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Cameroon Infrastructure Report Q4 2009Published by: Business Monitor International Published: Sep. 28, 2009 - 64 Pages Table of Contents
AbstractCameroon’s economic performance this year looks slightly better than it did three months ago, but thecountry is still handicapped by its poor infrastructure. The government did sign a key agreementinvolving some of its most ambitious projects, but the immediate future will still include serious threats toits economic strength.BMI is now forecasting GDP growth in 2009 of 0.8%. That is better than the 0.5% we were previouslyforecasting, but still far below the 4.8% growth of 2008. The economy should grow even faster insubsequent years. We are forecasting 2.4% growth in 2010 and then a surge to 5.8% in 2011. The mainreasons for our reassessment of 2009 are higher gross fixed capital formation and stronger than expectedconsumer spending. But nobody should overlook the problems in this resource-rich country. Electricity outages became apopular joke this summer. The power went down so often that the country’s aluminium smelter wasforced to halt production in August. The highway leading into and out of Bamenda collapsed, preventingheavy goods from being transported across the gash. The government replaced the energy minister andsacked the general manager of the Electricity Development Corp. The changes in personnel might bereasons for optimism, but the country’s difficulties run deeper than a handful of officials. Rio Tinto Alcan, which along with the government owns the Alucam smelter, has not given up onCameroon. The company and the government signed an agreement this quarter on a US$5.36bnhydroelectric dam, an aluminium smelter, and the Kribi deep seaport. Cameroon’s ability to overcomeobstacles in the long term depends on companies and investors being willing to help build theinfrastructure, a reality that government officials openly acknowledge. The reward is access to thebauxite, iron ore, gold and other mineral resources the country has to offer. Investors’ interest in the country bodes well for infrastructure development over the next five years.Thanks to debt cancellation through the World Bank and the International Monetary Fund’s HeavilyIndebted Poor Country (HIPC) initiative, public finances have been improved. The Cameroongovernment is collaborating with neighbouring countries and multi-lateral agencies, and the multinationalcorporations in the country are tolerant of risk and have diversified their risks over manycountries. The government itself appreciates the benefits of build, operate and transfer (BOT)transactions. The country still suffers from corruption, a lack of transparency and insecure borders, but the problemsare not getting worse. The Kribi seaport is one of two infrastructure projects that have the potential to influence the country’slong-term economic performance. The Lom Pangar Dam, on which work has now reportedly begun, isthe second. If the two projects go ahead, Cameroon should be able to greatly expand its iron ore andaluminium production, reducing its dependence on oil. The dam would reduce vulnerability to drought byensuring that the hydroelectric generators, which account for more than 80% of electricity production,have the water they need. Deep sea ports would be a gateway not only to Cameroon’s resources, but alsoto those of neighbouring countries. If the country can take these and other projects to completion, the resulting momentum is likely to bringfurther investment in infrastructure, including into roads, railroads and water and sanitation. BMI now expects growth of 3.1% in the construction sector in 2009, accelerating to 3.5% in 2010 andthen 6.1% the year after. Cameroon’s infrastructure activity, however, must be viewed in the context notjust of the global economic climate, but specifically in the context of commodities prices. Oil prices andsome metals prices have been moving up this summer, and although the gains are not uniform across thecommodities sector, any sign of price recovery should boost investors’ confidence about undertakingprojects in Cameroon. Get Full Details About This Report >> |
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