## 1cmrea2024002

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### STRUCTURAL TRANSFORMATION AND EXPORT DIVERSIFICATION — objectives and executive summary
- Cameroonian authorities aim to increase Manufacturing Value Added (MVA) from 14.5 percent in 2017 to 25 percent in 2030 and the share of manufacturing exports to 54.5 percent by 2030.
- Industrialization Master Plan (IMP, adopted in 2016) targets ten key industrial sub-sectors: energy, agribusiness, digital technology, forestry and wood processing, textiles, mining, metallurgy and ironworking, hydrocarbons, refining and petrochemicals, chemicals and pharmaceuticals, construction and related services, and non-financial services.
- Recommendation highlighted: prioritize horizontal policies (investments in human capital and infrastructure and governance improvement) as empirically most effective drivers and necessary conditions for successful industrial policy.

### Employment, production, and export structure — empirical findings
- Manufacturing share of real GDP: almost constant around 15 percent between 2000 and 2012; decreased to less than 13 percent in 2022.
- Manufacturing share of employment: increased from 9.6 percent in 2000 to 15.5 percent in 2022.
- Agriculture GDP share: moved from 18.1 percent in 2000 to 16.9 percent in 2022; employment share decreased by 22 percentage points between 2000 and 2022.
- Services: employment share increased by more than 18 percentage points; GDP share increased by 5.4 percentage points; services GDP share is more than 50 percent in 2022.
- Exports to GDP ratio (2003–2018): average 11.8 percent; historical peak 17 percent in 2006-2007.
- Export destinations (2003–2021 averages): 85 percent to global markets outside Africa, 8 percent to the CEMAC area, 5.8 percent to the rest of Sub-Saharan Africa (SSA).
- Export composition: mineral and fuel 43,15 percent; processed food 18,6 percent; fiber, textile, wood, hide and feather 15.2 percent; agricultural products 9.2 percent.
- Trends: processed food share historically reached 30 to 40 percent in 2009, 2011 and 2016; since 2019 exports to CEMAC and SSA became more diversified toward processed food, chemical and pharmaceutical products, metal and glass, and furniture, machinery, and appliances.
- Firm structure and size:
  - Retail share in formal non-agricultural privately-owned firms fell from 28.8 percent in 2009 to 15.2 percent in 2016.
  - Manufacturing firms share rose from 25 percent in 2009 to 30.5 percent in 2016.
  - Average firm size (full-time employees) in manufacturing fell from 36 in 2009 to 23.6 in 2016.
  - Manufacturing firms are on average three times bigger than retail firms and two times bigger than other services firms.
- Productivity (sales per employee) stagnated on average across sectors between 2009 and 2016 and was virtually equal across sectors; slight declines observed.

### Determinants of structural transformation — evidence synthesis
- Horizontal factors (most effective drivers):
  - Human capital and public infrastructure strongly favor shifts to higher value-added manufacturing and services.
  - Salinas (2021) — one standard deviation increase in educational attainment associated with a 170 percent increase in non-hydrocarbon/mineral exports; return on infrastructure quality 20 percent.
  - Port and electricity infrastructure prioritized as most important infrastructure interventions.
- Institutions and governance:
  - One standard deviation increase in governance associated with a 65 percent increase in non-hydrocarbon/mineral exports (Salinas, 2021).
- Industrial policy:
  - Theoretical justifications exist for sector-specific interventions when externalities or market failures are present, but empirical record is mixed-to-poor; risks include fiscal cost and rent-seeking.
  - Horizontal factors are typically necessary conditions for industrial policy success.
- Other determinants noted: revenue, trade openness, digitalization and information flows, FDI, R&D/technology adoption, access to credit, GDP per capita, importation of inputs.

### Assessment of Cameroon on key determinants
- Human capital:
  - World Bank Human Capital Index (2020): Cameroon HCI = 0.40 in 2020 (up from 0.38 in 2010).
  - Performance: slightly lower than the Sub-Saharan Africa average and lower than lower middle-income country average; relatively better on years of schooling but poor on test scores (learning dimension).
- Infrastructure and ICT:
  - Large public investment outlays have been undermined by implementation weaknesses; electricity, water, telecommunication, roads, railways, port, and air facilities remain weak.
  - Regional transport routes are a major impediment to trade and regional integration.
  - Several major infrastructure projects under way, notably in the electricity sector; completion could significantly improve electricity supply if related financing needs are met.

### Policy synthesis and focused recommendations (structural transformation)
- Priority horizontal actions:
  - Improve educational attainment and learning outcomes; align training curricula to private sector needs; emphasize entrepreneurial skills.
  - Resolve public investment implementation weaknesses to strengthen electricity, transport, port, ICT, and other infrastructure.
  - Strengthen governance and institutional quality to reduce corruption and improve government effectiveness.
- Caution on industrial policy:
  - Sector-specific supports carry fiscal and rent-seeking risks and have a mixed track record; more likely to succeed when horizontal conditions (human capital, infrastructure, governance, trade and labor policy frameworks) are in place.

### INSTITUTIONS, BUSINESS ENVIRONMENT, AND MARKET INFRASTRUCTURE — key findings
- Institutional weaknesses identified:
  - budget formulation and execution (timely domestic payments and public investment spending),
  - property rights and the legal system,
  - revenue administration,
  - government regulations,
  - corruption.
- Border administration:
  - OECD Trade Facilitation Indicators (2022) rate Cameroon’s border administration well versus sub-Saharan region; improvements since 2019 in internal and external border agency co-operation, governance, and impartiality.
  - OECD indicates further reform areas: formalities, governance and impartiality, information availability, involvement of the trade community, advance rulings, appeal procedures.
  - Recommended continued improvements: availability of information, advance information on future rulings, ease the burden of documentation, advance automation, risk management procedures.
- Financial markets and access to finance:
  - Inadequate access to financing due to banks’ heavy exposure to the state and poor legal environment for property rights and debt collection.
  - Government guarantee fund of CFAF 200 billion established to facilitate SMEs’ access to commercial bank loans.
  - Recommendation: continue and complement measures to improve SME access to finance.
- Business dynamism and product markets:
  - Labor market flexible; product markets heavily regulated formally or informally.
  - Large informal sector; informality causes include regulations, poor productivity, lack of access to finance, weak governance, fuel subsidies benefiting informal operators.

### INSTITUTIONS — prioritized policy actions
- Achieve nation-wide sustainable peace and political stability.
- Undercut corruption and improve functioning of the legal system.
- Improve budget formulation and execution, especially timely domestic payments and public investment spending.
- Improve border administration information availability, automation, and appeal procedures.

