Cameroon - Diversity, growth, and poverty reduction

Report No. 13167-CM Cameroon Diversity, Growth, and Poverty Reduction April 4, 1995 Population and Human Resources Division Central and Indian Ocean Department Africa Regional Office Documnt of te World Bank FL C  CURRENCY EQUIVALENTS Currency Unit = CFA Franc (CFAF) * US$1 = CFAF 577 (1994) US$1 = CFAF 290 (1993) US$S = CFAF 380 (1983) WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ASAFE Association pour la Promotion de la Femme Entrepreneur CAMSUCO Cameroon Sugar Development Company CDC Cameroon Development Corporation CDHS Cameroon Demographic and Health Survey (1991) CRAN Center for Food and Nutrition Research DSCN Directorate of Statistics and National Accounts ECM Yaounde Consumption Survey (1993) ELSR Enquete Legere de Suivi des Revenus (Yaounde), 1994. ERC Economic Recovery Credit FAFCAM Federation of Cameroonian Womens Associations FIMAC Fonds d'Investissements pour les Micro-Realisations Agricoles et Communautaires (Agricultural and Community Micro-Project Fund) FNE Fonds National de l'Emploi (National Employment Fund) HEVECAM Rubber Plantation Company HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome HBS Household Budget Survey (1983/84) IUCN International Union for the Conservation of Nature MINAGRI Ministry of Agriculture MINASCOF Ministry of Social and Women's Affairs MINDIC Ministry of Industry and Commerce MINEF Ministry of Environment and Forests MINPAT Ministry of Planning and Territorial Management NRM Natural Resource Management OCISCA Observatoire du Changement et de l Innovation Sociale au Cameroun ONCPB National Agricultural Product Marketing Board PIP Public Investment Program PIRIPER Public Investment Review/Public Expenditure Review PPA Participatory Poverty Analysis PTA Parent-Teacher Association(s) RGPH Population/Housing Census, 1976, 1987. SDA Social Dimensions of Adjustment SEMRY Rice Development Company of Yagoua SOCAPALM Palm Oil Company SODECOTON Cotton Development Company STD Sexually Transmitted Disease UDEAC Central African Economic and Customs Union WRI World Resources Institute WWF World Wide Fund for Nature FISCAL YEAR July I - June 30 * The CFA Franc (CFAF) is tied to the French Franc (FF) at the ratio of FF1 = CFAFIOO (prior to January 1994, the ratio was FFI = CFAF 50). The French Franc is currently floating.  Cameroon: Diversit, Growth, and Poverty Red1ction TABLE OF CONTENTS Preface Acknowledgments Executive Summary ........................................i PART I POVERTY IN CAMEROON: A COMPILATION OF EVIDENCE Chapter 1 Economic Performance in Historical Perspective .I Introduction: The Country Context .1 Economic Performance: The Quest for Growth .2 The Past as Prologue: Learning from the Past .4 Fiscal Policy: Unbalanced Spending Cuts and Priorities . 9 Conclusion: Uneven Effects of Recession .11 Chapter 2 An Income/Expenditure Profile of Poverty.13 Introduction .13 Poverty in 1983/84 .13 Poverty Trends, 1983-1993 .16 Developments in 1994 .25 Conclusion .27 Chapter 3 Coping With Crisis: The Viewpoint of the Poor .33 Introduction .33 Principal Poverty Issues .33 Linking Findings to Policy Recommendations: .43 Conclusion .44 PART II THE PERSISTENCE OF POVERTY: SYSTEMIC ISSUES Chapter 4 Food: Pervasive Insecurity .49 Introduction .49 Nutrition and Food Consumption .49 Agricultural Production and Marketing .53 The Agro-Industrial Sector .59 Conclusion .60  Chapter 5 Environment: Land, Law, and Livelihood ........................................ 62 Introduction ............................................ 62 Environmental Issues and Linkages to Poverty ..................................... 62 Land Tenure: Ownership and Use Rights ........................................... 66 Conclusion ............................................ 71 Chapter 6 Human Resources: The Nexus of Health, Education and Employment .......................................... 73 Introduction .......................................... 73 Demographic Dynamics .......................................... 73 Health .......................................... 74 Education and Schooling .......................................... 76 Employment .......................................... 78 Conclusion .......................................... 87 Chapter 7 Giving Voice to the Poor: Public Policy and Institutions ........... .... 90 Introduction .......................................... 90 Systemic Issues .......................................... 92 Supporting Local Initiatives and Participation by the Poor ............ ...... 98 PART III TOWARD A POVERTY REDUCTION STRATEGY Chapter 8 Poverty Reduction: A Question of Priority .................................... 103 Introduction .......................................... 103 Listen to the People .......................................... 104 Economic Policy from a Poverty Perspective ..................................... 106 Public Finance Policy .......................................... 112 Poverty Monitoring .......................................... 114 Chapter 9 Food Security: Building on Synergies .......................................... 116 Introduction .......................................... 116 Food Security: Cornerstone of Poverty Reduction .............................. 117 Nutrition .......................................... 120 Infrastructure .......................................... 122 Labor-Saving Technology Development and Application .................. 123 Chapter 10 Sustainability: Elements of a Long-Term Agenda ........................ 125 Introduction .......................................... 125 Sustaining Poverty Reduction in the Long-Term ................................ 125 Institutional Dimensions of Poverty Reduction .................................. 129 Environmental and Natural Resource Management Policies .......... .... 130 Land Tenure .......................................... 