In lieu of an abstract, here is a brief excerpt of the content:

59 Chapter Four The Effectiveness of Legal Instruments in Achieving Regional Balance and National Integration in Cameroon C.N. Ngwasiri The 1960 Investment Code (i) Summary The Code was designed to achieve a dual purpose: attract investment and assist in achieving the development objectives of the state. It offered four categories of incentives to business enterprises (Schedules A, B, C and D), corresponding to the activities of sectors where the government wanted to attract investments. These incentives consisted in exemption from taxes and custom duties for periods between ten and twenty-five years. Schedule A enterprises were allowed to import raw materials and capital goods duty-free for up to ten years, and their indirect taxes on finished goods for the first three years of production’ were either reduced, or simply cancelled. These enterprises were not to be affected by new taxes, or by adverse changes in the rates of existing ones. Schedule B enterprises were entitled to Schedule A benefits and to exemption from taxes on profits for up to five years. Companies in the mining and timber industries were exempted from paying royalties for the same period. Business organisations in Schedule C could negotiate agreements with the government under which they could be granted some, or all, Schedule B privileges. The government further provided a variety of guarantees including financial transfers for up to 25 years. The firms, for their part, undertook to maintain a certain minimum volume of production and to provide their employees with certain social amenities, including housing. Schedule D companies were those engaged in activities of particular importance to the long-term development goals of the state. They were granted Schedule C benefits and immunity to adverse tax changes and to new taxes for up to 25 years. (ii) merits and demerits of the 1960 code As Table A shows, by June 30, 1965, that is, just five years after the Code was instituted, 8,000 new jobs were made available by 38 new companies which had benefited from incentives under the Code. Their investments 60 totalled ten billion francs. This figure was almost quadrupled within the next four years to 38 billion francs and the number of companies rose to 133, generating a record 32,757 new jobs (Table B). And as we can see from Table C, by June 30, 1975, the Code had attracted investments from 218 companies totalling 84 billion francs. These statistics testify to the fact that the incentives provided by the Code successfully appealed to many companies and resulted in a very large increase in the volume of investments in the country. However, these figures are far from suggesting that the 1960 Code also succeeded in achieving regional equilibrium in the location of the new enterprises. Table C provides sectoral and regional distribution of industries as of June 30, 1975, as well as the percentages representing each sector of the economy and region of the country. It shows that over half of the industries approved by the National Investment Commission under the 1960 Code were located in the Littoral Province, and more than one-quarter in the Centre-South Province. The two provinces alone thus accounted for over three-quarters of the industries existing in the country at the end of the first 15 years of the Code. Although these industries were more or less evenly distributed among the four sectors listed in Table C, the Code has thus clearly failed to bring about balanced development of the regions of the country. The regional disequilibrium situation was even worse on the eve of the 1984 Code (see Table D). The number of enterprises which benefited from incentives under the Code had admittedly risen from 218 in 1978 to 452 in 1984, that is, more than double in just 7 years, but the number of those located in the East Province had fallen from 15 to 3 during the same period. On the other hand, enterprises located in the Littoral Province rose from 116 in 1975 to 262 in 1984, recording an increase of 125.85%. The lopsided location of industrial enterprises in favour of the Littoral and Centre-South Provinces, where a record 81 % of the industries were based by June 30, 1984 (Table D), shows that after almost 25 years, government policy of trying to achieve regional balance, through the Investment Code was a disaster. For a quarter century, therefore, regional inequalities against which government had waged sustained battle, were asserting themselves even more forcefully. A number...

Share