Report Urges a Rethink of Cameroon’s Informal Sector as Nation Longs for Full Employment

February 21, 2012

YAOUNDÉ, February 21, 2012- The labor market in Cameroon is characterized by a large informal sector, low-paying jobs, and low productivity due partly to the fact that the education system is not geared toward meeting the needs of the jobs market.   These are key highlights of the third issue of the Cameroon Economic Update, a publication of the World Bank’s office in the Central African nation.

The publication, which was released at the end of January, lays out the foundations of the Cameroonian economy.  It shows that almost all members of the work force (90 percent) earn their living in the informal sector. This sector consists basically of agriculture, which employs 53 percent of the informal work force.  The remaining 37 percent work in services (telecommunications, manufacturing, construction, banking, and the hotel industry) and retail. The formal private sector and the public sector employ 4 percent and 6 percent of the workforce, respectively.

This predominance of the informal sector, which is prevalent both in urban and rural areas, has a negative impact on wages.  According to Raju Jan Singh, the World Bank Lead Economist for Central Africa and the main author of the study, this is due partly to the low productivity of the agricultural sector, which is still largely under-developed.  “Formal employment has represented less than 10 percent of the labor force since the 1990s,” Singh explains, adding that this group is mainly composed of men living in urban areas.  “Current projections show that informal agriculture is likely to remain the main provider of employment in Cameroon in the short and medium term. Attention should therefore be focused on increasing productivity in this sector,” Singh says.

The report notes that efforts are already underway in this regard.  For example, cultivated areas are being expanded and work is being done to disseminate improved seeds, modernize agricultural equipment, and to teach farmers how to improve agricultural output.

Rethinking the Informal Sector

Beyond modernizing agriculture, the report urges authorities to fundamentally rethink their approach of the informal sector. “Rather than being viewed as a nuisance operating outside the regulatory framework, the informal sector should be seen as an asset for job creation and a way of giving millions of citizens the opportunity to aspire to economic mobility,” Singh says.  “The regulatory framework should therefore be adapted so as to facilitate the emergence of a generation of dynamic entrepreneurs operating on a small and medium scale.”

The report also illustrates a mismatch between vocational training and the needs of the labor market.  It notes, for example, that engineering students represent only five percent of total enrolment, a ratio that is at odds with the Cameroonian Government’s plan to invest in a number of large projects in energy and transport over the next few years. These projects are likely to create a greater need for skilled engineers.  Similarly, young people seeking apprenticeships face a problem because there is no formal structure for certifying the knowledge they acquire.  Yet this type of on-the-job training has a huge potential to equip them with practical skills needed for a particular profession. According to the report, this problem particularly affects young people from northern Cameroon, where apprenticeships are widespread.

Promoting Job Supply

But it would be wrong to conclude that worker profiles are the only problem; there is also a shortage of jobs.  Although the report notes that unemployment (as strictly defined by the International Labour Organization) is estimated at about 3.8 percent in Cameroon, underemployment concerns over 70 percent of the work force.  The phenomenon mainly affects women living in rural areas and is characterized by part-time work and remuneration below the minimum wage.

Conditions conducive to job creation must therefore be fostered.

Investments in infrastructure, and particularly in roads and energy, could make Cameroon more attractive to foreign direct investment, which would have a positive effect on employment opportunities.

Another avenue to be explored would be improvement of the business climate.  Cameroon gained seven places in the 2012 Doing Business index.  In particular, the country has made it easier to start a small or medium business by reducing the cost, the time needed, and the relevant procedures. These changes provide reason to hope for a better future.