In the early 21 century many Chinese companies ranging from a small shop to medium size enterprises in various industries could be seen positioning themselves in various parts of Africa, and Cameroon in arriving to complement other multinationals from other investing countries like US, UK, France etc. that have been there to a lesser scale and or unnoticed and thus strengthening and ramifying their tentacle throughout various industries. It sounds interesting for one to see many Chinese people right at the sub urban settings and villages in Cameroon undertaking any imaginable economic activity from various industries. This has drawn in so many questions of various works of life and the impact and implication of FDI in Cameroon. The research proves that Chinese FDI has effective and efficient positive impacts on the Agriculture, Research and Development, Infrastructure, Producer Goods i.e. import and export to enhance other sectors. Mining and other areas that were not examine in this research. The implications of these investments to China and has boosted the import and export in these area to china and Cameroon. The relevance of these investment and Challenges faced by in Cameroon, basically, the FDI has a great impact on the employment innovation and research and development that edify the domestic country hence improve the growth of the domestic country.
CHAPTER ONE: GENERAL INTRODUCTION
1.1: BACKGROUND OF THE STUDY
The attraction of foreign direct investments (FDI) is one of the most pertinent strategies for developing countries to enhance capital formation and technology transfer in order to generate economic growth. Cameroon is not exception, as a developing economy, or emerging country is striving attracted significant FDI in the last decades pushed by fluctuations growth GDP rates and low-tech capabilities amongst other. In this perspective Chinese foreign direct investment spearheaded since the establishment of the diplomatic relations in 1976. The relevance or impact of the Chinese FDI on Cameroon’s economic performance and on the development of key industrial sectors makes up the main issues of this research. An attempt to quantify the determinants and impact of the FDI growth rate is pertinent. Different approaches to accomplish its relevance to the economies of Cameroon and to Chinese economy on the one hand.
Chinese investment in Cameroonian particular dates back to the era of establishing diplomatic relations with the fifty-four nations that makes up Africa. But the flow of china’s state owned as well as private companies witnessed a boom at the dawn of the twenty first century. The Chinese government has for the past decade increased the strategic investment in various sectors of the economy in Africa with Cameroon not left out from state owned investments to boosting support to the Chinese private owned companies employing various strategies to maximize their objectives and goals. Notwithstanding, the Chinese government has also not left the limping state of Cameroon with weak financial, humans and material resources to this regard, they promote support that could optimize the performance of various states companies in Cameroon. Strategically Chinese government has as a strategy to strengthen the human capital through various methods of training through joint investments transfer knowledge and on the job skill to strengthen Cameroon counterparts. To recap, the Chinese private as well as state owned companies invest in most of these sectors of activities in Cameroon such as; Oils and naturals gas exploration 19 % Rails/Roads rehabilitation 19.55% ,Other mining 10%, Hydroelectric dams 9.20%, Iron ore 7.40%, Copper 6.90%, Civil construction5.90%, Manufacturing 3.70%, Uranium 2.30%, Airport 2.0%, Aid 1.80%, Port construction1.60%, Water 0.50%, Retail and commercial activities 11.00, Gold 0.70%, Agriculture and others 4.02 % (Konings, P. 2007)
1.2: STATEMENT OF PROBLEMS
Notwithstanding fierce completion may be part is the effect of FDI to domestic firms, are there positive effects that FDI improves the local economy and how? Not undermining there are benefits and opportunities that the Chinese companies have impacted in Cameroon, there may be growing dissatisfaction and discontent among various stakeholders for the presence of Chinese companies in Cameroon, local Chinese workers at a limited extent to governments, local government, as well as the local African indigenes, communities to a greater magnitude. This is driven by fear of competition! Really it is vital to examine critically the relevance of Chinese FDI or Chinese firms to the economy of Cameroon. To this perspective, “It is unanimously agreed (review literature) that firms moves abroad to reap the benefits of the advantages in the form of location, firm-specific capabilities or and in the markets, with local firm capabilities there will be fierce competition that may limit the performance of the domestic firms. Irrespective of these potential challenges what the positive effect that FDI impact on the local or domestic economy in terms of the growth?”
1.3 RESEARCH QUESTIONS
This research seeks to answer the following research questions.
