The structural adjustment program set up by the government of Cameroon has liberalized foreign investment in Cameroon through the investment code of 1990. Foreign and domestic investors are provided with investment guarantees which comply with international standards. With the elimination of most price controls, reduced import and export duties, the privatization of parastatals and the elimination of requirements for technology transfer and geographic location, foreign investment in Cameroon has become more attractive. With the Cameroon investment code enacted in 1990, investments are not screened, foreign exchange privileges are not rationed as investors can freely transfer dividends, return of capital and interest on foreign debt. Foreign investment in Cameroon has further been enhanced by the promulgation of an industrial free zone (IFZ) regime in 1990 which comprise of a package of incentives such as a ten year tax holiday and 15% corporate tax year beginning the 11th year for enterprises which export at least 80% of their output, with licenses awarded by the National office for industrial free zones (NOIFZ). To benefit from foreign investment in Cameroon, the code requires at least 35% of Cameroonian equity ownership in small and medium-sized enterprises. In 2002, the government of Cameroon further encouraged foreign investment in Cameroon by declaring all of Cameroon an industrial free zone and maintained the same incentives for enterprises which meet the export criterion. Foreign investment in Cameroon from France benefits from a recently implemented preferential treatment which encompasses a special 15% tax deduction for technical assistance. Most persons and corporations interested in foreign investment in Cameroon, be it foreign direct investment in Cameroon or the Cameroon investment promotion agency frequently ask the following questions;
- What are the positive points to consider for foreign investment in Cameroon?
- what are the negative points to consider for foreign investment in Cameroon?
- What government measures are put in place to encourage foreign investment in Cameroon?
- What are the procedures relative to foreign investment in Cameroon?
- What are the positive points to consider for foreign investment in Cameroon?
The Cameroon economy has some key strong points to wit; Long periods of political stability, low cost labour, abundant natural resources (oil, mining, agriculture etc), monetary stability, ongoing infrastructure modernization projects backed by IMF lending and a dynamic export economy.
- What are the negative points to consider for foreign investment in Cameroon?
Cameroon has a complicated business environment as evidenced in its 163rd position out of 190 in the Doing Business ranking of 2018. This ranking has confirmed negative aspects affecting foreign investment in Cameroon like corruption and lack of infrastructure.
- What government measures are put in place to encourage foreign investment in Cameroon?
The government of Cameroon has targeted certain sectors in a bid to enhance foreign investment in Cameroon. These sectors known as priority sectors concern investments in the transport industry, food industry, tourism industry and rural development. Significant programs are being implemented by public authorities in a bid to attract more investors in Cameroon with the support of the backing of finance institutions. These programs are aimed at increasing energy supplies, reinforce economic information, simplify procedures, support companies and ensure the protection of the economic environment against illegal threats.
Moreover, the free trade zones in which all export companies can be set up has brought further advantages to these companies as regards foreign investment in Cameroon to wit; exemption from all licenses, authorization or quota limitation for both export and import, possibility of being able to open a foreign currency account, no restrictions on sales operations, purchase of foreign currency, right to transfer profit abroad (25% has to be re-invested in Cameroon), tax and duty exemption for a 10 year period from the beginning of operations etc.
FOREIGN DIRECT INVESTMENT IN CAMEROON
Foreign Direct Investment in Figures
The UNCTAD’s World Investment Report of 2020 regarding foreign direct investment inflow to Cameroon shows that foreign direct investment is traditionally low compared to the potential of its economy with statistics of USD 782 million invested in 2019 which is a slight increase to USD765 million invested in 2018. Foreign direct investment stocks were estimated to represent USD 8.4 billion in 2019. Most of the foreign direct investment came from the European Union, particularly France and Germany with major target on the mining and oil extraction industry. However, China has become a major player and investor when it comes to large infrastructural projects.
France has been the biggest source when it comes to foreign investment in Cameroon. This can be seen as the french company Pechiney has been a long owned majority share holder of Alucam, a state aluminium complex since 1994. A french firm also bought a sugar mill in Cameroon in 1988, another french telecom firm was granted a mobile telephone license in 1999 whilst a french bank bought Cameroon’s last state bank in the year 2000. South African firms acquired controlling shares in the privatized national railroad and the state owned mobile telephone company. The common wealth development corporation had invested over 36 million pounds in Cameroonian enterprises as of 1999 including C.D.C, Hevecam, Printpak, Snec, Socatral.
CAMEROON INVESTMENT PROMOTION AGENCY
The Cameroon Investment Promotion Agency (CIPA) is a parastatal institution with legal personality and financial autonomy with headquarters in Douala. This agency falls under the technical supervisory authority of the ministry in charge of the promotion of private investments and the financial supervisory authority of the ministry of finance. This agency has has purpose to promote foreign investment in Cameroon in the following ways;
•reception, assistance and guidance of foreign and domestic investors at all stages involved in setting up their investment projects;
•receiving and examining application files for approval under one of the schedules of the Investment Charter and the structuring projects schedule established by the General Tax Code;
•obtaining the necessary visas for expatriate staff related to the• execution of their investment programs and for the stay of their foreign personnel in Cameroon;
•assisting approved companies at all the necessary stages related to carrying out of their investment programs;
•establishing, in collaboration with the relevant technical services, simplified administrative procedures for activities approved under the investment code;
•ensuring the follow-up, monitoring and implementation of commitments made by approved companies.
INVESTMENT INCENTIVES IN CAMEROON
Foreign investment in Cameroon has become a lucrative venture thanks to the investment incentives set forth by the government of Cameroon. These investments incentives have played a pivotal role in attracting foreign business in Cameroon thereby boosting the doing business in Cameroon initiative. Investing in Cameroon has become profitable due to the following incentives;
- Repatriation of profits,
- Free importation of capital,
- Tax and custom incentives,
- Finance and administrative incentives, and
- Specific incentives in priority sectors like;
- Development of agriculture, fisheries, livestock, plant, animal or fishery product packaging activities, etc.
It is the duty of K&P Firm to engage in due diligence for foreigners desirous of investing in Cameroon. We accompany our clients throughout every step in the investment venture.