Chinese-Cameroonian car factory venture fiasco: Botched scam or consequence of corruption?

By Mbom Sixtus

South China Morning Post’s Karen Zhang and Liam Lee, of Ta Kung Pao Daily contributed to this story.

As of February this year, many local and international companies had already stamped their baby footprints on Central Africa’s newest and largest seaport; the Kribi Industrial Port Complex, south of the Republic of Cameroon. Conspicuously absent on the list of investors is the Sino-Cameroonian venture, Cameroon Automotive Holding Company (Cameroon Auto)which had promised to be among the biggest investments on the zone.

The founder of the company, Lu Fuqing, had said they will invest about 153 million dollars in building Central Africa’s first auto plant on the industrial zone. Company officials had equally promised to create over 4600 direct jobs. The first “Made in Cameroon” sedans, SUVs, mini-vans, and pick-up trucks were supposed to be rolling out of the Kribi factory in January 2018, according to the company’s bosses.

For recall, in April 2017, they organized an auto exhibition in Yaounde and claimed the cars presented were made by the Cameroon Auto’s partner company in China. But we noticed the company’s supposed brand, “Star of Africa”, appeared to have been simply glued onto the vehicles clearly made by different Chinese car manufacturers like Foton.

Many projections were made and hopes were raised sky high. “Star of Africa”, was going to grab the lion’s share of the auto market in the Central African sub region – only a handful of existing distributors of new cars such as CFAO’s CAMI Toyota, KIA Motors, Tractafric Motors, SMT Volvo, and AUTOHAUS VW Cameroon were to be its competition; or so people were made to believe.

Five years after the exhibition, none of the lofty promises of the company have been kept. From the inception of the company which has turned out to be a deception in the eyes of many, company and government officials have been hauling blames from one side of the negotiation table to the other.

It should be recalled that Lu Fuqing, obtained an authorization to create and run the Sino-Cameroonian company after meeting with Cameroon’s President Paul Biya, the country’s Prime Minister, the Secretary General at the Presidency, Ferdinand Ngoh Ngoh and other top government officials. He was promised a 500-hectare portion of the 26 000-hectare industrial zone.

David Yonguet, Project Manager of the Cameroon Automotive Holding Company, blames government officials in Cameron for the failure of the company to deliver on its promises. Without citing names, he accuses top government officials of blocking the project; claiming that paperwork for acquisition of land tittles and other company documentation were being delayed because the company would not pay requested bribes to state officials.
Yonguet said the National Anti-Corruption Commission in Cameroon opened an investigation to uncover the truth when the matter was brought to the attention of the institution.

Meanwhile, Lu Fuqing, maintained that on the Chinese side, everything is moving on as planned. He said the company had made 5,000 vehicles in its car assembly plant in China. Parts of the Cameroon Auto plant were being pre-fabricated in China and would be transported to Cameroon for assembling when they get clearance from the host government, he claimed. He also said parts of more vehicles were being built in China and complained about dawdling negotiations with Cameroon Customs authorities.

The company also claimed it was training Cameroonians in China to man positions in the company when it goes fully operation in Kribi.

We sought out to verify the authenticity of the claims the company made.

Speaking of administrative bottlenecks, Shinwin Soh Donatus Boma, Deputy General Manager of the Cameroon Investment Promotion Agency dismissed claims the project was stalled by government officials.

He told Cameroon News Agency that the agency had offered the company incentives including tax exonerations during its first ten years of production and marketing, just as it does to other new businesses. According to him, Cameroon Auto may just be cash strapped. We have given them time to raise funds and following our guidelines, the effective period of some of our incentives can be extended for sometime before eventually terminated.

To fact-check the company’s claims of active production in China, we visited Tianjin City, in China where Lu Fuqing’s company is based. After three attempts, we could not meet him and neither were we able to reach him by phone.

When we consulted China’s Registrar of Companies, we found out Cameroon Auto’s partner company, Tianjin Jinhuai Trading Co. Ltd, registered in Lu Fuqing’s name had a registered capital of only 500,000 RMB (About 72,000USD), as of 2019. The registry also indicated he had registered another company known as Hong Kong Jinhuai Trading Company Ltd in 2014 but quickly dissolved in 2016.

From the visit and interview with another Chinese auto exporter, it turns out Lu Fuqing runs a small company that sells auto parts in China, though with an ambition to extend his business to Africa. It also appeared Lu does more PR than actual work, and gives the impression that he is working on behalf of famous Chinese listed company, Foton. Chinese media reporting on the failed project in Cameroon has rather highlighted hurdles Lu claims the government of the host country has put on his path.

But Award-winning investigative journalist, Amindeh Blaise Atabong told Cameroon News Agency the Chinese might not have really meant to build any auto plant.

“When I look at the project, it reminds of a controversial GEOVIC cobalt project. The company had claimed to have discovered the ‘largest known primary cobalt deposit in the world’ and promised to invest millions in the mining of this mineral resource in the East region of Cameroon. The company officials used the project to extort $100 million from the government of Cameroon as well as raised $66 million from the Toronto Stock Exchange. They made a lot of money for themselves in fat paychecks and stocks, and would end up shutting down their offices with nothing to show for the company’s two decades of existence in Cameroon,” he said.

Amindeh added that it was also delisted from the Toronto Stock Exchange.

Noting the information he has about the Cameroon Auto project is too sketchy for him to make any real conclusions, the Wits Journalism scholar said he is tempted to think it would be delusional for anyone to believe it would amount to anything.
Despite the fact that all evidence on the ground suggests the Cameroon Auto project is not what is was presented to be, Guy Dzeuguem, Communication Strategist for Cameroun Auto, argues the company is still in business.

“Our office in Yaounde is still operational and we are in search of financing,” he told Cameroon News Agency on February 19, 2021.

Admitting that no activity whatsoever has been carried out on the project site, as expected, Dzeuguem insisted; “setting up a business of this magnitude requires huge sums of money. We need partners, investors that would facilitate transportation of vehicles and pre-fabricated factory building parts from China to Cameroon”.

Asked whether he has been to China to see the work being done, Dzeuguem said he has not but remained optimistic that funds are being raised for the project to take off effectively. He told us he is totally oblivious of all financial transactions of the company and doesn’t know how much his bosses make in salaries and stocks.

“There are people still working in our offices but I am on involuntary unpaid leave ever since we sold the prototypes brought in from China,” he noted, maintaining his optimism that things will fall into place eventually.

However, even without the contributions of the Sino-Cameroonian venture, Chinese companies were ranked top contributor to the success of the Kribi Deep Seaport.

At the end of 2020, China recorded 174, 045 tons of goods exported through the port, Taiwan emerged a far second with 14, 773 and while Malaysia took the third position with 13, 699 tons. The three Asian country export mainly construction equipments, electrical appliances and food, according to Michael Mama, Director of Exploitation.

This work was produced as a result of a grant provided by the Africa-China Reporting Project managed by the Journalism Department of the University of the Witwatersrand.