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A three-year emergency investment plan to accelerate growth

A three-year emergency investment plan to accelerate growth

A three-year emergency plan has been launched by Cameroon, as a means to reengage the country’s youth.

Earlier in the year the World Economic Forum launched their annual Global Risk report. At the top of the list lay insecurity and regional conflict and making the top – five they had high structural unemployment and underemployment. Similarly in another study this time by global consultancy firm PwC, the biggest concern amongst African CEOs with regards their company’s growth prospects at the top of the list lay social instability.

As we have seen with the Arab spring, disenfranchised youth and rising unemployment can make for a toxic mix. It is against this backdrop that the Cameroonian government recently launched a three-year emergency investment plan. The FCFA925bn ($1.5bn) plan will run from 2015 to 2017, and is aimed to fast track the implementation of second-generation projects across the country. It is a special programme of measures and projects aimed at the immediate needs of the population. The three-year project will be rolled out across the entire country. “It is important to note that the project is separate from our strategy for growth and jobs which remains our development charter,” President Biya stated in an address, following a cabinet meeting he chaired to announce the plan.

The plan aims to provide an immediate boost to the economy as well as deal with some structural problems and social issues. These are to be quick fixes which will sit alongside the longer term projects and works which have become part of the national strategy adopted and designed to meet the goal of becoming a middle-income economy by 2035.

 

A MONITORING COMMITTEE

The president called a cabinet meeting and pushed a rapid deployment of the programme.

Cameroon is setting a growth objective in excess of 6% for 2015, higher than the continent average. This public investment boost will help reach this target. The shorter time frame will also make the policy makers more immediately accountable, in terms of its implementation and impact. A task force has been selected to form a monitoring committee which will fall under the authority of the Prime Minister Philémon Yang. This body will ensure that the plan’s commitments are fulfilled and that the deadlines are respected. The plan ultimately has been put in place to provide a countercyclical boost to the economy and to address the issue of inequality. And that is how it will be judged. Throughout Africa, GDP growth has come with increased inequality and the message from the cabinet was that the plan was targeted specifically for those at the bottom of the pyramid and would be measured by the impact on people’s daily lives. So how would it do this?

SEVEN PRIORITIES Seven priority areas are included in the plan as outlined by the PM Yang, starting with urban planning. The plan provides for the construction of 1,000 homes, with 100 in each of the 10 regional capitals. It also sets out to rehabilitate light and secondary roads

in Yaoundé and Douala, starting immediately in residential neighbourhoods, parcelled out in areas, and areas surrounding social and community facilities.

The second priority is health. The construction of referral hospitals in the regional capitals, where there are no health facilities, is on the agenda, as well as the rehabilitation and upgrading of technical facilities in the general hospitals in Yaoundé and Douala, and Yaoundé’s University Hospital.

The next priority areas are agriculture and livestock. A special programme for the dis-tribution of seeds, fertiliser and pastoral and fishery equipment has been announced, which takes into account the agro-ecological zones of the nation. Large markets to supply food will also be built in the 10 re-gional capitals of the country to ensure the flow of agricultural products to the urban centres. Finally, slaughterhouses and cold storage for agricultural products will be built in some cities.

In terms of infrastructure, the fourth priority concerns two major roads to be built in each region, in order to open-up production areas.

The fifth priority, concerning energy, intends to stabilise the power grid and to improve the supply of electricity to large cities. This project will upgrade the lines between Edéa-Yaoundé and Edea-Logbessou-Bekoko via Douala.

The sixth priority area is to improve the delivery of potable water. This involves the construction of drinking water supply points in 30 secondary towns and the drilling of 100 wells in each region.

The seventh and final priority, which comes from the desire to strengthen the security of the country, is to construct additional gendarmerie and police stations in the large urban centres of Yaoundé and Douala.

The plan was officially announced at the end of December. By the end of February, the Department of Public Procurement issued a call for tenders, inviting “Firms, engineering companies and businesses” to bid for participation in various projects. This was a sign that the plan has definitely been launched.

 

FUNDING

To finance the $1.5bn plan, President Biya authorised the Minister of Economy, Planning and Regional Development to sign loan agreements with mainly local banks. It was no longer a question of ‘can we afford it’, and became a matter of can we afford not to do it. Five banks, including four local banks, have been asked to fund the three-year programme and facilitate the implementation of the selected projects. These banks are BGFI Bank Cameroon, Atlantic Bank Cameroon, Standard Chartered Bank Cameroon, Ecobank and one international bank, Deutsche Bank.

6.3% GROWTH IN 2015 After reaching a growth rate of 5.8% this year against budgeted growth of 4.8% growth in 2014, the government of Cameroon has set a target of 6.3% growth in 2015. Cameroon will exceed the 6% mark next year, a first since reaching the completion point for the Heavily Indebted Poor Country (HIPC) initiative in 2006.

This growth is driven by a massive public investment drive and major projects as part of its longer term development agenda. PM Yang also emphasised that greater private sector investment had resulted in increased revenues for government. Oil revenues, despite a fall in global prices, should also net state coffers FCFA775bn ($1.25bn), which represents an increase of 6% year on year. The Prime Minister also announced that Cameroon plans to issue FCFA320bn ($500m) in bonds.

 

EMERGENCE PROJECTS This new emergency plan should strengthen the national economy and act

as a catalyst to bring the country’s GDP growth rate to at least 6% in 2015. Over the coming years, the plan should provide more substantial gains from the increase in different productions and national wealth, through the implementation of these major second-generation projects. Some of the major first-generation projects are underway while others have already been completed. These include the gas plant and the port at Kribi; dams and hydroelectric power plants; road construction and other major infrastructure works. These projects are part of the framework for the 2035 emergence strategy. The roadmap targets the complete transformation of the country where wealth is shared by a greater share of the population. And food security was also a central tenet within this grander project. Hence, the “emergence projects” revolve around the four strategic economic activity areas; agriculture and the environment; industrial production and processing; services and new technologies and governance.

With the largest population in the region Cameroon wants to act as an industrial hub serving its neighbours. It is in this context that the country is undergoing a massive building and upgrading of its road and rail networks and the launch of multimodal transport projects such as facilitating the transport corridor between Brazzaville and Yaoundé. The country plays a key role in the sub-region as it offers landlocked countries access routes to seaports, with Kribi becoming a central access point for the whole sub-region.

 

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