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AFRICAN DEVELOPMENT GROUP

MULTINATIONAL: CENTRAL REGIONAL INTEGRATION STRATEGY PAPER 2019-2025

CENTRAL AFRICA REGIONAL DEVELOPMENT AND BUSINESS DELIVERY OFFICE (RDGC)

REGIONAL INTEGRATION COORDINATION OFFICE (RDRI)

TRANSITION STATES COORDINATION OFFICE (RDTS)

March 2019

Translated Document

AFRICAN DEVELOPMENT BANK GROUP

This regional integration strategy paper was prepared under the supervision of Mr. Ousmane DORE, Director-General of the Regional Development and Business Delivery Office (RDGC). The technical teams worked under the direct supervision of Mr. Racine KANE, Deputy Director-General, RDGC; Mrs. Moono MUPOTOLA, Director of the Regional Integration Coordination Office (RDRI), Mr. Sibry TAPSOBA, Director of the Transition States Coordination Office (RDTS), and Mr. Hervé LOHOUES, Lead Economist (ECCE). The list of the Technical Team members, coordinated by Mr. Youssouf KONE, Regional Integration Coordinator, is provided in the table below.

Team Y. KONE, Regional Integration Coordinator RDGC.0 Leader M. TANGARA, Chief Regional Programme Officer RDGC.0 I. KONATE, Chief Electrical Engineer RDGC.1 A. KARANGA, Chief Transport Economist RDGC.4 C.A. MBENG MEZUI, Chief Capital Markets Expert PIFD.0 RDGC.2/ P. NGWALA, Chief Development Economist AHHD S. OMAR ELMI, Principal ICT Officer PITD.3 PROJECT TEAM R. LAKOUE DERANT, Senior Governance Officer RDGC.4 Team G. BIZIMANA, Principal Macro-Economist in charge of Members RDGC.0 Fragility B. OLLAME, Operations Analyst RDGC.0 A. FALL, Senior Trade Facilitation Officer PITD.2 N. ELAHEEBOCUS, Senior Development Officer RDGC.2 A. B. DIALLO, Labour Economist RDGC.2 A. C. EYONG, Principal Climate Change and Green Growth PECG.2 Officer K. M. KOUAKOU, Principal Gender Economist-Statistician AHGC J. C. TIEGUHONG, Consultant ECNR O. DORE, Director-General RDGC Directors R. KANE, Deputy Director-General RDGC MANAGEMENT TEAM Sector M. MUPOTOLA, Director RDRI Directors S. TAPSOBA, Director RDTS

Sector Division H. LOHOUES, Lead Economist ECCE Manager D. AMOUZOU, Principal Programme Officer PISA.0 N. KALUMIYA, Senior Country Economist ECCE PEER R. AMIRA, Regional Integration Coordinator RDGN.0 REVIEWERS K. R. EGUIDA, Principal Country Programme Officer RDGW.0 Y. AHMAD, Chief Country Programme Officer RDGN.0 J-G. AFRIKA, Principal Trade Expert PITD.2

TABLE OF CONTENTS

MAP OF CENTRAL AFRICA ...... iv EXECUTIVE SUMMARY ...... v I. INTRODUCTION ...... 1 II. CENTRAL AFRICAN CONTEXT ...... 2 2.1 Political and Security Context ...... 2 2.2 Economic, Monetary and Financial Context ...... 3 2.3 Social Context and Cross-cutting Issues ...... 5 2.4 Environment, Climate Change and Green Growth ...... 6 2.5 Fragility Factors and Sources of Resilience ...... 6 2.6 ECONOMIC OUTLOOK ...... 7 III. REGIONAL INTEGRATION AGENDA: STATUS, CHALLENGES, OPPORTUNITIES AND LESSONS LEARNED FROM EXPERIENCE ...... 7 3.1 Regional Integration Status in Central Africa ...... 7 a) Institutional Framework ...... 7 b) Infrastructure (Transport, Energy, and ICT) ...... 8 c) Intra-Regional Trade and Investments ...... 9 d) Financial Sector and Capital Markets ...... 9 3.2 Central Africa’s Challenges and Opportunities ...... 10 3.3 Lessons Learned from the Bank’s Experience ...... 10 a) Past Strategies and Lessons ...... 10 b) Regional Portfolio Performance Review...... 11 c) Bank’s Comparative Advantage and Positioning ...... 12 IV. BANK GROUP’S REGIONAL INTEGRATION STRATEGY IN CENTRAL AFRICA 2019-2025 ...... 13 4.1 Rationale for Bank Intervention ...... 13 4.2 Overall Goal and Pillars of RISP-CA 2019-2025 ...... 14 4.3 Strategic Intervention Areas and Results Framework ...... 15 a) Strategic Intervention Areas ...... 15 b) Monitoring and Evaluation and Results Measuring Framework ...... 20 4.4 Alignment with the priorities of the continent, Bank and region ...... 21 V. IMPLEMENTATION OF THE STRATEGY ...... 21 5.1 Country dialogue issues and regional economic communities ...... 21 5.2 Internal and External Arrangements ...... 22 5.3 Allocation and Financing ...... 22 5.4 Potential Risks and Mitigation Measures ...... 22 VI. CONCLUSION AND RECOMMENDATIONS...... 23 Annex 1: Indicative Multinational Operations Programme 2019-2025 ...... I Annex 2: Results-Based Logical Framework for RISP-CA 2019-2025 ...... IV Annex 3: Application of change theory in RISP-CA 2019-2025 ...... VII Annex 4: Key macroeconomic and socioeconomic data of Central Africa ...... VIII Annex 5: Central Africa Infrastructure Data ...... XVIII Annex 6: Key performance indicators of multinational projects under review in 2018 ...... XXIV Annex 7: Multinational Operations Portfolio as at 31 2018 ...... XXVI Annex 8: Rating of supervised projects using the IPR rating system ...... XXVIII Annex 9: 2018 Portfolio Performance Improvement Plan ...... XXIX Annex 10: CSPs and RISP-CA 2019-2025 Alignment ...... XXXI Annex 11: Note on fragility and sources of resilience in ECCAS zone ...... XXXII

