Central African Republic 2012

Home , African Development Bank, Central African Republic, Government spending, Paris Club

www.africaneconomicoutlook.org Central African Republic

Growth should improve in 2012-13 to around 4% a year, thanks to good harvests and better performance of exports (timber, diamonds, coﬀee and cotton). Investment in mining and the start of regional infrastructure projects (energy, optic fibre lines and transport) should also contribute.

The recovery in public finances should result in a new programme with the IMF (International Monetary Fund) and renewed ties with aid donors. The fight against poverty, which affects 62% of the population, should become more effective as a result.

Restoring public finances should result in a new programme with the IMF (International Monetary Fund) and renewed ties with aid donors. The ﬁght against poverty, which aﬀects 62% of the population, should become more effective as a result.

High unemployment among the youth and lack of real job opportunities are worsened by a very young working-age population and especially the absence of a government employment policy. Overview

Prospects for 2012 are good, with real gross domestic product (GDP) expected to grow by 4.2% because of improved security conditions, the end of electoral uncertainty, good harvests and resumption of delayed investment in mining. Inﬂation is predicted to be below the convergence criteria of the Central African Economic and Monetary Community (CEMAC) but rising from 1% in 2011 to 2.8% in 2012 because of the recovery of domestic demand.

Real economic growth steadied to 3% in 2011 thanks to good agricultural food production and revival of the main exports, timber and diamonds, as well as cash crops. But the economy was hit in 2011 by uncertainty linked to presidential and legislative elections, security concerns and, especially, by delayed mining investments and lack of external budget support.

The recovery in public ﬁnances begun in 2011 gives hope for 2012-13, with the possibility of a new programme with the International Monetary Fund (IMF) and renewed ties with aid donors. Foreign-funded programmes and projects for infrastructure (transport, energy and telecommunications) could add to growth, especially as they are additional to many investment projects in mining and oil. But such advances depend on:

the security situation and improving political dialogue through the continuing programme for disarmament, demobilisation and reintegration (DDR) of rebels.

restoring public finances to prepare for an IMF programme in 2012.

the international situation, in particular in Europe, which buys most of the country’s exports, along with good weather so agriculture can maintain its growth.

Youth employment in the CAR reﬂects the social, political and economic problems of recent decades. The high rate of joblessness and lack of real opportunity are worsened by the very young working-age population and especially the absence of a government employment policy and one targeting young people. The new poverty reduction strategy paper (PRSP 2011-15) highlights this lack of a national jobs and vocational training policy, as well as the private sector being a poor source of jobs and the economy’s lack of diversification.

African Economic Outlook 2012 2 | © AfDB, OECD, UNDP, UNECA Figure 1: Real GDP growth (Central)

12.5%

10%

7.5%

2.5%

0% Real Real GDP Growth (%)

-2.5%

-5%

-7.5% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Real GDP growth (%) Central Africa - Real GDP growth (%) Africa - Real GDP growth (%)

Figures for 2010 are estimates; for 2011 and later are projections.

http://dx.doi.org10.1787/888932618652

Table 1: Macroeconomic Indicators

2010 2011 2012 2013

Real GDP growth 3.3 3 4.2 4.6

Real GDP per capita growth 1.4 1.1 2.2 2.6

CPI inflation 1.5 1 2.8 2.9

Budget balance % GDP -1.4 -2.4 -1.6 -1.4

Current account % GDP -9.9 -8.4 -6.9 -7.9

Figures for 2010 are estimates; for 2011 and later are projections.

http://dx.doi.org/10.1787/888932602027

African Economic Outlook 2012 3 | © AfDB, OECD, UNDP, UNECA Recent Developments & Prospects

Table 2: GDP by Sector (percentage of GDP)

2006 2011

Agriculture, forestry, fishing & hunting 55.2 55.2

Mining and quarrying 2.8 2.8

of which oil --

Manufacturing 6.5 6.5

Electricity, gas and water 0.9 0.9

Construction 4 4

Wholesale and retail trade, hotels and restaurants 12.2 12.2

of which hotels and restaurants --

Transport, storage and communication 5.2 5.2

Finance, real estate and business services --

Financial intermediation, real estate services, business and other service activities 6.1 6.1

