Cameroon’s public finances have proven relatively resilient to the pandemic shock and we expect the deficit to be on a downward path over the medium term. The fiscal deficit on a cash basis widened in 2020 to 4.5% of GDP from 3.0% in 2019, owing to an only mild hit to tax collection and limited expenditure increases in response to the coronavirus shock (1.3% of GDP), given financing constraints. The phasing-out of pandemic-related spending and a recovery in tax receipts will bring the deficit down to 3.5% of GDP in 2021 and 3.0% in 2022. We assume the government would cut capital expenditure if revenues fell beyond the authorities’ forecast.

Near- and medium-term financing risks have lowered, in our view. We expect Cameroon to meet around 80% of its fiscal financing needs in 2021 (7.4% of GDP) through external project loans and domestic financing. The extension of the Debt Service Suspension Initiative (DSSI) to 1H21 will provide minor relief of 0.4% of GDP, although this will be higher if the authorities extend it for the whole year. Cameroon is likely to renew its Extended Credit Facility with the IMF before the end of 2Q21, which should catalyse additional official creditor support to fully cover funding needs in 2021 and ease funding conditions over the medium term.

At present, Cameroon is not planning to request a debt treatment under the G20’s Common Framework. It may issue another Eurobond to buy back a part of its 2025 Eurobond (USD750 million; 9.5%), due to be repaid in three instalments over 2023-2025. This would smooth the repayment schedule, although the annual amortisation over the period is small at 0.6% of GDP. We expect Cameroon will be able to roll-over domestic debt coming due in 2021 (2.7% of GDP) and interest payments on the Eurobond in 2021 and 2022, are small at 0.2% of GDP.

Cameroon’s ‘B’ ratings balance low GDP per capita and weak governance indicators against moderate government debt and low inflation supported by membership of the Central African Economic and Monetary Community (CEMAC).

We project general government debt to increase to 44% of GDP in 2022, from 42% of GDP in 2019, well below the current ‘B’ median forecast of 71% of GDP for 2022. Fitch’s debt ratio includes the debt of the public refinery SONARA (3% of GDP in 2020) as the government serviced this in 2020, although there is no explicit state guarantee. There has been some progress in on-going restructuring negotiations over SONARA’s debt, which could lead to an agreement before the end of the year but further delays are possible. Other SOE debt is estimated at 4.2% of GDP in 2020, although this official figure could understate its magnitude.

We expect real GDP growth to rebound to 4.3% in 2021 and 3.7% in 2022, after showing relative resilience to the pandemic shock with a 1.5% contraction in 2020 (‘B’ median of -4.2%). The recovery will be driven by higher demand for Cameroon’s agricultural exports and increased activity in the manufacturing and services sectors, but will remain moderate given persisting financing constraints, credit retrenchments and slow progress on vaccination. A slight decline in oil production in 2022 will adversely affect the growth outlook, although at 5% of GDP the sector is not a key driver. A longer or more severe pandemic shock would hit growth.

External liquidity risks are limited. Fitch forecasts the current account deficit to narrow to 4.4% of GDP in 2021 and 4.1% in 2022 from 5.2% of GDP in 2020, as agricultural and oil exports increase. The bulk of external funding needs will be funded by government borrowing. Access to CEMAC’s pooled stock of international reserves (USD7.4 billion end-January 2021) and to the convertibility guarantee provided by France somewhat mitigates external liquidity and short-term devaluation risks.

ESG – Governance: Cameroon has an ESG Relevance Score of ‘5’ for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption, as is the case for all sovereigns. These scores reflect the high weight that World Bank Governance Indicators (WBGI) has in our proprietary Sovereign Rating Model. Cameroon has a low WBGI ranking at the 14th percentile, reflecting institutional weakness, political instability as well as on-going security issues in the Anglophone regions and the far-North, for which we do not expect a near-term resolution. Deeply entrenched political divisions could also compound the risk of a disorderly transition of power from the 88-year-old president, Paul Biya.

Culled from Fitchratings

Today (9 March 2021) the United Kingdom has signed an Economic Partnership Agreement with Cameroon.

The trade deal, which will support jobs and build future prosperity, was signed by International Trade Minister Ranil Jayawardena and High Commissioner of Cameroon to the UK, H.E. Albert Fotabong Njoteh in London. The deal provides certainty for British and Cameroonian businesses, ensuring they can continue to trade as freely as they do now without any additional barriers or tariffs.

The UK-Cameroon trade was worth around £200m in 2019, and this deal lays a foundation to extend our trading relationship in the future. The UK market accounts for 12% of total exports of bananas from Cameroon and this agreement will maintain tariff-free market access to the UK. It also guarantees continued market access for UK exporters, who sold £50m in goods to Cameroon in 2019.

International Trade Minister Ranil Jayawardena said:

Today’s deal secures opportunities for both British and Cameroonian businesses – and will help support jobs and foster investment.

International trade and investment are engines of economic growth around the globe, so today’s deal will play a crucial role as we all build back better from Covid-19.

Minister for Africa James Duddridge said:

This agreement will make sure around £200m of trade between the UK and Cameroon can continue, supporting Cameroonian businesses to increase operations, enabling UK exporters to sell more goods and boosting prosperity for both countries as we together recover from the Covid-19 pandemic.

