Between 1986 and 1993, adverse terms oftrade shocks combined with a rigidly pegged nominal exchangerate and various domestic distortions to reduceCameroon's per capita income by roughly 50 percent.Though major policy reforms were slow to come, the CharteredFinancial Analyst (CFA) franc was finally devalued in 1994.A study conducted on more than 200 manufacturing enterprisesin Cameroon, before and after devaluation and reforms. The1994 devaluation of the CFA franc dramatically increased theprice of imported intermediate goods. This increase in costswas large enough to substantially reduce profits at somefirms, particularly those that were heavily dependent uponimported intermediates. However, at firms using domesticinputs, and especially at firms producing exportable goods,the increase in input costs was more than offset by risingoutput prices, and profit margins improved. Labor costs roseby roughly the rate of inflation overall, so they went uprelative to output prices in non-traded goods sectors, andfell relative to output prices in others.
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