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USAID Cameroon County Development Statement Analytical Study

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USAID Cameroon County Development Statement Analytical Study USAID Cameroon County Development Statement Analytical Study Prepared for the U. S. Agency for International Development under Contract No. PDC-OOOO-I-37-6135-00 Nicholas Kulibaba Eric R. Nelson Roger Poulin, Team Leader February 1989 Dflf Development Alternatives, Inc. 624 Ninth Street, N.W. Washington, D.C. 20001 PREFACE This Analytical Study was performed by Nicholas Kulibaba, Eric R. Nelson, and Roger Poulin between November 1988 and February 1989, for the United States Agency for International Development Mission in Cameroon under contract number PDC-OOOO-I-37-6135-00. The purpose of the analysis was to assist the Mission in preparation for its Country Development Strategy Statement (CDSS) for FY 1990- 1994. Although several portions of this analysis appear in the CDSS, severe space limitations precluded the full analysis from appearing in the CDSS itself. This document is intended to provide baseline information on the economic and policy environment in support of the future USAID Action Plan, studies, and program design during the period during which the CDSS guides the Mission strategy for assistance. Reflecting this baseline character, no effort has been made to update information obtained since the date of the study, despite (or because of) rapid changes in policy and program within the Government of Cameroon as part of its Structural Adjustment Program. The baseline date should be considered as February 1989. The team worked closely with members of the USAID Cameroon Mission, particularly with the Program Office, and gratefully acknowledges their extensive and perceptive prior analytical work upon which parts of this analysis are based. Some of this work appears as Appendices to the CDSS which was approved by the Africa Bureau of A.I.D.; these are cited in this Study but not included here. Other work used appears in Appendix D, documents used. Other comments and analysis were communicated orally but were no less useful even though it cannot be cited in the bibliography. Nicholas Kulibaba Eric R. Nelson Roger Poulin May, 1989 Ill TABLE OF CONTENTS PREFACE ................................ i I. OVERVIEW OF ECONOMIC PERFORMANCE AND INDICATORS. ...... 1 A. MACRO-ECONOMIC PERFORMANCE AND ISSUES ........... 1 1. Macro-economic Growth and Indicators .............. 1 a. Output and Employment .................. 1 b. Balance of Payments .................... 4 c. Fiscal Performance..................... 7 d. Monetary Stability ..................... 9 e. External debt ....................... 11 2. Action to Address the Short-term Crisis .............. 12 3. Long-term Fiscal Issues ..................... 13 4. Macro-economic Structural Adjustment Issues ........... 14 a. Import restrictions ..................... 14 b. Price Controls ....................... 15 c. Direct Government Participation in Industry and Commerce. .15 d. Export Taxes ....................... 16 e. The Franc Zone ...................... 17 f. Financial Sector ...................... 17 5. Next Steps Related to Macro-economic Structural Adjustment .... 19 B. SECTORAL PERFORMANCE AND ISSUES. .............. 20 1. The Parastatal Sector ...................... 20 2. Petroleum .......................... .24 3. Agriculture. ......................... .25 a. Recent Performance .................... 26 i. Food Crops ...................... 29 ii. Export Crops. ..................... 30 iii. Livestock ....................... 32 iv. Forestry. ...................... .34 b. The Agricultural Policy Context ............... 34 i. Food Self-sufficiency Policies .............. 35 ii. Export Price and Tax Policies .............. 35 iii. Cooperative Development ................ 36 iv. The Role of Government Organizations .......... 36 c. Next Steps, ........................ 37 4. Industry and Services ...................... 38 a. Recent Performance .................... 38 b. The Industrial and Commercial Policy Environment ...... 39 5. Financial Sector. ........................ 44 6. Government Services. ...................... 47 IV 7. Non-Agricultural Sectoral Policy Issues .............. 48 a. Price and Tax Policies ................... 48 b. Financial Resources .................... 48 c. Training and Human Resources ............... 49 8. Next Steps. ........................ ,49 C. POVERTY ALLEVIATION AND SOCIAL SERVICES ......... .50 1. Recent Trends and Indicators. ................. .50 a. Populatioa ........................ SO b. Child Survival. ..................... .50 c. Food Security and Malnutrition ............... 51 2. Sectoral Performance ..................... .52 a. Health Services, ...................... 