective providers of services. The yearly Global Competitiveness Report by the World Economic Forum surveys business leaders in their respective countries. In the 2014–15 edition, Cameroon received a middle rank among sub-Saharan African (SSA) countries in terms of the quality of infrastructure (Figure 4). Although Cameroon scored relatively well on ports, it lagged others on roads, air transport, electricity, and telecommunications infrastructure (Figure 5). World Bank data show that electricity consumption has remained flat—and in 2012 electricity use per person was roughly only half of the level of developing SSA countries—while subsidies to the power company averaged 0.3 percent of GDP. The weak financial standing of SOEs is a likely reason for poor infrastructure, as companies are unable to mobilize sufficient resources for investment.
Cameroon: Quality of Infrastructure, 2014
(Index)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: World Economic Forum, Global Competitiveness Index (2014–15 ed.).Cameroon: Quality of Infrastructure, 2014
(Index)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: World Economic Forum, Global Competitiveness Index (2014–15 ed.).Cameroon: Quality of Infrastructure, 2014
(Index)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: World Economic Forum, Global Competitiveness Index (2014–15 ed.).
Cameroon: Quality of Infrastructure, 2014
(1–7, best)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: World Economic Forum, Global Competitiveness Index (2014–15 ed.).Cameroon: Quality of Infrastructure, 2014
(1–7, best)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: World Economic Forum, Global Competitiveness Index (2014–15 ed.).Cameroon: Quality of Infrastructure, 2014
(1–7, best)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Source: World Economic Forum, Global Competitiveness Index (2014–15 ed.).B. Financial Performance of State-Owned Enterprises
7. The profitability of SOEs is low (Figure 6). Net income in 2009–13 indicated a weak bottom line, with 8 of the 17 enterprises realizing a cumulative loss, and only one firm, operating in the agricultural sector, consistently staying above breakeven level. Financial results generally deteriorated toward the end of the period and the overall net profit margin became negative in 2012–13. The national airline and the national refinery together amassed total losses on the order of 0.5 percent of GDP a year in 2012–13, with company specific factors playing a large role, such as investment costs for the airline and the uncovered shortfalls in revenue in a context of regulated domestic fuel prices in the case of the refinery. At the same time, it is important to recognize that SOEs are not necessarily set up to maximize profit, and that a proper assessment of performance would require weighing profitability against their public service obligations, which in Cameroon’s case have not been properly priced by the authorities.
Cameroon: SOE Profitability, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Profitability, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Profitability, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.8. The state’s net fiscal transfers to SOEs declined in 2013 (Figure 7). 6 Subsidies rose sharply from 0.4 percent of GDP in 2009 to an annual average 0.9 percent of GDP in 2011–12. Although widely dispersed across sectors, the largest recipients of subsidies were in the transportation and utilities sectors. The state’s net fiscal transfers declined in 2013, because of stronger tax recovery and lower subsidies to a few notable sectors—electricity and air transport. However, with continuing losses in these sectors potentially carrying over into the future, transfers net of profits are a better measure of financial dependency. These averaged 1.1 percent of GDP annually in 2012–13. Although SOEs do provide useful public services, the value for money from the subsidies they receive should be carefully weighed against the opportunity cost. For example, rising subsidy spending in 2009–14 was matched by a fall in total health care spending from 1.4 percent of GDP in 2009 to 1.1 percent in 2012 (IMF, 2014).
Cameroon: SOE Net Fiscal Transfers, 2009–13
(percent of GDP)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Net Fiscal Transfers, 2009–13
(percent of GDP)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Net Fiscal Transfers, 2009–13
(percent of GDP)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.9. The liquidity of SOEs has become more constrained. The gross operating surplus, a measure of the portion of income derived from production that is earned by capital, has halved since 2011, with an increasing number of firms reporting gross operating deficits (Figure 8).7
Cameroon: SOE Gross Operating Surplus, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Gross Operating Surplus, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Gross Operating Surplus, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.10. SOEs exhibit high levels of indebtedness, suggesting rising systemic risks (Figure 9). The debt of SOEs increased from 8 percent of GDP in 2009–10 to 12.6 percent of GDP in 2013. Although one firm accounts for nearly half of the debt, indebtedness increased for the majority of the firms. The total-debt-to-assets ratio rose substantially to exceed 70 percent, and six enterprises contracted debt near or above 80 percent of their assets. At the same time, SOEs’ arrears exceeded 2 percent of GDP in 2012–13 (Figure 10). Aggregate arrears declined in 2012, as companies reduced an overhang of unpaid taxes and supplier bills accumulated in 2011. The state budget bears the burden of arrears through foregone tax revenue, accounting for over half of all arrears. The wide dispersion of arrears across SOEs suggests a generalization of late payments in Cameroon. Arrears also increase transaction costs and put pressure on smaller firms, which may not possess sufficient working capital to absorb payment delays. This in turn may lead to a rise in non-performing loans in the banking sector. A possible factor contributing to large arrears is weak recovery of payments due; SOEs’ accounts receivables data point to a sharp increase to 3.6 percent of GDP in year, of which a significant portion represents outstanding payments due from the state.
