Nkafu Policy Institute Releases 2020 Budget Research Findings and Recommendations

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Nkafu Policy Institute Releases 2020 Budget Research Findings and Recommendations

Participants at the Press Conference

The Nkafu Policy Institute has released a research finding on the 2020 fiscal year in Cameroon. This was during a press conference organized at the Institute’sheadquarters of the Denis & Lenora Foretia Foundation at Simbock  Yaounde. The conference was marked by a panel discussion moderated by Dr. Fuein Vera KUM FOMUNJONG -Economist and Research Fellow at the Nkafu Policy Institute; Yaoundé-Cameroon.

The panel  made up of Dr. Louis-Marie KAKDEU -Director of Nkafu Fellows at the Nkafu Policy Institute and Team Leader of the Cameroon DBI Project; Yaoundé-Cameroon and Dr.Jean Cédric KOUAM -Economic Policy Analyst and Head of the Fiscal and Monetary Policy sub-section of the Economics Policy Division at Nkafu Policy Institute; Yaoundé-Cameroon focused on   the 2020 budget  viability, resilience, and conduciveness to the sustainability of the state’s debt and finding out whether  the 2020 budget in Cameroon promotes free enterprise

Panel Discussion

The press conference had as objectives to disseminate the findings of the 2020 report on the budget in Cameroon,  analyze the resilience of Cameroon’s fiscal policy for the year 2020 by focusing on the sustainability of state debt and the promotion of free enterprise and to propose recommendations to policymakers to improve debt sustainability and to develop a healthy, competitive, and diversified manufacturing sector capable of reversing the structure of foreign trade (exports and imports).

A concept note from the institute notes that in 2020, the Cameroonian economy, like most economies in the world, was hit hard by the crisis linked to the spread of the new coronavirus (Covid-19). This health shock has had significant consequences on all sectors of the economy  and has led to profound changes in everyday life. For example, the fall in oil prices on world markets, the slowdown in business activity due to the closure of borders and containment measures, and the consequent drop in tax and non-tax revenues have increased the country’s budget deficit to 4.5% of GDP, compared with the previously expected outcome of 1.5% of GDP. To mitigate the effects of the coronavirus pandemic on the economy, the Government of Cameroon has adopted a series of measures including the modification of its budget for the financial year 2020. Thus, on 3 June 2020, the 2020 Finance Law promulgated on 24 December 2019 by the President of the Republic through Law N°2019/023 of 24 December 2019 was amended by Ordinance N°2020/001 of 3 June 2020. This Amended Finance Law supplements certain provisions of Law N°2019/023 of 24 December 2019 on the finance law of the Republic of Cameroon for the financial year 2020. It establishes the new 2020 budget of Cameroon at 4,409 billion CFA Francs against 4,951.7 billion CFA Francs initially planned, a decrease of 542.7 billion CFA Francs in absolute terms. The direct consequence of the decrease in the 2020 budget is the reduction in payment credits granted to ministerial departments engaged in the promotion and improvement of national competitiveness. Despite this adjustment of the state budget, the need for financing and cash flow of the economy, estimated at 1304.5 billion CFA francs before the health crisis is now 1816 billion CFA francs; hence the need to resort to debt to finance the budget deficit. The dire economic situation necessitates an assessment of the financial viability and sustainability of the debt of the State of Cameroon vis-à-vis the country’s commitments within the framework of sub-regional and continental integration

 To achieve the objective of the report, secondary data was collected from various sources including the finance laws of the Republic of Cameroon, the World Bank, the International Monetary Fund, the Autonomous Amortization Fund (CAA), the Ministry of Finance, and the Ministry of Economy, Planning, and Regional Development just to name a few. Using descriptive statistics and a demonstrative approach, the study came out with the following key findings. 1) The study found out that Cameroon’s debt remains sustainable. However, the risk of external over-indebtedness remains high. As a result, the fiscal policy, whose objective is to ensure full economic growth, cannot achieve the objectives despite the government’s budgetary choices aimed at reducing the economic shocks linked to the COVID-19 pandemic. 2) It equally found that the efforts made by the Government of Cameroon as regards budgetary issues, in amending the Finance Law 2020, are very insufficient to develop a healthy, competitive, and diversified manufacturing sector, capable of reversing the structure of foreign trade (exports and imports). These efforts also remain insufficient both to increase the productivity of the economy (notably by intensifying agro-pastoral and fish farming activities as well as mining) and to sustainably promote “made in Cameroon” products, open the country to more competition, and deliver tangible results in terms of promoting the free market. Given these results, the study makes the following key recommendations:

1) Reduce the State’s lifestyle in terms of operating expenditure in all the sub-sectors of activity of the national economy. This concerns all the financial benefits of public service agents (missions abroad, perdiems, granting of vehicles, and fuel vouchers).

