background Of The Research Study
The vision for development in the long-term period for Cameroon was explained in the Cameroon Vision 2035. Particularly, Vision presents the primary aim of Cameroon as a rising nation over the period of upcoming 25-30 years. In addition to this, there are objectives for medium term of Vision that includes alleviation of poverty, developing Cameroon into a middle-income nation and make it to be an industrialized nation, solidifying democracy plus national unity of the nation without negotiating rich cultural diversity of the nation. Strategies for implementation of this specific Vision will call for an enhancement of environment of the business and governance in order to explore and mobilize resources for the purpose of investment to make certain that vulnerability of the nation to different internal and external shocks is curtailed. Undeniably, each and every institutional actor namely; the State, the private segment along with the households has various sources of funding with unique characteristics (Cameroon Vision 2035 p. 48). Particularly, for the State, major sources of funding are revenue (including tax as well as non-tax ones), investment earning, loan acquired from national as well as global markets, along with Official Development Assistance. Prospective resources for essentially the private sector takes into account corporate savings, bank funding, nationwide, regional along with global financial markets, savings of households and many others. Whilst for the private segment, primary sources of funding comprise of earned proceeds, social security advantages, transfer of wealth from diaspora, monetary earnings along with loans acquired from the financial segment. It can be observed that among the prospective resources, stress will be laid down on state savings (that is to say, public as well as private savings). Basically, the governing body is in the course of developing the 2nd stage of Vision through a novel National Development Plan covering the time period (2021 to 2030). The plan is in line with the prescribed Sustainable Development Goals.
In order to hold up efforts of resource mobilization of Cameroon, efficient use of the identified resources for executing Vision for the year 2035 is necessary. In itself, The Cameroon Government has the need to institute a partnership structure such as Public-Private Partnerships (PPP) that can augment investment flow for long-term period mainly foreign direct investment (FDI). This comprises of a driving force for economic growth both with respect to inflow of capital (indicating towards enhancement of flows of investment that are both public and domestic in nature) and technology transfer. The framework of Public-Private Partnerships can be considered to be an important model for supporting flow of investment during the long-term period principally FDI principally in large sized infrastructure projects. In essence, it is extensively accepted that (FDI) helps in development of gains in efficiency throughout the economy by means of movement of financial capital, proper management of knowledge, technology, business exercises, admittance to overseas markets, enhanced opportunities of employment, and improved socio-environmental status (OECD, 2002a). Furthermore, it also enhances competitiveness worldwide (OECD, 2002a). In essence, this clearly follows the vision proposed. These actions support increase in investments since growth attained through FDI permits the acquisition of advanced technologies. Fundamentally, this needs to slowly but surely direct towards domination of the secondary segment. There is a rigorous primary segment with professional and employment-generating tertiary segment that can work alongside an alteration in the pattern of overseas trade with a more dynamic assimilation in international exchange. However, there need to be no misapprehension that is (FDI) need not be considered as the primary source for addressing developmental issues in states. In actual, FDI can be considered to be a valued complement to regionally delivered fixed capital along with other external finance for investment rather than a chief finance source. This cannot be necessarily apportioned in a way it is carried out for state investment otherwise else Official development assistance (ODA) (Cameroon Vision 2035 pp. vi-ix). As a result, the axiom “policies matter” has become even more appropriate and valid than ever before, principally when international flows of FDI are declining.
PPPs and FDI can be considered as chief catalysts of economic growth in different developing nations as they are measured to be drivers for investment. In essence, it is supposed to cope with important impediments that include scarcity of pecuniary resources, technology as well as proficiency.
As suggested by (Green, 2000), akin to majority of other developing nations Cameroon has undertaken diverse initiatives to generate a positive and constructive environment for PPPs and draw FDI flows into the nation. However, the most crucial question that is time and again considered by researchers and lawful practitioners is as to whether there is sameness in treatment in different initiatives undertaken between FDI and regional investments on its admittance and institution. Different legislations of investment have provisions for handling overseas investments. The majority of these legislations prefer identical treatment of overseas investment capital and regional capital. In this case, the “Cameroon Investment Code for the year 1990” along with “Investment Charter for the year 2002” can be taken into consideration. Essentially, these comprises of provisions as per equal treatment even before enactment of the decree for both regional as well as overseas capital. Particularly, in Cameroon, it is likely for nationals of the foreign nation to establish and entirely their businesses. () says that there is no strict or else obligatory necessities to have a regional partner. Depending on explicit sector wise set of laws, business concerns can partake in different forms of remunerative actions. As such, there are no confines and restrictions to foreign ownership otherwise control. Nevertheless, in different segments (that is to say, for upstream oil segment, industry of telecom infrastructure as well as electricity creation), Cameroon is said to be the foremost economic performer. As rightly indicated by (Green, 2000), there are particular set of laws reserved for the sectors indicating the statuses and conditions under which private segment might invest. Principally, these types of set of laws are not complete prevention; however the State might endow a license (for say, telecom industry) and function in line with the production sharing agreement (for say, oil and gas industry). As mentioned by (Green, 2000), the governing bodies might screen certain proposals of investment in the perspective of standard so as to endorse specific credentials and certified competence of financiers or else investing firms. As such, in specific segments namely, telecommunication segment and oil and gas industries stated above, a financier cannot have absolute investment ownership that is developed in Cameroon. Also, there is the prospect through model titled “Build, Operate and Transfer” (abbreviated as BOT) of PPP structure delivering the opportunities for the financiers to regain their investment in due course.
As mentioned by (Green, 2000), investment comprises of a key macroeconomic element that plays an important role in the process of attainment of economic growth. Fundamentally, it is said to be obligatory to make a distinction between private as well as public investment stressing the fact that in developing nations it is private investment that carries an important role than public investment in ascertaining higher rate of economic. Intrinsically, investment can be considered to be an important factor that contributes towards higher economic growth. However, in this specific context, specific role of private segment is said to be unavoidable concerning its involvement in the process of development of Gross Domestic Investment (GDI), building potential to allocate and make use of resources effectively. Basically, private investment can not only be regarded as a driver for job and income generation, but is also said to play an important role in the process of provision of both infrastructure development as well as social services.
With regard to Cameroon, in essence private investment comprises of investment in the sectors of manufacturing, sectors of construction, small sized enterprises, and agriculture together with services. There are numerous enterprises that have dominated the entire scene in mainly Cameroon with a majority being owned by private units. Therefore, private investment refers towards payments for a greater fraction of the GDP of the nation. () asserts that nations in which private investment remains slow-moving over an elongated time period encounter the issue that short of capital assimilation directs towards dying out of future growth prospective. In brief, there cannot necessarily be materialization without sufficient as well as superior quality investment. In effect, investment can be considered to be both consequence and foundation for attainment of economic growth as well as development. As such, this becomes a concern for a development of a desirable investment environment that inspires entrepreneurship. In essence, this accountability comprises of generating the conditions that make it feasible to get hold of the requisite financial assets for investment that takes in macroeconomic plus microeconomic strategies, public finance, circumstances of financial system, along with other fundamental components of a nation’s economic environment.
