Cameroon’s recovery faces a new test as growth remains moderate and fiscal risks persist

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MAPUTO — Cameroon’s economy has remained resilient to external shocks, but its recovery is entering a more demanding phase. Growth remains moderate, inflation is broadly contained and services have become an increasingly important engine of activity. Yet declining hydrocarbon production, infrastructure bottlenecks, fiscal pressures and a high risk of debt distress are limiting the country’s ability to accelerate growth and translate macroeconomic stability into higher living standards.

The economy grew by 3.5% in 2025, according to Cameroon’s National Institute of Statistics, maintaining the pace recorded in 2024. The services sector remained the main driver, expanding by 4.3%, while the broader economy continued its gradual shift towards activities less directly dependent on hydrocarbons. The IMF expects the outlook to weaken slightly in 2026 as oil production remains under pressure and delays in expanding electricity transmission capacity constrain activity.

That distinction matters. Cameroon is not simply experiencing a commodity-driven rebound. It is an economy in gradual transition, with services playing a larger role while oil production declines. The question is whether that transition can generate enough productivity and employment to lift living standards at a meaningful pace.

Growth of around 3.5% is not particularly strong for an economy with a population approaching 30mn and annual population growth of about 2.6%. The arithmetic leaves only a relatively modest increase in output per person before taking into account differences in income distribution. World Bank data put Cameroon’s GDP per capita at about $1,972 in 2025.

This makes the quality of growth more important than the headline GDP number. Cameroon needs an expansion that grows faster than its population over a sustained period and, crucially, creates productive employment rather than simply increasing aggregate output.

Inflation, by contrast, has become a relative strength. Average inflation fell to 2.6% over the 12 months to August 2026, below the 3% regional threshold used by the CEMAC monetary union. But the latest monthly data point to renewed pressure, year-on-year inflation reached 3.4% in July, up from 3.0% in June and 2.7% in May, with food prices, particularly fresh produce, driving much of the increase.

For households, the distinction is important. Lower average inflation does not mean that the cost of living has fallen; it means that prices are increasing more slowly. Cameroon’s cumulative inflation between 2022 and 2025 reached 23.3%, with food prices rising by 41.8% over the period. The recent easing therefore provides relief, but it has not reversed the loss of purchasing power accumulated during the previous inflationary episode.

Unlike countries with independent currencies, Cameroon does not conduct monetary policy in isolation. It is part of the CEMAC monetary union, whose common currency, the CFA franc, is managed by the Bank of Central African States, or BEAC. Monetary conditions therefore have to be calibrated at the regional level, taking account of inflation, liquidity and foreign-exchange conditions across the monetary union.

The more immediate constraint is fiscal.

Cameroon’s fiscal position weakened in 2025, with the overall deficit rising as election-related disruptions and higher spending pressures affected public finances. The IMF expects continued fiscal pressure in 2026, including from the cost of fuel subsidies following higher international oil prices. Fiscal consolidation will therefore have to proceed without undermining infrastructure investment or the social spending needed to support a rapidly growing population.

The debt picture is more nuanced than the headline debt ratio suggests. Public debt is projected at around 40% of GDP in 2026, and the IMF expects it to decline gradually over the medium term. Yet Cameroon remains at high overall risk of debt distress. The issue is therefore not simply the size of the debt stock, but the government’s capacity to service debt while preserving liquidity, financing essential investment and maintaining access to external funding.

That distinction is crucial for a country with substantial infrastructure needs. Cameroon requires investment in roads, electricity transmission, logistics, industrial capacity and digital connectivity to raise potential growth. But financing those investments through increasingly constrained or expensive borrowing could aggravate the fiscal and liquidity pressures that policymakers are trying to contain.

Electricity illustrates the problem. The Nachtigal hydropower project has expanded generation capacity, but transmission constraints have limited the extent to which additional electricity can translate into reliable supply for households and businesses. The issue is therefore no longer simply generating more power, but connecting capacity to the productive economy.

The same principle applies to public investment more broadly. Cameroon has significant infrastructure needs, but the return on investment will depend on the quality and speed of project implementation. The IMF identifies infrastructure gaps, a shallow financial sector, weak governance in parts of the state-owned enterprise sector and regulatory obstacles as important constraints on growth.

The external position adds another layer of vulnerability. Cameroon’s current-account deficit is projected at around 5.4% of GDP in 2026, according to the IMF’s latest medium-term projections. Declining oil exports and strong import demand mean that economic expansion is not yet generating sufficient external earnings to eliminate pressure on the balance of payments.

This is where diversification becomes more than a policy slogan.

Services are already providing evidence of that transition. Information and communications, financial services, trade, transport and other tertiary activities have become increasingly important contributors to economic growth. In 2025, the services sector expanded by 4.3%, making it the strongest broad sector of the economy.

But services alone will not be enough.

Agriculture remains central to food security, rural employment and household incomes. It also offers one of the clearest opportunities to reduce import dependence by raising domestic productivity and expanding agro-processing. Manufacturing can perform a similar role by connecting agricultural production to domestic and regional value chains.

The objective should therefore be to build stronger links between agriculture, manufacturing, energy, logistics and services. A farmer who has reliable electricity, access to finance, transport infrastructure and digital markets is not simply producing more food; he or she is becoming part of a more productive domestic value chain.

This is also where employment becomes critical. Cameroon’s population is growing by around 2.6% a year, creating a continuous need for new productive jobs. If economic growth remains only marginally above population growth, improvements in average living standards will necessarily be limited.

The challenge is particularly acute for younger workers entering the labour market. The country needs private investment capable of creating formal and productive employment, rather than relying predominantly on public expenditure or low-productivity informal activity.

Cameroon nevertheless has important advantages. It is the largest economy in CEMAC, has a large domestic market, a diversified resource base, significant agricultural potential and a strategic position linking Central Africa’s major economic corridors. Continued investment in energy, mining, agriculture, manufacturing and digital services could raise medium-term growth if projects are implemented efficiently and financed without creating new fiscal vulnerabilities.

The country’s oil sector is also approaching a strategic transition. The IMF projects continued weakness in oil output beyond 2026, reinforcing the need to ensure that non-oil sectors can progressively compensate for declining hydrocarbon production. Non-oil GDP is expected to remain the stronger source of expansion, with growth projected at 4.1% in 2026.

The challenge for Cameroon is therefore not simply to achieve a higher GDP growth rate. It is to improve the quality, breadth and productivity of that growth.

That means raising agricultural productivity, expanding domestic manufacturing, improving electricity transmission, deepening access to finance, strengthening logistics and creating conditions for private investment. It also means ensuring that public investment produces measurable economic returns rather than adding to fiscal pressure without expanding productive capacity.

For households, the ultimate measure of the recovery will not be the headline GDP figure. It will be whether inflation remains contained, real purchasing power improves and the economy generates enough productive employment for a rapidly growing population.

Cameroon enters this next phase with a relatively stable macroeconomic foundation but limited room for policy mistakes. Inflation is much more manageable than during the recent price shock, while public debt is not exceptionally high by international standards. But fiscal space, external financing and debt-service capacity remain important constraints.

The next test is therefore whether Cameroon can convert macroeconomic resilience into faster, broader and more productive growth. The country needs to preserve fiscal stability while investing in infrastructure, accelerate diversification as oil production declines and create an environment in which private firms can invest, expand and employ more people.

Cameroon’s economic challenge is no longer simply one of resilience. It is the more difficult transition from resilience to transformation, ensuring that moderate growth becomes sufficiently strong to outpace population growth, raise productivity, create jobs and translate the country’s considerable agricultural, industrial, energy and services potential into higher living standards.