General government services 5.1 5.1

Public administration & defence; social security, education, health & social work --

Public administration, education, health --

Public administration, education, health & other social & personal services --

Other community, social & personal service activities --

Other services 1.9 1.9

Gross domestic product at basic prices / factor cost 100 100

Figures for 2010 are estimates; for 2011 and later are projections.

http://dx.doi.org10.1787/888932620628

Delayed presidential and legislative elections, security issues, a freeze in external funding and the need to make up for 2010 budget excesses were problems for the economy in 2011.

Real GDP growth was steady at 3% in 2011, slightly down from 3.3% in 2010 and early predictions. Continued growth despite the lengthy election period and security concerns was due to a robust performance by food and cash crops and revival of the country’s main exports, timber and diamonds. The shape of domestic production remained stable, with the dominant primary sector providing more than half of GDP.

All sectors grew at about the same rate as overall real GDP. The primary sector expanded by 3% thanks to food crops (up 4.1%) and higher cash crop output (coﬀee and cotton) and the main export, timber, was up 5.1% (after falling 15.6% in 2010). The primary sector expansion was due to better security conditions in production areas and good weather. Another reason was the supply of seeds and inputs to farmers by the International Fund for Agricultural Development (IFAD) under a scheme to tackle the food crisis supported by the World Bank. The livestock industry grew only slightly (0.5%), but peace returned to pasture areas and strategic programmes (vaccination of large animals and reintroducing small animals to former conﬂict areas) were carried out.

The secondary sector grew 3.9% , thanks to increased mining output (up 7.6% after falling 2.1% in 2010) because of higher world demand. Construction expanded by 5%, up from 3%. Infrastructure projects (health,

African Economic Outlook 2012 4 | © AfDB, OECD, UNDP, UNECA education and transport) begun in 2010 continued. In the tertiary sector, traded services grew 4.6% and non- traded 3.4%.

Private consumption (2.7 percentage points) was the main contributor to the variation in GDP growth. Public consumption remained low for lack of government funds. Other overall demand contributors to GNP growth were marginal, with public investment even slowing growth by 0.2 percentage points because of an absence of external funding linked to poor public ﬁnance management, which deprived the government of its main source of money. Despite revived timber and diamond exports, net external demand was only 0.7 of a percentage point of overall growth.

The economy should expand by 4.2% in 2012 and 4.6% in 2013, driven by agricultural production, investment in construction and regional infrastructure projects (energy, optic ﬁbre lines and transport). A new IMF programme should allow the country to increase its budget as foreign funding resumes, enabling the government to spend money on priority sectors in line with its poverty-reduction goals.

African Economic Outlook 2012 5 | © AfDB, OECD, UNDP, UNECA Macroeconomic Policy

Fiscal Policy

Execution of the 2010 budget had a strong and negative eﬀect on implementing budget policy in 2011. The 2011 budget aimed to improve domestic public revenue collection capacity; to steady domestic demand by keeping to budgeted spending; to boost ﬁnancial reputation by honouring government commitments; and to continue reform of public finance management.

Without external help, overall revenue fell signiﬁcantly to 17.4% of GDP (from 15.4% in 2010). Tax revenue rose slightly to 9.5% of GDP (9.3% in 2010) because of the streamlining of the tax structure for small and medium-sized enterprises (SMEs), the reform of income tax, and one-oﬀ events such as payment of a contract- signing fee by mining companies. Public revenue, especially tax, is still low compared with the sub-Saharan average and that of other vulnerable countries, because of structural problems in an economy dominated by a primary sector paying little tax and because of still inappropriate tax policy. But reforms have been under way since approval of the 2011 budget and have been well received by the international community.