The desirable arrangement of private investment still presents broad differences in investment performance through different regions. For instance, steadily increasing rates of investment in mainly the East Asian district are in sharp difference to decreasing rates of investment in particularly the Sub-Saharan Africa. In addition, diverse investment levels and level of efficiency employed are affected by several facets, majority of which are clustered under macroeconomic strategies, incentives along with institutional facets. Evidently, macroeconomic steadiness, distinct property rights, an appropriate judicial along with contracting scheme, a reasonable market, a proper infrastructure for technology, together with knowledgeable healthy persons are essentially components of an appropriate investment environment. Furthermore, admittance to worldwide markets is significant for the stream of goods, capital investment, and technology along with thoughts.
Even though private investment is funded by means of an assortment of sources, its entire bulk persistently gets funded by regional savings. Nonetheless, access to overseas capital plays a significant role for private segment in developing together with developed nations. In current years, capital acquired from global sources has become a vital part of private investment in different developing nations. Essentially, flows of investment for the long-term period, specially (FDI), can be considered to be vital in supplementing state-wide efforts for development of developing nations. This can help in overall augmentation of investment efforts, principally to merge development of infrastructure, augment transfer of technology, intensify productive associations and improve competitiveness on the whole.
It can be hereby observed that over the past two decades, just as other developing nations, Cameroon has gone through an escalating trend in investments through PPP. Essentially, this represents the enhancing role of specific initiatives undertaken by “Economic Recovery Programme”, “Structural Adjustment Programme” along with other pecuniary reform programmes to augment the private segment. Essentially, a steady rate of growth of economy along with persistent efforts aimed at restructuring and at the same time privatizing public segment, eradicating distortions of price, easing up foreign trade, exposing market to flows of FDI and intensifying overall potential of financial arrangement can help to mobilize savings of the nation and apportion financial assets. Thus, this can assist in enhancing overall share of investment in PPP in developing nations. Nevertheless, the overall level of investment has not been adequate to augment overall capital stock and capacity of production of the entire economy that subsequently lead to generation of preferred rate of economic growth, in comparison to other developed countries such as the US, UK as well as Canada. Hence, it is extremely troublesome that slightly robust rates of growth can be attained as well as sustained at a specific level over longer time periods only when an nation has the potential to keep up its public-private investment as a considerable amount of GDP.
For this reason, the governing body of Cameroon is undertaking steps for improvement of private segment that can subsequently direct towards transition of country to a rising nation by 205. However, certain steps initiated include intending to lessen the rate of inflation rate, rate of interest, making certain stability of currency, enhancing both medium along with long-term funds namely, FDI and developing desirable strategies along with regulatory environment intended at inspiring partnership framework in the outline of PPPs.
As suggested by (), there are increasing substantiation regarding the fact that economic investment relies to a great extent on PPP and FDI that contributes towards attainment of growth. Keeping a track of these specific variables can be considered to be a precondition for growth in economic investment. Also, it is supposed to be a means of augmenting economic investment. Essentially, governing body of Cameroon has made their attempt to attain growth and has become a rising nation by the year 2035. Thus it has exerted a great deal of efforts in making certain the fact that economic investment is enhanced in different segments of the economy. Therefore, the study intends to examine (PPPs) as well as Foreign Direct Investment (FDI) using empirical evidences as tools for Economic Investment.
As suggested by (), economic investment can be considered to be a vital necessity for attainment of higher rate of economic growth. This is because it allows the governing bodies with the necessary support of entrepreneurs to establish economic actions by drawing resources together to manufacture goods/services. Particularly, it has been extensively recognized among economists that the same put considerable amount of effort to endorse innovation, augment employment, lessen poverty and enhance state-wide welfare.
Nevertheless, the anticipated role of monetary investment in different developing nations such as Cameroon has not yet been realized because of the inability of the nation to enhance it to a certain appreciable level. This state is because of rippling impact of the nation’s previous experience regarding negative outlook towards investment that are private in nature, coupled with improper domestic strategies that ultimately directed the way towards high inflation as well as rate of exchange.
As rightly indicated by (Green, 2000)., investment levels particularly private ones can be considered to be a GDP percentage of the nation Cameroon. It has reflected a conflicting along with a downward trend for certain specific periods. Decreasing levels of investment are an issue, since matters of investment are an important factor for attainment of growth in the economy and as low level of investment enhances susceptibility in the entire economy (Mlambo and Oshikoya, 2001:16). Particularly, an important threat encountering the Cameroon economy is to introduce policies that can assist in increasing financial investment mainly private investment. With the intention of stimulating and improving rate of economic growth for drawing suitable policy, it is imperative to recognize facets exerting impact on economic investment in particularly Cameroon known the fact that rate of economic growth is particularly considered by GDP.
As suggested by (Green, 2000), in case of private investment and attainment of endogenous growth, different factors were examined that impact economic growth in particularly Cameroon during the time period (1963-1996). However, the study indicated towards the fact that influence of enhancement in private investment on particularly growth is huge and at the same time vigorous. Essentially, it can be hereby anticipated that private investment presents an association between particularly imported technologies with nation’s rate of growth.
As correctly indicated by (Green, 2000), economic investment enhances employment that subsequently helps in the process of reduction of poverty and enhances overall growth rate of the economy. In essence, the governing body of Cameroon has necessarily not relented its attempts to inspire investment in the nation Cameroon. Both PPP and FDI has been regarded by the government as a significant factor in the process of attainment of economic growth as well as development of the nation Cameroon. Therefore, varied initiatives were undertaken to inspire partnership structure along with foreign investment. There are certain measures that have been undertaken to inspire economic investment. These comprise of oversimplification of processes of administration, specific provisions of offered incentives and execution of a national governance programme to address the issues of corruption among many others. The investment legislation of the nation comprises of all the necessary components to deliver an open moderate investment environment.
Essentially, the regulations overseeing private investment in the nation Cameroon is essentially the investment code of the year 1990. In actual fact, the incentives of this specific code are similar to that of both foreign along with domestic investment and deliver numerous assurances to different financiers. However, incentives comprise of ownership of property, the capability to send back capital along with earning, previous compensation particularly for cases of expropriation and liberated movement within the nation Cameroon among many others. In particular, the government has also taken up specific aimed at loosening and easing up trade policy scheme, fostering involvement of private sector in the nation, enhancing overall competitiveness and promoting investment.
In spite of all the above mentioned dimensions and strategies undertaken by the government, Cameroon constantly records low and at the same time fluctuate levels of economic investment. For the economy to enjoy the benefits of economic investment, it is necessary to identify the variables such as PPPs and FDI as tools for investment and considerable significance of each one of these types of variables. Essentially, from these types of variables, strategies need to be developed and executed that can inspire investment so that the entire economy can move out of the phenomenon of ‘cycle of poverty’.
Primary Objective
The primary objective of the study under consideration is to determine overall efficacy of Public-Private Partnerships as well as Foreign Direct Investment as effective tools for drawing investment in the nation Cameroon.
Particular Objectives
The current study intends to find out whether
As suggested by (), the strategy of Public Private Partnerships particularly between the bodies and overseas partners with (FDI) in business world can be considered to be a contentious subject matter. This is so because there are some commentators who are of the viewpoint that it is valuable only to the developed nations and is carried out to augment economies of poorer or else developing countries.
However, there are also others who are of the view that majority of poor economies would necessarily be worse off than they actually are without the policy outlines laid down under PPP taken together with FDI. For that reason, it remains a subject matter of experiential studies else wise economic analysis to confirm or uphold opinions.
The current work is considerably important as this can help in reflecting, remaining within the purview of information gathered, whether adoption of PPP along with FDI can play an important role in the process of crisis recovery of an economy. This can facilitate the economy to achieve materialization; whether it can add towards advancement of the nation, and whether there are certain unfavorable impacts of PPPs as well as FDI on investment.