2) improve the level of capital or investment expenditure in all sub-sectors of activity with high competitiveness. This improvement would protect the most labor-intensive domestic sub-sectors from increased competition from foreign products.

3) Explicitly formulate an objective of competitiveness in the strategic sub-sectors of the economy of Cameroon which are still strongly influenced by the omnipresence of the state (posts & telecommunications, water & energy, transport). The challenge is to prevent the transfer of welfare from the people demanding to those offering and, in this way, to contribute to the protection of their purchasing power.

4) Increase the amounts of payment appropriations opened on programmes contributing to the promotion of competitiveness and the improvement of economic governance in the sub-sectors concerned. The aim is to ensure that the law that secures business will be properly applied. Moreover, the country’s infrastructure for logistics and the supply of energy, water, and telecommunications will be efficient and that other institutions such as education, health, social security, etc. will operate in good conditions.

5) Eliminate tax burdens that do not have a significant impact on growth, particularly those that discourage the free market. These are, for example, the tax on the right to exercise a professional activity, the taxes on specified services.

The research team included Dr. Louis-Marie KAKDEU, Director –Nkafu Fellows, and a Policy Fellow in Economics affairs at the Nkafu Policy Institute of the Denis and Lenora Foretia Foundation. He is a lecturer in Switzerland (2009-2010), Guinea (2011-2013), Ivory Coast (since 2014), Cameroon (since 2015), Senegal (since 2016), and Romania (since 2014). He mainly teaches business intelligence, public policies management, and evaluation, intercultural management and communication, development-related messages diffusion. He holds a Master of Advanced Studies in Public Administration (MPA) at the Swiss Graduate School of Public Administration with majors in Economics and public policies evaluation, and three Certificates of Advances Studies (CAS): one in Business intelligence/Management of information systems, one in tax and fiscal policies management and one in governance and political institutions. His Ph.D. and Post-Ph.D. researches were all about the development of rural areas. He is the Chairman of the Cameroon Forum for Agricultural and Rural Advisory Services (CAMFAAS) and the Chairman of the Thinktank Université Libre du Cameroun. He is the business partner of the companies Afrikcom Sarl, I&P Sarl, and LMK&Partners SARLin Guinea, F3A SARLin Ivory Coast, and LMK & Associates (Cameroon). He used to be the deputy Secretary permanent of ACDIC (Cameroon). In 2019, he had already published 8 books and 19 peer-reviewed journal articles. He is recognized as one of the reference person’s for business development in Cameroon. He is an expert in many projects including for example Dias’Invest 237 which accompanies 70 project leaders from the Cameroonian diaspora in France.

2) Dr. Jean Cedric KOUAM  an Economic Policy Analyst and the Head of the Fiscal and Monetary Policy sub-section of the Economics Policy Division at Nkafu Policy Institute. He holds a doctorate in economic policy and analysis (monetary and financial macroeconomics) from the University of Dschang in Cameroon. Since obtaining the Diploma of Advanced Studies in Mathematical Economics and Econometrics at the University of Yaoundé II in 2012, he has provided courses in economics, finance, and macroeconomic modeling in several private higher schools in Cameroon. Member of various groups of researchers and laboratories in Cameroon and abroad, his research interests relate to the economic development of Africa, the economic resilience of States, the effectiveness of cyclical and structural policies, the policy mix of the monetary union, and sustainable development. Former Fellow of the French Government (Doctoral research grant), he has been invited several times to the University of Poitiers in France (Centre de Recherche sur l’Intégration Economique-CRIEF) as well as international conferences of the Canadian Society for Economics in Canada (SCSE). Also, Dr. Kouam has carried out research stays at the Bank of Central African States (BEAC) where he is currently engaged in numerous research works with executives. He holds two certificates from the Institute for Capacity Building of the International Monetary Fund (IMF), one in debt management in low-income countries and another in financial programming and policy.

