Cameroon
Central African Rep.
Chad
Congo, Dem. Rep.
Congo, Rep.
Equatorial Guinea
Gabon
Madagascar
São Tomé and Príncipe
R...
Regional Edition
African
Economic Outlook
2013
Regional Edition
Central Africa
AFRICAN DEVELOPMENT BANK
DEVELOPMENT CENTRE...
The opinions expressed and arguments employed in this publication are the sole
responsibility of the authors and do not ne...
This is a complementary edition to the African Economic Outlook 2013
Other regional editions are available for :
African m...
CentralAfrica
Overview
In Central Africa, GDP is likely to continue to grow by 5.7% in 2013 and 5.4% in 2014 with above-av...
Real GDP Growth (%)	 2004-08	 2009	 2010	 2011	 2012(e)	 2013(p)	 2014(p)
Central Africa	 6,6	2,7	5,7	5,2	5,7	5,7	5,4
Came...
Cameroon
2013
www.africaneconomicoutlook.org
Aissatou Gueye / agueye@uneca.org
Facinet Sylla / f.c.sylla@afdb.org
http://dx.doi.org/10.1787/888932805042
Cameroon
Sections
The economy bounced back in 2012, stimulated by the recovery in t...
http://dx.doi.org/10.1787/888932808025
Table 1: Macroeconomic indicators 2013
2011 2012 2013 2014
Real GDP growth 4.1 4.9 ...
http://dx.doi.org/10.1787/888932809013
Recent Developments & Prospects
Table 2: GDP by Sector (percentage of GDP)
2007 201...
techniques), the optimisation of production facilities and the development of the Kribi gas power plant.
However, 2012 was...
Macroeconomic Policy
Fiscal Policy
In 2012, budgetary policy remained expansive with large expenditures linked to subsidie...
http://dx.doi.org/10.1787/888932810001
Table 3: Public Finances 2013 (percentage of GDP)
2009 2010 2011 2012 2013 2014
Tot...
http://dx.doi.org/10.1787/888932810989
The Douala free port – which is a hub for foreign trade (95% of customs income and ...
http://dx.doi.org/10.1787/888932805042
on public debt) estimated at XAF 2 970.9 billion, in 2013 the primary balance shoul...
Economic & Political Governance
Private Sector
Cameroon’s ranking in the World Bank report Doing Business 2013 – at 161st ...
this summarising activity.
While Cameroon signed up to the Extractive Industries Transparency Initiative (EITI) in 2005, t...
Social Context & Human Development
Building Human Resources
Cameroon appears to be on course to achieve Millennium Develop...
women received no education, compared with 8% of men.
Disparities between men and women in the working population also exi...
Thematic analysis: Structural transformation and natural resources
The structure of the Cameroonian economy has changed ov...
will compete strongly with Western multinationals, which traditionally monopolised distribution.
The PACD/PME programme al...
Central African Republic
2013
www.africaneconomicoutlook.org
Kalidou Diallo / k.d.diallo@afdb.org
Central African Republic
Sections
Growth in 2012 (3.1%) was lower than forecast, and the outlook for 2013 and 2014 has det...
http://dx.doi.org/10.1787/888932805080
http://dx.doi.org/10.1787/888932808063
Figure 1: Real GDP growth 2013 (Central)
Fig...
http://dx.doi.org/10.1787/888932809051
Recent Developments & Prospects
Table 2: GDP by Sector (percentage of GDP)
2007 201...
strong growth of 26.3% in non-market services as government activity increased and international co‑operation
resumed.
The...
http://dx.doi.org/10.1787/888932810039
Macroeconomic Policy
Fiscal Policy
Measures initiated in 2011 to redress public fina...
http://dx.doi.org/10.1787/888932811027
maintaining fixed parity between the CFA franc and the euro. It does so by using ind...
http://dx.doi.org/10.1787/888932805080
2010 and 2011 forced the government to borrow again to finance infrastructure projec...
Economic & Political Governance
Private Sector
The conditions for the development of the private sector are still difficult....
Access to drinking water is far higher in urban areas than in rural areas. Drinking fountains are accessible to 52%
of peo...
Social Context & Human Development
Building Human Resources
The Central African Republic remains confronted by the consequ...
Inequality Index. As is shown in the AfDB’s 2010 report on the Central African Republic’s gender profile, there
are still f...
Thematic analysis: Structural transformation and natural resources
The country has vast natural resources that have not ye...
Chad
2013
www.africaneconomicoutlook.org
Claude N’Kodia / c.nkodia@afdb.org
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa
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African Economic Outlook Southern Africa Central Africa Region 2013 United Nations Economic Commission for Africa

  1. 1. Cameroon Central African Rep. Chad Congo, Dem. Rep. Congo, Rep. Equatorial Guinea Gabon Madagascar São Tomé and Príncipe Regional edition Central Africa African Economic Outlook 2013 AFRICAN DEVELOPMENT BANK GROUP
  2. 2. Regional Edition African Economic Outlook 2013 Regional Edition Central Africa AFRICAN DEVELOPMENT BANK DEVELOPMENT CENTRE OF THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT UNITED NATIONS DEVELOPMENT PROGRAMME ECONOMIC COMMISSION FOR AFRICA AFRICAN DEVELOPMENT BANK GROUP DEVELOPMENT CENTRE
  3. 3. The opinions expressed and arguments employed in this publication are the sole responsibility of the authors and do not necessarily reflect those of the African Development Bank Group, its Board of Directors, or the countries they represent; the OECD, its Development Centre or the governments of their member countries; the United Nations Development Programme; the Economic Commission for Africa; the European Union; or those of the Secretariat of the African Caribbean and Pacific Group of States or its member states. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Corrigenda to the African Economic Outlook may be found on line at: www.africaneconomicoutlook.org/en © African Development Bank, Organisation for Economic Co-operation and Development, United Nations Development Programme, Economic Commission for Africa (2013). You can copy, download or print the content of this publication for your own use, and you can include excerpts from it in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of AfDB, OECD, UNDP, and UNECA as source and copyright owners is given. All requests for public or commercial use and translation rights should be submitted to rights@oecd.org. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at info@copyright.com or the Centre français d’exploitation du droit de copie (CFC) contact@cfcopies.com. 2 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 CentralAfrica
  4. 4. This is a complementary edition to the African Economic Outlook 2013 Other regional editions are available for : African members of the CPLP - Community of Portuguese-speaking countries Eastern Africa Northern Africa Southern Africa Western Africa Table of Contents Overview ........................................................................................................ Cameroon....................................................................................................... Central African Republic................................................................. Chad..................................................................................................................... Congo, Dem. Rep. ............................................................................... Congo, Rep................................................................................................... Equatorial Guinea.................................................................................. Gabon.................................................................................................................. Madagascar................................................................................................... São Tomé and Príncipe..................................................................... 4 7 23 37 49 61 77 91 105 121 3African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfrica
  5. 5. CentralAfrica Overview In Central Africa, GDP is likely to continue to grow by 5.7% in 2013 and 5.4% in 2014 with above-average growth in Chad and in DRC. In Chad, oil production and agriculture are the main drivers of growth. In DRC, mining, agriculture and construction are boosting growth. But sustainable growth also requires further prog- ress in political stability and the security problem in the eastern part of the country has significantly affected economic activity in that region. In 2012, Africa’s monetary authorities had to cope with emerging inflationary pressures stemming from high- er food prices and exchange rate depreciation. The depreciation of exchange rates helped to boost exports but added to inflation through higher import prices. At the same time, the deepening of the crisis in Europe increased risks of a new economic downturn in Africa. Monetary policies responded quite differently depend- ing on the balances of these risks. Monetary policies of the WAEMU and of the CEMAC continued their prudent stance with priority given to controlling inflation with fixed exchange rates tied to the euro. Given the risk of another economic downturn due to lower global demand several countries continue to pur- sue expansionary fiscal policies. But many other countries follow fiscal consolidation strategies to ensure debt sustainability. This is particularly important in countries, which are already at risk of debt distress. The Republic of Congo continued to implement an ambitious public investment program aimed at reducing large infrastructure deficits. In Cameroon, fiscal policy was also expansionary due to public investment and food and fuel subsidies. By contrast, other countries saw little fiscal space or need for an expansionary policy and tightened the fiscal stance. FDI flows to Central Africa stagnated around USD 8 billion in 2012 and are projected to hover around that fig- ure in 2013. FDI remained concentrated in Democratic Republic of Congo (DRC), Congo Republic and Equato- rial Guinea, attracted by natural resources. These three countries are likely to continue receiving 80% of the region’s FDI in the near future. FDI to Central Africa as a share of GDP averaged 6.4 % over the past decade. This is about twice the average of other regions and highlights the role of natural resources –especially oil - in the region’s economic growth. Africa’s economic prospects depend on global and domestic factors, which are highly uncertain. One of the downside risks is continued weakness of the global economy. The main channels of transmission of weaker global growth would be lower commodity export earnings, shrinkages in export volumes of other goods, tourism receipts, official development assistance (ODA), foreign direct investment inflows (FDI) and worker’s remittances. 4 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013
  6. 6. Real GDP Growth (%) 2004-08 2009 2010 2011 2012(e) 2013(p) 2014(p) Central Africa 6,6 2,7 5,7 5,2 5,7 5,7 5,4 Cameroon 3,1 1,9 3,3 4,1 4,9 5,0 5,2 Central African Rep. 2,9 1,7 3,3 3,1 3,1 3,2 4,6 Chad 11,4 4,1 14,0 1,6 7,2 7,4 11,5 Congo, Rep. 4,3 7,5 8,8 3,4 4,9 5,1 5,3 Congo, Dem. Rep. 6,5 2,8 7,2 6,9 7,2 8,2 9,4 Equatorial Guinea 16,2 4,6 -0,5 7,7 5,5 4,9 -2,0 Gabon 3,1 -2,7 6,9 7,0 5,6 4,6 4,8 São Tome and Príncipe 6,0 4,0 4,5 4,9 4,0 5,2 5,8 AFRICA 6,1 3,1 5,0 3,5 6,6 4,8 5,3 Consumer Prices (Inflation)(%) 2004-08 2009 2010 2011 2012(e) 2013(p) 2014(p) Central Africa 4,6 9,9 5,1 4,5 4,4 3,5 3,4 Cameroon 2,7 3,0 1,3 2,9 3,0 3,0 3,0 Central African Rep. 3,6 3,5 1,5 0,7 3,5 2,4 2,9 Chad 2,0 10,1 -2,2 2,0 7,0 3,1 3,1 Congo, Rep. 3,9 4,3 5,0 1,8 5,1 4,2 2,9 Congo, Dem. Rep. 14,7 46,2 23,5 15,4 6,4 5,9 5,5 Equatorial Guinea 5,1 6,0 5,6 4,8 4,5 3,1 3,5 Gabon 1,8 1,9 1,5 1,3 2,7 2,5 2,5 São Tome and Príncipe 20,8 17,0 13,3 14,3 9,5 7,9 7,7 AFRICA 7,4 10,0 7,2 8,5 9,1 7,4 7,2 Overall Fiscal Balance, Including Grants (Percent of GDP) 2004-08 2009 2010 2011 2012(e) 2013(p) 2014(p) Central Africa 8,3 -0,5 1,0 1,9 -0,1 -0,3 -0,4 Cameroon 9,1 -0,1 -1,1 -2,7 -3,5 -3,9 -4,2 Central African Rep. 0,5 -0,1 -1,4 -2,9 -3,5 -3,4 -3,4 Chad 1,1 -7,6 -4,1 2,4 0,8 0,0 3,8 Congo, Rep. 14,6 5,3 16,3 16,4 2,4 3,2 2,4 Congo Dem. Rep. -2,5 -4,2 2,4 -0,4 -6,2 -5,2 -3,0 Equatorial Guinea 17,0 -3,8 -5,1 0,9 6,0 6,3 3,5 Gabon 9,3 6,9 0,7 0,7 0,9 -1,2 -2,1 São Tome and Príncipe 18,2 -18,4 -10,2 -11,9 -9,4 -13,4 -13,2 AFRICA 2,0 -5,2 -3,0 -3,1 -2,5 -2,4 -1,9 External Current Account, including grants (Percent of GDP) 2004-08 2009 2010 2011 2012(e) 2013(p) 2014(p) Central Africa 0,7 -7,0 -5,2 -2,7 -1,8 -2,8 -3,6 Cameroon -2,7 -7,7 -5,2 -4,5 -5,3 -5,3 -6,2 Central African Rep. -5,6 -8,1 -9,9 -7,2 -7,0 -5,4 -5,3 Chad 1,1 -8,7 -10,6 -2,3 -6,1 -8,9 -2,1 Congo, Rep. 2,6 -8,1 5,2 0,8 0,3 0,6 -3,0 Congo, Dem. Rep. -7,5 -10,5 -8,1 -11,5 -11,1 -11,0 -9,1 Equatorial Guinea -3,7 -17,7 -20,5 -6,0 3,5 2,0 -1,0 Gabon 16,6 11,9 9,1 8,9 7,5 5,4 2,2 São Tome and Príncipe -21,0 -25,5 -30,9 -30,1 -22,5 -27,5 -27,7 AFRICA 6,4 0,3 -0,6 -1,1 -0,4 0,0 0,7 Trade Balance (Percent of GDP) 2004-08 2009 2010 2011 2012(e) 2013(p) 2014(p) Central Africa 25,8 11,7 18,0 20,2 19,9 18,1 16,2 Cameroon 1,6 -4,6 -2,7 -3,9 -4,4 -4,7 -5,3 Central African Rep. -4,0 -7,2 -8,1 -4,1 -5,1 -4,6 -4,7 Chad 25,8 0,8 3,6 10,6 8,1 4,2 9,9 Congo, Rep. 50,6 45,2 52,9 48,9 41,1 37,8 35,4 Congo, Dem. Rep. 0,4 -5,2 5,0 3,2 7,0 4,6 4,5 Equatorial Guinea 60,0 23,9 31,2 37,8 40,5 40,3 36,5 Gabon 46,6 35,8 36,5 37,9 35,1 33,7 28,8 São Tome and Príncipe -36,0 -37,9 -46,0 -41,8 -40,7 -38,5 -37,6 AFRICA 6,6 -0,1 2,9 2,7 4,1 4,3 4,5 Source: Authors’ calculations e: estimates; p: projections 5African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfrica
