I. COMMERCIAL OVERVIEW

During the mid-1980's, Cameroon suffered a massive 50 percent
loss of export income due to sharp declines in the world
market prices of its main exports, cocoa, coffee and petroleum
and an increasingly overvalued exchange rate.  As a result,
consumption slumped and the country's imports have been
declining steadily since then.  The economic crisis which
followed this shock in the terms of trade exposed the
structural weaknesses of the once-booming Cameroonian economy.
For the past seven years, Cameroon, backed by the IMF and the
World Bank, has been in the throes of economic reforms on a
scale which the country has never experienced in its 33 years
of nationhood.

Between 1989 and 1992, Cameroon's imports fell by 32 percent.
Further declines are expected in 1994 as a result of a 50
percent devaluation of Cameroon's currency, the FCFA, a common
currency used by 13 other French-speaking African countries.
The magnitude of the expected 1994 decline may be increased by
the recent entry into force of a new tax, the TCA ("taxe sur
chiffre d'affaires" or turn-over tax), whose impact on prices
could be comparable to the immediate inflationary aftermaths
of the January 1994 devaluation.

Cameroon's imports were heavily skewed towards consumption
goods, and an overvalued FCFA reduced the competitivity of the
country's exports.  After the 1994 devaluation, however, the
FCFA's value, relative to other currencies, offers
opportunities rather for investments in domestic import-
competing and exporting industries.  Consequently, the demand
for capital goods is expected to increase relative to the
import of consumer products, from 1994 onwards.

The sustained decline in consumption since the mid-1980's,
bolstered by political disturbances and a general feeling of
uncertainty, has led to a gradual but perceptible closure of
stores and shops in the main business centers of Douala and
Yaounde.  The current commercial environment has, however,
stabilized, as surviving businesses adjust to the realities of
a weaker Cameroonian market and a changing regulatory
environment.

The agricultural sector which suffered the first wave of
income loss in the mid-1980's (when world market prices for
petroleum, cocoa, and coffee decreased) is the first to enjoy
the economic recovery effects of devaluation.  Devaluation-
induced increases in prices to producers, backed by recently-
observed improvements in the world market prices of cocoa and
arabica coffee, are restoring confidence among the farmers of
these cashcrops and in the timber industry.  A government-
ordered 50 percent increase in the prices paid to cotton
farmers is reviving cotton cultivation.

The gradual recovery of Cameroon's agricultural sector
presents opportunities for U. S. firms.  Apart from the
prospects for the Chad-Cameroon pipeline project, however,
private foreign investment has been scarce during the past
several years.  Cameroon's sectoral development projects have
been frozen, and projects lined up for financing by the
African Development Bank have been frozen as well, due to the
insolvency of the Cameroonian government.

Cameroonian businesspersons have, since 1992, expressed the
desire to diversify their international business connections,
and are actively doing so.  The United States occupies a
privileged position in Cameroonian diversification priorities.
Only recently has South Africa emerged as a contending
candidate for diversification alongside Germany. American
businesspersons are generally seen as fair and straightforward
in their business dealings.  American products are appreciated
for their quality and durability.

Structural adjustment reforms, initiated since 1989, have
removed practically all barriers to doing business in
Cameroon.  The benefits of these reforms would be consolidated
if the government continued to execute sectoral reforms,
institute transparency and accountability in governance,
create an independent judiciary, and complete the
democratization process which is currently stalled.

Third-country competition is led by the French.  French
presence in Cameroon is deep and wide.  The French have the
advantages of a tied currency, local branches of French banks
which offer commercial financing, a language link, and a long
historical presence in Cameroon.  French development
assistance includes technical staffing at many Cameroonian
government ministries.  This expanded presence provides the
French with a significant advantage in, especially, market
intelligence and major projects.