Cameroon and China benefit from a new law to safeguard and promote private investment
New law safeguards China-Cameroon private investment
A NEW law introduced in cameroon seeks to protect and foster private investments between it and China. This comes on the back of deepening Chinese investment in Cameroon.
“The cooperation with China has become very important, meaning we need to open up a level playing field, not only for public investment, but one that also promotes private-sector investments, trade and any kind of exchange with China,” Pascal Hervé Essissima, Director of Regional Cooperation in the Ministry of the Economy, Planning and Regional Development, told Chinafrica.
The new law, drafted and sent to both countries’ parliaments as early as 1997, came into force only in 2014. Cameroon signed it more than a decade after China did in 2000.
Experts say this law will provide new momentum to private-sector investment between the two countries. Cameroon might see a stream of Chinese investment in every sector in the near future.
“Due to China’s high competitiveness in the global market and access to capital and technology, it is in a better position to benefit from this law,” Theodore Besong, an economic expert and fellow at the University of Yaounde, told Chinafrica. “We might see the local markets in Cameroon absorbed. This could explain why the Government of Cameroon delayed signing this accord when it has no strong and competitive economy.”
What the law says
The Law on Mutual Protection and Promotion of Investment between Cameroon and China creates a business environment where the same investment law applies for Cameroonian and Chinese individuals and businesses in both countries. Citizens of both countries can benefit from the same protection, obligation, tax regime and investment opportunities.
This law obliges both countries to facilitate legal investment procedures and the delivery of work permits, while ensuring equitable fairness.
With the complex regulatory environment and the threat of corruption often becoming obstacles for potential investors, companies often spend years negotiating deals and gaining final approvals from government agencies.
“This law will reduce the difficulties of implementing change and the time needed to close deals and transactions as it opens up an era where capital, dividends, salaries, profits and transfer of money to and from China will be free of any form of taxation,” Besong said.
Although Cameroon is the gateway to a huge market of more than 50 million people in the Central African Economic and Monetary Community, limited access to investment capital and inadequate infrastructure and technology make it difficult for local private-sector businesses to flourish.
Essissima sees new opportunities for both the economies as growth rates will surge with this incentive for private-sector businesses and more employment will be created in Cameroon. “Individuals can easily partner with Chinese firms and get access to capital and technology,” he said.
Growing Chinese investment
China has recently become Cameroon’s biggest investor, targeting important sectors such as infrastructure, energy, water, transport and telecommunications. Among the landmark projects undertaken by China are the construction of the Kribi Deep Seaport in south Cameroon, and dams for a 211-MW hydropower project in south Cameroon as well as a 50-MW one in east Cameroon.
Cameroon intends to modernize road transport by constructing a 200-km Douala-yaounde Highway connecting two of Cameroon’s largest cities at a cost of about $1.1 million.
“China provides Cameroon with initial capital, technology and expertise, the kind of opportunity we, as a developing country, need to grow. So we are prioritizing bilateral cooperation with China,” said Essissima.
Mining giant Sundance Resources’ Managing Director Giulio Cassello said in a company report that Cameroon, the Republic of the Congo and Gabon have significant iron ore deposits. But without infrastructure such as a port, railway and road, they remain economically unviable. The strategic position of the Kribi port will provide Cameroon and the region’s other landlocked countries rapid access to transport to export raw materials. The China Harbor Engineering Co., which is building Kribi, is seeking to deepen the franchise opportunities of the port through a strategic partnership deal with the Bollore Group, a French transport sector multinational which manages part of Cameroon’s rail and sea transport.
(Reporting from Cameroon)
Cameroon will build a modern 200-km Doualayaounde Highway connecting two of its largest cities