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The Effect of Legislation on Foreign Investment—the Case of Cameroon
Published online by Cambridge University Press: 28 July 2009
Extract
There is no doubt that the investment climate in every country is conditioned to a great extent by non-legal factors. Nevertheless, many developing countries have, to varying degrees, relied on legislation as a means of attracting foreign investment. When Cameroon attained independence in 1960, it enacted an Investment Code that same year with the aim of attracting investment which the young state needed so much for the realisation of its development objectives. When after two decades the said Code no longer responded to the needs of the state, a new one was instituted on 4 July, 1984. The common feature of Investment Codes is that they contain various incentives aimed at channelling investments to areas which the authors regard as top priority. In this article, an attempt will be made to show to what extent the Cameroonian government has succeeded in its effort to direct investments to desired regions of the country through a statute wherein incentives cohabit with regulations on matters such as imports, exports, price fixing, foreign exchange, etc., which foreign investors consider as repellent. The study is subdivided into two parts. The first part is based on the Investment Codes and the second deals with the country's regulatory environment.
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References
1 U.S.A.I.D., The Tortoise Walk: Public Policy and Private Activity In The Economic Development of Cameroon, Washington, 1983, p. 10.Google Scholar
2 Ministry of Economic Affairs and Planning, The Fifth Five-Year Economic, Social and Cultural Development Plan (1981–1986) Yaounde, 1981, p. 27.Google Scholar
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4 Biya, Paul, Communal Liberalism, Macmillan, London and Basingstoke, 1987. In his 140-page book, the Cameroonian President defines communal liberalism as embodying three cardinal principles, namely, freedom of undertaking, the regulatory role of a democratic state and the duty of solidarity (see pp. 115–121). The only innovation here seems to be the addition of solidarity to the notion of “planned liberalism”.Google Scholar
5 Instituted by Law No. 60–64 of 27 June, 1960.
6 Law No. 84–03 of 4 July, 1984, section 54.
7 Second Annual Report of the National Council of Credit, 1964–66, Yaoundé, 06 1967, p. 101.Google Scholar
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9 The New Code, section 5(4).
10 Ibid., section 10.
11 Ibid., section 27(2).
12 Companies in this category are those that produce essential commodities ranging from sugar to petroleum.
13 Created by Law No. 70/LF/7 of 20 May, 1970.
14 Set up by Decree No. 75/238 on the 2 April, 1975.
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17 Decree No. 67/DF/81 of 23 November, 1967.
18 Law No. 80/25 of 27 November, 1980, which devotes just four sections to foreign trade.
19 These are enumerated in the Decree of 1967 in section 11, one of the few surviving provisions.
20 Licences are required for the importation of unrestricted items only where their value exceeds Fr.500.000.
21 Apart from Cameroon, the other member states of the Union are Chad, Gabon, Congo, Central African Republic and Equatorial Guinea.
22 See section 22(3).
23 The subsection stipulates that “whenever it is of the opinion that the importation of a product is the essential cause of some damage or grievous threat to a branch of activity, the government is empowered to take all the measures it deems appropriate to correct the situation”. (My translation from the French version.)
24 The export regulations laid down in the 1984 circular are still in force.
25 In 1983/1984 these products accounted for 41.08 per cent of the country's exports: See the Sixth Five-Year Development Plan, p. 178.Google Scholar
26 The neighbours in question are Gabon, Central African Republic and Chad. The food is bought in open markets so it is difficult to know the quantity of food that leaves the country in this way.
27 Even the exporters of freely exportable items are still required to file export declarations, certificates of origin of their exports and the addresses of the banks to which the proceeds of the exports will be paid.
28 Prices are fixed by Orders of the Minister of Economic Planning.
29 The others are member states of U.D.E.A.C.
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32 Ibid., pp. 82 et seq.
33 U.S.A.I.D. op.cit., pp. 13–14.
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45 The main problem that a lawyer faces in writing on a subject of mixed law and economics, such as this, is that of the extent to which to push purely economic arguments. This article has endeavoured to limit such arguments to the minimum and it is for the reader to judge how successfully this has been done.
46 Ngwasiri, C. N., University of London Ph.D. thesis, 1979, pp. 21–22Google Scholar (unpublished). A British Court of Equity which administered English law was set up in Douala—now Cameroon's economic capital, by international treaty on 14 January, 1856, to settle disputes arising from the commercial transactions of the multi-national trading community in the town. It is also significant that the lingua franca in this city with an estimated population of one million people is pidgin English and not French.
47 U.S.A.I.D., op. cit., p. 10. Although this statement is made with regard to the manufacturing industry, it is the norm in every sector of activity in the country.
48 Ibid., p. 11.
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