Private Sector Development
To make the countryÃ¢â‚¬â„¢s business environment more attractive still presents a major challenge. In 2010 the CAR remained in last place (183rd) in theÃ‚Â Doing BusinessÃ‚Â ranking of the World BankÃ¢â‚¬â„¢s report on the business environment. The authorities are taking measures to improve the business climate, enabling the country to improve its ranking for Ã¢â‚¬Å“Starting a businessÃ¢â‚¬Â from 169th in 2009 to 158th in 2010. In April 2010 a joint committee involving the private sector and government departments was created as a decision-making body to complement the permanent public-private coÃ‚Â-operation framework set up in 2006. The committeeÃ¢â‚¬â„¢s remit is to define measures aimed at creating a business climate that fosters investment and the development of a competitive, dynamic private sector that promotes growth and job creation. With the support of the International Finance Corporation (IFC) the committee has already created five technical commissions corresponding to theÃ‚Â Doing BusinessÃ‚Â indicators and put them to work. The joint committee has also approved a series of reforms for business start-up and property transfer, in particular a reduction of more than 50% in the registration fees for business start-up and property transfer; the abolition of the trading permit and of ministerial registration, and of related start-up costs; the abolition of charges for the publication of business creation notices; and the abolition of advance payment of social security registration costs.
Other initiatives financed by the IFC were also undertaken in 2010. As part of the programme to support small and medium-sized enterprises (SMEs) in Africa, the IFC is helping a private bank based in the CAR to increase its capacity to support them. The IFC has already provided technical assistance to strengthen the capacities of the one-stop shop and the joint committee. Furthermore, in collaboration with the African Fund for Guarantee and Economic Co-operation (FAGACE), the ministry for SMEs organised a roundtable on the problem of private sector funding in the CAR. This event enabled participants to better understand the difficulties and constraints related to private sector development in the country and to analyse ways and means of introducing a win-win partnership between donors and economic operators in the CAR.
The financial system, which is limited to four commercial banks and a few microcredit institutions, contributes little to economic development. Financial intermediation remains very weak, with the consolidated balance sheet of banks representing only 12.5% of GDP and deposits and credits representing 8.5% and 6.5% of GDP respectively. Growth of bank loans continues to be hampered by structural weaknesses such as deficiencies in the legal and regulatory structure, the short-term nature of bank resources and the small number of bankable projects.
To promote and consolidate the sector, the authorities have adopted various measures, including the payment of salaries through banks, starting in 2009, and the obligation to pay taxes through banks, starting in February 2010. These measures have encouraged banking intermediation and contributed towards the formalisation of the economy. Furthermore, the reimbursement of government bonds to commercial banks has enabled the latter to improve their position in terms of the risks of dealing with public authorities and to strengthen their liquidity and private-sector lending activities, even if the banksÃ¢â‚¬â„¢ profitability was affected. In 2010 the volume of credits grew by 23.2%, with most credits being awarded to trade and telecommunications companies through short-term loans.
The authorities continued to preserve the stability of the banking system in 2010. In particular, they ordered the reorganisation of a commercial bank in difficulty in close co-Ã‚Âoperation with the regional regulatory and supervisory body, the Central African Banking Commission (COBAC).
Other Recent Developments
The country is faced with other obstacles, especially in the public sector and in infrastructure, that hold back domestic production.
As shown in the mid-term review of the 2009Ã‚Â-12 Joint Country Partnership Strategy Paper (CPSP) by the AfDB and the World Bank, significant progress has been made in the public sector and the management of public finances. The chapter on administrative and economic governance, which is the chief topic of the CPSP, mentions the encouraging results in terms of the effectiveness and transparency of public finances, the management of natural resources, and the planning and implementation of development programmes. Thanks to the projects and programmes supported by the two institutions, the public expenditure system has been fully computerised and the computer systems of the inland revenue (Systemif) and customs (Sydonia) have been connected to each other. For the first time, management accounts were created in 2010 with a view to the parliament adopting a budget review law. Also, other projects supported by the AfDB and the World Bank as part of the CPSP have enabled central and regional government officials to acquire and improve skills in macroeconomics, planning, results-based management, and especially in monitoring and evaluating projects and programmes. These projects contributed to the completion in 2010 of the 2008Ã‚Â-10 PRSP, progress in the implementation of the 2009Ã‚Â-12 CPSP identified in the mid-term review, and the adoption of the IMFÃ¢â‚¬â„¢s EFF programme following the final review in 2010.