ABBREVIATIONS AND ACRONYMS

ACCF Africa Climate Change Fund ADF African Development Fund AEC African Economic Community AEO African Economic Outlook AfCFTA African Continental Free Trade Area AfDB AIDI Africa Infrastructure Development Index ALT Lake Authority APD Final Design APS Preliminary Design AU AWF African Water Facility BDEAC Development Bank of Central African States BEAC Bank of Central African States CAPP Central African Power Pool Central African CBFF Fund CEMAC Economic and Monetary Community of Central Africa CET Common External Tariff CICOS International Commission for the Congo-Oubangui-Sangha Basin COBAC Central African Banking Commission CODE Committee on Operations and Development Effectiveness COMESA Common Market for Eastern and Southern Africa COMIFAC Central African Commission COP 21 21st Conference of the Parties COPAX Central African Peace and Security Council COPIL ECCAS/CEMAC Streamlining Steering Committee CPIA Country Policies and Institutions Assessment CPO Country Programme Officer CSO Civil Society Organisation CSP Country Strategy Paper DBDM Development and Business Delivery Model DRC Democratic Republic of Congo EAC East African Community ECCAS Economic Community of Central African States ECGLC Economic Community of the Great Lakes Countries EITI Extractive Industries Transparency Initiative FOMAC Central African Multinational Force GCF Green Climate Fund GDP GEF Global Environment Fund GHG Greenhouse Gas HDI

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HV High Voltage ICT Information and Communication Technology IDEV Independent Development Evaluation Department IIAG Ibrahim Index of African Governance ILO International Labour Organisation IMF International Monetary Fund INDC Intended Nationally Determined Contributions IPP Independent Power Producer LCBC Basin Commission LPG Liquefied Gas LRA Lord’s Resistance Army MDG Millennium Development Goal MIC Middle Income Country MINUSCA Multidimensional Integrated Stabilization Mission in the MTSP Medium Term Strategic Plan NDC Nationally Determined Contributions NEPAD New Partnership for Africa’s Development NEPAD-IPPF New Partnership for Africa’s Development – Infrastructure Projects Preparation Fund NTB Non-Tariff Barrier OHADA Organisation for Harmonisation of Business Law in Africa PACEBCO Congo Basin Ecosystem Conservation Support Project PARCI Institutional Capacity Building Support Project PASEC CONFEMEN Education Systems Analysis Programme PD Presidential Directive PDCT-AC Central African Consensual Transport Master Plan PIDA Programme for Infrastructure Development in Africa PIU Project Implementation Unit PPIAP Portfolio Performance Improvement Action Plan PPP Public-Private Partnership PREF- CEMAC Economic and Financial Reform Programme CEMAC PRODEBALT Lake Development Project RBLF Results-Based Logical Framework RDGC General Directorate – Central Africa Region RDGE General Directorate – East Africa Region RDGS General Directorate – Southern Africa Region RDRI Regional Integration Coordination Office REC Regional Economic Community REP Regional Economic Programme RISF Regional Integration Strategic Framework RISP Regional Integration Strategy Paper RPG Regional Public Goods RPPR Regional Portfolio Performance Review

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RPRSP Regional Strategy Paper SDG Sustainable Development Goal SEZ Special Economic Zone SME Small and Medium-sized Enterprise TFA Trade Facilitation Agreement TFP Technical and Financial Partner TSF Transition Support Fund TYS Ten-Year Strategy of the African Development Bank Group UA Unit of Account UDEAC Central African Customs and Economic Union UN United Nations UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change WTO Trade Organisation

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MAP OF CENTRAL AFRICA1

1 Within the African Development Bank Group, the operational of the Regional Development and Business Delivery Office for Central Africa (RDGC) covers seven countries: , Chad, Congo, , Central African Republic, Equatorial , Democratic Republic of Congo, and . This area therefore does not cover all the member countries of the Economic Community of Central African States (ECCAS), which is considered by the African Union as the Regional Economic Community of Central Africa. ECCAS comprises the following 11 countries: , , Cameroon, Chad, Central African Republic, Congo, Equatorial Guinea, Democratic Republic of Congo, Gabon, , Sao Tome and Principe, and Rwanda. However, as regards the Bank's operational portfolio, Burundi and Rwanda are covered by the Regional Office for East Africa (RDGE) and are included in RISP 2018- 2023 for that region, while Angola and São Tomé and Principe are covered by the Regional Office for Southern Africa (RDGS) and included in its next RISP 2019-2024. For more information on the Bank’s geographical grouping of the countries, see https://www.afdb.org/en/countries/ iv

EXECUTIVE SUMMARY

1. This Regional Integration Strategy Paper for Central Africa (RISP-CA) 2019-2025 proposes, to the Boards for adoption, the general framework for Bank operations in Central Africa over the indicated period. The Paper has been prepared within a context of major institutional changes, particularly following the adoption of the DBDM and RISF 2018-2025. In line with its Ten-Year Strategy, the Bank has placed regional integration at the core of its activities, and made it one of its 5 operational priorities (High 5s); the other 4 priorities seek to "Feed Africa", "Light up and Power Africa”, "Industrialize Africa" and "Improve the quality of life for the people of Africa." The preparation of RISP-CA 2019-2025 also takes into account the recommendations of development evaluation (IDEV) on the regional integration strategy and operations in Central Africa (2011-2016), as well as CODE's guidelines during approval, on 25 2018, of the Completion Report of the previous RISP which covered the 2011-2017 period. 2. For its implementation, the selected operational portfolio will cover Cameroon, Chad, Congo, Equatorial Guinea, Gabon, Democratic Republic of Congo (DRC), and Central African Republic, which fall within the operational area of the Central Africa Regional Development and Business Delivery Office (RDGC). The strategy also seeks to support the integration efforts of the member countries of the Economic Community of Central African States (ECCAS), recognised by the African Union (AU) as the Regional Economic Community in Central Africa. ECCAS comprises the following 11 countries: Angola, Burundi, Cameroon, Chad, Central African Republic, Congo, Equatorial Guinea, Democratic Republic of Congo, Gabon, Rwanda, Sao Tome and Principe, and Rwanda. However, from an operational viewpoint, Burundi and Rwanda are covered by the Regional Office for East Africa (RDGE) and are included in RISP 2018-2023 for the region already approved by the Boards, while Angola and São Tomé and Principe are covered by the Regional Office for Southern Africa (RDGS) and included in RISP 2019-2024 for the region. 3. RISP-CA 2019-2025 is based on CEMAC and ECCAS strategic and operational priorities. It takes into account recent developments in the region, the major roles expected of the private sector and governments, the diagnostic study conducted in 2017, and economic and sector work. The lessons and experience from the Bank's past interventions in the region have guided the formulation of the pillars and the choice of priority operations. A participatory process based on close consultations with RECs, development partners, and the private sector, as well as ongoing dialogue with the authorities of the region, has helped to build their support for the strategy. 4. Central Africa is marked by the juxtaposition of several sub-regional institutions with similar objectives and mixed performance. The institutions seek to create an integrated sub-regional space by eliminating problems inherent in fragmented national markets so as to ensure optimal conditions for a larger market. The main sub-regional institutions are CEMAC, ECCAS, CEPGL and LCBC. It should be noted that the six CEMAC countries also belong to ECCAS, with Burundi and Rwanda active in the EAC, while Angola and DRC are also SADC members. Furthermore, Burundi, Rwanda and DRC are COMESA members. 5. The region is also marked by political instability and a volatile security environment. This situation mainly stems from the activities of terrorist groups in the Lake Chad Basin (northern Cameroon, western Chad, south-eastern , north-eastern ) and the outbreak of several multifaceted conflicts, particularly for control over natural resources. The conflicts have been exacerbated by several factors, including: (i) the weak capacity of States to address insecurity and reconstruction problems; (ii) a high level of poverty and lack of good governance of natural resources; and (iii) the high unemployment rate and low employability of young people who constitute the majority of the working population and are exposed to manipulation by armed groups and militias due to the lack of and economic opportunities. The conflicts have created new humanitarian challenges, such as massive population displacements and influx of .