132 Conclusion: Back to Fundamentals .............................. ............ 134  ANNEXES Annex I: Statistical Annex .................................................. 137 Annex Il: Statistical Instruments for Monitoring Poverty ................................... 148 Annex III: Notes on Methodology .................................................. 152 Annex IV: Bibliography .................................................. 168 AnnexV: Maps .................................................. 179 LIST OF TEXT TABLES Table 1.1 Change in Share of Public Expenditures ................................................. 11 Table 2.1 Basic Data by Poverty Group, 1983/84 .................................................. 14 Table 2.2 Indicators of Poverty and Extreme Poverty ............................................. 15 Table 2.3 Consumption Budget Shares by Region .................................................. 16 Table 2.4 Trends in per capita Consumption, 1983 - 1993 ..................................... 17 Table 2.5 Consumption Budget Allocations, Yaounde, 1993 ................................. 18 Table 2.6 Trends in per capita Consumption by Type of Household, 1983-1993 ..19 Table 2.7 Poverty Level by Type of Household .................................................. 20 Table 2.8 Structure of Household Income by Poverty Level ................................. 20 Table 2.9 Household Income per capita by Employment Status ........................... 21 Table 2.10 Trends in Cash Crop Producer Prices, 1983-1993 ................................. 23 Table 2.11 Trends in Food Crop Producer Prices, 1984-1990 ................................. 24 Table 2.12 Trends in Earned Incomes in Yaounde .................................................. 26 Table 2.AI Urban and Rural Poverty Index by Province .......................................... 30 Table 3.1 Health Service Providers: Pros and Cons ............................................... 34 Table 4.1 Food Expenditure Per capita 1983 - 1993 .............................................. 52 Table 4.2 Consumption and Food Budget Shares, by Poverty Level ..................... 53 Table 6.1 Percent of Youth 15-24 without Schooling, 1987 .................................. 76 Table 6.2 Labor Force Participation Rates .................................................. 78 Table 6.3 Unemployment Rate in Relation to Education Level 1983-1993 .......... 80 Table 6.4 Salaried Employment in Relation to Education Level 1983 - 1993 ....... 81 Table 6.5 Weekly Hours Spent on Employment and Household Work ................. 84 Table 6.6 Job Creation and Job Plans of Young People Aged 15-29, 1992 ............ 85 Table 6.7 Monthly Earnings by Type of Employment in Yaounde ....................... 87 Table 6.8 Level of Meeting Selected Basic Needs by Region, 1991 ...................... 88 LIST OF TEXT BOXES Box 1.1 The Challenge of Diversity ...................................................1 Box 2.1 Expenditure Adjustment in Rural Areas .................................................. 25 Box 2.2 Pay Cuts in the Government .................................................. 26 Box 3.1 Poverty: A Self Assessment .................................................. 34 Box 3.2 Reasons for Enrollment and Retention of Girls in School in Douala ........... 39 Box 3.3 Transport Bias? .................................................. 41 Box 3.4 Isolation - The Case of Akwaya .................................................. 42 Box 4.1 Inadequate Breast Feeding Practices .................................................. 51 Box 4.2 Household Expenditures .................................................. 57  Box 4.3 Taxation of Cash Crop Farmers ............................................. 59 Box 5.1 The Population, Agriculture, and Environment Nexus ................................. 63 Box 5.2 Indigenous Peoples ............................................. 64 Box 5.3 Forest Taxation ............................................. 65 Box 5.4 Who Gets the Land? ............................................. 68 Box 5.5 Women and Land in Nso, North West Province .......................................... 70 Box 5.6 Conflict between Desirable Objectives ............................................. 70 Box 6.1 Labor Market Conditions in Yaounde ............................................. 79 Box 7.1 Information Inequalities, Poverty and Gender ............................................. 98 Box 7.2 Tontines .............................................. 100 Box 8.1 Broad Elements of a Strategy for Sustainable Poverty Reduction ............ 103 Box 8.2 The Action Plan of the Poor ............................................. 104 Box 8.3 Cameroonian Priorities ............................................. 105 Box 8.4 A Broad Reform Package........ ........ 107 Box 8.5 Boosting Labor Demand ................ 110 Box 8.6 Improving Agricultural Response to Price Changes .................................. 111 Box 8.7 Differential Incentives: Rational Economic Woman! ............................... 112 Box 8.8 Fiscal Strategy .................................... 112 Box 9.1 Livestock Production and Utilization .................................... 118 Box 9.2 Building a Cameroonian Food Industrial Sector .................................... 119 Box 9.3 The Micro-Enterprise Investment Program (FIMAC) ................................ 120 Box 9.4 "Enriching Lives" ..................................... 120 Box 9.5 "Enriching Lives": Priority Actions .................................... 121 Box 9.6 Early Warning and Emergency Relief .................................... 122 Box 9.7 Transports of the Mind .................................... 123 Box 9.8 Technology, Women's Time, and Productivity .................................... 124 Box 10.1 Growing Out of Poverty - How Long Will it Take? ................................... 