Cameroon: SOE Debt, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Debt, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Debt, 2009–13
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.
Cameroon: SOE Arrears, 2009–13
(Percent of GDP)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Arrears, 2009–13
(Percent of GDP)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Arrears, 2009–13
(Percent of GDP)
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.11. SOEs’ contingent liabilities pose a significant fiscal risk (Figure 11). Contingent liabilities (i.e., debt and arrears) of large SOEs were estimated at 14.9 percent of GDP at end-2013, a significant fiscal risk for the state. The Ministry of Finance has developed a measure of contingent liabilities, based on information available as of mid-2015. Although the definition of contingent liabilities used by the Ministry is narrower than the one used in this paper, even on this basis contingent liabilities of SOEs at end-August 2015 were significant at 6.1 percent of GDP, of which 2.3 percent related to government-guaranteed and on-lent loans. 8,9 A lack of time series data prevents an assessment of the evolution of this narrower definition of contingent liabilities, but the Ministry of Finance indicate that the amount had been growing over time. Contingent liabilities of SOEs could pose a significant fiscal risk in the event that a large SOE cannot meet its payment obligations (IMF, 2015).
Cameroon: SOE Contingent Liabilities, 2009–13
percent of GDP
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Contingent Liabilities, 2009–13
percent of GDP
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.Cameroon: SOE Contingent Liabilities, 2009–13
percent of GDP
Citation: IMF Staff Country Reports 2015, 332; 10.5089/9781513599588.002.A001
Sources: Cameroonian authorities and IMF staff estimates.C. Corporate Governance
12. Cameroon’s ownership arrangements for SOEs follow a dual model. A 1999 law establishes arrangements whereby specific line ministries and the Ministry of Finance share oversight functions of SOEs. This system gives the relevant sectoral ministry responsibility for overall oversight, while the executive board and management develop strategies and implement operational plans. Theoretically, this set up provides ministries with a basis for overall supervision of the SOEs in their purview.
13. The governance of SOEs appears weak. Boards and management teams are largely made up of representatives of government administrations or government officials, potentially weakening the independence of directors and, in so doing, corporate governance. World Bank analysis of a sample of 33 SOEs (including administrative establishments) found that that more than two-thirds of administrators were affiliated to the government. This type of representation could also weaken business capacity as such officials may lack practical business experience and skills. Accountability appears to be weak; although the law precludes directors from holding more than two successive three-year terms, turnover at several boards appears low with directors frequently exceeding the legal number of mandates. World Bank analysis also finds that the level of remuneration of Board members is high relative to private sector counterparts (World Bank, 2014).
14. Governance and accountability arrangements entail a significant potential for conflicts of interest. Line ministries have both ownership and regulatory responsibilities, enabling them to pursue public policy through SOEs rather than through regular budget channels. In this manner, SOEs have become a conduit for providing services below cost, including electricity, fuel, telecommunications, and air transport with few safeguards in place to assure their commercial viability. When government transfers do not fully cover operating losses, SOE activities become constrained, resulting in arrears vis-à-vis the government, suppliers, and each other. These debt obligations are typically addressed on an ad hoc basis through cumbersome cross-debt cancellations and/or securitization without addressing the underlying issues.
