The Economy of Cameroon
Did you know that Cameroon was the first African country to reach the quarter-finals in a soccer World Cup competition in 1990?
Cameroon has the potential to grow past eth current economic state due to the presence of resources which might not have been utilized to their full potential. The country has a rich cultural mix which gives it a unique ability to blend the capabilities of its citizens in driving the economy forward.
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According to Aguir (2014), the currency in use in Cameroon is the CFA Franc which is issued by the Bank of the Central African states located in the city of Yaound in Cameroon. The currency serves not only Cameroon but also the other Central African states. One interesting fact about the currency is that it is pegged to the Euro at a standard rate calculated as 1Euro = 655.957 CFA franc. The pegging can be attributed to the business linkages between the central African region and the European markets. The SFA franc is comparatively weak against the dollar since 1 CFA franc =0.0018 US dollars.
The currency was slightly stronger between 2013 and 2015 since it reached a record high of approximately 1 CFA = 0.0025 (Vreyer & Roubaud, 2013). From 2015 going through to 2017, the currency has weakened up to eth current exchange rate. The weakening has been attributed to the political instability in the Central African region with the constant wars and economic stagnation. However, the strength of the currency against the dollar is poised to increase for the remaining quarter of 2017 guided by the economic pointers in play. The economy of Cameroon is influenced by the characteristics of its populations. The current estimated number of Cameroonians stand at 24 229 404comprising of 0.32% of the total world’s population (Fosu, 2013).
The population density is 51 per km2 with approximately 56.7% living in the urban areas, and the median age is 18 years. In Cameroon, the major natural resources include oil, natural gas and mineral resources such as nickel and cobalt. The country is also endowed with rich agricultural soils and climate is making it possible for planting a variety of crops such as cocoa, coffee, tea, bananas, palm oil, and pineapples among others (Fosu, 2013). These agricultural products are consumed internally while the surpluses are exported to other countries.
The rich forest cover also provides timber for the economy. According to Aguir (2014), the economy is typically supported by mining and agriculture with technical support provided by businesses. According to the Economic Freedom Index of 2017, the Cameroonian economy is partly driven by the export of minerals such as oils and natural gas and the surplus from the agricultural sector such as those from cocoa beans (Vreyer & Roubaud, 2013). Even though the export business is not well developed due to the weak institutions and political situation, a greater part of the economy is still dependent on exports.
The export sector, therefore, comprises a mix of commodities. The major trading partner of Cameroon is China with an estimated export valued at $679 million and import estimated at $1.37 billion (Aguir, 2014). The country also trades with other economies such as India, Netherlands, USA, Nigeria, and France. The exports are mainly the minerals and raw materials while they receive manufactured goods.
According to Fosu (2013), the manufacturing sector is underdeveloped which is translated into large inflows of imports from foreign economies. The country is a member of the Economic Community of the Central African States which has the mandate of raising the living standards of the people through harmonious cooperation. The organization allows for limited trade restriction between the member states making ensuring economic stability in the region.
The strength of the economy is examined using the Gross Domestic Product (GDP). According to the World Bank, data from 2016 estimated the GDP of Cameroon at $24.2 billion (Aguir, 2014). The current figures in 2017 are poised to range strictly to the 2016 figures since no significant changes have happened to the economic structure of the country. Available data analyzed for 2016 project the Gross National Product (GNP) of Cameroon is estimated at $76.09 billion (Aguir, 2014). The GDP and the GNP are comparatively low when examined against other countries due to the high unemployment and debt rates in the economy. A country’s progress is highly dependent on the number of the labor force being of the economy as well as reducing the national debt levels.
The current average unemployment rate is at 4% of the total population with the young population greatly affected (Vreyer & Roubaud, 2013). The foreign debt, on the other hand, stands at approximately $44.9 billion in the first quarter of 2017. This debt is majorly as a result of bilateral borrowing from international financial institutions such as IMF and the World Bank. From the preceding analysis of the country’s GDP, GNP unemployment rate, the amount of foreign debt among other key economic indicators, one can conclude that the economy of Cameroon is performing averagely well (Aguir, 2014).
The unemployment rate is comparatively low implying that a larger part of their population is engaged in building the economy. Cameroon has strong bilateral and diplomatic ties with the United States which has ensured that trade and other support services thrive. The US has an embassy in Cameroon where the two governments engage in different issues which ensure growth and stability of the central African Nation.
In conclusion, Cameroon is a unique country with a lot to be admired. The economic situation is also averagely good going by the estimates of the GDP and the GNP. However, the trade is highly dependent on the exportation of raw materials such as crude oil and agricultural products which can be processed locally to increase their value before exportation.
Vreyer, P., & Roubaud, F. (2013). Urban labor markets in sub-Saharan Africa. Washington, D.C.: World Bank.Aguir, A. (2014). Price Stability in Open-Economy under Inflation Targeting Regime with Factors Influencing Inflation Volatility. International Finance And Banking, 1(2), 30. Fosu, A. (2013). Institutions and African Economies: An Overview. Journal Of African Economies, 22(4), 491-498.