  7. 7. Cameroon 2013 www.africaneconomicoutlook.org Aissatou Gueye / agueye@uneca.org Facinet Sylla / f.c.sylla@afdb.org
  8. 8. http://dx.doi.org/10.1787/888932805042 Cameroon Sections The economy bounced back in 2012, stimulated by the recovery in the oil sector and strong domestic demand, which was in turn driven by investments in infrastructure. This trend should continue in 2013 and 2014. Relative macroeconomic stability could be undermined by the maintenance of subsidies on oil products. Despite ongoing social policies, Millennium Development Goal (MDG) indicators highlight the scale of challenges to be met against a background of strong population pressure. Overview The rebound in the economy initiated following the 2008/09 financial crisis continued in 2012, with growth estimated at 4.9%, versus 4.1% in 2011. Supported by higher oil production and strong domestic demand tied to the launch of large infrastructure projects, this positive performance should continue in the 2013-14 period. In 2012, budgetary policy remained expansive with increased investment spending and spending on subsidies. According to estimates, the budget balance should remain in deficit, at 3.5% of gross domestic product (GDP), compared to a deficit of 2.7% in 2011. The monetary situation was characterised by a fall in net external assets (NEA) and an increase in domestic credit. Inflation, which should reach 3% (compared with 2.9% in 2011), can be explained by electricity price increases as well as the impact of flooding on harvest stocks. With a 32.6% share of exports, oil remains the main export. Estimates based on 2012 first-quarter performances indicate that several external balances will remain in deficit. The debt level remains manageable, with a ratio of public debt stock/GDP of around 16.7%. Cameroon has abundant natural resources. However, revenues obtained from the exploitation of these resources, and from oil in particular, have not been sufficiently channeled into structural investments in infrastructure and the productive sectors. The decline of the agricultural and forestry sectors in the country’s economic structure over the past decade attests to this. Recently, the State has undertaken steps aimed at reviving the productive sectors, particularly by strengthening infrastructure. While efforts to maintain macroeconomic stability are continued, poor governance persists and impedes the optimal use of public resources for the country’s socio-economic development. Figure 1: Real GDP growth 2013 (Central) Figures for 2012 are estimates; for 2013 and later are projections. Real GDP growth (%) Central Africa - Real GDP growth (%) Africa - Real GDP growth (%) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0% 2.5% 5% 7.5% 10% 12.5% RealGDPGrowth(%) http://dx.doi.org/10.1787/888932805042 Cameroon Sections The economy bounced back in 2012, stimulated by the recovery in the oil sector and strong domestic demand, which was in turn driven by investments in infrastructure. This trend should continue in 2013 and 2014. Relative macroeconomic stability could be undermined by the maintenance of subsidies on oil products. Despite ongoing social policies, Millennium Development Goal (MDG) indicators highlight the scale of challenges to be met against a background of strong population pressure. Overview The rebound in the economy initiated following the 2008/09 financial crisis continued in 2012, with growth estimated at 4.9%, versus 4.1% in 2011. Supported by higher oil production and strong domestic demand tied to the launch of large infrastructure projects, this positive performance should continue in the 2013-14 period. In 2012, budgetary policy remained expansive with increased investment spending and spending on subsidies. According to estimates, the budget balance should remain in deficit, at 3.5% of gross domestic product (GDP), compared to a deficit of 2.7% in 2011. The monetary situation was characterised by a fall in net external assets (NEA) and an increase in domestic credit. Inflation, which should reach 3% (compared with 2.9% in 2011), can be explained by electricity price increases as well as the impact of flooding on harvest stocks. With a 32.6% share of exports, oil remains the main export. Estimates based on 2012 first-quarter performances indicate that several external balances will remain in deficit. The debt level remains manageable, with a ratio of public debt stock/GDP of around 16.7%. Cameroon has abundant natural resources. However, revenues obtained from the exploitation of these resources, and from oil in particular, have not been sufficiently channeled into structural investments in infrastructure and the productive sectors. The decline of the agricultural and forestry sectors in the country’s economic structure over the past decade attests to this. Recently, the State has undertaken steps aimed at reviving the productive sectors, particularly by strengthening infrastructure. While efforts to maintain macroeconomic stability are continued, poor governance persists and impedes the optimal use of public resources for the country’s socio-economic development. Figure 1: Real GDP growth 2013 (Central) Figures for 2012 are estimates; for 2013 and later are projections. Real GDP growth (%) Central Africa - Real GDP growth (%) Africa - Real GDP growth (%) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0% 2.5% 5% 7.5% 10% 12.5% RealGDPGrowth(%) 8 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 Cameroon
  9. 9. http://dx.doi.org/10.1787/888932808025 Table 1: Macroeconomic indicators 2013 2011 2012 2013 2014 Real GDP growth 4.1 4.9 5 5.2 Real GDP per capita growth 1.9 2.8 2.9 3 CPI inflation 2.9 3 3 3 Budget balance % GDP -2.7 -3.5 -3.9 -4.2 Current account % GDP -4.5 -5.3 -5.3 -6.2 Figures for 2012 are estimates; for 2013 and later are projections. 9African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 Cameroon
  10. 10. http://dx.doi.org/10.1787/888932809013 Recent Developments & Prospects Table 2: GDP by Sector (percentage of GDP) 2007 2011 Agriculture, forestry & fishing - - Agriculture, hunting, forestry, fishing 22.9 23.6 Construction 3.3 5.7 Electricity, gas and water 1.1 1 Electricity, water and sanitation - - Extractions - - Finance, insurance and social solidarity - - Finance, real estate and business services 10.4 10.9 General government services - - Gross domestic product at basic prices / factor cost 100 100 Manufacturing 14.9 14.5 Mining 10.6 8.3 Other services 1.1 1.2 Public Administration & Personal Services - - Public Administration, Education, Health & Social Work, Community, Social & Personal Services 7.3 8.2 Public administration, education, health & social work, community, social & personal services - - Social services - - Transport, storage and communication 21.9 19.5 Transportation, communication & information - - Wholesale and retail trade, hotels and restaurants 6.6 7.1 Wholesale, retail trade and real estate ownership - - The economic recovery begun after the 2008/09 financial crisis continued in 2012, with an estimated growth rate of 4.9%, up from 4.1% in 2011. This performance is attributable to both a rise in oil production (+9.7%, compared to -7.3% in 2011) and strong domestic demand linked to the start of large infrastructure projects. In 2012, private sector activity boosted internal demand by 6.5%, up from just 5.3% in 2011. Through the supply of goods and services for various projects, the effect of this increased demand was felt throughout the economy. The recovery has boosted the growth of the non-oil sector, estimated at 5% in 2012, and of agriculture (+4.1%), agro food (+3.6%), construction (+11.2%), as well as transportation and telecommunications (+8.8%). This momentum should be sustained in 2013. The national hydrocarbons society (Société nationale des hydrocarbures, SNH) should benefit from new oil fields coming into activity, particularly at Dissoni, which could boost production by 17 000 to 20 000 barrels per day (bpd). This will bring production from its current level of 63 000 bpd to 90 000 or 100 000 bpd. Growth should also be boosted by the drilling of new mines in the Douala/Kribi-Campo basin, the reopening of certain mines in the Rio del Rey basin (thanks to new extraction 10 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 Cameroon
  11. 11. techniques), the optimisation of production facilities and the development of the Kribi gas power plant. However, 2012 was marked by events that negatively impacted on growth. The agricultural sector stagnated with floods in the North of the country resulting in crop losses. Rice paddy and sorghum stocks were partly damaged and seedlings and cultivated areas were literally swallowed up (cotton, onion, rice, and sorghum). The effect of this bad weather was compounded by external developments including the contraction in global demand for raw materials linked to the ongoing sovereign debt crisis in the euro area and falling prices for Cameroon’s key raw materials exports (wood, rubber, coffee, cocoa and cotton) due to geopolitical tensions. In addition, net external demand continued to exert a negative effect on growth in 2012 due to a deterioration in the exchange rate (-7.5%) and a rise in imports, particularly in equipment necessary for large public works. To consolidate gains since 2010, when the Growth and Employment Strategy was launched (and continued in the 2010-20 Growth and Employment Strategy Paper, GESP), Cameroon maintained its investment programme in the energy, transportation, telecommunications and manufacturing sectors. Initiatives included: i) the paving of roads, notably on the Djoum-Mintom-Congolese border (233 km), Fumban-Magba trunk (66 km), Ekok-Mamfe (73 km), and Garoua Boulaï-Ngaoundéré trunks; ii) the construction of the gas fired plant at Kribi and hydro electrical dams at Mekin, Lom Pangar and Memve’ele; iii) the extension of the fibre optic network; iv) the construction of 10 000 low cost housing units; and v) the construction of a new cement works in Douala. Thus, with the help of these projects and their effect on domestic demand, the economic recovery begun in 2010 should be sustained over the 2013-14 period. The extractive industries should grow, with: the Kribi gas plant scheduled to be operational in the first quarter of 2013 contributing an additional 216 MW to the country’s electricity supply; private investment to exploit the Mbalam gas well and the gas fields from Logbaba to Douala (212 billion cubic metres of gas and almost 4.2 million barrels of condensates); and the start of production of new oil wells, which will boost extraction volumes. These investments should represent 21.9% of GDP in 2013 and 22.9% in 2014 and these combined factors should enable Cameroon to reach 5% growth in 2013 and 5.2% in 2014. Following mixed results during the first two years of the 2010-2020 development strategy, the country is edging towards the 5.5% targeted growth rate. In the short to medium term, certain factors risk impacting growth projections for 2013 and 2014. These include the ongoing crisis in Europe and possible delays to public construction projects due to poor absorption capacities attributable to administrative deficiencies. The country’s growth also remains vulnerable to climatic shocks, as demonstrated by the 2012 floods, and to volatility in world prices for primary raw materials. Over the 2013-14 period however, the rise in oil production combined with the gradual decline in imports of equipment and the completion of a number of large construction projects in the transportation and electricity sectors, should offset these risks. According to estimates, inflation should level at 3% in 2012, up slightly from the 2.9% recorded in 2011. This is due to higher prices for food and non-alcoholic drinks, higher electricity prices and the effects of the floods that damaged harvests. 11African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 Cameroon
