Only about 10 percent of Cameroon’s 21,000 miles of road is paved, and many of the roads are treacherous and plagued by bandits and roadblocks.

Not many companies would take on the task of developing passenger bus service to the sub-Saharan country, which has an impoverished population and a government that has been notoriously corrupt in the past.

Enter Woodland Hills’ Transnational Automotive Group Inc.

The company received approval last month for a $9 million loan that will allow it to forge ahead with an ambitious expansion. After a state-sponsored public transportation venture failed in the mid-1990s, the developing African nation has been without bus service for more than a decade until Transnational began modest operations there late last year.

Now, with the Cameroon government’s backing, the company plans to expand its service as much as tenfold.

“Africa is in a rebirth mode right now,” said Ralph Thomson, Transnational president and chief executive. “But large urban centers have not caught up with some of the basic needs. The transportation systems are really quite spotty.”

The company has already invested about $15 million in the venture. Since signing a contract with the Cameroon government in 2005, the company has purchased about 100 buses for use in Cameroon’s major cities.

The first 28 buses went into service in September 2006, and they were received warmly.

On April 2, Niels Marquardt, U.S. ambassador to the Republic of Cameroon, wrote a letter to the president of the Overseas Private Investment Corp., an independent government agency that provided the $9 million loan and which helps U.S. companies invest in emerging global markets, praising the service.

Marquardt called it a “truly exceptional project” and cited Cameroon President Paul Biya as a supporter.

“I have heard directly and indirectly how pleased President Biya is with this development and how much he wants the project to succeed,” Marquardt wrote. “Popular reaction is just as enthusiastic.”

Indeed, local newspaper reports in Cameroon gushed over the possibilities that the project presented for the country including safer and expanded transportation options, as well as new employment opportunities.

The company said last month it has exceeded 136,000 passengers on 7,000 total trips since the buses went into service, providing service within Cameroon’s major cities.

Transnational reported about $1 million in revenue for 2006, but executives expect that number to increase dramatically as they expand service.

“We will be expanding our fleet by anywhere from 30 to 60 buses every two months until we get to a level of about 1,000 buses,” said Hassan Mubara, a consultant to the company and partner with Woodland Hills-based Magidoff Sadat & Gilmore LLP. The revenues from such an expansion, he added, could run in the tens of millions of dollars.

The company said it has fielded inquiries from about 10 other African countries regarding the possibility of developing similar transportation networks.

In addition to the $9 million loan, the company is working to raise about $30 million from international investors.

Transnational has already invested about $15 million in the venture, an amount matched by the Cameroon government.

Under the contract, the company is responsible for purchasing the buses, shipping them to Cameroon and running them. In addition to the management team, Transnational employs all of the bus drivers, mechanics and clerical staff, mostly Cameroon residents. In fact, of the company’s 750 employees, only about 15 mostly top executives work out of its Woodland Hills headquarters. Thomson said he expects the company’s payroll to surpass 1,000 by next year, and several thousand within 3 to 4 years.

The company’s stock, traded on the over the counter Bulletin Board, was priced in the 90-cent range through much of March, but lately it has increased. It traded above $1.60 last week.

Long time coming

Though the company has only been around for about two years, the contract was several decades in the making.

Joseph Parker, the company’s founder, served as a military attach & #233; in Cameroon for years, developing personal relationships with government officials, which the company credits with helping secure the contract.

“He knew all the governmental players, from the prime minister to the president to the vice president almost all of the senior decision makers,” said Terry Klapakis, the former president of Transnational.

In late 2005, the company, which was headquartered in Seattle until last year, hosted a delegation of Cameroon officials.

Around that time, the company signed the contract to develop a national bus system. But before it could get running, the company faced an internal upheaval.

Klapakis said investors grew uneasy with the slow pace at which the project was moving forward. Under pressure from investors, most of the company’s original management team, including Klapakis and Parker, left the company last August.

Parker declined to comment for this article.

The company appointed a new management team, including the former executive director of General Motors Corp.’s Africa and Middle East Operations. But it was still a struggle to maintain the trust that the previous management team had built with the Cameroonian government.

“We developed a very strong interpersonal and professional relationship with the prime minister’s office and with the office of the president,” Thomson said. “That took some months to gain that trust.”

Weeklong attempts to contact an English-speaking government representative (most people in the former colony speak French) to discuss the project were unsuccessful.

With nearly half the population living below the poverty line, an unemployment rate of about 30 percent and large (but shrinking) national debt, Cameroon is not exactly a beacon of international investment opportunity.

The country’s gross domestic product today is about $42 billion, which has been growing by about 3 percent to 5 percent per year recently, but high taxes and widespread corruption Transparency International last year ranked Cameroon as the 26th most corrupt country out of 163 surveyed have impeded economic recovery for years.

Spotty history

And Cameroon has a spotty and not-too-successful history with passenger bus service.

For 25 years, the widely criticized state-owned bus service known as Soci & #233;t & #233; de Transports Urbain du Cameroun or SOTUC held a monopoly over the country’s urban transportation sector. Before it was liquidated in 1995, the company earned a reputation for being poorly managed and severely unprofitable. According to a World Bank report, it lost about $39 million between 1988 and 1991.

And with taxis able to offer lower rates, the bus service was decimated by private competition. As a result, less than 5 percent of public transportation users rode the buses.

Passenger transportation in Cameroon has since consisted almost exclusively of taxis with more than 5,000 in operation in Yaounde and Douala, two of the country’s largest cities often packed as full as possible, which are widely considered unreliable and unsafe.

Now, Transnational is stepping into SOTUC’s vacated shoes even moving into its old headquarters. Its success hinges largely on management’s ability to maintain bus service, as well as the buses themselves, in an unstable social and economic environment.

“Other companies have been reluctant to enter in there,” Thomson said. “But the situation is much more favorable than is has been in the past. We don’t see too many hedges to our growth in the next three to four years.”