The main research question is a follow:
1. what is the relevance of Chinese FDI to growth of the receiving economy?
Specific research questions are as follow:
2. Does Foreign Direct Investment Accelerate Economic Growth in receiving economy?
3. How does China’s investment impact Cameroon growth and development
4. What are the challenges faced by Chinese companies in Cameroon?
5. Why is there misconception in Chinese companies doing businesses in Cameroon?
6. What are the effects of the Chinese companies in Cameroon?
Growth depends upon investments, be it internally or externally driven, increases assets and infrastructure development. Thus, Foreign Direct investment (FDI) in Cameroon economy shows that there is a good trend of investment which ultimately results in increasing firm growth and the ultimate domestic growth of Cameroon thus increasing trend of FDI increases the GDP of the receiving country, therefore Chinese FDI has a positive impact on Cameroons economic growth
1.5: OBJECTIVES OF THE STUDY
The research seeks to determine
1. The relevance of Chinese FDI inflow and its impact on GDP and Trade growth between the two economies.
In this perspective the research contributes to the literature by examining China’s investments in the context of a single country, thereby providing additional literature that could be used to optimize the efforts between the two economies in driving development.
Furthermore, this research seeks to add more light stakeholders and controversies surrounding Chinese investment in Cameroon and Africa in general and all those interested in exploring some truly fascinating issues that underlies China’s investments to Cameroon and Africa
1.6 SIGNIFICANCE OF THE STUDY
Chinese companies in Cameroon have some objectives, some of which are to impact the home economies, as well as are some challenges. Knowing these goals and challenges can help determine better ways to limiting these challenges and provide the solutions. It is very pertinent to acknowledge that these are objectives and challenges faced by Chinese companies. Going further to raise the real problems are a key to redress and optimize the main goals of the FDI and growth.
This also provides a means to communicating issues pertaining to the Chinese companies doing business in Cameroon in particular and Africa in general. It also helps induce the need for a faster and easier means to looking for solutions. In so doing provide each party to the challenge with first hand in formation, degree or the magnitude of the challenge as well as the views of other stakeholders.
Therefore, this work may be significant to the following stakeholder; Chinese investors, various state government, customers, environmentalist as well as the Chinese government.
Summarily the main objectives are to; the research envisages improving the understanding on the major impact of China’s investments in Cameroon and Africa as a whole. Compliment already existing literature on China’s investments to Cameroon This study could serve as a learning paradigm for stakeholders and actors when one looks at the controversy that surrounds China’s investments to these recipient countries.
1.7 DELIMITATIONS OF THE STUDY
This work will use exemplary Chinese companies investing in Cameroon. Further we use Cameroon as a focal point so as to have an impact in the research, which can provide credibility and to enhance the government wish to attract more FDI from china.
1.8 LIMITATIONS OF THE STUDY
This work is limited to Cameroon as stated above as opposed to the study of Chinese FDI in the entire Africa. It will also dwell only on one research question as opposed to the many questions that we have in the work. Furthermore, it is narrowed to a period of time from 1980-2016. Therefore, only one research question will be examined but due to time limits and resources, others could have been examined.
1.9 RESEACH METHODOLOGY AND STRUCTURE
The data is a time series data with Cameroon as country of study over 1980-2016. Time series data analysis can be defined as a suite of measurements occurred at (ordinarily- same-interval) systematic moment in time.
Further Regression analysis is an extremely important method that will be used in exploratory and confirmatory data analysis to investigate interactions between factors i.e. the interaction of Chinese FDI, Export, Import and inflation on economic growth in the receiving country Cameroon.
Figure 1:Structure of the thesis
CHAPTER TWO: LITERATURE REVIEW
China’s growth and its huge capacity to move in thirty years from under-development and extreme poverty to an emerging global power and one of the largest exporter of manufactured goods as well as services has attracted the attention of many developing countries particularly Africa. China has served as a development template for Africa and an alternative source of trade and finance from Africa’s old guards or traditional development partners. The impact of China on African economies has been diverse, depending in part on the sectoral peculiarities and composition of each country’s production and capabilities. In general, China’s increased engagement with Africa has generated important gains for African economies. This work reviews the different impacts implications of Chinese companies in Africa, quantifies the advantages and challenges, and policy solution suggestions necessary to maximize the development impact. One pertinent consideration in reaping the full benefits from Chinese trade and investment is substantial improvements in each stakeholder understanding of what is to be done particularly governance in African economies.