  12. 12. Macroeconomic Policy Fiscal Policy In 2012, budgetary policy remained expansive with large expenditures linked to subsidies and infrastructure projects. Budget execution was marked by a strong rise in income (+9.6%) over the previous year. This result was due to increased oil revenues (+10.5%) and tax collection efforts (+8.4%). In total, income accounted for 18% of GDP in 2012, up from 17.9% in 2011. Transfers and subsidies continued to rise, specifically driven by oil products and capital expenditure (linked to the public investment plan). In parallel to controlling current spending in 2012, budget execution progressed in reversing previous tendencies of poor investment absorption. Thus in 2012, the budgetary execution rate for spending reached around 89.2% of forecasts, compared with 86.2% in 2011. The adoption of the budget programme should strengthen strategic tools (the medium term budget framework and the medium term spending framework) already present in a large number of ministerial departments. The State significantly increased resources allocated to current expenditure and to petrol subsidies. These reached XAF 662 billion (CFA franc BEAC), or more than 1 billion euros in 2012, compared with XAF 550 billion in 2011. They should rise to XAF 689 billion in 2013. Alone, subsidies and transfers consumed more than 27% of total income and 26% of total spending during the 2012 budget exercise. Throughout the previous budget period, these ratios were 24% and 22%, respectively. Capital expenditure accounted for 32% of income and 31% of spending in 2012, unchanged from 2011. In light of the country’s weak infrastructure as well as delays built up over the years, investment ratios more than comply with GESP goals. This rhythm should be sustained over the 2013-4 period, with an average of 35% for income and 31% for spending. However, this rise in investment spending should have been accompanied by a gradual increase in spending on maintaining existing infrastructure – which is not currently the case. The trend in terms of subsidies and transfers is worrying. Indeed, petrol subsidies and the continued tax exemption status of food imports weigh heavily on public finances. In addition, the subsidies on petrol products have led to large arrears being accumulated with SONARA, the national oil refining company, and in turn, to the company’s high debt with national banks. Beyond the high opportunity cost in terms of investment, these measures provoke questions about their sustainability in regards to public finances and their efficiency in combatting poverty. The government should urgently consider introducing more targeted social protection nets (such as public transportation subsidies) and other direct assistance to low-income individuals. The 2013 budget law maintained this focus on supporting consumption and purchasing power, particularly for cash crop farmers. It also continued incentives for importers of goods of mass consumption (rice, wheat, fish, cement, etc.). The sole measures currently undertaken by the government to overturn this trend focus on promoting local production. This is the case, for example, of programmes to revive rice production, which will benefit from Japanese, Chinese and Indian aid, projects to develop intensive aquaculture, as well as aid to improve fishing and fish conserving facilities. While better fiscal mobilisation in 2012 enabled the public investment programme to be reinforced, the impact of food imports tax exemptions and petrol pump price subsidies continued to make budgetary management less efficient. The budget balance should deteriorate during the 2012 period, with a deficit of 3.5% of GDP, compared to 2.7% in 2011. In light of this situation, the State raised external financing (of XAF 49 billion), issued Treasury bonds (XAF 50 billion) and drained XAF 41 billion from central bank reserves. If this trend in spending continues (subsidies and transfers), the budget deficit could exceed 3% over the 2013- 14 period, save for a significant increase in oil revenues. 12 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 Cameroon
  13. 13. http://dx.doi.org/10.1787/888932810001 Table 3: Public Finances 2013 (percentage of GDP) 2009 2010 2011 2012 2013 2014 Total revenue and grants 17.4 16.6 17.9 18 17.6 17.5 Tax revenue 10.6 10.3 11 11.1 11 11 Oil revenue - - - - - - Grants 0.8 0.6 0.5 0.5 0.4 0.4 Total expenditure and net lending (a) 17.5 17.7 20.7 21.5 21.5 21.7 Current expenditure 13.5 13.8 14.6 15.2 15.1 15.1 Excluding interest 13.2 13.5 14.2 14.8 14.7 14.6 Wages and salaries 5.7 5.4 5.5 5.7 5.8 5.8 Interest 0.3 0.3 0.4 0.4 0.5 0.5 Primary balance 0.2 -0.8 -2.4 -3.1 -3.4 -3.7 Overall balance -0.1 -1.1 -2.7 -3.5 -3.9 -4.2 Figures for 2012 are estimates; for 2013 and later are projections. Monetary Policy Cameroon is part of the Central African Economic and Monetary Community (CEMAC). As such, its monetary policy is determined by the Bank of Central African States (BEAC), which prioritises controlling inflation and maintaining parity between the CFA franc and euro. Over the 2011-12 period, the country experienced a fall in net external assets and a rise in domestic credit. Net external assets declined by 12.6% in 2012 over the previous year, affected by the coverage of primary goods imports and fuel. Credits to the economy recorded an 11.3% increase in 2012, due to higher commitments from the private sector (up XAF 232.5 billion) and non-financial sector public companies (up XAF 14.6 billion) to the banking system. Also affecting domestic credit were the participation of banks in financing the construction of the Kribi gas power plant, the modernisation and increase in production capacities at SONARA, as well as the numerous loans obtained by companies sub-contracted on structural projects. Money mass declined slightly by 0.1%, going from XAF 2 703.3 billion in 2011 to XAF 2 701.5 billion in 2012. Deposits fell by 2.1%, while currency in circulation rose by 10.2%. The relative share of deposits in money mass went from 83.7% to 82.1% over the same period, reflecting increased national savings. This development in money supply is accompanied by a 3% increase in consumer prices, which still conforms to the convergence criteria and multilateral surveillance programme of the CEMAC zone. Lastly, it should be noted that in 2012, Cameroon drew on reserves rather than resorting to monetary financing of its deficit. Economic Cooperation, Regional Integration & Trade By virtue of its geographic position and diversified economy, Cameroon is the motor of regional trade in central Africa, particularly in the CEMAC zone. This is belied by statistics for the decade to 2010 as the Cameroonian economy accounted for almost 40% of GDP in the zone, 16.8% of exports and 38.8% of imports and more than 44% of money supply. According to the central bank, the leading trade partner for Cameroon in the CEMAC zone is Equatorial Guinea, with 30% of trade, followed by Chad (27%), Congo (25%), Gabon (11%) and Central African Republic (7%). Cameroon exports primarily food products, meat, mineral water, fruit juices, palm oil, iron and steel to the region. It imports crude oil, cigarettes, and liquefied gas (originating primarily in Equatorial Guinea). Aside from crude oil, Congo is the leading partner for Cameroon in the CEMAC zone, with 41% of trade. It is followed by Gabon (20%), Equatorial Guinea (16%), Chad (15%) and Central African Republic (8%). Despite the volume of these exchanges, numerous barriers persist that compromise full use of this trade potential. 13African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 Cameroon
  14. 14. http://dx.doi.org/10.1787/888932810989 The Douala free port – which is a hub for foreign trade (95% of customs income and most traffic to Cameroon is handled by the port) and an access point for neighbouring landlocked countries (Chad and CAR) – suffers from a number of issues. In the absence of adequate support structures, it has become a holding area and warehouse for a number of organisations, as importers are allowed eleven free days before having to pay storage fees. According to several sources, the one-stop shop for foreign trade (GUCE), which oversees customs clearance, takes up to eight weeks to process shipments. As a result, the port is near-permanently overcrowded. Awaiting the completion of modernisation works on the Kribi and Limbe ports, the government adopted a number of measures in 2012 including: implementing regulations, publishing performance standards for customs officials and optimising the management of dock workers. The digitalisation of the GUCE which is under way, should facilitate the execution of port formalities and reduce both delays and costs. In addition and for the purpose of regional integration, the government is highly involved in installing communications infrastructure. It also contributes to the convergence programme for the sub-region and it respects the four criteria imposed on regional states under the multilateral monitoring framework. Lastly, the government fulfils its financial obligations to sub-regional institutions and takes an active role in sub-regional meetings. During the 2012 budget year, exports were dominated by crude oil (32.6%). Excluding petrol products, the other five leading other exports accounted for 27.3% of the total: unprocessed cocoa beans, cut wood, unprocessed logs, natural rubber and raw cotton. Food products and equipment comprised the majority of imports. The exemption measures on foodstuffs provoked a phenomenon of re-exports to neighbouring countries, constituting a risk for the current account balance. Despite the good performance of world prices of its exports in 2012, Cameroon should continue to post several external deficits (estimates based on first quarter results). The current-account deficit should reach 5.3% of GDP at the end of 2012, versus 4.5% in 2011. The trade-account deficit should similarly become more pronounced, at around 4.4% of GDP, compared to 3.9% in 2011. The current-account balance should remain in deficit in 2013, at 5.3% of GDP, due primarily to the trade-account deficit, which should reach 4.7% of GDP. In terms of economic partnerships, France remains the largest foreign investor in Cameroon, although China appears to be increasingly involved. It is already participating in several projects in the country, particularly in transportation and energy infrastructure. Cameroon has signed an economic partnership agreement (EPA) with the European Union, which has yet to be ratified. It should be recalled that in September 2011, the European Commission announced that unless the EPA is ratified before January 2014, the country will be excluded from market access regulations. Cameroon must urgently pre-empt the impact of this action on its economy. Table 4: Current Account 2013 (percentage of GDP) 2004 2009 2010 2011 2012 2013 2014 Trade balance 1 -4.6 -2.7 -3.9 -4.4 -4.7 -5.3 Exports of goods (f.o.b.) 17.6 14.9 16.2 18.3 17.8 16.7 16.2 Imports of goods (f.o.b.) 16.6 19.5 18.9 22.2 22.2 21.4 21.5 Services -5.2 -2.3 -2.3 -0.5 -0.8 -0.5 -0.8 Factor income -3.3 -2 -1.1 -1.1 -0.9 -0.9 -0.8 Current transfers 1 1.2 0.9 1 0.8 0.7 0.7 Current account balance -6.5 -7.7 -5.2 -4.5 -5.3 -5.3 -6.2 Figures for 2012 are estimates; for 2013 and later are projections. Debt Policy Public debt levels should reach XAF 2 020 billion by 31 December 2012, or 15.6% of GDP, down by 9 billion over 2011. Foreign debt represents 65.4% (XAF 1 321 billion) of the total debt, and domestic debt 34.6% (XAF 700 billion). With domestic budget revenues estimated at XAF 2 662.2 billion and expenditure (including interest payments 14 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 Cameroon
