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Governance and Oil Revenues in Cameroon

Author

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  • Bernard Gauthier
  • Albert Zeufack

Abstract

Oil has been a curse for Cameroon, one of the potentially richest countries in Sub-Saharan Africa. While the discovery of oil in 1977 and initial prudent management accentuated hopes, Cameroon has become an example of growth collapse. GDP contracted by 5% on average per year, a combined 27% over the 8-year period, dropping per capita income in 1993 to half of its 1986 level. In 2007, Cameroon was still poorer than in 1985. Using recently available datasets on oil production, the World Bank’s Adjusted Savings data, and building on recent literature (Cossé 2006), this paper estimates the oil rent effectively captured by Cameroon since 1977 and analyzes factors explaining the aggregate savings and spending decisions from the oil rent that led to such poor development outcomes. The paper finds that Cameroon may have captured a sizeable portion of its oil rent – around 67%. However, only about 46% of total oil revenues accruing to the government between 1977 and 2006 may have been transferred to the budget. The remaining 54% are not properly accounted for. The paper argues that poor governance is the culprit. The decision to “save” Cameroon’s oil revenues abroad proves to have been sub-optimal given the lack of a transparent and accountable framework to manage them and the poor governance record of the country.The lack of transparency and accountability in oil revenues management has translated into a failure to engage in medium to long term development planning for the country. Donors have been pushing for improved governance and transparency in the oil sector for the past 20 years without significant success. The EITI, while a good initiative, is also in high risk of capture. The paper suggests changes in the incentives structure to reduce collusion and improve governance.

Suggested Citation

  • Bernard Gauthier & Albert Zeufack, 2010. "Governance and Oil Revenues in Cameroon," OxCarre Working Papers 038, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:038
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    File URL: http://www.oxcarre.ox.ac.uk/images/stories/papers/RevenueWatch/oxcarrerp201038.pdf
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    References listed on IDEAS

    as
    1. Frederick van der Ploeg & Anthony J. Venables, 2011. "Harnessing Windfall Revenues: Optimal Policies for Resource‐Rich Developing Economies," Economic Journal, Royal Economic Society, vol. 121(551), pages 1-30, March.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Is There a Curse of Resources? The Case of the Cameroon
      by Daron Acemoglu and James Robinson in Why Nations Fail on 2013-05-17 01:45:20

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    Cited by:

    1. Anthony Venables, 2010. "Resource rents; when to spend and how to save," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(4), pages 340-356, August.

    More about this item

    Keywords

    Cameroon; growth collapse; GDP; Adjusted Savings data; oil rent; poor governance;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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