Outline

Climate change is an imminent threat to the people and the economy of Cameroon. It is expected to result in significant output losses, exacerbate poverty and inequality, food insecurity and conflict risk, leading to increased population displacement. Climate-related losses in output would impede export capacity, and may increase imports either to cope with food, sanitation and health needs during crises or to invest in rebuilding after crises.

Cameroon needs to step up both its adaptation and mitigation efforts. World Bank Climate Change and Development Report (CCDR) estimates that Cameroon will incur GDP loss ranging from 4 to 10 percent in the most pessimistic scenario by 2050 due to climate change if no adaptation action is taken. Cameroon is vulnerable to climate change and natural disasters, in particular, through its impact on human capital and economic sectors such as agriculture and infrastructure. Being a hydrocarbon producer and exporter, the country should also advance its mitigation efforts and reforms to further energy transition, as the global low carbon transition could lead to spillovers risks, including to the country’s financial stability.

Advancing climate agenda has been slow due to weaknesses in the institutional and policy framework for climate change. There is still a lack of a comprehensive legal and regulatory framework governing climate reforms. Climate considerations are yet to be effectively integrated in the Public Financial Management (PFM) framework, including in fiscal planning and public investment management.

Mobilizing climate finance is a serious challenge for the authorities. In the near term, the main source of climate-related financing will likely remain donor financing. Going forward, Cameroon needs to develop its capital markets to harvest the potential private funding for climate investments and engage the private sector in supporting its climate agenda.

Context

Cameroon is ranked 16th most vulnerable to impacts of climate change globally. Climate hazards are getting more severe in Cameroon. Temperatures are getting progressively warmer, with the temperature increase especially pronounced in recent years and this trend is projected to continue. While precipitation projections are less certain, models predict an increase in the number of heavy precipitation days. Extreme weather events, such as droughts and floods, are increasingly reported – with the number of recorded events doubling in the past three decades. These changes have a significant impact on the society and the economy, causing both immediate damages and long-term output losses.

Geographical diversity exposes Cameroon to diverse climate shocks. While some areas are less vulnerable to climate risks, all regions face their specific challenges, and failing to address them may lead to spillovers to other regions and the economy as a whole. Northern regions in the desert and semi-arid areas are most vulnerable to climate change and exposed to droughts and desertification.

Climate change is expected to affect agriculture the most, reducing output, exports, and incomes, and increasing food insecurity. Agriculture in Cameroon employs over 70 percent of the population, and accounts for almost a third of export earnings—most important after the crude oil. It is mainly rainfed, and thus, crop cultivation is highly dependent on changes in precipitation. Higher temperatures and heat stress are expected to affect agriculture through their direct impact on labor productivity, lower crop yields, and other heat-related human health shocks. Subsistence farming is widespread, in particular, in rural areas, and often relies on traditional farming methods and outdated technologies, making it especially vulnerable to weather shocks.

Climate change is also expected to impact livestock farming, fishing, and aquaculture. Livestock farming contributes about 13 percent to the agricultural output and employs 30 percent of the rural population, mainly in the Northern and Western parts of the country.Changes in weather patterns impact availability of water and food for livestock, their migration patterns, disease spread, and thus, animal health and productivity. Moreover, it threatens livelihoods through lower incomes and access to food in an already highly food insecure environment: about 2.4 million people were severely food insecure in June 2023.

Climate change is expected to limit water availability, particularly in northern Cameroon. Compared to other countries in Africa, Cameroon has abundant surface water resources, due to high precipitation throughout most of the year and in most parts of the country. However, there is high seasonality and regional variation in water availability (with water scarcity in Lake Chad region, for example). More intense use of water resources by agriculture and industry are also likely to impact demand for water and its availability.

Climate change would limit resources and, in turn, likely aggravate conflict and fragility risks. Cameroon, being a fragile and conflict affected state, has suffered years of conflict in its Extreme North, and Northwest and Southwest regions. Competition over resources will likely increase, with increased scarcity of water supply and increasing food insecurity. Climate shocks strain fragile states even further, acting as a threat multiplier, where consequences of climate change, including resource scarcity, food insecurity, and human displacement will likely aggravate conflict and violence.

Natural disasters damage infrastructure and thus affect people and economic activity. Road infrastructure in Cameroon is particularly vulnerable to weather shocks. More frequent floods and landslides are likely to damage and block roads—about 274 km of the transportation system (about 0.2 percent of all roads) is affected every year. Even if the direct damage to roads will presumably be small (around 0.06 percent of GDP due to multi-hazard risk based on a study cited by the IPCC), indirect costs are likely to be sizeable, as frequent disruptions to trade, movement of people, and goods will have consequences for food security and economic productivity. There can also be an impact on the neighboring countries that rely on the port infrastructure in Cameroon, e.g., ports of Douala and Kribi, such as Chad and the Central African Republic.

