China Cements Its Position
BMI View: The recent US$467mn loan agreement between Cameroon and China Export Import Bank highlights Cameroon's continued strive towards developing its infrastructure, buttressed by rising oil revenues, as well as China's continued dominant position as a main contributor of funding in the country. We maintain our view of Cameroon as an attractive market for global construction players, yet likewise note the luring political risk surrounding the aging President Biya.
Cameroon and China Export Import Bank recently signed a US$467mn loan agreement, geared towards the building of a 215km express highway linking the capital Yaounde to the country's economic hub Douala.
The deal is in line with the government's current prioritising of infrastructure investment as part of a ten-year economic plan. The new six lane highway could certainly benefit trade for the Central African sub-region, where Central African Republic and other countries in the region rely on Douala for much of their trade.
We continue to see Cameroon as one of the more prospective markets in West Africa for infrastructure investments along with Ghana. With high oil prices currently easing budgetary woes, the government has, for now, the backbone to set in motion its ambitious infrastructure plan. That said, we still believe Chinese funding will remain dominant for larger flagship-projects, and its presence in the country reinforced by the Export Import Bank's continued heavy construction funding.
The main risk we see to Cameroon's construction outlook stems from political stability and a potentially unexpected exit of the aging President Paul Biya from power, as no clear transition plan is in place, and the institutional machinery for dealing with the president's incapacitation is largely lacking.
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