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2011 Index of Economic Freedom

2011 Index of Economic Freedom

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Source: http://www.heritage.org/Index/
Source: http://www.heritage.org/Index/

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Published by: jdfogg on Apr 08, 2011
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World Rank: 136

Regional Rank: 27

Cameroon’s economic freedom score is 51.8, making its
economy the 136th freest in the 2011 Index. Its overall
score is 0.6 point worse than last year, primarily as a result
of declines in freedom from corruption, fiscal freedom, and
labor freedom that were not entirely offset by a gain in busi-
ness freedom. Cameroon is ranked 27th out of 46 countries
in the Sub-Saharan Africa region, and its overall score is
lower than the regional average.

Cameroon’s economy, although relatively diversified with
services accounting for around 40 percent of GDP, remains
dominated by the public sector. The global economic slow-
down had a significant impact on growth, and economic
development continues to be hampered by the lack of a
dynamic private sector. Progress in structural reforms
has been only marginal, and the overall entrepreneurial
environment is not conducive to creating more economic
opportunities.

The economy lags in many of the 10 economic freedoms.
Cameroonian entrepreneurs face lingering systematic chal-
lenges that include inefficient bureaucracy, an unreliable legal
system, and poor infrastructure. Restrictive regulations hurt
employment and productivity growth. Restrictions on trade
through non-tariff barriers persist, and the weak judicial sys-
tem allows pervasive corruption that erodes the potential
for long-term economic expansion.

Background: President Paul Biya has held office since
1982, and there is little evidence of political reform. In 2008,
Biya’s supporters in parliament, having won a strong major-
ity in 2007, passed constitutional amendments granting the
president immunity for acts committed while in office and
enabling Biya to run yet again in 2011. Public frustration
with poor governance threatens to spark political unrest.
Despite abundant natural resources, with oil and pipeline
projects providing significant revenue, over half of the
population depends on agriculture. The transparency of oil-
related public finances has been improved, but economic
mismanagement continues to inhibit development.

Quick Facts

Population: 19.9 million
gdP (PPP): $42.8 billion
2.0% growth in 2009
2.8% 5-year compound annual growth
$2,147 per capita
unemployment: n/a
Inflation (cPI): 3.0%
FdI Inflow: $337.4 million

Economic Freedom Score

Country’s Score Over Time

Country Comparisons

Least Most
free free

50
25 75

0 100

51.8

1995 ’97 ’99 ’01 ’03 ’05 ’07 ’09 2011

30

40

50

60

70

0

20

40

60

80

100

51.8

Country

59.7

World
average

53.5

Regional
average

84.1

Free
economies

128

2011 Index of Economic Freedom

CAMEROON (continued)

THE TEN ECONOMIC FREEDOMS

Business Freedom

No. 151

Trade Freedom

No. 161

Fiscal Freedom

No. 146

Government Spending No. 17
Monetary Freedom

No. 109

Investment Freedom

No. 123

Financial Freedom

No. 70

Property Rights

No. 99
Freedom from Corruption No. 148
Labor Freedom

No. 139

COUNTRY’S WORLD RANKINGS

BUSINESS FREEDOM: 44.1

+ 6.9

Cameroon’s overall entrepreneurial environment remains
hampered by burdensome regulations. The regulatory
regime is inefficient and non-transparent. Despite some
reforms, requirements for business entry and exit are time-
consuming and costly.

TRADE FREEDOM: 59.6

0.1

Cameroon’s weighted average tariff rate was 15 percent
in 2009. Surcharges and inconsistent customs valuation,
import and export restrictions, import and export taxes and
fees, import registration and licensing, domestic preference
in government procurement, corruption, and inadequate
enforcement of intellectual property rights add to the cost
of trade. Fifteen points were deducted from Cameroon’s
trade freedom score to account for non-tariff barriers.