Climate change poses a threat to human capital accumulation and labor productivity. Cameroon ranks 151 out of 191 countries in the 2022 Human Development Index, with human capital development lagging in many areas. Children in Cameroon are the 10th most exposed and vulnerable to climate risks in the world. Climate impacts health and education directly through heat-related illnesses and damages to education infrastructure. Climate shocks can also impact human capital indirectly through limiting peoples’ ability to invest in healthcare and education due to income losses because of climate-related events. In addition climate change will likely contribute to spread of water-borne and food-borne diseases, though the exact impact is unknown.

Climate change exacerbates existing inequalities and poverty. Climate change affects the poor more. Over 55 percent of Cameroonians live in poverty which affects several aspects of their lives, including health, education, living conditions and work. About 38 percent are severely impoverished, with the poverty incidence particularly high in rural parts of the Extreme North and Eastern regions, where structural underdevelopment and frequent weather shocks, including floods and prolonged dry spells, have a detrimental impact on livelihoods.

Demographic growth will further increase Cameroon’s vulnerability to climate change. A growing population increases pressure on natural resources, exacerbates food insecurity and leads to more GHG emissions. Climate-related shocks tend to affect women more, which is explained by the existing gender inequalities,  such as limited access to resources, education, and economic opportunities that complicates their adaptation to climate change challenges. Demographic growth is also driven by high fertility rates in Cameroon explained by women’s lack of access to family planning and control of their reproductive choices.

Cameroon’s greenhouse gas emissions are only about 0.25 percent of the total global emissions, but higher than SSA average in per capita terms. The key contributing sectors are industrial process (47 percent) and land-use change and forestry (27 percent), followed by energy (12 percent), agriculture (10 percent) and waste (3 percent). As a large hydrocarbon producer, Cameroon should strengthen its mitigation policies, that should support its NDC commitments and also yield social and economic benefits. Strengthening mitigation efforts will also dampen the risk of a carbon lock-in, whereby the continued reliance on fossil fuels for development will significantly increase the cost of switching to cleaner energy sources in the future.

Key Climate Challenges and Reform Priorities

Strengthening Institutions

Cameroon places climate change among key challenges in its development strategy. The National Development Strategy (SND30) identifies adaptation and mitigation to climate change as key objectives to achieve sustainable and inclusive growth. Vision 2035 also emphasizes and recognizes the importance of climate change and its economic and social impact.

Cameroon took important steps towards building its institutional framework governing climate policies. The key climate change policy documents are the National Climate Change Adaptation Plan 2015–19, which is accompanied by a costed implementation plan, and Nationally Determined Contribution (NDC) updated in 2021. Several regional and municipal governments adopted local Climate Change Action Plans (CCAP).

However, important challenges remain in implementation of climate policies. First, both central and local governments face resource and technical capacity constraints in implementing adopted plans. Second, there is still no comprehensive regulatory framework that would require to integrate climate change into the government’s policy, planning instruments and processes. Finally, there is a lack of an effective coordination mechanism across arms and levels of government. This leads to duplication of functions and mandates with other agencies, which warrants clearly defining roles and responsibilities across ministries and designing appropriate coordination processes.

PEFA diagnostic conducted in 2023 revealed that climate change considerations are poorly integrated in Cameroon’s PFM framework. Climate risks are not considered in fiscal planning tools, such as macroeconomic forecasting and medium-term budget expenditure framework. There are no formal definitions in the budget nomenclature of expenditures related to climate, which impedes their effective monitoring and evaluation. Budget evaluation and audit do not consider the impacts on climate risks. Valuation of fixed assets do not take into account their exposure and vulnerability to climate change.

Public investment management lacks the framework to mainstream climate considerations in the project cycle. Cameroon envisages multiple projects to enhance its adaptation efforts, in particular, by improving the resilience of the national healthcare system, infrastructure, and agriculture. However, implementation of these projects is challenging due to lack of the framework to mainstream climate considerations in the public investment cycle. Projects addressing climate risks are not prioritized in the investment project selection, and climate-related considerations are not taken into account in procurement.

Building Resilient Agriculture and Infrastructure

Cameroon puts emphasis on enhancing adaptation efforts in agriculture and infrastructure. Priority areas outlined in the NDC include promoting climate-smart agriculture, building resilient energy and transport infrastructure, diversification of energy supply, disaster risk reduction, and improving population awareness and capacity. There are several challenges that hinder adaptation efforts, such as limited access to modern inputs and technologies, inadequate infrastructure, and financing constraints.

