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Country Brief

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Central African Republic: Country Brief

The Central African Republic is a country of some four million people and is endowed with rich forest and mineral resources and geographically landlocked, located at the cross-roads of Sub-Saharan Africa. Approximately 20 percent of the population lives in Bangui, the capital city. The country is also at the cross-roads of transition from extended instability to a new phase of peace and nation-building and economic recovery, for which sustained support from the international community is required.

An Inclusive Political Dialogue (IPD) organized in December 2008 in Bangui resulted in the adoption of a road map for full reconciliation including (i) formation of a coalition government; (ii) implementation of a Disarmament, Demobilization and Rehabilitation (DDR) program; and (iii) an independent electoral commission. The presidential and legislative elections were held successfully in January and March 2011 with the incumbent president declared the victor with 64 percent of the vote. Although largely peaceful, the elections were marred by allegations of fraud that are currently under investigation. The opposition currently remains outside of the Government and the newly elected National Assembly.

The security situation remains tenuous. The signing of a ceasefire with the Convention of Patriots for Justice and Peace (CPJP) on 12 June 2011 has brought stability to the north east. However, concerns remain regarding the presence of the Lord’s Resistance Army in the south east and the fact that the main rebel groups in the north have not been disarmed. Continuing progress on security sector reform (SSR), including restructuring of the defense as well as modernization and support to the police and judiciary, are critical elements of the transition for the Government.

The 2010 UNDP Human Development Report ranks CAR near the bottom of its Human Development Index (159th out of 162 countries) and unlikely to meet its MDG goals. The proportion of Central Africans living on $1 a day has decreased slightly to 62%  but it needs to be half of that in order to reach the 2015 goal, and the prevalence of underweight children under-five has increased since 2003 to nearly 30 percent, a rate nearly three times the MDG target. There are also large socioeconomic and regional variations, for example, rates of HIV/AIDs have increased from 3.1% in 1990 to 4.7% in 2009 with rates of up to 15-18% in the west of CAR. Notable increases in service delivery include an increase in primary enrollment (58% in 1990 to 91% in 2009); literacy rates from 34% in 1990 to 55% in 2009; and improved sanitation facilities and improved water sources from 11% and 58% in 1990 to 34% and 67% in 2009 respectively.

CAR has made progress towards consolidating macroeconomic stability but remains vulnerable to increases in the world prices of fuel and food. In June 2009 CAR reached the completion point under the enhanced Highly Indebted Poor Countries Initiative (HIPC) which, together with the Multilateral Debt Relief Initiative (MDRI), provided significant debt relief (59 percent of GDP). Achievement of the HIPC completion point was based on consistent and sustained governance efforts: CAR was the first country to move from decision point to completion point in less than two years, meeting twenty-one completion point triggers across eight sectors. In addition the country became EITI compliant in March 2011. In 2008, CAR was hit by a series of shocks, including the breakdown of the major hydro-power plant, followed by the worldwide price hike for food and fuel, and the global financial crisis. These events led to an overall reduction of real GDP of 1.5 percentage points compared to the period 2006-2008. Nevertheless, preliminary estimates predict a recovery in 2010 with real GDP growth of 3.3 percent and an inflation rate at 1.8 percent (down from the 9.3 percent observed in 2008).

At the end of 2010, the Government of CAR has just completed the implementation of its first generation of its Poverty Reduction Strategy Document (PRSP1) which covered the period 2008 to 2010.

While the reform agenda remains unchanged, PRSP 2 (2011-2015) is directed towards more growth - enhancing structural reforms to address the new challenges emerging from the global slowdown. It is based upon two principal themes, namely: (i) consolidation of peace and security, governance, rule of law and human rights (ii) and inclusive growth and human development. Rural development is at the core of the PRSP 2 strategy. The Government plans to focus on alleviating extreme poverty, including food security, by identifying solutions with rapid results and that will translate into more sustainable growth within the agricultural communities.  The monitoring and evaluation process will also be improved, based upon a more participatory approach, and with greater focus on the MDG targets and indicators.