In addition to this, there remains very less data and information regarding the actions undertaken and impact of PPPs as well as FDI in the nation Cameroon. Therefore, the current study has the intention to act as a foundation of a launch pad for future research in this identified area. Particularly, the study at hand can serve as an effective information source for upcoming works on the nation of Cameroon.
This study can thus present contributions to research that undertaken on actions and roles of PPPs and FDI in the state Cameroon and might perhaps provide the foundation for additional research in this specific area.
Notions OF Public-Private Partnership
Public Private Partnership (PPP) can be considered to be contractual scheme for the long-term period between specifically a government unit and multiple private bodies. In this contractual scheme, there are specific resources capabilities together with core competencies of particularly each and every party that are united with the intention of developing, funding, building and running a specific facility. Particularly, PPPs can be considered to be a way for government bodies to reduce their balance-sheet by acquiring financing from the private segment whilst acquiring advantage from the technical knowledge along with experience of latter. Analyzed in comparison to conventional public procurement, the scheme of PPP comprises of a better role for the private segment that endures risk for the project but also anticipates a relatively greater amount of profit margin founded on performance.
In essence, PPPs are more and more becoming an extensive and prevalent technique for funding different projects on infrastructure worldwide. In essence, the legal arrangements specified in a specific framework of PPP permit governments to build up assets of the public sector, whilst averting huge, straight capital expenditure, using off-balance sheet process of funding (Luca, 2018). However, in current years, a general trend that can be observed by governments is to execute, assimilate otherwise modify legislation of PPP in an attempt to generate climate where FDI can thrive. Essentially, long-term steady revenues resulting from PPP provisions with varied sovereign bodies prove to be extremely appealing to financiers along with small and medium-sized financiers drawing finances into syndicated lending. Additionally, well-outlined projects on PPP provide the idea of generating novel jobs and fostering rate of economic growth, whilst assisting FDI firms to institute a foothold in the regional economy, thereby yielding them the chance to search for more contracts and expand.
The connection between both public as well as private segments viewed its origin in different works printed during the middle of the period 1950. Nevertheless, the ordered discourse along with research conducted on PPP is said to be linked with the inception of new public management (also referred to as NPM). In fact, with the enhancement in number and execution of experiments undertaken in the area of the UK, New Zealand, as well as the United States, since 1990s, NPM necessarily became another name for privatization as well as PPP (Wettenhall, 2003). Although, from the closing stages of period 1980, there were few critics of NPM, mainly due to ideological as well as political insinuations. There are several governments both left-wing as well as rightwing, similar to Britain (during the period of 1988), France (during the period of 1989), Canada (during the period of 1990), and the United States (during the period of 1993), assimilated huge sectors of NPM in their authorized texts delivering their reform intent (De Palma et al., 2009). Particularly, it was primarily during this period that PPP schemes entered into the rhetoric with suitable suggestions of transnational business concerns such as the OECD along with the World Bank. However, till then conventional advocates of the market as the most favorable mode for allocation of resources (Aucoin, 1990; Hood, 1991; Pollitt, 1990).
The notion of PPP also known as “public-private cooperation”, indicating towards contractual schemes covering up a longer period of time (normally over and above 20 years) is utilized by specific public establishments to allot to private workforce the satisfaction of a mission that is of public interest. Particularly, it is certainly a system that has the intention to draw private investments for improvement of overall public infrastructure. Taking into consideration the escalating requirements to build facilities for infrastructure, the use of the scheme of PPP can actually allow for the private sector to formulate, develop, fund and operate novel and subsisting facilities in an attempt to enhance services delivery delivered by the public segment.
Essentially, the intention to engage private players in the process of management of certain public services initiated during the period of mid 1990s. In itself, the nation was immensely affected by severe financial as well as economic crisis, the government discussed a lot although, erroneously, on the subject of privatization. Therefore, by means of sector-wise regulations, different private players have made entry into the arena of public services. These areas of public service include telephone (that is to say, MTN that stands for Mobile Telephone Network), railway line (for example, CAMRAIL-that is the railway division of the company), provision of electricity (for case in point, American Electricity Supply also referred to as AES SONEL), services of water (as CDE-Cameroun De Eau) together with different industrial agricultural estate (as Cameroun Development Corporation). In essence, this kind of private sector engagement delivery of public service was essentially the PPP of first generation. Intrinsically, the principal feature was that they were essentially attained founded on sectoral rules, without an universal framework for PPP, and consultations were carried out based on case by case rule, and at times as per the stakeholders engaged in the process of bargaining (International Monetary Fund 2009).
During the period 2006, the government of the nation Cameroon instituted a general structure for the PPP regime and these are also known as second generation. Also, they are developed to make certain a superior risk sharing mainly between the state partners as well as private partners. Fundamentally, PPP can be considered to be 4th basic principle presented in the improvement stratagem in the medium term of Cameroon (The Spark 2013).
As mentioned above, Cameroon initiated to establish PPP structure during 2006 with the enactment of the law 2006/012 presenting the regulations monitoring different partnership agreement system. Subsequently, other regulations as well as enforcement announcement comprise of chief components of the legal framework for PPPs. In essence, the hierarchy of lawful agreement for PPP is as presented below:
The law numbered 2006-012 stated above illustrates a partnership agreement: whereby the entire State or else one of the structures assigns a third party, for a specific period reliant upon the period of investments depreciation otherwise the selected funding measures with accountability of all or else fraction of subsequent stages of an investment project:
One significant particularity together with innovation of PPP scheme of Cameroon is that a partnership agreement might also be signed between else wise among different public unit. Particularly, this provision is provided under article 2 (1) of the stated above law number 2012-012 of 2012, that mentions that partnership agreements needs to govern, within the background of enormously large-scale technical as well as monetary projects, partnership associations between:
There is innovation in PPPs driven mainly by two main players namely the public as well as private operators. Therefore, we need to wait and observe the contribution and impact of Cameroonian innovation on the overall efficacy of PPP. Nevertheless, in the study at hand, the learner intends to concentrate on partnership associations in PPPs between different the public as well as private business enterprises. Rule stipulated by governing bodies of Cameroon regarding contracts of Public-Private Partnership governs different forms of co-operation and alliance between public and private for a specific project in exchange of a ascertained fee founded on investments. Essentially, PPPs in particularly Cameroon take account of all different factors that include allowance, “Build-Operate-Transfer”, different facets of “Design-Build-Operate-Transfer”, varied factors of “Design-Finance-Build-Operate-Maintain” and many others.
Intrinsically, the structure of PPP also provides common directions and illustrates fundamental principles of initiating and executing projects of PPPs, explains roles as well as responsibilities of different parties involved, processes of procurement and system and many other factors. As such, the regulations explicate in detail the following:
Different projects under PPP need to satisfy specific conditions that are in line with the law that is to be instituted through the route of PPP. These conditions are hereby mentioned below”
As mentioned by Daniels, Readebaugh and Sullivan (2004), FDI can be considered to be flows of investment in which the foreign financier have possession of no less than 10% of the company shares, that normally varied between 10% and 25%.
