VZCZCXRO2208
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHYD #0291/01 0861303
ZNR UUUUU ZZH
R 271303Z MAR 09
FM AMEMBASSY YAOUNDE
TO RUEHC/SECSTATE WASHDC 9801
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/HQ USAFRICOM STUTTGART GE
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 YAOUNDE 000291 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/C 
DEPT PASS TO USAID FOR DCH/DG - BILLERA/LEMARGIE 
 
E.O. 12958: N/A 
TAGS: CM EAGR ECON EFIN EMIN EPET ETRD
SUBJECT: CAMEROON INCREASINGLY WORRIED ABOUT THE GLOBAL 
ECONOMIC CRISIS 
 
REF: A. YAOUNDE 108 
     ¶B. YAOUNDE 216 
     ¶C. 08 YAOUNDE 1032 
 
¶1.  (SBU)  Summary:  In a recent trip to the South West and 
Littoral Regions (Cameroon's economic heartland), Pol/Econ 
Chief found increasing nervousness about the potential impact 
of the global economic crisis on Cameroon's economy.  The 
oil, timber, cotton, coffee and rubber sectors (which 
together account for over 70% of total exports) are already 
suffering, with an attendant impact on national revenues and 
the balance of payments.  These sectors are also large 
employers and economic strain could bring greater social 
tensions.  Contacts voiced worries that the difficulty of 
raising international capital would cause problems for some 
investment projects.  Much of the economy, however, has not 
been touched by the global crisis, including cocoa and banana 
exports and the large subsistence agriculture sector.  End 
summary. 
 
Some Senior Contacts Concerned 
------------------------------ 
 
¶2.  (U)  Governors in the Southwest and Littoral regions 
voiced concern that the economic crisis would hurt the 
country.  In Douala, outspoken Cardinal Christian Tumi 
predicted the economic crisis would worsen poverty and social 
sector development.  The Secretary General of the major 
business chamber GICAM affirmed that the global crisis hit 
Cameroon in January, predicting it would fuel a budgetary 
crisis and seriously exacerbate social tensions. 
 
¶3.  (SBU)  Contacts in the regions were concerned that senior 
levels of the Government of Cameroon (GRC) are insufficiently 
focused on the potential impact of the global crisis.  The 
General Manager of the Cameroon Development Corporation (CDC) 
decried the lack of leadership on economic issues, asking 
rhetorically "who's in charge?"  He hoped the GRC would study 
the current world environment and adopt a realistic posture 
but so far he has observed "international hibernation". 
Regional Governor of Littoral Fai Yengo Francis was also 
frustrated that the Finance Minister had not acknowledged the 
scope of the economic risks Cameroon now faces. 
 
Major Exports Hurting 
--------------------- 
 
¶4.  (U)  Oil exports accounted for 53% of total exports and 
26% of total Government of Cameroon (GRC) revenues in 2008. 
While export levels have been relatively stable, this year's 
near halving of world prices will seriously hurt revenues. 
The World Bank estimates that the price drop will cost 
Cameroon 320 million dollars in lost revenue in 2009, 
equivalent to about 7 percent of the total budget. 
 
¶5.  (U)  European and Asian demand for Cameroonian timber 
products (used mainly for construction) has reportedly 
dropped dramatically.  While timbering of trees continues 
relatively unaffected, much of the wood in Cameroon is piling 
up in Douala warehouses or being sold at discount rates in 
Asia and Europe.  According to statistics from GICAM, lumber 
and timber product exports, which account for 14% the 
country's total export revenues, fell almost 10% in the 
second half of 2008.   Some contacts believe exports may drop 
by as much as 40% in 2009. 
 
¶6.  (U)  The cotton sector has been declining for the past 
four years.  Cotton exports declined by 47% in the past two 
years alone, suffering from a drop in world prices and 
problems internal to this sector (ref C).  While cotton 
exports account for only about 2% of total exports, the 
sector employs an estimated 300,000 Cameroonians and suffered 
a further 17.5% drop in exports in the last trimester of 
¶2008.  A senior official at Sodecoton, Cameroon's sole cotton 
marketer, told us that international buyers have canceled all 
the cotton sales contracted for in September, valued at 
nearly $14 million, citing the global financial crisis. 
Sodecoton expects it will have to discount its large stocks 
by half price at a time when fertilizer prices have doubled. 
 
