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Cameroon Firms Look to Hydro to Help Close the Power Gap

January 11, 2010

DOUALA, January 11, 2010—Basile Nkwesi, Directeur Commercial of Multiprint, speaks for dozens of frustrated business managers in this busy enterprise center when he talks about Cameroon’s costly and unreliable electricity.

Power outages interrupt the printing process, impair equipment, and cause delays and cost overruns for customers.

“It’s an enormous constraint,” he says. “We lose clients to Asian competitors, because despite the distance, they’re more competitive.”

Like virtually all companies in the country, Multiprint backstops itself with a diesel-powered generator—one of the most expensive and inefficient solutions to power supply.

And when clients take their business elsewhere, it’s harder to expand, invest or recruit. In fact, Multiprint has cut its workforce to about 115 from 200 over the past two years.

Inadequate power to support a more diverse and competitive private sector is one of the principle factors accounting for Cameroon’s sluggish economic growth, which falls far short of the seven percent annual growth the country needs to achieve the Millennium Development Goals, or to reach the government’s goal of attaining middle-income status by 2035.

Graphics System, another printing company here, operates a network of production houses, but 15 days out of every month, there is a power outage somewhere in the system. Energy costs chew up about 10 percent of revenue, estimates Jean-Luc le Gall, Directeur General.

When businesses in Cameroon are surveyed about constraints to doing business, 67 percent of the manufacturing firms cite limited access to and high costs of electricity as among the top five constraints they face.

“The energy problem is a problem for the whole economy,” says Justin Fotsing, chief economist of Groupement Inter-Patronal du Cameroun.

Said ou Abdoulai Bobboy, at the Cameroon Chambre de Commerce argues that with “the huge investment in private generators” and the associated costs, investments are routinely postponed or shelved. “Projects founder or stall because of the fear of inadequate electricity,” he says.

To address the power gap, the government has called for the development of its hydropower potential, among the largest in Sub Saharan Africa. The anchor project in this strategy is the Lom Pangar Hydropower Project, a regulating dam on the Sanaga River that could support additional hydropower generation of as much as 6000 MW.

Private sector leaders say they applaud the project. Their main worry is that it won’t come on soon enough to provide near-term relief from high production costs.