Daniels, Readebaugh and Sullivan (2004) assert that FDI is a kind of investment that is possessed and at the same time directed by a foreign division. However, in this connection it can be said that FDI differs from the concept of overseas portfolio investment that is necessarily a kind of investment that is mainly funded with foreign wealth and run by domestic inhabitants. In essence, overseas portfolio investment can be considered to be typically extra risky for the donor nation in case if the recipients be deficient in proficiency and knowledge in implementing the project under deliberation.
As stated by Daniels, Readebaugh and Sullivan (2004), it is important to draw attention to different components of control whilst laying stress on the previously mentioned definitions. Thus, it can be hereby mentioned that FDI can be said to subsist at the when the outlay, over and above minimum 10 % of shares, provides control of business enterprises to the financiers. Green, (2000) indicates towards the fact that although an overseas financier might have possession of 100 % of company shares, but in case if regulations of the governing body in the host nation do not sanction, then financiers might not possess the control. Each and every nation has their set of laws that guide overseas investments. However, in case of Cameroon the majority of overseas investments are not completely under the sovereignty of the foreign financier.
Essentially, there are different regulatory agencies, positioned under particular ministries that might possibly play a administrative role in some way.
As stated by Keegan and Green (2002), FDI is necessarily a type of investment that stems from the aspiration to have incomplete or straight ownership of different overseas operations.
Basically, the notion of FDI is thus based on the need to have possession of an overseas investment, in order to acquire the optimum gain from the same, and to exert control over the entire unit. In essence, the differentiating factor is that FDI entails not only resources transfer (generally capital) but also the acquirement of power. Control is essential as the investing corporation may perhaps intend to carry out best international operations in place of what is best for carrying out operations in a particular nation.
Even though some supporters of FDI argue that governing bodies need not have any kind of interest in different private investments from out of the country, however, critics opine that a host nation’s interest might probably suffer in case if an international business presents decisions from far based on its own international otherwise national aims. For instance, a international business might arrive at decisions regarding employment otherwise an industry that has general pride from particularly its head office. Therefore control can be considered to be a matter of concern for governing bodies. As such, this kind of controls by different recipient governments do not typically have a negative outcome on the corporation, however makes certain maintenance and adherence to the regulations of sustainability for the benefit of both the foreign as well as home nation.
An important characteristic of FDI is the establishment of transnational corporations. Nevertheless, there is no common accord regarding the characterization of multinational corporations. In particular, this is primarily owing to specific definitions that lay stress on structural factors namely total number of nation in which the business corporation carries out operations otherwise ownership by individuals from different nations or else nationality otherwise overall management composition in the upper echelon. Again, other illustrations lay emphasis on performance features namely the total amount of income, assets. There are other definitions that are founded on specific behavioral features of top management.
Basically, the notion of FDI is hugely supported by certain theories that attempt to illustrate the reason why corporations tend to become global; the reason firms intend to expand in the foreign market by investment. Also, the concepts of FDI explicates the reason behind FDI taking place in certain sectors and reason why certain nations are necessarily the source of stream of FDI and many others.
The procedure followed for the purpose of long-term growth of Vision of Cameroon started during the period 2006 with the business concern of a training seminar on the formulation of the vision. In essence, this training seminar primarily included 20 staff of the then Ministry of Planning, Development Programming as well as Regional Development (MINPLAPDAT). Fundamentally, the training program was conducted and moderated by specialists of Institut des Futurs Africains (Cameroon Vision 2035 p. 2)
Intrinsically, the Vision was developed as a reaction to the threat in prior studies to satisfy the anticipation and requirements of the entire population and policy ambitions pfor the Cameroonian individuals. According to the Vision, Cameroon is projected as a country that is restructuring, recovering and emerging for the next 25-30 years(Cameroon Vision 2035 p. 3).
There are general and sector specific objectives of the Vision based on characteristics of emerging countries such as Tunisia, Indonesia, Morocco and Malaysia. For the Vision to be operational, strategies were also set. These strategies were developed based on the challenges, essential stakes that ensue and following strategies implemented in reference emerging countries. Account was also taken of the country’s potentials and its overarching factors as evidenced in the retrospective analysis. A list of factors likely to hamper the achievement of the vision’s objectives was drawn up. Such factors which include uncertainties and risks wereanalyzed following four areas namely: (i) institutional and political level, (ii) sociological and social level, (iii) economic level, and (iv) international level (Cameroon Vision 2035 p. 3)
Ever since Cameroon acquired independence in the year 1960s, overall economic strategy has relied on diverse political vision, thereby indicating the other face of the coin. Thereafter, concerns of speedy process of nation-building had as consequence a state-managed nation. The objectives of the Vision is to make certain that the nation is less reliant on imports by way of domestic production and struggling for food self-adequacy and restricting the nation from turning out to be a consumer economy(Cameroon Vision 2035 p. 6).
The primary purpose of the first four five-year development schemes (for the period 1961 to1980) was to enhance per capita income twofold within 20 years. Intrinsically, this was attained. During the period 1980, novel objectives were established during the long term period, specifically for the year 2000. The new objectives included diversification of specifically production, shielding endogenous development and gaining admittance to indispensable amenities for one and all. These basic amenities included health, clean and drinkable water together with electricity for each and every one, free and compulsory primary education for every child below the age of 14 years).
Regrettably, the 5th plan (that refers to the period between1981to1985) can be considered to be the last one to be realized. However, the beginning of economic crisis in the year 1986, the dip in overall earning that followed and vital requirement for transformed macro-economic steadiness forced the government to suspend the 5th plan and end the preparation of 5 year schemes. Particularly, the government thus went for programmes on structural modification with backing from the worldwide community of finance. From this time forth, the State functioned as controller whilst the tactical function of growth was conferred on private segment (Cameroon Vision 2035 p. 6).
During the period of January 1994, currency modification and an assortment of revitalization programmes directed towards growth starting again though the outcomes were insignificant regarding impact on the living conditions of Cameroonians. There is a huge proportion of the population (that is to say, around 39.9%, out of which 55% happens to be women) still subsist below the line of poverty, condition of underemployment still is said to be rife and considerable disparities still subsist as regards admittance to superior quality of social services. Budgetary resources acquired by means of attainment of growth were by and large utilized in servicing the nation’s overseas debt. Eligibility of Cameroon for the HIPC initiative during the period of 2000, realization of decision point during October 2000 along with the completion point during April 2006 permitted for considerable resources for debt-relief marked down for alleviation of poverty (Cameroon Vision 2035 p. 6).
The primary basis of this is poor integration of Cameroon into the worldwide economy. In actual fact, Cameroon is incompetent of supporting regional industry because of competition from foreign segments whose earlier subsistence has relative benefits difficult to turn around. The production of the nation is restricted to specific commodities namely, oil, perennial crops, minerals and many others.
Especially for the State, effectual resources mobilization can be developed on foreign direct investment (FDI) attraction: real opportunities for attracting FDI still exist in spite of the 2008 international financial crisis. Foreign associates still has the intention to make investments in Cameroon owing to social as well as political steadiness, geo-strategic arrangement in the Gulf of Guinea and crucial structural reforms that directed towards achievement of conclusion point of HIPC scheme. Numerous financiers from varied nations have already shown interest in making investment in Cameroon in different segments namely agro-segment, mine along with the rural segment (Cameroon Vision 2035 p. 49). Enhancing nation’s attraction can therefore be an everlasting quest, pillars being infrastructure improvement, effectual PPP, development of governance, legal system together with tightening of security of goods/people.