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6. The economies are largely based on the production and export of extractive raw materials (oil, , etc.) and are therefore highly vulnerable to exogenous shocks. Economic activity has been slowing down since the second quarter of 2014, as a result of the fall in oil prices and several security shocks. As regards the seven countries covered by the RDGC, Central Africa recorded one of the lowest growth rate on the continent in 2018. Indeed, the real gross domestic product (GDP) growth rate stood at 2, 2% in 2017, compared to 5.7% for East Africa, 4.3% for North Africa, 1.2% for Southern Africa, and 3.3% for . Central Africa's real GDP growth was 5.9% in 2014 compared to 4.9% in 2011. In 2018, growth in Central Africa was supported by a recovery in commodity prices. External debt increased significantly from 14.3% of GDP in 2011 to 27% of GDP in 2018, thereby demonstrating adjustment difficulties in the region. The poverty rate was estimated at 60%, and there is a rising trend in inequality in most of the countries, especially those affected by conflicts such as DRC or CAR. 7. The active portfolio of multinational operations in Central Africa consisted of 44 operations for a total of UA 779.55 million as at 31 August 2018, compared to 29 operations and UA 676.86 million in May 2017 (date of the last portfolio review). The 15.2% increase in the volume of commitments shows the Bank's willingness to support integration activities in the region through several financing windows (AfDB, ADF, TSF, AWF and NEPAD-IPPF). The Bank thus wants to develop the poor intra-regional infrastructure, which is one of the main obstacles to intra-regional integration and trade. 8. Central Africa is still grappling with many challenges that it must overcome to promote effective integration of its economies. The challenges include: (i) peace building to break the vicious circle of instability and fragility; (ii) infrastructure development (transport, energy, ICT, water); (iii) operationalization and harmonization of ECCAS and CEMAC free trade areas; (iv) reduction of non- tariff barriers; (v) human and institutional capacity building at regional level; (vi) promoting the employability of young people; (vii) economic diversification and development of productive capacities; (viii) improving the business climate; (ix) rational management of natural resources and environmental protection; (x) resource mobilisation and strengthening of public-private partnerships (PPPs); and (xi) leadership and political will in the countries. 9. Despite these challenges, the region has significant potential, particularly its pivotal and strategic geographical position, the abundance of natural resources to boost economic and social development, and demographic dividend due to its predominantly young population (62%). Central Africa has significant oil resources, deposits of precious metals and minerals, huge transboundary water resources, and the continent's greatest potential. 10. The strategy aims to support economic diversification and structural transformation through the improvement of intra-regional trade in Central Africa. The Bank intends to achieve this objective through two pillars, approved in June 2018 by the Committee on Operations for Development Effectiveness (CODE), namely: (i) Reinforce regional infrastructure (energy, transport and ICT); and (ii) Support reforms for intra-regional trade development, and build the institutional capacity of RECs. 11. The RISP-CA should thus make it possible to tackle the issue of fragility, which is a major challenge for the region. Indeed, the strategy is expecting to strengthen the region's economic resilience through structural transformation of the region's economies, diversification and reduction of their dependence on oil and exports. 12. The implementation of the strategy will require investments amounting to UA 3.185 billion, corresponding to 30 regional operations over a seven-year period (2019-2025). About 88% of the planned funding would be devoted to strengthening regional infrastructure (energy, transport and ICT), compared to 12% for support to the development of intra-regional trade and build institutional capacity in RECs. With regard to the risk of fragility in the region, the proposed indicative programme, in its infrastructure and institutional capacity building components, will support the resilience of the countries of the region. Beyond these interventions, specific operations vi

are also planned, for example, to strengthen resilience to food insecurity, the socio-economic reintegration of vulnerable groups, or the conservation of ecosystems in the Congo Basin. This approach is in line with the Bank's vision of reducing fragility and building resilience in states. It also complements the value chain supports projects financed by the Bank as part of the Country Strategy Papers. . 13. The expected outcomes are: (i) improved transport quality for better access to regional markets; (ii) improved access to reliable and affordable energy for the population and private sector; (iii) improved connectivity of transport infrastructure; (iv) increased density of terrestrial interconnections and national fibre-optic backbones; (v) a harmonized and operational institutional framework that promotes intra-regional trade and investment; (vi) a more dynamic financial sector with increased domestic financing for the private sector; (vii) increased decent employment and sustainable economic opportunities, especially for young people; and (viii) strengthened REC capacity to improve the management and implementation of regional projects. The targeted pillars and operational sectors have great potential to create jobs and economic opportunities, especially for young people. They should therefore contribute to inclusive and sustainable growth.