Government spending fell to 17.8% of GDP from 19.3% in 2010, with both current and capital spending down for lack of external budget support. A supplementary budget was also required after a year of fast-rising government spending on elections and on stabilising demand. Wages and salaries were slightly up, however, because of new public sector hiring and payment of arrears. The reduced overall spending meant that despite less government money being available the overall public deﬁcit was kept to 2.4% of GDP in 2011. The structure of government spending is still not entirely best suited to meeting development challenges, chieﬂy because of the share of (and increase in) spending on transfers and subsidies, which exceed capital spending. The World Bank’s 2011 review said spending on government operations between 2008 and 2010 had become more and more disproportionate.

Major reforms were proposed at the September 2011 general conference on public finances to correct the 2010 and early 2011 governance problems and return to budget discipline and transparency in execution. The IMF board’s praise for these steps in January 2012, when it considered a report on the CAR’s 2010/11 economic policy and changes, should help consolidate the government’s public finance reform efforts and achievements of recent years. Computerisation of the public spending chain (Gesco), begun in 2008 under the global public finance reform plan PGRFP (Plan global des réformes des finances publiques), has included the four steps of the budget process since January 2011. Despite weaknesses, the government financial and economic operations tables (Tofe) are regularly published and are getting better. Budget and accounting terms were harmonised for the 2010 and 2011 budgets. After strengthening the tax system (including curbing exemptions and fighting evasion), the government included in the 2011 budget reforms to boost collection, such as streamlining taxation for SMEs, abolishing the reduced value added tax (VAT) rate and converting the business licence into a turnover tax.

African Economic Outlook 2012 6 | © AfDB, OECD, UNDP, UNECA Table 3: Public Finances (percentage of GDP)

2003 2006 2007 2008 2009 2010 2011 2012 2013

Total revenue and grants 9.6 22.9 14.4 15.2 16.1 17.9 15.4 16.5 17.3

Tax revenue 6.8 7.9 7.3 7.9 8.7 9.3 9.5 9.6 9.7

Oil revenue ------

Grants 1.5 13.4 4.1 4.8 5.3 6.3 3.6 4.6 5.4

Total expenditure and net lending (a) 12.9 13.9 13.2 16.2 15.4 19.3 17.8 18.1 18.7

Current expenditure 9.9 9 9.6 11.7 10.5 12.5 11.3 10.9 10.9

Excluding interest 8.8 8.1 8.2 9.8 9.6 11.5 11.3 10.9 10.9

Wages and salaries 5.2 4.8 4.6 4.3 4.5 4.4 4.6 4.5 4.4

Interest 1.2 0.9 1.4 1.9 0.9 1 0 0 0

Primary balance -2.1 9.9 2.6 0.9 1.6 -0.4 -2.4 -1.6 -1.4

Overall balance -3.3 9 1.2 -1 0.7 -1.4 -2.4 -1.6 -1.4

Figures for 2010 are estimates; for 2011 and later are projections.

http://dx.doi.org10.1787/888932621616

Monetary Policy

Inﬂation has fallen since 2009 and was an average 1% in 2011 (1.5% in 2010), below the CEMAC’s 3% convergence criterion, thanks to increased local food production, which keeps prices down. Revived domestic demand will push inflation up to 2.8% in 2012 and 2.9% in 2013, still within the CEMAC range.

Growth of the money supply slowed in 2011 to an estimated 5.5% (from 14.2% in 2010) and loans to the economy to 25.5% (40.3% in 2010). Loans to the government also slowed, but those to the private sector increased by 25% owing to economic buoyancy and the increasing use of banks.

The country’s monetary affairs are in the hands of the Bank of Central African States (BEAC), which ensures a fixed rate of the CFA franc BEAC (XAF) to the euro, controls inflation, issues currency and guarantees its stability, decides and conducts monetary policy of member-countries of the monetary union, conducts exchange operations, holds and manages exchange reserves and promotes an efficient payments system within the union. Economic Cooperation, Regional Integration & Trade

The trade deﬁcit widened slightly, from 8.1% to 8.3% of GDP between 2010 and 2011 because of dearer oil imports and a greater volume of consumer goods imports. Exports by value rose to 16.6% of GDP, (15.5% in 2010) mostly because of revived production and higher world demand for diamonds and timber. The current account balance improved thanks to services and current transfers.

