Recent reports from Cameroun put Cameroon’s national debt to the tune of fcfa 4.700 billion. Since this information is coming from government sources, one is tempted to think that our national debt could even be higher than fcfa 4.700 billion. Fcfa 4.700 billion (almost 5 trillion) is a lot of money.
GDP for 2015
According to CIA.gov (The World Factbook), Cameroons GDP for the year 2015 was $72.64 billion (circa cfa 42.76 billion). What then is GDP? The Gross Domestic Product is the total value in monetary terms of the total amount of goods and services produced by a country within a certain period. So, for the year 2015, the cost of all the goods and services produced in Cameroon as earlier mentioned stood at fcfa 42.76 billion. That’s a shame for a country with unlimited resources. So, even the revenue generated from the sales of all goods and services produced in Cameroon in 2015 is not enough to buy Paul Biya’s 75 billion frs laptops.
Expected tax revenue for 2015
What do we expect the Cameroon government to get as tax from the fcfa 42.76 billion? If we assume that VAT is 19.25%, then we should expect the government revenue for the year 2015 to be somewhere around fcfa 8.231 billion. The government might have made 8.231 billion frs from taxes (2015). Biya spent 75 billion frs on laptops that have not yet been seen by the intended and fictitious beneficiaries. Anyway, this is not about the laptop saga.
How long will it take us to pay our national debt of cfa 4.700 billion?
For the purpose of information sharing and knowledge gain, it should be noted that long-term loans and short term loans have different interest rates. Short term loans normally have higher interest rates.
Let’s get back to business. Looking at the 2015 GDP figure of fcfa 42.76 billion (CIA.gov), we would expect Biya’s government to have generated at least fcfa 8.231 billion for the tax year 2015, assuming that VAT stood at 19.25%.
If the Biya regime stupidly decides to use all the tax revenue each year to pay back our purported debt of fcfa 4.700 billion, it will take Cameroon at least 571 years to pay back her debts.
However, no government in this planet is that stupid to use all of her tax revenue to repay her debts. As we all know, taxes are used to pay civil servants and contractors, pay bills, to build schools, roads, hospitals, to pay for other social services, etc, etc.
No sign of improvement
As a result of this, I strongly believe that it will require at least 750 years to pay back our current national debt of fcfa 4.700 billion (from part of our national annual tax income), considering the current state of our economy. In 2035, Cameron will be worst off if things keep going at this rate. There is no indication that things will be better in either the near future or even in the long run. Since the Biya regime is not doing anything to move Cameroon from an agrarian economy to a manufacturing economy or to a service industry, it would certainly take more than 750 years for Cameroon to recover from this mess. Until something drastic happens, Cameroon’s situation will not improve.
The Biya regime should reconsider their borrowing habit. The regime should embark on industrialization in order to increase production of goods and services, making sure that most of the industries are Cameroonian owned. Small and Medium size Enterprises (SME) should be encouraged and markets for our commodities must be created and expanded. The regime should borrow to invest in manufacturing plants like food processing industries. The government should borrow to set up rubber processing plants for example, where we would be able to manufacture tyres, other plastic parts needed by automobile industries, etc. The building of hotels, the fake laptop deal and construction of low-cost housing by the state are not our priorities. The government spending habit should change. Borrowing should not be an option. It should be avoided if possible and in our case, we can avoid it or reduce it to at least 20% from our current level.
As just mentioned, Biya should avoid getting loans. If we are a manufacturing economy, we would be able to generate revenue that could be needed for further projects. This would prevent us from being so highly indebted. We shall be in a position as a nation to self-finance most of our projects without resorting to the Chinese and the West.
Callistus Funjong, UK