Building an Inclusive Future : Making Public and Private Investment Work in CEMAC

By Salim Ahmed Vessah

Executive summary

Over the past two decades, CEMAC has invested heavily in public infrastructure, yet job-rich and inclusive growth remains limited. Private investment is shallow and concentrated in extractive sectors, while SMEs face chronic financing and regulatory constraints, leading to weak diversification and high exposure to external shocks. This brief reframes the challenge as one of public–private complementarity: how to redesign public spending, financial instruments, and governance so that each public franc attracts private capital, capabilities, and jobs. We propose a sequenced reform package. Within 12 months, governments should publish a quarterly public-investment dashboard, launch a partial credit-guarantee window for SME lending, implement two transparent PPP pilot projects, and introduce fast-track business licensing and permitting. Over 12-36 months, project appraisal and ex-post evaluation should be institutionalized, PPP frameworks standardized, and commercial courts strengthened. Over 36-60 months, regional investment rules should be harmonized, and financing diversified through regional and green instruments. Progress will be measured by on-time project delivery, SME credit growth, non-extractive private investment, and formal job creation.

Introduction

For over two decades, CEMAC has invested heavily in infrastructure, yet inclusive growth, job creation, and economic diversification remain stubbornly weak. Despite abundant natural resources, the sub-region remains increasingly dependent on hydrocarbons and highly exposed to external shocks. The central constraint is not the volume of public investments, but its effectiveness in mobilising private investment and productive activity. Public investment continues to dominate, reaching an estimated 3-4% of GDP in Cameroon in 2023. However, weak project selection, cost overruns, delayed execution, and governance gaps limit its economic impact. Too often, infrastructure investments fail to unlock private sector response, generate durable jobs, or stimulate non-extractive value chains. At the same time, private investment, the primary driver of productivity, innovation, and employment remains shallow and narrowly concentrated in extractive industries. While private investment averages about 13% of GDP in Sub-Saharan Africa, CEMAC performs significantly below this benchmark. Foreign direct investment inflows represented only 3.8% of GDP in 2022, lagging behind peer regions in West and East Africa and far below North Africa in absolute inflows. SMEs continue to face binding constraints in access to finance, regulatory complexity, and market entry. Without a shift toward policies that crowd in private capital and capabilities, CEMAC risks locking itself into low diversification, weak job creation, and persistent vulnerability.

CEMAC’s constraint is not insufficient public spending, but weak public-private complementarity. Public investment expands infrastructure without mobilising productive private capital, leaving growth shallow and job-poor. The central policy challenge is to redesign public investment, finance, and regulation so that each public franc systematically crowds in private investment, productivity, and formal employment.

Public Investment : Dominant but unproductive

Since the early 2000s, CEMAC countries have prioritised public investment as the primary engine of development, directing large resources toward roads, energy, and port infrastructure. In several years, public investment has exceeded 8% of GDP. Yet this effort has not translated into sustained productivity gains, diversification, or job creation. The core problem is not scale, but efficiency and sequencing. Weak project preparation, limited cost-benefit analysis, fragmented procurement, and slow execution raise costs while delaying economic returns. As oil revenues declined after 2015, financing pressures further exposed these structural weaknesses, reducing the growth impact of each additional public franc. Empirical evidence confirms the low marginal productivity of public investment in the region: each dollar of public spending generates less than fifty cents of additional output, far below performance observed in more reform-oriented African peers (IMF, 2024). At the same time, heavy reliance on domestic borrowing to finance public projects absorbs scarce banking liquidity, compressing credit available to firms. State dominance in infrastructure, energy, and transport further limits private entry, competition, and innovation. Instead of crowding-out effect in private capital, public investment increasingly substitutes for it. This misalignment constrains entrepreneurship, delays industrial upgrading, and weakens the transmission of infrastructure spending into inclusive growth.