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I. INTRODUCTION 1.1.1 This Regional Integration Strategy Paper for Central Africa (RISP-CA) proposes a new framework for the Bank's operations in the Central Region over the 2019-2025 period. It thus takes over from RISP 2011-20152, which was approved by the Boards in April 2011 and extended to December 2017. RISP-CA 2019-2025 aims to support the integration efforts of member countries of the Economic Community of Central African States (ECCAS), recognized by the African Union (AU) as the Regional Economic Community in Central Africa. ECCAS comprises the following 11 countries: Angola, Burundi, Cameroon, Chad, Central African Republic, Congo, Equatorial Guinea, Democratic Republic of Congo, Gabon, Rwanda, Sao Tome and Principe, and Rwanda. However, from an operational viewpoint, Burundi and Rwanda are covered by the Regional Office for East Africa (RDGE) and are included in RISP 2018-2023 for the region already approved by the Boards, while Angola and São Tomé and Principe are covered by the Regional Office for Southern Africa (RDGS) and are included in RISP 2019-2024 for the region. For its implementation, the selected portfolio will cover Cameroon, Chad, Congo, Equatorial Guinea, Gabon, Democratic Republic of Congo (DRC), and Central African Republic (CAR), which fall within the operational area of the Central Africa Regional Development and Business Delivery Office (RDGC) that is in charge of this strategy. 1.1.2 RISP-CA 2019-2025 comes after the Bank's approval, in 2018, of a new continental Regional Integration Strategic Framework (RISF) for the 2018-2025 period3. In line with its Ten-Year Strategy, the Bank has placed regional integration at the core of its activities, and made it one of its 5 operational priorities (High 5s); the other 4 priorities aim to "Feed Africa", "Light up and Power Africa”, "Industrialize Africa" and "Improve the quality of life for the people of Africa". The RISF, which RISP-CA 2019-2025 seeks to operationalize in Central Africa, is in line with the Bank's new development and business delivery model (DBDM) and focuses on three pillars: (i) electricity and infrastructure connectivity; (ii) trade and investment; and (iii) financial integration. 1.1.3 This new strategy takes into account the recommendations and experience of the Bank's past interventions in support of regional integration. Indeed, it takes into account the recommendations of the Independent Development Evaluation Department (IDEV)4 of March 2018, one of which concerns the proportionate approach retained for RISP-CA. The guidelines of the Committee on Operations and Development Effectiveness (CODE) defined during the presentation of the Completion Report of RISP-CA 2011-2017, combined with the Regional Portfolio Performance Review, in June 2018 are also taken into account. CODE particularly recommended: better handling of fragility issues and capacity building, as well as strengthening of dialogue with national and regional authorities, and other development partners. 1.1.4 That is why RISP-CA 2019-2025 reflects the Bank's regular consultations, through the Bank’s Regional Office in Central Africa (RDGC), with regional and national authorities, as well as development partners. For the preparation of this strategy, several dialogue missions were undertaken to ECCAS General Secretariat, the Commission of the Economic and Monetary Community of Central Africa (CEMAC) and the Member States. The close dialogue made it possible to propose a strategy based on CEMAC and ECCAS strategic and operational priorities. It also takes into account recent developments in the countries of the region, the greater role of the private sector as the main engine of growth, as well as the role of governments as agents and facilitators of structural reforms to achieve the objectives of economic diversification and structural transformation. The strategy is also based on sector diagnostic studies conducted in 2017, two economic and sector studies

2 African Development Bank: Regional Integration Strategy Paper 2011-2015, April 2011. 3 African Development Bank: Regional Integration Strategy Framework, March 2018. 4 African Development Bank: Addressing Regional Integration Challenges in Central Africa: Evaluation of the African Development Bank's Regional Integration Strategy and Operations, 2011-2016 – Summary Report. IDEV, March 2018. 1

on the investment climate and industrialization of the timber sector respectively, and an in-depth literature review on the challenges and opportunities of regional integration in Central Africa; etc. 1.1.5 Taking these guidelines into account, this new RISP-CA seeks to "improve economic diversification and structural transformation through the improvement of intra-regional trade in Central Africa". The Bank intends to achieve this overall goal through two pillars approved by CODE in June 2018, namely: (i) Strengthen regional infrastructure (energy, transport and ICT); and (ii) Support reforms for intra-regional trade development and build the institutional capacity of RECs. 1.1.6 In addition to this introduction, this report has five other chapters: (i) the Central African context; (ii) the regional integration agenda and lessons drawn from the experience; (iii) the Bank's Group’s proposed regional integration strategy in Central Africa for the 2019-2025 period; (iv) the implementation of the strategy; and (v) the conclusion and recommendations. II. CENTRAL AFRICAN CONTEXT 2.1 Political and Security Context 2.1.1 Central Africa is marked by political instability and a volatile security environment. This situation is mainly due to the activities of terrorist groups in the Lake Chad Basin (northern Cameroon, western Chad, south-eastern Niger, north-eastern Nigeria) and the outbreak of several multifaceted conflicts, including control over natural resources. In addition, over the past three years, the political situation has been dominated by electoral processes that have often brought tensions. This was the case in Burundi, Gabon, Congo, Angola, Chad, Equatorial Guinea and CAR. The situation shows that the region faces significant challenges in building strong and consensual political institutions to promote social cohesion. Strong presidential political power systems coupled with the lack of alternation have most often led to crises that have interrupted economic activity by destroying infrastructure and disrupting markets.5 2.1.2 The conflicts have been exacerbated by the inability of the countries to address insecurity and reconstruction problems, the high levels of poverty and unemployment especially among young people, and the lack of proper natural resource management. The incidence of terrorism is particularly high due mainly to the permanent threat posed by in the Lake Chad Basin (LCB)6, the political and military crisis in CAR, continued armed conflicts in the Great Lakes region, and the activities of the Ugandan rebel movement, Lord's Resistance Army (LRA), in DRC and CAR. Furthermore, the crisis in Kasai region (DRC) continues to cause massive population displacements and create new humanitarian needs. Finally, the political and security crisis in the north-west and south-west of Cameroon has worsened the vulnerability factors already weighing on the economies of the region. Conflict and insecurity are fuelled by the manipulation of young people affected by underemployment, as well as the illegal proliferation and circulation of small arms and light weapons. Concerted actions to combat insecurity are being carried out by national and regional authorities, with the support of development partners, sometimes to the detriment of social expenditure in the countries concerned. 2.1.3 The humanitarian situation remains deplorable given the crises in CAR, DRC, Congo and the Lake Chad Basin. Indeed, the actions of Boko Haram have led to more than 200,000 refugees and about 2.6 million displaced people, including 1.5 million children, while