The country has made significant progress in terms of the management of natural resources, especially in observing the principles of the Extractive Industries Transparency Initiative (EITI). Following the creation of the new mining code and the publication in 2009 of the first EITI report, relating to 2006, the CAR published in 2010 reports on the years 2007, 2008 and 2009, stating the revenues from diamond, gold and uranium production. These advances, combined with the strengthening of the capacities of the EITI-CAR (technical secretariat, steering committee and national council), should enable the CAR to achieve the status of a country complying with the EITI principles in the near future. In the forestry sector, the country is continuing to implement the African Forest Law Enforcement and Governance (AFLEG) plan, while the revision of the forestry code has enabled the provisions to local communities for the transfer of 30% of stumpage fees and 25% of reforestation taxes to be made effective.
The population still faces major difficulties in accessing basic socio-economic infrastructure (roads, transport, water and energy). The level of transport infrastructure remains among the lowest in Africa, even though the countryÃ¢â‚¬â„¢s geographical position (a landlocked country with no direct access to the sea) makes such infrastructure essential for its economic development. Nevertheless, transport infrastructure absorbs a large proportion of public investment. The sectorÃ¢â‚¬â„¢s main obstacles are:Ã‚Â i)Ã‚Â the absence of a permanent link for the development of imports and exports by sea;Ã‚Â ii)Ã‚Â the inadequacy and poor maintenance of existing infrastructure;Ã‚Â iii)Ã‚Â the lack of density of the network; andÃ‚Â iv)Ã‚Â unbalanced land use. The countryÃ¢â‚¬â„¢s landlocked position is exacerbated by the plethora of administrative checks that make transport expensive.
The main form of transport for travel, freight and supplies is by road. The country has 24Ã‚Â 000Ã‚Â km of roads, of which about 1Ã‚Â 000 are asphalted. The network consists of 5Ã‚Â 400Ã‚Â km of national roads, 4Ã‚Â 000Ã‚Â km of regional roads and 15 000Ã‚Â km of tracks. Like most countries in Central Africa, the CAR has abundant water and is crossed by tributaries of the Congo river, providing many potentially navigable waterways within its borders. There is only one international airport in the country, through which almost 90% of traffic passes. The other three airports have paved runways in a poor state of repair. Efforts have been made to promote the development of infrastructure, with various major public works having begun in 2010. The AfDB, the World Bank and the EU, through the Transport-Transit Facilitation Programme for the CEMAC, support a transport development policy based on three primary objectives: opening up access to import and export ports for raw materials and manufactured goods;Ã‚Â diversifying access routes; and making development hubs viable and interconnected. One-fifth of the work planned for this programme was carried out in 2010. In December 2010, the AfDB agreed to a study on the plans to build a road between Ouesso in the Republic of Congo, Bangui in the CAR and NÃ¢â‚¬â„¢Djamena in Chad and the plans for river transport on the Congo River and two of its tributaries, the Ubangi and the Sangha.
The energy situation in the CAR remains very precarious. Barely 4% of the population had access to electricity in 2010 (15% in Bangui and 1% in smaller towns). In rural areas, where most poor people live, access to electricity is almost non-existent. This precariousness exists despite reforms that have been undertaken, most notably the adoption in 2004 of a national energy policy framework aimed at reducing poverty between 2005 and 2010. The authorities liberalised the sector by publishing the electricity code, creating a regulatory body (Arsec) and creating an autonomous agency for rural electricity (Acer) responsible for regulating the sector and implementing government policy on rural electricity. Despite the lack of energy, the country has a fairly dense river system with various sites that have a high potential for hydroelectricity, with outputs of between several hundred kilowatts (KW) and several dozen megawatts (MW). Firewood accounts for 90% of energy consumption, the rest coming from imported oil products and hydroelectric resources, the latter providing barely 4%. Development of the energy sector is in particular held back by a legislative and regulatory framework that is not adapted; the lack of an energy information system; deficiencies in the way the sector is run, especially in Enerca, the company that holds a monopoly on the production and commercialisation of electricity; and limited human and financial resources. The infrastructure consists of:Ã‚Â i)Ã‚Â two hydroelectric power stations (BoaliÃ‚Â 1 and BoaliÃ‚Â 2);Ã‚Â ii)Ã‚Â a hydroelectric dam (BoaliÃ‚Â 3);Ã‚Â iii)Ã‚Â a thermal power station in Bangui;Ã‚Â iv)Ã‚Â two transmission lines connecting Bangui to BoaliÃ‚Â 1 and BoaliÃ‚Â 2; andÃ‚Â v)Ã‚Â a distribution network. The five BoaliÃ‚Â 1 generators and the two other BoaliÃ‚Â 2 generators have a total capacity of around 15Ã‚Â MW. BoaliÃ‚Â 3 still has only two turbines with a total capacity of 10Ã‚Â MW.
