Important changes are afoot at the Ministry of Finance. Photo Provided to China Daily

The dynamic government is actively pursuing modernization of its financial mechanisms

As part of its plan to become an emerging nation by 2035, Cameroon is launching a number of major projects that will completely modernize the country. InFocus Reports speaks to Alamine Ousmane Mey, Cameroon's Minister of Finance to find out what is being done to attract the investment needed to reach this goal.

AOM: The creation of wealth and jobs requires productive investments. Such investments require a number of conditions in the host country, such as the existence of infrastructure, energy sources and services. The Head of State, President Paul Biya has therefore advocated a massive transformation of Cameroon's environment to turn the country into a "major construction site" in an attempt to facilitate the implementation, development and realization of investments, thus fueling the engine of growth. In order to engage the private sector, however, the government must make the first move, and this is what we see today.

To develop its infrastructure, the State has undertaken a vast program funded through internal and external resources which aims to develop transport infrastructure so that production sites can be linked to consumption centers. The transportation of goods from one point to another will no longer be hampered by heavy loads and reduced competitiveness. Just like the emergency programs initiated by the Head of State, many roads will be rehabilitated or built to ensure Cameroon is connected to other countries in the sub-region.

Another fundamental factor is energy supply, both for factories and households. The current supply (1,000 MW) falls well below demand and penalizes economic activity. That's why today various power plant are under construction such as the Kribi gas plant and the hydroelectric dams of Lom Pangar, Memve'ele, and Mekin.

As soon as they become operational, Cameroon's energy supply will be strengthened and our economic growth fueled.

The projects are being implemented thanks to the participation of international bodies - the World Bank, the African Development Bank, Eximbank, for example - but also with resources from the domestic market. They will provide more and better energy and will support business expansion and development. These projects are called "structuring projects" because they imply that a certain number of activities will be developed around them. Because of their size and scope, they will create many jobs and Cameroon will benefit from technology transfers; because of their location, Cameroonians and foreigners will be able to work jointly. The search for financing sources for these large projects is therefore fundamental: they are the cornerstone of Cameroon's developing economy and a milestone towards horizon 2035.How will these projects be funded?

Cameroon has been engaging in a process of modernization over the past five years. We started heavy public finance reforms, with the aim of improving resource mobilization and ensuring more efficient allocation of these resources. This resulted in reforms in the field of treasury management and in the implementation of a new national financial regime. Efforts were also made to improve and diversify funding sources.

As an illustration, the 2012 State budget amounts to CFA 2,800 billion including 500 billion external financing.

We have modernized the State financing instruments so as to provide a significantly improved risk profile, which makes it very attractive to bankers and investors. We will therefore seek further subscriptions for our treasury bonds.

This operation, which began in 2011 with a collection of CFA 50 billion, continued in 2012 and has already raised CFA 20 billion. This is in addition to the 2010 bond issue that had collected 200 billion.

These funds supplement the State's budget for operating and capital costs. Investors may be interested in Cameroon's productive projects given that they will be a source of significant ROI with an appreciable 7 percent to 8 percent growth. All of this will encourage full employment and wealth creation; it will be an efficient poverty alleviator, and accompanied by an improved financial management system. It is an ongoing process and one we are deeply committed to.

How important are international partners in funding these projects?

Developing economies are experiencing a significant growth in their investment needs, and consequently, states need to go to capital markets to leverage additional resources.

The issue for Cameroon was about improving the quality of its signature. That has thankfully been done, as we met the convergence criteria. This allows us to reach private and institutional investors. Public aid for development, concessional loans and donations are all likely to experience a gradual decline because donating countries have engaged with financial austerity programs due to the global financial crisis. It is therefore necessary for Cameroon to diversify its funding sources.

How are you increasing private sector involvement ?

At the Cameroon Business Forum meeting held each year, government officials meet private sector representatives. Supported by the IFC, the Government has evaluated the possible improvements and changes that can be made in order to attract more private investors. This is how for instance we were able to reduce the business start-up process to 48 hours on average, and the time needed to deliver land titles. We have also created approved management centers to support businesses.

We have also made significant efforts to improve access to financing with innovations now sealed in the legislative landscape. The investment rate today is well below 20 percent of the GDP. We aim to raise it to 25 percent through the public investment budget in order to encourage more FDIs.

Our environment offers strong opportunities for entrepreneurship, when compared to the saturated markets of developed countries.

If processing industries come and settle here, we'll be able to add value locally and contribute to the enrichment of all actors in the chain. An industrial base is also emerging.

A number of Asian companies are already settling in Cameroon, and we welcome them since it means that Cameroon has an attractive business climate capable of attracting even more investors looking for profitable projects.

(China Daily 09/25/2012 page18)