Identifier
Created
Classification
Origin
07YAOUNDE599
2007-05-10 11:35:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Yaounde
Cable title:  

CAMEROON ONE YEAR AFTER COMPLETION POINT

Tags:  ECON EFIN ETRD EAID ENRG CM 
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RR RUEHMA RUEHPA
DE RUEHYD #0599/01 1301135
ZNR UUUUU ZZH
R 101135Z MAY 07
FM AMEMBASSY YAOUNDE
TO RUEHC/SECSTATE WASHDC 7713
INFO RUEHNJ/AMEMBASSY NDJAMENA 1501
RUEHFR/AMEMBASSY PARIS 1850
RUEHLO/AMEMBASSY LONDON 1605
RUEHMA/AMEMBASSY MALABO 0226
RUEHLC/AMEMBASSY LIBREVILLE 1540
RUEATRS/DEPT OF TREASURY WASHDC
RUEHZK/ECOWAS COLLECTIVE
RHMFISS/HQ USEUCOM VAIHINGEN GE
UNCLAS SECTION 01 OF 03 YAOUNDE 000599 

SIPDIS


SIPDIS
SENSITIVE

DEPT FOR AF/C, EB/IFD/OMA
DEPT PLEASE PASS TO USTDA FOR PIERCE DAVIS
EUCOM FOR J5-A AFRICA DIVISION AND POLAD YATES
PARIS AND LONDON FOR AFRICA ACTION OFFICERS

E.O. 12958: N/A
TAGS: ECON EFIN ETRD EAID ENRG CM
SUBJECT: CAMEROON ONE YEAR AFTER COMPLETION POINT

Ref A Yaounde 132
Ref B Yaounde 372
Ref C Yaounde 511
Ref D Yaounde 442

YAOUNDE 00000599 001.2 OF 003


Marked paragraphs are sensitive but unclassified
(SBU). Not for distribution outside the USG.

UNCLAS SECTION 01 OF 03 YAOUNDE 000599

SIPDIS


SIPDIS
SENSITIVE

DEPT FOR AF/C, EB/IFD/OMA
DEPT PLEASE PASS TO USTDA FOR PIERCE DAVIS
EUCOM FOR J5-A AFRICA DIVISION AND POLAD YATES
PARIS AND LONDON FOR AFRICA ACTION OFFICERS

E.O. 12958: N/A
TAGS: ECON EFIN ETRD EAID ENRG CM
SUBJECT: CAMEROON ONE YEAR AFTER COMPLETION POINT

Ref A Yaounde 132
Ref B Yaounde 372
Ref C Yaounde 511
Ref D Yaounde 442

YAOUNDE 00000599 001.2 OF 003


Marked paragraphs are sensitive but unclassified
(SBU). Not for distribution outside the USG.


1. (SBU) Summary. April 28 marked the first
anniversary of Cameroon's approval for debt relief
under the Heavily Indebted Poor Countries (HIPC)
Initiative, which triggered an estimated $2.65 billion
in debt relief between 2006 and 2015. While the
Government of Cameroon (GRC) has undertaken some
important steps, the overall balance is largely one of
half-measures and as-yet unrealized potential. End
summary.

--------------
Completion Point: Financial Fallout
--------------


2. (U) According to the IMF, the forgiveness of USD
1.267 billion in debt (1999 terms) under the HIPC
process reduced Cameroon's future debt service
payments by about $4.9 billion in nominal terms.


3. (U) For the first time in many years, the
Government of the Republic of Cameroon (GRC) is
unquestionably in a financial position to implement
its ambitious program to reduce poverty and generate
economic growth. Cameroon's three-year economic
program (Poverty Reduction and Growth Facility or
PRGF),a HIPC-related conditionality, expires in June

2008. The GRC is currently in the planning stage for
the next Poverty Reduction Strategy Paper (PRSP) which
will focus on fighting poverty through economic
growth.


4. (U) The most visible component of bilateral debt
relief is the five-year Debt Cancellation and
Development contract signed in June 2006 with the
French Cooperation Agency (C2D) to direct $704 million
to finance poverty reduction projects in five sectors:
1) health, and AIDS control, 2) basic education, 3)
infrastructure, 4) agricultural development and food
security and 5) environment. The impact of the C2D
projects is already visible through a number of high
profile infrastructure projects in Douala and Yaounde.



5. (U) To respond to public impatience to reap the
benefits of debt forgiveness and to ease the burden of
inflation, the GRC in September 2006 reduced taxes
levied on certain imported staple commodities like
rice, sugar, and fish. Also, the GRC reduced the
charges consumers need to pay in order to connect to
the water and power networks, contributing to improved
living conditions through higher purchasing power.

