Have you been considering starting a business in Cameroon? We’re here with a rundown of the important factors you’ll want to take under consideration.
Starting a business in Cameroon is a promising option for many diverse ventures. Cameroon is a French- and English-speaking coastal nation in West Africa, with a young population of around 23.4 million and a high literacy rate of around 71.3% of the adult population. Business in Cameroon benefits from its membership in the Economic and Monetary Community of West Africa, as well as from an Economic Partnership Agreement with the European Union, by which they avoid custom duty on many export products. Cameroon’s national currency is the CAF, or Central African Franc (XAF). Read on for particulars on starting a business in Cameroon.
First Steps
As with beginning a business anywhere else in the world, you’ll need to draft a strong business plan that includes in-depth information on your business concept, available resources, projections, strategies, research, and more. Check out our free business plan templates available for free download to help you along in starting your business in Cameroon.
Business in Cameroon adheres to the OHADA schema of corporate law, an acronym for the French title Organisation pour l’harmonisation en Afrique du droit des affaires“, which translates into English as “Organisation for the Harmonization of Corporate Law in Africa,” and is a corporate law scheme applied in 17 African states (currently) and is meant to counteract economic underdevelopment in sub-Saharan Africa. OHADA aims to foster a positive investment climate in its member states and thus promote both domestic and foreign investment.
Once you’ve written a bullet-proof business plan, you’ll want to determine which business structure will make the most sense for your enterprise. In Cameroon, you’ll most likely wish to register as a Sole Proprietorship, A Private Limited Company (SARL), a Public Limited Company (SA), or a foreign branch (also known as a Succursale). Branch Offices and Sole Proprietorships have unlimited liability, where the inverse is true of SARLs and SAs.
A Private Limited Company (SARL)
- Requires at least one director and one shareholder
- Minimum share capital of XAF$1,000,000.
There is also an important difference between a SARL run by one director and a multi-person SARL run by a board of directors. Regardless, both structures must open a bank account for their business and have at least 1 million XAF or around 1760 USD for launch capital.
A Public Limited Company (SA):
- Requires at least one director and one shareholder (can be a person or company)
- Needs at least XAF$10,000,000 in divided share capital if the company wishes to be publicly listed upon registration.
- Must appoint 2 auditors, 4 if listed at the Douala Stock Exchange.
A Succursale:
- Requires at least one regional director (can be of any nationality) to oversee business in Cameroon.
- Every two years, must seek branch status renewal from the Ministry of Trade and Commerce, or register in Cameroon as a Limited Company. http://www.mincommerce.gov.cm/
You can also set up as an individual or a small business if the business’ annual income amounts to fewer than 49 million francs CFA, or around 86,000 USD. In this category we find very small, small, and medium- sized companies, ranging from one person to a handful of people. While this is often the cheapest form of business to start, especially if you’re a small or one-person company, it can be difficult to acquire bank loans or external financing for your project, and you won’t be in a capacity to bid for public projects.
Registering
Once you’ve decided upon the right structure for your business in Cameroon, you’ll need to register your business with the Center for Enterprise Creation Formalities (CFCE), which can be reached online and on Facebook here for further information regarding national office locations. Registration can be expected to take from a couple of days to a couple of weeks, and incorporation can take up to five weeks. You’ll also need to get a tax number and a business patent from the Taxation Department, where you’ll need to pay an annual fee. If you’ll be hiring, you’ll also need to register with the National Social Insurance Fund (CNPS) and the Labour Office.
The CFCE currently has five centers within the Minister of Small and Medium Enterprises in Social Economy and Artisanship, and can be found in Yaoundé, Douala, Garoua, Bamenda et Bafoussam. Here is what you’ll need, depending on what kind of business you are registering:
Individual Enterprises
- A photocopy of a national ID card or birth certificate
- A photocopy of your marriage license, if applicable
- An affidavit stating that you are not forbidden to practice business in Cameroon
- An affidavit attesting to your residency in Cameroon
- In case of a loan or investment, the proper paperwork to demonstrate your possession of funds
- An authorization to practice commerce, if applicable
- A location plan
Foreign Investors
- A copy of your passport or visa/residency card
- An affidavit stating that you are not forbidden to practice business in Cameroon
- An affidavit attesting to your residency in Cameroon
- Une copie de l’acte de mariage,
- A photocopy of your marriage license, if applicable
- A 4×4 ID photo, colour or black and white
- A location plan signed by the applicant
Promising Sectors
With an annual economic growth rate of 4,8% in 2016 and a rich and varied economy, business in Cameroon is booming and only set to improve in the future.
