Cameroon’s Path to Fiscal Stability: Enhancing Revenue Collection and Public Spending for Vision 2035

The World Bank’s report provides a roadmap for Cameroon to achieve its Vision 2035 goals through sound fiscal management, effective public spending, and strategic investments in human capital.

Cameroon’s aspiration to become an upper-middle-income country by 2035 faces critical hurdles that must be tackled urgently. A report by the World Bank, Cameroon Public Finance Review: Collect More, Spend Better to Achieve Vision 2035 Goals, outlines these challenges, ranging from sluggish economic growth to fiscal constraints caused by internal conflicts and the COVID-19 pandemic. To navigate this complex path, the report highlights the need for a significant overhaul in public financial management and a more strategic approach to revenue collection and expenditure allocation.

Cameroon’s Fiscal Landscape

Over the past few years, Cameroon’s fiscal health has been under immense pressure. Domestic revenues are dwindling, and public debt has reached alarming levels, further limiting the government's capacity to invest in essential services and infrastructure. The country’s total tax revenue, sitting at approximately 11% of its Gross Domestic Product (GDP), is far below the international benchmark of 15%, which is necessary to support even basic government operations.

Instead of expanding revenue, recent fiscal consolidation measures have focused on cutting public investment, leading to a worrying reduction in growth potential. Cameroon’s reliance on indirect taxes like the Value Added Tax (VAT) has made its tax system regressive, while direct taxation (such as personal and corporate income taxes) remains underutilized. This situation, coupled with declining oil revenues, has further constrained the country’s fiscal space.

The report recommends implementing a Medium-Term Revenue Strategy (MTRS) to boost revenue collection. This strategy would focus on broadening the tax base, reducing tax exemptions, improving compliance, and modernizing tax administration.

Public Spending Needs Reform

While revenue mobilization is a critical concern, how the government allocates its resources is equally important. According to the World Bank’s findings, public spending in Cameroon is heavily skewed towards general administration, with insufficient investment in human capital development and social protection. This imbalance has resulted in underfunded health, education, and social welfare sectors, which are crucial for the country’s long-term development.

For instance, Cameroon’s spending on education has declined in recent years, and health expenditure remains low, leading to significant disparities in access to essential services across different regions. These gaps are most evident in remote areas, where children struggle to access basic education and healthcare services are limited. The report suggests a reallocation of resources to these critical sectors to address inequalities and ensure a more balanced development approach.

Improving public expenditure efficiency is also a major concern. The report points out inefficiencies in public investment management, especially in infrastructure projects, which often suffer from cost overruns and delays. These inefficiencies undermine the potential benefits of public spending and hamper economic growth.

The Importance of Fiscal Decentralization

Another key area of focus in the report is fiscal decentralization. The decentralization process in Cameroon has been slow and uneven, leaving subnational authorities with limited capacity and resources to deliver public services effectively. Fiscal decentralization is essential to empower local governments, reduce regional disparities, and enhance public service delivery, particularly in health and education.

The report calls for a more structured approach to decentralization, with clearly defined roles and responsibilities for local governments and adequate financial support. It also emphasizes the need to strengthen the administrative and technical capacity of local authorities to ensure that resources are used effectively.

What Lies Ahead for Cameroon’s Vision 2035

The path to achieving Vision 2035 is challenging, but not unattainable. To secure a stable and prosperous future, Cameroon must adopt comprehensive reforms that address both the revenue and expenditure sides of its fiscal equation. The report proposes several actionable recommendations, including,

Boosting Revenue Mobilization: Implement a Medium-Term Revenue Strategy to increase tax revenue by broadening the tax base, reducing exemptions, and enhancing tax compliance.

Reforming Public Expenditure: Reallocate spending to high-impact areas such as education, health, and social protection. Enhance efficiency in public investment, particularly in infrastructure projects, to maximize returns on spending.

Strengthening Human Capital Development: Increase investment in human capital by improving teacher deployment, ensuring equitable access to health services, and expanding social protection programs for the vulnerable.

Promoting Fiscal Decentralization: Empower subnational governments through improved fiscal transfers and capacity building to enhance local service delivery and reduce regional inequalities.

The World Bank’s report provides a roadmap for Cameroon to achieve its Vision 2035 goals through sound fiscal management, effective public spending, and strategic investments in human capital. However, these reforms require strong political will, effective implementation, and sustained efforts across all levels of government.