The governmentÃ¢â‚¬â„¢s energy policy focuses on three priorities: upgrading the BoaliÃ‚Â 1 and BoaliÃ‚Â 2 hydroelectric power stations and the distribution network; increasing the production of BoaliÃ‚Â 3 with new equipment and increasing the production of BoaliÃ‚Â 2; and restructuring the sector and improving the running of Enerca. Some of this work has already begun, such as making the BoaliÃ‚Â 1 and BoaliÃ‚Â 2 hydroelectric installations safe, as part of the agreement signed in 2008 with the French Development Agency (AFD), which provided a 4.2Ã‚Â million euro (EUR) grant. Protective relays were installed in the Boali generators, exciter transformers at BoaliÃ‚Â 2, a high-voltage system at Boali 2, and high-voltage coupling cells were fitted to the Boali generators, thus stabilising the electricity supply to Bangui and the surrounding area and markedly reducing the circuit breakages of the Boali-Bangui network. Support from the AfDB and China concerns equipment for the enlargement of the BoaliÃ‚Â 3 station. The conception phase of these projects, which is of Chinese origin, was completed in April 2010, and the projects are forecast to be undertaken towards the end of the second quarter of 2011.
The water and sewerage sector was particularly affected by the years of conflict. Access to safe drinking water stands at 30.2%, well below the African average of 60%, and access to sewerage stands at only 5.3%, also below the African average, which is 31%. In May 2005, the government adopted a national water and sewerage policy and strategies document and in April 2006 it published the water code and the water and sewerage master plan. The water code led to the creation of the ANEA water and sewerage agency (Agence nationale de lÃ¢â‚¬â„¢eau et de lÃ¢â‚¬â„¢assainissement) and the implementation of a water and sewerageÃ‚Â sector committee (ComitÃƒÂ© sectoriel eau et assainissement) with the United Nations ChildrenÃ¢â‚¬â„¢s Fund (UNICEF) as the main partner. Two AfDB projects approved in 2009 following an audit of the 16Ã‚Â regional capitals started behind schedule in 2010. These two projects were the AEPA water and sewerage supply project (Projet dÃ¢â‚¬â„¢appui institutionnel pour lÃ¢â‚¬â„¢approvisionnement en eau et assainissement)Ã‚Â and a project to provide drinking water and sewerage to three regional capitals (Berberati, Bouar and Bossangoa).
Telecommunications and information technology services have improved significantly over the past few years. Since December 2007, the mobile telephone market has been split between four operators (Telecel, Moov Centrafrique, Nationlink, and Orange Centrafrique). Fixed-line services, however, are provided by a single company, the wholly state-owned Socatel (SociÃƒÂ©tÃƒÂ© centrafricaine de tÃƒÂ©lÃƒÂ©communications), although the market is open to competition. The number of subscribers is expected to break the one-million barrier in 2010, up from 700 000 in 2009. This represents growth of nearly 50%, and has brought the penetration rate up to 23% of the population. These advances were made possible by the increased supply of mobile telephone services to users with low purchasing power, the introduction of telephones at affordable prices, and the increased coverage of the various networks. For the past five years the government has been initiating reforms aimed at creating a coherent and efficient legal framework for the sector to ensure the development of basic infrastructure and coverage of the entire population. As part of their joint strategy to support development policies in the country, the AfDB and the World Bank are financing a regional fibre-optic project for the CAR, Cameroon and Chad called the Central Africa Backbone (CAB). This project envisages a fibre-optic link between Bangui and MaÃƒÂ©dougou (Cameroon), following the line of the oil pipeline from Kribi (Cameroon) to Doba (Chad). The CAR would then be able to link up more cheaply to the intercontinental SAT-3/WASC undersea cable. The CAR should also benefit from the signal from the Pan-African RASCOM satellite launched in August 2010. This signal aims to cover more than 130Ã‚Â 000Ã‚Â African towns and cities and will reduce the cost of Internet and telephone services on the continent.