Private Investment : Insufficient and Concentrated

Between 2010 and 2023, private investment in CEMAC revealed a structural divergence from continental trends. While Sub-Saharan Africa experienced a general investment slowdown after 2020, CEMAC recorded the steepest contraction, reflecting its high dependence on hydrocarbons and weak diversification. The post-2015 oil price shock triggered a collapse in non-extractive private investment, exposing the extreme concentration of FDI in Equatorial Guinea and Congo, where inflows remain overwhelmingly tied to petroleum. In contrast, sectors such as agro-processing, logistics, manufacturing, and digital services attract limited capital. Domestic constraints reinforce this pattern. Firms face regulatory uncertainty, slow administrative procedures, weak contract enforcement, and high operating costs. In Cameroon, for example, business registration and construction permitting delays continue to deter formal investment, while in Chad and the Central African Republic, security risks and infrastructure gaps further suppress private activity. Rising public debt, reaching approximately 55% of GDP in 2023 has intensified credit crowding-out, constraining bank lending to SMEs and raising financing costs. As a result, mobile capital shifted to more diversified and predictable  markets such as Ghana, Kenya, and Côte d’Ivoire, where investors access deeper value chains, better logistics, and clearer regulatory frameworks. Without targeted reforms, CEMAC risks continued private investment erosion and persistent dependence on extractives.

Challenges

The interaction between weakly productive public investment and structurally constrained private investment has locked CEMAC into a fragile growth model. Economic diversification remains limited, with hydrocarbons accounting for more than 70% of total exports, exposing public finances to recurrent oil price shocks, notably in 2008, 2014, and 2020. Each shock triggers sharp revenue losses, widening fiscal deficits, and forced expenditure adjustments, undermining long-term planning and service delivery. At the same time, public investment has failed to build a sustainable productive base, while private investment is suppressed by regulatory uncertainty, limited access to credit, and debt-driven crowding-out. The labour market absorbs these distortions through informality, now employing over 80% of the active population, weakening tax mobilization and social protection systems. This cycle of rent dependence and weak private-sector dynamism constrains productivity, job creation, and resilience. Without reforms that improve investment efficiency, mobilise private capital, and strengthen business confidence, CEMAC risks persistent volatility, low inclusive growth, and rising social vulnerability.

Opportunities

CEMAC does possess considerable assets to reverse the trend. Better-targeted public investments, focused on basic infrastructure, education, and health, can play a catalytic role by stimulating private investment and improving overall productivity. Public-Private Partnerships (PPPs) are an effective lever for mobilising capital in strategic sectors like energy, digital, and transport, while sharing risks and reducing budgetary pressure. Furthermore, the AfCFTA and the African Union’s Agenda 2063 provide a framework conducive to regional integration and attracting pan-African investors, opening up prospects for market and financing diversification. If these opportunities are fully exploited, CEMAC can generate more formal jobs, diversify its economy, strengthen its budgetary resilience, and enhance its continental competitiveness.

Recommendations

Short Term (1-2 years)

• Public Investment Transparency :Publish a region-wide online pipeline of all public investment projects (costs, financing source, procurement status, execution rate) under CEMAC Commission coordination, updated quarterly.
• Project Quality Control :Require mandatory cost-benefit screening for all projects above CFA 10 billion using a standardized appraisal template validated by BEAC and national planning ministries.
• Credit Decongestion :Cap domestic bank financing of public projects and create a CFA 100-150 billion partial credit guarantee window at BDEAC to unlock SME lending.

Medium Term (3-5 years)

• PPP Deployment :Launch two cross-border PPP pilots (power interconnection, logistics corridor) using standardized contracts and open competitive bidding.
• Business Entry Reform :Reduce business registration and construction permitting to under 10 days through digital one-stop platforms in all member states.

Long Term (5-10 years)

• Regional Investment Code :Harmonize PPP rules, tax incentives, and dispute resolution mechanisms at CEMAC level.
• Financing Diversification :Develop regional bond issuance, green infrastructure funds, and diaspora investment instruments.
• Industrial Clusters :Anchor industrial zones around agro-processing, renewable energy equipment, and logistics hubs.

Conclusion

CEMAC does not need higher public spending to accelerate growth ; it needs smarter spending that mobilises private investment and productivity. Improving transparency in the public investment pipeline, deploying targeted risk-sharing instruments to unlock SME finance, and piloting credible, well-governed PPPs can rapidly shift incentives and restore investor confidence. These reforms are practical, politically feasible within a single electoral cycle, and directly measurable. If governments act decisively, public resources will crowd in private capital, deepen non-extractive investment, and expand formal employment. The alternative is continued dependence on hydrocarbons, persistent fiscal vulnerability, and widening informality. Public-private complementarity must therefore become the organising principle of economic policy : the state focusing on infrastructure quality, regulation, and accountability, while enabling firms to lead in production, innovation, and job creation. The window for reform is open, delaying action will only increase adjustment costs and missed opportunities.