15. Transparency is limited and monitoring has been ineffective. The law requires that all non-financial firms in Cameroon comply with the Organization for the Harmonization of African Business Law (OHADA) accounting framework. To this end, all financial accounts must be reviewed by a statutory auditor approved by the Economic Community of Central African States, and validated by an annual general meeting within six months of the end of the financial year. In practice, reporting is slow with few statements respecting the mandated deadline. In addition, the coverage of reporting is poor; according to a June 2014 report, the audit chambers of the Cameroon Supreme Court have found that in recent years only one in five SOEs actually produced yearly financial statements (US State Department, 2014). Furthermore, the current OHADA standard does not comply with International Financial Reporting Standards (IFRS). As a result, the overall quality of financial reporting is weak, with the Global Competitiveness Report (2014–15) ranking Cameroon 124th (of 144 countries surveyed) in terms of the strength of auditing and reporting standards. The Ministry of Finance collates the available information provided by SOEs, but its reports lack analytical depth and are not widely disseminated.
D. Possible Reform Agenda
16. Given the potentially large fiscal risks linked to SOEs, strengthening the monitoring and disclosure of contingent liabilities is an urgent priority. International best practice holds that governments should seek to quantify and report contingent liabilities to the extent possible. For example, the government could, in the context of each annual state budget, provide a note on fiscal risks, including an estimate of the present value of the contingent liabilities of SOEs, their evolution over time, a description of their nature, and policies adopted to mitigate the corresponding risks. An additional policy lever already adopted by the authorities is an annual ceiling on debt guarantees and on-lending to SOEs—this ceiling has remained unchanged since 1996 at CFAF 40 billion. This level should be re-evaluated on an annual basis in the context of the broader debt management strategy.10
17. SOEs should benefit from predictable and constrained budget allocations. At present, the budget provides for allocations to SOEs, but a tight treasury position leads to uncertainty regarding whether SOEs will actually receive those resources, which then contributes to SOE arrears and disrupts proper business planning. At the same time, the authorities do not assess the adequacy of resources provided to SOEs to deliver public goods, nor comprehensively review value for money. To strengthen its financial dealings with SOEs, the government should introduce the concept of public service obligations (PSOs). This would involve defining what public goods specific SOEs are expected to provide—for example, providing below cost services to certain communities—and calculating the cost associated with these activities. If the objectives and costs are deemed realistic, the PSO would be financed through a direct budget transfer to the SOE, thus providing for predictable resources while imposing the discipline of well-defined service goals under a hard budget constraint. A good test case could be the on-going restructuring of the loss-making national airline, where the government contracted an external consultant to conduct a technical and financial audit before providing further capital.
18. SOEs need an enhanced system of risk and performance monitoring, involving regular reports. The SOE monitoring unit in the Ministry of Finance has initiated a study of indicators of specific and measurable risks for SOEs, including financial, human resources, and governance risks. This matrix of risks would include separate norms for commercial and non-commercial SOEs (i.e., administrative establishments), recognizing their different organizational focuses. Such a matrix would provide a useful tool for flagging incipient risks, which should be included in the above-mentioned annual report on fiscal risks. Going forward, an effective performance monitoring framework would require moving beyond broad benchmarks toward measures tailored to individual companies, taking into account their specific commercial and non-commercial objectives as set out by the government. This would require a substantial investment into the government ownership unit to build up its skills for analyzing company performance. Given capacity constraints, it could make sense to have the unit focus only on commercial SOEs, and keep responsibility for monitoring public agencies with the sector ministries, given that public agencies are extensions of the public sector and require different monitoring.
19. Broad governance reforms should accompany strengthened performance monitoring. A cultural shift is needed to give enterprises autonomy and accountability vis-à-vis performance objectives. This process could be supported by country- and company-level corporate governance assessments by an internationally reputable entity, such as the World Bank or the International Finance Corporation. Some steps to improve autonomy and performance could include strictly limiting line ministries’ role to the core ownership function; improving the appointment process to executive boards, emphasizing previous financial and corporate governance experience; requesting SOEs to annually publish a report on their progress against performance targets; regularly evaluating the performance of executive boards; and establishing a policy on Executive Board remuneration that is competitive, but also benchmarked against private sector practices.
20. Urgent efforts are needed to improve accounting and reporting standards. The government should encourage SOEs to improve the timeliness of their financial reporting, which should be finalized within six months of the end of the financial year, as required by the law. In addition, financial reporting should be based on common standards across SOEs to produce consistent and comparable accounts. Financial reports should be accompanied by a descriptive commentary from managements that would help the government and the public to evaluate performance. Within the regional context, Cameroon could also champion the timely transition from OHADA to IFRS standards.