### INDUSTRIAL POLICY (IP) — objectives, instruments, and outcomes
- IP objectives: economic growth, diversification, employment, technological catch-up; newer drivers include supply-chain resilience, climate change, and national security.
- Strategy mix: import substitution plus export promotion with emphasis on downstreaming; practical tilt toward import substitution while retaining export promotion objectives.
- Instruments in use:
  - Disincentives on raw exports: export duties and bans; Law No. 2016/004 authorizes prohibiting exports of certain goods.
    - 22 April 2022: Ministry of Commerce suspended exports of wheat flour, rice, vegetable oil, and other nationally produced cereals.
    - Export duty on raw log increased from 17.5 percent in 2017 to 60 percent in 2023.
    - 2023: export duty on raw cocoa beans introduced; excises elevated on imported tobacco products, beverages, and certain processed food items.
  - Incentives: Law N° 2013/004 of 18 April 2013 — VAT and corporate tax exemptions up to 5-10 years, plus financial and administrative incentives tied to local staff, export share, and value-added.
  - Industrial Free Zones (IFZ): Parliament Ordinance N° 90/001; enterprises exporting at least 80 percent receive extensive benefits.
    - IFZ tax regime: full exemption from taxes and duties for 10 years; afterward flat rate of 15 percent profit tax.
    - IFZ coverage: 13 IFZs in nine regions; three more IFZs planned; number of special ZFI reached 38 in 2022.
  - Public procurement: Decree No. 2018/366 — New Public Procurement Code (2018); NDS30 target minimum of 60 percent local procurement.
  - SOE interventions: SOEs across energy, agriculture, mining, financial, and services; total assets about 20 percent of GDP in 2020.
- Implementation outcomes and constraints:
  - Down-streaming: gradual increase in exported value-added in cocoa and wood but constrained by high input prices, volatile commodity prices, and infrastructure and finance gaps.
  - IFZs: limited economies of scale, restricted spillovers, land access difficulties, lack of skilled labor; government-managed IFZs limit private-sector-led zone management.
  - Public procurement: local pharmaceutical sourcing 3.56 percent (Cameroon) versus 11.69 percent (African average) and NDS30 target 60 percent.
  - SOEs: growing number require budget support; recapitalizations, guarantees, on-lending, and fiscal arrears are used; restructuring progress limited (example: SONARA).

### IP — risks, safeguards, and orientation
- Comparative evidence: import substitution historically less successful than export orientation for stronger growth and diversification; export promotion supports economies of scale, technology, and skills.
- Risks: support overhang where protected domestic sectors fail to compete internationally without government support; export bans may trigger retaliatory measures.
- Safeguards recommended:
  - robust institutional framework,
  - fiscal cost and risk analysis,
  - continuous monitoring and evaluation,
  - assessment of competition effects and sectoral spillovers,
  - WTO compliance checks.
- Emphasis: prioritize horizontal policies (infrastructure, public investment effectiveness, labor market, human capital, financial deepening) because IP requires strong government capacity and anti–rent-seeking mechanisms.

### CLIMATE CHANGE — vulnerability, impacts, and priorities
- Climate risk overview:
  - Cameroon ranked 16th most vulnerable to impacts of climate change (Climate-related INFORM Risk Indicator, 2022, vulnerability sub-indicator).
  - World Bank CCDR: GDP loss ranging from 4 to 10 percent in the most pessimistic scenario by 2050 if no adaptation action is taken.
- Observed and projected trends:
  - Temperatures progressively warmer; models predict more heavy precipitation days.
  - Number of recorded extreme weather events doubled over the past three decades.
- Sectoral and socio-economic impacts:
  - Agriculture employs over 70 percent of the population and accounts for almost a third of export earnings.
  - Agriculture output projected to lose between 6 to almost 14 percent by 2050 due to climate change.
  - Maize yield in Far North declined by over 20 percent in 1998-2012.
  - Livestock contributes about 13 percent to agricultural output and employs 30 percent of the rural population.
  - Severe food insecurity (June 2023): about 2.4 million people.
  - Internally displaced persons (as of March 2023): over one million.
  - Refugees and asylum seekers (as of March 2023): almost half a million.
- Infrastructure and economic losses:
  - Over 94 percent of roads unpaved; 11 percent of national and regional roads in good condition.
  - About 274 km of transportation system (about 0.2 percent of all roads) affected every year by weather-related damage.
  - Average annual economic losses due to floods: US$130 million (or about 0.3 percent of the GDP).
  - Direct road damage estimate (multi-hazard study cited by IPCC): around 0.06 percent of GDP.
- Human capital and social impacts:
  - Human Development Index rank (2022): 151 out of 191.
  - Children rank: 10th most exposed and vulnerable to climate risks globally.
  - Plantain productivity decline in cited study: 43 percent; associated school attendance impact: 6 months lower on average.
  - World Bank estimates about 60 percent of the loss to GDP by 2050 due to climate change would come from direct labor productivity losses.
- Greenhouse gas emissions and mitigation:
  - Cameroon GHG share of global emissions: 0.25 percent.
  - Sectoral GHG shares: industrial process 47 percent; land-use change and forestry 27 percent; energy 12 percent; agriculture 10 percent; waste 3 percent.
  - Per capita emissions decline (1998–2018): about 47.5 percent.
  - NDC mitigation target: 35 percent reduction by 2035 relative to 2010 (12 percent unconditional).
  - Fiscal cost of fuel subsidies in 2022: estimated at over 1,000 billion CFAF.
  - Rainforests cover about 40 percent of territory; annual deforestation rate around 0.6 percent; reforestation rate 0.1 percent.
  - Cameroon among top 30 countries by volume of gas flaring.
- Financing needs and gaps:
  - NDC adaptation financing needs: over US$32 billion until 2030.
  - Estimated overall climate financing needs: about USD 60 billion.
  - Climate-related development financing received (2017–2021): around US$2.7 billion (about 80 percent to government entities).
  - Private financing share of total mobilized climate finance (2019-20): about 2.6 percent.
- Policy priorities for climate:
  - Step up adaptation and mitigation; develop comprehensive legal and regulatory framework.
  - Integrate climate considerations into the PFM framework and public investment management.
  - Operationalize coordination mechanisms and build government capacity.
  - Mobilize climate finance: near-term donor financing and develop capital markets to mobilize private funding and private sector engagement.
  - Phase out fuel subsidies with accompanying social protection measures.

### COOPERATION WITH DEVELOPMENT PARTNERS — climate finance and technical support
- Climate-related development finance flows (2017–2021): around US$2.7 billion; about two-thirds targeted mitigation; agriculture, forestry, and fishing the most targeted sectors for adaptation flows (about 40 percent).
- Providers: multilateral partners accounted for three quarters of recent flows; World Bank largest multilateral provider.
- Examples of partner engagements:
  - World Bank Development Project Financing (DPF): improve climate resilience of road infrastructure, water management, expansion of safety nets toward adaptive social safety nets.
  - WFP: strengthen early warning systems, digitalize social information, design insurance scheme for agricultural workers.
  - UNESCO: observe climate impacts, raise community awareness, promote alternative income-generating agroecology.
  - FAO: support sustainable logging regulatory framework, biodiversity and forest inventories, capacity of forestry communities.
  - IFAD, UNHCR: reforestation and forest resilience initiatives.
  - Bilateral: European Development Fund (largest donor), BMZ (forestry and resilient agriculture), AFD (renewable energy, sustainable forest management, flood prevention).