The World Bank’s CPS (2009-2012), prepared jointly by the World Bank Group (WBG) and the African Development Bank (AfDB) builds upon the Country Re-Engagement Note of mid-2004 which marked the re-establishment of the WBG’s relationship with CAR, following a period of suspension due to CAR’s extended instability and accumulation of arrears. Given its emphasis on conflict, security and development, the current CPS also represents many of the key elements that are emerging from the Bank’s new corporate framework for Fragile States, including focusing on partnerships and responding flexibly to emerging needs while also helping to develop institutional capacity to ensure sustainability.

The World Bank’s commitments to CAR have grown rapidly from re-engagement in 2006 at around US$17 million to US$230 million in 2010. This amount is striking given CAR’s total IDA 15 allocation of $33 million. To respond quickly and flexibly to CAR’s emerging challenges, various funding sources include regional IDA, various World Bank-administered trust and vertical funds, and exceptional IDA including the Crisis Response Window (CRW). All IDA financed operations were processed as emergency operations in order to quickly support the Government’s response to the food, fuel and financial crises. 

The CPS’ two strategic themes remain priority areas for the Government of CAR: (i) to consolidate economic governance and institutional capacity to ensure an effective management of the country’s resources and create an enabling environment for private sector development; and (ii) to rehabilitate and develop infrastructure to sustain economic growth and improve basic service delivery and the living conditions of the population. While maintaining a flexible approach, including the ability to respond to shocks, during the remainder of the CPS, the Bank will focus on (i) new lending in agriculture and health, (ii) implementation and quality of portfolio performance, iii) and expanding support beyond Bangui to more remote areas of the country. 

In 2009, the World Bank and the African Development Bank (AfDB) prepared a Country Partnership Strategy. This built upon the Country Re-Engagement Note of mid-2004 which marked the re-establishment of the WBG’s relationship with CAR, following a period of suspension due to CAR’s extended instability and the subsequent Joint AfDB/WBG Interim Strategy (JISN). Despite huge capacity constraints, an unfinished peace-building process, and uneven governance, implementation of the JISN was satisfactory, and the CPS has begun to produce results.

JISN FY2007-2008 Outcomes

  • Clearance of external arrears to multilateral creditors;
  • Implementation of structural reforms, leading to attainment of HIPC Decision Point;
  • Control of cash advances for non-salary recurrent expenditures;
  • Adoption of an Action Plan based on institutional assessment of the mining sector; and admission of CAR as an EITI implementing member country;
  • Reintegration of 7,500 ex-combatants;
  • Strengthening of the capacity of communities and domestic stakeholders to participate in PRSP preparation and monitoring;
  • Increased use of voluntary counseling and testing for HIV/AIDS;
  • Control of cash advances for non-salary recurrent expenditures;
  • Implementation of some 80 micro-projects in communities; and
  • Initiation of public works in three Bangui districts, which have created employment and produced concrete infrastructure improvements.

CPS FY2009-2012

Improved Public Finance Management and Revenue Mobilization

Considerable strides have been made in terms of improving Public Finance Management as a result of efforts undertaken through the World Bank’s Economic Management and Reform Grant (EMGRG III), the fourth in a series of Development Policy Operations (DPOs). Recent reforms include the review by the Court of Accounts of the use of the 2008 budget; the establishment of a single treasury account (down from 73 accounts); and the publication on the Government website of all tax exemptions, which has led to an increase in tax revenues (from 8 percent of GDP to 8.7 percent).  Civil servant salaries are now paid regularly and domestic revenues are collected through commercial banks and transferred to the central bank (BEAC). The Government has also started to apply the new procurement code, but efforts are still needed to strengthen the deployment of the investment budget using competitive bidding. These efforts have also been supported by technical assistance provided from the Bank-administered LICUS Trust Fund and the Institutional Development Fund (IDF), which have focused on strengthening capacity in PFM and public procurement. 

