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Cutting Ties: Cameroon’s Path to Monetary Autonomy

In the midst of electoral fraud and corruption scandals, President Paul Biya of Cameroon visited the 2019 French military Bastille Day parade, sparking outrage and exacerbating the violent protests at home. The French National Army, as well as the armies of former colonial African nations, pass from Champs-Élysées to the Arc de Triomphe to meet Macron and his cabinet at the Place de la Concorde. Macron concludes the historical parade with words of passion and nationalism for France. The recent rejection of such association with the French government stimulates from recent movements that are boldly proposing reforms to remove the use of the French franc in former Western and Sub-Saharan African Nations. Even in a nation like Cameroon, where there are deep commercial and political ties, citizens are pushing for monetary autonomy. Coupled with the desire to be free of ties to the French treasury with poor fiscal mismanagement, great strife motivates these ambitious groups. Though such a move might lead to serious tensions with France, shifting toward an autonomous monetary system would be a prudent move for Cameroon for the long-term notwithstanding the short-term sacrifices.

Cameroon is faced with grave economic strife and a frustrated public desiring great change. Cameroon ranks 169th in the World Bank’s ease of doing business index because, despite promised economic reforms by President Paul Biya, corruption is still rampant. Biya, the current longest-serving non-royal ruler in Africa, has been held responsible for electoral fraud numerous times. While GDP growth is expected to be 4.3% in 2020, the rebound is mainly driven by the increase of natural gas production. The World Bank forecasts that Cameroon can achieve upper-middle-income status by 2035 if it increases its productivity and strengthens its private sector. Economic growth is only transformative for a developing country if it includes the entire population. While on aggregate, Cameroon saw economic growth from the 1980s and onward, it also saw increased inequality and a higher percentage of individuals under the poverty line. However, due to the iron grip Biya has over the country, it is hard to imagine that his leadership, or any of his hand-picked successors, will follow the advice of the World Bank. With sweeping control over the government, President Biya has cemented his position despite widespread popular unrest. His poor leadership, reliance on French investment, and pegged currency are the roots of the economic turmoil. For economic success, Cameroon needs to establish an independent central bank and seek an alternative currency, as it will aid them in creating sound fiscal and monetary policy and eliminate possibilities of financial mismanagement.

Paul Biya succeeded former president Ahidjo when the latter resigned unexpectedly in 1982. Biya centralized power after an attempted coup in 1983-1984 by disbanding the Republican Guard in the military, allowing him to eliminate his political rivals. Since then, Cameroon’s ruling party, the Cameroon People’s Democratic Movement (CPDM), has long dominated the political landscape. The CPDM currently owns 148 of 189 seats in the National Assembly and 81 out of 100 seats in the Senate. Unsurprisingly, Cameroon ranks 141th out of 160 countries in the Democracy Index. This is due to censorship, electoral fraud, the closing of voting polls, the incarceration of dissidents, and the absence of pluralism. Because of Biya’s obsession with power and his financial discrimination of the Anglophone region of the country, foreign investors are wary to partake in Cameroon’s economy. Besides authoritarian rule, Cameroon suffers tremendously from corruption and rent-seeking practices as most industries in key sectors are state-owned and state-managed. The extraction of natural resources and the exportation of primary commodities is key to Cameroon’s public revenue and the general economic growth of the nation. Cameroon’s lack of versatility in economic activity also makes it susceptible to periods of financial downturn, as volatile world prices can have a detrimental impact. Moreover, the limited number of private investors are solely interested in primary commodity markets and partake in ambitious projects that benefit only Biya and the elite. An example is ExxonMobil’s public-private project in coordination with the World Bank in the early 2000s to build a Chad-Cameroon oil pipeline. It drew much opposition from the public. While there is group sentiment that Cameroon is underdeveloped due to the “resource curse” that plagues many African nations, they forget the fiscal and monetary management at play. 

The public criticized the ExxonMobil project, feeling that the World Bank’s failure in this public-private project was a reflection of paternalistic sentiments, but they ignore the fact that the Cameroonian government has heavily relied on foreign loans from the World Bank and the IMF, as it has poor credit ratings. Cameroon originally could not even qualify for private loans. It wasn’t until Biya had to resort to the IMF and the World Bank that Cameroon achieved solvency. This pattern of reliance on foreign entities for liquidity and funds comes from Cameroon’s inability to control corruption and rent-seeking of federal revenue. Bureaucrats and politicians often pocket the government revenue, amassing Paul Biya a personal wealth of $200 million. While the government points fingers towards world price volatility as the primary factor of economic downturn, they ignore their own poor management and reliance on foreign nations and entities.