The concept of Public–private partnerships (PPPs) at present has become the solution to the issues and needs related to the government investment and infrastructure` in addition to that they have been accepted by various political parties, communities, and people all over the world (Ghere, 2001; Tennyson, 2003; Wettenhall, 2003). The growth may increase as the governments may experience ?scal de?cits and that would enable them to find out various alternatives for enhancing and delivering its services. The reason for the creation of such arrangement is tp includes both pragmatic and ideological perspectives (Savas, 2000). The various advocates contradicts that the private segment is much more superior to the public sector when it comes to production and delivery of commodities. The leaders of the government identify the PPP as a process to bring the unique technical expertise, innovations, funding, or management methodologies from the private sector for addressing the complex issues of public policy. The rising field of the various commodities that PPP provides involves schools, toll roads, security services hospitals, emergency response and wastewater treatment. For a long time the private sector has been involving in various projects related to infrastructure, under several arrangements where they make contracts for making and designing building and roads after that they give them o the governments for maintenance. Om different conditions the models operate ein the private sector when it comes to ownership control, investment, risk sharing, technical collaboration, mode of finance, tax treatment, cash flows management and many more.
There are several models of PPPs that are emerging that represents the different degrees of private involvement, that includes concessions, build, design, and operate model; build, own, operate, and transfer model; and design, build, operate model and ?nance (Hodge and Greve, 2005).
The model PPP states that the Government grants and defines the rights that are company- specific for the process of building and operating facilities for period of time that is fixed. The Government may retain the ultimate ownership of the facility and/or right to supply the services. When it comes to concessions, the payments functions in two ways, one is when concessionaire pays to government for the rights related to concession and the government may also pay the concessionaire by granting a concession to the private participant to charge user fee to enable to improvise the facilities and operation of maintainace.
In the Usual case, such payments that are made by government is, on the basis of the user charges which is important to make the projects viable commercially and lessen the level of level of commercial risk of the private sector. In the initial years of a program of PPP when the private sector is not having enough efficiency in making such commercial venture, the government comes to help. The common periods for concession ranges from 5 to 50 years. It can be observed that the concession model in case of PPP, aspecial purpose vehicle (SPV)for implementation and operation of the project may always it be needed.
The Build-Operate-Transfer (BOT) is the PPP contract that is most utilized. It captures the characteristics of the public service’s private provision. In a contract of BOT contract, the company that is selected entity operates and constructs the public service during the phase that is granted after which the possession goes back to the public sector. The BOT is a financial agreement that takes place between private segment entity and the government. In addition to that, from the perspective of the new PPP market, the private sector entity bene?ts by becoming a de facto monopoly power while operating the public services during the duration of a BOT contract. At that time, time is given to the government to look for the contract that is most suitable to balance the provision need and control of the public goods of the chosen monopoly power of the private segment organisation.
In the type of Build-Own-Operate (BOO) along with iys other variations, for example, the private sector builds, Design-Build-Finance-Operate (DBFO), operates and owns a facility and sells the commodities to the beneficiaries. This is the most familiar form of participation of the private segment in the counties power segments. In case of the BOO project, the government may possess a agreement of purchasing power that is long at a price that is approved by the project operator.
The licensing in many respects can be taken as a model of BOO variant of private participation. To the undertakings of public the government grants the for the various services such as mobile telephony and fixed line, television, Internet service, and radio broadcast, along with railway services and public transport. However, the licensing can also be taken as the as a type of “concession” assets of the private ownership. The Licensing also provides in market, competitive pressure by allowing various operators, like the n mobile telephony in order to give competing services.
Two types of licensing can be pointed out that includes quantity and quality licensing. By setting limits through the quantity licensing, the government is able to maintain the competition of the providers of service and adjust supply between areas. However, in case of quality licensing do not have any such restriction on the amount of service that is being provided or its number of providers, although, it specifies the service quality that is needed to be given. The government in this case may receive a revenue share that the private sector earns under arrangement of licensing or a kind of a fee.
The model of Private Finance Initiative (PFI) model, the BOO model builds similar to the public segment where it operates and owns a facility. The public sector however, buys the services from the segment that is private with a help of an agreement that is long term. The PFI projects hence have to encounter all the obligations related to finance to government situations as needed. Additionally, the contingent liabilities explicit and implicit may take place for the guarantees that is given to the lenders and default of a private or public enterprise on non-guaranteed loans.
In case of the model of PFI, the ownership of asset in end of the period of contract can be transferred to the private segment. The model of PFI has therefore, many variants
An example of PFI model is the model of annuity for the purpose of national highways financing of in Cameroon. In this arrangement, a chosen private bidder dis given a cobtract for the development of a highway section and for its whole period. The bidder is given the fixed semi-annual payments for his project investments. The concessionaire, in this approach need not to bear all the related risks that may take place in the operation..
The model of PFI, apart from constructing the economic infrastructure, also develops various social infrastructure like buildings, school and hospitals, which does not have the purpose of earning revenues.
There are exists various FDI theories. However, for the purpose of this research, only a few will be taken in hand:
The theory of international trade has been started in the doctrine of comparative advantage in international trade, that states that a nation excels in those commodities where there is more advantage related to comparison to other trades and countries than the products which has more comparative disadvantages. The goods availability that that the countries secures with a given resources amount will be enlarged. This theory however possesses various limitations as it mainly stresses upon trade that is restricted to export of goods. The factor proportions theory tells us the relationship with the FDI.
As per the theory of factor-proportions, its states that the factors related to abundance are much more inexpensive from the factors of relative scarcity. As a Consequent to the same, these relative cost factor would enable the countries to produce and export more products as compared to others. Foreign direct investment would prefer the country with objectives that has a more relative abundance than the ones which have less abundance. This is done for (i) alleviating poverty (ii) advancing the technology, (iii) expanding the residential enterprise to foreign countries and so on.
In a market that is free, the producers naturally would accuse the products of being inefficient in production and prefer those who are more efficient in production. The factors mobility would therefore, may lead to the multinational companies to invest in other nations in search of efficiency in production. This means that the companies will invest in factors of other nations where the cost of factor are much lower and gives the firm a competitive advantage.
Opposite to the previous theories that are on the basis of international trade, the theory of direct investment are founded on economics that are international and concerns the international capital movement. The worldwide flow of capital theory tells us that the capital moveswithin the countries in response to marginal capital productivity. That means that the capital will flow from abundant to scarce. As a result, the investments will flow from more capital to where there is less. Another aspect of the theory of direct investment is the abroad capital formation rather than capital movement alone underlies, direct investment. Moreover, the “defensive investment” theory by Alexander Lamfalussy is linked that says that that the direct investment will takes place in the growing large, markets, irrespective of their profits.
As per the model, a business makes a direct foreign investment in order to some quasi-monopoly advantages that it holds. A firm from abroad may have benefits over a local one, in spheres such as access to capital, technology, organizational scale or superior management. However, the businesses special assets must be vital enough to counterbalance the demerits of its status of being foreign in the home country. In addition to that, the firm needs to direct investment outside its geographical boundary to earn more profit.
This theory is also based on international trade. It is to the effect that countries with large land areas are apt to have varied climate and an assortment of natural resources, making them more self-sufficient than smaller counties. By “extension” therefore, a country’s size can determine the size of the economy and production scales can determine the level of FDI.