- Service: Transportation and logistics, telecommunications, education, health services, and more, are all promising sectors in Cameroon. In terms of developing domestic infrastructure and providing important services, the service sector is worth looking into for numerous reasons.
- Agriculture: Cocoa, bananas, coffee, cotton, and lumber are only some of the most agricultural goods that can be grown and/or harvested in Cameroon and sold abroad, and Cameroon benefits from one of the most diverse agricultural offerings in all of Africa.
- Artisanal Goods: While artisanal goods actually account for a significant portion of Cameroon’s economic activity, especially domestically, it’s a sector that remains disorganized. Many artisans do not actually define themselves as such, and these businesses can exist in legal and economic grey areas for a long time. However, it’s a sector that has great potential and a country that has a rich culture filled with special objects and techniques for making them. Don’t let the sector’s up-and-coming nature intimidate you.
- Import-export: As previously mentioned, Cameroon benefits from its Economic Partnership Agreement with the EU. The most popular products exported from Cameroon are coffee, cotton, cocoa, bananas and plantains, and certain palm-oil derivations. In terms of importation, it remains largely focused on machinery and industrial technology, and electronics, such as vehicles and telecommunications equipment. Whether importing or exporting, it’s a worthy sector to look into if you’re considering starting a business in Cameroon.
- Innovation and Start-ups: The country has seen its start-up culture flourish rapidly in the last few years, and it’s a wonderful place to consider starting your business in Cameroon. Thanks to grants and programs like the Tony Elumelu Entrepreneurship Program, oriented towards helping entrepreneurs both imagine and fund their business initiative, we can expect this trend to continue. Popular orientations for start-ups are around communications, health services, agro-business, and even fashion. The sector’s main difficulty is a lack of financing, something to keep in mind when considering the resources at your disposal and the idea you’d like to make a reality.
Tax Obligations
Here, we’ve round up information on the notable tax expenses your business in Cameroon may incur include but are not limited to:
- Value-Added Tax (TVA): 19.25%. Excise taxes of 25% apply to cigarettes, cosmetics, and luxury products.
- Company Tax: 33% (30% corporate tax increased 10% for communal taxes)
- Capital Gains Tax: Gains from the sale of listed shares or the transfer of rights related to natural resources may incur a 16.5% withholding tax.
- Professional Tax: Newly-incorporated business in Cameroon are exempt from this tax during the first year of operation.
- 0.159% turnover of large companies (a minimum contribution of XAF 5 million and a maximum of XAF 2.5 billion)
- 0.283% turnover of medium-sized companies (a minimum contribution of XAF 141 500 and a maximum of XAF 4.5 million)
- 0.494% turnover of small companies (a minimum contribution of XAF 50,000 and a maximum of XAF 140,000).
Newly incorporated businesses are exempt from this tax in their first year of operation.
With a large, educated, and bilingual workforce, a cosmopolitan outlook, and beneficial economic agreements within the domestic government and on an international scale, starting a business Cameroon is a compelling option when considering where you’ll find economic opportunity coupled with a great pool from which to draw your workforce. 62.5% of Cameroon’s population is under the age of 25, and with a high literacy rate only set to come closer and closer to 100%, Cameroon is a country with a fantastically competent work force and numerous economic opportunities for you and your ventures. Business in Cameroon is booming.
If you’re looking into other localities for your nascent business venture, check out our sections on Starting up in the United States and the United Kingdom, and don’t forget to check back for further articles on where to start your business. And don’t hesitate to leave us questions or feedback in the comments section.