--------------
The Social Dividend
--------------


6. (U) The benefits of debt forgiveness are intended
to boost pro-poor and pro-growth spending. Cameroon's
FY07 budget (Refs A and B) includes significant
increases to ministries providing critical social
services; four of the five largest line items are for
secondary education (up 12% to $333 million),public
works (up 83% to $266 million),basic education (up
38% to $242 million) and health (up 60% to $210
million). The GRC has also announced it will add
13,300 new teachers at the elementary education level
through regularized temporary contracts. In addition,
the health sector will benefit from the recruitment of
an addition 1,500 new personnel.

--------------

YAOUNDE 00000599 002.2 OF 003


Macroeconomic and Private
Sector Developments
--------------


7. (U) In line with President Biya's public promises
to energize Cameroon's economy, the next PRSP will
focus on the private sector as an engine of economic
growth and poverty reduction. Prime Minister Inoni
and Minister of Economy and Finance Polycarpe Abah
Abah have undertaken initiatives to engage the private
sector in plans to reduce the barriers and increase
the stimulus for economic growth. These overlapping,
and perhaps competing fora have yet to produce
concrete results, but the Prime Minister has promised
action to implement the recommendations that sub-
sector working groups are supposed to submit to him
later this year.


8. (U) Many are hopeful that the Douala Stock
Exchange will play an important role in generating
capital to involve local entities in a number of the
privatization processes begun during the campaign for
completion point and since stalled in the bureaucracy.
To date only the shares of the Cameroon Mineral Water
Corporation held by the National Investment
Corporation (SNI) have been traded at the Douala
financial market.


9. (U) The fate of national telecom provider CAMTEL is
still unclear and made murkier by a number of
agreements signed between the parastatal and
multinational firms that would appear to contradict
pledges that it will no longer draw on the public
treasury. A technical partnership agreement with
China's Huawei Company, for example, deployed CDMA
(Code Division Multiple Access) technology to build a
new QCT PhoneQ network to compete with other mobile
operators, boosting the number of subscribers and
perhaps making CAMTEL more attractive for potential
buyers. Also, the availability of the INMARSAT
undersea cable at the Douala port, in conjunction with
the optical fiber laid along the Chad-Cameroon
pipeline will provide develop Cameroon
telecommunication infrastructure.


10. (U) The privatization of CAMAIR, also a completion
point conditionality, will be re-launched after the
April 4 announcement (Ref C) that an earlier tender
process was Qunfruitful.Q National postal agency
Campost, also tapped for reform by the IMF and World
Bank, entered into a financial services agreement with
the Canadian company Tecsult. The Inter-communal
Investment Fund (FEICOM) which has been a locus of
embezzlement in the past, has been restructured to
focus on its core activity of lending to
municipalities to finance infrastructure investments.
Cocoa parastatal agency Sodecao activities received
financial support to renew the aging nurseries and
better seedlings that will be more disease resistant.


11. (U) The GRC has elaborated a long-term development
plan to boost energy supply to about 10,000 megawatts
to cater for the demands of a growing population and
economic development. That plan hinges on a number of
projects including:

- The project to construct a new hydro-power plant at
Nachtigal on River Sanaga

- The construction of a thermal power station at Kribi
with a capacity of 150 megawatts;

- The project to build the Lom Pangar storage dams,
the feasibility studies of which are underway;

- The project to build the Memve'ele dam (The UK's
Globeleq and China's Sinohydro have been short-listed
to win this project).

YAOUNDE 00000599 003.2 OF 003



--------------
On the Political Front
--------------


12. (U) The last 12 months have witnessed some
important political developments, many of them linked
to Cameroon's effort to attain completion point.
During the June 2006 Parliamentary sessions, the
deputies adopted landmark laws relating to the
elections of senators and regional councilors as well
as the declaration of assets and personal property in
an effort to introduce greater transparency in public
management, but the President has not yet issued the
decrees needed to implement these laws.


13. (U) In an added effort to combat corruption,
President Biya on March 11, 2007 appointed the twelve
members of the National Anti-corruption commission
(Ref D),but this body is not yet operational and its
mandate remains undefined. A new criminal procedure
code, generally lauded for successfully integrating
the contradictory legal systems in the French and
Anglophone regions, entered into force on January 1,
2007, but is still not fully implemented.

--------------
Comment: Great Promise, Slow Delivery
--------------


14. (SBU) The tremendous resources freed by debt
forgiveness have empowered Cameroon to undertake
massive pro-poor investments. Broad initiatives have
been launched in health, education and infrastructure.
The HIPC process succeeded in relieving Cameroon's
crushing debt burden and shifting the onus for
financing development to the government. The ultimate
test for the debt relief process, however, is the
success in delivering concrete improvements on the
ground. It is still too early to make the call in
Cameroon's case, but pervasive problems of bad
governance, weak political will and rampant corruption
have thus far impeded more rapid progress. End
Comment.

MARQUARDT