Political Instability and Foreign Direct Investment in Cameroon: Navigating Risks and Resilience

Political instability has long cast a shadow over Cameroon's economic prospects, creating a volatile environment for foreign direct investment (FDI). As the country approaches its October 2025 presidential election, the interplay between governance challenges and market resilience becomes a critical focal point for investors. While urban hubs like Douala and Yaoundé have shown surprising resilience in real estate markets, broader economic vulnerabilities persist, particularly in conflict-affected regions. This analysis examines how political uncertainty has shaped FDI trends, sector-specific impacts, and the government's efforts to stabilize the investment climate.

FDI Trends: A Mixed Picture

Cameroon's FDI inflows have fluctuated significantly since 2020. According to Lloyd's Bank Trade data, inflows reached $963.53 million in 2021 but declined to $799 million in 2023, rebounding to $925 million in 2024. This volatility reflects the dual pressures of political instability and global economic headwinds. While the country remains a key FDI destination in Central Africa, its inflows-accounting for just 1.6671% of GDP in 2023, according to Generis Online-fall short of its regional potential. China has emerged as the largest investor, funding infrastructure projects like the Kribi Port and the Memve'ele Hydroelectric Dam, though challenges such as poor infrastructure and governance issues continue to deter broader capital inflows, Generis Online notes.

Sector-Specific Impacts: Real Estate and Beyond

The real estate sector exemplifies the duality of Cameroon's market resilience. In Douala and Yaoundé, property prices rose by 20–30% between 2020 and 2025, driven by demand from foreign investors who account for 10–15% of transactions, according to The African Vestor. However, conflict-affected Anglophone regions and areas near the Nigerian border have seen stagnation or declines, underscoring the sector's sensitivity to security conditions, as The African Vestor reported.

Beyond real estate, FDI has concentrated in mining and energy. Chinese-backed projects in oil extraction and iron ore, such as the Mbalam-Nabeba venture, highlight the sector's appeal despite risks, Lloyd's Bank Trade indicates. Agriculture, though rich in potential, remains underdeveloped due to weak infrastructure and governance challenges, Generis Online observes. Meanwhile, energy projects like the Lom Pangar hydroelectric dam have attracted foreign capital, though local content requirements complicate operations, according to Generis Online.

Government Strategies and Market Resilience

To counteract political instability, Cameroon has implemented policies aimed at improving the investment climate. Special economic zones, tax exemptions, and legal frameworks like the Investment Code seek to attract foreign capital, Generis Online explains. The government has also introduced performance indices, such as the Indice de Performance Économique (IPE), to prioritize public projects and enhance transparency, as detailed in an Nkafu report. However, these efforts are undermined by administrative inefficiencies, corruption, and the lingering threat of Boko Haram in the north, issues noted by Lloyd's Bank Trade.

Political uncertainty, particularly ahead of the 2025 election, remains a wildcard. As the IMF review notes, the risk of prolonged instability could further erode investor confidence, even as urban markets demonstrate adaptability.

Conclusion: A Delicate Balance

Cameroon's investment landscape is a study in contrasts. While urban real estate and strategic infrastructure projects show resilience, broader economic vulnerabilities-rooted in political instability-limit long-term growth. For foreign investors, the key lies in balancing opportunities in stable sectors with caution in regions prone to conflict. As the country navigates its electoral transition, the success of governance reforms and infrastructure development will determine whether Cameroon can transform its potential into sustained FDI growth.