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Cameroon Business Forecast Report Q4 2008Published by: Business Monitor International Published: Jul. 28, 2008 - 47 Pages Table of Contents
AbstractStability Through Economic Growth?The expiry of the June deadline for the creation of an electoral commission represents a fresh blowto those cautiously hoping for a more transparently democratic environment in Cameroon. Whilethe opposition is presently peaceful, the government will need to ease the population’s economicgrievances to decrease the chances that an armed resistance will eventually emerge in the politicallyrepressive, resource-wealthy country. Fortunately, the state looks set to receive a boost to itsresources thanks to the high forecast price of oil. We are forecasting a sizable fiscal surplus overthe next five years, on the back of oil receipts and we expect the government to use the wealth tofund infrastructure. Such investment, coupled with investment in mining and agriculture, shouldpush up economic growth, which has been disappointing over the last few years. Given the rebel movements in neighbouring Chad, Central African Republic and Nigeria, the risksof a violent uprising emerging in Cameroon should not be ignored. Presently, the most dangerousregion is the oil-rich Bakassi Peninsula, where grievances against the government by the largelynon-Cameroonian population could conceivably grow into a Niger Delta-style oil disruption andtheft campaign. While such a scenario is presently only a risk, little has been achieved in the wayof developing regional security measures. Security in the north and east parts of the country isalso likely to remain in danger, given the ongoing conflicts across the border. On the economic front, Cameroon should manage to keep inflation below 5% this year, despitethe continuation of high global food and energy prices, thanks to the strength of the euro and theconcomitant strong purchasing power of the pegged Central African franc. Upside pressure toinflation includes the rising costs of food and oil, but in Cameroon, the high price of oil should allowthe country to sustain a current account surplus in 2008 for the first time since 1995. Thereafterwe expect the country to slip back into deficit as the price of oil falls off its 2008 peak.The tax burden is high, with an overall corporate tax rate of 38.5%. According to the World Bank’s‘Doing Business 2008’ report, the total tax rate (as a percentage of profit) sits at a cumbersome51.9%. The IMF underlines that the high tax rates - particularly for VAT - means that the authoritiesshould focus on broadening the tax base through reducing exemptions and improving taxincidence in the informal sector. Foreign companies complain about burdensome tax audits andgovernment efforts designed to force companies to compromise on tax assessments, includingblocking company bank accounts for temporary periods. Get Full Details About This Report >> |
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