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Remarks by Political and Economic Section Chief Scott Ticknor
American Chamber of Commerce Luncheon
March 18, 2008. Le Forchette 12:30pm
President of the American Chamber of Commerce,
Distinguished members of AMCHAM,
Ladies and Gentlemen,
Thank you for inviting me today to talk about one of my favorite topics - the U.S. economic relationship with Cameroon. I will focus on trade and investment, since I believe that will be of most interest to you, but can also answer any questions you may have about our assistance programs.
I feel humbled by the fact that many of you have been in Cameroon and watching this relationship much longer than I have. You are in the thick of it, on the front lines. I have been in Cameroon six months but can offer you a perspective of someone who has spent considerable time in Africa (my last post was Ghana) and almost five years as a commercial officer in Bangladesh and Nicaragua. I also benefit from an excellent Embassy team in Cameroon.
Promoting trade, investment and economic development are among our highest priorities in Cameroon. Bilateral trade and investment not only benefit U.S. firms and American jobs – something we obviously see as a priority - but are also important to the economic stability and prosperity of Cameroon.
U.S. exports to Cameroon are on the rise again after two years of stagnation. The U.S. goods trade deficit with Cameroon was $41 million in 2007*, a change of $112 million from the $153 million deficit in 2006.
U.S. goods exports in 2007 were $128 million, up 6.4 percent from the previous year. Corresponding U.S. imports from Cameroon were $169 million*, down 38.2 percent. Cameroon is currently the 130th* largest export market for U.S. goods.
What’s behind this story? The top five U.S. exports to Cameroon in 2006 were:
- Drilling and Oilfield equipment --- $73.2 million
- Computer and telecommunications equipment $8.7 million
- Petroleum products----------------- $4.4 million
- Wheat------------------------------- $3.3 million
- Industrial engines ----------------- $2.8 million
Other significant export categories were measuring and testing equipment, passenger vehicles, chemical fertilizer, pharmaceutical preparations, and $377,000 worth of aircraft parts. We expect these sectors to continue to be good prospects for sales of American products. For the coming year I would also add construction material and equipment, including a very large sale of Caterpillar equipment to a road building firm.
It is not clear to me why Cameroon’s exports to the U.S. dropped by almost 40% last year. At least in part, it reflects the weak dollar, which benefits U.S. exports but hurts Cameroon’s exports to the U.S. Overall exports have been declining from Cameroon, with much of the commodity exports going to Europe and Asia. We are still investigating this and I welcome your thoughts.
The African Growth Opportunity Act (AGOA) provides trade advantages to some 37 eligible African countries including Cameroon. These advantages include duty-free and quota free entry into the U.S. market for some 6,700 products. The objective of the program is to develop eligible African countries’ industrial sectors by increasing their exports to the United States.
AGOA has helped diversify and increase Cameroon’s exports to some degree since it was created by Congress in 2000. Cameroon’s exports to the U.S. before AGOA were barely $50 million, 95% of which was crude oil. The United States exports were almost the same amount and the content was limited to oil rigs, aircrafts and parts. Thanks to AGOA, crude oil and other oil products decreased from 95% of total exports recorded in 2000 to 76% in 2006, which is an increase of 19% for non oil products over the year 2000.
Cocoa, coffee, rubber, wood products, and art articles accounted for the increase. Cameroon cocoa exports in 2006 amounted to $15 million compared to $1 million in 2000. Exports of Cameroon’s rubber to the U.S. have more than quadrupled, from $2 to $8 million, and exports of wood products during the same period grew from $8 million to $22 million. Coffee exports and artwork have more than doubled during the same period.
While there is a recognition that AGOA could be made even more effective, the statistics I have shared point to the undeniable fact that AGOA has helped open U.S. markets to Cameroon on a range of products.
I would like to think that at least some of the success of U.S. exports is due to the U.S. Embassy’s commercial outreach. Our Commercial Section provides a number of business services to U.S. companies hoping to sell to or invest in Cameroon, as well as to Cameroonian firms looking for U.S. partners for their investment projects, for U.S. importers/exporters, and for help from U.S. financial institutions. I’ll ask one of our Commercial Specialists, Christopher Ekom, to elaborate a bit more on these services in a few minutes.
U.S. exports are also aided by three U.S. government financing programs. The U.S. Export-Import Bank (Ex-Im Bank) finances exports of U.S. goods overseas. For such Exim Bank financed deals, overseas buyers of American-made products are required to pay a 15% down payment. Exim Bank then guarantees the remaining 85% to the bank financing the deal.