FISCAL FREEDOM: 66.9

4.9

Cameroon has high tax rates but ineffective tax collection.
Both the top income tax rate and the top corporate tax rate
are 38.5 percent (35 percent plus a 10 percent surcharge).
Other taxes include a value-added tax (VAT), a transfer tax
on businesses sold, a property tax, and an inheritance tax.
In the most recent year, overall tax revenue as a percent-
age of GDP was 18.5 percent. Reforms are underway to
broaden the tax base and bring new taxpayers from the
informal sector into the system.

GOVERNMENT SPENDING: 89.7

3.0

In the most recent year, total government spending, includ-
ing consumption and transfer payments, equaled 18.5
percent of GDP. Expenditures are driven primarily by an
expanding public wage bill amounting to 5 percent of GDP
and by subsidies to SONARA (the national oil refinery)
and other state-owned enterprises. Public debt hovers at
9.5 percent of GDP.

MONETARY FREEDOM: 73.3

+ 1.4

Inflation has been moderate, averaging 3.4 percent
between 2007 and 2009, and is forecast to continue declin-
ing to 1.9 percent in 2010. The regional Banque des Etats de
l’Afrique Centrale (BEAC) prioritizes the control of infla-
tion and maintenance of the CFA franc’s peg to the euro.
The market determines most prices, but the government
subsidizes and controls prices for such “strategic” items
as rice, flour, consumer goods, agriculture inputs, electric-
ity, water, petroleum products, telecommunications, cook-
ing gas, pharmaceuticals, and cotton. Fifteen points were
deducted from Cameroon’s monetary freedom score to
account for measures that distort domestic prices.

INVESTMENT FREEDOM: 35

no change

Foreign investments face government screening. Cor-
ruption, cumbersome bureaucracy, and decision-making
delays persist. The government generally maintains a large
ownership interest in privatized companies. Dividends,

capital returns, interest and principal on foreign debt, lease
payments, royalties and management fees, and returns on
liquidation can be freely remitted abroad. Liquidation of
foreign direct investment must be declared at the Minis-
try of Finance and the central bank. Residents may open
foreign exchange accounts with central bank and Ministry
of Finance approval. Many capital transactions, including
foreign borrowing, foreign direct investment, liquidation,
and foreign securities, are subject to controls and generally
require the approval of or declaration to the government.
Delay and corruption are encountered in resolving com-
mercial disputes.

FINANCIAL FREEDOM: 50

no change

The cost of financing remains high, and access to credit
is very limited in rural areas. There is a wide network of
microfinance institutions. Three major banks still domi-
nate the banking sector, and the sector’s performance has
deteriorated due to lack of transparency and accountabil-
ity in lending. The largest insurer is foreign-owned, but
Cameroonian ownership is increasing. The stock exchange
remains small.

PROPERTY RIGHTS: 30

no change

Corruption and legal uncertainty can lead to confiscation
of private property. Courts and administrative agencies
often favor domestic firms and are accused of corruption.
Some foreign companies allege that unfavorable judg-
ments are the result of fraud or frivolous lawsuits. Trade-
marks and copyrights are routinely violated, and software
piracy is widespread. Cameroon is ranked 109th out of 125
countries in the 2010 International Property Rights Index.

FREEDOM FROM CORRUPTION: 22

1.0

Corruption is perceived as pervasive. Cameroon ranks
146th out of 180 countries in Transparency International’s
Corruption Perceptions Index for 2009. Courts and govern-
ment agencies have been accused of corrupt practices, and
there continue to be reports of beatings of detainees, arbi-
trary arrests, and illegal searches. Despite anti-corruption
and good-governance initiatives, legal loopholes and legis-
lative gaps allowing corruption have not been eliminated.

LABOR FREEDOM: 47

5.2

Cameroon’s labor market remains inflexible and inefficient,
although the overall legal framework for a well-function-
ing market is in place. The non-salary cost of employing a
worker is moderate, and dismissing a redundant employee
is not costly.

129

How Do We Measure Economic Freedom?

See page 447 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.

2009 data unless otherwise noted.
Data compiled as of September 2010.

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