In Yaounde, Henri Kouam, the founder and Executive Director of the Cameroon Economic Policy Institute (CEPI) brought together policymakers, academics, entrepreneurs, and students to engage with the findings of CEPI’s latest report, one which evaluates how trade agreements are poised to reshape the economic landscape in Cameroon.
Hosted at the Mansel Hotel, the crucial meeting was focused on the significant impact of the African Continental Free Trade Area (AfCFTA) and the Economic Partnership Agreement (EPA) on the Cameroonian economy.
“Free trade in these trade agreements are beneficial to the Cameroonian economy but much more have to be done to ensure that our businesses can effectively leverage and benefit from these trade agreements.” Henri Kouam said. “What our report found is that these trade agreements are going to cause our GDP to increase, they would improve employment, they are going to attract investment but all of this is only possible if we reform properly. Which means that we have to make it easier for people to do business in Cameroon…” he added.
The report emphasizes that Cameroon signed the AfCFTA agreement in March 2018 and ratified it in October 2019, marking its commitment as a leader in the agreement’s pilot phase. With access to a market of over 1.2 billion consumers, expected to grow to nearly 2.5 billion by 2050, AfCFTA presents a transformative opportunity for Cameroon. It aims to achieve sustainable growth by enhancing exports, stimulating industrialization, creating jobs, and diversifying the economy.
On the other hand, the EPA, which came into effect in 2016, allows Cameroonian products to enter EU markets duty-free. While this agreement opens doors for local producers, it has also raised concerns about the competitive pressures it places on domestic industries, particularly in sensitive sectors like agro-food. The CEPI report highlights that while the EPA can foster economic growth, it may also exert downward pressure on wages, necessitating protective policies to secure livelihoods for local workers.
Yannick Ngellewi, one of the panelists believes that, the challenge in Cameroon is not all about the absence of finances, but rather that of approach and orientation of revenue in Cameroon. “If our states continue to depend on external financing, they will never be able to focus on entrepreneurial priorities… if every Cameroonian were to pay FCFA 100, it will amount to FCFA 2 Billion and in 10 months, FCFA 20 million. This can help us finance our projects instead of constantly borrowing from international money launderers who will truncate our development.”
According to the economic journalist, educating citizens and making them see necessity for their FCFA 100 investment for road and infrastructure construction is essential. To him, making them see how getting a hold of the international economy would secure their children’s future as they would be able to work and trade freely on the African market in future would make them more willing to contribute.
The findings presented at the conference shed light on several critical areas:
On the aspect of GDP growth, the implementation of both AfCFTA and EPA is projected to significantly boost Cameroon’s GDP. The report estimates that these agreements could enhance economic resilience, with potential growth rates that promise to uplift the national economy.
On export opportunities, the CEPI report projects notable growth in agricultural and industrial exports to the EU, highlighting the potential for increased market access. It estimates that, between now and 2030, there will be an increase in the exportation of agro products by $ 6.55 million, while exportation into the industrial sector will rise by $282.07 million. However, it also points out that exports to other African nations may remain limited under the EPA, indicating a need for strategic initiatives to strengthen intra-African trade.
Concerning domestic demand trends, while the EPA is expected to moderately increase domestic demand for various products -0.01% for agro products, 0.59% for industrial products and 0.03% for services, it is feared that the AfCFTA may introduce challenges, particularly for the agricultural and industrial sectors. As such, this dual impact necessitates careful consideration and targeted interventions to support local markets.
Investment Dynamics. The report reveals an anticipated increase in investments, especially in the industrial sector by 0.2% which is crucial for long-term economic development. However, it also notes a decline in investment in agriculture and services by 0.1%, emphasizing the importance of a balanced approach to investment across sectors.
In relation to household welfare, both agreements have the potential to improve household welfare by $651.79 USD but the report warns that the EPA could negatively impact wages in Cameroon. This highlights the need for policies that protect income levels and support workers in adapting to the changing economic environment.
Director Kouam believes that, improving the overall business environment by reducing bureaucratic hurdles and fostering political stability will attract much-needed foreign investment. “No investor would want to invest in a politically unstable country. Cameroon needs to fix the Anglophone crisis and the Biko Harram crisis which are plaguing the nation.” He reiterated.
To fully leverage the benefits of these trade agreements, the CEPI report outlines several strategic recommendations. Key among them is the need to strengthen infrastructure, which is vital for facilitating trade and reducing costs for exporters.
The second recommendation was enhancing agricultural competitiveness through modern techniques and tax incentives. CEPI believes that, this is also essential for boosting local productivity.
Improving the Business Environment to Attract Investment. This means reducing red tape, ensuring political stability, and creating a regulatory framework that encourages foreign investment.
Use Development Cooperation. Cameroon was advised to actively engage in EU development initiatives to enhance trade-related infrastructure and capacity. This includes seeking technical assistance and funding for projects that align with the goals of the EPA, such as improving trade facilitation and competitiveness.
Boosting Manufacturing Production. Cameroon should aim to increase its manufacturing sector’s contribution to GDP to 25%, as outlined in its national development strategy for 2020-2030. This is crucial for reducing reliance on imports and enhancing export capacity, especially in agriculture and processed goods.
Developing a National Strategy for AfCFTA. CEPI suggests that, a comprehensive national strategy should be created to align with AfCFTA goals, focusing on building credible regional value chains and boosting intra-African trade in intermediate and manufactured products.
Strengthening Trade Regulations. According to CEPI, implementing effective regulations that facilitate trade, such as simplifying customs procedures and adhering to AfCFTA rules, is essential for smooth business operations.
Raising Awareness in the Private Sector. There is a need for extensive awareness campaigns to inform businesses about AfCFTA, its benefits, and how to navigate the new trade environment. This to them, will enhance participation and competitiveness in the regional market while lowering trade costs.
Investing in Infrastructure. Improving transport and logistics infrastructure will be vital for facilitating trade flows and reducing costs associated with moving goods across borders.
Judging from the proposals advanced by CEPI, it is clear that effectively regulating trade policies is of utmost importance for Cameroon’s economic future. In his words, these regulations can help maximize the benefits of these trade agreements while safeguarding local industries and promoting sustainable growth.