  15. 15. http://dx.doi.org/10.1787/888932805042 on public debt) estimated at XAF 2 970.9 billion, in 2013 the primary balance should represent -3.1% of GDP. The XAF 265.1 billion amortisation of public debt will require XAF 574 billion in financing. This should be covered by foreign grants of XAF 66 billion (of which XAF 43 billion falls under the Debt Reduction- Development Contract), foreign indebtedness (of XAF 258 billion) and domestic credit, through the emission of XAF 250 billion in public securities. In terms of sustainability, debt levels will remain manageable between 2013 and 2017. Over this period, the ratio of public debt stock/GDP will remain around 16.7% and, even with extremely challenging external shocks, it will not surpass 17.6% - a figure well below the critical threshold of 70% fixed by the CEMAC zone convergence criteria. By 2014, the ratio of present value of debt to GDP could reach almost 25%. Although there is no current risk of over indebtedness, the country’s obligations towards developing economies for its infrastructure projects are beginning to be significant1 and could, in time, pose a problem for the viability of its foreign debt. Figure 2: Stock of total external debt and debt service 2013 Figures for 2012 are estimates; for 2013 and later are projections. Debt/GDP Debt service/Exports 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0% 10% 20% 30% 40% 50% 60% Percentage http://dx.doi.org/10.1787/888932810989 Figures for 2012 are estimates; for 2013 and later are projections. Debt Policy Public debt levels should reach XAF 2 020 billion by 31 December 2012, or 15.6% of GDP, down by 9 billion over 2011. Foreign debt represents 65.4% (XAF 1 321 billion) of the total debt, and domestic debt 34.6% (XAF 700 billion). With domestic budget revenues estimated at XAF 2 662.2 billion and expenditure (including interest payments 15African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 Cameroon
  16. 16. Economic & Political Governance Private Sector Cameroon’s ranking in the World Bank report Doing Business 2013 – at 161st place out of 185 countries – indicates a long road ahead to improve the business environment. In 2012, the government implemented a number of reforms, including: i) revising business start up regulations, with a provision for a new 48-hour maximum delay for procedures with notaries prior to approaching business creation regulation centres (CFCEs); ii) introducing a new procedure for registering with the Registre du commerce et du crédit mobilier, with greater autonomy given to CFCE agents; iii) reducing by 22% the costs of forming a company in CFCEs; iv) a three-month delay to produce land titles; v) launching a tax centre (CDI) for small companies and reinvigorating the fight against contraband, evasion and counterfeits; vi) creating commercial chambers in courts to facilitate the settling of trade disputes (Law 2011/027 of 14th December 2011), with appointed presidents; vii) continuing to digitalise the judicial system; viii) passing the application texts on the e-commerce law; ix) introducing electronic payments for customs duties, via an agreement between the banks and the Finance Ministry; x) signing the decree regulating certification; xi) creating a virtual platform between the automated customs system and the Oscar management system of the container terminal to speed up customs procedures; xii) connecting customs offices nationally to introduce a new trade system; xiii) establishing a review board for applications for construction permits in the Douala metropolitan area (CUD), which will meet twice monthly; and, xiv) digitalising the system for managing construction permits, which will introduce transparency into the system. Financial Sector Cameroon’s financial sector continues to be dominated by multi-service banks. Specialist banks (business and investment banks) and leasing companies remain absent, which considerably limits long-term borrowing capacities. In addition, the cost of mobilising resources remains high, even with surplus liquidity in the banking system. Overall, the sector is healthy, with the exception of two banks (out of a dozen), which have been struggling since 2009. They are being restructured, under the supervision of the Central African Banking Commission (COBAC), the CEMAC banking supervision body. An assessment of the prudential ratios in mid 2012 confirmed this relative solidity: ten banks adhered to liquidity ratios, while three had excess liquidity. The CEMAC banking system consolidation programme aims for all banks in the sub-region to bring their minimum capital to XAF 7.5 billion by June 2012 and to XAF 10 billion by 30 June 2014. By 30 June 2012, the two weaker banks were struggling to meet to these standards. The sizeable arrears the State owes to SONARA pose a risk for the Cameroonian financial system, given its high exposure. Since 2010, the State has had recourse to the bond market and since 2011 the Treasury has issued bonds to cover short-term needs. Over 2011, the State raised XAF 50 billion in bond-equivalent securities with an average interest rate of 2.3%. By end June 2012, XAF 55 billion had been raised with an average interest rate of 2.2% - which remains competitive in comparison to the 4% charged on BEAC statutory advances to national treasuries. Public Sector Management, Institutions & Reform In 2012, the government undertook two broad measures aimed at increasing the effectiveness of the State’s financial management: i) lightening public procurement procedures, notably via the creation of an ad hoc ministry; and ii) adopting a results-based budget programme which should have been brought into effect on 1st January 2013. Other advances are of note, such as multiannual commitments for investment spending and the development of the market for Treasury bonds, which has improved management of the State treasury. Public administration is highly fragmented, as seen by the large number of ministers. Reforms aimed at decentralisation are under way with more power being granted to local authorities in order to strengthen internal co-ordination. The GESP contributes by focusing ministerial departments on a number of strategic priorities, obliging them to act in line with the strategy. Efforts to increase transparency have continued, with monthly publications of public finance indicators (called TABORD). Local public project monitoring committees produce quarterly reports in a number of localities. A report on the physical and financial execution of the public spending budget summarises both these local reports and ones on centrally managed projects. All the same, in 2012, a few irregularities came to light in the course of this summarising activity. While Cameroon signed up to the Extractive Industries Transparency Initiative (EITI) in 2005, the country is struggling to raise itself to the level of compliant countries. It runs a risk of being expelled if corrective measures are not undertaken before August 2013 – a scenario which could lead to a loss of confidence in international donors who support EITI. In May 2012, Cameroon thus adopted a three-year plan that should 16 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 Cameroon
  17. 17. this summarising activity. While Cameroon signed up to the Extractive Industries Transparency Initiative (EITI) in 2005, the country is struggling to raise itself to the level of compliant countries. It runs a risk of being expelled if corrective measures are not undertaken before August 2013 – a scenario which could lead to a loss of confidence in international donors who support EITI. In May 2012, Cameroon thus adopted a three-year plan that should enable it to become compliant by the deadline. Natural Resource Management & Environment Located adjacent to Lake Chad and part of the Congo basin, Cameroon is very sensitive to environmental issues and it has signed numerous international agreements on the subject. The country has several action plans and national programmes in place aimed at improving management of the environment, forests and fauna and of the forestry sector. Recent floods and their socio-economic impact have also increased awareness of environmental issues amongst the authorities. The framework law for the environment moreover is in need of revision. Forestry sector reform has advanced greatly recently. A new code has been drawn up and will be discussed in Parliament shortly. The draft provisions reinforce transparency in access to forestry concessions, which will be granted interdepartmentally, with civil society and the private sector participating when concessions are opened up. In the mining sector, the code has been revised to comply with international standards, particularly in terms of transparency in granting permits and, more importantly, in obliging mining operators to compensate and mitigate the impact of mining activities. Lastly, measures have been taken to reinforce synergies between the natural resources sector and other sectors. The management of these resources is thus no longer the prerogative of the ministries in charge of forests and the environment, as interdepartmental management has become more widespread, with civil society increasingly involved. Political Context The year 2012 was marked by socio-political stability. The President Paul Biya, in power since 1982, was re- elected in October 2011. Under the guidance of the current Prime Minister, Philémon Yang, re-elected to his post, a new government was appointed in December 2011 with none of the opposition parties included. The only noteworthy change concerned the creation of a Public Procurement Ministry. In April 2012, having been proposed by the government, a law extending the mandate of parliamentary members was adopted. The text provides for a renewable six-month extension of the current legislature. This change has resulted in the postponing by one year of legislative elections, initially scheduled for 2012. The ‘Épervier’ plan to improve governance and bring high-ranking officials accused of various forms of embezzlement to justice has been in operation for several years. It has brought about the arrest and conviction of several political figures. For several observers however, these trials are only the shadow of a battle that will offer up the possible successors of the current head of state. 17African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 Cameroon
  18. 18. Social Context & Human Development Building Human Resources Cameroon appears to be on course to achieve Millennium Development Goal (MDG) 2 on universal primary education by 2015. The gross enrolment rate (GER) has already exceeded the 100% target and the net enrolment rate (NER) is rising, having increased by 8.5% between 2001 and 2010. Other indicators remain below target, although they are improving steadily, as is the case for the primary school completion rate (which reached 73%, versus an 88% target). Cameroon will clearly find it more difficult to attain MDG 4 pertaining to under-five and infant mortality by the deadline. Despite all of the components of this indicator exhibiting a falling trend since 2000 (infant mortality and child-juvenile mortality), progress has not been sufficient. According to data from the 2011 special demographic and health survey (EDS-MICS), infant mortality went from 151 per thousand before 1998 to 144 per thousand in 2004 then to 122 per thousand in 2011. Maternal mortality (targeted in MDG 5) has followed a worrying trend over the past decades, with the rate going from 511 deaths per one hundred thousand live births in 1991 to 782 in 2010. These statistics reflect an alarming situation, which should undermine the achievement of this goal by 2015. On the other hand, efforts to increase access to reproductive healthcare (Target B of MDG 5) form part of a real drive. Increasingly, a large proportion of women have access to prenatal care, although the situation differs from region to region. Broadly, 64% of pregnant women give birth in the presence of a healthcare worker and 61% give birth in health clinics (of which 21% are in private establishments). But in 37% of cases, women still give birth at home, particularly in rural areas (54%). The country is trying to reverse the HIV/AIDS prevalence curve. For 15-59 year olds, this went from 