126 Box 10.2 Investing in Girls' Education ..................................... 128 Box 10.3 Institutional Measures for Poverty Reduction .................................... 130 Box 10.4 National Environmental Management Plan .................................... 131 Box 10.5 Forest Management .................................... 132 Box 10.6 Land Tenure .................................... 133 LIST OF TEXT FIGURES Figure 1.1 Long-Term Movements in Output and Consumption .2 Figure 1.2 Long-Term Trends in Exchange Rate and Terms of Trade .3 Figure 1.3 Banking System Credit to the Public and Private Sectors .8 Figure 1.4 Wage Bill: A Growing Burden .10 Figure 2.1 Average per capita Consumption in Yaounde (in constant 1983 CFAF) 18 Figure 2.2 Distribution of Households and Income Levels by Poverty Groups. 22 Figure 2.3 Recent Consumer Price Trends by Product Type .27 Figure 2.AI Prevalence of Malnutrition by "Possession Index" . .30 Figure 3.1 Use of Health Services in the South-West Province, Cameroon .35 Figure 3.2 Eastern Province: Ranking of Most Common Health Ailments .35 Figure 3.3 The Medical Route in Five Regions for Two Time Periods .36 Figure 3.4 Problems Affecting Schools in the South West Province .38 Figure 3.5 The Impact of Poor Infrastructure on the Rural and Urban Poor .40  Figure 4.1 Stunting by Residence 1978 and 1991 .................................................. 50 Figure 4.2 Prevalence of Stunting by Occupation of the Mother, 1991 .........................5 1 Figure 4.3 Contribution to Various Sectors to Food Availability ................................. 54 Figure 4.4 Weekly Hours of Labor by Activity and Gender .......................................... 57 Figure 4.5 Gender Difference in Time Allocation .................................................. 58 Figure 6.1 Age Structure of the Population, 1991 .74 Figure 6.2 Changes in Prevalence of HIV Among Pregnant Women 1989-92 .75 Figure 6.3 Distribution of Health Personnel and Population by Province, 1989. 76 Figure 6.4 Unemployment Rate by Age 1983-1993 .80 Figure 6.5 Level of Activity of Women by Age 1983-1993 .83 Figure 7.1 Participation of Men and Women in Public Life, 1992 .97 LIST OF TEXT MAPS Map 2.A1 Poverty Index by Province ........................................ 31 Map 2.A2 Poverty Index by Province (Urban and Rural) ........................................ 32 Map 6.1 Illiteracy Rates by Province ........................................ 77 Summary Table of Principal Data Sources Type of Survey 7 Geographical Abbreviation used Year/Period of Coverage in Text References Implementation Income Siurvey Yaounde | ELSR _ April 1994 Price Survey P Principal Towns | 1993-1994 1-2-3 Survey (Employment + Informal Sector + aounCde 1-2-3 1992-1993 Consumption) (ELA/ECM1 OCISCA Douala OCISCA/ 1993 DSCN Demographic and Health Survey i National CDHS _ _ Agriculture Survey National _ _AG_1990 1989/1990 Agriculture Survey National AG1991 1990/1991 General Population and Housing Census National RGPH(87) 1987 Agricultural Census National AG84 1984 Household Budget Survey National HBS 1983/1984 Nutrition Survey National NNS 1978 General Population and Housing Census National RGPH(76) 1976 I-Standard of LivinR Surve Yaounde RI -%IA A Source: Annex 111.   Acknowlegments Many people have contributed to the preparation of this poverty assessment (PA). The PA received direct financial support from the Government of France (SDA Trust Fund) for the preparation of the poverty profile, and from the Government of the Netherlands (Poverty Assessment Trust Fund) for the Participatory Poverty Analysis (PPA). The PPA also received financial support from the Population and Human Resources Division of the former Occidental and Central Africa Department (Ok Pannenborg, Division Chief), and from CARE Canada and CARE Cameroon. The PPA was carried out in Cameroon by local researchers during the period March- September 1994. The teams which carried out the PPA are as follows: Ajaga Nji (Coordinator), Severin C6cile Abega (Technical Adviser). Eastern Province: Florentin Mpol Zalang, RADEF, Team Leader, Mendouka Mbele, Bikoi Achille; Far North Province: S. Abega, CARE Cameroon, Team Leader, Yvonne Njock Nje, Christianne Nyangono; South West Province: Jacob N. Ngwa, PAID, Team Leader, Emmanuel Gwan, Rebecca Ngeve, Banyong Fonyam Betha, Tata Robinson; Douala: Gisele Yitamben, ASAFE, Team Leader, Andre Pouassi, Beatrice Achaleke, Toukam Lydie-Claire, Fongang Kuete; Yaounde: Jean Mfoulou, University of Yaounde I, Team Leader, Valentin Nga Ngono, Cyrile Balla, Sidonie Zoa Ngaoundoua, Jacqueline Aboa Ngono. Throughout the PPA process, technical advice and backstopping was provided by CARE Cameroon, with support from CARE Canada. The guidance, pragmatism, and tireless support of Michel Larouche (then Director, CARE Cameroon) is especially appreciated, as is the support from Gail Steckley (CARE Canada), and Katharine Reid (Consultant-PPA Training). The core team which prepared the PA is as follows: C. Mark Blackden, AFTH-R (Team Leader), Antoine Simonpietri, AFTHR (Poverty Profile and Statistical Systems), Lawrence Salmen and Gibwa Kajubi, ENVSP (Participatory Poverty Analysis), Roger Key, AF4PH (Macroeconomics and Poverty), Elisabeth Shields, EDIDM (Institutional Issues), Thierry Brun, AFTHR (Food Security and Nutrition), Abdou Salam Drabo, AFTHR (Coping Mechanisms), Cyprian Fisiy, AFTES (Land Tenure), and Julia Clones, Consultant (Poverty and Environment). The assessment was coordinated at different times by Mark Woodward, AF5PH, and Qaiser Khan, AF3PH. The team benefited greatly from the support of the Resident Mission in Cameroon, notably Joe Ingram, Joe Ntangsi, Werner Roider, Helene Pieume, and Gina Bowen. The team also gratefully acknowledges the contributions of Andre Ngassam, Directorate of Statistics and National Accounts (DSCN)/Cameroon, and Francois Roubaud, DIAL (poverty profile), George Koppert (food security surveys), Pierre Romand-Heuyer (poverty mapping), Fabrice Bonnaire AF4PH (tables), and Daniele Jaekel, AFTHR (charts and graphs). The Lead Advisor for the Poverty Assessment is Gloria Davis, ENVSP. Peer reviewers are Helen Sutch, EC4C2, and Aubrey Williams, OPRIE. The Managing Division Chief is David Berk, AF3PH, and the Department Director is Andrew Rogerson (Michael N. Sarris, Acting).  