### Actionable policy checklist (derived recommendations)
- Prioritize horizontal policies: human capital, infrastructure, governance, and public investment efficiency.
- Improve PFM and cash management to limit fiscal costs of incentives and SOE support.
- Assess and rationalize fiscal incentives and trade measures; require monitoring, evaluation, and cost-benefit analysis.
- Advance SOE restructuring and strengthen monitoring of contingent fiscal risks.
- Integrate climate considerations into budgetary and public investment processes; implement climate budget tagging and expand fiscal risk assessment to include climate risks.
- Mobilize climate finance: improve PPP/PPP pipeline and capital markets, develop green financial instruments, and expand private sector engagement.
- Strengthen border administration, customs, tax administration, and digitalization of payments and procedures to reduce red tape and improve trade facilitation.
- Support SME access to finance (complement CFAF 200 billion guarantee fund with credit-history improvements and competition among banks and nonbank providers).

*Source: CAMEROON, INTERNATIONAL MONETARY FUND (excerpt from 1cmrea2024002).*

### References______________________________________________________________________________13

### STRUCTURAL TRANSFORMATION AND EXPORT DIVERSIFICATION

### Abstract / Key objective
- Cameroonian authorities aim for structural transformation and export diversification, pursuing an import substitution agenda to increase Manufacturing Value Added (MVA) from 14.5 percent in 2017 to 25 percent in 2030 and the share of manufacturing exports to 54.5 percent by 2030.
- The Industrialization Master Plan (IMP, adopted in 2016) targets ten key industrial sub-sectors: energy, agribusiness, digital technology, forestry and wood processing, textiles, mining, metallurgy and ironworking, hydrocarbons, refining and petrochemicals, chemicals and pharmaceuticals, construction and related services, and non-financial services.
- Recommendation signaled in the abstract: prioritize horizontal policies (investments in human capital and infrastructure and governance improvement) because they are empirically the most effective drivers and necessary conditions for successful industrial policy.

### Employment, production, and export structure — empirical findings
- Manufacturing share of real GDP: almost constant around 15 percent between 2000 and 2012; decreased to less than 13 percent in 2022.
- Manufacturing share of employment: increased from 9.6 percent in 2000 to 15.5 percent in 2022.
- Agriculture GDP share: moved from 18.1 percent in 2000 to 16.9 percent in 2022; employment share decreased by 22 percentage points between 2000 and 2022.
- Services: employment share increased by more than 18 percentage points; GDP share increased by 5.4 percentage points; services GDP share is more than 50 percent in 2022.
- Exports to GDP ratio (2003–2018): average 11.8 percent; historical peak 17 percent in 2006-2007.
- Export destinations (2003–2021 averages): 85 percent to global markets outside Africa, 8 percent to the CEMAC area, 5.8 percent to the rest of Sub-Saharan Africa (SSA).
- Export composition: mineral and fuel 43,15 percent; processed food 18,6 percent; fiber, textile, wood, hide and feather 15.2 percent; agricultural products 9.2 percent.
- Trends: processed food share historically reached 30 to 40 percent in 2009, 2011 and 2016 (years of export troughs). Since 2019, exports to CEMAC and SSA (excluding CEMAC) more diversified toward processed food, chemical and pharmaceutical products, metal and glass, and furniture, machinery, and appliances.
- Firm structure and size:
  - Proportion of retail in formal non-agricultural privately-owned firms decreased from 28.8 percent in 2009 to 15.2 percent in 2016.
  - Proportion of manufacturing firms increased from 25 percent in 2009 to 30.5 percent in 2016.
  - Average firm size (full-time employees) in manufacturing fell from 36 in 2009 to 23.6 in 2016.
  - Manufacturing firms are on average three times bigger than retail firms and two times bigger than other services firms.
- Productivity (sales per employee) stagnated on average across sectors between 2009 and 2016 and was virtually equal across sectors; slight declines observed.

### Determinants of structural transformation — literature synthesis
- Horizontal factors (most effective drivers):
  - Human capital and public infrastructure are quasi-unanimously found to favor shifts to higher value-added manufacturing and services (Hausmann et al., 2007; Cabral and Veiga, 2010; Harrison and Rodríguez-Clare, 2010; Zhu and Fu, 2013; Teng and Lo, 2019; Salinas, 2021).
  - Empirical estimates cited: Salinas (2021) — one standard deviation increase in educational attainment associated with a 170 percent increase in non-hydrocarbon/mineral exports; return on infrastructure quality 20 percent.
  - Strengthening port and electricity infrastructure highlighted as most important infrastructure priorities.
- Institutions and governance:
  - Improved government effectiveness and controlled corruption associated with stronger industrialization; Salinas (2021) — one standard deviation increase in governance associated with a 65 percent increase in non-hydrocarbon/mineral exports.
- Industrial policy:
  - Theoretical justifications exist when large externalities, mispriced international prices, or demand factors warrant sector-specific support (Harrison and Rodríguez-Clare, 2010; Freire, 2017).
  - Empirical record of sector-specific industrial policy is mixed-to-poor; risks include fiscal costs and rent-seeking (Hausman and Rodrik, 2003; Harrison and Rodríguez-Clare, 2010; Salinas, 2021).
  - Horizontal factors are typically necessary conditions for industrial policy success (Anand, Mishra and Spatafora, 2012; Salinas, 2021; Sen, 2016).
- Other determinants noted: revenue, trade openness, digitalization and information flows, FDI, R&D/technology adoption, access to credit, GDP per capita (Hausman et al., 2007), digitalization effects (Atasoy, 2020), importation of inputs (Alessandria and Yi, 2021).

### Assessment of Cameroon on key determinants
- Human capital:
  - World Bank Human Capital Index (2020): Cameroon HCI = 0.40 in 2020 (up from 0.38 in 2010); a child born today will be 40 percent as productive when she grows up as with complete education and full health.
  - Performance: slightly lower than the Sub-Saharan Africa average and lower than lower middle-income country average; relatively better on years of schooling but poor on test scores (learning dimension).
- Infrastructure and ICT:
  - Despite large public investment outlays, implementation weaknesses have resulted in weak public economic infrastructure across electricity, water, telecommunication, roads, railways, port, and air facilities.
  - Regional transport routes are a major impediment to trade and regional integration; prioritized by CEMAC institutions and member countries.
  - Several major infrastructure projects are under way, notably in the electricity sector; completion could significantly improve electricity supply in the short to medium term provided related financing needs are met.

### Synthesis and policy focus (from text)
- Horizontal policies should be prioritized given empirical evidence that they are both most effective and necessary for successful industrial policy and structural transformation.
- Specific priority areas to concentrate efforts:
  - Improve educational attainment and learning outcomes to raise human capital (address test score weaknesses despite acceptable years of schooling).
  - Resolve public investment implementation weaknesses to strengthen electricity, transport, port, ICT, and other infrastructure.
  - Strengthen governance and institutional quality to reduce corruption and improve government effectiveness.
- Caution on industrial policy:
  - Sector-specific supports carry risks (fiscal costs, rent-seeking) and have a mixed empirical track record; they are more likely to succeed when horizontal conditions (human capital, infrastructure, governance, trade and labor policy frameworks) are in place.