The theories of internationalization encompass a wide variety of explanatory elements that follow the firms’ responses to distorted, imperfect markets. Whilst traditional theories were concentrated on foreign direct investment and on how multinationals enlarged their involvement in international markets, recent theories have focused their attention on small to medium businesses following either a staged model or a networked approach. There has been wide disagreement regarding all theories of internationalization. This paper provides a light literature review on the main theories of internationalization and concludes that due to the emergence of a new polycentric economic world a new theory encompassing new important factors is in high demand.
2.0 Traditional Theories of multinational companies
The theories of internationalization encompass a wide variety of explanatory elements that follow the firms’ responses to distorted and imperfect markets. Whilst traditional theories are concentrated on foreign direct investment and on how multinationals enlarge their involvement in international markets, recent theories also focus their attention on small to medium businesses following either a staged model or a networked approach. There has been wide disagreement regarding all theories of internationalization. This section provides a light literature review on the main theories of internationalization and concludes that due to the emergence of a new polycentric economic world a new theory encompassing new important factors is in high demand
The basic traditional view of the multinational firm, (2) from the early analyses in the 1960s and early 1970s, a multinational firm is defined as one of a large industrial company with operations in multiple countries and a centralized chain of command. By definition, a multinational firm has activities in more than two countries. Although this simple definition is not widely used, it is a reasonable baseline from which to begin thinking about such firms. If the firm has sales operations in multiple countries, production in multiple countries, or some other permutation of international business activities physically present in multiple countries, then it is multinational company or firm.
2.0.1 Fundamental concepts of Traditional Theories of FDI
(i) Comparative Advantage and Gains from investments
Comparative advantage is one of the most fundamental concepts in trade theory. A country has comparative advantage in a good if has a lower opportunity cost of producing the good than an-other countries. While other countries are expected to export goods for which their autarky (no trade) relative prices are lower than other countries. In so doing countries gain from trade when they have different in relative prices of goods.
(ii) Hecksher-Ohlin Theory
one of the reasons why countries might have comparative advantage in a good is that countries differ in their factor endowments. There are two factors, capital and labor disparities. The home country is the capital abundant one, the one with more capital per unit of labor. One of the goods is more capital intensive than the other: it uses more capital per unit of labor than the other good. Countries have access to same technologies – factor endowments only differs between countries. Under free trade or internationalization, the capital abundant country (home) is expected to produce relatively more of the capital intensive good than the other country. Capital abundant country (home) therefore is expected to export the capital intensive good if no strong bias in consumption. Owners of capital in the capital abundant country (home) benefit due to seeing their rents rise relative to prices of goods, while owners of labor (home workers) suffer due to seeing their wage fall relative to prices of goods. As long as capital endowments in the two countries are not too different and which good is capital intensive is the same in both countries, the wage and rent will be the same across countries under free trade with no transport costs, “but in reality, we can never do away with the transport cost”
Daniels, Readebaugh, and Sullivan (2004), explain that FDI can exist solely when the investment, in addition to at least 10 percent shares, give the investor the control of the company. They emphasis on the element of control, they argue that, though a foreign investor may own 100 percent shares of a company, he may not have the control of the company if regulations in the host country do not permit this. As it is in every country to have regulations just like in Cameroon.
FDI is an investment resulting from the desire of having direct or partial ownership of operations outside the home country as postulated by Keegan and Green (2002). Therefore, the concept of FDI could be seen as owning a foreign investment and making the highest possible gain from it hence exercising control over the entity. Therefore FDI, in addition to the transfer of resources (capital), involves control. Most investing company rather than doing what is supposed to be best for its operations in a country may rather do what is best for their operation in that country that is why it is important to talk of control motive in investment operations.
Proponents of FDI explain that government should not have interest in private investments from abroad. However, critics are of the opinion that the national interest of a host country will ache if MNEs make decisions not in line with its own national or global objectives. For example, a multinational corporation can undertake decisions about employment or relating to an industry that is off national pride from its headquarters. This means that control is a huge concern for host countries. Recipient government’s controls do not have negative impact on the firm; rather, ensure sustainability to the benefits and advantages of both the home and foreign countries. Charles Chetcho (2015).