Preface SUSTAINABLE POVERTY REDUCTION IS THE OVERARCHING OBJECTIVE OF THE WORLD BANK. IT IS THE BENCHMARK BY WHICH OUR PERFORMANCE AS A DEVELOPMENT INSTITUTION WILL BE MEASURED. (LEWIS PRESTON, POVERTYREDUCTIONHANDBOOK). To be poor is to be deprived and vulnerable: deprived of adequate nutrition, rudimentary health care, basic education, a living income, and opportunities to escape being poor; vulnerable to hunger, disease, ignorance, destitution, and to opportunities slipping away. If poverty persists, children born into poverty grow to adulthood and bring into the world a new generation of impoverished children. The cost of persistent poverty is measured in deferred dreams and wasted lives. A society that fails to extend opportunity to all its members-young and old, women and men, rural and urban-is a society adrift. Cameroon has been an independent nation for three and a half decades. Yet poverty is still an ever-present reality of many of its citizens' lives. Indeed, the extent of poverty has spread in the second half of the third and at the start of the fourth decade. Official statistics and the voices of the poor alike point to a society that has, so far, not done enough to confront its poverty. This report is intended to spark a debate on poverty in Cameroon: what it means to be poor, who the poor are, why they are poor, and what can be done about it. The problems are complex, but can be overcome with commitment, as other countries have shown. Above all, this report is a call for action. Another generation of poor Cameroonians is growing up fast. It is time for Cameroon to make a strong and unequivocal commitment to poverty reduction. If not now, when? The report endeavors to reflect the deliberations of a technical workshop organized in November 1994 in Kribi, the objective of which was to provide a forum for Cameroonians (inside and outside Government) to discuss an earlier draft of this assessment and to formulate ideas and priorities for poverty reduction in the country. The report also endeavors to incorporate and reflect comments received from the Cameroonian Government in January 1995.  EXecutive summary 1. Introdction 1. This poverty assessment (PA) was undertaken for Cameroon, as for other IDA-eligible countries, as part of the IDA mandate to focus Bank Group support on sustainable poverty reduction. The objective of the PA is: (i) to assess the extent, depth, characteristics, trends, and causes of poverty in Cameroon, and in so doing to draw attention to poverty in Cameroon, which affects more than 50% of the rural population and up to 30% of the urban population; (ii) to move poverty to the center of any sustainable development strategy by articulating a poverty reduction strategy for Cameroon, which could be recommended to the Government as an input into its own strategy formulation, and which could be supported by the Bank; and (iii) to initiate and structure a process of longer-term dialogue with Cameroon on poverty issues, while providing a basis for further poverty monitoring and assessment.' Poverty reduction is one of the key elements of the most recent Country Assistance Strategy, where it is stated that the dialogue on poverty reduction covers economic performance issues, resource mobilization and expenditure allocation issues, and policy actions aimed at improving coverage and efficiency of basic health and education services (World Bank 1994a). 2. Quantitative data, while not entirely absent, are both limited and in some respects out-of- date. The choice of the 1983-93 period for purposes of comparison is dictated solely by the availability of data from the 1983 Household Budget Survey (HBS) and the 1993 surveys in Yaound6 and Douala (1-2-3 Survey and OCISCA Survey), which provide the principal quantitative benchmarks for this assessment. It is important to note that the evolution between 1983 and 1993 in fact masks two sub-periods, which cannot be dated precisely owing to data limitations. The turning point occurred around 1986, with the period 1983-86 constituting the end of the boom period spurred by high petroleum revenues and high agricultural export prices. To avoid bias in interpreting the data, every effort has been made to place recent trends- economic (Chapter 1); income/consumption (Chapter 2); nutrition (Chapter 4); and human development (Chapter 6)-in a broader historical context, drawing, where possible, on data from the 1960s and 1970s. It is still too soon to assess the impact of the major events of end- 1993/early 1994, the cumulative 60% cut in public sector salaries, and the 50% devaluation of the CFA franc, though some initial trends can already be observed. II. The Dynamics of Poverty and impoverishmcnt in Cameroon 3. Cameroon is a country of striking diversity and tantalizing potential. Throughout the 1965-85 period, Cameroon enjoyed high-and at times very high-economic growth. Its performance was praised by outside observers, including the World Bank. Yet the 1983/84 1 An earlier draft of this assessment was presented at a technical workshop organized in November 1994 in Kribi Cameroon, the objective of which was to provide a forum for Cameroonians (inside and outside Government) to discuss the conclusions of the assessment and to formulate ideas and priorities for poverty reduction in the country. This report endeavors to reflect the deliberations of this workshop and to incorporate and reflect comments received from the Cameroonian Government in January 1995.  