This theory propounded by Raymond and Vernon (1966), explains that in the early life of a product, innovations tend to be centered in a richer industrialized country and later extend to other countries. Vernon further argued that once a product has evolved in a standard form and competing products have been developed, the firm might decide to expand its production frontiers overseas. The resulting expansion tends to capture lower cost locations and new markets in form of exports. This theory also sees investment innovation in three phases. Phase one is called the innovative stage. Here, firms are located in the most advanced industrial countries. Phase two is called the maturing or process development stage where manufacturing process keeps improving. Here, similar firms arise producing the same product in other industrially advanced economies due to increase foreign demand for such product. The third phase is called the mature or standardization phase and allows for the installation of plant and machineries for production in Less Developed Countries (LDCs). Therefore, based on the above, the product cycle theory provides a useful point of departure for the causes of international investment in the form of foreign direct investment (FDI).
FDI can take many forms, the most common of which are:
Direct Investment:
As the name implies, this type of FDI takes the form of directly creating the affiliate of a company overseas. In this case the investing company owns all the shares of the new venture. This is common in developing countries that do not have capital and are facing a crisis while needing foreign capital to create jobs and generate taxes. This is known as Greenfield investment. Greenfield investment in Cameron was championed by the International Monetary Fund (IMF) and the World Bank during the period of Economic crisis. The results are laudable, as presently, the economy has been revamped, many jobs have been creates and wages paid to workers have increased.
In this type of investment FDI is shared by more than one company. If it is capital the shares are clearly defined so that in case of any profit, it will be shared to the capital invested.
The type does its operations when the government of the home country owns few shares in the FDI together with a foreign enterprise. This can be said to be joint venture by which Cameroon has many companies, entities and industries where the Cameroon government becomes the shareholder with other country. Like the Cameroon Airlines and the National Railway Cooperation.
This kind operates when the host country government owns some FDI shares together with a foreign company. This kind of joint venture that has a number of firms, corporations and industries, where the Cameroon government acts as a shareholder with other countries. Examples include the National Railway Cooperation, the Cameroon Airlines, etc.
Country Location
The Republic of Cameroon (Cameroon) a sub-Sahara country is locatedin the central Africa with a surface area of 475,442sq km (land 469,442sq km, water 6,000sq km), is a former German colony that was mandated to British and French rule by the League of Nations after the First World War (1919) and later became a trust territory of the United Nation Organization in 1946, still under British and French rule. It has neighbors Nigeria to the West (1,690km), Lake Chad to the North, Chad to the North East (1094km), Central African Republic to the East (797km), Congo Republic to the South East (528km) and Equatorial Guinea to the South (189km) and the faces the Gulf of Guinea of the Atlantic ocean to the South – West (402km).
The extends of the topography from low land around the sea (0 meters above the sea level) to the highest point in West Africa, Mount Cameroon 4100m high and hot in the Far North. This variation influences the economy to a large extent because it determines the various crops grown around the country since the economy is predominantly agrarian (Arable land: 12.81%; permanent crops:2.58%; other: 84.61 % in 2001).
Cameroon high potential of minerals, forest oil, agriculture, hydroelectricity, fishery and livestock. In addition, since Mr. Paul Biya who was selected as the country president under the election that took place in 1988, Cameroon enjoys relatively stable political situation. However, the northern Cameroon has been attacked by Boko Haram, an Islamic militant group based innorth-east Nigeria, which makes the area unstable.
The investment climate in the Republic of Cameroon is moderately conducive to private investment, largely in part to the economic and business potential despite bureaucratic hurdles and the presence of corruption at all levels of government. The investment climate is improving slowly, as Cameroon begins to experience the higher-grade technology being offered by foreign firms, as well as the application of corporate social responsibility norms and international best business practices. Opportunities are available in every sector, from extraction industries, to agriculture, construction, telecommunications, infrastructure for clean water, and renewable energy resources. The rapidly growing youth population is in need of employment, access to modern infrastructure, and economic development. Disaffected youth are in danger of recruitment by radical groups and terrorist organizations, located in the far northern regions of Cameroon. Job creation is a stated priority of the Government of the Republic of Cameroon (GRC). Government officials appreciate U.S. companies’ willingness to hire and invest in their Cameroonian work forces, because they provide better conditions and proper training.
Cameroon is a greenfield environment for foreign enterprises and investors, worthy of attention due to the tremendous potential for growth across a wide range of sectors.
The GRC wants to attract foreign direct investments. The Prime Minister of Cameroon repeated this commitment in 2014 during his budget speech. Figures from the United Nations Conference on Trade and Development (UNCTAD) show that in 2013, Cameroon received FDI inflows of USD 572 million, which represents a net increase of 8 percent from the previous year. Cumulatively, since 2010, FDI represents 22 percent of the national gross domestic product (GDP); however, compared other countries within the region, Cameroon remains a modest FDI destination in Sub-Saharan Africa. Cameroon does not have policies that deliberately discriminate against foreign investors by prohibiting, limiting, or conditioning foreign investment in a sector of the economy. Foreign direct investment is governed by the Investment Code (Law No. 2002/004 of April 19, 2002) and subsequent texts (for example Law N° 2013/004 of 18 April 2013), which outlines incentives to private investment in Cameroon. Most contracts are regulated by civil law, while a minority of specific sectors is governed by unique regulations.
1) Mining code: Law No 001 of 16 April, 2001
2) Oil and Gas code (www.snh.cm/ReglementationDesHydrocarbures/Gas-Code-in-English.pdf)
3) The Law No 2011/022 of 14 December 2011 governing the electricity sector in Cameroon
4) The Forestry code
The currency unit utilized in Cameroon is necessarily the “Commuaute Financiere Africaine (CFA) franc”. During the year 1999, the rate of exchange was mainly set at I Euro equal to 656.09 CFA francs. However, at the moment, this specific rate remains fixed and assists monetary conversion as well as transfer. Particularly, dividends, returns on capital, specified rate of interest along with principal on overseas debt amount, lease expenses, royalties along with fees of management, along with returns earned on liquidation can be generously remitted in a foreign country. Nevertheless, liquidation of FDI has got to be stated 30 days before with particularly the “Ministry of Economy and Finance” as well as BEAC. Moreover, profit-making transfers carried out in foreign exchange have got to be sanctioned by the Ministry of Economy and Finance. In essence, these kinds of authorizations are customarily granted in case if they do comply with the directives of investment as well as fiscal matters. However, it requires 12 days on average to acquire these kinds of sanction.
The governing authority of Cameroon has the power to expropriate in national interest. Majority of the current expropriation cases took place during the period of construction of significant development infrastructure. These constructions include dams, roadways, advanced ports, plus airports.
The governing authorities ascertain overall compensation level. Particularly, there is an instance linking destruction of undersized markets and residences for a public road expansion project in Douala that is the largest city of Cameroon. There were some claimants who protested that they were not accepting the level of compensation advertised by the government.
Unlawful expropriations are primarily protested and managed by means of standard lawful processes. However, the courts are weak, and different legal complaints take several years to solve and are exposed to corruption. Essentially, there is not anything to point towards probable expropriations in the upcoming future. Fundamentally, expropriations have the tendency to take place at the time of construction of huge projects on infrastructure, making optimum use of land for mainly public good.
The investment code of the year 1990 mentions the fact that, during the period of incorporation or application for acquirement of benefits of investment code, a business enterprise might adopt one of many processes. The processes entail arbitration by regional courts, adjudication by the intercontinental court and global centers of arbitration. As per the Cameroonian regulation and ruling, all these are regimes of arbitration. Particularly, under the charter petitions of the year 2002 redressal or else non-compliance with different provisions mentioned in the charter get forwarded to a specific regulation and a board for competition that was shaped during the period September 2004 however the government has not yet appointed any associate.
