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Business News of Wednesday, 6 August 2014

Source: Dw-World

Carlos Lopes: “Reaching 7% minimum growth should be the magical goal”.

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In this reflection that we publish in its entirety, the Executive Secretary of the Economic Commission for Africa United Nations analyses the economic potential of Cameroon, a country that he compares to a Cheetah. In addition, the author suggests ways to borrow, for a rapid transformation of Cameroon's economy.

Cameroon has the necessary resources for industrialization and agricultural processing. 4.9% annual economic growth currently is not commensurate with the vast opportunities in the transformation of the country's wealth.

The economy is relatively diversified as evidenced by the operation of important agricultural resources, forests, mines and energy. Exports are dominated by oil, cocoa, timber, rubber and cotton. This diversification of resources lends itself to economic transformation by industrialization.

I have seen for myself the potential of economic transformation to improve the social conditions of Cameroonians. Young people who demonstrate dynamism have a role to play in transforming the gross assets of the Cheetah in industrial products, which will be the pride of the country. It is possible to transform agricultural products, timber, rubber and cotton for the local, regional and international markets.

The country’s regional potential is particularly impressive. Given its geographical location and its broad access to the sea, the country can easily position itself as a supplier of goods and services between Central Africa and West Africa.

Cameroon must focus on value chains to maximize its economic base. Only taking account of the potential of cotton would develop close links between farmers and the nascent fashion industry by integrating the quality required by consumers, in the creation of a textile industry. The opportunity to gain market share is so manifest. One percent only of the clothing industry is controlled by nationals. Since contractors require quality locally sourced inputs, the clothing industry funds can be distributed to reduce the share of new clothes and second hand imports.

Clothing industry is a sector in which 64% in less than 25 years could redirect their energy, which would stimulate economic growth. To achieve this goal, Cameroon must design and implement measures to support the initiatives of local businesses to reap the benefits of their creativity in local and regional value chains. The disappearance of barriers to innovation and business practice will improve their competitiveness.

Other sectors too within the country are also promising. Young entrepreneurs realize breakthroughs in the lucrative market of apps for smartphones and tablets. They have understood that there is a niche for frugal innovation. AppsTech, company created by Rebecca Enonchong, specializes in software for businesses. Rebecca entered the profitable market of software solutions at a time when the demand for these services is growing throughout Africa. Another example is that of Tony Smith founder of Limitless, a company specializing in the design of tablets, smartphones and flat screens.

This entrepreneurial spirit can accelerate the necessary changes in a stagnant workforce. If it is proven that there is no jobs, we must strive to create one. It is essential that the socio-economic policies of Cameroon are consistent with the needs of 75% of the young population that is unemployed.

It goes without saying that the Government will hardly be able to provide unemployed people jobs in the public service. However, the opportunity is truly given to address the mismatch between the skills of job seekers and the needs of employers. There is the need to find a solution to this problem so that young people are prepared for jobs that are part of the dynamics of economic transformation.

The oil and gas sector can provide jobs. Its diversification could contribute to increasing the share of locally supplied services. The need for technical expertise is real, but companies should be required to replenish at the local level. If they are not available, businesses must contribute to the formation and promotion of new skills. Currently, the hydrocarbons represent 8% of the GDP. They are required to move forward, taking into account the natural gas reserves of 135 billion cubic metres, compared to about 30 billion the country needs.

The production and exportation of minerals, energy and petrochemicals diversify the skills that Cameroon draws as well as the training that will be offered to young people. From 2012, the increase in production requires investment, technological upgrading and qualified human resources.

The construction of a deep water port plus a large industrial area for heavy, medium and light industry is a positive step in increasing employment. Supply of electricity too will increase thanks to the power of the Kribi project and the Lom-Pagar and Memve'ele hydroelectric dams. In 5 years, Cameroon should have completed the expansion and modernization of the entire infrastructure that depends on its industrial transformation.

To show strength, Cameroon must also increase the access of entrepreneurs to financing, designing innovative products of bank credit. The manner in which export earnings are used currently does little highlight the dynamics of industrialization. The role of small and medium-sized enterprises is decisive for the passage to a more labour intensive model. Mining employs only 10% of the workforce, which is very insufficient.

The country has a very fertile land, gigantic sea and marine resources in addition to mineral wealth. I am convinced that Cameroon can do much better economically. Its strengths, as described, are intense. They must be supported by strong policies and a grip. Reaching 7% should be the magical goal. Magic, because it is the growth rate that would allow the country to double the scale of its economic impact in a decade and create the conditions for a drastic reduction of poverty. Otherwise, the legitimate aspirations of Cameroon to emerge would be compromised.

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