The overall external position remained shaky in 2011 mainly because of suspension of various external fundings and slower capital inﬂows due to delays and postponement of major mining investment. Foreign direct investment (FDI) fell to XAF 19.4 billion from XAF 30.4 billion in 2010. Exchange reserves shrank to the equivalent of 2.8 months of imports of goods and services at the end of 2011.

The CAR is ﬁrmly committed to regional integration, as noted in the new PRSP (2011-15), and the country belongs to several regional groupings, in particular CEMAC and the Economic Community of Central African States (ECCAS). Regional cooperation is mainly agricultural because of the region’s great potential. The CAR belongs to the Central Africa Forests Commission (Comifac), the International Commission for the Congo- Oubangui-Sangha Basin (Cicos), the Economic Community of Livestock, Meat and Fishery Resources (Cebevirha) and the Lake Chad Basin Commission (CBLT). The country, along with other regional states, has also adopted directives and guidelines to improve food security and reduce poverty. The CAR conducts free trade with other

African Economic Outlook 2012 7 | © AfDB, OECD, UNDP, UNECA members of CEMAC.

Table 4: Current Account (percentage of GDP)

2003 2006 2007 2008 2009 2010 2011 2012 2013

Trade balance 0.9 -3.1 -4.2 -7.6 -7.4 -8.1 -8.3 -8.6 -9.5

Exports of goods (f.o.b.) 11.2 10.7 10.5 7.6 6.3 7.3 8.3 8.3 7.6

Imports of goods (f.o.b.) 10.3 13.8 14.7 15.1 13.7 15.4 16.6 16.9 17.1

Services -5.5 -4.7 -5.1 -4.9 -4.6 -5.7 -4.5 -4.2 -3.9

Factor income -0.2 -1 -0.9 -1.1 -1.1 -0.2 -0.1 -0.1 -0.1

Current transfers 2.5 5.5 3.7 3.6 3.9 4 4.6 6 5.6

Current account balance -2.2 -3.2 -6.4 -9.9 -9.2 -9.9 -8.4 -6.9 -7.9

Figures for 2010 are estimates; for 2011 and later are projections.

http://dx.doi.org10.1787/888932622604

Debt Policy

Public debt (including domestic debt) greatly increased in 2011 to 40% of GDP, beyond a target of 27%. The country achieved completion point under the Heavily Indebted Poor Countries (HIPC) initiative in June 2009, triggering substantial relief of public debt, which fell from 80.3% of GDP in 2008 to 35% in 2009. Domestic and external arrears grew and new loans were obtained from China and India (outside the Paris Club) to fund infrastructure and social projects. External debt arrears are 0.5% of GDP and domestic arrears 2.7%.

The 2011 IMF Article 4 consultation mission noted the danger of excessive debt because of the worsening indicators in 2011. The economy, based on timber and diamond exports, is also very vulnerable to international conditions. The country still has a moderate risk of excessive debt, according to the latest IMF/World Bank debt sustainability analysis in 2010. Further eﬀorts to obtain debt relief will greatly reduce external and public debt in the medium term. But the sustainability analysis showed the country is still vulnerable to external shocks and said it should maintain its minimal concessionality requirement in future loans, as excessive debt classiﬁcation is based on non-concessional loans.

