Abstract
There a number of grounds for optimism about infrastructure development in
Cameroon over the next
five years. Public finances have been helped by
debt cancellation through the World Bank’s Heavily
Indebted Poor
Country (HIPC) initiative. The government is collaborating with those of
neighbouring
countries and with multi-lateral agencies. The government
appreciates the benefits of Build-Operate-
Transfer transactions. Most of
the multi-national corporations who are active in the country are
risktolerant
organisations who have diversified their risks over many
countries other than Cameroon.
Problems associated with corruption, lack
of transparency, and insecure borders are serious - but are not
obviously
deteriorating.
Although Cameroon’s economic development involves
investment in new roads and railways, the Kribi
Deep Sea Port and power
transmission networks, a key project is the Lom Pangar Dam. Assuming that
construction goes ahead as planned, the dam will substantially reduce the
country’s vulnerability to
drought and consequent inability to
produce electricity from its hydroelectric generators – which
account
for well over 80% of output. Rio Tinto and Alcan – the key
participants in the (majority) state owned
Alucam aluminium smelter have a
significant incentive to support the construction of the dam.
In the
short-term, though, 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 1.2% of
GDP in 2008, flipping
to a deficit equal to 3.5% 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 Q109 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 growth,
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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