Transparency and Accountability in Natural Resource Management

Associated technical assistance from the World Bank also helped CAR to strengthen transparency and accountability in natural resource management. This resulted in CAR becoming ‘EITI Compliant’ in March 2011, a tremendous accomplishment for a country still emerging from crisis. Bank-financed budget support has also focused on strengthening the regulatory framework in the mining, forestry, and petroleum sectors in order to boost growth and employment. A new Mining Code was adopted by the Parliament in April 2009, and a revised forestry code has been formulated that calls for the return of a percentage of revenues to forest communities. Finally, the GoCAR recently signed a Voluntary Partnership Agreement (VPA) with the EU as part of the Forest Law Enforcement and Governance Trade support process (FLEGT) in December 2010.

Rehabilitation and Development of Basic Socio-Economic Infrastructure (Transport, Telecommunications and Energy)

Good progress is being made with respect to improving infrastructure for regional economic integration from a very low base, though challenges remain on energy.

In transport, the Bank provided additional financing (US$67 million) to the ongoing CEMAC Transport and Transit Facilitation Project, currently project financed by the AfDB, the French Development Agency and the EU, to fund the Boua/Garoua-boulaï road paving works on the border with Cameroon as well as to strengthen the road maintenance component. Despite delays, this outcome is largely on track; the proportion of road in good condition on the Douala - Bangui corridor increased from 50 percent in 2007 to 57 percent in 2010.

In telecommunications, the Bank recently supported the launch of the Central African Backbone project (US$215 million), designed to increase the geographical reach and usage of regional broadband network services and to reduce prices to all CEMAC countries. Work is now underway to prepare the second phase of the program that will support infrastructure investments to connect the CAB network to Cameroon and CAR.

In Energy, through the Emergency Power Response Project (US$8.0 million), the Bank, in partnership with the French Development Agency, has been working to support the national electric utility company (Enerca) to partially restore the electricity supply to its essential customers, by focusing on the rehabilitation of the Boali 1 and 2 hydropower facilities and to improve its financial and operational performance. Project efforts are advancing but the infrastructure remains in a critical state, the current generation capacity of 15 MW is insufficient to meet demand and electricity supply outside of the capital is minimal.

Urban and community infrastructure

In urban areas, an IDA exceptional allocation and Crisis Response Window (CRW) resources of US$24 million towards the Bank’s Emergency Urban Infrastructure Project helped to protect 46,600 people against periodic flooding, to provide access to year-round passable roads to 290,000 people, and provide access to an operational solid waste management system to 112,000 people. In the aftermath of the floods, the Bank led an assessment that proposed a medium-term flood reduction and mitigation program. IDA is helping to implement this through an exceptional allocation of US$5 million aimed at natural disasters.  In rural zones, efforts will be supported through the Bank’s Community Development Project Targeting Vulnerable Groups as well as the recently implemented Community Reintegration Project. The latter is designed to strengthen community capacity in northern CAR, with particular focus on those areas with a high concentration of returning ex-combatants.

Agriculture and Livestock productivity

The World Bank and the AfDB responded to the 2008 food crisis with emergency support of US$7 million and UA3.0 million respectively to support a school feeding program implemented by the World Food Program (WFP) and to prepare for further investments in sustainable food security. All food rations have now been distributed by WFP; 120,000 students in 397 primary schools and pre-schools benefited from two meals daily in 2008 and 2009. Work has recently commenced to advance the second and third components of the grant, namely to support activities to increase agricultural production and productivity in targeted zones through two field-based NGOs, and to undertake key agricultural studies that will monitor food security, nutrition and vulnerability, develop a livestock census methodology, and identify environmentally and socially friendly agricultural practices. These studies will inform the new Emergency Agro-Pastoral Recovery Project, which has just been implemented, thanks to the granting of an exceptional IDA 15 allocation of US$20 million.

