Cameroon is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Cameroon was undertaken in 2008. According to that Evaluation, Cameroon was deemed Compliant for 0 and Largely Compliant for 10 of the FATF 40 + 9 Recommendations.
US Department of State Money Laundering assessment (INCSR)
Cameroon was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Cameroon’s growing financial sector is the largest in the Economic and Monetary Community of Central African States (CEMAC) and, in 2014, hosted 13 banks, 25 insurance companies, over 460 microfinance institutions, and a nascent stock exchange (The Douala Stock Exchange). Yet despite hosting 70 percent of financial institutions in CEMAC, Cameroon is still relatively disconnected from the international financial system. According to the Bank of Central African States (BEAC), less than 10 percent of the population has access to bank services. Cameroon’s economy is heavily cash dependent, and the majority of financial transactions take place in the informal sector, notably in indigenous savings schemes locally known as “Njangui.”
Corruption in Cameroon is an endemic problem in commerce and government; it facilitates money laundering and other financial crimes and retards broad-based development. Various government programs to address corruption have proven ineffectual. Most significant financial crimes in Cameroon derive from domestic public corruption, tax evasion, and embezzlement. The Cameroonian media regularly reports cases of embezzlers of public funds who reinvest funds in real estate projects in an attempt to launder the ill-gotten funds. High profile corruption cases also have revealed the use of offshore transfers by government officials. Cameroonian authorities assert that Cameroon is not a major narcotics transit hub or destination.
Risks to the integrity of the Cameroonian financial system include terrorism activities, illicit wildlife trafficking, and maritime piracy. Instability in neighboring countries and the use of a common currency have resulted in Cameroon being used as a conduit to move funds from those countries to Nigeria, Europe, and the Middle East. Trade-based money laundering is rampant and utilizes the banking system, microfinance institutions, and the informal financial sector.
Cameroon is particularly vulnerable to abuse by bulk cash smugglers and exploitation by companies transferring money internationally. Most foreign currency transactions are in naira, euros, or dollars.
The six member states of CEMAC share the BEAC, a regional central bank, and a common currency, the Central African Franc (CFA). Traffickers and money launderers may exploit dysfunctions in cross-border cooperation between national agencies. As the largest economy in the region such regulatory weaknesses may, at the domestic level, result in Cameroon being used as a conduit to move funds from those countries to tax havens and other personal investments primarily in Europe and Asia.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 25
World Governance Indicator – Control of Corruption 11
Corruption is endemic in Cameroon and significantly increases the costs and risks of doing business. Bribery, nepotism and corruption are rife in almost all sector of the Cameroonian government and economy; but is particularly prevalent in the judiciary, public services, and customs. The legal and regulatory systems are non-transparent and difficult for foreign companies to navigate. In addition, there exists a lack of effective regulations, insufficient law enforcement and significant delays in courts. Cameroon's Penal Code (in French) criminalizes corruption, bribery, extortion and bribery of foreign public officials, and corruption is punishable by a prison term of five years to life, a fine of up to USD 4,000 and/or asset seizure. Facilitation payments and gifts are also addressed in Cameroon's legislation, yet insufficient implementation of anti-corruption legislation coupled with impunity among public officials has exacerbated the levels of corruption in the country. For further information - GAN Integrity Business Anti-Corruption Portal
Modest oil resources and favorable agricultural conditions provide Cameroon with one of the best-endowed primary commodity economies in Sub-Saharan Africa. Oil remains Cameroon’s main export commodity, and despite falling global oil prices, still accounts for nearly 40% of export earnings. Cameroon’s economy suffers from factors that often impact underdeveloped countries, such as stagnant per capita income, a relatively inequitable distribution of income, a top-heavy civil service, endemic corruption, continuing inefficiencies of a large parastatal system in key sectors, and a generally unfavorable climate for business enterprise.
Since 1990, the government has embarked on various IMF and World Bank programs designed to spur business investment, increase efficiency in agriculture, improve trade, and recapitalize the nation's banks. The IMF continues to press for economic reforms, including increased budget transparency, privatization, and poverty reduction programs. The Government of Cameroon provides subsidies for electricity, food, and fuel that have strained the federal budget and diverted funds from education, healthcare, and infrastructure projects, especially in 2015, as low oil prices have led to lower revenues.
