Cameroon at a crossroads: urgent call for fiscal transformation

Despite its natural resources and dynamic people, Cameroon’s economic progress has stalled, leaving income per capita below what it was in the 1980s. Why? Weak governance, conflict, insecurity, and climate change have drained public resources and pushed the country deeper into debt distress risk. With a savings rate and investment levels far below of that of similar countries like Côte d’Ivoire and Ghana, Cameroon is struggling to finance its own development. But hope is not lost.

The time for change is now: Cameroon stands at a critical crossroads, where bold fiscal reforms can chart the path to a brighter future.

Let’s imagine a Cameroon where government collects enough taxes to build new schools, pave roads, light up dark areas or provide quality healthcare services. This reality could come true, but the reality today, is very different. With a tax-to-GDP ratio of only 11.3%, Cameroon lags behind its regional peers like Côte d’Ivoire and Senegal. Even more alarming, 73% of the country’s non-oil tax revenue comes from just 0.5% of businesses. It’s clear: Cameroon is leaving too much untapped potential on the table. 

The World Bank’s Public Finance Review (PFR) calls for a comprehensive tax reform, leveraging from ongoing Government’s efforts. By broadening the tax base, improving compliance, and curbing excessive exemptions, Cameroon could increase fairness and equity of its tax system and increase its revenue by up to 6% of GDP, providing essential funds for public services.

Spending Smarter: Making Every CFA Franc Count

Raising more revenue isn’t enough. Cameroon also needs to manage its spending better. Too much of the budget is lost in inefficient, non-productive expenditures—resources that could be redirected to human capital investment, infrastructure or others strategic priorities. Loopholes in the budget process led to excessive spending, unchecked by proper controls. As a result, the country finds itself at a high risk of debt distress, with arrears alone averaging 4% of GDP. 

But here’s the opportunity: By shifting resources toward high-impact investments and streamlining budget processes, Cameroon could save up to 3% of GDP each year—money that could fuel long-term development and improve lives across the country.

Investing in People: Cameroon’s Greatest Asset

At the heart of Cameroon’s journey to prosperity lies its people. Human capital is the engine of any thriving economy, but Cameroon’s government spending in education and healthcare remains far too low. Spending on these vital sectors is less than 5% of GDP, leaving citizens to pay out of pocket for 70% of their health expenses—one of the highest rates globally – and exposing disadvantaged families to a permanent financial burden in terms of education. Social safety nets are almost non-existent, with spending at just 0.16% of GDP. 

To break the cycle of poverty, the Public Finance Review urges Cameroon to increase investment in human capital, particularly in underserved regions and to improve efficiency. By ensuring equitable access to quality education and healthcare, the country can build a workforce capable of driving sustainable growth and meeting its Vision 2035 development aspirations.

Empowering Local Communities: The Case for Fiscal Decentralization

For true progress, Cameroon’s governance model needs to shift power to local communities. Fiscal decentralization holds the key, but right now, subnational governments receive just 3 % of the national budget. As a result, they lack the financial resources and authority to effectively deliver services that respond to actual people’s needs.

Strengthening local tax systems, reducing bureaucracy, streamlining funds to local regions, and building capacities can ignite a transformation. Empowering communities to take control of their own development is essential for creating a more inclusive and prosperous Cameroon.

The Road to the 2035 Vision

To achieve its Vision 2035 goal of becoming an upper-middle-income economy, the country must embark on a bold journey of fiscal transformation. The road ahead is challenging, but the rewards are immense. With the right choices, Cameroon can turn today’s fiscal challenges into tomorrow’s opportunities, paving the way for a brighter, more equitable future.

Source: World Bank Blogs