This provides the continuity businesses in both the UK and Cameroon need to ensure trade between our countries continues to flourish and grow.

Today’s signing comes after the agreement to roll over current EU-Cameroon trading arrangements from 1 January 2021 concluded at the end of December.

The UK government has secured agreements covering 66 countries plus the EU, worth £890bn of trade in 2019.

Source: Gov.UK

The Chadian government, which is mired in debt and badly affected by the Covid-19 crisis, wants to speed up the sale of part of its shares in the COTCO oil pipeline to Cameroonian state-owned oil company SNH and President Biya and his ruling CPDM crime syndicate are poised to buy the Chadian oil pipeline stake as Idris Deby battles with economic crisis.

Source: Africa Intelligence

Cameroon could lose its access to the lucrative European Union seafood market due to the government’s failure to tackle illegal, unreported, and unregulated (IUU) fishing.

The European Commission has put Cameroon on notice by issuing the country a “yellow card,” which is a formal warning that could lead to a total ban on seafood exports from the country to the E.U.

Cameroon, the commission said, has so far failed to abide by agreed standards “under international law of the sea as flag, port, and market state.”

The commission identified a lack of a robust registration policy for fishing vessels to operate under its flag, and insufficient attempts to ensure efficient and adequate control over fishing activities carried out by vessels flying the country’s flag, key constraints in Cameroon’s involvement in the fight against IUU.

According to the Environmental Justice Foundation (EJF), Cameroon is notorious in offering a “flag of convenience” to fishing vessels operating illegally with minimal monitoring and enforcement hence facilitating illicit marine seafood harvest “by making it hard to identify and take action against boat owners.”

“We very much welcome the European Commission’s decision to warn and initiate a formal dialogue with Cameroon,” EJF Executive Director Steve Trent said.

Trent said illegal operators using Cameroon’s flag of convenience abetted illicit fishing that “undermine any attempts to manage fisheries sustainably and push fish populations to collapse, threatening food security and livelihoods in many regions.”

He commended the European Commission’s use of the carding system, which he said is a “powerful tool against flags of convenience and has helped several countries such as Togo, reform dramatically.”

The preference of Cameroon as the source of the flag of convenience has been linked to laxity in government, with EJF’s previous findings showing at least a third of vessels, now sailing under the country’s flag, were adopted “only recently, in the last two to three years, despite having no obvious link with the country.”

The country’s fishing capacity is now nine times larger than it was before 2018, according to the EJF.

“Sustained commitment to progress is needed from all countries if we are to succeed in ending illegal fishing and once again the European Union is leading the world in this commitment,” Trent said.

Previously, FAO had observed emergence of a small industrial fleet “consisting primarily of shrimp trawlers, which are however often operated in joint venture with distant fishing nations.”

Despite nearly 50 trawlers greater than 24 meters having been reported way back in 2009, FAO says there are no reliable recent figures reported.

By 2015, a total fleet of 12,700 vessels was reported with 4,000 unpowered and 7,200 powered vessels, all under 12 meters, according to the FAO. An estimated 239,000 metric tons (MT) of fish was caught at the time, with 75,000 MT from inland waters and 164,000 MT from marine waters. More than 65 percent of the total catch is small pelagics.  

Source: Seafoodsource.com

For all intents and purposes, Cameroon is not known as a key mining destination. However, I believe that AIM-listed Oriole Resources’ first mover advantage could unlock the country’s true gold potential.

Last week Oriole received five new exploration licences in central Cameroon via its 90%-owned subsidiary, Oriole Cameroon. The licences, together with a further three new licences granted to Oriole’s partner, Reservoir Minerals Cameroon.

This represents a contiguous, district-scale land package covering 3,592 km2 of gold-prospective terrane in central Cameroon. The licences have an initial three-year term of a possible total nine years tenure.

Oriole is already involved in more advanced exploration programmes currently ongoing at the Bibemi and Wapouzé projects in the north of the country. Now, the new licences will expand the company’s operational base in Cameroon.

Favourable signs of promise

Oriole’s CEO, Tim Livesey, said, “As first movers in Cameroon, and with further advanced exploration ongoing at our Bibemi and Wapouzé projects in the north of the country, we are extremely pleased to have received formal approval for these additional new licences.

“Based on our in-house prospectivity analysis in 2019, this district-scale grassroots licence package was identified as having significant potential to host orogenic-type gold mineralisation. Key geological attributes of the district include suitable host rock geology, a favourable structural location covering deep crustal structures, and historic evidence of gold mineralisation. We believe that this contiguous package of nearly

3,600 km2, offers exciting Greenfield potential and we look forward to commencing our first-pass exploration programmes during the first half of the year.”

Cameroon’s mineral potential remains vastly untapped. These resources include gold, bauxite, cobalt from lode deposits, granite, iron ore, nepheline syenite, nickel, and rutile. For decades mining has never been a key area of focus. Positively, now green shoots are starting to emerge as companies are looking to start mining in the country.

Oriole’s current position puts it ahead of the curve and I will be closely watching developments unfold in the coming months. Could Oriole be the key that finally unlocks the country’s true gold potential?

Source: Mining Review