References
Organization for Economic Co-operation and Development, 2005, “OECD Guidelines on Corporate Governance of State-Owned Enterprises.” OECD Publishing, Paris.
Organization for Economic Co-operation and Development, 2015, “State-Owned Enterprises in the Development Process.” OECD Publishing, Paris.
International Monetary Fund, 2014, “Cameroon: 2014 Article IV Consultation,” Washington, DC .
International Monetary Fund, 2014, “Cameroon: Selected Issues,” Washington, DC .
U.S. Department of State, 2014, “Investment Climate Statement.” Washington, DC .
World Bank, 2011, Time for the Lion to Wake Up: An Economic Update on Cameroon.” Country Economic Update, Issue No. 1, Yaoundé .
World Bank, 2012, Unlocking the Labor Force: An Economic Update on Cameroon.” Country Economic Update, Issue No. 3, Yaoundé .
World Bank, 2014, “Corporate Governance of State-Owned Enterprises: A Toolkit.” Washington, DC .
World Bank, 2015, “World Development Indicators,” Washington, DC .
World Economic Forum, 2014, “The Global Competitiveness Report 2014-15.” Geneva .
Prepared by Toomas Orav.
The list excludes the National Investment Corporation (Société Nationale d’Investissements), a fully state-owned holding company whose portfolio includes several large public enterprises, and the national oil and gas company (Société Nationale des Hydrocarbures), which finances and manages hydrocarbon exploration and production in partnership with various international companies.
The Cameroon Development Corporation (CDC) is an agricultural-industrial enterprise which acquires, develops, and operates extensive plantations of tropical cash crops.
The IMF (2014) has estimated total public sector employment at around 250,000 persons.
The value added created by SOEs is calculated as the total value of production less intermediate consumption of goods and services.
The net fiscal transfer is defined as subsidies less taxes and dividends paid. Calculating the net fiscal burden would require fuller data on SOE tax arrears owed to the state and the government’s payment arrears to SOEs, as well as data on SOEs access to subsidized interest rates or rent-free property.
Gross operating surplus is calculated as value added less payroll.
The Ministry of Finance’s definition of contingent liabilities focuses on high-risk liabilities, including companies already experiencing payment difficulties with government-guaranteed loans and government on-lending, and arrears to suppliers.
Based on Ministry of Finance reports on public sector contingent liabilities, the bulk of liabilities relate to the 17 SOEs under review.
In 2011, a presidential decree increased the ceiling on an exceptional basis in conjunction with international financial institutions participating in the financing of gas and thermal power plants.
Reference
International Monetary Fund, 2000, “Equity and Efficiency in the Reform of Price Subsidies—A Guide for Policymakers,” Washington, DC .
International Monetary Fund, 2012, “Automatic Fuel Pricing Mechanisms with Price Smoothing: Design, Implementation, and Fiscal Implications,” Washington, DC .
International Monetary Fund, 2013, “Cameroon: Selected Issues,” Country Report No. 13/275, Washington, DC .
International Monetary Fund, 2015, “How Large Are Global Energy Subsidies?” Washington, DC .
International Energy Agency, 2015, “Oil demand by product for non-OECD countries”, IEA World Energy Statistics and Balances (database).
Prepared by Guy Jenkinson.
IMF 2015 puts the magnitude of subsidies for fossil fuel energy at US$5.3 trillion worldwide in 2015, including direct fiscal costs and implicit subsidies from the failure to charge for environmental damages or tax energy at the same rate as other consumption products.
This note focuses on the distribution on refined fuel oils that are produced by SONARA or are imported by distributors. For the sake of simplicity, and given the low volumes of kerosene and cooking gas consumed, as well as the social considerations related to these two fuels, the analysis in this note deals only with the distribution of “super”-grade gasoline and diesel. Kerosene and cooking gas subsidies could amount to up to CFAF 50 billion in 2015.
The Oil Code (Loi 99/013) was adopted in 1999.
Transport costs are based on a formula using the three-month moving average of market quotations for shipment fees between Europe and West Africa.
The reference price is based on market quotations in Europe and does not include transport costs.
Other countries have recently followed this approach. India cut diesel subsidies in 2014. More recently, in January 2015, Morocco increased the pump price to eliminate diesel subsidy.
Staff estimates that restoring the TSPP at its pre-July 2014 level at the present juncture would result in only a marginal increase in the pump rice for gasoline and no increase for diesel.
