While no reliable statistics on the scope of Foreign Direct Investment (FDI) are available, the US Department of State 2011 reports that FDI clearly plays a key role in the economy. The government is actively encouraging foreign investment and is in the process of undertaking reforms to facilitate further foreign investments. Although still not fully implemented, the government adopted an Investment Charter (in French) in April 2002 aimed at streamlining investment procedures, and the creation of an Investment Promotion Agency (IPA) was announced in 2005. The IPA became functional in February 2010, when its management was appointed. Still, however, the institutional setting for free markets and competition is deficient, as the enforcement of rule of law is hampered by corruption and inefficient public institutions. Foreign investment in Cameroon is limited, largely due to the problem of corruption, and much remains to be done in order to improve the overall business environment. According to the World Economic Forum Global Competitiveness Report 2010-2011, companies identify corruption as a top constraint to doing business in Cameroon. Corruption and other irregularities in the country's oil and forestry sectors continue to undermine the full economic potential of these sectors. For more information in this regard, access this profile's special page on Cameroon's oil and forestry sectors. The US Department of State 2011 reports that sectors which are particularly prone to corruption include customs, public health facilities and public procurement. Companies are recommended to use a specialised public procurement due diligence tool in order to help mitigate the costs and risks of corruption involving public procurement processes in Cameroon.

The intensive regulation of the economy by the government has been reduced since its participation in the Structural Adjustment Programmes (SAPs) of the 1990s. Nevertheless, Cameroon still has a large and strong informal sector against which formalised companies often find themselves in competition. As an example, over 90% of surveyed service companies compete against unregistered or informal companies, and 76% identify practises of informal sector competitors as a major constraint, according to the World Bank & IFC Enterprise Surveys 2009. Privatisation has been made a top-priority item for reform, and several privatisations of former state-owned companies have taken place. The process is still ongoing with the World Bank supervising some of the bidding rounds, however, the US Department of State 2011 reports that some of the bids have gone deserted and many larger companies are still awaiting privatisation, such as the national telephone company, CAMTEL. Moreover, whilst domestic and foreign companies are formally allowed on equal terms, accusations of preferential treatment of French companies have persisted, since the granting of licences to Cameroonian companies has been rare. Total privatisations are also rare, as the government normally continues to hold 30-45% shares in 'privatised' companies, although it is reportedly often willing to reduce its ownership of shares.

Infrastructure varies in development and measures to improve infrastructure in the Anglophone northwest and southwest provinces are continually deferred by the Francophone-dominated state in favour of Francophone areas. According to a Transparency International 2007 business survey (in French) conducted among domestic companies, corruption in the public sector is singled out as the largest impediment to doing business in Cameroon. Corruption within the private sector is also perceived to be widespread, and 18% of the surveyed companies admit having resorted to bribery in order to win contracts and market shares. In addition, according to the World Economic Forum Global Competitiveness Report 2010-2011, Cameroon ranks very poorly in relation to the ethical behaviour of companies, and it is reportedly common for companies to make undocumented payments and bribes in relation to imports/exports, taxation, to obtain public utilities and licenses and when interacting with the judicial system. The World Bank & IFC Enterprise Surveys 2009 reports that around 51% of companies expect to make informal payments to public officials in order to 'get things done' and that 61% identify corruption as a major constraint to doing business. In order to mitigate corruption risks, companies are strongly advised to develop, implement and strengthen integrity systems and to conduct extensive due diligence when planning to do or are already doing business in Cameroon.

While an Investment Charter (in French) was adopted in 2002 to attract foreign investors and streamline investment procedures, it is still not fully implemented. According to the US Department of State 2011, President Biya has postponed the deadline for implementation of some provisions of the Investment Charter to 2014. The delayed implementation of the charter has resulted in a complicated and challenging regulatory environment in which relevant portions of the 1990 Investment Code remain in effect until the full implementation of the Investment Charter. The US Department of State 2011 further reports that Cameroon's legal and regulatory systems are inefficient and often arbitrarily interpreted and enforced. Accordingly, Cameroon ranks poorly in the World Economic Forum Global Competitiveness Report 2010-2011, when measuring the negative impact of the administrative burden on doing business in Cameroon. The World Bank & IFC Enterprise Surveys 2009 state that senior management can expect to spend nearly 7% of its time managing the administrative burden of dealing with government regulations.

On the other hand, some positive developments must be noted; unlike the Investment Code of 1990, the Investment Charter 2002 does not discriminate with regard to equity ownership, it permits full foreign ownership, and procedures for obtaining land titles have been simplified and the authority decentralised. According to the World Bank & IFC Doing Business 2011, Cameroon has made major progress in several areas including starting a company, dealing with licenses and paying taxes. Moreover, the African Economic Outlook 2011 notes that the poor ranking by the World Bank has made the Cameroonian government respond with several measures to simplify the procedures governing tax-paying and starting up a company. Cameroon Tribune reports in a May 2010 article that pilot centres for One Stop Shops have been set up in Yaoundé and Douala in February 2010, with the aim of reducing the time it takes to obtain an authorisation to set up a company to 72 hours. As part of the efforts to improve the business environment the government has by March 2010 established three Certified Taxation Management Centres (in French).

Central public institutions are often ineffective and, according to the Bertelsmann Foundation 2010, peripheral powers of traditional authorities frequently exceed the power of state representatives. There is a risk that these leaders may occasionally act to enforce their own policies, and the government continues to struggle to fully co-opt them to its agenda. Public procurement is reportedly also a problematic area, even though some progress has been made since 2002, where systematic post-fact audits were conducted on valuable contracts. According to the Bertelsmann Foundation 2010, foreign trade is distorted by state regulation, special rules and tariff barriers, although Cameroon's membership in the Economic and Monetary Community of Central Africa (CEMAC) has facilitated the establishment of some common trade rules. CEMAC also sets uniform rules of the game for market participants, but state intervention continues and the institutional setting for free markets and competition is reportedly inadequate.

Cameroon is a member of the Organization for the Harmonization of Business Law in Africa (OHADA), which has the purpose of bringing Cameroonian business laws in line with other African member countries. Business laws are relatively clear but the challenges lie in their implementation. The US Department of State 2011 reports that Cameroonian law provides both foreign and domestic investors with property rights protection that comply with international standards and does not discriminate between foreign and domestic companies. On the negative side, unreliability, non-transparency and inefficiency in the judiciary weaken the rule of law. Many foreign and domestic companies complain about the process of enforcing their legal rights, including contract and property rights, due to time-consuming and complicated procedures. The fact that judges are not required by law to give reasons for their decisions adds to the lack of transparency of Cameroon's judicial system. In practice, both courts and administrative agencies grant preferential treatment to domestic companies and have been accused of corrupt practices. Corruption places private property in danger of being confiscated, according to the Bertelsmann Foundation 2010. In many cases, where rulings have been in favour of a company, there has been a lack of enforcement of court orders due to corruption. According to the US Department of State 2011, companies routinely exert pressure on the courts, which may be swayed by large bribes or by the status of politically influential persons. A company may choose from several procedures: adjudication by local courts, arbitration by the international courts of justice and international arbitration centres according to Cameroonian law and the arbitration regimes of which Cameroon is a member. These arbitration regimes include the International Centre for the Settlement of Investment Disputes (ICSID) and the New York Convention 1958. Cameroon accepts binding international arbitration between foreign investors and the government. Cameroon's Council of Business Managers and Professional Associations (GICAM) created its own arbitration centre to handle business disputes (see 'Private Anti-Corruption Initiatives' below). Access the Lexadin World Law Guide for a collection of legislation in Cameroon.