Complicatedness in the process of resolving commercial row and disagreement, principally process of contractual rights enforcement, can be considered as one of the grave obstacles in way of boosting investment in the nation. As such, the system of court system is observed to be extremely slow as well as fraudulent, whilst the process of enforcement of legal decisions is also sluggish and fraught with secretarial and official bottlenecks.
Essentially, Cameroon is one of the members of the global center for the resolution of disputes on investment, and is a signatory to the convention on identification as well as enforcement of overseas arbitral awards for the period of 1958. This convention is also popularly referred to as the New York convention that presents the rules along with structure for arbitration of global commercial disagreements, the regulations on arbitration issued by the “International Chamber of Commerce” as well as “United Nations Commission”. During the early period of 2001, CEMAC instituted a court in essentially the N’djamena for evaluating local commercial dispute. Cameroon is a party of the agreement for the association to go with business regulations in Africa.
In essence, Cameroon is a party to the Seoul convention for the year 1985 that instituted the “multilateral investment guarantee agency”. The agency intended to safeguard different non-commercial threat. In addition to this, it is also said to be a participant to the Lome convention that shaped an arbitration method to resolve disagreements between mainly the African, the Pacific States and Caribbean, and different contactor, service providers funded by the “European development fund” and many others.
WTO
The governing authorities of Cameroon have a strategy that intends to meet the terms of World Trade Organization. In essence, the strategy is to avert conditionality on specific goods bought and to stay away from restrictions on flows of foreign exchange.
As per OHADA and appropriate laws of business in particularly Cameroon, financiers take pleasure in the benefits mentioned below during the phase of establishment that might perhaps not surpass 5 years, on and from the issuance date of the sanction:
– release from stamp duty on different commercial institution or capital swell;
– Exemption from specific stamp duty on lease of particularly immovable property utilized solely for specialized purposes that outline an essential division of the investment plan;
– Exemption from particularly transfer taxes on acquirement of immovable property, specific land as well as buildings vital for the execution of investment plan;
– Exemption from specific stamp duty on agreements for the delivery of equipment along with construction of different buildings along with installations necessary for the execution of their investment plan;
– Complete deduction of fees for technical aid in fraction of the amount of the investment carried out, enumerated as per total investment amount
– Release and exemption from particularly Value-Added Tax on specific service provisions associated to the implementation of the project and acquired from out of the country,
– Exemption from different stamp duty levied on concession agreements;
– Exemption from particularly tax on business license;
– Exemption from different taxes plus duties on different equipment as well as materials associated to the investment scheme;
– Exemption from different VAT on mainly importation of specific equipment along with materials;
– Instantaneous exclusion of equipment along with material linked to investment program particularly during operations of clearance.
Fundamentally, the financier might perhaps, as per the investment scale and anticipated economic returns, enjoy exemptions from otherwise decrease in disbursement of following taxes as well as duties along with other fees mainly during the operation phase of a contract, that might not go beyond 10 years,
– Corporate tax;
– profit tax
-Minimum Fee
– Specific Stamp duty levied on loans borrowed, overdrafts, issued guarantees; any kind of transfer of actions, actual profit Ownership otherwise “usufruct” (that refers to a restricted real right on definite profit advantages), company shares or leases;
– Tax levied on earning proceeds from different movable assets specifically during the income distribution mainly as dividends otherwise other forms to be mentioned in the contract;
– Special income tax on overall sums disbursed to foreign corporations for different services rendered or utilized in Cameroon specifically during phases of designing as well as project execution stages, given the fact that they invoices are made at cost price;
– Specific taxes, registration together with stamp duties levied on the transportation of different processed goods;
– Various customs duties along with different other fees together with service taxes levied on importation of different equipment types, various building resources, tools, varied spare parts, transitional products along with consumables that do not necessarily have regionally manufactured substitutes, duties, definite taxes along with other fees for non-tax believed to be a service fee;
– Particular duties on specifically exportation of varied construction along with processing plant equipment;
– Any particular tax, particular duty otherwise charge of any type that is enumerated based on turnover realized by the corporation;
– Any kind of transfer tax, buying or selling of overseas currency and any indirect tax on consumers, counting the exceptional tax on specified petroleum products.
The financier might perhaps also enjoy the following advantages:
– Deferment of deficits subsequent to 5 years, effective from that particular occurrence date;
– Release from particular duties, particular taxes, fees along with fees on capital importation of goods utilized for specific investment scheme.
A specific investment code is a lawful text that specifies particular setting under which particular economic actions are believed to function. In essence, this indicates evidently varied attached incentives. Particularly, this specific document replicates evidently the ideology of the government at specified time period.
Investment codes that have subsisted in Cameroon comprise of the following;
The 1960 Investment Code
The investment code of the year Cameron inspires investment in rural segment and normally replicates colonial strategies of developing export. There are colonial masters namely French as well as British that were involved in developing agricultural segment of the nation that can deliver them with raw materials for their home segments. During the year 1960 investment code of Cameroon also inspires private segment partaking in the economy. Based on the above, it is observed that 1960 investment code positioned only on outlay in agricultural sector. It also focused on export based agriculture.
The 1984 Investment Code
This particular code was not extremely different from period of 1960 investment code which reflects the colonial policies. The code continues to reflect the ideology of balanced development and article five of this specific code mentions that different economic actions that add to balance development of the nation and that enhances the competitiveness of the country’s were inspired. The code of investment was classified into four different schedules that comprise of the following;
Schedule A
Essentially, this schedule is for investment actions over and above 500 million francs and to be situated at the border segments where admission was difficult. Moreover, the actions had the necessity to give in to increasing value added where preference is added to selected technology along with the utilization of regional labour.
Actions under this specific schedule need to be over and above 2500 million francs and need to be situated in different non-port segments of border. Essentially, investments carried out under this particular schedule have sectors identified by governing units
This specific schedule is mainly for different small as well as medium size businesses. Particularly, this entails investment actions lower than 500 million francs. Specifically, for business enterprises to meet the criteria mentioned under this agenda, it is necessary for Cameroonians to hold 65% of the share capital. Essentially, the primary aim of this schedule is to encourage regional entrepreneurship and development of community.
Actions mentioned under this specific schedule are the ones regarded to be very crucial for economic development of the nation. In essence, it can be observed under regulations mentioned section 29 of this code, businesses running in economic areas are identified in the process of execution of economic, social as well as cultural development schemes. Business enterprises to function under this specific schedule have the need to sign a convention for establishment with mainly the government and need not go beyond a functional period of 15 years. Essentially, the convention also mentions the common conditions for the purpose of manufacture, guarantees of government associated to steadiness, admittance to the market for labour, liberty of selection of different suppliers, proper accessibility to water as well as electricity, suitable transportation of different goods along with ports usage.
The 1990 Investment Code
This investment code was first established during the period 1990 as per Ordinance numbered 90/007. Principally, the Cameroonian government intends to lure investment from global business or individual units so as to stimulate the economy of Cameroon. The regulation presently overseeing investment in the area is mainly the investment code of the year 1990. Above all, its incentives are said to be similar to local as well as foreign investment. In particular, the normal advantages of this investment code are presented to diverse new along with already existing firms. However, the primary objectives is to promote novel investment, promoting development of export, generating novel jobs for particularly Cameroonians, and inspiring technological shifts.