African Economic Outlook 2012 8 | © AfDB, OECD, UNDP, UNECA Figure 2: Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services)

125%

100%

75%

Percentage 50%

25%

0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Debt/GDP Debt service/Exports

Figures for 2010 are estimates; for 2011 and later are projections.

http://dx.doi.org10.1787/888932618652

Private Sector

Growth of the private sector, the key to the faster overall growth spelled out in the new 2011-15 PRSP, continues to faces major obstacles. Business conditions are still unattractive in the CAR, according to the World Bank’s 2012 Doing Business report, though the country slightly improved its ranking, from bottom to last place but one. Several steps have been taken with the help of the African Development Bank (AfDB). The joint government and private sector committee, set up in 2010 with executive powers to complement the permanent state/private sector consultation framework, took several decisions in the fields of getting credit, registering property and starting businesses. Reforms were announced in the 2011 budget to streamline taxation for SMEs, cutting stamp duty on urban property transactions by 15% and on sales of rural property and land by 12%. As well as these efforts to encourage property investment, significant progress was made towards launching the one-stop shop for firms that was set up in 2008.

Despite these important steps, the country still faces serious challenges in promoting private sector development and stimulating growth, as noted by the 2011 IMF report on CEMAC area competitiveness. The report said the CAR should focus on improving the business climate by reforming investment and trade legislation, strengthening the commercial court, reforming domestic tax law (especially the companies tax oﬃce), strengthening institutions, improving energy supply and infrastructure to overcome the country’s landlocked status, and diversifying production by setting up regional development projects. Financial Sector

The financial sector is still small but expanding rapidly. Only four commercial banks operate, alongside the Crédit mutuel de Centrafrique (CMC), a savings and loan co-operative specialising in micro-finance. Loans to the private sector were up by a quarter in 2011, reflecting more economic activity and the increasing use of banks. Civil servant salaries are paid through banks, as well as pensions, charges and taxes. But loans to the economy, mainly to the private sector, were barely 11% of GDP in 2011 (9% in 2010).

The banks increased their self-generated assets to comply with most of the prudential ratios of the Central African Banking Commission (COBAC), especially the ratio of individual loans to the bank’s capital. The Commercial Bank Centrafrique (CBCA) had solvency problems before being recapitalised in July 2011 when the government issued a treasury bond while the majority shareholder was being chosen. Boosting the risk- management ability of banks needs to be monitored to ensure portfolio quality is maintained. But some credit establishments have major liquidity problems due to the still low level of deposits and lack of a money market. COBAC wants to strengthen the rules about solvency and risk divisibility, as banks are not obliged to fund the government debt. Public Sector Management, Institutions & Reform

Public finance management is still a problem and poor transport and energy supply continue to hamper growth. The many excesses in budget implementation since 2010 have delayed an economic and financial agreement with the IMF. After the September 2011 round table conference on public finances, new steps have been taken to restore budgetary discipline and increase transparency in the use of funding and this was welcomed in the IMF’s 2011 annual country report. Extra-budgetary spending in 2010 in particular was investigated and regularised and a ministerial order stressed the need to comply with the normal chain of spending, monitoring and automatic recording of outlays, and to notify the treasury of purchases in its name so they could be later settled within 48 hours. The treasury’s technical liquidity monitoring unit was reinforced with more technical support from the secretariat of the liquidity monitoring commission. Natural Resource Management & Environment

The Central African Republic was recognised as a country complying with the rules of the Extractive Industries Transparency Initiative (EITI) at the organisation’s March 2011 global conference in Paris, only two years after beginning the process, thus becoming one of ﬁve African countries considered able to provide adequate transparency about its mining and oil revenue through co-operation between the government, the companies and civil society.

Reform of forestry resources and environmental management has included joining the Forest Law Enforcement, Governance and Trade (FLEGT) process, measures to enforce forest laws, granting felling permits, reform of customs valuations and setting up a forestry monitoring centre. After national consensus was reached in 2008 and 2009 on signing a FLEGT agreement, talks for a voluntary partnership agreement (VPA) with the European Union (EU) began in October 2009 and an agreement was signed on 21 December 2010 in Bangui which will take full eﬀect in 2014. The CAR is the fourth African country to have signed a VPA after Ghana, Cameroon and

