What U.S. Economic Sanctions Mean For Cameroon’s Ailing Economy

The decision of the US President to cut-off Cameroon from the African Growth and opportunity Act, AGOA, due to continuous human rights violation by the Government will deprive Cameroon of FCFA billions.

Through the AGOA, Cameroon currently enjoys access to the United States’ tax-free market, which has been fetching the country FCFA billions, money which the Government has been using to finance her development drive in the country.

Before stripping Cameroon of her AGOA privileges, the US had earlier sanctioned Cameroon by reducing about FCFA 10 billion in military aid to Cameroon, and suspending some military related schemes between the US and Cameroon, due to persistent human rights violation by Cameroon’s security forces.

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Cameroon’s exclusion from the AGOA, will affect sectors like mineral fuels, which in 2018, brought in $126 million (approximately FCFA 74.12 billion), wood and wood products that brought in $26 million (approximately FCFA 15.27 billion), cocoa which brought in $16 million (approximately FCFA 9.39 billion), rubber that brought in $15 million (approximately FCFA 8.81 billion) and other special returns that brought in $8 million, approximately FCFA, 4.69 billion.

Statistics from the US Trade Representative, show that “US imports of agricultural products from Cameroon totaled $36 million (approximately 21.14 billion) in 2018”

Commodities such as cocoa paste, cocoa butter, rubber and it’s by- products, processed fruits and vegetables, tobacco, and unroasted coffee were highly demanded. 

Data from the office of the US Trade Representative also note that the US trade with Cameroon, in recent times shifted from a goods trade surplus of $41 million (approximately FCFA 24.083 billion) in 2017, to a goods trade deficit of $26 Million(approximately FCFA 15.27 billion) in 2018.

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The exclusion of Cameroon from the AGOA means that if the country must do business with the US, it will like other economically viable countries and multinationals, be exposed to tariffs and other market huddles, that keep only economic giants in the field, where countries and businesses with comparative business advantage make the best out of market forces, in the absence of preferential treatment or business incentives. 

Meanwhile, after forfeiting her preferential status, Cameroon can start dabbling into other avenues in the world market in search of markets where it can sell its crude oil and other exports that had previously enjoyed a tax-free market in the USA, thanks to the AGOA.

Another option could be for the country to refine its crude and rather sell finished petroleum products, but it’s lone and partly burnt and grounded oil refinery was designed to refine only light crude, meanwhile the country produces heavy crude. Thus Cameroon resorted to selling its heavy crude and buying light crude for its home industry.

In his correspondence to the US Congress, Donald J. Trump cited the violations of internationally recognised human rights, the engagement in torture, as well as arbitrary arrests and detention of its citizens, as the reason behind Cameroon being kicked out of the AGOA.

“Despite intensive engagement between the United States Government and the Government of Cameroon, Cameroon has failed to address concerns regarding persistent human rights violations being committed by Cameroonian security forces. These violations include extrajudicial killings, arbitrary and unlawful detention and torture,” Trump lamented in his correspondence to the US Congress.

The Trump administration noted that Cameroon will effectively be cut out of AGOA on January 1, 2020. “Accordingly, I intend to terminate the designation of Cameroon as a beneficiary sub-Saharan African country under the AGOA as of January 1, 2020”.

In a press release to reassure Cameroon of the United States commitment despite the severing of the AGOA, the US Embassy in Yaounde stated that; “The (US) President can reinstate Cameroon as a beneficiary of AGOA when it again meets the criteria, and we remain committed to working with Cameroon to do so”.

The Embassy statement also noted that under US law, beneficiary members of the AGOA are subject to regular reviews to assess the criteria set out by the US Congress in the legislation that created the African Growth and Opportunity Act.

The US Embassy also revealed statistics from 2018, which show that Cameroon in 2018, exported goods and services to the United States, worth over $ 220 million (approximately FCFA129.22 billion).

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 It was further revealed that over $ 63 million, approximately FCFA 37 billion worth of goods and services, were exported under the AGOA. Over 90 per cent of the exports was crude petroleum, which happens to be Cameroon’s top and lucrative trade commodity in the world market.

To assure Cameroon after severing its tax-free access to the US market, the US Embassy said; “The United States is a committed partner and friend of Cameroon and we will continue to pursue robust and diverse commercial ties, working with other tools at our disposal towards realising the enormous potential of this relationship for our mutual prosperity and economic growth”.

Meanwhile,   Cameroon’s Minister of Communication and Government Spokesperson, Rene Emmanuel Sadi, has described the US sanctions as biased.

According to him, the Separatist Fighters have wrecked a lot of havoc in Cameroon and the security forces have always acted professionally.

The sanction and the corresponding loss of revenue from the AGOA, will come to add to Cameroon’s economic woes, in an economy that currently relies on foreign loans and aid, given the instability in the country due to the Boko Haram insurgency in the North, the Anglophone crisis in the Northwest and Southwest regions, as well as cross border crime in the East region from neighbouring Central African republic.

In the Anglophone regions where government troops have been indicted for human rights violations by major partners like the U.S., key sectors like the CDC, second largest employer after the State, have seen its activities grounded, starving the State of billions in foreign income on monthly bases, and the economy of over FCFA Six billions in circulation monthly in the Southwest region.  Also, there is now the grounded National Refinery, whose petroleum products fetched billions, but now lies in ruin after a fire incident.

Cocoa production that mainly originates from the Southwest region to boast national export, has also dropped drastically, due to the Anglophone crisis, thereby depriving the economy of billions in foreign income. This alongside the investment unfriendly climate due to insecurity has made Cameroon economic problems to increase by the day.

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