ii Household Budget Survey found both a high degree of poverty in rural areas and a marked inequality in the distribution of incomes, and the situation has further deteriorated since then (Part III below). Little is known about levels of poverty or income distribution in the mid 1960s. What is clear is that the high rate of economic growth was not sufficient to eliminate rural poverty or to achieve a desirable distribution of incomes during this period. 4. Since 1985, there has been a sharp and well-documented reversal in economic performance. GDP per capita declined by 6.3% per year from 1985 to 1993 and this translated into a 6.0% rate of decline in private consumption per capita. Cumulatively, this represents a drop in average per capita consumption of over 40% in eight years-a collapse that has been one of the most painful that any country has suffered, particularly coming after the extended period of growth over the previous two decades. As a result, the structural poverty which predated the crisis has combined with the rapid impoverishment that has accompanied the economic decline in the 1985-93 period to become a serious problem for Camneroon, one requiring urgent and sustained attention. 5. The decline in Cameroon's economic situation can be attributed in part to highly unfavorable extemal factors, notably the drop in export prices, declines in petroleum exports and revenues, and the high level of foreign debt service. These factors were very important in precipitating and extending the downturn. Cameroon's extemal terms of trade fell by over a half in 1985-88, implying that export volume would have had to double to pay for a constant volume of imports. Since then, the terms of trade have declined even further, though not at the disheartening pace of the mid 1980s. The difficult external environment was compounded by a marked loss of economic competitiveness. In 1985, Cameroon's real effective exchange rate moved sharply upwards, and by 1992 stood at 162 (1985=100), while it would have had to fall to 38 to match the terms of trade movement. The main causes of the change were beyond Cameroon's control: the appreciation of the French franc vis-a-vis the US dollar, carrying with it the CFA franc which maintained the same parity with the French franc, and the decision of the Nigerian Government to devalue the naira in 1985/86. 6. Labor Market Performance. The loss of product markets was reflected in lower demand for labor, and this limited the employment and income possibilities for all Cameroonians. As argued in Chapter 2, the mode of entry into the labor market is a key factor in the structure of income received by different households. Employment data illustrate the slow growth in demand for labor in the formal sector from the mid-1980s. New hiring has been extremely limited, and personnel reductions have often occurred through attrition. There have also been mass lay-offs in some enterprises, especially in recent years, as a result of bankruptcies and plant closures. The only sector of the economy where employment grew during the period was the public administration, which expanded by about 10%. Expansion of public employment absorbed only a minute fraction of new labor force entrants, and in any case has proven to be fiscally unsustainable. 7. The corollary of formal sector decline, and a key indicator of labor market stress, is the massive regression in the share of salaried employment as the informal sector expanded. The proportion of salaried to total workers was over 65% in 1983, and was still at 63% in 1987, but fell to under 50% in 1993. As the economic crisis worsened, the informal sector became the chief provider of jobs. In 1992, more than four in five jobs created were in the informal sector.  iii 8. The soaring unemployment Bo : Labor Market Conditions in Yaoundd rate is the primary indicator of the difficulties Cameroonians face trying Sharply diverging trends in labor supply and demand have led to to enter the labor market (Box 1). a large increase in unemployment which stood at about 7 pement Over a period of ten years this rate has in 1983. A 1993 study of the labor market in Yaounde provides risen from 7.3% of the active a grim view of contemporary urban labor rnaket conditions. Open unemployment was reported at close to 25 percent in population to 24.6%. Today, the urban 1993. Discouraged workers and underenployment add unemployment rate in Cameroon is significantly to this total. Whatever figure is accepted, it points one of the highest in Africa and well to a collapse of urban employment of catastrophic proportions. above the rates recorded in Latin The 1993 survey preceded the November 1993 cuts in civil service salaries and the January 1994 devaluation, both of which America and Asia, with youth have had a negative effect on employment opportunities in the unemployment (over 40% for the 20- short-term. 24 age group in 1993) particularly severe. Not only has unemployment risen sharply in recent years, but, in marked contrast to 1983, the rate of unemployment is now highest among tertiary graduates (Figure 1). Unemployment, and more specifically the labor market entry of young job seekers, has become a problem which economic policy can no longer afford to ignore. Figure 1 Unemployment Rates by Lew] of E&dcation, 1983-87-93 No schooling Primary 19 I I ~ ~ ~ ~ ~ ~~l~983 Secondary D 1 97 Higher 1993 0 5 10 15 20 25 30 36 (Percent) Source: HBS (1983); RGPH (1987); 1-2-3 Survey; own estimates. 9. Individuals and households, especially in Yaounde and Douala, have mobilized family labor and diversified activities in order to earn incomes. The labor market in Cameroon is overstretched, and even the informal sector is strained. Labor market stress has led to a pronounced decline in real wages. Even before the events of late 1993 and early 1994, average earnings in the informal sector were well below the 1993 poverty line. The informal sector is not leading the way out of poverty, but has to-date been sinking into ever lower equilibria. 