5 UNDP : Central Africa, a region lagging behind, March 2017 6 The Lake Chad Basin Commission (LCBC) was established on 22 May 1964 by four countries bordering Lake Chad: Cameroon, Chad, Niger and Nigeria. However, the number of member countries increased to six since the accession of Central African Republic in 1996 and in 2008. , , Republic of Congo and DR Congo are observer members. The headquarters of the Organization is in N'djamena, Republic of Chad. 2

about 1.3 million people have been displaced in Kasai region (DRC)7. The mass of refugees is increasingly affecting the socio-economic balance of the host regions. 2.2 Economic, Monetary and Financial Context 2.2.1 Economic activity has been slowing down since the second quarter of 2014, due to the fall in oil prices and various security shocks8. In 2018, the GDP growth rate in Central Africa accelerated slightly, to 2.2 %from 1.1% in 2017, but remained below the African average of 3.5%. Central Africa’s growth was driven primarily by the rebound in raw material prices, principally oil. East Africa led with GDP growth estimated at 5.7 percent in 2018, followed by North Africa at 4.9 percent, West Africa at 3.3 percent, Central Africa at 2.2%, and Southern Africa at 1.2 percent.9 Central Africa's real GDP growth was 5.9% in 2014 compared to 4.9% in 2011. ECCAS's GDP growth rate stood at 1.54% in 2017, compared to 2.8% in 2015 and 5.2% in 2011. It even came out negative at -0.31% in 2013, strongly affected by the poor performances of Central African Republic (-36.7%) and Equatorial Guinea (-4.13%). As regards CEMAC, the real GDP growth rate was 2.18% in 2017, compared to 2.25% in 2015 and 5.12% in 2011. It also turned negative in 2013 and 2016, at -5.2% and -0.32% respectively. 2.2.2 The region's economies are largely based on the production and export of extractive raw materials (oil, minerals, etc.) and are therefore highly vulnerable to exogenous shocks. The secondary sector dominates the regional economy with an average contribution of 42.20% to real GDP in 2017. The contribution is made mainly by the extractive industrial sector, justifying that the value added of the manufacturing industry does not exceed 14.5% of real GDP. The tertiary sector contributed an average of 40.94% to real GDP in 2017, mainly as a result of the good performance of market services, commercial activities and Figure 1: Oil Price Trends 2013-2018 telecommunications, and transport services. The primary sector contributes only slightly (16.88%) to the region's GDP, and this trend has not improved significantly for at least one decade. The crisis caused by the fall in oil prices (see Graph 1 opposite) has deteriorated macroeconomic frameworks and jeopardised prospects for sustained growth in the short term, with widening Source: https://prixdubaril.com budget and external current accounts deficits. 2.2.3 National budgets have been under severe pressure since the second half of 2014 due to the decline in oil prices. Indeed, in 2018, for the seven countries covered by the strategy (RDGC), the overall budget balance has recorded a deficit of 1.4 percent of GDP, down from a deficit of 3.0 percent in 2017. This reduction in deficit is attributable primarily to the slight rise in oil prices and fiscal consolidation under the CEMAC Economic and Financial Reform Program. As regards ECCAS, the deficit fell from -3% of GDP in 2014 to -5.7% of GDP in 2016. This trend is also observed in CEMAC: -6% of GDP in 2016 compared to -2.6% of GDP in 2014. 2.2.4 The sharp fall in government revenues and the resulting increase in current account deficits have led to depletion of foreign exchange reserves (Graph 3) and an increase in external debt. In 2018, external debt in Central Africa region stood at 27 percent

7 Office for the Coordination of Humanitarian Affairs (OCHA), Humanitarian Situation, Lake Chad Basin, November 2017. 8 CEMAC, 2017: 2017 Final Report on Multilateral Surveillance and Prospects for 2017. 9 ADB: African economic outlook 2019, January 2019. 3

of GDP against 14.3% in 2011, 19.6% in 2014, 25.5% in 2015 and 28.1% in 2017. As regards ECCAS, external debt almost doubled within a period of seven years, from 28.7% in 2011 to 57.1% in 2017. As for CEMAC, the situation was even more severe, with external debt rising from 19.5% of GDP in 2011 to 60% of GDP in 2017, thereby demonstrating adjustment difficulties in the region10. However, there are disparities between countries: for example, according to the AfDB’s African economic Outlook, in 2018, Congo’s debt, at 67 percent of GDP remains a major concern. It rose from 32 percent of GDP in 2013 to 87 percent in 2016, partly a result of high public spending for political decentralization. Gabon’s debt climbed from 15 percent of GDP in 2011 to 25 percent in 2015 and 41 percent in 2017 but has fallen back to 37 percent in 2018. For other countries, external debt ratios have generally fluctuated between 20 percent and 30 percent, except in Equatorial Guinea, at 10 percent. It should also be noted that the appreciation of the Dollar against the has contributed to increasing external debt in the CEMAC region. Finally, inflation is fairly under control in the Central Region (RDGC) with an average of 9.3% in 2017, significantly driven by DRC (41.5%). As regards CEMAC countries that are in the same currency zone (CFA ), it can be noted that inflation is generally under control, reflecting the policy of stable prices conducted by the central bank. Inflation rates range from 0.6 percent in Equatorial Guinea to 3.9 percent in Central African Republic. However, in Democratic Republic of Congo, the inflation rate stood at 27.7 percent in 2018, down from 41.5 percent in 2017. Except in Central African Republic (3.9 percent), inflation in 2018 was below the CEMAC target of 3 percent in all the community’s countries: Cameroon (1.1 percent), Chad (2.1 percent), Congo (1.5 percent), Equatorial Guinea (0.6 percent), and Gabon (2.8 percent). The fixed exchange rate policy in the CFA franc zone helps CEMAC countries weather the distortions created by the dominance of their extractive industries by maintaining a stable inflation rate below 3 percent. The region’s seven countries recorded an average inflation rate of 6.8 percent in 2018, lower than the 14.5 percent in East Africa, the 12.8 percent in North Africa, the 7.4 percent in Southern Africa, and the 9.5 percent in West Africa11. 2.2.5. Increased insecurity has led to significant additional macroeconomic and budgetary costs. Central Africa’s (RDGC) Public Expenditure is estimated at 17.8% of GDP in 2018 compared to 19.4% of GDP in 2017. It is driven by country-specific transformative investments and integration projects. In addition, security expenditure (internal and defence) in DRC increased from 7% of the State budget in 2013 to 14% in 2015 and 17% in 2017. In Chad, security expenditure in the State budget increased from 8% in 2012 to 19.1% in 2013, before falling back to 10% in 2015 and then rising again to 14% in 2017. It should be noted that most of the ongoing infrastructure works are carried out mainly with imported equipment, thereby putting additional pressure on foreign exchange reserves (Graph 2).

