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Funding cameroon's development through foreign direct investment
The document discusses the role of foreign direct investment (FDI) in addressing Cameroon’s economic challenges, particularly in enhancing productivity and job creation. It proposes strategies for the government to create a favorable investment climate and highlights the mutual benefits for both the government and multinational companies. Ultimately, it emphasizes the necessity of a holistic approach to reduce reliance on loans and foster sustainable growth through FDI.
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Funding cameroon's development through foreign direct investment
- 1. FUNDING CAMEROON’S DEVELOPMENT THROUGH FOREIGNDIRECT INVESTMENT PRESENTED BY SHUDZEKA ERIC TEWIY
- 2. Country specifics Region:Sub-Saharan Africa Income category: Lower middle income Population: 21,699,631 GNI per capita (US$): 1,170 Doing Business 2014 rank: 168 Doing Business 2013 rank: 162* Change in rank: -6 surface area: 475650 km2 (sources: Doing Business 2014 and NIS 2013)
- 3. Target audience The generalaudience is the Cameroonian public The target audience will include: Policy makers Multinational enterprises The scientific community The educational community Cameroonian entrepreneurs
- 4. Area of focus Cameroon’s greatest challenge is achieving sustainable economic growth This presentation focuses on how FDI will help achieve such economic growth
- 5. Presentation objectives Topropose an alternative means of financing Cameroon’s development using foreign direct investment To propose holistic measures that could help achieve sustainable economic growth in Cameroon
- 6. What is FDI? ForeignDirect Investment occurs when a firm invests directly in facilities in a foreign country A firm that engages in FDI becomes a multinational enterprise
- 7. The Problem Cameroon’slabor market is characterized by a large share of the labor force occupied in the informal sector with few formal jobs Unemployment is low, at about 31% in 2013 (NIS, 2013), because most Cameroonians cannot afford not to be working. Most of these jobs, however, have extremely low productivity and generate very little money The challenge is thus to enhance the productivity – hence the earnings – of those already employed, while at the same time creating more formal jobs.
- 8. The problem cont’d An unfavorable investment climate, particularly inappropriate infrastructure, is also holding the country back Despite the noted constant economic growth, from 1.9% in 2009 through 3.3 in 2010 to 5.4 in 2014, the country is still groping towards emergence
- 9. Problem continued • Theeffects of the economic growth is yet to be felt by the common man • Much revenue is therefore needed to boost the economy • With its high external debt, which stood at 1179.9 billion FCFA in 2011 (MINFI, 2012), taking external loans will greatly increase the country’s precarious nature • Loans are not an option now because much revenue is spent on servicing debts (confer 134 billion FCFA out of a total of 1763 billion on 2013 budget) • FDI could therefore be the missing link
- 10. My theory ofChange In lieu of taking external loans, the government of Cameroon could engage in the following: Create a favorable climate for multinational firms to invest in Cameroon Provide tax rebates for multinational firms who want to invest in Cameroon Multinational firms must take obligations that as part of their corporate social responsibility, they will provide social facilities to the local population such as hospitals, schools, roads and electricity employ a given percentage of Cameroonians as part of their skilled and unskilled labour act as internship and mentorship training centres for young Cameroonians collaborate with schools and Cameroonian authorities in designing curriculum such that training will be geared towards industrial needs
- 11. Why would theGovernment be interested? This will reduce its yearly expenditure by close to 134 billion FCFA It will increase its revenue through the collection of taxes from companies that grow around the multinationals (in their value chains and value networks) It will increase employment opportunities in the country This will reduce government expenditure on the provision of social facilities such as roads, hospitals, schools, etc The release of such funds could then be used to invest in sectors such as energy, port facilities and boosting local entrepreneurship
- 12. Government interest cont’d FDI in this way will help align education to the world of work by multinationals helping schools design their curricula it will also help increase local entrepreneurship by multinationals posing as role models and mentors It will lead to the provision of essential goods and services that could not be provided by the government alone Multinationals will help in the reengineering of Cameroonian organisations by providing newer organizational structures and increase competition It will reduce dependence on the export of primary products whose prices fluctuate and could lead the country to an economic crisis
- 13. Why would multinationalfirms be interested? They get a tax rebate that reduces their expenditure The country is enjoying a constant economic growth of about 5.4% despite the average of about 2% in Sub Saharan Africa The country is engaging in many infrastructure investments that would boost the economic climate such as the Lom Pangar energy project, the Kribi deep sea port project, the Wouri bridge project etc (MINFI, 2012) There is a ready supply of labour that could be easily sourced from among the 152 institutions of higher learning in the country (NIS, 2013) There is the presence of extensive raw materials and a ready market for their produce
- 14. Why would theprivate sector be interested? They also benefit from the social facilities provided by the multinationals There is a great opportunity for the formation of inter- organisational dyads (alliances and partnerships) They benefit from the knowledge and training that comes through the partnership of multinationals with universities and institutions of learning
- 15. Conclusion For Cameroon tobecome “An Emerging, Democratic and United Country in Diversity” (Vision 2035), a holistic approach to development would be required. One of the major approaches would be to reduce loans and increase FDI to finance development.
- 16. References Cameroon Vision20135 Doing Business 2014, Cameroon IMF (2012). Unlocking the labour force: An Economic Update on Cameroon MINFI(2012). Proceedings of the Annual Conference of MINFI Central and Devolved Services, 2012 Edition MINFI (2013). Report on the Financial situation 2012 and prospects for the nation 2013 financial year National Institute of Statistics (2013). Annuaire des Statistiques du Cameroon 2013