0.5% in 1987 to 10.8% in 2000 then to 5.5% in 2004, before falling to 4.3% in 2011. Access to healthcare remains a serious challenge. As a result, the MDG 6 target of achieving universal healthcare in 2010 could not be met. The situation regarding malaria is also worrying and Cameroon will most probably not achieve the related MDG 6C target. This disease continues to be the leading cause of morbidity and mortality amongst the most vulnerable groups, particularly children under five and pregnant women. It is responsible for 24% of all deaths recorded in healthcare institutions, 40-45% of medical consultations and 30% of hospitalisations (EDS-MICS 2011). Tuberculosis remains a scourge with 22 500 new cases recorded on average each year by the Ministry of Public Health. It is responsible for a 1% fall in GDP. The resurgence of this disease is linked to both persistent poverty and the HIV/AIDS pandemic. Poverty Reduction, Social Protection & Labour In April 2003, the government adopted a Poverty Reduction Strategy Paper (PRSP) the aim of which is to bring the incidence of poverty to 25.2% by 2015 (which entails halving the 1996 rate of 53.3%, and with an interim rate of 37.1% in 2007). In order to reach this target, the paper hypothesises on a 7% growth rate per annum for the period. However, growth has not exceeded 3% to 3.4%. The PRSP, which focuses primarily on priority social sectors, projects bringing the poverty rate down to 28.7% in 2020. The periodically conducted Cameroon household survey (ECAM) enables the country to monitor poverty indicators regularly. Despite a 13-point fall in the incidence of poverty between 1996 and 2001, between 2001- 07 poverty only dropped from 40.2% to 39.9%. As such, progress was slower than expected, with a decline in poverty of just 0.28%. The Southwest, West, South and border provinces posted a 30% incidence of poverty, while in the Centre it reached 41% and approached 50% in the Northwest, East and Adamawa. These data also attest that poverty fell in urban areas (-5.7 points) but rose in rural ones (+3 points). As such, the rural poor increased from 85% to 89% between 2001 and 2007. The principal determinants of poverty are household size, high fertility, education level and sector of economic activity. Gender Equality The attainment of MDG 3 which aims to eliminate gender disparity in education at all levels by 2015 remains problematic when analysing the evolution of social indicators. Parity in the gross enrolment rate was 0.86 in 2010. The male/female gap in primary and secondary schooling has been reduced significantly, from 4.3% in 2001 to 0.6% in 2010. Parity increased significantly at secondary level, with a more pronounced reduction in the gap between the sexes, of 0.01 and 0.08 for the primary and secondary levels. However, the EDS-MICS 2011 survey revealed that less than 69% of women are literate, compared with 82% of men, and that 20% of women received no education, compared with 8% of men. Disparities between men and women in the working population also exist, as well as high inequality in terms of property ownership. While Ruling 74-1 of 6 July 1974 guarantees that every individual or entity possessing land titles has the right to benefit from and dispose of them freely, in reality the situation seems less favourable for women; they are almost entirely absent from land registers. 18 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 Cameroon
  19. 19. women received no education, compared with 8% of men. Disparities between men and women in the working population also exist, as well as high inequality in terms of property ownership. While Ruling 74-1 of 6 July 1974 guarantees that every individual or entity possessing land titles has the right to benefit from and dispose of them freely, in reality the situation seems less favourable for women; they are almost entirely absent from land registers. Early marriage remains relatively common. At age 15, around 8% of women have already given birth at least once, and this proportion accelerates with age so that 55% have given birth before 20 and 83% before 25 (EDS- MICS 2011). 19African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 Cameroon
  20. 20. Thematic analysis: Structural transformation and natural resources The structure of the Cameroonian economy has changed over the past decade, with a relatively large fall in the contribution of the primary sector to GDP, to the benefit of the tertiary sector. Every sector has experienced structural changes: thus, the contribution of agriculture (food or industrial agriculture, livestock, fisheries and forestry) has gradually but drastically diminished, falling from 33% to 17% between 1998/99 and 2012. Inversely, the oil sub-sector rose although to a lesser extent, with a 9% contribution to GDP in 2012, versus 5% at the end of the 1990s. In the service sector, trade, hotels and restaurants experienced major development while, over the same period, transportation and communication fell significantly. Cameroon has plentiful natural resources – oil, wood, coffee, cotton, cocoa, rubber and aluminium – which drive exports. It also has enormous untapped potential in natural gas, iron, bauxite and cobalt. Oil has an important place in the economy: over the past decade, it has represented on average 40% of exports in terms of value and contributed 25% of budget income. Since the 1994 devaluation and until the recent recovery of the sector, Cameroon has experienced weak growth, specifically reflecting the gradual depletion of oil resources. But the sector continues to play an important role in public finances and in the balance of external accounts. Despite the underlying fall in oil production over the past ten years, the price of Cameroonian crude has continuously increased (except in 2009), explaining the good performance of oil revenues. Investment spending however was stuck at very low levels, at around 2.8% of GDP until 2006, the date at which the Heavily Indebted Poor Countries (HIPC) Initiative completion point was reached. Economic growth has increasingly suffered from the negative performance of transportation, a decline in forestry activities and breakdowns in the energy sector. Since the 1990s, the falling off of efforts at upkeep, maintenance and expansion of roads, ports, airports and railways became a major factor in the decline in the stock and quality of infrastructure. In energy, this disinvestment led to recurring power cuts and electricity rationing for companies. Lastly, in the forestry sector, formerly the largest source of jobs, a decline in activity has led to the closure of numerous companies. Given these challenges and thanks to lesser budgetary pressure resulting from debt relief, since 2006 the Cameroonian state has committed to a new initiative aimed at upgrading and extending energy, port and transport infrastructure. It also sought to revive oil production by opening new fields and reopening a number of wells. Thus 2012 marked the revival of oil production, with an estimated rise of 9.7%. This trend should continue in 2013, with production expected to grow by 15.6%. Lastly, scheduled liquefied gas production in 2015 opens new and important prospects in the hydrocarbon sector. In an attempt to maximise oil profits, the authorities have concentrated on producing broad regulatory texts, including: i) the mining code; ii) a national investment code; iii) the community investment charter; iv) EITI standards; and, v) the GESP. The mining code regulates all extractive activity and invested the SNH with the task of promoting the oil sector. In addition to granting prospecting licences and permits, the SNH must both attract investors and enjoin them to respect current regulations. The State does not have a stabilisation fund as such to invest oil and gas revenues in long-term assets. Oil receipts are generally injected into the overall budget. When a surplus exists, a specific budget line is adopted or the money is allocated to building up central bank reserves. Natural resource revenues have not been channelled sufficiently towards structural investments in infrastructure or productive sectors. However, for some time now the State has been involved in a programme to revive the productive sectors, specifically via strengthening key infrastructure. At the same time, it is attempting to increase the mobilisation of non-oil resources and thus to improve the budget structure. Overall, while the authorities have succeeded in maintaining a degree of macroeconomic stability, administrative dysfunctions persist reflecting governance failings – which hamper the optimal use of public resources towards the country’s socio-economic development. Drawn up in 2009, the GESP reflects the government’s ambition to make Cameroon an emerging economy by 2035. With this strategy, which amplifies the political will to diversify the economy, the public authorities intend to work towards a deep transformation of the structure of the productive industries. The share of manufacturing in GDP should thus reach at least 23%. This policy also aims at boosting the role of manufacturing products in foreign trade, to the detriment of primary materials. This underlies the importance placed on activities relating to industrial transformation in general and the extractive industry in particular in the GESP. Logically, the local transformation of hydrocarbons is key in the country’s investment code. This code clearly states the multiple advantages – administrative, economic, customs and tax – from which local and foreign companies transforming the sector’s products in situ will benefit. The main changes introduced these past years focus primarily on giving local companies access to distribution activities of petrol products. These henceforth will compete strongly with Western multinationals, which traditionally monopolised distribution. The PACD/PME programme also aims to support the creation and development of small- and medium-sized enterprises (SMEs) through more efficient processing and conserving of local mass market goods. The Ministry for Small and Medium Enterprises, the Social Economy and Crafts has been active in this task. Through a multipronged approach of direct and indirect support, the PACD/PME facilitates SME access to technology, 20 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 Cameroon
  21. 21. will compete strongly with Western multinationals, which traditionally monopolised distribution. The PACD/PME programme also aims to support the creation and development of small- and medium-sized enterprises (SMEs) through more efficient processing and conserving of local mass market goods. The Ministry for Small and Medium Enterprises, the Social Economy and Crafts has been active in this task. Through a multipronged approach of direct and indirect support, the PACD/PME facilitates SME access to technology, finance and essential services (including feasibility studies, incorporation, training, drawing up technical construction plans, and technical and administrative support, etc.). Regionally, the authorities are also focused on promoting local processing through the creation of the ‘CEMAC product’ label under the Community Investment Charter. Products originating in the CEMAC are given substantial tax advantages over other foreign goods. Notes 1. According to the Independent Amortisation Fund (Caisse autonome d’amortissement), the body charged with debt management, this undertaking resulted in new financing agreements being signed in 2011 amounting to XAF 618 billion. Negotiations are underway for nine other projects (airports, roads, water, sanitation, energy and telecommunications), valued at XAF 1 658 billion. 21African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 Cameroon
  22. 22. Central African Republic 2013 www.africaneconomicoutlook.org Kalidou Diallo / k.d.diallo@afdb.org