2.1: Theoritical and empirical literature
2.1.1 China’s Foreign direct investment to Cameroon
Chinese investment in Cameroon represents a small 3 to 4 percent in 2011of the growing piece of total Chinese outward foreign direct investment (OFDI) worldwide. Africa is the third largest recipient of Chinese OFDI behind Asia and Europe, totaling nearly $90 billion. (16) The outward foreign direct investment from China has increased considerably in recent years, and China is the source of FDI in a great number of host African economies. While the open-door policy in the late 1970s lead to modest outward FDI, the liberalization associated with Deng Xiaoping’s tour of South China in 1992, and the Go Global strategy initiated in 1999, lead to boosts in Chinese outward FDI, and dramatically fueling the outward FDI in recent years which has led to more substantial increases. While China accounted for 3.3% of total outward investments from developing countries in 1996, its share had risen to more than 10% in 2012. This makes China the 3rd largest developing country in terms of outward FDI. (16)
Cameroon, just like other African countries, sees FDI as an important way to boosting its economic growth. Karim and Ahmad (2009), describe that in developing countries like Cameroon, leaders think or believe that FDI will generate more capital for investment, and assist domestic firms to be productive and adopting efficient technology. Just like most fast-growing economies today depend on Capital inflows from FDI to boost their growth.
Johnson (2010) argues that, African emerging nations like Cameroon need FDI to speed up their determinations in economic enlargement. Cameroon’s leaders together with the Cameroon population that more capital inflows from FDI into the country would lead to the creation of employment opportunities (as in the example of the Cameroon Kribi port project) which was as bringing development and growth to the locals in terms of employment, transfer of skills and further increase productivity in the area for many locals, this in turn wasn’t the case.
There have been on-going debates as to why Chinese investments in Africa and to what extend these investments has influenced growth and development in the African continent. This debate could be seen in the lights of the pessimists’ schools of thoughts who argued that china’s FDI in African host countries has a negative impact. Meanwhile on the other side of this argument the optimistic school argued against negative impacts of china’s FDI on the African continent.
Kiggundu (2008) suggested that Chinese investments are resource-driven. “Results show that largely driven by monopolistic state-owned enterprises (SOE), china’s outward FDI is concentrated in a few large resource-rich African countries characterized by high risk governance environments and poor global competitiveness”
Elu & Price (2010) said, growing trade openness with China is not an avenue of higher living standards in the long-term for SSA. Increasing trade openness with China in the long run will have little or no significant increase in the standard of living and productivity of the Cameroonian Economy if this openness is not being checked or regulated by the Cameroonian government, by their investments agreement policies and implementation put in place even before investment in done. Therefore, a favorable investment ground is important to be established to favor both the host country and the partner. Asongu (2016) suggest that increasing trade openness with China is not a long run source of higher living standards for sub-Saharan Africa”.
Chemingui & Bchir (2010), Africa will not benefit much from Sino-African relations because the continent is characterized by low levels of diversification and small productive capacities. Results by Asongu (2016) also show that even in the case where China will offer more market access for African countries, the situation will not improve much for most of them. The reason is that Africa is still suffering from small productive capacities and a low level of diversification of its economy.
Power (2008) The relations between Africa and china are harmful to SSA’s industrial growth because it challenges the mainstream wisdom of industrialization being a crucial development strategy component. “These challenges are expressed through a combination of direct impacts for instance the bilateral relation between countries and indirect impacts (reflected in competition in third country markets). These impacts are greatly harmful for SSA’s industrial growth, as expressed through its recent experience in the exports of clothing to the US under AGOA (African Growth & Opportunity Act). ‘If Washington Consensus policies prevail, these harmful impacts will be sustained and deepened’ Asongu (2016).
Also, Kaplinsky & Morris (2009) suggest that SSA should device rational policies to benefit from the exploitation of its natural resources. SSA countries should make the most of the opportunities opened to them by their resource-base by adopting a similarly integrated and focused response to Chinese and other investors who seek to make use of the continent’s natural resources.
