By Louis-Marie Kakdeu
The President of the Republic signed on August 30, 2023 the circular letter N ° 001 (oops! the first time the gentleman has worked since the beginning of the year) relating to the preparation of the 2024 budget. He places this preparation under the sign of a socio-economic impact budget (point 4). we are therefore changing the paradigm by going from cost-effectiveness/utility analysis to budget impact analysis (BIA). What is it about ? Is this the real problem?
Reinforcement of the austerity policy
it is the logical consequence of the program with the IMF and the downgrading of Cameroon’s rating on the international market. The country did not go into default because it was still given this chance: that of agreeing to strengthen austerity. BIA means that we will no longer implement a project according to its usefulness, but rather that we will do it according to its budgetary impact. The goal is to apply the budgetary discipline necessary to repay the debt. except that beyond the words, the basic problem remains. In the same point 4, the President sets out six unfinished projects supposedly already financed in the past which will still be money pits in 2024. when we talk to you about the “commissioning of major first and second generation projects”, we remember that this affair has been going on since 2011 without a balance sheet. a responsible policy would rather make it possible to ensure over a given period (one year in this case) that the budget generates a visible social impact. it would be in the methodology, to be able to compare the situation before (2023) and the situation after (2024) to show that the action has had a positive impact. in a context marked by a continuous increase in inflation (for at least 30 years), it would have been a priority to put an end to the bleeding and to target the purchasing power of Cameroonians. in one year, it is quite possible to relieve consumption through budgetary measures, which is not possible to do by targeting major budget-intensive projects. Indeed, it is useless to invest in construction sites when one does not reach the break-even point. in the language of accounting, these sites remain liabilities or better, money pits.
Bad growth policy
On this subject, it is necessary to criticize the policy of balanced growth of Cameroon. to put it simply, it is the propensity to want to invest in all sectors of activity at the same time when the country does not have sufficient financial means and effective means of coordination. the President of the Republic is now unable to monitor all the projects launched. Therefore, he creates gasworks, white elephants and cash cows to fatten his network of customers. it would rather be necessary to apply the policy of unbalanced growth which supposes to concentrate its few means on a key sector which would make it possible to draw the other sectors like this locomotive which draws the wagons. for example, Côte d’Ivoire first focused on cocoa, which allows it to pull other sectors. Ethiopia has focused on textiles and has just entered the circle of emerging BRICS countries whereas thirty years ago it was a starving country that received our yellow coins. You can’t do everything at once. this is why the economic orientation of the Cameroonian government remains bad and without social impact.
Lack of planning
On the macro-economic level, I disagree with the government which constantly justifies our economic disaster by exogenous factors. No! the economic decline observed in Cameroon has lasted since 1987 when the Biya regime put an end to the planning of our development. It is therefore not linked to Covid-19, nor to the Russian-Ukrainian crisis, nor to climate change. This is another evasion of responsibility.
There is no economy without planning. And then, we cannot go into the international environment only to look for threats. the President of the Republic never tells us what opportunities his regime was able to seize during the year to accelerate the application of its program. He never tells us what benefit the country has been able to derive from the international situation. for example, the increase in the price of a barrel of oil.
This means that he sails by sight! Through its circular letter, it changes course each year, like a weather vane that turns at the discretion of donors. still trying to find a justification for the mediocrity of its economic results. .the government’s usual argument that the economic decline observed in Cameroon is “like in most countries in the world” does not hold insofar as other countries are implementing a program of structural reforms whose results are visible on the qualitylife of their citizens. and then, we can’t just say that we’re fine since things are also bad with the neighbors. .rather, it should be seen that we have not been able to invent innovative and endogenous solutions in a context where we have abundant resources just waiting to be exploited. you can’t die of thirst at the edge of the water and explain that the situation is not serious since the desert is going badly.
The extraversion of the economy
we are impacted by the international situation because we depend on foreign countries for our internal consumption (extrovert economy). Our capacity for innovation to produce locally is almost nil. We must therefore finance innovation in 2024. common sense would have liked the President of the Republic to focus on this issue to boost local production more than ever. Its circular letter makes no provision for the import-substitution policy yet listed in the objectives. however, this would directly impact purchasing power (local creation of wealth and consumption of made in Cameroon).
What interest does the President have in playing the dilatory every year when he has the cards in his hand? for example, during this back-to-school period, the President of the Republic could have regulated the textbook market to relieve the burden on parents. The country absorbs about 90 million books (not counting notebooks) that are printed entirely abroad. it is about FCFA 300 billion that escape each year instead of staying in the country to create wealth locally and relieve consumption. The capitalist publishers will print cheaply abroad and come back to strangle the parents under the passive and complicit gaze of the State. similarly, the major projects announced by the Head of State are of no use to the national economy if concrete is even imported from abroad, as was the case for the Olembé stadium. a common-sense budgetary policy would give local entrepreneurs the facilities they seek abroad. .in his letter, the President rather orders the vertical increase of the tax base (through the creation of new taxes) while the opposite action (reduction of taxes) would allow the increase of the tax base on the horizontal plan (increase in the number of taxpayers)we cannot talk about improving the business climate by implementing the overtaxation of the few taxpayers who have the courage to remain in the formal circuit. This is the main cause of the explosion of the informal sector, a tax haven sector.
This tax policy makes Cameroon an eternal trading post. As in the days of the slave trade, citizens must be content to be workers in their own country with miserable wages. wages which have not always reached in 2023 the level where they were already in 1993 before the reduction to nearly 70%. Common sense would have liked the increase in purchasing power to be the justification for any economic action in Cameroon today.
In a normal country where there is an active civil and political society, we would push the President of the Republic to bring back his circular letter to direct him towards increasing purchasing power. in the meantime, and as I always say, it is time for citizens to wake up and take their responsibilities, each at their own level. Political laissez-faire is the disease of this country. the boat continues to sink before our eyes; life is becoming more and more expensive; and soon, we will all be immersed. It is good to flee abroad to find shelter, but God did not create us in Cameroon to flee our responsibilities.
The power is us!
louis-Marie Kakdeu, HDR, PhD & MPA
Member of Shadow Cabinet SDF
Economy, Finance & Commerce