Cameroon has implemented a sweeping reduction in customs duties on European goods, as confirmed by a statement from Minister of Finance Louis Paul Motazé. This bold move is part of the Economic Partnership Agreement (APE) involving Cameroon, the European Union (EU), and the United Kingdom. The adjustment targets the third category of products, deemed vital for public revenue due to their significant contribution to customs collections. The phased approach includes an annual 10% reduction, culminating in the complete elimination of tariffs by 2030.

The new tariff cuts apply to a range of strategic imports, including commercial vehicles, fuels, cements, paints, and industrial packaging originating from the EU and the UK. This follows an accelerated schedule for the first two product groups. Since August 4, 2023, goods in the second category—such as gypsum, clinkers, trucks, trailers, and generators—have entered Cameroon duty-free. Meanwhile, the first group, which encompasses pharmaceuticals, fertilizers, pesticides, computers, gas, and tractors, has enjoyed tariff exemptions since August 4, 2019.

Fiscal impact remains manageable for Cameroon

When the APE was first introduced, concerns arose about a potential budgetary shortfall due to reduced customs revenues. However, official figures show that over the past decade, the cumulative loss in customs income stands at approximately 103 billion FCFA, averaging slightly over 10 billion FCFA annually. While this is a substantial figure, it remains within the country’s fiscal capacity when viewed against the broader economic landscape.

Surprisingly, Cameroon’s total customs revenue crossed the 1,000 billion FCFA mark for the first time in 2023. This counterintuitive growth, occurring as European tariffs decline, can largely be attributed to a shift in the country’s trade patterns. Diversification of trading partners, particularly toward Asia, has offset the decline in European trade revenue by broadening the tax base.

China emerges as an unexpected winner in APE negotiations

The irony of the APE is evident in China’s dominance in Cameroon’s trade. Since 2013, China has held the top position as both Cameroon’s largest client and supplier. A 2024 report by the National Competitiveness Committee, under the Ministry of Economy, highlights this trend.

In the machinery and equipment sector alone, China’s market share surged from 23.8% in 2016 to 52.5% in 2024—a remarkable increase of 28.7 percentage points over eight years. During the same period, the EU’s share plummeted from 50.1% to 29.3% in 2023 before rebounding slightly to 32.3% in 2024. This decline of nearly 20 points raises critical questions about the effectiveness of tariff preferences granted to European industries in the face of China’s aggressive pricing strategies.

Benefits heavily skewed toward a small group of enterprises

An analysis of the distribution of APE tariff benefits reveals stark inequalities. As of December 31, 2023, out of 1,021 companies utilizing the APE preferential tariffs, fewer than 5% captured roughly 75% of the fiscal advantages. The disparity extends to company size, with large enterprises securing 80% of the gains, leaving only 20% for small and medium-sized businesses. This imbalance reflects both the structure of formal imports in Cameroon and the varying capacities of businesses to navigate preferential customs procedures.

The Competitiveness Committee notes that an examination of the top 50 companies benefiting from APE tariffs reveals a strong concentration in industrial and commercial sectors. With full tariff elimination slated for 2030, Cameroonian authorities face a critical decision: balancing the historical ties with Europe against the reality of an economy increasingly shaped by China’s influence. This shifting dynamic has already sparked discussions on revisiting the APE framework.