¶7.  (U)  Rubber exports also fell, with the recent contract 
cancellation by Michelin tire company (a major buyer of 
Cameroonian rubber), resulting in a 42% drop in the fourth 
quarter of 2008, with a further decline expected.  The 
General Manager of the Cameroon Development Corporation (CDC) 
 
YAOUNDE 00000291  002 OF 003 
 
 
told Pol/Econ Chief that rubber production would have to stop 
in several weeks, jeopardizing a great number of the 
company's 15,000 jobs.  Rubber accounts for 1.5% of total 
Cameroonian exports. 
 
¶8.  (U)  Coffee production dropped from 125,000 to around 
30,000 tons in the past ten years and many farmers have 
switched out of the crop, largely in response to low world 
prices.  While production may be rebounding to some extent, 
industry contacts are concerned that the demand for coffee 
may suffer from the slump in European purchasing power. 
 
Investments 
----------- 
 
¶9.  (U)  There is general concern that capital investment 
will be more difficult to find for a wide range of current 
and future projects.  While a U.S.-led bauxite exploration 
investment is moving forward, U.S. cobalt mining company 
Geovic has downsized its staff and delayed its project by a 
year, largely because of the international financial climate. 
 Australia's Sundance iron ore project has also drastically 
scaled down Cameroon operations.  Some Cameroonians question 
Rio Tinto's continued ability to  invest its Cameroonian 
aluminum plant ALUCAM.  A British television company 
reportedly canceled a million dollar soccer programming 
contract with Cameroon for reasons attributed to the world 
economic situation.  Managers at Cameroon's oil refinery 
SONARA say they have locked in financing for the near future 
but are concerned about raising international capital for 
expansion plans. 
 
Some Big Sectors Untouched 
-------------------------- 
 
10,  (U)  Contacts in some food crop industries tell us they 
have not been affected by the global economic woes.  Banana 
growers are expanding acreage and production, benefiting from 
duty free access to European markets provided under the 2007 
Economic Partnership Agreement (EPA).  Contacts at Dole and 
Delmonte said bananas are still viewed in Europe as cheap and 
in high demand.   Palm oil production is growing and cannot 
keep up with domestic demand but has been affected to some 
degree by rising world prices for spare parts and inputs. 
Cocoa exports are predicted to hold steady at about 180,000 
tons/year.  The head of the Cocoa and Coffee Exporters 
Association predicted cocoa prices would drop with demand in 
Europe as a result of the economic crisis.  However, the 
General Manger of OlamCam, one of Cameroon's significant 
cocoa exporters, said that Cameroonian cocoa fills a niche 
that will not be seriously impacted by the world economic 
situation, especially given a large global deficit in cocoa. 
 
Comment 
------- 
 
¶11.  (SBU)  A palpable, growing worry about the global 
economic crisis is much more evident now than a month ago. 
Douala is still bustling and the Littoral and South West 
regions are blessed with fertile land and large agricultural 
export infrastructure.  Many Cameroonians live in the 
informal economy which is fairly insulated from the global 
economy.  Nonetheless, the worries we heard during travels in 
these regions mirror heightened concerns expressed in other 
recent conversations in Yaounde.  The IMF is concerned about 
world financial crisis' impact on the balance of payments and 
budget (ref B), reducing GDP growth projections downward to 
3.3% in 2009 (slightly lower than prior predictions).  An IMF 
team visiting Cameroon next week will be looking closely at 
this situation. 
 
¶12.  (SBU)  It is not clear how much Finance Minister Essimi 
Menye grasps the dimension of the financial crisis.  Some 
observers believe he has been in denial and he seems not to 
be very focused on the upcoming IMF visit.  He recently 
commented to Pol/Econ Chief that the timber sector should 
"just leave those trees in the ground" and he offered no 
vision for how the government would tackle the current 
challenges.  At the same time, he acknowledged to Pol/Econ 
Chief that the global crisis has hit Cameroon hard, noting a 
drop in revenues and commenting that the rubber sector is 
begging for a bailout in what could be a "real crisis". 
 
¶13.  (SBU)  The timber, cotton, and rubber sectors employ 
hundreds of thousands of people and organized labor is 
 
YAOUNDE 00000291  003 OF 003 
 
 
becoming worried about the economy.  Public sector workers in 
some sectors have recently been pressing for higher wages and 
more job security.  There is the real danger that increased 
unemployment will exacerbate social tensions in a country 
already suffering from growing poverty and slow progress on 
democracy, with economic-related February 2008 riots still 
high on people's minds.  With the largest economy and port in 
Central Africa and as a producer of food and refined oil for 
its neighbors, Cameroon's ability to manage the current 
challenges will impact the entire region. 
GARVEY