ILLICIT FINANCIAL FLOWS AND THE REGULATORY FRAMEWORK FOR MINERAL RESOURCE EXPLOITATION ARRANGEMENTS IN CAMEROON

Introduction

1.1. Context and rationale of the study

The African continent is said to be the richest continent in the world in terms of natural resources endowment. The continent is gifted with such resources as forests (the so-called green gold) and wildlife; water, and mineral resources including liquefied (black gold) and non liquid minerals of all types (the so-called white gold). Paradoxically, the continent has been documented as the poorest and least developed: ‘the paradox of plenty’, ‘resource curse’, or the ‘development paradox’. It therefore has the lowest development index consequent upon such factors as exponential population growth, high rate of HIV/AIDS and related health hazards, high rate of illiteracy, accelerated environmental degradation, insecurity, and a partial justice system, among others. This is not all. Foreign direct investment has increased in recent years especially with the continual discovery of mineral resources deposits and an urgent political need to encourage exploitation for purposes of enhancing economic growth and poverty reduction. In the process, Africa’s problems have consequently been further compounded by illicit financial flows (IFFs) from investments generally and investments in the extractive sector exploitation in particular. This being the case, the continent’s future in terms of its development potential is therefore more and more compromised by alarming statistics that reveal such illicit outflows from the continent. The question then is what accounts for this unfortunate situation. It is increasingly acknowledged that weak governance system in the majority of the countries is the root cause of this state of affairs. In particular, regulatory frameworks are generally insufficient, inappropriate, obsolete, and weak as mechanisms to address illicit financial flows.

Cameroon, which has been termed Africa in miniature, undoubtedly reflects the foregoing picture. The country is today known to be one of the leading countries in the continent in natural resources endowment in general and a diversity of mineral resources in particular. Consequently, there is a mad rush by foreign investors into the mineral exploitation sector and contractual arrangements are crafted between government and mineral exploitation companies. The exact amount in US dollars, of illicit financial flows resulting from these contractual exploitation arrangements is not yet known but what is certain is that there is, as in many other African countries, a non negligible amount of illicit financial outflows, which if checked, can be used to strengthened such key sectors as health, education, the justice system and environmental protection hence accelerate the country’s transformation process.