Building resilient infrastructure is crucial for the long-term economic health of Cameroon, especially for the agricultural sector. There are significant linkages between infrastructure and agriculture that become crucial in the context of climate change. Infrastructure in general is important for the development of sustainable and productive agricultural systems. However, frequent extreme weather events, such as rainfalls and floods, damage infrastructure, disrupting the transportation and storage of food products. Building resilient infrastructure can promote sustainable farming and protect the environment.

Advancing Mitigation Efforts

Under the NDC, Cameroon committed to reduce greenhouse gas emissions by 35 percent by 2035 relative to 2010, including an unconditional target of 12 percent. Cameroon committed to promoting renewable energy sources such as hydropower, solar, and wind energy. It also aims to improve energy efficiency to reduce emissions from the energy sector. Cameroon also recognized the importance of climate-smart agriculture practices to reduce emissions and enhance food security, through improved land management, agroforestry, and sustainable farming techniques. This reduction target is conditional on receiving international support in the form of finance, technology transfer, and capacity building.

Phasing out fuel subsidies should be part of the effective mitigation strategy. Cameroon’s government subsidizes fuel consumption by fixing the local pump prices for domestic fuel consumption.  In addition, the fuel subsidy is not well targeted at the poor and tend to benefit mostly the higher income households. Phasing out fuel subsidy should be accompanied by social protection measures, which would also contribute to building resilience to climate risks. The authorities are currently working with the World Bank on strengthening their social safety net.

Rapid deforestation hampers Cameroon’s ability to achieve its mitigation objectives. Despite the authorities’ conservation efforts, the annual rate of deforestation is around 0.6 percent and exceeds the rate of reforestation of only 0.1 percent. Given the role of the rainforest in mitigating climate change, protecting the rainforest and reforestation policies can play a crucial role in addressing climate challenges. Further strengthening forestry governance and law enforcement against illegal logging would support the policies to reduce deforestation. Promoting ecotourism would also make the rainforest more valuable and be part of the conservation strategy.

Gas flaring has significant environmental and economic implications. To deal with the problem of gas flaring, several potential solutions exist, such as capturing and utilizing this gas, and imposing penalties on companies to reduce such emissions.

Identifying Financing Sources

Estimated climate financing needs are significant. Addressing these needs would also help close existing development and infrastructure gaps.

In the near term, the main source of climate-related financial flows will likely need to come from official sources of financing. Introducing green measures in public financial management could be beneficial, for example, climate budget tagging, where budget lines are tagged if they contribute to climate mitigation and adaptation objectives of the country. Moreover, in a country with relatively limited fiscal space, climate budget tagging may need to go beyond climate positive public expenditures, and will have to identify high-carbon and climate-vulnerable public spending to support reform measures, such as fuel subsidy reforms. Such policies, if sequenced appropriately and integrated well into the existing PFM framework, could improve management of public finances as well as contribute towards climate goals. These measures also provide a strong signal to donors and reduce uncertainty.

Achieving climate objectives will not be possible without private sector involvement. Going forward, mobilization of private sector financing will be key to address climate related challenges. Therefore, participation of the private sector poses a significant challenge to implementing climate policies in Cameroon. Moreover, partnerships with businesses and industry associations can promote sustainable practices, technological innovation, and investment in low-carbon solutions. There is a need for a dynamic and competitive private sector to achieve long-term economic growth and support the country’s climate agenda. However, private sector’s involvement in climate considerations has so far been limited.

Among other obstacles, private sector has been constrained by weaknesses in the national Public – Private Partnerships (PPP) framework. Although the legal framework for PPPs has been in place for over a decade, management of PPPs varies among sectors, with some line ministries and agencies conducting PPPs autonomously without involvement of national PPP structures. Sectoral governance issues, such as in the energy sector and ports, may send negative signals to prospective investors. Therefore, a comprehensive review of the PPP framework and its implementation, including funding for the Support Council for the Realization of Partnership Contracts, the PPP unit, would support the development of climate-smart infrastructure projects.

Cameroon needs to develop its capital markets to harvest the potential private funding for climate investments. Raising private climate finance entails several steps, including ambitious and stringent climate policies, disseminating relevant data, and developing capacity. One possible approach to raise green financing is to develop taxonomy for thematic bonds, such as green or sustainability bonds ─ a financial product designed to raise funds for sustainable development projects related to mitigation and adaptation.