Business and Economy; July 4,2011

Improved Growth Amidst Skyrocketing External Debts

By Ernest Ndukong

Increase in prices of raw materials caused a 4.4 percent growth in the first quarter relative to the same period in 2010. Increase in price for oil resulting from the unrest in the Arab world meant increase in oil earnings. Other primary products whose earnings contributed to the growth include cocoa, coffee, cotton and timber. 2011 growth rate is forecasted at 3.8 percent as against 2.9 percent in 2010.

While the economy is growing at an undesirable slow rate, external borrowings are skyrocketing. The Minister of Finance, Essimi Menye, said Cameroon’s debt in the first quarter stood at FCFA 23.6 billion, as against FCFA 15.1 billion in the same period last year. What remains surreptitious is the purpose for which the loan was taken, how far it has been implemented and Cameroon’s total external debts.

In a related development, Cameroon and France signed the second development and debt relief contract worth FCFA 214 billion on July 1 2011. The money would be used to finance mostly primary activities and development in rural areas. Agriculture and rural development will consume 60 percent from the package while the rest will be used to improve urban development.

Still in the light of receiving cash from external sources, Cameroon will get over FCFA 13 billion of the over FCFA 36 billion that would be given by the World Bank to the Central African Economic and Monetary Community (CEMAC) zone. Job creation, poverty reduction, improving the competitiveness of the Cameroonian economy with much focus on agriculture and professional training, was the centre of discussion between Essimi Menye and Gregor Binkert, World Bank Director of Operations for the CEMAC zone.

Cotton Production Swells

Cameroon is among the top 25 cotton producing nations in the world with a production capacity of over 150,000 tonnes per annum. The cash crop witnessed a 47 percent increase in production in 2010 and SODECOTTON projects a production capacity of 200,000 tonnes in 2011. The use of pesticides, fertilisers and high yielding seeds by farmers, are some of the reasons for upsurge in cotton production.

Almost all of this soft, fluffy staple fibre is exported, be it by individual farmers or the National Cotton Corporation who buy from local farmers. Farmers, however, are very reluctant selling their crops to SODECOTTON, claiming they offer cheaper than what is offered by Nigerian buyers. It was reported in a local tabloid that the economy lost FCFA 14 billion in 2010 due to smuggling of the crop to neighbouring countries.