10. Efforts by households to diversify income have resulted in greater recourse to all available sources of labor, and have translated into greater rates of participation of women and youth in the labor force. Participation by women in a low-earning and precarious informal sector,  iv notwithstanding the flexibility it may afford in balancing domestic and economic activities, is by no means uniformly beneficial. Young people, increasingly combining school and employment, are also faced with a highly precarious future, characterized by limited job opportunities and a set of expectations about future employment that is completely at odds with the likely patterns of labor absorption in the foreseeable future (Figure 2). Meanwhile, the education and training system has not met the real demand of society in the area of skills development for self- employment. Figure 2 Gap Between Job Prefernce and Jobs Crested for Youth aged 15-29 in Yaoude, 1992 90 s 70 ~30 20 - 10 Public Public Private Sector Infonnal Administaon Enbrpris Sector So,*: Enqults 1-2-3 (93). diision sebmat. Cc`ted Jobs - _Desired Empioment] 11. For the coming decades, an explosion of the labor force is in prospect, driven by demographic dynamics (para. 20), and this represents a critical challenge for Cameroonian society. To avoid continuing downward pressure on real wages and earnings, labor demand must essentially rise sufficiently to absorb the increase in the labor force. To achieve buoyant and rising levels of earnings, as was the case in the early part of Cameroon's history, even more rapid growth of labor demand will be necessary. Growth will need to be rapid, and the focus on labor- intensity in long-term growth extremely sharp, if Cameroon is to avoid deepening poverty. 12. Public Finance Performance. The way in which fiscal adjustment was attempted in 1985-93 proved very harmful to the poor. Reflecting in part reduced economic activity, in part a slackening of tax collection, revenues declined steadily as a share of GDP throughout the 1985- 93 period. As a result, expenditures were under severe pressure, though some items were not easily compressed. The wage bill was stable or at times rising throughout the period, except in late 1993. Instead, cuts tended to be made in materials, supplies and counterpart funds for extemally financed development projects. It is now a rare exception to find public sector facilities -schools, hospitals, clinics-with adequate supplies to fulfill their tasks unless these are supplied by a foreign donor. The views of the poor confirm this finding (Chapter 3). 13. Analysis of limited available public expenditure data portrays a trend of increasing stress on public budgets. There has been a continued squeezing out of non-salary expenditures to cover salary costs. Data for 1989-92 confirm that salaries continued to rise as a share of total recurrent expenditures-the aleady negligible (and dwindling) share of non-salary expenditures precluded the effective provision of critical non-salary inputs, such as medicines, textbooks, and equipment. Actual non-wage expenditures in 1992/93, the last year for which data are available, represented only 5% of total expenditures for education, and 13% for agriculture and health.  V 14. Regional differences in budget allocations and actual expenditures cannot be appreciated directly in budget data, though various proxies suggest a strong degree of centralization and marked regional disparities in resource allocations. Even recent trends in budget allocations do not indicate any shift in the composition toward priority development sectors, but rather the reverse. The trend of declining allocations to poverty-focused sectors was maintained in the budget allocations for 1993/94 and in the recently approved 1994/95 budget. Total recurrent expenditure budget allocations for 1994/95 have declined for agriculture, the social sectors, and other development sectors, while those for national sovereignty and environment ministries have increased. It therefore appears that budget allocations continue to favor sectors and activities which prima facie, and with the exception of the environment, are not focused on poverty reduction. III. A PrOfik of PoVet 15. The Situation in 1983/84. Data from the 1983/84 HBS suggest that previous patterns of economic growth in Cameroon were highly uneven, leading to considerable inequality among both socio-economic groups and regions in the country. Based on the 1983/84 distribution of consumption expenditures, a relative poverty line was defined to include as poor all households whose per capita consumption was at or below that of the 40th percentile of the income distribution, which corresponded to a consumption level of CFAF 78,000 (US$205 equivalent) (in 1983 prices). Poor and very poor households accounted in 1983/84 for only 20% and 8%, respectively, of total consumption. Per capita food consumption of poor households was four times less (and for the poorest, five times less) than that of non-poor households. Disparities were even greater for total consumption, as mean per capita consumption of non-poor households was CFAF 287,300, (US$756) compared with CFAF 36,700 (US$97) for the poorest and CFAF 50,500 (US$133) for the poor. The poverty status of households was (and still is) significantly affected by their age and gender structure, size, education level, and location (Table 1). Regional disparities in annual per capita consumption in 1983/84 were also marked. Geographic location was therefore a strong indicator of poverty. In 1983/84, poor households were concentrated in rural areas (Figure 3). 