  23. 23. Central African Republic Sections Growth in 2012 (3.1%) was lower than forecast, and the outlook for 2013 and 2014 has deteriorated and become highly uncertain since the rebel attacks in December 2012, which led to the fall of François Bozizé’s regime. Efforts made in the area of public finance enabled the government to conclude an agreement with the IMF in June 2012 and to re-establish relations with the African Development Bank (AfDB) and the World Bank, which had suspended their budget support in late 2010. Despite having substantial natural resources, the Central African Republic has not yet achieved the structural transformation needed to create strong, sustainable growth and reduce poverty. Overview The increasingly fragile political and security situation has not only worsened the economic outlook for 2013, it has also made it highly uncertain. Despite the peace deal signed in Libreville on 11 January 2013, resulting in a national unity government, the Seleka rebels launched an offensive on the capital, Bangui, on 22 March 2013, setting up a new regime. Chief rebel Michel Djotodia proclaimed himself president, while former president François Bozizé was forced into exile. The events also sparked extensive looting and the destruction of public and private property in Bangui. Real gross domestic product (GDP) growth in 2012 was 3.1%, below initial forecasts of 4.2%. The performance was lower than expected because of bad weather causing a slowdown in agriculture and because of the worsening security situation. A decline in agricultural production and higher prices for petroleum products pushed inflation above the levels that were forecast. Concerning public finances, efforts to maintain budgetary discipline continued in 2012. These efforts enabled the country to re-establish relations with its main development partners. In June 2012, the government signed an economic and financial programme with the International Monetary Fund (IMF) through an Extended Credit Facility (ECF). The African Development Bank (AfDB) and the World Bank provided budget support for the reforms, which had been suspended since 2010. However, it is difficult to predict to what extent the economic and financial reforms supported by the country's technical and financial partners will be enforced over the next two years given the current political turmoil. Social developments such as eradicating extreme poverty, reducing infant mortality and providing access to basic sanitation remain slow. Some factors did show a marked improvement: the primary-school enrolment rate, promotion of gender equality, the ratio of girls to boys in primary schools and the supply of drinking water. The Central African Republic has substantial natural resources, but their exploitation has not yet led to the structural transformation needed for stronger, sustainable growth. Recent encouraging progress in the management of natural resources has enabled the Central African Republic to comply with the Extractive Industries Transparency Initiative (EITI). The country’s political fragility, deficient basic infrastructure and prevailing business climate make a structural transformation of the economy very difficult. Central African Republic Sections Growth in 2012 (3.1%) was lower than forecast, and the outlook for 2013 and 2014 has deteriorated and become highly uncertain since the rebel attacks in December 2012, which led to the fall of François Bozizé’s regime. Efforts made in the area of public finance enabled the government to conclude an agreement with the IMF in June 2012 and to re-establish relations with the African Development Bank (AfDB) and the World Bank, which had suspended their budget support in late 2010. Despite having substantial natural resources, the Central African Republic has not yet achieved the structural transformation needed to create strong, sustainable growth and reduce poverty. Overview The increasingly fragile political and security situation has not only worsened the economic outlook for 2013, it has also made it highly uncertain. Despite the peace deal signed in Libreville on 11 January 2013, resulting in a national unity government, the Seleka rebels launched an offensive on the capital, Bangui, on 22 March 2013, setting up a new regime. Chief rebel Michel Djotodia proclaimed himself president, while former president François Bozizé was forced into exile. The events also sparked extensive looting and the destruction of public and private property in Bangui. Real gross domestic product (GDP) growth in 2012 was 3.1%, below initial forecasts of 4.2%. The performance was lower than expected because of bad weather causing a slowdown in agriculture and because of the worsening security situation. A decline in agricultural production and higher prices for petroleum products pushed inflation above the levels that were forecast. Concerning public finances, efforts to maintain budgetary discipline continued in 2012. These efforts enabled the country to re-establish relations with its main development partners. In June 2012, the government signed an economic and financial programme with the International Monetary Fund (IMF) through an Extended Credit Facility (ECF). The African Development Bank (AfDB) and the World Bank provided budget support for the reforms, which had been suspended since 2010. However, it is difficult to predict to what extent the economic and financial reforms supported by the country's technical and financial partners will be enforced over the next two years given the current political turmoil. Social developments such as eradicating extreme poverty, reducing infant mortality and providing access to basic sanitation remain slow. Some factors did show a marked improvement: the primary-school enrolment rate, promotion of gender equality, the ratio of girls to boys in primary schools and the supply of drinking water. The Central African Republic has substantial natural resources, but their exploitation has not yet led to the structural transformation needed for stronger, sustainable growth. Recent encouraging progress in the management of natural resources has enabled the Central African Republic to comply with the Extractive Industries Transparency Initiative (EITI). The country’s political fragility, deficient basic infrastructure and prevailing business climate make a structural transformation of the economy very difficult. 24 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  24. 24. http://dx.doi.org/10.1787/888932805080 http://dx.doi.org/10.1787/888932808063 Figure 1: Real GDP growth 2013 (Central) Figures for 2012 are estimates; for 2013 and later are projections. Table 1: Macroeconomic indicators 2013 2011 2012 2013 2014 Real GDP growth 3.1 3.1 3.2 4.6 Real GDP per capita growth 1.2 1.1 1.3 2.6 CPI inflation 0.7 3.5 2.4 2.9 Budget balance % GDP -2.9 -3.5 -3.4 -3.4 Current account % GDP -7.2 -7 -5.4 -5.3 Figures for 2012 are estimates; for 2013 and later are projections. Real GDP growth (%) Central Africa - Real GDP growth (%) Africa - Real GDP growth (%) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0% 2.5% 5% 7.5% 10% 12.5% RealGDPGrowth(%) 25African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  25. 25. http://dx.doi.org/10.1787/888932809051 Recent Developments & Prospects Table 2: GDP by Sector (percentage of GDP) 2007 2011 Agriculture, forestry & fishing - - Agriculture, hunting, forestry, fishing 54.3 54.1 Construction 4.1 4.4 Electricity, gas and water 0.9 0.7 Electricity, water and sanitation - - Extractions - - Finance, insurance and social solidarity - - Finance, real estate and business services 6.5 6.9 General government services - - Gross domestic product at basic prices / factor cost 100 100 Manufacturing 6.6 6.6 Mining 2.8 2 Other services 1.7 1.4 Public Administration & Personal Services - - Public Administration, Education, Health & Social Work, Community, Social & Personal Services 4.7 4.7 Public administration, education, health & social work, community, social & personal services - - Social services - - Transport, storage and communication 12.9 13.3 Transportation, communication & information - - Wholesale and retail trade, hotels and restaurants 5.5 5.8 Wholesale, retail trade and real estate ownership - - Real GDP growth stabilised at 3.1% in 2012, below the initial forecast of 4.2% but equivalent to the rate in 2011. Growth did not reach the predicted level because there was a slowdown in the primary and secondary sectors. Primary-sector growth slowed from 6.7% in 2011 to 2.9%, while secondary-sector growth slowed from 5.2% in 2011 to 4.1%. Tertiary-sector growth, meanwhile, accelerated from 3.1% in 2011 to 4.8%. The primary sector’s poor performance was due to a decline in food-crop production following the late arrival of the rainy season and the worsening security situation during part of the harvest period. Cash-crop exports had mixed results. Cotton production grew by 10.3%, helped by a project involving Chinese co‑operation, but coffee production fell. Timber – the main export product – performed well in 2012 thanks to lumber production, but not as well as in 2011. Secondary-sector growth was boosted by the recovery of mining, which grew by 10.7% in 2012. This strong growth probably occurred thanks to new mining policies, the revitalisation of support structures and cooperatives and efforts to build the capacities of artisanal miners. The other secondary-sector industries (construction, industry and electricity) grew at least as strongly as in 2011. The tertiary sector benefited from strong growth of 26.3% in non-market services as government activity increased and international co‑operation resumed. The country’s GDP sector composition, dominated by the primary sector, has not changed over the past few years. The primary sector contributed more than 50% of GDP in 2012 (food crops alone contributed 28%), the tertiary sector about 30% and the secondary sector nearly 20%. 26 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  26. 26. strong growth of 26.3% in non-market services as government activity increased and international co‑operation resumed. The country’s GDP sector composition, dominated by the primary sector, has not changed over the past few years. The primary sector contributed more than 50% of GDP in 2012 (food crops alone contributed 28%), the tertiary sector about 30% and the secondary sector nearly 20%. In terms of aggregate demand, growth in 2012 was provided by both public and private consumption and by public investment. This situation was mainly thanks to the recovery of external financing through development programmes and to growing interest from non-traditional investors in the construction and agriculture sectors. External demand improved its contribution to economic growth, but remains marginal. The government achieved its 2012 budget objective of reducing current primary expenditure to 10.9% of GDP. Total expenditure including net lending was 19.2% of GDP. Domestic resource mobilisation, however, was still very low. Tax revenue falls far short of being able to cover recurrent spending (9.5% of GDP in 2012). It remains well below the ratio of most sub-Saharan African countries. Despite measures to improve revenue administration and efforts to control public expenditure, the budget balance deteriorated. In 2011 there was a deficit of 2.9% of GDP, but in 2012 this expanded to 3.5%. Inflation remained moderate, at 3.5%, albeit higher than the 2011 rate of 0.7%. Inflation was driven up by agriculture’s poor performance and the rise in the prices of imported food. The Central African Republic’s continued improvement of its macroeconomic management enabled the government to reach an agreement in June 2012 with the IMF on a three-year economic programme through the ECF. Current transfers increased to help improve the current-account balance, reducing the deficit from 7.2% of GDP in 2011 to 7.0% in 2012. The current political climate is likely to hinder the agricultural calendar in 2013, resulting in lower yields. Part of the foreign direct investment (FDI) programmed for the mining sector and certain externally funded agricultural and infrastructure projects could also be affected by political uncertainties. Growth is forecast at less than 3.2% in 2013, and will depend largely on how the political landscape and international climate shape up. Inflation, meanwhile, should dip below the 3.0% regional convergence criterion to 2.5% in 2014. It should be noted that forecasts for 2013 and 2014 were made before the recent political turmoil and the fall of President François Bozizé. 27African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  27. 