CAMEROON: An Introduction to General Business Law
Cameroon is located in Central Africa, specifically in the CEMAC Region, of which it is the leading economy. For the most part, it has a Civil legal system. However, the English-speaking North-West and South-West Regions continue to use common law to a substantial extent. In some areas, such as criminal law, features of both systems have been mixed.
While the country’s economy is driven by the secondary and tertiary sectors, Cameroon also had a significant industrial sector.
Current Economic Conditions Affecting Clients or the Legal Profession
Cameroon’s overall economic outlook is positive. The AfDB and the IMF predict between 4.3% and 4.5% of economic growth in 2024. The World Bank estimates that real GDP growth should average 4.2% during the 2023-2025 period.
National statistics indicate an 8.6% progression of investments in Cameroon in 2023. Private investments account for 2.6% of the GDP growth. This trend is obvious in the legal profession, as business law firms experience a growing demand in terms of direct investments and project finance.
At the same time, Cameroon is facing many challenges, including a security crisis in the English-speaking Regions and the fight against terrorism in the Far North Region. The World Bank estimates that more than 1 million people have been internally displaced as a result of those conflicts.
In order to sustain security operations, the Government enacted repeated tax law changes and tax increases that have affected individuals and business alike, and can be fairly challenging to navigate for both the legal professionals and their clients.
Inflation also remains a pressing issue. The CEMAC reports that by December 2023, Cameroon’s inflation rate was at 6.7%, ie, 3.7% above the 3% rate mandated by the CEMAC. Fortunately, in the 2024 Finance Law, the Government has anticipated a reduction to 4% in 2024.
The Level of Activity, Trends and Developments in General Business Law in Cameroon
Private Investment
As previously mentioned, private investment is firmly on the rise in Cameroon. Typically, investors (both foreign and local) require legal services for the incorporation of new companies, mergers and acquisition, private equity and project finance.
Public Investment
Cameroon has well over XAF5000 billion (USD 7,96 billion) worth of ongoing or proposed infrastructure projects. Those notably include:
• A nation-wide smart video surveillance system to combat the rise of crime for roughly XAF108 billion (USD 203,8 million);
• A nation-wide solar photovoltaic electrification project for XAF96 billion (USD152,86 million);
• Several major and secondary roads infrastructure projects for more than XAF3,000 billion (USD9,15 billion); or
• Reconstructions plans for the English-speaking regions, and the Far North Region, respectively for XAF 3500 billion (USD10,67 billion) and XAF1816 billion (US 5,54 billion).
Capital Markets
In recent years, Cameroon has been very active on the capital markets.
The year 2023 marked its seventh bonds issue overall. That issue (“ECMR 2023 à tranches multiples”), which was the country’s very first multi-tranche bonds issue on the CEMAC market, closed at XAF176,7 billion (USD 281, 36 million).
In 2022, another issue on the CEMAC market (“ECMR 6,25 % Net 2022-2029”) closed at XAF239 billion (USD 380,57 million).
In 2021, Cameroon’s Eurobond on the Euronext Dublin (“REPCAM 9,5%”) closed at XAF450 billion (USD 716,56 million).
Our firm has had the privilege to provide legal services (either to the Government or to the arrangers) in all three operations.
Significant New Legislation that Will Have an Effect on Clients
The New Mining Code
The new Mining Code has all but revolutionised the mining sector in Cameroon.
Most notably, in an effort to curtail trafficking, the National Mining Company (SONAMINES) is now the sole entity allowed to purchase and sell gold and diamonds in Cameroon. All miners are therefore required to sell their production to SONAMINES, which will most likely affect them in terms of pricing.
One other innovation of note is the decentralisation of the power to grant authorisations for small mining to localities.
The 2024 Finance Law
The 2024 Finance law has significantly increased taxes on business and individuals alike.
For instance, benefit in kind provided by employers to their employees are now fully taxed. The list of such benefits has also been redefined and extended to include internet and phone service and gas bills.
For foreign companies that must apply for an authorisation to carry out a commercial activity in Cameroon, application fees of XAF1,000,000 (USD1,592) for public limited companies and simplified joint stock companies, and XAF500,000 (USD796) for limited companies have been created. This concerns all companies with 50% or more of their share capital owned directly or indirectly by foreign individuals or corporations.
It should also be noted that for tax debts due before the 31 December 2022, a special procedure has been instituted to allow for the amicable resolution of the corresponding tax litigation proceedings.
CEMAC Foreign Exchange Regulations
Companies in Cameroon report lingering difficulties in the internal implementation of CEMAC Foreign exchange regulations, notably in terms of what precisely are their regulatory obligations, and the relevant procedures to comply with those.
This was particularly true for extractive companies (upstream oil & gas and mining), for which a special regime had to be curated to reflect the intrinsically cross-border realities of their businesses, notably in terms of financing.
Potential Hurdles or Difficulties Faced by Clients and How These can be Overcome
Cameroon has a complex legal system and an even more complex regulatory environment.
More often than not, people invest without any knowledge of the relevant legal and regulatory obligations and face sometimes serious sanctions.
It is therefore essential to engage a competent and experienced lawyer to help one navigate the intricacies of the Cameroonian administration.