2 Table 1 Basic Data By Poverty Group, 1983/84 in CFAF and percent Poorest Poor Intermed. Non Poor Cameroon % households with 6+ members 64 59 44 30 45 Food consumption per capita 22800 30800 54600 119200 105000 Total consumption per capita 36700 50500 96000 287300 152000 % of infants 0-S 23 23 20 17 21 % of children 6-15 33 31 28 24 29 % who never attended school 64 62 54 44 55 Source: HBS(1983/14), own estimates. 2 The dearth of "poor' households in Yaounde and Douala is, of course, misleading, and should be interpreted only to signify that, using the relative poverty line, the 40%/ of households with the least resources did not live in the two largest cities. Undoubtedly, even in 1983/84 at the height of the oil boom, some households in Yaounde and Douala were not able to meet their basic needs, and thus fell below an absolute poverty line.  vi Figure 3 Powerty Inicators by Region, 1983-84 so 450000 so - - 400000 } @0 l X / 335DO00 so - - ~~~~~~~~~~~~~~~~~~~300000 so- #> ** { v 250000 , 40 _ A C i _ _ _ 200000 30 15~~~~~~~~~~~~~~~00(0 20 w_oo ID ~~~~~~~~~~~~~~~~~~~~~~50000 0 ~~~~~~~~~~~l0 North South South North Douala Yaounde Rural Rural Urban Urban inPoorhmtlds(1q C%withnoahoO&V rk Icmkof povrty(tq ---Av.peffczPft.yMty Wpa1tw (CFAF) Source: HBS(1983/84). 16. Poveny Trends to 1993. The period since the mid-1980s has been one of rapid impoverishment in Cameroon, and there has been a very sharp decline in per capita consumption. Direct household survey data are only available for Yaounde and Douala. The increase in the incidence of urban poverty has been marked. While fewer than 1% of households in Yaounde and Douala fell below the poverty line in 1983, more than 20% of households in Yaoundd, and 30% in Douala, did so in 1993. Data for Yaounde suggest that mean per capita consumption has fallen in nominal terms from CFAF 454,500 (US$1,196) in 1983 to CFAF 305,000 (USS1,051) in 1993. Adjusting for changes in relative prices results in per capita annual consumption of CFAF 231,000 (US$608) (1983 prices), or a reduction in value terms of about 50%. In 1964, per capita consumption amounted to CFAF 56,000, or CFAF 336,000 in 1993 terms. In this light, the level of per capita consumption in Yaounde is about 10% lower than it was thirty years ago (Figure 4). 17. The burden of decline has also been uneven. Though all groups of households showed a substantial drop in consumption in the period to 1993, those who were the poorest at the outset have proven to be the most vulnerable.3 Households which remained in the ':formal" sector, notwithstanding the employment stagnation, were comparatively sheltered but nevertheless sustained a 20% to 30% reduction in per capita consumption. "Informal households experienced both a contraction in demand and lower prices for the goods and services they sold, and their consumption declined by about 40%. Lastly, "inactive/unemployed' households were hardest hit: incomes shrank and consumption plummeted by more than 60%. The earnings gap between the formal and informal sectors may have been narrowed by the 1993 civil service 3 In this analysis, households are classified in three groups, along two axes: first, as a function of their per capita consumption: (i) 'poor' households with consumption below the poverty line (20% of households in Yaounde); (ii) 'intermediate' households with consumption between I and 2 times the poverty line (30%); and (iii) "non- poor' households with consumption more than twice the poverty line (SO4); second, as a function of their employment status: (i) "formal" (private/public), where the household head earns a wage or salary; (ii) "iformal" where the head is not salaried; and (iii) "inactive/unemployed", where the head has no employment, this latter being, a priori, a disadvantaged and vulnerable group from a poverty perspective.  vii salary cuts, but reduced demand from this group (representing about 22% of employment in Yaounde) has further depressed informal sector earnings. 18. Rural Poverty. The 1983 HBS data established that poverty was Figur 4: Mean Per Capita Consumptonh In overwhelmingly a rural phenomenon in Yaos (in constant 193 CFAF) Cameroon, estimating that I in 2 rural so households fell below the poverty line. 40 Rural areas have not been spared by 400 ~3B Cameroons economic collapse, and 30 rural poverty is estimated to have 2s increased considerably in the last 10 , 2c0 years. Producer prices for most crops i 100 have declined significantly over the so period. The drop in producer prices for o cash crops is estimated at 42% for the 1964 1983 1N3 period. The decline in real income from cash crop farming is estimated at some 60% over the period. For food crops, the fall in prices between 1985 and 1993 has been particularly steep. In per capita terms, production volumes have declined (from index 101 in 1981-3 to 86 in 1988-90). Total income from agriculture (cash and food crops, including own-consumption) shrank in value terms by 6% between 1985 and 1993. If demographic growth (estimated at 2% per year in rural areas) is taken into account, nominal per capita income fell by 25%. Assuming that the decrease in per capita consumption was uniform for all rural households, and that consumer prices increased by only 10% (as against 30% in Yaound6), the number of rural households below the poverty line would have risen from 49% to 71% during this period. These estimates suggest a considerable expansion of rural poverty in Cameroon over this period. Figure S compares the estimated number of households in poverty in Cameroon by region in 1983 and 1993. Figure 5: Incidence of Poverty by Region - 1983-1993 250 - South Rural North Rural South Urban North Urban Doumla Yewjft Source: HBS (1983); 1-2-3 Survey (1993); own estimates. 