Cameroon: An untapped SSA opportunity?

While multinationals are focusing their Sub-Saharan African strategies on getting more out of their existing markets and capturing additional demand in the region’s large opportunities, the region also offers some under-the-radar opportunities that many companies are not tapping into. One of them—for some industries—is Cameroon. My most recent trip to the market reinforced FSG’s view that the country requires careful risk management, but also has some untapped opportunities companies can benefit from as they seek additional growth in their SSA portfolio.

The nascent retail sector holds opportunities

While the macroeconomic outlook for the country remains upbeat, the country’s formal retail sector—especially beyond the main urban centers—remains rudimentary.  However, even in the capital Yaoundé, expatriates and wealthier locals that I spoke to bemoaned the absence of shopping malls and upmarket retail outlets, which is despite the presence of large diplomatic, NGO, and public sector workforces in the city.  While the choice of basic FMCG products in local supermarkets is good, their prices are extremely high especially for western, imported brands.  This confirms FSG’s view that there is an underserved middle and upper middle class consumer in the market, offering opportunities for multinationals that move in early with competitively-priced quality products.

Operational risks persist, but most are surmountable 

From an operational perspective, MNCs face numerous challenges in the country.  My visit reinforced FSG’s view that corruption remains pervasive in the country at all levels of the administration.  MNCs also face challenges in terms of distribution. Although the road network between main urban areas is sufficient for daytime driving, driving during hours of darkness is considered dangerous, potentially placing constraints of distributors’ hours of operations in the country. MNCs that rely on constant supplies of electricity—such as those handling perishable, or temperature-sensitive products—will find that the combination of the country’s equatorial climate and intermittent power supply means investment in back up electricity generation is essential for maintaining uninterrupted operations, adding to costs.

MNCs also need to be aware of ongoing tensions in the Anglophone regions we’ve been writing about for the past several months, which have worsened recently and do not appear to be easing.  Whilst travelling to these regions in the country, the impact of the recently-introduced internet blackout became apparent, as there were no functioning Wi-Fi hotspots, and data services for mobile phone users were also completely cut off.  With the grievances among the Anglophone population is expected to continue, the internet blackout in the North West and South West regions —which has been enacted by the central government—will likely persist for the foreseeable future, with ongoing adverse impacts for MNCs operating in these regions. This complicates communications with customers and partners, as well as data collection and online services provision.

Nevertheless, from an operational perspective for most MNCs operating in the country, Cameroon broadly remains a politically stable country, especially in the Francophone regions which account for the majority of the country’s commercial activity and consumer demand.

Consumers’ preferences reveal market potential 

Despite risks, Cameroon surely holds substantial opportunities for companies operating in certain sectors. The country has a large and growing beverage market, with a broad choice of alcoholic products available throughout the country.  Beer is particularly popular, with many of the leading brands owned by French companies and produced in Cameroon under license. The high quality of locally-produced beers available illustrates the untapped demand that potentially that exists for locally manufactured consumer goods in the country.   Furthermore, while the tourism sector is currently very small, there are positive signs that quality of accommodation is beginning to improve, suggesting that an increasingly discerning group of consumers is emerging in the country. This was evidenced by opening of a new high-quality four-star hotel in the provincial town of Bafoussam in 2016.

Beyond consumer goods, the country is also seeing steady investment in infrastructure, with progress being made on a new road bridge west of Douala, and the construction of the new deep-water port at Kribi which is expected to be completed at some point in 2017.  In addition to contributing to improved supply chain efficiency, opportunities potentially exist for companies bidding for government infrastructure contracts.  Furthermore, owing to the ongoing threat from Boko Haram in the region, it is likely that expenditure on the security industry—both in terms of the military and private sector security—will remain robust in Cameroon.

MNCs operating in Cameroon also benefit from a very stable currency thanks to the country’s membership of the Central African franc monetary union.  Currency stability has contributed to low inflation rates, which support consumer confidence and make price setting and financial planning more predictable. Furthermore, the country’s role as a regional logistics hub—which is focused on the country’s largest commercial center of Douala—also potentially offers opportunities for MNCs looking to supply their operations in neighboring, landlocked markets.  Furthermore, while FSG has recently lowered the forecast for economic growth for 2017 owing to weak oil prices and unrest in the Anglophone regions, the outlook remains fairly upbeat, with FSG forecasting growth of 4.1% YOY in 2017 and 4.0% YOY in 2018.  Cameroon, therefore, continues to offer opportunities for companies seeking untapped markets in Sub-Saharan Africa.

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