*Source: CAMEROON, INTERNATIONAL MONETARY FUND*

### 16.       Institutions. Although Cameroon has a rich institutional structure that, despite security

### 16.       Institutions. Although Cameroon has a rich institutional structure that, despite security

### Institutional weaknesses and business environment
- Cameroon has a rich institutional structure that, despite security pressures, has maintained political and macroeconomic stability.
- Private sector and reviews of economic governance cite several areas where Cameroon’s institutional environment could be strengthened to better meet private sector needs.
- Identified weaknesses include:
  - budget formulation and execution (especially with respect to timely domestic payments and public investment spending),
  - property rights and the legal system,
  - revenue administration,
  - government regulations,
  - corruption.

### Border administration
- Border administration efficiency improved recently, but additional efforts are needed.
- Border administration can significantly impact trade flows.
- The government has made efforts to improve border administration and the OECD Trade Facilitation Indicators (2022) rates Cameroon’s border administration well compared to the sub-Saharan region.
- The OECD reports improvement since 2019 in:
  - internal border agency co-operation,
  - external border agency co-operation,
  - governance,
  - impartiality.
- OECD’s assessment indicates reforms with greatest benefit lie in:
  - formalities,
  - governance and impartiality,
  - information availability,
  - involvement of the trade community,
  - advance rulings,
  - appeal procedures.
- Recommended continued improvements:
  - availability of information,
  - advance information on future rulings,
  - ease the burden of documentation,
  - advance automation,
  - risk management procedures.

### Financial markets and access to finance
- Inadequate access to financing is a major impediment for business.
- Causes include:
  - banks’ heavy exposure to the state,
  - poor legal environment for property rights and collecting debt obligations.
- Recent policy: government has put in place a guarantee fund of CFAF 200 billion to facilitate the SMEs’ access to commercial bank loans.
- Recommendation: efforts should be pursued to improve SME access to finance (including continuation and complementary measures to the CFAF 200 billion guarantee fund).

### Business dynamism, innovation, and product markets
- Cameroon’s labor market is flexible, but product markets are heavily regulated either formally or informally.
- The weight of public institutions and market control does not make for an inviting entrepreneurial environment.
- Product market flexibility is hampered by control of prices for key items, whether subsidized by the state or indirectly by business.
- A large portion of the business community remains in the informal sector.
- Literature identifies multiple causes of informality, including:
  - regulations,
  - poor productivity of entrepreneurs,
  - lack of access to finance,
  - lack of enforcement and self-exclusion as result of poor public governance,
  - fuel subsidies (the informal sector also benefits from fuel and energy subsidies that are financed by taxes on the formal sector) (Bento et al., 2018).

### Summary of structural transformation status
- Cameroon has recently made some progress on the determinants of structural transformation.
- Remaining significant challenges are still representative of the latest data of the World Bank enterprise surveys dated back in 2016 (Text Figure 5 reference).

### E. Policy Recommendations — focus areas
- To achieve structural transformation and export diversification, Cameroon needs to address identified structural factors; institutional and governance improvements are necessary conditions for economic development.
- Priority focus areas and recommended actions:

  - Institutions
    - achieve nation-wide sustainable peace and political stability,
    - undercut corruption,
    - improve functioning of the legal system,
    - improve budget formulation and execution, especially with respect to timely domestic payments and public investment spending.

  - Infrastructure and ICT
    - improve public investment efficiency and increase infrastructure in electricity, telecommunication, and roads,
    - improve public investment implementation records by taking measures to foster public spending efficiency,
    - build more quality infrastructures (roads, telecommunication, electricity and water facilities),
    - leverage natural endowments to embrace and promote renewable energy sources.

  - Human capital
    - enhance learning in schools and align training curricula to the private sector needs,
    - continue supporting school attendance and improve quality of learning,
    - ensure adequacy of training to private sector needs,
    - emphasize entrepreneurial skills training given high informality.

  - Product and labor markets
    - remove regulations that hinder competition among firms,
    - allow more market flexibility,
    - encourage more formalization of existing firms,
    - use formalization incentives that crosscut improving access to finance, tax administration efficiency, governance, and simplifying tax requirements and procedures,
    - involve informality enforcement.

  - Business dynamism and innovation
    - decrease weight of public institutions and market control to improve entrepreneurial environment, creativity, and innovation.

  - Measures to facilitate access to finance
    - improve credit history and financial record at micro-levels to help financial institutions measure risk,
    - promote competition among banks and nonbank financial actors, including mobile money service providers,
    - accompany the government’s ongoing effort to provide guarantee fund for the benefit of SMEs and learn from other countries’ experiences.

  - Tax administration and customs
    - improve tax administration and customs efficiency,
    - simplify tax codes,
    - remove red tape, bribery, and other administrative bottlenecks,
    - pursue digitalization of payments and procedures (digitalization in Benin and Rwanda cited as good experiences).

  - Trade policy
    - promote regional trade; the African Continental Free Trade Agreement (AfCFTA) is a welcome initiative to leverage.

### F. Conclusion (key diagnostic points)
- The paper analyzes challenges of economic structural transformation and export diversification.
- Despite longstanding objective to industrialize, manufacturing has been persistently sluggish.
- Exports were concentrated in minerals, fuel, and raw commodities in less diversified destinations outside Africa.
- Obstacles range from economy-wide structural and institutional deficits to market failures and strategic choices.

*Source: Excerpt from “1cmrea2024002 - 16.       Institutions. Although Cameroon has a rich institutional structure that, despite security” (IMF).*

### 6.      IP objectives and strategies have evolved in recent years. The traditional economic

### 1cmrea2024002 - 6.      IP objectives and strategies have evolved in recent years. The traditional economic

### Evolution of IP objectives and strategies
- Traditional economic objectives: promoting growth, diversification, employment, and technological catch-up.
- Newer drivers: supply chain resilience, climate change, and national security.
- Theoretical justification: industrial policies (IP) justified in presence of market failures (IMF, 2023) but practical implementation faces information asymmetry and rent-seeking challenges.
- Strategic typology: trade-related (export promotion and import substitution) versus theme-driven (down-streaming, achieving low carbon, and Industry 4.0/digitization).

### IP instruments — classification and general effectiveness
- Instruments classified as:
  - External trade–related: export promotion and import restrictions (quotas, sanitary/phytosanitary conditions, technical trade barriers, import monitoring), local content requirements, trade facilitation, trade-related investment measures, Special Economic Zones (SEZ).
  - Domestic (non-trade): financial support (subsidies, grants, tax exemptions/reductions, low-interest loans, loan guarantees, state equity participation), public procurement, SOE interventions.
- Effectiveness note: instrument cost and effectiveness depend on strategy; e.g., Aghion et al. (2015) find subsidies and tax holidays enhance productivity more effectively in competitive sectors.

