Introduction.

Even as governments are adopting continent-wide trade agreements, some governments are sticking to protectionist trade measures. Governments have traditionally imposed protectionist measures to protect local businesses or improve the welfare of citizens. Cameroon, like most developing market economies, has a nascent manufacturing sector. As a result, local production cannot always satisfy domestic and international demand for agro-processed food or manufactured products. This has caused the price of some commodities such as rice, corn, and cereals to increase at a breakneck pace, blunting the purchasing power of Cameroonians, increasing food poverty, and reducing the impact of policies designed to improve the standards of living for everyday citizens.

Inflation, defined as an increase in the general price level, is of particular concern to governments. In countries like Cameroon, the export and import of certain commodities notably impact inflation. The government has traditionally imposed export bans to prevent the price of basic commodities such as wheat, corn, and cooking oil from rising quickly.

This article briefly overviews export restrictions and how they are enforced across Cameroon. We then examine the implications of the Great Financial Crisis (GFC) export restrictions. Upon making a case for why export restrictions are bad for the economy, we recommend supporting Cameroon’s domestic production capacity to avert future export bans on agricultural and agro-processed products.

A brief overview of export restrictions

Export restrictions could cover both agricultural and non-agricultural products and seek to achieve diverse policy objectives. Governments could impose export restrictions to protect the environment, boost economic welfare and social well-being or prevent exaggerated increases in the price of a good or service.

According to Jeonghoi (2010), export restrictions include export duties, quantitative restrictions, voluntary restrictions, export prohibitions, and licensing requirements. Export restrictions protect domestic industry and support local consumption as they create a difference in the price of locally produced goods compared to imported products Gabrielle (2016). An export restriction could equally be applied to;

• Prevent a shortage of a particular product in the domestic market and keep prices low.
• Manage the domestic market of the importing country, which may be forced to impose anti-dumping duties otherwise.
• Enforce sanctions in another country.
• To limit the use of items that may be used in the proliferation of terrorism, nuclear or biological warfare,
• Limit trade to a sanctioned nation.

An Overview of Export Restrictions in Cameroon

In 2015, the government banned cheaper imported vegetable oil to protect its domestic industry. At the time, Orilius Mbui, an official of Cameroon’s agro-industrial company, the Cameroon Development Corporation (CDC), estimated that 16,000 jobs were at risk of unhealthy competition Moki, E.(2015).  In December 2021, Fongod Edwin Nuvaga, Director General of Cameroon Customs, signed a note that suspended the exports of vegetable oils and cereals produced in Cameroon Andzongo, S.(2022).

How does the government enforce export restrictions

Cameroon developed the ability to enforce restrictions upon developing a “Single Window for Foreign Trade Operations’ (GUCE) for customs procedures in December 2000 at the Douala port.  The GUCE is a network of banks, the Douala port authority, exchange offices, the National Office of Cocoa and Coffee, and phytosanitary services.

A GPS tracking system allows Cameroon customs to track goods destined for neighboring countries following pre-Shipment Inspection (PSI), and shippers are required to obtain a  “Bordereau Electronique de Suivi des Cargaisons“(BESC) from the Cameroon Shippers Council office in Douala before loading any cargoes. This is attached to the export customs document, and failure to do so will result in a fine that is 50%  of the cost of the original BESC. Any cargo loaded in Cameroon ports or transit must possess an Electronic Cargo Tracking Note (ECTN), validated by the Cameroon National Shippers’ Council (CNSC) or representative body. As such, the export restrictions will be duly enforced to minimize illegal trade.

Implications of Export Restricts; Experience from the 2008 Great Financial Crisis

Export restrictions do not always benefit citizens when imposed and cause government revenues to fall due to lower exports. Export restrictions in the agriculture sector can have a short-term positive effect on the price of goods. However, they overwhelmingly aim to protect the domestic agriculture sector from the international supply (Barris, 2011).

During the 2007-2008 food crisis, over thirty countries imposed a range of quantitative export prohibitions, export duties, and price controls to protect the domestic food supply and prevent food price inflation from rising significantly. However, this created additional pressure on food prices as countries swiftly moved to impose export restrictions, which caused a multiplier effect on global food prices.  Findings from Giordani, Rocha, and Ruta (2012), illustrate how global food prices tend to rise when food exporters use trade policy to shield domestic economies from large price shocks. Using a Sample of 125 countries and 29 food products between 2008 – 2010, they estimate that a 1% surge in export restrictions caused food prices to rise by 1.1% between 2008 – 2010.

As Pascal Lamy (2011), the Director-General of the World Trade Organization (WTO), pointed out: “Export restrictions play a direct role in aggravating food crises. However, other factors, such as the sudden reduction in food stocks, higher levels of domestic demand, financial speculation in commodities markets, and monetary policy, equally contribute to the rise in food prices.

For example, EU wheat and cereal exports to Cameroon are estimated at 17% and  9% respectively. Export restrictions will not materially impact the price of imports but could negatively impact Cameroon’s trade balance estimated at -509 million Euros–  in agriculture products.  So export restrictions are a short-term measure that does not address the underlying problem of low production capacity, poorly developed agriculture value chains, and inadequate farm-to-market strategies.

Implications of the recent export restriction: The recent restrictions will likely cause domestic consumption and sudden sharp increases in cereals and vegetable oil prices. This will reduce food poverty and support consumption in the Northern region prone to high poverty.

What can be done to support Cameroon’s Production

1. Firstly, the government’s subsidies for the agriculture sector should be broad-based and targeted to ensure inclusive production across the value chain. The government should draw from its experience with Edenred’s digital solutions to optimize the management of its new subsidy program. However, access to subsidies should be made against quantifiable outcomes so that the effectiveness of the policy can be gauged.
2. Secondly, policymakers should prioritize farm-to-market strategies to ensure that goods and services reach consumers effectively without lags across agro-value chains.
3. Finally, greater emphasis should be placed on electricity generation across industrial zones to support domestic manufacturing and packaging. Beyond trade shows, local supermarkets should provide verifiable standards to ensure local producers can contribute toward marketing products that are affordable and accessible to civil society.

Conclusion

Export restrictions can support domestic consumption and prevent sudden increases in the prices of basic commodities such as vegetable oil and cereals. While such measures benefit consumers in the short run, they render local industries less competitive and insular. Policymakers should prioritize policies such as targeted subsidies and roadmaps to support farmer-to-market strategies for local producers.

Henri Kouam is the Founder/CEO of CEPI, a consultant for the North American Treaty Alliance (NATO) and an Economic Consultant at the Economist Intelligence Unit (EIU), based in the United Kingdom. He regularly contributes to locaql news papers such as Defi Actuel, Cameroon Business Today and the CRTV. He previously comnsulted for the Bill & Melinda Gates Foundation across francophone Africa on th Demographic Divident and Knowledge Transfer Programmes.

Chairman, CEPI

References.

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