“The Central African Republic has been unstable since its independence from France in 1960 and is one of the least developed countries in the world,” according to a June 2006 article by BBC News. Previous President Ange-Felix Patasse was overthrown in a coup in 2003 and went into exile in Togo. Coup leader Francois Boizize replaced him for two years of military rule, and was then elected as president in May 2005. On August 29, 2006, the trial of Patasse began. He is accused of embezzling public funds.
President Boizize reorganized his cabinet in May 2005 and appointed Sylvain Maliko as minister of economy, planning, and international cooperation in the Finance Department of the government. Maliko is one of the very few Central Africans with a high level of expertise gained in international organizations. He was a Lead Economist in the United Nations Economic Commission for Africa, and was granted a Special Leave Without Pay by the United Nations Secretary General, who positively responded to a pressing call from the President Bozize.
We met with Minister Maliko in June 2006.
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Partnerships in a civil society are the foundation of our national efforts to meet the various and diverse challenges of stabilization and reconstruction as quickly as possible. We intend to put more emphasis on the fight against poverty, particularly in the rural areas where it has deepened during the long period of crisis and conflicts. Poverty reduction in the rural area is a top priority, a good indication of our dream to set a solid foundation for our future.
The CAR is coming out of a conflict, which has severely affected the economy, causing much of the economic activity to be informal, generating no tax revenues. This means the government is very limited in the basic services it can provide. The establishment of the rule of law is a priority. We need to be able to provide basic services to the population and establish an adequate framework for the normalization of the economic activities and social life.
Creating Economic Stabilization
Working with the IMF and the World Bank, we have identified some strategic pillars for the macro-economic stabilization and structural reform programs. They are:
- The administration and economy need to be reorganized, and public financing improved.
- Structured reforms around agriculture, mining, forests, and telecoms are required.
- Basic infrastructure needs to be rebuilt (or rehabilitated) and modernized to strengthen the links between (and inside) the regions, and to facilitate the transformation of the economy.
Reforms are being undertaken regarding the economy. The government needs to focus on regulatory initiatives in order increase the productivity of the administration with quick and positive spillover effects for the whole society. That means raising the quality and quantity of some fewer basic and essential services. But the main idea is for the public services to be efficient during the transitional period and also to create conditions for gradual withdrawal in areas where other potential actors with comparative advantages can best perform. This means the resources that used to be given will be reduced. Everyone will eventually benefit through prioritization, but it will be a painful process in the meantime.
For government fiscal revenue as a percent of GDP, CAR is at 8 percent, far behind most of the countries in the region with 15-20 percent. Developed countries are 40 percent or above. So fiscal pressure in CAR needs to be increased and efficiency in tax collection needs to be upgraded. CAR doesn’t have the means for financing its ambitious reconstruction programs because internal resources are very weak. It is therefore hard to give privileges to the poor through activities that directly involve the poor.
As CAR is in a good path for peace, it needs more resources to rebuild the country. Unfortunately, the level of development assistance received during the last two years is the continuation of falling trends observed since 1994. Obviously, foreign aid has been impeded by the conflicts in the CAR. It means that the gap between needs and capability is so wide that revenues deriving from taxes collected during this short period of peace are not sufficient to permit covering basic and real needs of the populations.
When we compare our case to that of some countries in the same circumstances, we feel that the treatment received from the international community is not balanced. Many observers agree with us that we are “suffering a silent crisis.” We do understand that improving our fiscal level is essential and a good sign of good governance. But it is quite difficult to solve financing deficits in the short term with internal resources since the economy is not recovering rapidly. Our efforts to redress the fiscal performances are constantly under stress and the recent shocks from the oil prices are one of these unexpected negative factors. These are the types of additional threats a landlocked, non-oil exporter, and heavily indebted country is facing.
Rural Sector Challenges
In our country, we have many poor people working in agriculture in the rural areas. During the time of the crisis, the link between cities and rural areas was impossible. Production from the rural areas could not reach the market. As a result, many producers were discouraged. Now the government’s effort is to reestablish the link between rural areas and cities. Security is the key to enable this reconnection. However, security efforts are perceived by our development partners as a sovereign responsibility. But how can assistance or development be realized if conditions of long-term peace are not met or threatened by external factors beyond the control of a weak state? This is an important question we are facing today in a subregion where pockets of virtual or tangible rebellions are inflating in some countries with high risks of spread across the region.
Forty percent of rural manpower in CAR is in the cotton subsector, itself integrated in an annual agro-cycle production. If cotton producers could get their goods to market, they could get money and this would stimulate the economy. The state is struggling to help the cotton producers restart their work, by seeking financial resources to clear their debt arrears left by a failed public trading company. But it is difficult to gain support from development assistance agencies who feel that investing in cotton is a waste of resources. Theoretically, their position makes sense, but socially and in the specific context of the CAR where substitute cultures are not yet developed, it is a necessary political and social act that needs to be taken in this period of economic transition.
The country has enormous agricultural capacity and enormous underground resources to be mined. The CAR has less than 4 million people and is 623,000 square meters in size. If we could exploit these resources in a rationale way, we would have less poor people. We are looking for shortcuts to achieve this improvement, starting with the basic infrastructure to create links between rural and urban areas. We encourage foreign direct investment through liberal economic options to help us transform these dormant potentials into wealth for the benefit of the whole country.
What do we need in developing partnerships?
The first thing we need is what you are doing now: research. We lack research perspectives in how we can make progress going forward. The studies like what you are doing can be an important input to the national reflection underway with our partners for the identification of the reconstruction priorities. It will certainly enrich our internal dialogue for the formulation of our poverty reduction strategy and our long-term perspective studies.
Besides this, we have urgent issues to address. We have many social problems to be faced, among which health care, education, creating jobs, and giving the state the opportunity to get back its capacity. And we need to consolidate security and peace (at the national and subregional levels), which are basic conditions for long-term development programming.
The Need for Private Sector Development
We need to attract foreign investments and key trade relationships. We are not blind regarding the realities of doing this. Official development assistance has conditions, whether from multilateral institutions or bilateral development agencies. Our past economic assistance was dominated by multilateral agreements, and as we were facing huge arrears on debt stocks to these institutions, we have been running short of resources to rebuild the country. That is why we urgently need to diversify our partnership by extending the scope of our cooperation to the private sector.
In the past (i.e., before the crisis period), we were relying mostly on the public development assistance. The private sector was considered as a residual provider of resources. Now we are paying the cost of that option and we are in the meantime realizing that private sector involvement in our development process is a missing element. While we are opening up with public development agencies (in the framework of our cooperation policy), we need also to create favorable conditions to attract the private sector. One of those conditions is in security, but another is security for investments. That means having a legal and judicial system that provides an attractive environment. These questions are part of what we are doing in structural reforms.
Our capacities and potentials are not well known externally. In addition to that, people think of CAR as a country always in crisis. If some of these conditions disappear, we hope for bold and substantial private investment flows in the coming years. Our continental position, seen as a handicap in the past, can now be turned into an advantage because of our geo-strategic position. This is really a daunting, passionate, and exciting challenge. But we believe it is feasible working hand in hand with the international community.