Cameroon, like many developing countries, is guilty of the economic “sin” of procyclical monetary policy. In periods of economic growth, he reduces taxes and lowers interest rates to further accelerate economic growth, while in times of economic downturn he raises taxes and interest rates to generate revenue. Developed countries practice countercyclical policy, where they raise taxes and interest rates during boom periods to have a “rainy day fund” and prevent inflation. During recessions, they lower taxes and interest rates to boost the economy. In developed countries, independent central banks control these policies, but in developing countries, the executive branch controls them. This is symptomatic of the fact that certain developing countries like Cameroon have people in leadership positions that prioritize short-term political gains rather than long-term economic development. Such decisions lead to unemployment, debt accumulation, budget deficits, and loan defaults. When self-serving bureaucrats, rather than trained economists and policymakers, shape the fiscal and monetary policy, poor economic growth is the outcome.

Since Cameroon became an independent nation in 1961, it started to receive substantial aid from international institutions such as the World Bank and IMF, as well as developed countries like France, the United Kingdom, and the United States. France, having previous colonial control over the area, is the largest investor in Cameroon, owning 105 subsidiaries in key areas of agriculture, service, and manufacturing sectors. Cameroonian citizens that desire reform and greater autonomy claim that such foreign interference crowds out the local industry. But reliance on foreign entities stems from Paul Biya’s own corruption and mismanagement. The leadership of Cameroon has become quite used to relying on foreign credit and debt forgiveness, as they utilize the severity of their economic recessions as justification for aid. 

The CFA, the Central African franc, is a pre-colonial currency that has been used for decades and caused much opposition from Cameroonian and Senegalese citizens. Citizens feel that it is a “relic” of French colonialism and that true independence requires Cameroon to have an independent Central Bank that would not only have control over fiscal but also monetary policy. Currently, the CFA franc is pegged to the Euro and is backed by the French treasury. While there is a concern of inflation and shortages, as Guinea experienced after dropping the CFA franc, Cameroon has almost no say in monetary policy with the current system. Proponents for a new currency argue that in exchange for the guarantees provided by the French treasury, African countries channel more money to France than they receive in aid. The French government was quiet on such protests and has been for a while. Nonetheless, while campaigning, President Macron did state that the decision of African countries to drop the CFA franc was theirs to make.

In recent years, West and Central African countries have pushed for the adoption of the ECO currency, as they argue that replacing the CFA franc will promote trade, lower transaction costs, and make payments easier across the 15 ECOWAS countries. While Cameroon is not part of the ECOWAS community, proponents of removing the CFA franc in Cameroon rely on organizations like ECOWAS to promote their own goals of monetary policy reform. Sticking to the CFA franc has resulted in limited intra-regional trade, high dependence on producing and exporting a limited number of primary commodities, a narrow industrial base, and high vulnerability to external shocks. Therefore, Cameroonians supporting monetary reform have proposed tying their currency to other foreign currencies, allowing for reform in reserve requirements to avoid issues of shortages. They have even called for the adoption of their own regional currency rather than pegging it to the Euro. While such reform is controversial, it would be a step towards the right direction in ensuring Cameroon is no longer heavily tied to France and can control over its own monetary policy.

Cameroon has struggled economically because its leadership is self-interested and partakes in stubborn policies that favor the short-term over the long-term. Biya’s reliance on foreign entities and the rejection of countercyclical policy illustrate this. Corruption’s effects on the economy also manifest in the poor performance of state-owned enterprises and the government’s reluctance in welcoming private investors or privatizing firms to encourage foreign investment. With all –– if not most –– of the financial and economic control, Paul Biya is therefore accountable for the poor economic performance. Disciplined management is key when it comes to economic activity, as the state of Cameroon has not implemented sound policy or allowed policy experts to manage their economic activity. Only when Cameroon adopts the reforms that break its reliance on France and limit corruption will citizens and the government achieve true development.

Photo: Image via Flickr (jbdodane)

About the Author

Leonardo Moraveg '22 is a Staff Writer for the World Section of the Brown Political Review. Leonardo can be reached at