About two-thirds of the population use wells or waterholes, higher than the average for comparably vulnerable countries. About a quarter of the waterholes are not in service and these sources of supply are used by between 1 500 and 2 000 people, many more than the ﬁgure of 300 set by the government. Access to clean water varies widely between town and country, with 52% of town-dwellers having access to public water taps (ten times more than people in the countryside) and 43% to wells and waterholes (half the access in rural areas). In the countryside, 95% of water is drawn from waterholes and hand-pumps. Only 14% of the rural population are reckoned to have drinking water, compared with 61% in towns: 43% of rural household members have to walk for between 30 minutes and an hour to fetch water, compared with 25% in towns. Political Context

Presidential and legislative elections were ﬁnally held in January and March 2011 after being twice postponed in 2010. President François Bozizé was re-elected in fairly peaceful voting that raised hopes of forming broad coalitions for peace and development so as to head oﬀ political deadlock and resumed violence. The opposition disputed the election results and refused to join the new government. The DDR programme for rebels did not go as well as hoped. Ugandan rebels of Joseph Kony’s Lord’s Resistance Army (LRA) and, more recently, the Chadian rebel Front populaire pour le redressement (FPR), led by Baba Ladé, continue to attack the population in the north-east. Strengthening peace and restoring security is essential.

Building Human Resources

The new 2011-15 PRSP makes growth of human resources a national priority and states that human development is the measure of a country’s achievements in the key areas of healthcare, education and per capita income.

A national health development plan, PNDS 2, 2006-15 (Plan national de développement sanitaire) aims to rehabilitate and expand infrastructure, make basic healthcare better and more accessible, reduce infant and maternal mortality, curb the spread of endemic diseases, especially HIV/AIDS, and strengthen the healthcare system. PNDS 2 was assessed in 2011 and, despite encouraging progress, many challenges were found to remain. Life expectancy at birth fell from 49 years in 1988 to 43 in 2003. The World Health Organization’s 2011 statistical report said in 2009 it was 48 for women and 49 for men. Infant mortality fell from 131 to 106 per 1 000 live births between 2003 and 2010 and child mortality from 220 per 1 000 to 175. Infectious diseases remain endemic and continue to kill many people, with malaria aﬀecting 38% of the population (32% of these being children under five).

The government has set ﬁve targets to improve the education system and move towards the Millennium Development Goals (MDGs) and the aims of UNESCO’s Education for All initiative. These are a 6% increase in both primary school enrolment and completion; raising gross secondary enrolment by four percentage points; creating ten vocational and technical training centres; and giving professional training to teachers working in 90% of higher education institutions. The MDG gross primary enrolment goal will not be achieved by the target date of 2015. The enrolment rate was only 36% in 2008/09 (far from the 100% MDG target) and did not change between 2009 and 2010. Poverty Reduction, Social Protection & Labour

The new 2011-15 PRSP, which follows on from the earlier one (2008-10), is a strategic framework to meet the challenges in these areas and seeks to promote strong growth of direct beneﬁt to the poor and other vulnerable groups. Poverty affects 62% of the population.

Government employees are regulated under an August 2009 civil service law and private sector workers under the 1973 labour law regulating conditions of hiring. The private sector legislation is no longer adequate because of changes in the labour market and growth of the informal sector. Even formal-sector ﬁrms tend not fully to apply it. Little money is spent on programmes for the public sector labour market and very few workers benefit.

The 2011-15 PRSP stresses the lack of any social safety-net but lists proposals to remedy this, including creation of legal and institutional means for social protection and drafting and implementing a national policy. The ﬁnancial capacity of the national social security fund (CNSS) needs to be restored. Voluntary social security and insurance mechanisms also need to be created to provide better coverage for informal sector workers. So do programmes for women, children and other vulnerable groups such as health insurance co-operatives, contributory or non-contributory social allowances, and other means to reduce ﬁnancial barriers to access to basic social services for the disadvantaged. Gender Equality

The Central African Republic ratiﬁed the 1979 Convention on the Elimination of all forms of Discrimination against Women (CEDAW) in 1992 and incorporated clauses about gender equality into the national constitution. Progress made includes amending family law to give men and women equal rights to seek divorce and obtain an identity card or passport. The law is not always implemented in reality. Violence against women is still widespread, as in most countries emerging from conﬂict, though the government has adopted legislation to protect women against violence. Prevention and punishment, along with help for victims, are still inadequate however.

