AN APPRAISAL OF FOREIGN DIRECT INVESTMENT AND SUSTAINABLE DEVELOPMENT IN CAMEROON

ABSTRACT

The concepts of Foreign Direct Investment and Sustainable Development are contemporary and relevant concepts which are of great significance to the global economy. Their correlation cannot be denied, as it has clearly been shown that, Foreign Direct Investment impacts sustainable development both on positive and negative levels. Cameroon has over the years been shown to attract less FDI than its Sub Saharan counterparts and this has led to a continuous revision of laws to ensure its attraction. This is evident in that; Cameroon’s Vision 2035 roadmap prioritizes economic development over environmental conservation efforts which is a consequential threat to the promotion of sustainable development. This piece of research thus sets out to analyze the concept of FDI and how its inflow can be improved. Also, it seeks to establish how well it can be tailored to contribute positively to sustainable development. This is done using the qualitative research methodology and adopts the doctrinal research method which consists of content analysis of primary and secondary data. Going by these methods, it has been established that FDI can contribute significantly to strengthening the host country’s economy. Cameroon’s business climate is relatively unconducive given that it is plagued by poor infrastructure, weal rule of law and high levels of corruption. It has also been determined that most FDIs in the territory blatantly violate the rule of law and human rights principles. This is detrimental to the economic and social wellbeing of the population. Also, the environment tends to suffer degradation due to such malicious acts. In the same light, Cameroon lags behind regarding hard and succinct laws which are required to promote sustainable development. In view of these issues clearly stated, it is important to improve on the investment climate in order to encourage and attract FDI. Not only should FDI be achieved, but it is important to ensure that, it contributes positively to sustainable development within the territory. This can be achieved by putting in place hard laws to regulate both concepts and ensuring that every person, both natural and legal, contributes positively towards this goal

CHAPTER ONE

GENERAL INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The role of investment, especially Foreign Direct Investment (herein after referred to as FDI), in driving economic growth and development has been a contested one ever since the UN development decade of the 1960s.[1] FDI and Sustainable Development have a positive relationship. This is because FDI brings a lot of benefits to a host economy some of which include; transfer of capital, technology and enhancement of market access. It also contributes positively to infrastructural development in the host country. The negative effects of these ventures cannot however be undermined and this research will be shining light on these issues and proposing solutions on how best to promote FDI for optimum sustainable development benefits. Having achieved independence and become established as the Republic of Cameroon during this decolonization era, a better appreciation of the evolution of FDI in Cameroon can be gained by dividing the recent economic history of Cameroon into four economic subperiods. These include, the post-independence era (up to 1977), the oil-boom era (1978 – 1985), the era of economic crisis and failed reforms (1986-1993) and the post-devaluation era (1994-2002).[2] All these would lay the groundwork and basis for the current era which includes the period from 2003 up till 2020.

Sustainable Development has become a popular catchphrase in contemporary development discourse.[3] However, despite its pervasiveness and the massive popularity it has garnered over the years, the concept still seems unclear as many people continue to ask questions about its meaning and history, as well as what it entails and implies for development theory and practice. It is only right at this point to have a background knowledge of this concept and the strides it has made in history. Sustainable development is the idea that human societies must live and meet their needs without compromising the ability of future generations to meet their own needs. The official definition was developed for the first time in the Brundtland Report in 1987.[4]

 Historically, the concept of Sustainable development derives from economics as a discipline.[5] By the late 1960s and early 1970s the melting pot of different ideas about progress, sustainability, growth, and development which had developed over many years started pointing in a new direction, that of sustainable development. After two global wars, it was evident that, particularly in the moral domain, there was also a downside to scientific and technological advances, which had brought material crisis to the world at large.[6] Scientific and technological progress was also causing terrible damage to the natural environment. During the period of unprecedented industrial and commercial expansion after World War II, people became aware of the threats which rapid population growth, pollution and resource depletion posed to the environment and human survival as well. Environmental concern became more acute and radical because of the fear that economic growth might endanger the survival of humanity and the planet. This alarmist mood stimulated a new mode of thinking about development and prepared the way for sustainable development as an alternative to economic growth.

By the late 1970s, the existing notions of ‘progress’, ‘growth’ and ‘development’ were being challenged. This realization necessitated a paradigm shift to a new notion of development. During this time, the concept of sustainable development emerged as a compromise between the notions of development and conservation, which came to be viewed as interdependent issues. At the start of the 1970s, the term ‘sustainable development’ was coined, probably by Barbara Ward, founder of the International Institute for Environment and Development.[7] The conceptual underpinnings for the current use of the term were consolidated during this period. In the declaration of the United Nations Conference on the Human Environment, held in Stockholm in 1972 as the first in a series of International conferences on the threatening ecological crisis, it was stated:

A point has been reached in history when we must shape our actions throughout the world with a more prudent care for their environmental consequences. Through ignorance or indifference, we can do massive and irreversible harm to the earthly environment on which our life and wellbeing depend. Conversely, through fuller knowledge and wiser action, we can achieve for ourselves and our posterity a better life in an environment more in keeping with human needs and hopes… To defend and improve the human environment for present and future generation has become an imperative goal for mankind- a goal to be pursued together with, and in harmony with, the established and fundamental goals of peace and of world-wide economic and social development [8]

Sustainability featured in several of the principles adopted by the conference and it was realized at this time, that development indeed needed to be sustainable. It should not focus on economic and social matters alone, but also on matters related to the use of natural resources.

