Cameroon Infrastructure Report Q1 2013

Business Monitor International
November 14, 2012
64 Pages - SKU: BMI4911104
Countries covered: Cameroon

BMI View: Cameroon’s construction sector faces favourable conditions over the medium term as thegovernment continues to prioritise infrastructure investment as part of its 10-year economic plan.Cameroon therefore ranks as one of the best locations in West Africa for infrastructure investments. Inaddition, high oil prices are swelling government coffers and facilitating ambitious infrastructure plans,while Chinese funding remains dominant for mega-projects.

The key factors driving our outlook this quarter are:

China First Highway Engineering Company was awarded a contract to build a motorwaybetween Douala and Yaounde in China. The six-lane motorway will reduce the distancetravelled between the two cities from 265km to 215km. It also aims to foster trade within thecentral African region, particularly within Cameroon, the Central African Republic and Chad.The bridge will be funded by China Export Import Bank, which has signed a US$467mn loanagreement.

The World Bank has announced that it will provide a US$132mn loan for the Lom PangarHydroelectric Power Project in Cameroon. The project will increase the hydroelectric powerproduction capacity of the Sanaga River by 40%. The loan will also finance the construction of anew 30 megawatt (MW) power plant, which will provide electricity to 2,400 homes in thecountry.

Kribi Power Development Company (KPDC) will receive a long-term loan of EUR29.5mn(US$38.42mn) from the European Investment Bank (EIB) for its Kribi power project inCameroon. The EUR263mn (US$342.49mn) project involves the construction of a 216MWnatural gas power plant in Southern Cameroon, a high-voltage transmission link of 100km, newsubstations and transformers. Cameroon's government and AES Corporation had establishedKPDC to execute the project. The Sanaga South gas field offshore Cameroon will be the mainsupplier of natural gas to the plant. In addition, the electricity generated by the plant will beexclusively supplied to Cameroon power utility AES-SONEL.

Cameroon is emerging as an up-and-coming cement producer, as good access to both thebooming West African economy and global export routes are bringing in an increasing amountof foreign investment. In May 2012, Morocco’s leading home builder Addoha Group beganconstruction of an US25.9mn 0.5 metric tons per annum (mtpa) plant. After a number of delaysrelating to land disputes, Dangote Cement finally began work on a US$115mn 1.5mpta plant.Both the builds are located in Douala.

A surge of investment and new exports should boost construction industry growth to an average of 6.1%between 2013 and 2017, while improved infrastructure will play a role in lifting the long term real GDPgrowth rate to an average of 4.4% per annum over the same period. Risks are primarily to the upside, withoil production potentially exceeding expectations in 2012.

We believe neither changes to the electoral code, nor the postponement of parliamentary elections into2013 will prove to be serious issues. The single greatest uncertainty facing Cameroon over our 10-yearforecast period to 2021 is how a transition from the leadership of President Paul Biya, who has ruled since1982, will be managed. Despite this significant risk – and smaller challenges such as piracy – Cameroon'sfundamentals are relatively stable, leading to our expectation of broad political continuity.



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