10 IMF: Regional Economic Outlook: Sub-Saharan Africa, April 2017 11 African Development Bank: Central Africa Economic Outlook 2019; March 2019. 4

2.2.6 Backed by a monetary union with a fixed exchange rate, CEMAC adopted an economic and financial reform programme (PREF) in July 2016. The programme has three objectives that are mainly focused on fiscal policy, namely: (i) strengthen policy by raising indirect tax rates (VAT and excise duties) and reduce direct taxation; (ii) improve public expenditure; and (iii) harmonise procedures and coordinate fiscal policies. In addition, countries in the region have Figure 2: Exchange Reserves in Figure 3: CEMAC - Fiscal Indicators concluded an IMF staff- CEMAC, July 2014–December 2014–22 monitored agreement on 2017 1 2 0 macroeconomic policies 5 1 2 –5 and frameworks that 0 –1 1 1 underpin the regional 5 –1 1 8 –25 strategy to correct fiscal 0 6 5 –2 and external 5 12 4 0 –3 imbalances. Budget 20 1 1 1 1 1 2 2 2 2 14 5 6 7 pr8 pr9 pr0 pr1 pr2 surpluses expected to be Capital expenditureoj. oj. (leftoj. oj.scale oj.) Non-oil revenue (left scale Overall non-oil fiscal balance, excl. grants right recorded in 2019 in all Sources: Authorities of the Economic and Sources: Authorities of the Economic and Monetary countries in the region Monetary Community of Central Africa; IMF Community of Central Africa; IMF calculations. except in Cameroon, calculations. Congo, and Equatorial Guinea.At the origin of this expected easing in public finance we note the increase in revenues from hydrocarbon exploitation, following a higher than expected increase in crude oil prices, coupled with an increase in oil production in some countries and steady decline in budgetary expenditure. Annex 4 highlights the trends of key macroeconomic and social indicators in the Central Africa region. 2.2.7 Central Africa is lagging behind in governance, and this weakens the efficiency of institutions and reduces the impact of public policies on development. In 2016, the average Ibrahim Index of Governance in Africa13 (IIAG) score for ECCAS was 44/100, compared to an average of 50.8/100 for Africa. Between 2005 and 2016, overall governance deteriorated particularly in CAR (30.5/100), Congo (42.8/100) and Cameroon (46.9/100). In addition, the abundance of natural resources and rich biodiversity have led to illegal exploitation and struggle for their control. 2.3 Social Context and Cross-cutting Issues 2.3.1 The social context is marked by persistent poverty, high inequality and high unemployment, especially among women Figure 4: Employment Trends by Sector and young people. Indeed, poverty affects 80 60% of the regional population, while the 60 Gini index was estimated at around 45% over the 1990-2014 period14. There was even 40 increased inequality over that period in some 20 countries, particularly those in conflict (DRC, 0 CAR, and Chad). Inequalities mainly refer to 2010 2011 2012 2013 2014 2015 2016 2017 limited access to basic social services Agriculture services (education and health), lack of jobs and economic opportunities for women and young people, poor distribution and limited access to land and natural resources (AEO 2018). While the (official) unemployment rate as defined by

12 IMF: Report on the Common Policies in Support of CEMAC Countries' Reform Programmes, July 2018 13 This index puts together 166 variables from 34 different sources to measure governance. The combined variables help to define 95 indicators, 14 sub-categories and 4 categories that make up the overall governance score. The four categories of indicators that make up overall governance are security and the rule of law, participation and human rights, sustainable , and human development. 14 African Development Bank: African Economic Outlook, 2018. 5

the International Labour Office (ILO) has been low and stable (4.7%) since the beginning of the decade, it should be noted that extended unemployment and underemployment are very high (70%). Furthermore, as shown in Graph 4 opposite, the agricultural sector is the largest employer in the region, with an employability rate of about 70%, followed far behind by services (20%) and the industrial sector (11%). 2.3.2 The education systems are very weak, in terms of both infrastructure and quality of education. Despite progress made in young people's access to education, the quality of training remains a structural challenge that hampers competitiveness of the labour force15. In addition, high unemployment rates, especially among young vocational training and traditional higher education graduates, indicate a mismatch between education systems in the countries and the needs of the private sector. Strengthening and harmonizing curricula, especially in technical and vocational education and training, as well as promoting regional centres of excellence and skills development in growth-promoting sectors, will help to increase employability. This is consistent with Agenda 2063 on supporting young people as drivers of Africa's renaissance. 2.3.3 There are disparities in status between men and women, in terms of economic opportunities, human development and participation in decision-making processes. The African Index is estimated at 53.4 for the region, compared to 61.7 for Southern Africa and 54 for East Africa. As such, it is important to continue promoting women’s economic empowerment through better participation in cross-border trade and regional enterprises. 2.4 Environment, Climate Change and Green Growth 2.4.1 The population largely depends on activities related to forestry, agriculture, energy and water. The potential impacts of climate change on tropical rainforests include a reduction in their surface area and composition in the region. Climatic risks mainly consist of high temperatures, bush fires, forest loss, bad weather, changing patterns, floods and droughts, etc. To combat the effects of climate change, Central African countries, like other African countries, have undertaken, at the international, sub-regional and national levels, to implement mitigation and adaptation measures, particularly by formulating their nationally intended and determined contributions (NIDC), which became nationally determined contributions (NDC) after the Paris Climate Agreement. Support for implementation of these NDCs is a priority for Central Africa, with great opportunities for mobilizing funding, and should be included in sub-regional strategic plans. 2.5 Fragility Factors and Sources of Resilience 2.5.1 Central Africa is a region affected by many fragility factors, as shown in the above analysis of the political, security, economic and social context. Furthermore, Central African Republic, Democratic Republic of Congo and Chad are recognized by the Bank as being in transition.

2.5.2 The region has a lot of potential that could constitute significant sources of resilience. Indeed, forest resources, oil, solid and precious minerals, and agricultural potential are foreign exchange-generating resources and engines of growth in the region; their transparent and efficient exploitation should guarantee long-term economic and social development.

2.5.3 These transition countries need to be treated differently to ensure further integration into the regional economy. The challenges they face (in terms of infrastructure,

15 PASEC, 2014 – Education system performance in Francophone sub-Saharan Africa: Competencies and learning factors in primary education. 6