### Industrial Policy in Cameroon — objectives and strategy
- Primary objectives: achieve economic growth by enhancing domestic production, diversifying the economic base, creating jobs, improving external balance, and higher employment.
- Non-economic considerations: strategic independence and regional development may be included but economic objectives predominate.
- Strategy mix: blend of import substitution and export promotion with emphasis on developing downstream industries; selection of targeted sectors aligns with NDS30 and perceived comparative advantages (robust agricultural base, abundant natural resources).
- Practical stance: policy priorities lean towards import substitution while export promotion remains an objective; down-streaming discourages export of unprocessed materials and encourages local processing.

### IP instruments in Cameroon — specific measures and legal bases
- Instrument 1: Increasing Tax to Discourage (Putting Sand in the Wheels)
  - Disincentivize raw commodity exports via exit export duties and direct export bans; Law No. 2016/004 authorizes prohibiting exports of certain goods.
  - Example: export ban applied to cement and some food items in April 2022.
  - 2023 measures: introduced an export duty on exports of raw cocoa beans; increased export duty for raw log; increased export duty on timber to incentivize local “advanced transformation”.
  - Export duty on raw log increased progressively from 17.5 percent in 2017 to 60 percent in 2023.
  - Regional initiative: discussions of imposing export ban of raw log—initially planned effective January 2022 in CEMAC and expected to come into force in 2026 in Cameroon.
  - Import-side: special excise duties (2019 Budget Law) on beverages; 2023 elevation of excises on imported tobacco products, beverages, and certain processed food items; excise on selected paper and plastic articles and packaging materials associated with certain processed food items.
- Instrument 2: Reducing Tax to Incentivize (Grease the Wheels)
  - 2013 Investment law (Law N° 2013/004 of 18 April 2013) provides incentives including exemptions from VAT and corporate taxes up to 5-10 years, and financial and administrative incentives.
  - Eligibility criteria include number of local staff, export share, utilization of natural resources, and value-added components; law highlights priority sectors for additional incentives.
- Instrument 3: IFZ (Special Treatment)
  - Industrial Free Zones (IFZ) offer commercial exemptions, tax concessions, and other incentives to attract export-oriented sectors and FDI.
  - Legal basis: 1990 Parliament Ordinance N° 90/001; enterprises exporting at least 80 percent of products enjoy extensive fiscal, regulatory, and customs benefits.
  - Tax regime in IFZs: full exemption from taxes and duties for 10 years; thereafter a flat rate of 15 percent profit tax applies; provision to carry over losses during the initial ten-year tax relief.
  - Financial and operational benefits: ability to maintain foreign-currency accounts, no barriers to repatriating profits; prioritized access and favorable rates for electricity and port services; trade and labor advantages; freedom from license and quota limitations and from price or profit margin regulations.
  - Current coverage: 13 IFZs in nine regions under MAGZI management; three more IFZs planned (Douala, Edea, Minim Martap). Companies could also establish as special ZFI; number of ZFI reached 38 in 2022.
- Instrument 4: Public Procurement (Demand Creation)
  - New Public Procurement Code: Decree No. 2018/366 and common rules for public company contracts adopted in 2018 emphasize incorporation of highly labor-intensive approaches.
  - NDS30 target: elevate share of public procurement for locally produced goods and services to a minimum of 60 percent.
  - Practical constraint: implementation of demand-side instruments is constrained by supply limitations.
- Instrument 5: SOEs (Playing in the Field)
  - SOEs present across energy, agriculture, mining, financial, and services sectors; total assets about 20 percent of GDP in 2020.
  - SOE composition: industries, agriculture, and transport account for the majority in firm number; agricultural SOEs are the biggest employer among SOEs.

### Implementation outcomes and constraints
- Down-streaming in agriculture and forestry:
  - Mixture of high export duties on raw materials and high import duties on finished products used for coffee, cocoa, sugar, rubber, cotton, and forestry.
  - Gradual increase in exported value-added in cocoa and wood (local processed exports such as cocoa butter and paste, swan wood and veneer sheets).
  - Challenges: high agricultural input prices (e.g., fertilizers), volatile international commodity prices, lack of hard and soft infrastructure (transport, access to finance).
- IFZ performance and spillovers:
  - Most IFZs lack economies of scale and have limited spillover to the broader economy.
  - Constraints: land access difficulties limit zone size; lack of local production capacity and skilled labor limits labor and supply linkages; IFZs in Cameroon are government-managed (contrast with private or PPP-administered zones elsewhere).
  - Infrastructure needs: maintenance and development of Douala and Kribi ports; stable road and rail connections critical for inland zones.
  - Competitive pressure: domestic and regional competition to offer attractive concessions strains sustainable development of IFZs.
- Public procurement and local sourcing:
  - Limited local content in pharmaceuticals: local producers supply 3.56 percent of medicines versus African average of 11.69 percent and the NDS30 60 percent target (MEPRD, 2022).
  - Enforcement shortfalls: weak enforcement of online procurement for selected projects.
- SOE fiscal pressures:
  - Growing number of SOEs require budget support due to weak performance; reliance on increasing direct state subsidies for operations and capital investment.
  - SOE support includes recapitalizations, government guarantees for commercial loans, on-lending, and accumulation of fiscal arrears.
  - Restructuring progress limited; example: national oil refinery SONARA (big fire in 2019) still in early stages of restructuring.

### Cross-border spillovers
- Limited cross-border spillovers expected because CEMAC countries are adopting similar IP strategies focused on import substitution; Cameroon's externally traded items are easily substitutable, implying outward spillovers likely negligible.

### Discussion — evidence, risks, and policy orientation
- Drivers for resurgence of IP and import substitution:
  - Vulnerabilities exposed in global supply chains (e.g., Covid-19).
  - Geopolitical tensions (notably US–China) increasing cost and unreliability of certain imports.
  - Economic security and resilience goals prompting supply chain diversification.
- Comparative effectiveness:
  - Historical evidence: import substitution has been less successful than export orientation for stronger economic growth and diversification.
  - Export promotion favors broader global markets and economies of scale, contributing to efficiency, technological development, and skills improvement (Cherif and Hasanov 2022; Irwin, 2021; Juhász et al, 2023b).
  - Cameroonian policymakers view import substitution as transitional toward export orientation.
  - Risk of support overhang: domestic sectors may not compete internationally in the longer run without government support.
- Safeguards and governance:
  - Imperatives: robust institutional framework, thorough fiscal cost and risk analyses, continuous monitoring, assessment of competition effects and sectoral spillovers, WTO compliance for external trade measures.
  - Warning: export bans may trigger retaliatory measures.
  - Sustainable strategy focus: technology innovation, cost-effective production, resilient SME sector, attracting foreign investment.
- Role of horizontal policies:
  - Emphasis on broad-based structural reforms (horizontal policies) to address infrastructure gaps, improve public investment effectiveness and public-private partnerships, enhance labor market efficiency, reduce informality, develop human capital via vocational training aligned with industrial needs, and promote financial deepening and inclusion.
  - Horizontal policies are critical given IP requires strong government capacity and anti–rent-seeking mechanisms; absent these prerequisites, IP's role should not be overstated.

