A number of barriers exist to investment in Cameroon, including a weak business environment and a much smaller new-vehicle market relative to regional neighbours. However, a developing middle class and expectations for growth in fixed investment support our optimistic forecast for the autos sector.
We have upgraded our forecast for 2015 vehicle sales to 15.0% (versus 7.5% previously) on the back of stronger private consumption in Cameroon. Our Country Risk team forecasts growth in private consumption to pick up to 6.5% in real terms in 2015 following estimated growth of 5.3% in 2014. While the country is much poorer per capita than other thinly populated states in Africa, its middle class population is slowly developing. At the same time, the substantial decline of global crude oil prices since June 2014 and our Oil & Gas team's forecast for Brent crude to remain subdued support our optimistic forecast. Low interest rates, which we expect to come in at 2.50% by end-2015, will lend marginal support to vehicle sales. Over the 2015-2019 period, we forecast auto sales to grow at an annual average of 10.0%, which will see sales reach 6,042 units in 2019.
We forecast fixed capital investment to grow at an average rate of 7.2% over the 2015-2019 period. This will boost demand for commercial vehicles (CVs). Capital-intensive drivers of headline growth are unlikely to employ many Cameroonians, and since so many of the new mega-projects are foreign owned, we do not anticipate them having a major impact on domestic consumption. Instead, we believe job growth - a key driver of private consumption growth - will come from growth in the retail and telecoms sectors, as well as some agriculture segments.
A marked uptick in infrastructure spending (with the government increasingly turning to China in its development efforts) and construction projects shows potential not just for CV demand, which often correlates with infrastructure investment, but also for the improvement of the country's roads to accommodate increased vehicle use. Road transport accounts for around 70% of the country's transport network but is severely constrained by the poor state of the roads.
BMI believes a number of barriers exist to investment in Cameroon and we are doubtful on the likelihood of the completion of several projects. Indeed, the country suffers from a weak business environment, consistently scoring near the bottom of business indices, such as those produced by the World Bank and the World Economic Forum. To an extent, this is due to weak infrastructure and overly burdensome regulations, so the country may improve its standing over the next 10 years. However, infrastructure is already a relative strength for Cameroon on a regional basis, mitigating the potential gains. Also holding down the business climate is widespread corruption and weak rule of law. With little likelihood of an upheaval in the ruling political class, we see few prospects for fundamental reform in these areas.
Additionally, Cameroon's new vehicle market is a fraction of the size of some of its larger regional neighbours, but its growth rate picked up significantly in 2013. Vehicle ownership is still low by regional standards and is expected to remain below 15 vehicles per 1,000 people over our five-year forecast period to 2019, which suggests there is not the same level of middle-class development as in some of the bigger Sub-Saharan African markets. Several economic episodes have reduced demand for new cars in favour of cheaper second-hand alternatives. These include the economic crisis of the 1980s, the franc's devaluation and the reduction in civil servant salaries in the 1990s.