business climate, investment, employment, governance) are different. As such, CODE members recommended that this strategy "take into account fragility and security issues, as well as disparities between countries in the region...” Annex 11 provides a summary analysis note on regional fragility based on the Country Resilience and Fragility Assessment (CRFA)16 tool. 2.6 Economic Outlook 2.6.1 Growth in Central Africa is gradually recovering but remains below the average for Africa as a whole. It is supported by recovering commodity prices17. Fiscal consolidation efforts are under way through economic programmes with the IMF, including the PREF-CEMAC. These efforts benefit from favourable factors related to the rise in oil prices, although there are still risks related to volatility and to security environment. On the whole, Central Africa is expected to see its real GDP increase to 3.6 percent in 2019 and 3.5 percent in 2020. . 2.6.2. The current context in the region, marked by falling prices of extractive raw materials, particularly oil, creates a favourable context for accelerating the implementation of reforms required for the diversification and structural transformation of economies. The reforms include strengthening good governance and developing intra-regional trade to create strong, sustainable, transformative and inclusive growth in the region. III. REGIONAL INTEGRATION AGENDA: STATUS, CHALLENGES, OPPORTUNITIES AND LESSONS LEARNED FROM EXPERIENCE 3.1 Regional Integration Status in Central Africa a) Institutional Framework 3.1.1 Central Africa is marked by the juxtaposition of several regional institutions with similar objectives and mixed performance. The institutions seek to create an integrated regional space by eliminating problems inherent in fragmented national markets so as to ensure optimal conditions for a larger market. The main regional institutions are CEMAC, ECCAS, CEPGL and LCBC. The six CEMAC countries also belong to ECCAS, while Burundi and Rwanda are active in the EAC, and Angola and DRC are also SADC members. Furthermore, Burundi, Rwanda and DRC are COMESA members. It should also be noted that as regards negotiations on the Economic Partnership Agreement (EPA) between the and CEMAC countries, which aims to establish a free trade area between these two communities, only Cameroon has decided to sign an Interim Agreement. The reluctance of other CEMAC countries to join the EPA shows difficulties in harmonising economic and trade cooperation instruments within CEMAC. In addition to a common monetary policy and related macroeconomic convergence criteria, the CEMAC zone has been marked, since 2017, by the application of the Additional Act of 25 June 2013 abolishing visas for all CEMAC nationals travelling within the Community area. 3.1.2 The 13th Conference of ECCAS Heads of State and Government, held in in October 2007, decided on harmonising ECCAS and CEMAC. As such, a CEMAC/CEEAC Streamlining Steering Committee, which includes representatives of the two institutions, the AU, ECA and AfDB, has been established. In addition, ECCAS has initiated an internal reform process to be more efficient and able to fulfill its missions. 3.1.3 The Bank approved its new Development and Business Delivery Model (DBDM) in June 2016. This reform allows it to streamline management processes so as to improve its

16 The CRFA tool is the first multilateral development tool to measure countries' capacities and pressure levels. It allows for more nuanced understanding of the fragility of countries and entry points to strengthen resilience. The tool complements the CPIA, with a more holistic focus on resilience and fragility factors, particularly regional impacts, environment, governance policy, and security. 17 African Development Bank: Central African Economic Outlook, 2019, January 2019. 7

efficiency, enhance its financial performance, and increase its development impact. To that end, five Regional Centres were established, including the Central Africa Regional Office (RDGC). This region covers the 6 CEMAC countries and DRC. Burundi and Rwanda, which belong to ECCAS, are covered by the East Africa Regional Office (RDGE), while Angola and Sao Tome and Principe, which are also ECCAS members, are attached to the Southern Africa Regional Office (RDGS) for operational purposes. b) Infrastructure (Transport, Energy, and ICT) 3.1.4 The shortage of high-quality and accessible regional infrastructure throughout ECCAS is a serious handicap to economic and social development, as well as to acceleration of the regional integration process, despite efforts made by Member States with Bank support. This is coupled with the landlocked position of some countries and the poor implementation of reforms by the countries to ensure free movement of persons, goods and services. The infrastructure concerns transport (roads, railways, inland waterways, seaports and air transport), energy and information and communication technology (ICT). In the central region, the transport system is mainly dominated by roads, which account for between 80% and 90% of freight movements and nearly 99% of passenger movements. However, most of the roads are not paved (4.1% of roads paved out of a total length of 186,415 km in 2006), and the related road density (3.5 km/100 km²) is one of the lowest on the continent.18 As for the railway networks, they are disjointed and rare, while river transport is, at best, handled by small operators. Finally, as illustrated in Annex 5, transport costs are extremely high, due mainly to the length of road corridors, regulations, formal and informal market structures, uncertain freight transit times, and non-tariff barriers. In January 2004, ECCAS adopted a Consensual Transport Master Plan for Central Africa (PDCT-AC), which aims to provide the sub-region with safe, reliable, efficient and affordable transport infrastructure, as well as facilitate the free movement of people and goods. 3.1.5 Despite its very high hydroelectric potential, Central Africa has low rates of access to modern energy (electricity, liquefied petroleum gas, and kerosene). The region has huge fossil and renewable energy resources, but offers limited access to energy for rural and semi-urban populations. This contrasts with the increase in electricity access rate noted at continental and global levels over the past decade. Indeed, the region has less power grid interconnections than the other African regions: with the exception of the planned electricity interconnections between Cameroon and Chad, DRC and Congo, and DRC and Angola, there is no link between the countries. Several power plants are currently being rehabilitated (e.g. Inga), or need to be rehabilitated (e.g. ). 3.1.6 The population’s access to communication services is also limited, despite some recent progress in mobile telephony or broadband Internet. In the Central Region (RDGC), about 1 in 100 inhabitants subscribe to fixed-line telephony, compared to 49 in 100 inhabitants for mobile telephony. Furthermore, 46.18% of the population has access to the 3G mobile network with 29 out of 100 inhabitants who subscribe to the mobile broadband network. For ECCAS as a whole, 1 in 100 inhabitants has access to fixed telephone and 73 in 100 to mobile telephone. In addition, 26 out of 100 inhabitants have access to the active mobile broadband network, with regional coverage of 47% for 3G. Access prices are high and account for 11.19% of the region's gross national income, compared to 9.3% for sub-Saharan Africa and 3.7% for the rest of the world. Only 10% of ECCAS households have access to a computer and the Internet. However, these figures conceal some disparities between the countries due, for example, to their development levels (see Table 2 in Annex 5).

18 Economic Commission for Africa: Report on Infrastructure Development in Africa, Priority Areas and Interventions. December 2015. 8

c) Intra-Regional Trade and Investments

3.1.7 Central African (ECCAS) intra-regional trade accounts for barely 2% of the region's total trade 19. This situation is due to several factors, including the low production of tradable goods, an embryonic industrial fabric, shortage of infrastructure, numerous tariff and non-tariff barriers, the reluctance of countries to implement reforms for the free movement of goods and persons, etc. There are five different tariff profiles in ECCAS zone: the common external tariff (CET) of CEMAC, the East African Community (Burundi and Rwanda), Angola, DRC and Sao Tome and Principe.