3) Dr. Joel MOUDIO MOTTODr. Joel M. MOUDIO is a political scientist and a researcher on public policies, political economics, and public administration. He is an Economic Policy, governance, and regional integration analyst for the Denis & Lenora Foretia Foundation. He is a full member of the Association International de Sociologue de Langue Française (AISLF), the Centre d’Etudes et de Recherches en Dynamiques Administratives et Politiques (CERDAP) at the University of Yaounde II, and a junior lecturer of political science in the same public university. He is also a leader of many private associations. He spends his time on skill-building and serving people as he believes that a leader remains a servant. He is passionate about food security matters, so much that his studies (Ph.D., Mastersthesis, and article) focused on it. He also is passionate about social sciences. Dr. MOUDIO is a political journalist as he has a Master’s degree in political journalism from the Advanced School of Mass Communication (ASMAC). He has been editor-in-chief and deputy manager of some newspapers. For now, his interest is in political communication thus, he works as an independent political journalist. He is a judoka semiprofessional and children trainer.

4: Ulrich D’POLA KAMDEM  a Senior Economic Policy Analyst at the Nkafu Policy Institute and Coordinator of the Nkafu Policy Institute. He joined the Institute as an Economic Policy Analyst-Contributor (on a part-time basis) and next, on a full-time basis, as an Economic Policy Analyst in 2018. He has over four years of professional teaching experience on topics related to Economics and Quantitative Finance in Cameroon’s Universities. He holds a Master of Science in Applied Economics from the Third Cycle Inter-university Program (PTCI) at the University of Yaounde II. He also holds a Master’s degree in Monetary Economics from the University of Douala. Since 2017, Ulrich is an Economist-Consultant for several media both local and international where he provides, in English and French, insightful and in-depth analyses on economic issues affecting African countries. In 2020, he obtained a certificate of competence on ‘‘Making the African Continental Free Trade Area (AfCFTA) work’’ delivered by the United Nations Economic Commission for Africa-UNECA (Addis Ababa, Ethiopia) and the African Institute for Economic Development and Planning-IDEP (Dakar, Senegal). Finalist of the 2015 CEDIMES Excellence Award in Paris-France, his areas of interest include Financial Inclusion, International Economics, Poverty Reduction, Monetary and Development Economics, and Entrepreneurship.

5: Egoh Modi Aziz is a former Development Policy Analyst at the Nkafu Policy Institute. Before joining Nkafu, he was the managing director of MEEC Enterprise, a marketing and distribution in Douala. He also is on the Board of the Great Commission and Humanitarian Association based in Douala and serves as the organization’s secretary-general. Egoh obtained his bachelor’s degree in History and International Relations from the University of Yaounde 1. In 2006 he completed a postgraduate degree, Cum Laude, in Development Studies at the Institute for Social Development -University of the Western Cape –Cape Town and was admitted as a fellow in the Democracy and Diversity Institute. He further obtained a Master of Arts in Development Studies from the University of the Witwatersrand in 2007. His research interest is in the role of civil society organizations (CSOs) in Development

About  The  Cameroon DBI Project

The World Bank’s Doing Business Index (DBI) is an internationally recognized ranking of how easy it is to set up and run a business around the world. Cameroon’s score on the DBI is very poor, ranked 166 among 190 economies. Atlas commissioned World Bank’s research shows definitively that improvements in a country’s DBI score by 5 points correlates with a reduction of 1% in unemployment. In Cameroon, 37.5% of the population live below the poverty line, and 75.8% are underemployed. The DBI report highlights positive action but does not provide answers on how to improve the score. Our goal for this project is to achieve a 5-point increase in Cameroon’s DBI score which would result in the creation of 40,000 jobs and reduce unemployment by 1%. In the country, an inefficient civil service, weak rule of law, and restrictions on trade severely limit growth and job creation. Improving the DBI score is urgently needed. We will accomplish this goal through the following activities:

 a.Publish 4 thematic reports quarterly to provide detailed analysis and recommendations for action;

  1. Produce two Budget Reports providing an initial analysis of the budget, promoting budget transparency, public engagement, and identifying key issues relating to improving the DBI score;
  2. Train 50 scholars on policy analysis, implementation, and public engagement;
  3. Aggressive media engagement including press conferences, interviews, op-eds, and direct involvement of policymakers and their staff

About the Nkafu Policy Institute and the Denis and Lenora Foretia Foundation

The Denis & Lenora Foretia Foundation was established to catalyze Africa’s economic transformation by focusing on social entrepreneurship, science and technology, innovation, public health, and progressive policies that create economic opportunities for all. The Nkafu Policy Institute is a think tank at the Denis and Lenora Foretia Foundation focused on using the independent analysis to inform public debates. Its mission is to advance public policies that help all Africans prosper in free, fair, and democratic economies. The institute has distinguished itself as a leading research center in Cameroon, engaged in promoting open debate that builds consensus on a democratic future.

2020-11-17T12:03:52+00:00November 17th, 2020|actions, annonces|