Friedman (2009) explained that, China is transforming Africa by exporting entrepreneurial talents and economic dynamism. Most African state sees Chinese investment as a means to an end, by ending poverty and transforming the African economy towards growth, in the context of this study, the author align with the fact that china is already transforming Africa through entrepreneurial talents, and even cultural dynamism. This is due to the corrupt and weak African regime, China is found to be exporting entrepreneurial talent to Africa and to be dynamizing the African economy through East Asian practices.
Drogendijk & Blomkvist (2013), Chinese firms have similar motivations to Western firms. They find that African countries enjoy a higher likelihood of Chinese outward FDI than the rest of the world. Moreover, they find that Chinese firms invest in African markets for market-seeking, natural resource–seeking, and strategic asset–seeking motives; hence, the motives for Chinese FDI in Africa seem to match those of Western firms’ investments in global markets.
This study goes beyond the main determinants of natural resource seeking, profit and market seeking to establish the reason and impact of Chinese FDIs in the Cameroon.
2.1.2 How much is Chinese investment in Cameroon
How much has China invested in Cameroon? Is a simple question that any common man would wish to know, the recent Sino Africa summit in Beijing china saw every speaker ranging from then president HU Jintao to many African leaders and government in attendance cheers up the cooperation saying “China’s investment in Africa has increased a staggering 30-fold since 2005, with 2,000 Chinese firms now present in 50 African countries.” Let’s look first at the arithmetic of the whole show, here are the annual official figures for Chinese investment in Cameroon from MOFCOM:
FDI inflows to Cameroon, traditionally low compared to the potential of its economy, declined even further in 2016, reaching only USD 128 million, compared to USD 627 million in 2015 and USD 726 million in 2014 (UNCTAD, 2017). Consequently, net FDI stocks represent a modest percentage of GDP (7% in 2016). Most of FDI come from the European Union, particularly France and Germany and target the mining industry, including oil extraction. (Source: INS 2004) and INS 2006)
Wishing to know how many Chinese companies are active in Cameroon is another critical point. The figure from China’s Ministry of Commerce states that there are 2000 firms in all the ten regions of the countries, but to be more precise, numbers from national institute of statistics shows that are mostly in littoral, center, NW, SW, South and east and Adamawa. The investments that have gone through and acquired approvals for operation, as of March 2013. (17) is encouraging and still have much potential to grow. Some firms have multiple projects. On the other hand, the greater percentage includes a number of small enterprises that including all the Chinese shops so the true number of “firms” is undoubtedly higher.
China is stepping up strategies in improving the level of its investment in Africa. Currently, over 2,000 Chinese enterprises are investing and developing in more than 50 African countries and regions, and cooperation fields have expanded from agriculture, mining and building industry to intensive processing of resource products, industrial manufacturing, finance, commercial logistics and real estate. The figure bellow illustrates the Distribution of China’s Direct Investment in Cameroon .
Project Recipient sector Value in million USD
Construction of the Yaoundé conference center culture
Construction of the Lagdo hydroelectric dam Electricity and water
-supply of tractors to ministry of agriculture
-dissemination of mushroom cultivation in Obala agriculture
Protection of the banks of river Benoue agriculture
Financing of the Lagdo rice cultivation project
Construction and furnishing of a tailoring workshop for handicap women in Yaoundé and a hostel for trainers Social work
A200 bed gynecological-obstetrical and pediatrics hospital in Yaoundé health 10
Table 1: Completed projects by Chinese Firms
2.1.3. Driver of china’s foreign direct investment in Cameroon
Driven by a desire to secure natural resources and tap new markets, Chinese state-owned enterprises (SOEs) have made large investments in Cameroon Today, China not only recognizes Africa and Cameroon in particular as a source of energy and natural resources but also as a rapidly expanding market for Chinese goods and services. Moreover, Cameroon and Africa in general represents an additional destination for Chinese manufacturing to move offshore as profit margins on the mainland deteriorate and the government promoted policies seeking to move the Chinese economy up the value chain.
While private Chinese firms are becoming increasingly active in many industries, private companies make up the lions share while SOEs make up a minute share of OFDI in Cameroon. This is largely a result of the maturity and size of SOEs that have paved the way for the development of the Chinese private firms in Cameroon, which provide them efficiency with greater capacity to seize opportunities in more volatile environments. Leading state-owned firms include China National Offshore Oil Company (CNOOC), China National Petroleum Corporation (CNPC), China Petroleum & Chemical Corporation (Sinopec), and China National Machinery Industry Corp (Sino Mach) just to cite a few that operates in Cameroon.
