THE PROBLEM SURROUNDING INCREASED FUEL PRICES

CAMEROON`S INCREASED FUEL PRICES

By Tikum Mbah Azonga

Ever since Cameroon`s national football team was booted out of the ongoing World Cup competition, Cameroonians have been boiling with rage.  It was a double blow because it was not just the fact that the Indomitable Lions lost out but also because the behavior of some players while in Brazil for the games was below the belt. Worse still, top officials such as the Chairman of the Football Normalization Committee and the Minister of Sports and Physical Education were said to have been at daggers drawn while in Brazil.

As a result, the day the delegation returned to Cameroon not all of them  returned.. One player who came back was physically
assaulted by angry mobs and his car, damaged. Cameroon`s President Paul Biya issued an ultimatum to Prime Minister Philemon Yang to give .  
him a report on what went wrong with the national team as well as make suggestions for improving the situation, within one month.

However, the euphoria was overshadowed on July 1, when the government suddenly increased fuel prices throughout the country. The new prices went into effect on the same day. So, a liter of petrol rose from 569 FCFA to 650 FCFA, which represents an increase of 81 FCFA. The price of diesel went up from 520 FCFA to 600 FCFA.   A bottle of cooking gas climbed from 6000 FCFA to 6500 FCFA. However, kerosene was maintained at 350 FCFA per liter.

Reaction was swift with taxi drivers grumbling that it was an unfair deal. The Cameroon Consumers` League announced a strike action to start on 7 July. The League warned: "The specter of the hunger strikes of February 2008 is already looming over Cameroon after the recent increase of (fuel) pump prices".   The national president of the transporters trade union, CGSTC, described the rise as "the last straw breaking the camel`s back, considering that the transport sector is already undergoing the anguish of unfair competition imposed by clandestine drivers, nuisance from the men in uniform, and the multiple road check points."

Nonetheless, any keen observer of the Cameroonian political landscape must have noticed that sooner or later, there was bound to be these increases. Some seven or so months ago, clearly with the intention of introducing the imposition, the government sent out feelers into the field to sound the reaction of Cameroonians.

Apart from that, international donors such as the International
Monetary Fund (IMF) have been ceaselessly urging government to
cut subsidies it was using to cushion the price of fuel and
the fallout in other more socially beneficial projects such as health and education. In fact, government subsidies on fuel prices cost up to 157 billion CFAF in the first half of the current fiscal year.


The IMF also indicated that Cameroon`s overall fiscal deficit for the first half of the 2014 budget year was up to 5.5 per cent of GDP because of the adverse effects of fuel subsidies and an over expanded investment programme. The Fund warned that the figure could reach 5.7 of GDP in 2015. It said: "The cost of these subsidies remains elevated and crowd out
other expenditure that could promote more inclusive growth."

The Cameroon Journal summarized the readings which Mario de Zamaróczy, head of an IMF delegation to Cameroon in April-May 2014 made thus: “He said recent macroeconomic developments in the country were broadly in line with the projections made at the time of the previous mission in 2012. Growth reached 4.4 per cent in 2012 from 4.1 per cent in 2011, thanks to a rebound in oil production. Inflation has been moderate with a 2.4 per cent consumer price increase in 2012. Credit to the economy remained subdued and rose by 2.6 per cent. Looking ahead, he said Gross Domestic Product (GDP) is projected to accelerate to about 4.8 per cent in 2013 and to rise to 5.5 per cent in the medium term, fuelled by an expected rise in oil production and projected increases in public investment in infrastructure. However, growth would need to be sustained at a higher level for Cameroon to reach its objective of becoming an upper-middle income country by 2035.”


If it were up to the IMF, Cameroon would have implemented the fuel cuts much earlier, had it not been wary because of the riots
that rocked the country  in 2008 when the prices of primary basic
foodstuffs went up and the fact that its neighbor, Nigeria,
unsuccessfully tried to cut similar subsidies in 2102.

Whatever is the case, the government has gone on the defensive. Trade Minister Luc Magloire Mbarga Atangana was quick to announce that despite the increase in fuel prices, those of high consumer goods such as rice, fish and table oil would remain unchanged. The minister said: "Importers and wholesalers have assured us that there is enough stock.We are therefore certain that the second quarter is guaranteed. Since 2008, there has not been any problem of supply in the market and it should not be the case now." He warned traders who might want to take advantage of the fuel price increase to raise their own prices.

The government-run national daily, Cameroon Tribune said: "It emerged from the separate meetings that available stocks of imports and local production of rice are estimated at over 22 000 metric tons and could supply the national market for four to five months. Meanwhile for fish, stakeholders said there is enough stock for the months ahead, pledging to maintain the peace."

The very vocal Communication Minister and Government Spokesman Issa Tchiroma Bakary explained that “the decision by the government (to increase fuel prices) is purely for economic reasons to meet up with envisaged projects towards Cameroon`s emergence.”  According to Tchiroma, far from completely removing subsidies, government has reduced them, which means that Cameroonians will continue to benefit from subsidies, albeit not to the same extent as before. He pointed out that the actual price of a liter of petrol which has now risen to 650 FCFA (from 569 FCFA) should really have been 825 FCFA. Diesel whose increased price is 600 FCFA (from 520 FCFA) should have been 770 FCFA; and the gas bottle whose cost has been increased from 600 FCFA to 650 CFA should really have been 9230 FCFA.

The minister concluded that “the State has therefore not abandoned consumers since the subsidy to oil products is still there. It is simply reduced in a reasonable proportion to be easily supported by the State budget.” Other accompanying measures announced by Tchiroma include an increase in civil servants’ salaries which he said was already being worked on by the Minister of Finance. He said there would be a 50 per cent reduction in the withholding tax for low income earners, a 50 per cent reduction on the axle tax and a 50 per cent reduction on parking tax. Furthermore, the guaranteed minimum wage would be revalorized.

What happens next in the country depends on how tactfully the government proceeds.