Cameroon has regularly failed to attract the same levels of foreign direct investment as its Central African peers, despite boasting one of the most diversified and stable economies in the region.

Following recent in-country research, our sub-Saharan Africa team provides an overview of three key operational risks to investors in the market.


1. Political uncertainty

Paul Biya’s advanced age and rumoured ill-health presents a major contribution to political risk within Cameroon. The 85-year-old president’s rule has been characterised by increased authoritarianism and centralised control. Parliament effectively acts like a rubber-stamp, enabling him to rule by presidential decree. In 2008, Biya abolished presidential term limits, allowing him to rule indefinitely, and he is now serving his seventh successive term since assuming power in 1982. Critically, Biya’s centralised approach has made it difficult to predict who might replace him.

According to the Cameroonian 1996 Constitution, if the presidency is vacant, the president of the Senate will temporarily assume presidential responsibilities and will need to organise general elections within 120 days. The current occupant of the position – Marcel Niat Njifenji – is just a year younger than Biya, and is not expected to attempt to unconstitutionally extend his tenure beyond the interim period.

This leaves the field surprisingly open. Biya, unlike his neighbours in Gabon and Equatorial Guinea, has opted against establishing a political dynasty and has avoided grooming his children for office. Rather, current contenders to succeed him include minister of finance, Louis-Paul Motazé, and former minister of defence and transport, Edgar Alain Mebe Ngo’o. Motazé is a political veteran and maintains close ties with the president, while Ngo’o, despite stepping out of the political limelight in recent years, maintains a clear intent to secure the presidency and has established strong critics amid his ambitions.

However, other leading members of the ruling Rassemblement démocratique du Peuple Camerounais (RDPC) maintain their own political agendas. Precedent suggests that displaying political ambition prematurely could see candidates politically exiled or detained, leaving many presidential hopefuls covertly planning their campaigns. Should Biya become incapacitated without declaring a successor, a significant power struggle is likely to follow.



2. Worsening insecurity in the Southwest and Northwest regions



The principal security threat is presented by the ongoing conflict between Anglophone separatists and security forces in Cameroon’s Northwest and Southwest regions. Since late 2016, the alleged marginalisation of Anglophone communities, coupled with a robust security crackdown against public demonstrations in the region, has encouraged the formation of several Anglophone separatist militias engaged in ongoing armed campaigns in the region, and has led to the declaration of a putative breakaway state, Ambazonia. This has resulted in 400 killings in 2018, and, due to its location in highly productive regions within Cameroon, has quickly overtaken Boko Haram militancy, which remains confined to the remote Far North region, as the biggest security threat to commercial operations in the country.

The government has prioritised a military response to the conflict, implementing curfews and shutting down telecommunications in the affected areas. As the conflict intensifies, key infrastructure and commercial operations have faced an increased threat of collateral damage in worsening gun battles between government forces and separatist fighters. Operators in the region will need to review their security procedures and assess their resilience against this emerging conflict threat. The self-proclaimed Ambazonia Defence Forces (ADF), and several of its affiliates, have led much of the violence. According to Amnesty International, there have been over 260 security incidents since the start of the year, comprising skirmishes between military and separatist forces, targeted kidnappings and assassinations. The incidents also include unlawful killings by the security forces and the destruction of private property by both sides. The military is becoming increasingly stretched in its efforts to contain the situation.



In addition to local communities, foreign nationals have been impacted. In October, a US national was killed while travelling in the Northwest Region – due to contradictory reports, it remains unclear whether Anglophone separatists or government forces were responsible. Earlier in the year, the Cameroonian government claimed that militants had abducted 18 travellers, including Swiss and Italian tourists, in the Southwest Region. (The tour company later denied that the incident was a kidnapping, indicating that it was more likely an extortion attempt. However, the incident remains demonstrative of growing insecurity in the region.)

Schools in particular have been targeted by the ADF as part of their campaign against the predominantly Francophone government. More recently, there have been increased reports of government buildings and public markets being razed. In one such attack, Ambazonian separatists raided the state-owned Cameroon Development Corporation rubber plantation in Tiko, Southwest Region, assaulting at least 15 employees with machetes.

The conflict has already displaced 160,000 people, leaving numerous cocoa plantations unattended, while Cameroon’s palm oil and timber industries in conflict-affected areas are also likely to be impacted. Although the government asserts that its heavy-handed approach has had success in curbing the separatist conflict, it is likely to take years before the violence is contained. The grassroots nature of the conflict means that a clear end will best be achieved through political dialogue, an avenue the current administration appears hesitant to take.

Recent Security Incidents Targeting Commercial and Government Properties

11 May 2018

Separatists attack Nafut High School, Northwest Region.

6 June 2018

Separatists attack Legal Department and the State Counsel of Muyuka, Southwest Region.

June 2018

Cameroonian forces attack the local health unit in Ikiliwindi, Meme County, Southwest Region.

14 July 2018

Separatists attack two public societies, the Cameroon Development Cooperation and the SONARA in Limbe, Southwest Region.

6 August 2018

Cameroonian forces reportedly shut down and damaged health centres in the Momo County, Northwest Region.

10 August 2018

At least five buses belonging to the Mondial transport agency were burnt down by unknown gunmen in Mazem, Northwest Region.

31 October 2018

Ambazonian Separatists attacked employees of the Cameroon Development Corporation rubber plantation in Tiko, Southwest Region.


3. Corruption

Levels of corruption in Cameroon are high, as indicated by the country ranking in the bottom fifth of Transparency International’s global corruption perceptions index. While Cameroon is a member of a Central African anti-money laundering body overseen by the Financial Action Task Force, the country still lacks an effective anti-money laundering framework.

Foreign companies face significant corruption risks when dealing with local private sector actors in Cameroon. Since the advent of multi-party politics in Cameroon in 1990, the border between business and politics has become increasingly blurred, as indigenous private companies have become increasingly involved in political financing. This has increased the risk of local commercial operators holding corrupt ties to politicians. The lack of public record information in Cameroon further serves to obscure the operating environment: corporate and litigation registries are not digitised and are organised at a regional level, making information retrieval an arduous and time-consuming process.

Since the mid-2000s, the Cameroonian government has introduced various anti-corruption measures which have proved to be only partially effective. In 2006, the government launched Operation Epervier, an anti-corruption drive primarily targeting corruption at ministerial level, which has led to the imprisonment of several high-ranking ministers. To oversee Epervier, the National Anti-Corruption Commission was created in 2006, with powers to investigate any government ministry. In 2012, the government introduced legislation which enabled scrutiny of the awarding of state contracts, in addition to their execution.

However, Epervier is widely regarded to have served as a political tool employed by Biya to silence his critics and potential rivals within the government, and has done little to improve governance across state-owned institutions. For instance, a review by the International Monetary Fund found $300 million of the national oil company’s revenue for 2017 was unaccounted for. Regardless of the identity of Biya’s eventual successor, there is a fair likelihood that they will follow the examples of the recently-appointed leaders in South Africa and Angola, and investigate corruption perpetrated by the previous regime. Amid this context, investors need to ensure they have a thorough understanding of potential partners before proceeding with transactions.