With numerous strategies in play, the Chinese government has supported Chinese enterprises in establishing a number of pilot SEZs throughout in Cameroon and in Africa. Notwithstanding the challenges, the Chinese government has regularly made pledges of state-sponsored economic cooperation with Cameroon. These zones, developed by both Chinese SOEs and private firms, are intended to help China’s own restructuring, allowing less competitive and labor-intensive industries, such as textiles, leather goods, and building materials and others to move offshore
Projects Recipient sector Value (million USD)
Renovation and extension of the Buea hospital. health 5.20
Renovation of the Yaoundé conference center culture 4.00
Construction of the Yaoundé sports palace Culture(sports) 30.00
Construction of houses for personnel of the gynecological-obstetrical and pediatric hospital health 3.00
Construction of a primary school in Mvomeka education –
Modernizationof telecom network between CAMTEL and HUAWEI Telecom 45.20
Table 2: Completed projects Financed and Chinese Aid.
projects Recipient sector Value (million USD)
Rehabilitation and extension of water supply system in Douala water 27.60
Construction of 1000 to 1500 social accommodations Social work 50.00
Agreement on projects to be defined by both parties in the future 9.20
Exchange of letters for construction of a gynecological-obstetrical and pediatric hospital in Douala health 0.90
Exchange of letters for construction of primary two school education
Exchange of letters for the construction of a gynecological-obstetrical and pediatric hospital in Yaoundé health 0.13
Table 3:Completed projects Financed and Chinese Aid.
CHAPTER THREE: METHOD AND PROCEDURES
3.0 Background of the study area
Analyzing the Motivations and Implications of the Chinese Multinationals Companies in Cameroon and its implication is a critical move that any business and business experts as well as scholars can be longing to understand. Over the past years, a new generation of Chinese multinationals as well as private firms has set out to conquer global, African and the Cameroon markets in particular. Seeking to analyze the nature of the phenomenon; illustrating the reasons behind the international expansion of Chinese companies, motivation, the factors that facilitate and or hinder this process and finally the implication of this expansion which could be either positive or negative are examined. The entry modes are further examined and the strategic implications to Cameroon and China.
3.0.1. Sino-Cameroonian relations in Brief
Sino-Cameroonian relations is mainly driven by china’s willingness to increase the number of diplomatic allies and showcase its solidarity with the ‘third world’ since the early 1970s and, to a lesser extent, Cameroon’s non-alignment policy and hopes to weaken France’s dominating influence on its economy and foreign affairs as with many other African countries, Cameroon’s relations with China are initially politically significant but economically marginal. The establishment of diplomatic relations between Cameroon and the People’s Republic of China (PRC) in March 1976 and the end of any official link between Yaoundé and Taipei were important for both sides (Oyono D, 1990).
Taking advantage of the Sino-Western rapprochement, Ahidjo visited China and met Mao Zedong in 1973: he was the first African president to travel to this country after the most chaotic part of the Cultural Revolution (Fodouop K, 2010). In the following years several visible and symbolic infrastructure projects were launched in Cameroon, including the construction of a new Presidential Palace (Unity Palace) and a National Congress Hall (Palais des Congrès) in Yaoundé which was inaugurated in 1977 and 1985, respectively). Additionally, a large hydroelectric project, the Lagdo dam in the north of the country, was financed with a $75 million Chinese loan (completed in 1982). In 1972, the first trade agreement was signed followed by the second signed in 2002), and in 1984, a cultural cooperation accord was concluded. In the same period of time, Beijing launched a medical assistance program, turning Cameroon into a window for the rest of the continent Khan S A, (2014) As early as 1975, it started to send Chinese medical teams and it offered to build two hospitals equipped with Chinese doctors, one in Mbalmayo, south of Yaoundé opened in 1975, and the other one in Guider, in the Northern Region (1976). This led to a very close partnership in the fight against malaria that took off not long later. This later development was for a long time the most specific feature of Sino-Cameroonian cooperation Afrodad, (2011).