### Key numeric facts and legal references (preserved exactly as in source)
- Law No. 2016/004 (authority to prohibit exports of certain goods).
- 22 April 2022: Ministry of Commerce suspended exports of wheat flour, rice, vegetable oil, and other nationally produced cereals.
- Export duties and tax specifics:
  - Export duty on raw log increased from 17.5 percent in 2017 to 60 percent in 2023.
  - Enterprises exporting at least 80 percent receive extensive benefits under Parliament Ordinance N° 90/001.
  - IFZ tax relief: full exemption from taxes and duties for 10 years; afterward flat rate of 15 percent profit tax.
- Investment incentives: VAT and corporate tax exemptions up to 5-10 years under Law N° 2013/004 of 18 April 2013.
- Public procurement target: minimum of 60 percent local procurement under NDS30.
- Local pharmaceutical sourcing: 3.56 percent (Cameroon) versus 11.69 percent (African average); target 60 percent (NDS30).
- SOE assets: about 20 percent of GDP in 2020.
- IFZ coverage: 13 IFZs in nine regions; three more IFZs planned; number of special ZFI reached 38 in 2022.
- Decree No. 2018/366: new Public Procurement Code adopted in 2018.

*Source: IMF staff, Cameroon Country Report (excerpt).*

### 27.      Cameroon has positioned IP at the core of its development strategy. This emphasis on

### Cameroon: Industrial Policy (IP) and Climate Change — Key Challenges and Reform Priorities

### Industrial Policy (IP) — objectives and instruments
- Cameroon has positioned IP at the core of its development strategy, driven by objectives such as economic diversification, job creation, and growth.
- The IP strategy blends import substitution and export promotion, aiming to grow domestic downstream industries.
- Instruments deployed include higher export and import duties, tax incentives and subsidies, building IFZ, public procurement, and state support to SOEs.

### IP — costs, implementation challenges, and institutional needs
- Fiscal and budgetary effects:
  - Tax and other incentives and increasing subsidies reduce fiscal revenues and increase spending.
  - SOEs’ financial difficulties and slow pace of SOE restructuring have weighed on the budget.
- Implementation and capacity constraints:
  - PFM weaknesses and cash management challenges impede effective IP execution.
  - Infrastructure gaps and lack of skilled labor restrain development of IFZs; impact on economic growth has been limited.
- Institutional priorities:
  - Need to assess current fiscal incentives, their implementation, and economic and budget impact.
  - Strengthen institutional framework and government capacity for effective IP execution.
  - Shift toward horizontal policies that support the broader economy and private sector via more efficient infrastructure, reforms to improve business environment, and a robust institutional setup.
- Monitoring and evaluation:
  - Currently limited data and information to assess IP measures in place in Cameroon.
  - Lack of monitoring prevents detailed cost-benefit analysis; assessment of economic impact and associated costs of various measures is important.

*Prepared observations drawn from the section on Cameroon’s industrial policy.*

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### Climate change — overarching assessment
- Climate change is described as an imminent threat to people and the economy of Cameroon, expected to result in significant output losses, exacerbate poverty and inequality, food insecurity and conflict risk, and increase population displacement.
- World Bank CCDR estimates Cameroon will incur GDP loss ranging from 4 to 10 percent in the most pessimistic scenario by 2050 if no adaptation action is taken.
- As a hydrocarbon producer and exporter, Cameroon needs to advance mitigation efforts and energy transition reforms to address spillover risks, including to financial stability.
- Institutional and policy weaknesses:
  - Lack of comprehensive legal and regulatory framework governing climate reforms.
  - Climate considerations are yet to be effectively integrated in the PFM framework, including in fiscal planning and public investment management.
  - Capacity constraints and lack of an effective coordination mechanism; institutional and governance frameworks to respond to climate challenges are not yet operationalized.
- Climate finance:
  - Near-term climate-related financing will likely remain donor financing.
  - Cameroon needs to develop capital markets to mobilize private funding and engage the private sector for climate investments.

### Climate vulnerability and trends (context)
- Cameroon is ranked 16th most vulnerable to impacts of climate change globally (Climate-related INFORM Risk Indicator, 2022, vulnerability sub-indicator).
- Observed trends:
  - Temperatures are getting progressively warmer, with pronounced increases in recent years.
  - Models predict an increase in the number of heavy precipitation days.
  - Number of recorded extreme weather events (droughts, floods) has doubled in the past three decades.
- Geographic and regional exposure:
  - Northern regions (desert and semi-arid) are most vulnerable to droughts and desertification; historically between 20 and 50 percent of the Extreme North’s population has been affected by droughts.
  - Central and coastal regions experience heavy rainfalls and floods; sea-level rise causes coastal erosion.
  - South Cameroon faces deforestation and mining pressures on the Congo Basin carbon sink.

### Sectoral impacts and socio-economic consequences
- Agriculture:
  - Agriculture employs over 70 percent of the population and accounts for almost a third of export earnings (most important after crude oil).
  - Agriculture is mainly rainfed; higher temperatures and heat stress reduce labor productivity and crop yields.
  - Maize yield in Far North declined by over 20 percent in 1998-2012.
  - Agriculture output is projected to lose between 6 to almost 14 percent by 2050 due to climate change.
- Livestock, fishing, and aquaculture:
  - Livestock contributes about 13 percent to agricultural output and employs 30 percent of the rural population.
  - Cameroon is one of the most dependent on marine food, with one of the largest projected decline catch potential due to climate change.
  - About 2.4 million people were severely food insecure in June 2023.
- Water resources:
  - Cameroon has abundant surface water resources overall, but with high seasonality and regional variation; Lake Chad region faces water scarcity.
  - More intense use by agriculture and industry likely to impact water availability.
- Conflict, displacement, and fragility:
  - Climate-related resource scarcity likely to aggravate conflict and fragility risks.
  - As of March 2023, over one million people in the country were internally displaced (IDPs) due to violence and climate hazard, and there were almost half a million refugees and asylum seekers.
  - In the Extreme North, over 60 percent of recent displacements were caused by floods.
- Infrastructure and economic losses:
  - Over 94 percent of roads in Cameroon are unpaved and only 11 percent of the national and regional road networks are considered in good condition.
  - About 274 km of the transportation system (about 0.2 percent of all roads) is affected every year by weather-related damage.
  - Average annual economic losses due to floods are estimated to be around US$130 million (or about 0.3 percent of the GDP) – according to the UNDRR.
  - Direct damage to roads is presumably small (around 0.06 percent of GDP due to multi-hazard risk cited by the IPCC), but indirect costs and disruptions can be sizeable.
  - Port disruptions could affect neighboring countries that rely on Cameroon’s ports (e.g., Chad and the Central African Republic).
- Human capital and health:
  - Cameroon ranks 151 out of 191 countries in the 2022 Human Development Index.
  - Children in Cameroon are the 10th most exposed and vulnerable to climate risks in the world.
  - Floods in September 2022 damaged or destroyed 88 schools and more than 9,000 homes.
  - A cited study found a decline of plantain productivity by 43 percent due to temperature increase was associated with 6 months lower school attendance on average.
  - World Bank estimates that about 60 percent of the loss to GDP by 2050 due to climate change would come from direct labor productivity losses.
- Poverty, inequality, and urban exposure:
  - Over 55 percent of Cameroonians live in poverty.
  - About 38 percent are severely impoverished, with poverty incidence particularly high in rural parts of the Extreme North and Eastern regions.
  - Very high urban population growth, poor urban planning, and inadequate urban infrastructure increase vulnerability of informal settlements.