27. http://dx.doi.org/10.1787/888932810039 Macroeconomic Policy Fiscal Policy Measures initiated in 2011 to redress public finances continued in 2012. These measures restored normal procedures for public spending, introduced reforms to simplify the tax system and reorganised financial authorities to improve tax revenue mobilisation. Following fiscal slippages in 2011, the government made budget enforcement the cornerstone of its fiscal policy in 2012. It created a budget-management monitoring committee (Comité de suivi de la gestion budgétaire, CSGB) and strengthened the two liquidity monitoring units: the finance ministry’s Commission de suivi de la liquidité (CSL) and the treasury’s Cellule technique de suivi de la liquidité (CTSL). The CSL met regularly to establish the monthly and annual treasury plans put forward by the CTSL. The CSBG, meanwhile, would meet every two weeks to monitor revenue collection, disbursements and the use of foreign financial assistance. The government also continued reforms to improve its domestic revenue mobilisation by simplifying tax legislation for small- and medium-sized enterprises (SMEs), abolishing the reduced VAT rate and completing the creation of tax bands. It cut registration fees by half. Finally, in 2012 it completed plans to simplify personal income tax and adopted them in the 2013 budget. Total government revenue (including grants) represented 16.2% of GDP in 2012, up from 14.7% in 2011. This increase was helped by the return of external budget support, which in 2010 and 2011 was suspended. The tax-to-GDP ratio remains below the 12.0% target. In 2012 it was 9.9%, up slightly from 9.5% in 2011. Public expenditure increased in 2012 to 16.2% of GDP, from 15.7% in 2011. This increase was linked to the rise in investment expenditure financed by external resources, which in turn was thanks to the resumption of budget support from technical and financial partners. Thanks to additional tax revenue and control of current expenditure, the overall fiscal balance stabilised at 4.8% of GDP in 2012. Table 3: Public Finances 2013 (percentage of GDP) 2009 2010 2011 2012 2013 2014 Total revenue and grants 16.1 17.9 14.5 15.7 16.4 16.4 Tax revenue 8.7 9.4 9.4 9.5 9.5 9.4 Oil revenue - - - - - - Grants 5.3 6.3 3.5 4.5 5.3 5.3 Total expenditure and net lending (a) 16.2 19.3 17.4 19.2 19.8 19.8 Current expenditure 11.2 12.5 11.8 10.7 10.9 10.8 Excluding interest 10.1 11.5 11 10 10.3 10.3 Wages and salaries 4.5 4.4 4.5 4.6 4.5 4.5 Interest 1.1 1 0.8 0.7 0.5 0.4 Primary balance 1 -0.4 -2.1 -2.8 -2.9 -3 Overall balance -0.1 -1.4 -2.9 -3.5 -3.4 -3.4 Figures for 2012 are estimates; for 2013 and later are projections. Monetary Policy Monetary policy is determined by the Bank of Central African States (BEAC). The bank’s mission is to issue the currency and ensure its stability, set and implement monetary policy for member states, conduct foreign- exchange transactions, hold and manage member states’ foreign-exchange reserves and help the union’s payments system to run smoothly. The BEAC’s monetary policy gives priority to controlling inflation and 28 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  28. 28. http://dx.doi.org/10.1787/888932811027 maintaining fixed parity between the CFA franc and the euro. It does so by using indirect instruments such as refinancing and obligatory reserve requirements to control the money supply. The BEAC’s prudent monetary policy has helped contain inflationary pressures since late 2011. In 2012, the rate of inflation of the consumer price index was slightly above the 3% convergence criterion for member states of the Economic and Monetary Community of Central Africa (CEMAC). The inflationary pressures seen in the Central African Republic were caused by a slight rebound in prices during the final six months of 2011 as imported food became more expensive. Another factor could be a delayed effect of the BEAC’s interest-rate cut to 4% in 2010. The cut caused the volume of credit to the economy to increase, especially short-term loans. The Central African Republic’s foreign assets continued the downward trend that began in early 2011, thus limiting the expansion of the money supply. Economic Cooperation, Regional Integration & Trade The country’s trade deficit widened in 2012 from 4.1% to 5.1% as cotton prices collapsed and oil and food prices continued to rise. By contrast, the current-account deficit narrowed slightly from 7.2% to 7.0% thanks to a rise in the volume of current transfers. The government continued with its regional integration policy in 2012, implementing the CEMAC Customs Code (Code douanier). CEMAC’s common external tariff is the simple average of the Most Favoured Nation’s (MFN) tariff of the past few years (18.2%), with much higher tariff protection for agricultural goods (22.7%). However, due to the government’s financial difficulties the country obtained an exemption from CEMAC’s General Preferential Tariff (GPT). The Central African Republic therefore grants no preferential tariffs to any country. By adopting programmes in late 2012 that are better adapted to the regional integration strategy, the Central African Republic committed to promote regional trade facilitation. The consultation process with Cameroon and Chad was revived in 2012 for the institutions affected by traffic in the Bangui-Douala and Ndjamena-Douala corridors. The asphalting of the Bouar-Ngaroua-Mboulaï road, partly funded by the AfDB, was completed in 2012, improving traffic in the Bangui-Douala corridor. Despite its political commitment and its geographically strategic location in Central Africa, the country does not capitalise enough on regional integration. Exports to the region grew by only 5.2% between 2003 and 2010; on average, exports by other CEMAC countries grew by 13.5% during the same period. This poor performance is largely caused by problems with the transport infrastructure and a poor business climate. Nevertheless, the country’s membership in CEMAC has contributed to macroeconomic stability by limiting the negative effects of external shocks. Table 4: Current Account 2013 (percentage of GDP) 2004 2009 2010 2011 2012 2013 2014 Trade balance -1.4 -7.2 -8.1 -4.1 -5.1 -4.6 -4.7 Exports of goods (f.o.b.) 10.5 6.5 7.3 9.2 8.6 8.6 8.6 Imports of goods (f.o.b.) 11.9 13.7 15.4 13.2 13.7 13.2 13.3 Services -5.1 -4.6 -5.7 -5.6 -5.3 -4.8 -4.4 Factor income -1.1 -0.3 -0.2 -0.1 -0.1 -0.1 0 Current transfers 5.8 3.9 4 2.6 3.5 4.2 3.9 Current account balance -1.8 -8.1 -9.9 -7.2 -7 -5.4 -5.3 Figures for 2012 are estimates; for 2013 and later are projections. Debt Policy The Central African Republic completed the Heavily Indebted Poor Countries (HIPC) Initiative in 2009. As a result, its public debt was drastically reduced from 80.3% to 35.0% between 2008 in 2009. Fiscal slippages in 29African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  29. 29. http://dx.doi.org/10.1787/888932805080 2010 and 2011 forced the government to borrow again to finance infrastructure projects. Public debt thus rose to 42% of GDP in 2011, well above the projected target of 27% for 2010 set in the IMF and World Bank’s Debt Sustainability Analysis (DSA). Despite its growing debt, the Central African Republic is classed as having “lower debt vulnerability and a lower capacity” with regard to the IMF’s debt limits. Figure 2: Stock of total external debt and debt service 2013 Figures for 2012 are estimates; for 2013 and later are projections. Debt/GDP Debt service/Exports 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0% 20% 40% 60% 80% 100% Percentage http://dx.doi.org/10.1787/888932811027 Figures for 2012 are estimates; for 2013 and later are projections. Debt Policy The Central African Republic completed the Heavily Indebted Poor Countries (HIPC) Initiative in 2009. As a result, its public debt was drastically reduced from 80.3% to 35.0% between 2008 in 2009. Fiscal slippages in 30 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  30. 30. Economic & Political Governance Private Sector The conditions for the development of the private sector are still difficult. The unattractive business climate, as evidenced by its position of 185th in the World Bank report Doing Business 2013, hinders private-sector development. Complex procedures are necessary to start up or shut down a business. Starting a business requires an average of eight procedures and takes 22 days. The relative costs, however, have fallen. In 2010 it cost an average of 244.9% of income per capita, but in 2011 it cost an average of 228.4%; this compared with a sub-Saharan African average of 95.4%. The government is seeking to overcome these constraints, but is struggling to produce the desired effects with the measures it has taken. A one-stop shop was created in 2008 to reduce business start-up costs and simplify procedures. A joint committee responsible for improving the business environment was also formed. FDI remains low, however. Economic operators have various hurdles to overcome. The country is isolated, infrastructure is lacking and of poor quality, the judiciary is unstable and there is insufficient dialogue between government and the private sector. Financial Sector Financial intermediation and private-sector development remains superficial. There are few financial institutions, and they are heavily concentrated in the capital, Bangui. Financial-sector assets as a proportion of GDP remain below the regional average. More than 90% of the financial system’s consolidated assets are concentrated in four commercial banks. There are two insurance companies (4% of assets) and eleven microfinance institutions (3% of assets). Measures taken in 2012 to increase the use of banks for paying salaries and business taxes have improved people’s access to banking and financial services, despite expensive fees. Cash machines are rare and the vast majority are in Bangui. Despite a rise in the overall volume of credit to the economy in 2012, thanks to private-sector tenders, SMEs still have little access to finance. The banking sector’s financial soundness indicators had mixed results in 2012. Two banks had enough net capital resources to comply with all prudential standards. Microfinance improved thanks to the Programme d’appui à l’émergence d’un secteur financier inclusif (a support programme for the emergence of an inclusive financial sector, PAE/SFI), organised by the United Nations Development Programme (UNDP) for the period 2008‑12. Five of the eight microfinance institutions benefited from the programme, which helped raise the number of branches to 23 in 2012, including 9 in rural areas. According to UNDP statistics for 2012, the programme benefited 62 000 people, including 23 000 women. The total savings of microfinance institutions in 2012 was USD 13 million, while total lending was USD 4.5 million. The portfolio at risk of the microcredit institutions was estimated at 18‑20% in 2012. Public Sector Management, Institutions & Reform A weak institutional capacity and structural deficiencies hinder the country’s economic and social development. Public-sector management improved in 2012, enabling the country to reconnect with its technical and financial partners to receive budget support and to create an economic programme with the IMF in June 2012. However, despite this progress the Central African Republic is still faced with major challenges, as underlined by the results of the first review of the IMF programme in November 2012. The IMF mission found that the government had made significant efforts to strengthen public finance management, particularly the monitoring of treasury transactions. It also noted that several government revenue mobilisation goals had been achieved. However, there were still problems with controlling the expenditure chain caused by the use of exceptional payment procedures. Budget priorities are ignored, including spending on poverty reduction and the ceiling for the reduction of domestic payment arrears. Natural Resource Management & Environment In March 2011, the country became compliant with the EITI just two years after being admitted as a candidate country. About 70% of the population use wells or waterholes. This figure is higher than average for similar fragile states. The wells and waterholes are in such a poor state that they rarely provide drinking water. About a quarter of the waterholes are not working, and the rest serve an average of 1 500 to 2 000 people each. This figure is far higher than the government’s target of 300 people per waterhole. 31African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  31. 