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Cameroon Infrastructure Report Q1 2010Published by: Business Monitor International Published: Jan. 15, 2010 - 63 Pages Table of Contents
AbstractPositive developments in the economy and infrastructure sectors were somewhat overshadowed this quarter by Société Nationale des Hydrocarbures (SNH)’s disclosure that total oil production had fallen by 13.8% in the first 10 months of 2009.This was unwelcome news for Cameroon, whose economy is tightly correlated with commodity fluctuations, especially when added to a 44.3% decline in oil prices over the same period. Highlighting yet again Cameroon’s urgent need to diversify its growth strategy away from energy, this price fluctuation and production decline will adversely impact on the country’s deficits and dwarf treasury revenue, which depends on the oil sector for around half its export revenue. Nonetheless, there was progress this quarter on the beleaguered Lom Pangar dam project, which was originally conceived during Cameroon’s economic meltdown in the 1980s. Renewed financial commitment for the project, which has inflated by 15% since 2008 to around EUR22mn, came from the French Development Agency (AFD) among others. The government considers the Lom Pangar dam a key project, which it argues would reduce power supply vulnerability to drought by ensuring that hydroelectric generators, which account for more than 90% of electricity production, have the water they need. Indeed, Prime Minister Philémon Yang expressed optimism that a series of projects that have fallen on the backburner will come to fruition in 2010. This includes the 200MW Memve’ele hydropower station in southern Cameroon, which was taken up by China’s Sinohydro early this quarter. Under a preliminary agreement Sinohydro is expected to deliver the US$795mn project by December 2014. Cameroon’s transport sector continued to benefit from the multilateral drive to create and improve trade links between Central African countries. The World Bank committed an additional US$217mn this quarter to the Transport and Transit Facilitation Project to ensure its completion, bringing the total project cost to US$980mn. Approved in 2007, the project will improve road and rail infrastructure in Central Africa and enhance trade among the Central Africa Economic and Monetary Community (CEMAC) members. The project also specifically aims to open up markets for Cameroon, Chad and the Central African Republic. Meanwhile, in September, the African Development Bank approved US$190mn to fund the Ketta-Djoum Road and Brazzaville-Yaounde Transport Corridor Facilitation Project, which will link up the capitals of Cameroon and Congo. In the same month, Prime Minister Philémon Yang inaugurated the 63km Kumba-Buea-Douala road, linking several of Cameroon’s major cities. Investors continue to express tangible interest in Cameroon’s energy and mining sectors, despite the country’s seemingly insurmountable regulatory and legal weakness. With competing U.S. and Chinese energy and minerals interests in the continent there is little reason to doubt that investment will continue in the long-term even in the absence of the government’s mitigation of political risk in Cameroon. However, the downside of the current geopolitical trend is that the country’s desperate need for transport and other infrastructure development will receive minimal investment from such investors and will continue to rely on multilateral support. In 2008, BMI estimated that Cameroon’s construction sector was worth US$0.8bn. However, due to this relatively low base, growth should be reasonable in the short-term, despite the global slowdown. By 2010, this sector should have reached a value of US$0.93bn, rising to US$1.2bn by 2014, a 47% increase on 2007 levels Get Full Details About This Report >> |
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