In the 1980s, the new paradigm of sustainable development was popularized and became more widely used. The United Nations commissioned a group of 22 people from developed and developing countries to identify long-term environmental strategies for the international community. This World Commission on Environment and Development (WCED), better known as the Brundtland Commission, chaired by the then Norwegian Prime Minister, Gro Harlem Brundtland, submitted their report, entitled ‘Our Common Future’ to the United Nations in 1987.[9] The Brundtland report focused primarily on the needs and interests of humans and was concerned with securing a global equity for future generations by redistributing resources towards poorer nations to encourage their economic growth, to enable all human beings to achieve their basic needs. It further expressed the belief that social equity, economic growth, and environmental maintenance are simultaneously possible, thus highlighting the three fundamental components of sustainable development: The environment, the economy and the society, which later became known as the Triple bottom line.[10] It concluded that economic growth was essential, particularly in the developing world, but that there should be a switch to “sustainable development”, which would be environmentally sound.

In the Cameroonian context, “Cameroon: An emerging democratic and united country in diversity” is a vision which has as objective, to make Cameroon an emerging economy over the next 25 to 30years, which is a period required to move from one generation to another.[11] An emerging economy is a developing nation economy that is becoming more engaged with global markets as it grows.[12] The main features of such an economy are an increase in liquidity and equity markets, increased trade volume and an increase in foreign direct investment. Typically, an emerging economy is one which is transitioning from a low income, less developed often pre-industrial economy, towards a modern, industrial, and higher standard of living.[13] Typically, emerging markets do not often have the level of development of market and regulatory institutions as found among developed nations. A key aspect of such economies however is that, over time, reforms and institutions are adopted, which promote economic growth.[14] Less developed countries might have difficulties in achieving the SDGs because of their low level of socio-economic development. Two-thirds of the less developed countries are African countries.^[15] These countries lack financial resources to plan and carry out the SDGs. For these countries, FDI might be an opportunity to achieve the Sustainable Development Goals. FDI is perceived by developing countries as a source of economic development and modernization, income growth and development.^[16] While most studies show a positive relationship between FDI and income growth, some authors provide evidence that FDI may have negative effects that lie mainly in social and environmental development. In this context, the concept of sustainable investment, should play a fundamental role in achieving all 17 Sustainable Development Goals.

The strife to become an emerging economy is therefore the driving force of most economic policies in Cameroon. Bearing in mind that foreign direct investment is an area of interest, it is of great importance to know how this is sought to be achieved. The concept of Sustainable Development is one which is global and current. Cameroon is not left out on making efforts to ensure that sustainability is achieved in the quest for growth. These intricacies pave the way for this study, as there is need to ensure that Cameroon indeed becomes an emerging economy by 2035 but does so in a manner that is deemed sustainable by international standards.

Since Cameroon is an active member of the United Nations, its Foreign Direct Investment policy therefore, is expected to reflect and portray its actions towards realizing the much talked about and trendy Sustainable development. It can without doubt be stated that FDI is intricately linked to sustainable development and its effect on the latter cannot be undermined. These overlapping concepts are of keen and strategic importance to the progress of the Cameroonian economy. This research, therefore, seeks to explore and appreciate the strides realized in that domain and the problems encountered so far.

 1.2 STATEMENT OF THE PROBLEM

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1.3 RESEARCH QUESTIONS

Based on the problem, the following questions will be answered:

 1.3.1 Main Research Question

To what extent can the promotion of Foreign Direct Investment in Cameroon contribute to Sustainable Development?

1.3.2 Subsidiary Research Questions

• How can Foreign Direct Investment and sustainable development be conceptualized in the case of Cameroon and what correlation do these concepts have?
• What are the legal and institutional frameworks that govern the establishment and operation of FDI and Sustainable Development as concepts in Cameroon?
• What is the current state of FDI in Cameroon, and how does it enable the attainment of sustainable development in terms of its effects on the country’s economy?
• What legal and policy recommendations can be made to attract FDI to Cameroon and ensure the implementation of sustainable development practices by investors who indeed establish in the territory?

[19] “Ease of doing business in Cameroon” Available at: https://tradingeconomics.com/cameroon/ease-of-doing-business (last accessed, 18 August 2020)