Cameroon: Where Has It Gone Wrong and What Signs of Optimism Are There?
Williams, Nye, Teaching Business & Economics
This article has been written by Nye Williams, a student at St Paul's School. It looks at the African country of Cameroon and covers some of the key economic data relating to the country and some of the portents for the future. It could be used as a case study with students covering Development Economics. Nye has added some questions at the end to help build some of the understanding and the skills linked with studies of Development Economics.
Cameroon, sometimes known as the 'hinge of Africa', is a 'small' West African country, about the same geographical size as California. Favourable comparisons stop there. Cameroon, a French colony until 1961, has per capita GDP (PPP basis) of $2,300 compared to California's $42,300. Set against the $1,060 per capita GDP of its fellow sub-Saharan African countries. Cameroon looks less of a struggler. Nevertheless, with its measly wealth distributed unequally (in 2005 the United Nations Development Programme estimated Cameroon's Gini co-efficient at 0.44), as many as 40 per cent of Cameroonians live in poverty. Cameroon is not without natural advantages; it has a 402 km coastline from which to trade and a range of natural resources to exploit, including bauxite, iron ore, timber and oil. Yet this hasn't added up to economic success. Why has economic success eluded Cameroon? What are the problems and are there solutions that offer hope? I will highlight three related aspects of Cameroon's plight - its neighbours, its over-dependence on commodities and its low share of foreign direct investment in sub-Saharan Africa.
In his book 'The Bottom Billion', Paul Collier (Oxford, 2007) develops a model to explain why African countries have failed economically. Collier's model identifies a number of 'traps', several of which apply to Cameroon. The first trap is being 'landlocked by bad neighbours'. Though not landlocked. Cameroon is located in a 'very bad neighbourhood'. In the north it borders the Central African Republic and Chad, in the east and south, the Democratic Republic of Congo, Equatorial Guinea and Gabon and in the west, Nigeria. All of these neighbours, most notably Chad and the Central African Republic (CAR), have suffered civil wars and instability as rival political groups, often with tribal roots, quarrel to control the wealth created by natural resources, especially oil.
Cameroon has avoided civil war. It also has political institutions that look democratic. The bad news is that underlying this relative 'stability', the multi-party political system has been abused by President Paul Biya since he came to power in 1982, corruption is rife and government tax revenues and aid flows are wasted or stolen by officials. In the 2010 corruption index, published by Transparency UK, Cameroon was ranked 146th out of 182 countries surveyed. Regional political instability also undermines economic development in Cameroon and makes it hard to do business there. According to new International Finance Corporation (IFC) (Washington DC, 201 1) data published at the start of 2011, Cameroon is the 168th most difficult country in the world for doing business. Having chaotic, low growth neighbours certainly doesn't help and means that Cameroon has enjoyed no spill-over benefits from the economic successes of others. The Chad-Cameroon oil pipeline project, commissioned in 2000 and funded by the World Bank, was the most notable attempt to generate mutual benefits for Cameroon and a neighbouring country. The project aimed to develop Chad's oil resources, reduce its people's poverty and to bring benefits to Cameroon through oil transportation revenues and improving stability across the border. In the event, the failure of the Chad government to use its wealth to alleviate domestic poverty (a precondition for the loans) caused the World Bank to hold back project funding (BBC News online, London, 12 January 2006) and prevented any benefits for the region arriving before the global recession set in during 2008. …