While in 2010 the Growth and Employment Strategy Paper (GESP) promised us emergence in 2035 following 15 years of sustained growth at annual rates of at least 10%, the Renewal Regime has instead placed our country in an uninterrupted cycle of sluggish growth that will persist until 2030, with growth rates fluctuating between 3.6% and 4.4%, according to the converging projections of the Cameroonian authorities and international partners. The gap between Cameroon’s economy and that of Côte d’Ivoire, to which our own was often compared, began to widen more than 10 years ago, and has continued to widen ever since, with Côte d’Ivoire’s annual growth rates exceeding 7%, leading to a GDP of 87.4 billion US dollars in 2024, i.e. more than one and a half times Cameroon’s GDP, estimated at just 52 billion US dollars for the same year! The much-vaunted resilience of the Cameroonian economy is, in reality, nothing more than a cover-up for an irrefragable certainty: there will be no emergence in 2035, or after 2035 for that matter, with the current regime. Because of the following facts:
I- A SLUGGISH MACROECONOMIC SITUATION AND OUTLOOK
According to government departments, the Cameroonian economy will experience a slowdown in growth in 2023, posting a growth rate of 3.3%, after 3.6% in 2022. In 2024, this growth is estimated at 4.1%, and medium-term projections have been maintained at around the same rate, in a surge of optimism that is more a matter of voluntarism than a cold analysis of the facts: This is because, notwithstanding the stability of growth projections for the tertiary sector – whose dynamism, as we know, is heavily dependent on the health of the primary and secondary sectors, and not the other way round – the factors that are depressing growth in the latter two sectors (which account for over 41% of GDP in 2024) are at half-mast, and will remain so for several years to come:
- According to official figures, the secondary sector, which creates wealth and employment par excellence, is in decline, with its share of GDP falling from 23.3% to 21.3% between 2024 and 2027. The extractive industries sector, which includes hydrocarbons, is in persistent decline (-4.7% and -0.1% in 2024 and 2025) and will contract further in 2026 and 2027 (-11.8% and -5.1%).
- The supply of electricity, which is essential for industry and heavy industry in particular, remains inadequate, due to unfulfilled promises regarding hydroelectric dams.
- Loans to the economy are falling (10.9% then 8.1% in 2024 and 2025)
- Foreign direct investment is becoming increasingly rare, due to the gloomy outlook for our economy in the short and medium term, and due to public finance management that encourages a preference for financial investments to the detriment of direct investment.
II – THE PUBLIC FINANCES TO SERVICING THE DEBT
On 20 June 2024, the President of the Republic, by decree, revised the current budget upwards from 6,740.1 to 7,278.1 billion francs, an increase of 538 billion francs in absolute terms and 8% in relative terms. Those who might have imagined that this increase was intended to revive our sluggish economy with a view to creating more of the wealth and jobs that our young people so sorely lack, are in for a rude awakening. In reality, it was a sleight of hand, unfortunately cynically approved by international donors, aimed at disguising the near bankruptcy of the State! This is because, in the light of the official data, the primary balance of this new budget – a parameter that makes it possible to assess the viability of a budget in the short and medium term – already insufficient in 2023 (at +138.8bn) to meet the State’s contractual financial commitments, is now projected to be negative (at-182.2bn), reflecting the government’s inability to service the public debt, even partially, from its own resources.
With this revision, the government is therefore assuming a budget deficit of 137.9 bn, up from the 125.4 bn deficit in 2023. Worse still, it plans to embark on an all-out borrowing campaign to the tune of 2070.1 bn, representing 6.6% of national GDP, to… pay off previous debts! In other words, 1291.5 bn in structured debt, 84 bn in VAT repayments, 537 bn in arrears payments, 19.7 bn in net outflows of the corresponding funds, to which will be added 137.9 bn in deficit financing, giving a total financing requirement of 2070.1 bn for 2024 alone, according to the government.
Not a single penny has been earmarked for increasing capital expenditure (investment), which is 48 billion lower than in the initial 2024 budget, or even for increasing current expenditure excluding interest, which falls from 3662.4 billion in the initial budget to 3536 billion in the revised 2024 budget. That’s a fall of 126.4 bn!
All in all, then, the revised budget for 2024 will do nothing to revive our country’s moribund economy: neither through a supply-side policy, through a relative reduction in taxes and levies (which are being maintained at levels that are suffocating businesses in the formal sector), nor through an assertive demand-side policy, via substantial current and investment spending.
It is therefore clear that the disastrous and unpatriotic governance of our economy, through the cavalier management of its finances, is inexorably driving the country into a spiral of indebtedness that will lead – if nothing is done – to the collapse of the entire national economic system, with worsening unemployment and mass poverty as its corollary.
III- INCREASINGLY UNSUSTAINABLE PUBLIC DEBT.
With regard to Cameroon’s indebtedness, outstanding public sector debt has only increased from year to year, rising from 12,457 billion in 2023 to 13,070 billion, or 43% of GDP, according to the Caisse Autonome d’Amortissement (CAA). Within this stock, the central government has accumulated debts totalling 12,219 billion (40% of GDP), made up of 67.5% external debt and 32.5% domestic debt. This high level of indebtedness is putting excessive pressure on the State’s finances, which will have to service a debt of around 2252.3 billion by 2024, far in excess of the planned investment expenditure of just 1424.3 billion. As we said earlier, the government is spending more to pay off unproductive debts than to support consumption and investment, the main drivers of economic growth.
