Abstract
Cameroon, despite its numerous economic problems, manages to appeal to
investors looking for
opportunities in its key infrastructure sectors. In
the latest quarter, several new projects were proposed
and key
participants already operating in the country reaffirmed their commitment to
the sector, despite
their need to pare back investment spending elsewhere
because of the economic crisis.
This interest bodes well for
infrastructure development in the country over the next five years. Thanks
to
debt cancellation through the World Bank and the International Monetary
Fund' s Heavily Indebted Poor
Country (HIPC) initiative, public finances
have been helped. The Cameroon government is collaborating
with
neighbouring countries and multi-lateral agencies; the multi-national
corporations in the country are
tolerant of risk and have diversified
their risks over many countries. The government itself appreciates the
benefits of build-operate-transfer (BOT) transactions.
The country still
suffers from corruption, lack of transparency and insecure borders, but the
problems are
not getting worse.
Two infrastructure projects deserve -
and are getting - especially close scrutiny. Both have the potential
to
influence significantly the country' s long-term economic performance. The
Kribi Deep Sea Port could
greatly enhance Cameroon' s ability to exploit
its mineral resources. The Lom Pangar Dam would give it
the ability to
increase and stabilise its electricity generation. Greater iron ore and
aluminium production -
and export - are likely to result if the
construction of the two projects goes ahead as planned, and
therefore a
reduction in the dependence on oil. The dam would reduce vulnerability to
drought by
ensuring that its hydroelectric generators, which account for
more than 80% of electricity production,
have the water they need.
If
the country can get those and other projects to completion, the resulting
momentum is likely to bring
further investment in infrastructure,
including into roads, railroads and water and sanitation.
In the short
term, however, the economic environment has taken a clear turn for the worse.
On the back of
falling oil, commodity and tourism exports, we see
Cameroon' s current account surplus, equal to 1.12%
of GDP in 2008,
flipping to a deficit equal to 3.4% of GDP in 2009. The potential for an
outbreak of
militancy could exacerbate the size of the deficit, while a
deeper than anticipated drop in imports on the
back of CFA franc
depreciation and falling investment could help bring in the current account
deficit.
In BMI' s Cameroon Q209 Infrastructure Report we have thus revised
downwards our forecasts for
Cameroon to reflect the deteriorating
macroeconomic outlook and risk aversion, which may keep a
number of
investors otherwise interested in the industry at bay. We now forecast that
the industry real
growth will be 8.2% for 2009, down from our previous
forecast of 13.8%. This seems enviable, but it
should be noted that the
industry nominal value is forecast to be a mere US$800mn, therefore even
one
medium-sided project (such as the bridge in Douala) can have a big
impact on real growth, whereas in
other, larger markets the effects on one
medium-sided project would be muted.
BMI is forecasting real GDP growth in
Cameroon to slow from 4.6% in 2008 to 2.4% in 2009.
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