3.0.1 Chinese FDI in Cameroon
It should be noted that Cameroon as an investment friendly environment, because of rampant corruption (ranked 144 in 2013 against 134 in 2011, according to Transparency International), 21 is not considered very propitious, and is in any case less attractive than a number of other Africa economies like Ghana or Ivory Coast. The stringent measure to fight corruption has also encouraged Cameroon government embarked on attracting and to convince Chinese companies to invest more in Cameroon, particularly in the oil and the manufacturing industries, but not with much success.
China has long time been investing much in the socio economic political and financial capital in Cameroon with the establishment of the diplomatic relations. After the establishment of diplomatic relations between the two countries the relationship has been dominated by the completion symbolic and important projects and the regular exchange of socioeconomic and political teams and delegations. As with many Sino-African economic partnerships, the Sino-Cameroon properly took off in the late 1990s and in the early 2000s.1 Today, China is one of Cameroon’s key partners in trade, development, and investments particularly, infrastructure projects (MINEFI (2007).
China’s growing presence in Cameroon has decreased engagement with other key countries traditional partners like France etc. The decreased engagement from France, and other Western nations, has created, in Cameroon as elsewhere in Africa, more room for China to step in Political stability have contributed in facilitating growing involvement in Cameroon’s development strategy and international positioning of strategic foreign direct investment (Wenzel E, 2010)
Table 4: Distribution of Cameroon’s foreign direct investment (FDI) inflows, 2003–2013 (million $)
Distribution of Cameroon’s foreign direct investment (FDI) inflows, 2003–2013 (million $)
(Sources: total FDI inflow: UNCTAD, ‘World Investment Report 2013: (accessed 10 October 2017). China: China Commerce Yearbook. Beijing: China Commerce and Trade Press, 2013, p. 231).
3.02. Sectors of impact of Chinese FDI
The key sectors significant to Chinese FDI have been made are oil, forestry and agriculture and general construction and distribution industries.
Oil and mining
Oil and mining dominate in the primary sector until recently, Cameroon has been a declining crude oil producer and exporter, with an output of 55,000 barrels per day (bpd) in 2015 (against a peak of 185,000 bpd in 1986), and despite this there are prospects of growth in FDI inflow from china, in 2014, it hoped to nearly double its production to 82,000 bpd. Although China started to buy a significant amount of Cameroonian oil in the mid-2000s, it only became major actors in the oil industry in 2011, with two large Chinese investments being made in this sector (Shen, Xiaofang 2013).
In April 2009, Yan Chang co Ltd, signed a $62 million production-sharing agreement with Société Nationale des Hydrocarbures (SNH, National Hydrocarbons Corporation) and started to explore oil onshore in two blocks that it had acquired for $18 million, Yan Chang controlling 75% and SNH 25% of the shares of Yang Chang Logone Development Holding, the joint venture created by the companies. In 2011, it successfully drilled an oil well in the Zina–Makary block in the Logone Birni basin of the extreme north region of Cameroon, close to Chad. In the mining industry, the only noticeable investment has been made by Sinosteelcam, a subsidiary of Sinosteel, for exploring iron in the Lobe concession, close to Kribi in the South region Renard, Marie Francoise 2011)
Forestry-timber In the timber industry, the only important Chinese investment goes back to 1997 when Vicwood, a Chinese group headquartered in Hong Kong, acquired the French group Thanry, becoming the largest timber company in Cameroon, controlling 10–12% of the total area of concession (570,000 ha). There are only nine timber companies in the country, exploiting 23 logging concessions ( Mbatu R S & KM Otiso 2012)
In the agricultural sector, the first Chinese investment was the establishment in 2006 of a Sino-Cameroonian joint venture, called Sino Cam Iko, that would exploit 100,000 ha of land leased for 99 years from the Cameroon government. The plans were to cultivate rice, cassava, maize and other farming products on three different sites: 2000 ha in Nanga–Eboko (in the Centre region’s Haute-Sanaga department, 170 km from Yaoundé); 4000 ha in Ndjoré (in the same area, 100 km from Yaoundé); and another 4000 ha in Santchou (in the West region).