Cameroon devotes significant resources to several large infrastructure projects currently under construction, including a deep sea port in Kribi and the Lom Pangar Hydropower Project. Cameroon’s energy sector continues to diversify, recently opening a natural gas powered electricity generating plant. Cameroon continues to seek foreign investment to improve its inadequate infrastructure, create jobs, and improve its economic footprint, but its unfavorable business environment remains a significant deterrent to foreign investment.
Agriculture - products:
coffee, cocoa, cotton, rubber, bananas, oilseed, grains, cassava (manioc, tapioca); livestock; timber
petroleum production and refining, aluminum production, food processing, light consumer goods, textiles, lumber, ship repair
Exports - commodities:
crude oil and petroleum products, lumber, cocoa beans, aluminum, coffee, cotton
Exports - partners:
China 16.7%, India 15.7%, Spain 6.2%, Belgium 6.1%, France 6.1%, Portugal 5.6%, Netherlands 5%, Italy 5% (2015)
Imports - commodities:
machinery, electrical equipment, transport equipment, fuel, food
Imports - partners:
China 27.9%, Nigeria 13.9%, France 10.9%, Belgium 4.1% (2015)
Investment Climate - US State Department
Despite the collapse of oil prices, the government of Cameroon expects the economy to grow by 4.7% in 2016 (a slow-down from about 5.5-to-5.9% in 2015) and inflation to average 2.7%. Cameroon plans to earmark 33% of the national budget to critical transport, communication and power infrastructure. In 2015, the government was able to raise funds from its first Eurobond issues and also secured loans from donors, notably China. U.S. companies alone invested over $1.2 billion dollars in utility, energy, sports, and housing infrastructure. The country plans to generate more revenues for investment from domestic taxation and by attracting more foreign direct investments.
To meet the goal of becoming an emerging economy by 2035, Cameroon would have to double its growth rate and keep a lid on a widening fiscal account deficit (5.6% of GDP in 2016). The government is trying to address governance issues in the public service, which continue to undermine economic efforts by creating a deleterious business climate. These reforms would send a strong positive signal to foreign investors. Although Cameroon laws enable foreign investors to create, own and operate their business without limitations, the public administration remains an important player in the economy with a large portfolio of State-owned companies, which create virtual monopolies in many economic sectors and contribute to the distortion of the competitive landscape.
In addition to risks stemming from oil prices, Cameroon also faces a number of internal risks. The first stems from concern surrounding the upcoming political transition as longtime President Paul Biya prepares to leave office. There are also deepening social tensions stemming from the country’s widening generational gap, as Cameroonians under 25 years make up to 50% of the population but feel excluded from the socio-economic and political process. In a 2014 report, the World Bank argued that the growing army of disenchanted and unemployed youth is probably already serving as recruiting ground for Boko Haram in the Far North of Cameroon. These internal risks are exacerbated by the spill-over crisis from neighboring countries, Central African Republic and Nigeria, which is bringing an influx of refugees and internally displaced people as well as violence. The World Bank notes that this continued influx is putting pressure on natural resources, land, water, housing and health facilities.
Notwithstanding these issues, opportunities exist for foreign investors. With modern technology and innovative financial mechanism and in some cases the right local partners, foreign investors can gain a competitive advantage in key sectors such as transport, energy, communications, mining and construction. Cameroon lacks trained mid-level technicians although youth are eager to gain professional knowledge. The Institute of National Statistics (INS) estimates that 75% of young people are underemployed with qualifications that do not match requirement of the job market.
The key issues to watch in 2016 are:
Uncertainties and potential risks arising from the political transition, as well as from insecurity in the Far North of Cameroon.
In 2016 and 2019, Cameroon will host the African soccer nations’ cup. The government is anchoring some of the major infrastructure projects to these events to provide extra impetus for more investment.
The government of Cameroon has commenced significant reform of public finances with the assistance of multilateral and bilateral donors, which began with the introduction of program budgets in 2012. The reforms are expected to increase transparency, improve efficiency (notably in the national investment budget) and also curb corruption.
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