BDEAC Backs Feasibility Work for Cameroon’s $1B Minkouma

Cameroon's trade deficit has widened by 23% in 2025, a sharp reversal that threatens the country's macroeconomic stability and undercuts government ambitions to reduce import dependency through domestic production. Simultaneously, the Development Bank of Central African States (BDEAC) has moved to support feasibility work on the $1 billion Minkouma hydroelectric power project—a potential cornerstone of energy-led industrialisation meant to catalyse manufacturing competitiveness and reduce foreign exchange pressures.

The dual narrative—widening trade imbalance against a backdrop of major infrastructure investment—reveals the structural vulnerabilities in Cameroon's economy and the urgent calculus behind the power push.

## Why is Cameroon's trade deficit accelerating despite import substitution rhetoric?

Cameroon's 2025 trade deficit expansion reflects a fundamental disconnect between policy intent and execution. The government has long signalled commitments to domestic value-add in sectors like agriculture, textiles, and light manufacturing. Yet import bills have surged, driven by persistent reliance on foreign capital equipment, fuel, and raw materials that domestic producers cannot yet supply at competitive prices or scale. This suggests that import substitution programmes lack the coordinated investment, technology transfer, and supply-chain infrastructure needed to shift purchasing patterns meaningfully. Agricultural underperformance—Cameroon remains a net food importer despite arable land—has compounded the deficit, as global food inflation passes through directly to import costs.

Currency depreciation against the euro (Cameroon uses the CFA franc) has also imported inflation, making foreign goods nominally more expensive while failing to deter demand for essential inputs.

## How does the Minkouma project address underlying competitiveness?

The BDEAC's backing of Minkouma feasibility work signals institutional confidence that hydropower is the missing lever. Cameroon possesses substantial hydroelectric potential—currently underdeveloped—and chronic electricity deficits have hobbled industrial zones. Manufacturing cannot scale without reliable, low-cost power. A $1 billion investment could add 500+ MW of capacity, enabling energy-intensive sectors (agro-processing, cement, steel) to operate at export-competitive margins. Lower electricity costs would indirectly reduce the import content of domestic production by making local manufacture of food, textiles, and finished goods viable against cheaper imports.

BDEAC backing is significant: the multilateral development bank serves Central African economies and typically structures co-financing with bilateral and private actors. A greenlit feasibility phase typically unlocks World Bank, African Development Bank, or private infrastructure investor interest within 18–24 months.

## What are the near-term investor risks?

Implementation remains uncertain. Cameroon's track record on mega-projects is mixed; governance delays and cost overruns are endemic. The widening trade deficit, if sustained, could pressure the CFA franc peg, raising borrowing costs and delaying project financing. Additionally, Minkouma's benefit realisation is 4–6 years out; the import substitution problem worsens in the interim, creating political and currency risk that could deter both foreign direct investment and portfolio flows into local assets.

The 23% deficit widening is a yellow flag that structural reforms—not just infrastructure—are overdue.