The halfway-point review of progress towards the MDGs at the end of 2010 showed good results in moving towards gender equality and primary school gender parity, where girls rose from 60% of pupils in 2003 to 72% in 2008. But gender disparity remains high and the country is 138th out of 146 countries in the UN Development Programme (UNDP) 2011 Gender Inequality Index (GII). Few women are involved in management and control of economic resources. Rural land management is a mixture of tribal customs and formal law. Under a tribal regime, land is inherited, with a bias towards men. Land is managed by tribal oﬃcials who distribute it to men and women who want to cultivate it, but with the right to take it back from them at any time. The cost of urban land excludes the poor, especially women, which limits their access to bank loans, which require property as security. Only 11% of members of parliament are women and 12.5% of the government. Access to ante-natal or childbirth care and family planning is very limited. Only 44% of births are

African Economic Outlook 2012 12 | © AfDB, OECD, UNDP, UNECA assisted by qualified health personnel and maternal mortality is estimated at 1 100 for 100 000 births.

Gender equality in growth of capital is a priority, but various conﬂicts and budgetary problems have prevented full application of this and creation of monitoring bodies. The PRSP stresses the importance of gender in national development programmes based on the 2005 national programme to promote equality, fairness and autonomy for women, PNPEE, (Politique nationale de promotion de l’égalité, de l’équité, et de l’autonomie des femmes) and the 2010 AfDB-funded gender report. But despite creation of a gender affairs ministry, not enough money is available to implement these recommendations.

Employment has been aﬀected by the political and economic problems of the past decades and a lack of recent data and studies prevents clear understanding of the issue. For several years, young people were ﬁghting in armed conflicts or living with violence and no education.

With half the population under 18, most of the unemployed are young. The UNDP forecast in 2006 that 28 000 new job-seekers would be joining the labour market every year by 2015. The education system continues to turn out people with qualifications in over-saturated fields, while technical subjects (accountancy, management, statistics and computing, technicians for the mining and timber industries) in demand from local firms lack students. The unemployed include both recent graduates and the unqualified.

The CAR’s labour market, as in most African countries, has a modern urban sector, an unstructured urban sector and a specific rural labour market. The most recent figures show more that 70% of jobs are in the countryside and 70% of these are in agriculture. A significant number of the urban young still work in agriculture. Most jobs in towns are in the informal sector, with fewer in the modern private sector. A 2007 UNDP report stressed that, in the modern sector, commercial firms and the civil service were a poor source of jobs and thus contributed to unemployment, especially of young people (those under 30).

The government has no policy or national strategy to cope seriously with unemployment. The 2011-15 PRSP points to this as well as to: the lack of vocational training policy; the weakness of the private sector and the non- diversiﬁed economy which limits job opportunities and reduces the possibility of protecting people against economic and social risks and shocks; the lack of any policy to provide vulnerable groups with independence and means to create their own jobs; the absence of a suitable policy to boost the technical and operational capacity of ministry managers and staﬀ dealing with employment matters; and failure to thoroughly incorporate employment into development projects.

The PRSP says the government’s main idea for youth employment is to create independent jobs and income- generating activity, develop labour-intensive projects and promote private-sector jobs. The strategy includes:

creating an attractive institutional and regulatory framework to encourage decent long-term employment (through legal and institutional reform, setting up support structures and working with firms).

strengthening institutions in charge of national job and vocational training policy.

introducing a system of information and management of the labour market and vocational training.

Job creation, especially for young people, has worked best in countries where it resulted from determined government policies, backed by a clear vision and long-term commitment. So the CAR needs to adopt a national jobs and training policy linked to a strategy for strong growth that can truly increase job opportunities for young people.