19. The Impact of the Public Sector Salary Cuts and the Devaluation. Over and above the cumulative decline of the 1986-93 period, and although data are provisional, it is already possible to assess the initial impact of the approximately 60% cut in public sector wages (January and November 1993) and the 50% devaluation of the CFA franc (January 1994) on household-level consumption and behavior, notably in Yaounde. Between December 1993 and March 1994, nominal salaries in the public sector remained roughly constant, not moving in the  viii administration and declining slightly in the public enterprise and formal private sector. By contrast, the incomes of self-employed people in the informal sector have fallen sharply, by on average 35%. This is largely attributable to contraction of demand from public sector employees. Here too, the burden of adjustment seems to be falling disproportionately on the lowest, and least secure, income categories. Meanwhile, the rise in the general level of consumer prices between December 1993 and April 1994 was 29%. By end-December 1994, prices had risen by 48% over the period. As a result real urban "incomes" fell markedly during the year, by about 1/3 in the public sector, and by more than 1/2 in the informal sector. 20. Human Resource DevelopmenL Cameroon's population is estimated at around 12 million (1993), growing annually by close to 3%. If current demographic indicators remain constant, as is likely, Cameroon's population will reach 15.5 million by the year 2000 and 21 million by the year 2010. More than 30% of the population is under age 10, and nearly 60% is under 20. The demographic pressure resulting from the youth of the Cameroonian population poses significant problems for all economic and social services, notably education, health, and job creation. Cameroon's health indicators resemble those of low-income countries in SSA. Children under 5 are at a significant health risk in Cameroon. The infant mortality rate is estimated at 65 per 1,000 live births and the under 5 mortality rate is 126 per 1,000 live births. HIV/AIDS is a health risk throughout Cameroon, including in rural areas. Prevalence rates vary by risk group and by province. Census and CDHS data confirm a high correlation between health service use and the socio-economic (education and employment status) and regional classification of households, with education status of mothers having a strong positive effect on health and on reducing fertility. Urbanization increases the likelihood that health needs will be met. 21. The period up to about 1987 has seen an impressive increase in schooling levels in Cameroon. Between 1976 and 1987, illiteracy among those 11 years and older fell from 53% to 41%, while the enrollment rate for the 6-14 age group rose from 67% to 73%. This helped to reduce both male/female and urban/rural disparities, though important differences persist. Regional differences in access to schooling are significant. According to the 1987 census, adult illiteracy ranges from less than 20% in the Littoral, South, and Center provinces, through 30%- 45% in the South West, West, East and Adamaoua provinces, up to about 70% in the North and Far North. The latter two provinces also have the lowest school attendance rates, regardless of sex or age group, as fewer than 50% of children aged 6-14 attended school in 1987, as against 90% in the Littoral, South, West, and Center provinces. Trends in educational enrollments since 1987 are unclear, though there are some indications that school attendance is declining in response to the crisis. 22. Nutrition and Food Security. In spite of a marked improvement in average nutritional status since independence in 1960, relatively high levels of malnutrition persist in Camneroon. Twenty-five percent of all Cameroonian children under 5 suffer from stunting, indicating a high prevalence of chronic malnutrition and chronic illness. There are large regional differences in the prevalence and the trends of malnutrition with incidence higher in the North and lower in the Center and West of the country. From 1978 to 1991, the level of chronic undernutrition declined by 60% in the principal cities but only by 20% in rural areas. Chronic undernutrition declined in all provinces but considerably less so in the Adamaoua/Nordi/Far North region and East province than elsewhere. There is also a high prevalence of micronutrient deficiency diseases (iron and iodine deficiencies, causing goiter and anemia) affecting mainly children and women  .x of low-income groups.4 Analysis of food consumption budget trends in 1983-93 shows that the level of food expenditure per capita has declined by 30% in 10 years. Changes in budget outlays for food items suggest that important shifts in dietary patterns have occurred, indicating a deterioration in the diet of Cameroonians. 23. Problems associated with hunger, dietary inadequacy, and high food expenditures Bo 2: PovertA SelfAssessment dominate the assessment made by the poor of The poor in all the regions distinguish themselves the distinguishing characteristics of poverty from the non-poor on five main criteria: (Box 2). Cameroon's cities are fed by complex chains of small producers and intermediaries. 4 the presence of hunger in their households; In both food production and marketing, women + fewer meals a day and nutritionally inadequate play a major role. Women have a diets; disproportionately heavy workload compared + higher percentage of their meager and with men. In a study close to Yaounde, the irregular income being spent on food; most striking contrast is between men's and 4 non-existent or minimal sources of cash women's total labor hours. Men's total weekly income; labor averages 32 hours, while women's is over 4 a feeling of powerlessness and inability to 64 hours, and much of this disparity results make themselves heard. from differences in domestic labor hours (Figure 6). If women are to have more time to Source: PPA Synthesis Report 1994. supply urban markets, they need reliable labor- saving technologies and credit. Fgure 6: Cameroon - Weekly Hours of Labor by Activity and Gender 70 50 _Other Productive Activsts 4 Paliine Production I!40 _ Cocoa Roduction