To meet these obligations, the country’s leaders are calling on a wide range of multilateral (ADB, IBRD, IDA, etc.) and bilateral (AFD, EXIMBANK, Korea, USA, etc.) budgetary and commercial support, as well as on domestic savings (32.5%), through public securities and bank loans (BEAC, etc.) in particular. These incessant appeals to the financial markets to service the debt logically push up the interest rates (sometimes reaching 10%) charged to the State, and create a disincentive to investment, caused by the particular attractiveness of financial investments to the detriment of actual investment.
The problem of the sustainability of Cameroon’s debt has therefore been raised, even if the Cameroonian authorities are, as usual, in denial, taking refuge behind the famous and simplistic rule that sets the threshold for debt sustainability at 60-70% of GDP, when the most relevant criteria say the opposite. In fact, according to official sources, the history and negative projections of both primary and overall budget balances, as a percentage of GDP (-3.8 -3.9 -2.6 -1.9 -2.1 -1.7 -1.0 -0.7), from 2021 to 2027 on the one hand, and the debt service to budget revenue and export revenue ratios well above the minimum thresholds on the other, point to serious risks of unsustainability for Cameroon’s debt.
The rating agencies Standard and Poor and Fitch in particular have made no mistake in assigning Cameroon a B rating with a negative trend.
The truth is that the government’s headlong rush into debt to finance budget deficits and pay off debts from previous periods can only push the country further into the economic doldrums and even compromise the sluggish growth projected by the public services. In economics, everything is linked, and the external sector cannot do well when everything else is going badly.
IV- A DETERIORATING EXTERNAL POSITION
Unsurprisingly, and according to government figures, the current account balance of Cameroon’s balance of payments as a percentage of GDP has been structurally and trend-negative since at least 2021 and until 2027 (-4%, -3.4%, -4%, -2.7% –3.3%, -2.3% -2.4% -2.5%), echoing the chronic deficit in our trade balance over the same period (8.1%, 8.7% 7.6% 9.6% 9.2% 9.5% 9.4% 9.9%). By way of illustration, Cameroon’s imports rose by 10.9% in the fourth quarter of 2023 compared with the same period in 2022, while exports recorded a 9.2% drop in goods, coupled with an 18.1% fall in services over the same periods. As a result, the country’s net foreign assets will deteriorate dangerously (-10.1% in 2023; -6.6% in 2024; -1.1% in 2027).
V- LIFE IS BECOMING INCREASINGLY EXPENSIVE
In an economy with a high population, which does not invest or produce enough, which imports more than it exports, and which takes on a lot of debt to pay off its debts, it is hardly surprising that the cost of living is high and that people are complaining about it more and more. In June 2024, the consumer price index was on the rise, reaching 5.7% on average over 12 months, well above the 3% target set by the CEMAC, and estimated at 7% by the end of this year by government services.
This upward trend is mainly attributable to the 7.6% rise in food prices and the 14% increase in transport costs, following the rise in fuel prices at the pump. The ‘Housing, water, gas, electricity and other fuels’ product group is also on the rise. As we know, these components are essential items in the ‘household basket’. Everyday life in Cameroon is therefore becoming more and more expensive, and the vast majority of Cameroonians are becoming poorer and poorer.
VI- THE GROWING IMPOVERISHMENT OF CAMEROONIANS
The 5th survey (ECAM5) on the state of poverty in Cameroon in 2021-2022 attests to the worsening and expansion of poverty among the Cameroonian population. The national development strategy (SND30), the reference framework for planning development policies between 2020 and 2030, set a target of a 30.8% poverty rate by 2030. However, notwithstanding the disparities between the various regions and between urban and rural areas, the poverty rate, which declined from 40.2% to 37.5% between 2001 and 2014, has started to rise again, reaching 38.6% in 2021.
Also, the gap of 1 to 10 in consumption levels between rich and poor has not decreased at all over the period 2014-2021: the richest 20% still consume 10 times more than the poorest 20%. According to the ECAM5 study, the poverty line was estimated at CFAF 813 per person per day in 2002. According to this new criterion based on income, 37.7% of the Cameroonian population was living below the poverty line in 2022, still a long way from the 30.6% rate planned for 2030, which is already upon us. It is therefore reasonable to conclude that despite so many billions produced internally or received from abroad over the decades, around 2 out of 5 Cameroonians still live below the poverty line!
Faced with this gloomy picture of the Cameroonian economy, the Movement for the Renaissance of Cameroon believes that there is only one way to break the vicious circle of impoverishment in which the country finds itself, and that is to reinvest in the Cameroonian economy the 30% or so of national GDP that is diverted annually through multiple mafia-type channels. This would undoubtedly enable the Cameroonian budget to be brought up to the level it should be, the debt to be serviced by means other than debt, and economic growth to be boosted by a significant increase in good quality public spending, i.e. directed towards growth-generating projects and managed with competence and patriotism.
Consequently, the CRM calls on the government to finally engage in a merciless fight against corruption and embezzlement, which are fatally depriving our country of so many resources that are essential to accelerating its economic growth and improving the well-being of its citizens.
It also invites Cameroon’s main multilateral financial partners to be less complicit in the calamitous management of our resources and our economy.
Signed in Yaounde on 30 October 2024.
Maurice KAMTO
National President of the CRM