52 b. Education. ....................... .53 3. Policy Issues and Priorities in the Social Sectors ......... .54 H. SOCIAL, POLITICAL AND INSTITUTIONAL ENVIRONMENT ........ 57 A. SOCIAL ANALYSIS ........................ .57 1. Balance and Equity as Issues of Fundamental Social and Political Importance ....................... .57 2. The State Apparatus as a Unifying Force ............. 57 3. Centrifugal forces. ....................... 58 a. Ethnic and Religious Interests ................ 58 b. Regional Interests and Imbalances .............. 58 c. Linguistic Regionalism ................... 59 d. Economic Class ...................... 59 B. THE POLITICAL AND INSTITUTIONAL ENVIRONMENT. ....... 60 1. The Ideological Basis for State Participation in the Economy ... .60 2. The Central Role of Executive Authority ............. 60 3. Problems of Coordination in Policy-Making ............ 61 4. Issues: The Process and Pace of Change ............. 61 a. Change and Preservation of the Regime. .......... .61 b. Ideological Shift in the Role of Government.......... 62 c. Absorbing the Economic Costs of Adjustment......... 62 d. Reticence of Elites and Civil Servants in Implementing Reforms........................ 62 e. Social and Political Costs of Increased Unemployment ..... 62 f. Balancing Distributional Impacts ............... 63 5. Next Steps ........................... 63 a. Confronting the Issue of Institutional Viability. ........ 63 b. Policy Dialogue ...................... 63 c. Obtaining the Maximum Impact and Systemic Change. ..... 64 in. STRATEGY FOR DEVELOPMENT . ................... .65 A. DEVELOPMENT STRATEGY OF THE GOVERNMENT OF CAMEROON .65 B. OTHER DONOR OBJECTIVES AND PROGRAMS. .......... .69 1. Overview. .......................... .69 2. Bilateral Assistance ....................... 70 a. France ......................... .70 b. Federal Republic of Germany ................ 71 c. Canada.......................... 71 3. Multilateral Assistance. ..................... 71 4. Non-Governmental and Private Voluntary Organizations....... 72 5. Donor Coordination ....................... 73 6. Issues Concerning Other Donors, ................. 74 C. USAID DEVELOPMENT STRATEGY ................ .74 1. Introduction ......................... .74 2. Strategy Goal and Objectives. ................. .75 a. Goal .......................... .75 b. Strategy Objectives..................... 76 i. Increasing the Efficiency of the Public Sector ....... 76 ii. Creating a Market-oriented Private Sector ......... 77 iii. Increased Efficiency and Equity in Providing Social Services ..................... .79 3. Strategic Programming Options.................. 80 4. Examples of Possible Activities to Implement this Strategy. .... .82 IV. APPENDICES ............................. .85 A. Scope of Work for Analytical Study .................. 87 B. Economic and Statistical Tables .................... 91 C. Economic and Statistical Analysis .................. 141 1. Quality of Statistical Data ................... 143 2. "Dutch Disease". ....................... 147 3. Industrial and Commercial Policy Instruments .......... 151 D. Documents Consulted. ....................... 157 E. Persons Interviewed ........................ 161 vii LIST OF TEXT TABLES 1. Gross Domestic Product and Expenditure (Annual Growth Rates) ........ 2 2. Export Prices. .............................. 4 3. Balance of Payments. ........................... 5 4. Central Government Revenues and Expenditures ............... 7 5. Agriculture in the Economy ........................ 27 6. Growth Rates of Export Crops ......... ............. 27 7. Production of Export Crops ........................ 28 8. Commerce and Industry: Share of Non-oil GDP ............... 38 9. Economic Efficiency of Industry ...................... 43 10. 1989 Social Indicator Data ......................... 51 11. Government Health Budgets, 1986/87 - 1988/89. ........... .52 12. Government Education Budgets 1986/87 - 1988/89 .............. 54 13. Donor Commitments to Cameroon. .................... .69 14. Donor Sectoral Emphases. ......................... 70 SECTION ONE OVERVIEW OF ECONOMIC PERFORMANCE AND INDICATORS A. MACRO-ECONOMIC PERFORMANCE AND ISSUES 1. Macro-economic Growth and Indicators1 Between 1977 and 1985, Cameroon experienced a rapid rate of economic growth based primarily on oil production. Oil earnings enabled Cameroon to have a positive balance of payments and a balanced national budget for most of this period. Prior to 1977, the growth sector in Cameroon was agricultural exports, mainly cocoa and coffee. Cameroon is the sixth most important exporter of tropical hardwoods, and maintains significant protected forest reserves. The investment of agricultural and oil surpluses in industry and infrastructure brought about a rapid rate of import substitution as well as increased value added from the processing of domestically- produced agricultural products.
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