31. Access to drinking water is far higher in urban areas than in rural areas. Drinking fountains are accessible to 52% of people living in urban areas, but only around 5% of people living in rural areas, where waterholes and hand pumps provide 95% of water. Since only 10% of water from wells and waterholes is safe, only 14% of the rural population have access to safe drinking water, compared with 61% of the urban population. In addition, 43% of rural households must walk between 30 minutes to an hour to fetch water, compared with 25% of urban households. Political Context Rebel attacks launched by Seleka (the Sango word for “coalition”, since it is a coalition of armed groups) in December 2012 have made the political and security situation very fragile. The attacks led to the fall of François Bozizé’s regime on 22 March 2013. The former president fled to Cameroon. These events occurred despite the peace deal signed between Bozizé and Seleka on 11 January 2013 in Libreville (Gabon) and the national unity government that was set up. As the rebels began to gain ground, the Economic Community of Central African States organised a conference in Libreville from 9 to 11 January, inviting all parties involved. The peace deal was supposed to put an end to hostilities and create a national unity government led by a prime minister from the opposition. The leader of the Seleka coalition, Michel Djotodia, proclaimed himself President of the Republic on 22 March and announced the suspension of the 27 November 2004 constitution and the dissolution of the National Assembly and the national unity government. He also announced his intent to hold “free and fair elections with everybody’s help” by 2016. Michel Djotodia has left Prime Minister Nicolas Tiangaye (from the rival party of the former president) in office. Security has worsened since the rebel offensive. There has been extensive looting, and public and private property has been destroyed, especially in the capital. The cost of the damage is still difficult to calculate. After a decade of armed conflicts, the political changes in 2003 following the military coup that brought General François Bozizé to power led to the signing of various agreements to promote peace, security and the emergence of the rule of law. The new constitution was approved by referendum in 2004 and presidential and parliamentary elections took place in 2005. Several peace agreements were signed between the new government and the former armed groups. These agreements planned for disarming, demobilising and reintegrating former combatants. Political stability gradually returned, and the government restored its relations with its main development partners. The political climate became tense after the presidential and parliamentary elections of 2011, the results of which were contested. The opposition refused to be part of the national unity government that was expected after the elections. Dialogue and the peace- and security-building process that had been under way for several years deteriorated. 32 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  32. 32. Social Context & Human Development Building Human Resources The Central African Republic remains confronted by the consequences of the multiple political crises that rocked the country over more than a decade. The country’s Human Development Index improved slightly in recent years. By 2013 it was 0.345, compared to an average of 0.475 for sub-Saharan Africa, giving it a ranking of 180th out of 187 countries. The overall analysis of vulnerability and food security carried out by the World Food Programme, the UNDP and the Food and Agriculture Organization of the United Nations (FAO) shows that in 2011 around 30.0% of households in the Central African Republic suffered from food insecurity. Malnutrition is still endemic throughout the country and is particularly rife in the mining towns of the south-west (Carnot, Nola and Berberati), where under-five malnutrition stands at 16.0%. The proportion of children under five who are underweight is increasing and now stands at 28.3%. A huge 68.2% of infants under 36 months have vitamin A deficiency and 84.0% are anaemic. Furthermore, armed conflict and insecurity, with 250 000 displaced persons in the north- west regions, have increased food insecurity. Malnutrition remains the cause of more than half of deaths of children aged under five. Malaria affects 22.0% of the population and 32.0% of children under five. Because it is unlikely to achieve the Millennium Development Goals (MDGs) by 2015, the Central African Republic made a commitment to implement the MDG Acceleration Framework, as certain other sub-Saharan African countries have. With this new strategy, each country chooses a particular target and focuses its resources on that target. The Central African Republic chose the target of halving the proportion of people suffering from hunger by 2015. One of the priorities of the Poverty Reduction Strategy Paper (PRSP 2) for 2011‑15 is education. Public expenditure on education increased from less than 10% in 2007 to almost 40% by 2011. The mid-term review of the MDGs at the end of 2010 showed that the primary-school enrolment rate had improved drastically. The preschool enrolment rate improved from 5% in 2005 to more than 8% in 2011, with nine girls for every ten boys. The gross enrolment rate also improved from 74% in 2007 to 91% between 2010 and 2011. The SNSE education strategy (Stratégie nationale du secteur de l’éducation) was developed and implemented in 2009 with the aim of building and developing the country’s human resources. The government committed to progressively allocating significant shares of the operating budget, with the figure reaching 23% by 2020. Poverty Reduction, Social Protection & Labour The country has adopted most of the necessary laws to comply with the fundamental conventions of the International Labour Organization, but most of the laws are not enforced. Trade unions defend the interests of workers but have few members. The Central African Republic has also legislated against child labour and in favour of the employment of people with disabilities, but the laws are rarely enforced. The labour market is dominated by private-sector jobs, with relatively few public-sector and parastatal-sector jobs. Government policy on employment is conducted by the Agence centrafricaine pour la formation professionnelle et l’emploi (ACFPE). After passing new legislation aimed at improving the institutional framework of the civil service (including the November 2008 law on the institutional and legal framework of public enterprises and public office), the government passed a law on its status in August 2009. In the private sector, companies do not fully implement labour legislation because the informal sector is so large and because they have little capacity to hire staff following the destruction of capital and material goods during the conflicts. The Labour Code (Code du travail), which was published in 2012, is currently being disseminated. Labour market regulations still discourage the creation of jobs in the formal sector and fail to protect much of the workforce. Very little money is spent on programmes for the labour market and very few workers benefit from them. Only a small fraction of the population have social-security coverage: public-sector employees and a few private-sector employees. The risks covered by the programme are limited. Pensions, social benefits and payments related to workplace accidents and illnesses are not always paid because the social-security administration (Office centrafricain de sécurité sociale) has financial difficulties. Private and complementary insurance schemes, meanwhile, are almost non-existent. Initiatives aimed at providing microinsurance to people with low incomes and workers in the informal sector began in 2012. Gender Equality Gender disparities remain high. The country was ranked 142nd out of 148 countries in the 2013 UNDP Gender 33African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  33. 33. Inequality Index. As is shown in the AfDB’s 2010 report on the Central African Republic’s gender profile, there are still few women involved in managing and controlling economic resources. Only one in nine MPs and one in eight members of the executive are female. Access to prenatal and childbirth care and family planning is very limited. Only 44% of births are assisted by qualified health personnel and maternal mortality is estimated at 1 100 per one hundred thousand births. The Central African Republic did however ratify the 1979 Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) in March 1992 and has incorporated clauses on gender equality in the national constitution. Despite this, as the MDG mid-term review conducted in 2010 shows, encouraging progress has been made to promote gender equality. In primary schools, the ratio of girls to boys increased from 0.60 in 2003 to 0.72 in 2008. The PRSP 2 stressed the importance of gender in national development programmes based on the 2005 PNPEE gender policy (Politique nationale de promotion de l’égalité, de l’équité, et de l’autonomie des femmes). However, despite these measures and the creation of a ministry responsible for gender issues, there are insufficient resources available. private-sector employees. The risks covered by the programme are limited. Pensions, social benefits and payments related to workplace accidents and illnesses are not always paid because the social-security administration (Office centrafricain de sécurité sociale) has financial difficulties. Private and complementary insurance schemes, meanwhile, are almost non-existent. Initiatives aimed at providing microinsurance to people with low incomes and workers in the informal sector began in 2012. Gender Equality Gender disparities remain high. The country was ranked 142nd out of 148 countries in the 2013 UNDP Gender 34 African Economic Outlook - Regional Edition / Central Africa © AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  34. 34. Thematic analysis: Structural transformation and natural resources The country has vast natural resources that have not yet been exploited. Only 700 000 of the 15 million hectares of useful farmland are cultivated. Dense tropical forest covers 34 million hectares, offering great potential for forestry. Mineral resources including diamonds, gold, uranium, iron, calcium and copper are just as significant. These natural resources, however, have not enabled the country to experience economic development involving structural transformation. Instead, agricultural has continued to focus essentially on subsistence food crops and unprocessed cash crops for export. The only mineral resources exploited are diamonds and gold, and they have always been mined by artisanal miners. Only the timber industry has begun to process goods, albeit on a small scale. Political and strategic errors and poor governance have been compounded by the country’s isolation and vast size. Similarly, mediocre infrastructure, the small domestic market and the weak private business sector all contribute to the poorly diversified economy. Manufacturing value added per capita (VAM) fell from USD 21 to 16 between 1990 and 2010, affected by political unrest. This contributed to the Central African Republic’s classification as a country in the first phase of industrialisation. Progress has been made in improving the institutional framework. The mining and forestry codes have been revised to adapt them to international standards and foster the processing of natural resources. Measures taken over the past few years enabled the country to become EITI compliant in March 2011 just two years after being admitted as a candidate country. The government signed a Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade (FLEGT) with the European Union in 2010. It also joined the United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD) for the management of the Congo Basin Forest in 2010. In May 2012, the country’s parliament passed a law to create an agency to manage forestry resources, the Agence autonome de gestion des ressources forestières. 35African Economic Outlook - Regional Edition / Central Africa© AfDB, OECD, UNDP, ECA 2013 CentralAfricanRepublic
  35. 35. Chad 2013 www.africaneconomicoutlook.org Claude N’Kodia / c.nkodia@afdb.org

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