Enhancing the Efficiency and Sustainability of Investments in Cameroon

By Dr. Stephane Atangana

Introduction

Cameroon’s drive toward economic emergence by 2035 hinges on ensuring the maximum impact and long-term viability of its investments—public, private, or foreign. Current data, however, highlights ongoing challenges that include reductions in public investment budgets, insufficient infrastructure, and fluctuating foreign direct investment levels (1) . These constraints highlight the urgency of a coordinated strategy for reinforcing investment management and governance structures. This policy brief concentrates on identifying the most significant determinants of investment in Cameroon, examining both the factors that undermine efficient capital allocation and those that facilitate better outcomes. Such determinants range from macroeconomic conditions, like elevated inflation and external debt, to governance issues, such as weak institutional frameworks and corruption.

The primary objectives of this analysis are to assess how existing investment policies function, propose relevant modifications that align with the national development strategy (SND30), and address accountability gaps. Methodologically, it draws upon existing legislation, official economic and competitiveness assessments, as well as statistical data on investments. The approach integrates insights from successful practices and contextualizes them within Cameroon’s unique economic structure. This document begins by clarifying the nature of the investment challenges and exploring avenues for improvement, then critically discusses suitable policy choices in light of Cameroon’s institutional and economic context, and concludes with policy recommendations and potential lines of future investigation to foster an inclusive and transformative investment framework.

I – Investment Analysis in Cameroon

1. The determinants of investment

Investment drivers can be subdivided into four main categories: general, private, public, and FDI-related. Within the broader context, aspects such as interest rates, economic growth, political stability, and transparent regulations significantly shape investment activity. In the private domain, factors including anticipated returns, market demand, credit access, and investor confidence assume a pivotal role (2, 3). Meanwhile, public investment stems largely from government policy objectives, the availability of budgetary resources, and national debt levels; the involvement of PPPs can also considerably influence the scale and direction of expenditures (4,5). As for foreign direct investment, its volume often hinges on legal and political stability, resource availability or promising domestic market conditions, and the presence of sound infrastructure (6, 7). Because these determinants frequently intersect, investment outcomes manifest as complex interactions among macroeconomic indicators—such as growth or interest rates—and sector-specific characteristics—like the cost and availability of local resources. Consequently, understanding these multifaceted variables, including trade policies that ease market access, becomes central to devising strategic investment frameworks at both the national and international levels.

1. Investment Hurdles in Cameroon

A pressing challenge in Cameroon’s investment landscape involves mitigating resource-allocation inefficiencies, most notably within the public sector. Between 2022 and 2023, the Public Investment Budget (BIP) declined by 119.75 billion FCFA, an 8.1 percent drop to 1,359.2 billion FCFA (8). Although part of this trend is attributed to ongoing fiscal consolidation, it also highlights how external financing—currently covering 53.2 percent of the BIP—constrains government responsiveness to local priorities. Observers have noted that certain infrastructure projects and initiatives essential to meeting the SND30’s objectives still suffer from underfunding or delays (9).

Private-sector investment remains obstructed by an unaccommodating business climate and longstanding governance deficiencies. Recent legislative reforms, such as Law No. 2013/004 on Investment Incentives and Law No. 2023/008 on Public-Private Partnership Agreements, have been introduced to reduce some obstacles. Nonetheless, many companies continue to face elevated input costs and inadequate infrastructure, limiting their competitiveness. Administrative inefficiencies and uneven enforcement of existing regulations  (10) also hinder investment, and corruption alongside uncertain decentralization processes further diminishes investor confidence. Though progress has been observed in areas like municipal staff oversight, the broad scope of governance reforms required to draw in substantial private capital remains unmet.

FDI patterns present a similarly mixed picture. While net inflows decreased between 2022 and 2023, the overall FDI stock grew by 12.3 percent, reaching 7,283 million dollars (11). This paradox highlights the sustained interest of long-term foreign investors in Cameroon’s abundant natural resources and its potential role as a regional economic hub, counterbalanced by the reluctance of prospective new investors who perceive bureaucratic delays, insufficient infrastructure, and a limited skilled workforce as significant risks. Low talent rankings, as noted in various competitiveness analyses, compound these concerns, inhibiting the expansion of technology-oriented or higher-value-added projects. Although the government’s “friend-shoring” strategy seeks to entice partner-region investors, achieving tangible outcomes in terms of tax policy, legal assurance, and cost structures remains a challenge.

