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Cameroon: Price Hikes Blamed On Ambiguous Gov't Policies
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The Post (Buea)
25 February 2008
Posted to the web 25 February 2008
Kini Nsom & Nformi Sonde Kinsai
The current price push inflation in Cameroon has been attributed to the ambiguous economic policies of the regime.
Dr. Francis Menjo Baye, an economist and lecturer in the Department of Economics and Management of the University of Yaounde II made this observation in Yaounde, February 22.
The occasion was the monthly debates on topical issues organised by the Fredrich Ebert Foundation Press Club. The debate centred on whether salary increase in Cameroon can be a solution to poverty.
In response to a question and singling out one example to justify government ambiguity in economic policies, which engenders trouble, Dr. Baye mentioned the declaration by President Paul Biya end of year address to the nation where he gave the hope of salary increase.
Biya had in that speech stated that: "in the coming months, we are going to see to what extent budget wedges can allow us to envisage the gradual raising of remuneration in the public service."
On the basis of such a declaration, Baye said economic agents have now adopted moves to reap as much as possible from such a possibility by indulging in endless tactics of speculation and hoarding to push up prices. He said if the president was categorical that there will be no salary increase, the present confusion and galloping price push inflation shouldn't have occurred.
The economist said if the speculative attitudes of economic agents are not dismantled, the inflationary tendencies would remain in motion. He noted that this would be so especially if enough idle capacity does not exist to increase production beyond the capacity of speculators and if imports are not forthcoming to close the gap between demand and supply.
Baye said in situations where high inflation is stirred by salary increase, exports are discouraged while imports are encouraged to benefit from high prices at home and borrowing is encouraged while saving is discouraged.
He noted further that inflation distorts the resource allocation function of an economy while the very forcefully hit are vulnerable groups with a weaker bargaining power, a category he claimed public sector workers in Cameroon fall under.
He argued that one of the ways to keep the purchasing power of workers intact is to index salaries to the rate of inflation. He, however, said "this is likely to work well only in societies where production and distribution channels as well as the rate of inflation are mastered and measured accurately.
Baye said claims that through budgetary savings over the years, salaries can now be increased is either ill-intentioned or at best, ill-informed. He said declarations that budgetary savings have been made are not tantamount to saying that the amounts saved are stacked in some account somewhere.
Meanwhile, one of the presenters, Jean Kandem, a mathematics teacher and a trade unionist, said the pre-1993 salaries of public workers enabled them to lead lives compatible with minimal exigencies for human existence.
Describing the 1993 drastic deductions in pay packages of workers as a salary tsunami, he said a public service worker on indice 1140 was on a gross monthly salary of FCFA 420,425 but by November of the same year the sum was cut to FCFA 154,287 representing a slash of FCFA 266,138 giving a percentage of 63.3.
He said Cameroon remains the only country in the world where such a massacre was inflicted on the salaries of public service workers.Kandem's analysis further indicates that between 1997 and 2000 a timid salary re-instatement moved a civil servant on indice 1140 from a gross monthly salary of FCFA 154,287 to FCFA 243,600 while as of today, the same civil servant is still expecting FCFA 176,825 as monthly gross wage to attain the 1993 level.
He observed that the two salary cuts of 1993 deprived civil servants and state agents of 75 percent of the purchasing power in the face of galloping inflation.
Even though he attributed the salary cuts to a fall in the prices of basic commodities in the world market due to an unjust international economic order, he said consecutive slashes in salaries was also due to poor management of the local economy.
He mentioned the confiscation, through impunity, of national riches by a few top officials, opaque management of petroleum revenue, non-declaration of assets which give room for vote holders to steal State funds, and so on.
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Abel Akara Ticha of CRTV and Junior Binyam of the French daily, Mutations moderated the debate.
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