### Key numeric facts and indicators (as reported)
- GDP loss projection (no adaptation, most pessimistic scenario by 2050): 4 to 10 percent.
- Agriculture output projected loss by 2050: between 6 to almost 14 percent.
- Agriculture employment: over 70 percent of the population.
- Agriculture share of export earnings: almost a third.
- Maize yield decline in Far North (1998-2012): over 20 percent.
- Livestock contribution to agricultural output: about 13 percent.
- Livestock employment in rural population: 30 percent.
- Severe food insecurity (June 2023): about 2.4 million people.
- Internally displaced persons (as of March 2023): over one million.
- Refugees and asylum seekers (as of March 2023): almost half a million.
- Share of roads unpaved: over 94 percent.
- Share of national and regional roads in good condition: 11 percent.
- Transportation system affected annually: about 274 km (about 0.2 percent of all roads).
- Average annual economic losses due to floods: US$130 million (or about 0.3 percent of the GDP).
- Direct road damage estimate (multi-hazard study cited by IPCC): around 0.06 percent of GDP.
- Human Development Index rank (2022): 151 out of 191.
- Children exposure ranking: 10th most exposed and vulnerable to climate risks.
- Plantain productivity decline in cited study: 43 percent; associated school attendance impact: 6 months lower on average.
- Share of GDP loss by 2050 attributed to direct labor productivity losses (World Bank estimate): about 60 percent.
- Poverty incidence: over 55 percent live in poverty; about 38 percent are severely impoverished.
- Historical Lake Chad shrinkage over last 60 years: 90 percent.

### Policy priorities and reform directions (identified in the text)
- Industrial policy:
  - Assess fiscal incentives, their implementation, and economic and budget impact.
  - Strengthen PFM and cash management to mitigate fiscal costs of incentives and subsidies.
  - Accelerate SOE restructuring and address SOE financial difficulties.
  - Focus on horizontal policies that improve infrastructure, business environment, and institutional capacity to support private-sector-led growth.
  - Improve monitoring and evaluation of IP instruments and economic impact; collect data to enable cost-benefit analysis.
- Climate policy and resilience:
  - Step up both adaptation and mitigation efforts.
  - Develop a comprehensive legal and regulatory framework for climate reforms.
  - Integrate climate considerations into the PFM framework, including fiscal planning and public investment management.
  - Operationalize coordination mechanisms and build government capacity for climate response.
  - Mobilize climate finance: near-term donor financing plus development of capital markets to attract private funding and private sector engagement for climate investments.

*Source: IMF staff analysis and reporting in the Cameroon country chapter.*

### 14. Demographic growth will further increase Cameroon’s vulnerability to climate change.

### 14. Demographic growth will further increase Cameroon’s vulnerability to climate change.

### Demographic and social impacts
- A growing population increases pressure on natural resources, exacerbates food insecurity and leads to more GHG emissions.
- Climate-related shocks tend to affect women more due to existing gender inequalities (limited access to resources, education, and economic opportunities), which complicates their adaptation to climate change challenges.
- High fertility rates, driven by women’s lack of access to family planning and control of their reproductive choices, are a key driver of demographic growth.

### Greenhouse gas emissions and mitigation priorities
- Cameroon’s greenhouse gas emissions are about 0.25 percent of total global emissions.
- Sectoral contributions to national GHG emissions:
  - Industrial process: 47 percent
  - Land-use change and forestry: 27 percent
  - Energy: 12 percent
  - Agriculture: 10 percent
  - Waste: 3 percent
- Per capita emissions decreased between 1998 and 2018 by about 47.5 percent but remain above the SSA average.
- Emissions per unit of GDP were higher than both the SSA and world averages.
- NDC commitments and targets:
  - Committed reduction of greenhouse gas emissions by 35 percent by 2035 relative to 2010, including an unconditional target of 12 percent.
  - Targeted sectors: energy (including transportation), forestry, agriculture, and waste management.
  - Promotion of renewable energy (hydropower, solar, wind) and improved energy efficiency are central.
- Phasing out fuel subsidies is recommended as part of an effective mitigation strategy:
  - Fiscal cost of fuel subsidies estimated at over 1,000 billion CFAF in 2022.
  - Subsidies are not well targeted to the poor and tend to benefit higher income households.
  - Subsidy phase-out should be accompanied by social protection measures to build resilience to climate risks.
- Forestry and land-use:
  - Rainforests cover about 40 percent of Cameroon’s territory.
  - Annual rate of deforestation is around 0.6 percent and exceeds reforestation rate of only 0.1 percent.
  - Strengthening forestry governance, law enforcement against illegal logging, reforestation policies, and promoting eco-tourism are highlighted as mitigation measures.
- Gas flaring:
  - Cameroon is among the top 30 countries by volume of gas flaring and has one of the highest intensities of gas flaring in the world.
  - Gas flaring contributes to GHG emissions and wastes a resource that could be used for power generation; solutions include capturing/utilizing gas and imposing penalties on companies.

### Institutional framework, planning, and public financial management
- Policy and strategy context:
  - National Development Strategy (SND30) identifies adaptation and mitigation as key objectives.
  - Vision 2035 recognizes the importance of climate change and its economic and social impact.
  - Key climate policy documents include the National Climate Change Adaptation Plan 2015–19 (with a costed implementation plan) and the updated NDC (2021).
  - Ministry of Environment, Nature Protection and Sustainable Development (MINEPDED) and the National Observatory on Climate Change (ONACC) play central institutional roles.
- Implementation challenges:
  - Central and local governments face resource and technical capacity constraints.
  - No comprehensive regulatory framework mandates integration of climate change into policy, planning instruments, and processes.
  - Lack of effective coordination across arms and levels of government leads to duplication of functions and unclear roles.
- Public financial management (PEFA diagnostic, 2023):
  - Climate risks are poorly integrated in Cameroon’s PFM framework.
  - Climate risks are not considered in fiscal planning tools (macroeconomic forecasting, medium-term budget expenditure framework).
  - No formal definitions in the budget nomenclature for climate-related expenditures, impeding monitoring and evaluation.
  - Budget evaluation and audit do not consider impacts on climate risks.
  - Valuation of fixed assets does not consider exposure and vulnerability to climate change.
- Public investment management:
  - NDC estimates financing needs to support adaptation projects at over US$32 billion until 2030.
  - The public investment cycle lacks a framework to mainstream climate considerations: climate projects are not prioritized in investment selection and climate considerations are not integrated into procurement.