Then estimated at $62 million, the project is to be financed by FOCAC funds via the Exim Bank. However, there has been some uncertainty about the amount of the realised investment since, to date, only an agricultural demonstration centre and a pilot project using 2000 ha for cultivating fruits, vegetables and various varieties of rice have been built. On this site, a preliminary 120 ha has been used to test various varieties of rice. Sixty Chinese and 100 locals work there and part of the labour is allocated for the construction of an agricultural school; because of local opposition and compensation problems, the rest of the concession has not yet been granted to Sino Cam Iko (Jansson J. 2009)
This is the major area where Chinese companies have been most successful and competitive in Cameroon, as they have in the rest of Africa. Their spectacular capacity to bid for and win large contracts aimed at completing structural projects has been well reported. In addition to the projects financed by the Exim Bank without tender (in Cameroon as elsewhere), Chinese infrastructure companies, both public and private, have been able to get funding from the African Development Bank and the World Bank, especially for road projects. It is impossible to present all the infrastructure projects which Chinese companies have been engaged in, but includes all the major ones. Jolly J, Les (2013) as indicated above, Chinese companies have won the lion’s share of infrastructure projects because, as elsewhere in Africa and the developing world, they propose a low price (which is seen by their competitors as a dumping strategy) and they are able to complete the project at great speed. Further, the Chinese are able to help fund the projects. However, as the number of projects funded by China increases, so does Cameroon’s external debt, significantly increasing its burden in the mid-term future. (Bräutigam D & H Zhang, 2013)
Table 5: Conditions of major Chinese loans to Cameroon (2007–2013) Source: Cameroon Ministry Finance
Cameroon and China commemorated 42 years of fruitful cooperation in public health). Forty-two years ago, Cameroon and China engaged on south-south cooperation. Since then, positive statistics have been recorded as provided by Cameroon’s Ministry of Public Health. For instance, between 1965-2017, more than one million Cameroonians have been treated by the Chinese and acupuncture successfully practiced on close to 250,000 people in the four major Chinese hospitals in Cameroon. Moreover, 17,800 women have had safe deliveries and hundreds of thousands more successfully operated by Chinese medics for illnesses such as growths, fibroid, ectopic pregnancies, urinary tract infections, amongst others.
Health facilities managed by Chinese /Cameroon joint project
The Mbalmayo District Hospital
This is the first health institution constructed by the Chinese in Cameroon currently have 12 specialists from China and the strict use of Chinese traditional medicines.
Gyneaco-Obstetric, Paediatrics Hospitals Yaoundé
Another landmark achievement for Cameroon china FDI is the construction of a Gyneaco-Obstetric and Pediatrics Hospital in Yaoundé. Since March 28, 2002, pregnant women living in Yaoundé and its environs have greater chances of giving birth safely, following the inauguration of the hospital by the President of the Republic of Cameroon, Paul Biya. With a capacity to handle 500 patients daily and this facility caters for women and children. To be more specific The hospital is in it right address family planning, antenatal consultations, child delivery, vaccination, pediatric surgery, obstetric surgery, infant cardiology, nutrition, radiology, acupuncture and every other illness related to children and women.
Gyneaco-Obstetric and Pediatrics Hospital in Douala,
Cameroon and China embarked on the construction of a second Gyneaco-Obstetric and Paediatric Hospital in Douala, to the tune of FCFA 10 billion. On November 17, 2015, this facility was officially inaugurated by Cameroon’s Prime Minister, Philemon Yang. During the ceremony, the Chinese Ambassador to Cameroon, HE Wei Wenhua, explained that; “The Chinese Government is concerned and is taking concrete measures to take part in the provision of solutions to the health and wellbeing of Cameroonians. The Gyneaco-Obstetric and Paediatric Hospital of Douala is another technological based facility offered to the Republic of Cameroon by China.
The practice of TCM through private clinics
TCM is practiced mainly in private clinics belonging to Chinese or to Cameroonians. These clinics have emerged in a general situation in which private health care, mostly specializing in traditional African medicine, is booming in Cameroonian cities. (François Wassouni) These kinds of medicine appear under different names (Michel Bruneau) and have become a striking feature in the history of healthcare in Cameroon, to such an extent that Olivier Schmitz’s opinion that in Cameroon the coexistence of multiple medical practices is become commonplace, and no longer surprises anyone (National Statistical Institute 2010) could apply equally to Cameroon
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