Institutional outline for both public as well as private partnership are there for the execution of projects that are large-scaled and the ones that call for technologies as well as finance. Referring to Law numbered 2006/012 for the period 2006 it can be said that there are common rules for Partnership agreements that establish the common conditions for partnership contracts. These are also referred to as PPP Law (as per “Law numbered 2006/012)” that was propagated during the period 2006. Essentially, the law delivers the fundamental structure for the design and handling different projects of PP. This includes setting up of institutions as mechanisms of support.
As per the PPP Regulation (Law numbered 2006/012) specifies that the Board that is necessarily the decision making limb, takes in the chairman, the secretariat, and committee for advisers with several representatives from Presidency, representatives of the Prime Minister’s Office (PMO), council members of the Ministry of Public Work as well as other associated institutions. Essentially, there is a Board that evaluates the eligibility of various proposals for projects under PPP. In actual fact, the analysis is handled by MINEPAT by means of the Board. Procurement of cluster of contractors is carried out on the basis of technical evaluation and estimate of different project proposals.
Approximately there are around 15 projects that are accepted and executed since the period of institution of PPP Regulation (referring to Law numbered 2006/012) till the period of 2016.
Research Design
The learner will utilize a descriptive as well as analytical design of research. This design is said to be suitable for this study as it delivers a multifaceted advance for collection of quantitative data and can deliver statistics regarding a specific occasion. For the purpose of the present study, time series data is acquired for the period (2006 – 2016) that in turn can be utilized for describing the present state of the research study.
For the purpose of the present study, the learner intends to collect Secondary data from the World Bank, exclusive data from Investment Promotion Agency located in Cameroon, requisite data from World Development Indicators as well as data from Africa Development Indicators. Particularly, this specific data will mainly be on overall quantity of flows of FDI, flows of resource of PPPs along with Total Economic Investment for telecommunication sector, energy sector, potable water, different public works and investment for agricultural segments of Cameroon for the period 2006-2016. Essentially, these flows shall be expressed in US Dollars every annum.
Fundamentally, the secondary data acquired for the current study shall be evaluated analyzed utilizing the software “Statistical Package for Social Scientist (SPSS) version 20”. In this study, the tables along with different other diagrammatic presentations shall be put to use to present the analysed data for easily understanding the outcomes.
The learner has made use of a time series yearly secondary data over the period (2006-2016). Essentially, the data were pronounced by the World Bank as well as other institutions. Requisite Data were also collected from “Investment Promotion Agency”, exclusive pointer were collected from “World Development Indicators” as well as “Africa Development Indicators”.
As per the model projected by Marbuah and Frimpong (2010), it can be hereby mentioned that:
In this case, EI is necessarily the dependent variable that stands for economic investment as well as definite explanatory variables as
In particular, the economic model presented in the first equation can necessarily be changed into an econometric model since natural logarithm is implemented partly for the purpose of obtaining linear exponential trend (in case if there is any) essentially in time series.
In this case, definite coefficients as α1, α2 represent the parameters of specific respective variables. In this case, α0 reflects the constant term in the model, t indicates towards time plus µt denotes the error term.
In the current section under consideration, this study institutes a conceptual framework based on which different determinants of mainly economic investment shall be analysed. Particularly, the empirical structure implemented in this area of analysis entails regression of financial investment on certain explanatory variables. Also, the analysis of different determinants of financial investment can be carried out by means of diverse ways that are mentioned below.
Oshikoya (1994: 586), Ghura and Goodwin (2000, 1822) opined that economic investigation recommends that there exists a long-run equilibrium association between different economic variables engaged in economic hypothesis under examination. Useful econometric evaluation in attempting to approximate these long-run associations implicitly takes into consideration ‘constancy doctrine’ of different variables engaged (Gujarati, 2003:820). As such, averages and variances are the constant and are not reliant on time. This empirical association can be articulated as:
In this case, Yt =financial investment carried out in different levels, α and β reflect different parameters that need to be approximated (Ghura and Goodwin, 2000: 1822). Again, Xt is illustrated as observable variables reflecting different factors exerting impact on financial investment in a nation. Again, εt represents the random error term that has a mean zero, reflecting measurement error along with unmeasured plus immeasurable facets Harris, 2000: 62).
This particular specification when examining different determinants of private investment are normally utilized. It can be hereby recognized that studies utilizing this structure are commonly interested in examining whether different variables need to be counted in this specific model (Harris, 2000: 63).
Unit Root Test
In case if a data set on time series is said to be stationery, then it implies that mean, variance plus covariance essentially remains identical. These are said to be time invariant.
Gujarati (2003) states that examination for stationerity is carried out to avert different spurious outcomes of the OLS approximations, for instance, it is hereby evident whether PPPs as well as FDI distributions that are stationery in nature. However, this cannot be ascertained easily by means of examination of plot of a time series. In case if the level of specific series is non-stationery in nature but the variance of the specific series is said to be stationery then the entire series has “unit root”, “integrated of order 1”, otherwise “difference stationery”.
For the purpose of the study at hand, examination for the existence of unit root shall be carried out by utilizing the “Augmented Dickey Fuller” test in which the test for null hypothesis mentioned that the series necessarily has unit root. Moreover, AIC shall be utilized to select the maximum length of lag of a particular series that can be utilized in the ADF test.
Autocorrelation
A general issues in utilizing regressions of time series is that specific estimate residuals have the tendency to be associated across a period of time. That is to say, the residuals at specified time “t” can be correlated with essentially the residuals in essentially the time “t-1”(Hamilton, 1994). The current study intends to examine existence of autocorrelation by means of the Breusch-Godfrey test (Green, 2000). Also, “The Breusch-Godfrey Test for examination of serial correlation is utilized to examine autocorrelation among different errors and is apt irrespective of the fact that there are different dependent variables that are lagged. The null hypothesis for the current study is that there exists no serial correlation particularly up to a pre-mentioned lag order.
In essence, the classical linear regression supoposes that variance registered for the error term remains constant over a period of time. This means that, the error term is necessarily homoscedastic. In case if the error term variance is changing over a passage of time, then in that case, the supposition of homoscedastic gets violated directing towards heteroskedasticity. Essentially, the Ordinary least squares estimates are said to be consistent mainly in the case of heteroskedasticity. However, the conventional enumerated standard errors are said to be no longer convincing (Green, 2000). For the purpose of the present study, the learner intends to carry out heteroskedasticity test that shall be taken into consideration utilizing the Breusch-pagan examination mechanism in which the null hypothesis referring to error term variance is constant.
Multicollinearity takes place at the time when there are numerous time series otherwise variables that can be represented or generated as a combination that is linear in form of diverse other variables presented in the model.
However, in the study at hand, the learner shall examine multicollinearity utilizing the “Variance Inflation Factor “. In essence, the principle is essentially the variables that are having a specific VIF greater than 10 and are considered to be a source of multicollinearity. In order solve this issue, either one of the variables can be dropped or sample size can be increased.
Essentially, the Ramsey Reset test refers to a specific test that permits one to see if there are omitted variables in the current model that might influence the results of the study. As per hypothesis there are no omitted variables. Particularly, at level of significance of 5%, null hypothesis shall be accepted in case if p-value of current test is greater than 5%.
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