Another pathway to improvement lies in resolving governance shortcomings that hamper the execution of publicly funded projects. The Public Investment Project Selection Manual calls for the use of specific performance indices, notably the Indice de Performance Économique (IPE) and the Indice de Performance Sociale, Environnementale et Climatique (IPSEC), to guide the selection and prioritization process. However, organizational constraints and inadequate monitoring have led to inconsistent application (12).

Cameroon must also work on creating a stable macroeconomic environment to attract diverse investment sources. Persistently high inflation of 7.4 percent in 2023 erodes purchasing power and heightens production costs, while the predominantly external public debt burden restricts the government’s ability to finance novel ventures (13).

Below, Table 1 outlines the distribution of the 2023 Public Investment Budget by source, illustrating the continued predominance of foreign financing despite minor gains in internal funding. This reliance raises concerns about vulnerability to fluctuations in external funding conditions.

Table 1. Public Investment Budget (BIP), 2023

Source : Rapport sur l’Économie Camerounaise en 2023.

II – Recommendations

A first key recommendation is to strengthen governance and transparency frameworks that regulate public spending and partnership deals. In the short term, the government should enhance the use of feasibility studies and systematically apply IPE and IPSEC criteria for project appraisal. Over the medium term, the institutionalization of periodic audits and the routine publication of project results will foster greater accountability. Finally, establishing an autonomous oversight body with sufficient legal authority and resources would, over the long run, sustain and deepen these reforms, thereby increasing public trust and investor confidence.

A second recommendation involves improving private-sector competitiveness while deepening collaborations between public institutions and private stakeholders. In the short term, building dialogue platforms to fast-track infrastructure expansions in agro-industry, energy, and other high-potential sectors is essential to alleviating production constraints. Subsequently, over the medium term, adopting a more structured approach to skills development and technological transfers can address major labor gaps identified in competitiveness reports and boost overall productivity. In the long term, clarifying PPP norms and streamlining administrative procedures will not only attract higher-value FDI aligned with structural transformation but also help cultivate a domestic private sector capable of generating quality employment and adding diversity to the economy.

A third recommendation pertains to broadening financial partnerships and empowering local capacity to diminish heavy reliance on external loans. Initially, the government could more proactively engage with regional development banks and adopt innovative instruments such as blended finance options. Over the medium term, facilitating local content and promoting private capital markets can direct national savings toward pivotal projects, reinforcing a sense of local ownership over economic development. In the long run, continuous investment in research, innovation, and policies sensitive to gender disparities will foster inclusivity across different social groups, thereby establishing a more stable and equitable trajectory for future growth.

Conclusion

This policy brief set out to investigate ways for Cameroon to improve the effectiveness, transparency, and sustainability of its public, private, and foreign investments in order to achieve structural transformation and inclusive growth. Grounded in the SND30, the Public Investment Project Selection Manual, and economic surveys of budget allocations, private-sector performance, and FDI trends, this overview focused on identifying central obstacles, including governance deficits, infrastructural shortfalls, and an unpredictable macroeconomic climate. By illuminating these constraints, the analysis proposed actionable interventions consistent with broader national development objectives.

The central findings highlight tensions arising from budget austerity, the country’s reliance on foreign financing, the challenges of effectively implementing project selection standards, and the difficulties encountered by private and foreign stakeholders in a volatile business environment. Relying on available evidence and existing frameworks rather than new empirical investigations, this brief synthesized major insights and incorporated them into targeted recommendations. Key themes included elevated transparency, a reinforced PPP structure, and the importance of nurturing domestic capabilities.

Ultimately, this brief underscores the need for stronger governance mechanisms, reliable partnerships, and varied financing to build a robust, inclusive, and enduring investment ecosystem in Cameroon. Policymakers, private entities, and development partners now have a preliminary blueprint to collaborate on reforms that drive sustained economic progress and shared prosperity across the country.