PART II
The Cameroon Economy Under the Second Republic (1982 - 1997)
President Ahidjo resigned form office in November 1982, designating Mr. Paul Biya as his successor. Unfortunately, and in spite of his having inherited an economy in excellent health from his predecessor, during the fourteen years that Mr. Biya has been in power, he has presided over the pillaging, decline and finally, the decay of the Cameroonian economy. A combination of certain factors notably bad economic policies, the institutionalization and generalization of corruption, tribalism and nepotism have conjugated to lead the country into bankruptcy and total political and social disintegration.
The Dilapidation of an inheritance and economic decline in all sectors
During the period from 1983 to 1994, GNP rose to a peak of US$ 11.43 billion and then collapsed to US$ 6.8 billion in 1994. However, the Total External Debt grew by 250% during the same period. As a result, the sovereignty ratio of Cameroon declined from 3.0 to 1.0 in 1994. This implies that Cameroon’s negotiating position against its foreign partners and creditors is now weaker than at any time in its history. Between 1982 and 1984, the effects of this crisis were not felt because of a brief oil boom and a favorable climate for commodities in the world market. It is indeed the collapse of commodity prices in 1986 which finally plunged the government into a profound financial crisis and exposed the bankruptcy of the state.
The government was finally forced to take the problem of the decline of the economy seriously after initially ignoring and neglecting it. For instance in June 1987 while the country was already in deep crisis, Mr. Biya declared during a speech to the National Assembly that Cameroon would resolve its economic problems with its own means rather than turn to the World Bank or the IMF. It was the most timely moment to take bold measures to save the economy because the economic and social fabric was still intact. It was however when the budget deficit finally reached the shocking level FCFA 502 billion that the CPDM government secretly initiated negotiations with the IMF and the World Bank.
Following these negotiations, the government signed a series of agreements with the World Bank and the IMF by which certain reform programmes were going to be implemented with effect from 1988. Unfortunately, most of these measures were never implemented. Consequently, a study done by the World Bank in 1994 revealed that among some twenty-five African countries which had undertaken structural adjustment programmes, Cameroon was one of the lowest ranked in terms of programme implementation. The second and the third accords did not fare any better. Both were suspended for non-compliance by Cameroon with the conditionalities.
It is this bankruptcy in economic management, its systematic opposition to any bold economic reforms and the installation of true democratic reforms in Cameroon which produced a contraction in GDP of the order of 6.3% per year between 1986 and 1994. In spite of several attempts to stabilize the economy, including the devaluation of the FCFA in January 1994, public finances are permanently in crisis as the budget deficit has been growing. The government still cannot meet the civil service payroll in spite of salary reductions of nearly 75% which were introduced in 1992 and 1993. The government cannot service its external debt nor provide minimum coverage in social services such as primary health, education, nutrition, water supply and road maintenance to support the rural sector.
At the same time, the balance of payment has continued to be in deficit in spite of the slight improvement in the trade balance which was produced by the devaluation. The economy has been paralyzed by public debt. In 1995 the internal debt stood at FCFA 2,180 billion while the external debt was at FCFA 3450 billion. The banking and insurance sectors have also collapsed in spite of many years of restructuring which has resulted in the liquidation of several banks.
In spite of the slight improvement in export of agricultural commodities due to the devaluation and the fiscal and customs reforms undertaken by UDEAC, there has been no improvement on the investment front. The main reason is that public debt has stifled the private sector. The banking sector has not performed well for a very long time. To crown it all, the social and political crisis of legitimacy of Mr. Paul Biya following the massive electoral fraud and the electoral coup d’etat of the Supreme Court of 1992, as well as the recent confiscation of councils won by the SDF in the January 1996 Municipal Elections and the imposition of Government Delegates on councils won by the opposition, have not been forgotten by the public which has lost total confidence in the Biya regime.
It is evident that the social situation in the country is now intolerable. Poverty and misery has reached all the levels of society- Unemployment and underemployment is rampant especially among the young school graduates and holders of university degrees or professional schools. Most of the public sector companies have been closed while those which are still open are plagued with chronic problems of management and debt. Civil servants are subsisting on misery wages. Consequently, they are demoralized and have relapsed into absenteeism and corruption. The civil service has now become the worst enemy of development, by the conspiracy of adverse circumstances resulting from the disastrous governance of the Cameroon Peoples’ Democratic Movement (CPDM) under the leadership of Mr. Paul Biya.
In the area of education, there is now the new phenomenon of de-scholarisation whereby every year, 500,000 children are not being sent to school because their parents cannot afford the cost of their education.
A 1995 World Bank report on the state of poverty in the world indicated that Cameroonians are poorer now than they were in 1964. All of this is because of one man, Paul Biya, and his 14-year rule over the destiny of Cameroon.
The Principal Causes of the Economic Bankruptcy.
Cameroon is generally considered as a country which had everything which is required to succeed as a nation. In spite of its abundant natural resources, a high level of literacy and a large pool of trained people, a good head-start which was provided by the stable leadership of the First Republic and a solid economic inheritance from that period, the Cameroonian economy still crashed, leaving the population poorer than they were in 1960 and totally unprepared to enter the 21st century. There are many reasons for this historic failure, but the principal reasons are the following:
The Institutionalization of Corruption
The Biya regime bears heavy responsibility for the present economic bankruptcy. First of all this regime institutionalized the embezzlement of state funds and transformed such a vice into a virtue because it became apparent that the highest offices in the administration could only be occupied by those who have beaten existing records in misappropriation of state funds.
In order to engage in this orgy of corruption with total impunity, he introduced an excessively centralized system of state management which engendered permanent antagonism between the state and economic operators who were classified as fraudulent.
