Illicit Financial Flows and the Petroleum Sector in Cameroon: Hitches and Policy Considerations

Abstract

Cameroon depends to a large extent on the extraction of petroleum resources for their exports and tax revenue. However, this sector has been prone to generate illicit financial outflows over the years, causing the State to lose billions of dollars to this activity. In 2019, it was estimated that Cameroon lost over 7 billion US dollars which was approximately 4,200 billion XAF to IFFs. The loss was attributed to multinational companies operating in the oil, mining and gas sector in Cameroon. This study therefore aims at examining how the regulatory frameworks in the petroleum sector have been able to curtail the rise of IFFs in this sector. The paper also sheds light on the role of transparency in curtailing illicit financial flows, the catalysts of IFFs, the effects of and the hitches faced in curtailing IFFs in petroleum sector in Cameroon. The study underscores the fact that though the Cameroonian government has made laudable efforts through enactment of laws and putting in place regulatory structures to curtail this activity, lack of transparency, limited State participation in petroleum contractual arrangements, corruption, weak regulatory frameworks, tax evasion, trade mispricing and tax heavens remained the principal hitches to IFFs. Based on these findings, this study recommends strengthening of transparency mechanisms for oil licenses and contract awards, increased in State participation in oil contractual arrangements, citizen’s inclusivity during the negotiation processes and signing of oil contracts, regular publication of oil data and revenue to the public amongst others.