Invest in Cameroon…Are you crazy?

Le Meridien Hotel, Douala.

Forbes’ Best Countries for Business list is out and Cameroon arrives at 137th place out of 141 countries ranked.

New Zealand the number one “Best Country for Business”, followed by Denmark, Hong Kong, Singapore, Canada, Ireland, Sweden, Norway, Finland and United Kingdom. The United States, with its “inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, sizable current account and budget deficits – including significant budget shortages for state governments – energy shortages, and stagnation of wages for lower-income families,” comes in at 12th place.

The countries at the bottom of this year’s list — the ten worst countries for doing business — are Cote d’Ivoire, Yemen, Mauritania, Ethiopia, Haiti, Cameroon, Venezuela, Zimbabwe, Chad and Guinea.

Forbes’ Cameroon Profile:

Because of its modest oil resources and favorable agricultural conditions, Cameroon has one of the best-endowed primary commodity economies in sub-Saharan Africa. Still, it faces many of the serious problems confronting other underdeveloped countries, such as stagnant per capita income, a relatively inequitable distribution of income, a top-heavy civil service, endemic corruption, and a generally unfavorable climate for business enterprise.

Since 1990, the government has embarked on various IMF and World Bank programs designed to spur business investment, increase efficiency in agriculture, improve trade, and recapitalize the nation’s banks. The IMF is pressing for more reforms, including increased budget transparency, privatization, and poverty reduction programs. Subsidies for electricity, food, and fuel have strained the budget. New mining projects – in diamonds, for example – have attracted foreign investment, but large ventures will take time to develop. Cameroon’s business environment – one of the world’s worst – is a deterrent to foreign investment.

Of course, like any “best of” list, one can quibble with the rankings and what they mean. China, for example, ranks 96th, yet attracts many foreign investors. So perhaps in some countries, the potential returns outweigh the negatives. Certainly that is the case for the foreign extractive industries companies investing in Cameroon. Forbes looked at 11 different factors: “property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.” And for its data, the magazined used research and reports from: “the Central Intelligence Agency, Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, World Bank and World Economic Forum.”

But what does it mean for Cameroonians to be among the worst countries in the world for doing business? As one lawyer in Yaounde told me recently,”This country is so corrupt that few legitimate businesses will come here. It’s the cowboys who come to Cameroon. People here to make money fast and get out before the whole system collapses.”  He may have been exaggerating a bit, but it’s certainly true that Cameroon’s business environment doesn’t encourage local business creation and that, of course, is what is needed for real economic development. As long as the main foreign investment comes from the “extractors” — the oil, gas, mining and export-oriented agricultural investors — and the country does nothing to address the real obstacles to economic growth (such as the lack of electricity and decent roads), Cameroon will remain stuck at the bottom of the heap.

This entry was posted on Tuesday, November 27th, 2012 at 5:49 pm.