Human Development

The Education For All-Fast Track Initiative Catalytic Fund (US$37.8 million) has supported the Government to finance the first phase of its National Education Strategy and to meet its respective MDG goals by 2020. Gross primary enrollment now stands at 84 percent, surpassing the target of 77.4 percent. The number of textbooks to be distributed has doubled and the pupil to textbook ratio of 1 to 1 is expected to be met by 2011. In health, the Bank’s HIV/AIDS project has recently been extended in order to allow for the distribution of equipment to clinics and the distribution of the 250,000 bed nets. To date 100,000 have been distributed (from a zero baseline).  A Health Sector Status Review is underway to provide the appropriate analytical underpinnings for a forthcoming IDA funded intervention in FY12.

Investment Climate

Initial efforts to improve the investment climate are also starting to show results. CAR’s private sector is small, hampered by insecurity, low capacity of SMEs, a weak business environment and poor infrastructure including unstable electricity. In addition, CAR was ranked 182nd out of 183 countries in the 2010 Doing Business Report. To address CAR’s serious investment climate challenges, IFC helped establish the Joint Committee for the Improvement of the Business Environment, presided by the Prime Minister, and mandated to implement priority Investment Climate reforms. To date these efforts have resulted in reforms designed to reduce the cost of creating businesses (e.g., a reduction by more than half of the current business registration tax; from 150.000 to 70.000 CFA, (US$300 to US$140 equivalent) as well as in the cost of transferring properties (reduction by 50% of the transfer tax; from 15% to 7.50 %). The provision of political insurance through the issuance of MIGA’s guarantee to S.A. Orange in 2008 also contributed to helping the company to develop a global system for mobile communications (GSM) network and to provide internet services.

Community Development

The Bank has considerable expertise and a comparative advantage in assisting governments to implement community driven recovery and development and productive infrastructure rehabilitation, especially in fragile and conflict-affected settings. In CAR, efforts are being undertaken by the Bank to address rural areas that are somewhat neglected by development agencies. The objective of the ongoing Support to Vulnerable Groups project is to rehabilitate social infrastructure and improve the capacity of local stakeholders to plan and manage local recovery in targeted areas of CAR.

CAR has huge unmet needs regarding reconstruction and development. While the total volume of aid has increased since 2006, CAR still remains a donor orphan (its ODA per capita is US$41 compared to US$91 for Sierra Leone, US$104 for Cameroon and US$186 for Liberia). Donor support is critical to support CAR’s efforts to maintain stability and make solid progress on the MDGs.

A high level side event, organized in the margins of the MDG summit in September 2010, enabled the Government of CAR, the United Nations, the European Union, and the World Bank to focus international attention towards the peace building and development needs in CAR. The This meeting, which was attended by the UN Secretary-General, the President of CAR, the Bank’s Africa Region Vice-President, the AU Commission Chairperson, the President of the African Development Bank, the EU’s Development Commissioner, as well as senior representatives of sub-regional organizations, provided an opportunity to underscore the importance of the political transition in sustaining and further consolidating peace in the country. It also emphasized the huge development and reconstruction needs that the country faces, including substantial gaps with respect to the achievement of the Millennium Development Goals.

The meeting laid the foundation for the donor Roundtable that took place in Brussels in June 2011, after the elections. Discussions focused on the preliminary draft of the PRSP 2011-2015 with rural development and food security as main topics. The Comprehensive Africa Agriculture Development Program for CAR (CAADP) was also presented as well as opportunities for contributing to economic growth in the agro-pastoral sector. Further to the event, the GoCAR set out a road map to finalize the PRSP2 and to mobilize a diverse set of participant to ensure that the country’s huge needs are supported by a broad spectrum of partners.

Significant collaborative efforts have also been undertaken with partners such as the AfDB, the European Union (EU), the United Nations (UN) and the French Development Agency (AFD) to advance support and implementation of the World Bank’s Country Partnership Strategy at all levels. Examples include (i) the preparation of the CPS with the AfDB, (ii) the establishment of a Memorandum of Understanding (MOU) between the Government, the Bank, the EU and the AfDB to provide budget support, and (iii) donor coordination at the sector level to facilitate implementation including in transport, energy, community development, and urban development. The IFC presence in the Country Office has resulted in an effective joint Bank/IFC collaboration with respect to improving the investment climate.

Last updated September 2011

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