### Building resilient agriculture and infrastructure
- Priority adaptation areas in the NDC: climate-smart agriculture, resilient energy and transport infrastructure, diversification of energy supply, disaster risk reduction, and improving population awareness and capacity.
- Challenges limiting adaptation: limited access to modern inputs and technologies, inadequate infrastructure, and financing constraints.
- Infrastructure-agriculture linkages: transport, irrigation and water management, energy, storage, and processing are crucial to withstand extreme weather events (rainfalls, floods) that damage infrastructure and disrupt food systems.
- Building resilient infrastructure is essential to promote sustainable farming and protect the environment.

### Financing needs, sources, and private sector role
- Estimated financing needs:
  - Climate Policy Initiative estimate: overall climate financing needs in Cameroon are about USD 60 billion.
  - NDC adaptation financing needs estimated at over US$32 billion until 2030.
- Recent climate-related flows:
  - Between 2017 and 2021, Cameroon received around US$ 2.7 billion in climate-related development financing, mainly from multilateral development banks targeting mitigation in the energy sector.
  - About 80 percent of those funds were delivered to government entities.
- Short-term financing prospects:
  - Official sources of financing will likely be the main source of climate-related financial flows in the near term.
  - Introducing green measures in PFM (e.g., climate budget tagging) could help identify climate-positive expenditures and high-carbon or climate-vulnerable public spending (supporting reforms such as fuel subsidy reform).
- Private sector mobilization:
  - Private financing was estimated to account for about 2.6 percent of total mobilized climate financing in 2019-20.
  - Private sector participation is crucial but limited; constraints include weaknesses in the national PPP framework and sectoral governance issues.
  - Recommendations to mobilize private finance:
    - Comprehensive review and improvement of the PPP framework and its implementation (including funding for Support Council for the Realization of Partnership Contracts and the PPP unit).
    - Develop a PPP pipeline based on sector assessments to mobilize private financing for climate-smart infrastructure.
    - Develop capital markets and financial instruments (e.g., taxonomy for green or sustainability bonds) and extend stress testing methodologies to include climate risks.

### Key statistics and figures cited
- Cameroon GHG share of global emissions: 0.25 percent.
- Sectoral GHG shares: industrial process 47 percent; land-use change and forestry 27 percent; energy 12 percent; agriculture 10 percent; waste 3 percent.
- Per capita emissions decline (1998–2018): about 47.5 percent.
- NDC mitigation target: 35 percent reduction by 2035 relative to 2010 (12 percent unconditional).
- NDC adaptation financing needs: over US$32 billion until 2030.
- Estimated overall climate financing needs: about USD 60 billion.
- Climate-related development financing received (2017–2021): around US$ 2.7 billion (about 80 percent to government entities).
- Private financing share of total mobilized climate finance (2019-20): about 2.6 percent.
- Fiscal cost of fuel subsidies in 2022: estimated at over 1,000 billion CFAF.
- Rainforest coverage of territory: about 40 percent.
- Annual deforestation rate: around 0.6 percent; reforestation rate: 0.1 percent.
- Cameroon ranks among the top 30 countries by volume of gas flaring.

*International Monetary Fund — Cameroon chapter: “14. Demographic growth will further increase Cameroon’s vulnerability to climate change.”*

### Annex I. Cooperation with Development Partners

### Annex I. Cooperation with Development Partners

### Overview of climate-related development finance flows
- Climate-related development finance flows to Cameroon have been on the rise in recent years but remain smaller than estimated needs and are relatively volatile, making planning difficult.
- About two-thirds of the flows targeted mitigation projects.
- The large majority of mitigation financing targeted the energy sector.
- Agriculture, forestry, and fishing were the most targeted sectors for adaptation flows, with about a forty percent share.
- Adaptation flows also targeted multisectoral goals such as urban and rural development and disaster risk management, transportation, water supply, and disaster risk reduction.
- In terms of providers, multilateral partners accounted for three quarters of recent flows.
- Figures referenced: Cameroon: Adaptation/mitigation focus of climate-related development finance (Thousands of 2021 USD); Cameroon: Providers of climate-related development finance; Cameroon: Sectors targeted by mitigation flows 2017-2021; Cameroon: Sectors targeted by adaptation flows, 2017-2021.
- Source data: OECD DAC data.

### Multilateral partners and World Bank engagement
- The World Bank is the largest multilateral provider of climate-related development finance in Cameroon.
- The latest Development Project Financing (DPF) targets multiple critical climate areas through its sustainability pillar:
  - Improve climate resilience of road infrastructure by targeting road and road maintenance through operationalizing the relevant law and implementing it through a decree.
  - Water management measures to ensure efficient allocation of water across various uses, given its importance for agriculture.
  - Expansion of safety nets with the eventual goal of having adaptive social safety nets that can effectively respond to disasters.

### UN agencies: disaster risk reduction, social protection, and resilience
- World Food Program (WFP):
  - Strengthening resilience against disasters by improving data collection to enhance early warning systems and establishing policy and legal frameworks for disaster risk reduction.
  - Strengthening digitalization of social information to enable social safety nets to respond quickly and effectively in case of a disaster.
  - Devising an insurance scheme for agricultural workers to improve resilience to climate-related risks (disaster risk finance).
- UNESCO:
  - Recording data to observe climate impacts, for example on water quality and flooding, to prevent the spread of water-borne diseases.
  - Raising awareness in local communities of climate-related risks to create an enabling environment for private risk management.
  - Providing alternative income-generating activities for local indigenous populations through agroecology.
- International Organization for Migration (IOM):
  - Supports governance and knowledge generation for sustainable solutions to internal displacement by climate risks, especially in conflict-affected areas.

### Forestry, land, and agriculture-focused interventions
- Food and Agricultural Organization (FAO):
  - Convening consultations and supporting development of a regulatory framework to promote sustainable logging.
  - Creating an inventory of biodiversity and forests.
  - Developing capacity of forestry communities to implement forestry management plans.
- International Fund for Agricultural Development (IFAD):
  - Planting selected species of trees to increase forest resilience in various areas.
- UN High Commissioner for Refugees (UNHCR):
  - Multiple projects on reforestation to increase the resilience of refugees to climate risks.

### Bilateral partners: European engagement
- European governments and agencies are the most active bilateral partners in Cameroon.
- European Development Fund:
  - Identified as the largest donor with projects in agricultural policy and management to help promote sustainable and inclusive growth favorable to vulnerable populations and consolidating democratic, economic, and administrative governance.
- German Federal Ministry for Economic Cooperation and Development (BMZ):
  - Focuses on forestry management and improving agricultural production by making food systems more resilient.
- French Development Agency (AFD):
  - Supports development of renewable energy, sustainable forest management, flood prevention, and structuring national climate change strategies.

*Source: Annex I. Cooperation with Development Partners (Cameroon). OPC: OECD DAC data.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2024/english/1cmrea2024002.pdf_