Cameroon’s B-/B rating: the political transition risk hiding in plain sight

Standard & Poor’s (S&P) has affirmed Cameroon’s sovereign rating at ‘B-/B’ with a stable outlook, a decision that looks reassuring on the surface but places the political transition in Yaoundé at the heart of market concerns. The verdict, made public in mid-September, lands at a pivotal moment when the long-taboo question of presidential succession is becoming a central variable in how the country’s risk is assessed. For investors and multilateral partners alike, the reaffirmation functions less as a vote of confidence than as a subtle caution.

A rating kept in place, but a warning barely concealed

By maintaining the ‘B-/B’ status, S&P acknowledges the fiscal path Yaoundé has followed under its programme with the International Monetary Fund (IMF), while underscoring the structural fragility of Cameroon’s economy. The rating remains firmly in speculative territory, five notches below investment grade, signalling a repayment capacity seen as vulnerable to shocks. The agency’s analysts highlight a public debt burden that continues to weigh on revenues, and budget execution that is disrupted by volatile hydrocarbon prices.

Beneath the apparent stability, S&P stresses the political uncertainties that could derail the fiscal trajectory. The country is entering a sensitive electoral sequence, with the presidential vote set to determine whether the regime in place for more than four decades will extend its longevity. This context is pushing up the risk premium demanded by markets, in a regional environment already shaken by Sahel turbulence and tightening financing conditions for African issuers.

Presidential succession: the new risk premium

It is the question of transition at the top of the state that crystallises attention. The US agency believes that the outcome of the vote and, more broadly, the management of the post-Biya era will shape the country’s macroeconomic stability in the years ahead. A controlled institutional handover would help preserve relations with donors, starting with the IMF, whose programme anchors structural reforms. Conversely, any political deadlock, post-election dispute or poorly prepared vacancy would expose Yaoundé to a sudden withdrawal of capital and a downgrade of its credit signature.

Cameroon, the largest economy in the Central African Economic and Monetary Community (CEMAC), serves as a regional anchor. Its credit signature directly influences the financing conditions of other issuers in the franc zone, from Gabon to the Republic of Congo. A sovereign downgrade in Cameroon would therefore have immediate contagion effects on the Bank of Central African States (BEAC) and on shared foreign exchange reserves, already strained by member countries’ external refinancing needs.

Budget reforms and persistent vulnerabilities

On the macroeconomic front, S&P acknowledges efforts to streamline fuel subsidies, broaden the tax base and contain the wage bill. These measures, required under the letter of intent signed with the IMF, have helped stabilise the budget deficit around levels deemed sustainable. Yet non-oil revenue mobilisation remains weak, at around 12 to 13 percent of gross domestic product, a ratio well below the standards of comparable economies.

Dependence on hydrocarbons also continues to undermine external balances. Cameroonian oil production is structurally declining, eroding export earnings at a time when import needs, particularly for food and energy, remain high. External debt servicing, estimated at several hundred billion CFA francs per year, absorbs a growing share of public resources, limiting fiscal room for long-term investment.

Technical and financial partners are also monitoring the effective implementation of IMF recommendations on the governance of state-owned companies, particularly in the hydrocarbons and electricity sectors. The National Hydrocarbons Corporation (SNH) and Camair-Co are among the entities whose restructuring determines the credibility of the announced fiscal trajectory through 2027.

A signal to investors and donors

For asset managers exposed to African debt, S&P’s message is twofold. The stability of the rating opens the door to new eurobond issues or private placements, if market conditions allow. But the explicit mention of political risk invites caution, just weeks before an event whose outcome will redraw the geography of power in the sub-region. Western diplomats and Gulf capitals, now very active in financing African infrastructure, are watching with equal attention.

The agency has expressly linked the stability of its outlook to the authorities’ ability to ensure an orderly transition, a prerequisite for maintaining access to international capital markets.