Excessive interventionism also helped to destroy the banking system because he named incompetent and corrupt civil servants to head key banking institutions. The main concern of such bank managers was to extend loans and advances without collateral to the barons of his regime.
In the agricultural sector, he used the Marketing Board to collect produce from farmers and sell abroad in order to use the revenue to finance his over-bloated administration. He never succeeded to introduce any system or social scheme which was capable of revitalizing or protecting the rural masses.
On the diplomatic front, the Biya regime has stained the image of Cameroon to the point where it has even lost its leadership position in the Central Africa region where Cameroon’s economic potential and human resources make it the natural leader of the region.
Finally in the context of the structural adjustment programmes which were negotiated with the World Bank and the IMF, Mr. Biya embarked on a privatization programme which is totally lacking in transparency and whose main objective seems to be to facilitate the expropriation of the assets of the state by those who in the country support his regime or by outsiders on whom he depends in order to maintain himself in power.
A regime accustomed to living beyond its means and presiding over the decline of agriculture!
Any country in the world having such a government in power cannot obtain results different from those in Cameroon. Even the best conceived structural adjustment programs cannot change that. The bankruptcy of government can only lead to the destruction of the entire society. Consequently, in a country where due process of the law no longer exists, political adjustment and restructuring must precede economic adjustment.
The Inadequacy of the Legal and Constitutional Framework
The Perversion of Excessive Centralization: Cameroon, as is the case with all the other former French colonies, inherited from France at the time of independence a highly centralized state structure which had a paralyzing effect on economic initiative. Not only did all the economic decisions emanate from the summit of the administrative hierarchy, but the state presented itself as the principal economic agent. As such it was present in all the sectors of the economy through the various state-owned enterprises or companies with mixed ownership. Consequently competition was stifled in these sectors and the negative aspects of a managed economy become generalized. An allied phenomenon of excessive centralization was the one-party system which produced corruption, patronage and tribalism.
Absence of An Independent Judiciary: Another aspect of the perversion of excessive centralization is the absence of an independent judiciary. A judicial system which is not independent is forced to exist at the behest of the executive branch of government. Private investors are placed at the mercy of judges who take their orders from the administration. The administration thus becomes both judge and jury. At the same time there is no specific legislation which either protects or stimulates business activity. As private investors are not protected, they become wary. Cameroon, under the Second Republic became a country where due process of the law ceased to existed (and still does not exist) and justice can be bought and sold like a commodity. The government deliberately breaks laws promulgated by itself because it does not feel accountable to anybody. After promulgating a new constitution, the government continues to deliberately promote constitutional uncertainty by maintaining that the new constitution shall be implemented “progressively”. This gives the government the license to apply some provisions of the old and new constitution, at its whim, to suit its purposes.
Hostile Monetary and External Environments
During the period from 1986 to 1994, the FCFA was an overvalued currency. The failure of the monetary authorities to take effective action to correct the overvaluation caused long-lasting damage to the economies of some of the countries of the Franc Zone. The most severely damaged economies were those of the countries which shared long borders with non- Franc Zone countries which were already implementing structural reforms. Apart from being neighboring countries which share a long common border, the following countries also have some common characteristics in terms of the structure of their economies:
- Cameroon and Nigeria which were mainly oil producers during the period under review
- and Ghana and Cote d’Ivoire which were mainly producers of cocoa during the same time period.
The main difference between the countries is that Cameroon and Cote d’Ivoire are Franc Zone countries while Ghana and Nigeria are not. Ghana and Nigeria were already under structural adjustment in 1986 and devalued their currencies during the same year. The adjustment programmes put Ghana and Nigeria on a growth path while the economies of Cameroon and Cote d’Ivoire continued to decline. The differences in growth performance of these countries is due almost entirely to the decision to leave the exchange value of the Franc CFA at the same level it had been since 1948, in spite of the adjustment programmes which were being implemented in Nigeria and Ghana.
First of all this engendered capital flight from the Franc zone countries to the neighboring non-franc zone countries. Secondly it caused the collapse of both the industrial and agricultural sectors in the Franc Zone countries. In Cameroon, the fraudulent importation of cheaper Nigerian petroleum products caused a drop in the production of SONARA and loss of government revenues of around FCFA 35 billion per year. As Ghanaian and Nigerian products became cheaper, industries in Cameroon and Cote d’Ivoire were closed. Cocoa and coffee production fell as the government set producer prices at levels which forced some farmers to convert their land for cultivating other crops.
Under Biya, the Confidence Ratio crashed from 22% to 3% and the Sovereignty Ratio collapsed from 3 to less than 1! Eexternal reserves have benn completely wiped out!
The capital flight was further exacerbated by the fact that for purely pan European reasons, France decided to maintain extremely high interest rates in pursuit of the policy of the Franc Fort. This policy attracted flight capital of epidemic proportions from the Franc Zone in Africa to Europe. Indeed the collapse of the Cameroonian economy is due to this protracted period of monetary repression (1986-1994) and the failure of the Cameroon government, as a partner in the monetary arrangements of the Franc Zone, to take initiatives to safeguard the interests of the Cameroonian economy.
It is because of this policy and its disastrous aftermath that the SDF believes that the present institutional arrangements in the Franc Zone are unsatisfactory. Consequently one of the areas of reform which shall receive great attention from an SDF government shall be in the field of monetary reform aimed at ensuring that Cameroon shall regain some of the sovereign control of monetary policy instruments.
The Greatest achievement of the 2nd Republic has been the reversal of the achievements of the 1st Republic!
Next: SDF National Economic Salvation Programme (NESPROG) - 3
More documents
|
