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Fuel subsidy cut could prompt Cameroon unrest

Hydrocarbon Engineering,


Following a meeting between Prime Minister Philemon Yang and trade union leaders regarding controversial plans to lift the country's fuel subsidy, opposition parties and unions have threatened to take to the streets in protest.

Precedent for Unrest

Plans to drop Cameroon's subsidy have been on the cards since late 2011. However, the proposals were shelved when the wholesale removal of similar subsidies in neighbouring Nigeria led to widespread strikes in January 2012. Yang's suggestion during the meeting with union leaders that a rise in fuel prices was "inevitable" raises fears of a repeat of the civil unrest that swept across Cameroon's major cities in 2008.

Repeated Conditions

Those incidents four years ago were what prompted the government to implement the current fuel subsidy. The public disquiet at the time was prompted by high commodity prices and government autocracy, conditions still present today.

President Paul Biya's government ignored calls to reverse parliament's decision to get rid of constitutionally mandated presidential term limits. Instead the government thought to throw money at the surface-level economic issues by setting lower fuel costs. Staving off further unrest in the lead up to the October 2011 presidential election was no doubt at the forefront of central government thinking.

Looming Difficulties

Almost a year into President Biya's latest seven year term, such concerns are somewhat distant. Crucially, however, it was never going to be a sustainable economic solution. An IMF report in September 2011 suggested that rising fuel prices would make the subsidy a macro-economic hazard. Among others, the IMF projected that if Cameroon continued subsidising fuel at the current level, expenditure would surpass the budget for the country's Hydrocarbons Prices Stabilisation Fund by 25 per cent, with potentially damaging economic implications. The fuel subsidy currently takes up around 14 per cent of the country's budget overall but this could rise even higher. Cameroon's dependence on the world of international financial institutions may make it hard for them to ignore these warnings.

Consequences

As we saw in Nigeria, the removal of fuel subsidies has knock-on effects, driving up the price of various other commodities and transport. Government officials have made unconvincing arguments that planned parallel decreases in parking charges and price freezes on cooking gas and kerosene would offset any rise in fuel costs. It is unlikely that the public will be satisfied with such half-baked deflection policies.

Possible Violence

The return of protesters to the streets, however, will partly depend upon the impact of the subsidy cuts to Cameroonians' purses. It may also depend upon the willingness of the government to use excessive force to contain such a development. Harsh security clampdowns may strongly deter would-be demonstrators, and the ruling party has proved in the past that it has no qualms about using force in response to civil unrest.

Author:

Hannah Waddilove is a sub-Saharan Africa specialist from AKE, a global security and risk management firm. For more information on AKE’s services please email intel@akegroup.com or call +44 (0)20 7816 5454. You can also view the website at www.akegroup.com and you can follow Hannah on twitter at http://www.twitter.com/hannahwaddilove

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/15082012/cameroon-to-lift-fuel-subsidy/


 

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