Cameroon has cut subsidies on petroleum and diesel prices under pressure from international donors such as the IMF. The IMF alleges that the move is necessary for the country's long-term economic sustainability. Let's remember a similar situation was responsible for the 2008 protests when the government cut fuel subsidies leading to nationwide protests.
Such a situation is not unique to Cameroon. The IMF was also blamed for riots in Indonesia during the 1997 Asian Financial Crisis which turned deadly in some parts of the country. Similarly, the IMF put pressure on the Nigerian government to cut oil subsidies in 2011. The Nigerian government however put off the cuts till 2012, when it finally cut fuel subsidies, causing the price of petrol to increase from N65 to N140 ($1.5 per gallon). This move sparked violent protests all over the country so much that the government was forced to keep the price low at just under N97 per gallon. Unofficial word is that the government plans to re-introduce the issue of subsidy cuts again in 2015 after the general elections.
Back in Cameroon, the price of petrol has risen by 14% while the price of diesel has risen by 15% all due to the subsidy cuts. This puts the price of a litre of petrol at 650FCFA ($1.36) and the price of a litre of diesel at 600FCFA. In a statement, the IMF claims it is a necessary move to try to cut the approximately $600 million the government spends on subsidies. The statement did nort say exactly how much the government is going to save as a result of these measures.
In May, the IMF said Camerron's 2014 fiscal deficit woulmd be 5.5% of it's GDP mainly due to fuel subsidies. For the first six months of 2014, the subsidies have already cost Cameroon 157 billion FCFA, and so the IMF looks to see Cameroon and many other sub-saharan African countries balance their budgets by scaling back on subsidies. The main concern is that considering Nigeria's failed attempt to cut fuel subsidies and the violence surrounding it, would Cameroon succeed where others have tried and failed?
But now another question looms. Why has it taken so long?
There could be three different answers to this question.
First of all, there's the fact that Cameroon's leaders have a history of postponing neccesary changes. The same was the case with former president Ahmadou Ahidjo who kept postponing the neccesary structural adjustments that were needed to contain the global financial crisis of the 1980's untill he no longer could; and how did he do that? By extensive subsidisation. When Paul Biya came to power and could no longer keep pace with the economic pracices of the previous administration, the currency was devalued.
Secondly, the government has been cautious not to re-ignite the flames of the 2008 crisis that threatened to shaken the power base of the ruling elite. The riots provided a platform for people to vent their anger and frustration towards the government of Paul Biya who has been in power since 1982 (32 years), and the deteriorating economic situation that has come along with his regime. Cameroon is by no means the poorest country in Africa, but the growing gap between the various classes of society has angered many.
Lastly, part of the subsidy money comes from international donors, and not from government coffers. This provides an opportunity for many of those handling the funds to enrich themselves seriously. So the longer the funds flow, the richer they become.
The population of Cameroon have not welcomed this move, and the Union of Taxi Drivers is planning a strike action. In a bid to calm down tensions, the government spokesman Issa Tchiroma Bakary said in a press conference,. “I call upon our people to accept these adjustments with responsibility, understanding and civic-mindedness…,". The government has also promised to open talks about increasing the minimum wage angd other measures to try and console the Cameroonian people.
It's only left to be seen how the Cameroonian people finally react.
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