Abstract

This study examined the impact of external debt sustainability on agricultural development in Cameroon during the period 1996–2023. Agriculture accounts for approximately 22% of Cameroon’s GDP and employs more than 60% of the labour force, yet the sector remains chronically underfunded in the face of escalating external debt obligations. Employing the Engle–Granger two-step co-integration method and an error correction model (ECM) estimated with STATA 14, and using secondary data from the World Bank’s World Development Indicators (WDI), we investigated the short-run and long-run relationships between external debt stocks (long-term and short-term), debt-servicing costs and agricultural value added as the primary outcome measure. Control variables included trade openness, inflation, gross fixed capital formation, CO2 emissions, life expectancy and urban population growth. Our findings reveal that long-term external debt stock exerts a statistically significant negative effect on agricultural value added in the long run (β = −0.057; p < 0.05), whereas debt servicing acts as a powerful crowding-out mechanism that redirects fiscal resources away from agricultural subsidies, rural infrastructure and extension services. Short-term debt displays a marginally negative short-run effect (β = −0.004; p < 0.10). The error correction term is negative and significant (ECT = −0.383; p < 0.01), confirming long-run equilibrium reversion at a speed of approximately 38% per annum. Gross fixed capital formation is the single most potent driver of agricultural output growth (β = 0.737; p < 0.001). The study concluded that unsustainable external debt trajectories constitute a structural impediment to agricultural transformation in Cameroon, operating through the twin channels of fiscal displacement and macro-economic instability. Policy recommendations include the establishment of a debt-for-agriculture swap mechanism, the ring-fencing of agricultural budget allocations and institutional reforms to enhance debt transparency.