In addition to EXIM, the Overseas Private Investment Corporation (OPIC) provides up to 60% loan financing for U.S. investment projects overseas, as well as offering political risk insurance.
The U.S. Trade and Development Agency (USTDA) sponsors feasibility studies for sizeable investment projects (usually a minimum of $10 million) and pays for capacity building for companies developing large projects with high developmental impact and seen as having prospects for U.S. exports. For example, TDA has sponsored studies in the aviation, port development and gas sectors.
Foreign Direct Investment (FDI) plays a key role in the Cameroonian economy, but accurate FDI statistics are not available. We estimate U.S. foreign direct investment (FDI) in Cameroon was $231 million in 2006 (latest data available), up from $99 million in 2005.
In the USTR’s latest National Trade Estimate report, the cumulative stock of U.S. foreign direct investment in Cameroon as of 2003 was USD 3.7 billion, up from USD 2.8 billion in 2002.
The Embassy believes U.S. investment is the largest source of FDI to Cameroon in terms of value, largely as a result of sizeable energy sector investments.
You know the investment landscape in Cameroon better than I do. Many of the two dozen or so American firms represented in Cameroon are here today – and I would welcome your insights about the situation for U.S. companies in Cameroon.
I believe it is accurate to say that the majority of American business activity for the moment is in Cameroon's petroleum sector. The Chad-Cameroon pipeline is the largest U.S. investment in sub-Saharan Africa, estimated at USD 4.4 billion. Exxon/Mobil and Chevron/Texaco jointly hold a majority interest in the pipeline company, with Petronas of Malaysia as their partner; this single project accounts for the lion’s share of American investment in Cameroon.
Downstream, Texaco has extensive retail networks to sell refined petroleum products, especially gasoline. Of course, there is also a large investment by U.S.-based AES Corporation that owns a majority stake in power producer and distributor SONEL.
The other major U.S. investment is Transnational Automotive Group (TAUG) and its LeCar and Lebus bus services. TAUG won the Secretary of State’s 2007 Award for Corporate Excellence and I understand TAUG hopes to expand its investment in Cameroon in 2008.
We believe that American investment is rising, with a number of pending U.S. investments in the energy, oil, tourism, mining, telecommunications, social housing, road construction, and public transportation sectors.
These include:
American investor Starwood, which has bought French interests in the Meridien Hotel and another U.S. group is coming up with a $40 million Marriott hotel project in Douala.
Geovic, a U.S. mining firm, which was awarded a permit in 2003 to extract rich deposits of cobalt and nickel in Cameroon’s East Province. We hope Geovic can start operations this year. U.S. firm Hydromine, in consortium with several international mining companies, has a license to exploit the Ngaoundal bauxite reserve. We are also hopeful this will move forward in 2008.
Tomorrow in Yaounde a group of American companies will launch a partnership with a local Cameroonian company, GlobtourNet, to bring mobile internet (WIMAX & WIFI) to individuals and to their homes at very affordable rates. This project, called REMUDEV, represents a $20 million U.S. investment. Endorsed by the Ministry of Youth affairs, it is expected to create more than 5,000 jobs for Cameroonian youth.
There are many other opportunities for U.S. investments. In our view, best prospect sectors are mining (granite, marble, rutile), natural gas, textiles (taking advantage of Cameroon’s cotton production and AGOA benefits), wood products, road construction equipment, biofuel, food processing, and housing (given an estimated housing deficit of 1,500,000 houses).
Of course, future U.S. investment and the export market here are tied very closely to the economic fundamentals of the country. If the business climate improves -- if corruption reduces, if the bureaucracy becomes less predatory and less cumbersome, if infrastructure were better -- I would expect to see more investment interest by U.S. companies. Of course, investors in the U.S. also want political stability, security, predictability and transparency.
The Embassy spends considerable time meeting with senior government officials encouraging improvements in the business climate. Every year we produce a Country Commercial Guide, which gets published on the Internet and hopefully serves as a guide to businesspeople and government officials alike. We provide training on intellectual property rights protection. We have a full range of Public Affairs tools, including exchanges, speakers and Digital Video Conference options. We spend a lot of time helping U.S. companies navigate the Cameroonian bureaucracy.
I have seen many Amchams operate in other countries and know that a proactive Amcham can be an influential voice in affecting economic and business policies. Your work is important and I look forward to working with you to explore ways that the U.S. Embassy can cooperate more to strengthen the role of the Amcham in Cameroon.
Thank you for time and thank you for listening. I’ll now ask Chris Ekom to add a few thoughts.