Table 1: Intra-African Trade by Economic Area in 2017 CEN- Economic Area UMA SAD COMESA EAC ECCAS ECOWAS IGAD SADC AFRICA WORLD Exports to % of total exports AMU 4.4 6 2.2 0 0.4 1.5 0.3 0.3 7.9 100 CEN-SAD 2.2 9.3 2.9 1 1.6 6.6 1.3 3.5 15.4 100 COMESA 2.4 6.8 12.2 3.7 3.5 0.5 5.4 10.8 21 100 EAC 0.3 10.6 26.7 18.8 11.1 0.7 15 13.9 37.9 100 ECCAS 0.1 1.3 3 0.2 1.8 0.6 0.1 4.6 6.7 100 ECOWAS 0.3 11.5 0.3 0 2 10.8 0 5.2 18.3 100 IGAD 0.3 12.4 17.9 11.7 5.6 0.4 15.5 6.8 28.5 100 SADC 0.4 2.6 9.2 1.5 2.8 1.1 1.1 20.9 24.3 100 AFRICA 1.5 6.2 5.3 1.2 2.2 3.5 1.5 9.7 17.7 100 WORLD 0.7 1.8 1 0.2 0.3 0.7 0.3 1 3.4 100 Source: UNCTAD 3.1.8 Like 38 other African countries, the 11 ECCAS countries acceded to and signed the Agreement Establishing the African Continental Free Trade Area (AfCFTA) on 21 March 2018. The agreement provides for the elimination of at least 90% of tariff barriers on goods imported from other States Parties over a period of 5 to 15 years20. This initiative is a profound aspiration of the continent's Heads of State, and seeks to stimulate intra-African trade. The Agreement, currently ratified by some 10 States, requires 22 ratifications to enter into force. In the ECCAS zone, only Rwanda and Chad have already ratified the Agreement. 3.1.9 The Central Region has an unattractive business climate that does not attract sufficient investment and stimulate the private sector. On the other hand, per capita foreign direct investment (FDI) flows in ECCAS zone fell by 55% between 2011 and 2015, from USD 337.6 to USD 15321, and most local investments come from supplier credits, forcing companies to mobilize their cash flow, profits and depreciation provision. In addition, the accumulation of arrears due to the current economic downturn is affecting all economic sectors in the region, thereby weakening the financial situation of SMEs and financial institutions. Excessive documentation formalities, cumbersome customs procedures, and inefficient port operations lead to additional costs and delays for economic operators in the region, particularly in landlocked countries (see Annex 5). d) Financial Sector and Capital Markets 3.1.10 The regional financial system, which is mainly dominated by the banking sector, is not dynamic enough. This situation hampers its ability to finance economies in efforts to develop regional markets. For example, in the CEMAC zone, total assets are estimated at 25% of the regional GDP, and the sector's activity is dominated by whose business model is

19 UNCTAD: UNCTAD, (2018), UNCTAD Database, http://unctadstat.unctad.org. 20 ECA: African Continental Free Trade Area – Towards Finalization of Modalities on Goods. June 2018 21 AfDB, AU and ECA, based on OECD and UNCTAD data. 9

mainly based on a restrictive credit policy that can only attract large companies due to high fees. In addition, access to finance for small and medium-sized enterprises (SMEs) is limited and constitutes a major challenge in the region. As at 31 December 2016, the CEMAC banking system had 52 banks that provide very little medium-term financing (3 to 7 years) under rigid access conditions. Long-term financing (over 7 years) is scarce and accounts for an average of 3% of the loans. The proportion of companies with a credit line and the self-financed investment rate stand at 9% and 93% respectively, compared to an average of 22.5% and 79% for sub- Saharan Africa. 3.2 Central Africa’s Challenges and Opportunities 3.2.1 Central Africa is grappling with many challenges that it must overcome to establish the foundations for successful regional integration. The challenges include: (i) peace building to break the vicious circle of instability and fragility; (ii) infrastructure development (transport, energy, ICT, shared waters); (iii) operationalization and harmonization of ECCAS and CEMAC free trade areas; (iv) reduction of non-tariff barriers; (v) human and institutional capacity building at regional level; and (vi) economic diversification and development of productive capacities; (vii) improving the business climate; (viii) combating climate change, ensuring rational management of natural resources, and protecting the environment; (ix) mobilising domestic resources and strengthening public-private partnerships (PPPs); (x) youth employability; and (xi) leadership and involvement of senior authorities in the effective implementation of harmonised Community instruments. 3.2.2 Despite these challenges, the region has Figure 5: Sector Breakdown of significant potential, including the abundance and Multinational Operations quality of , which is an asset for large- scale industrial agriculture, a predominantly Multisect young population (demographic dividend), Social or diversified ecosystems and abundant forest and Finance 0.2% 1.2% Agriculture 2% shared water resources. In addition, more than half 0.1% Communica Environmen of the region’s population (133.5 million for all the tion t 3.6% 0.1% seven RDGC countries) is under 25 years of age, Energy Transport representing available workforce, although it should 50.5% 42.2% Water/ be noted that they can also be a major challenge for 0.2% countries with low employment opportunities, as well as structures and training programmes that do not match labour market needs. Furthermore, the region occupies a strategic geographical position, straddling the other regions of the continent, and has several dense and high-potential navigable waterways whose development could improve intra- regional trade. 3.3 Lessons Learned from the Bank’s Experience a) Past Strategies and Lessons 3.3.1 The first Central Africa RISP, covering the 2011-2015 period, was approved in April 2011 and extended in June 2015 to December 2017. The completion report on the strategy, approved by CODE in June 2018, identified several lessons, particularly the need for: (i) greater State involvement in the implementation of regional reforms and operations; (ii) strong REC leadership in the implementation of integration projects; (iii) streamlining of governance, fragility and resilience issues in the strategy and operations; (iv) strengthening of project preparation, implementation and monitoring mechanisms; (v) specific indicators to monitor country progress in regional integration; (vi) the establishment or strengthening of frameworks for dialogue with stakeholders; and (vii) the strengthening of complementarity 10

between Country Strategy Papers (CSPs) and the RISP. In addition, it is necessary to improve the measuring, monitoring and quality of jobs and economic opportunities generated by operations, as well as to integrate skills development (vocational training and technical education) into them to increase employability. 3.3.2 These lessons confirm the main recommendations of IDEV’s independent evaluation22, in particular: (i) adopt an approach that is proportionate and adapted to the regional context; (ii) have an operational indicative programme; (iii) disseminate the regional integration programme to stakeholders more actively; (iv) improve policy dialogue and leadership at regional level; (v) support the private sector; (vi) ensure more realistic operational planning; and (vii) continue to support capacity building in RECs. 3.3.3 CODE noted the support of its members for the pillars of RISP-CA 2019-2025 and made several recommendations, in particular: (i) design the strategy in such a way that it leads to the expected outcomes; (ii) take into account issues relating to fragility, disparities between countries, and human capacity building; (iii) strengthen dialogue with national and regional authorities, as well as with development partners; (iv) be more selective and invest in areas where the Bank has a comparative advantage; and (v) draw on IDEV’s evaluation. b) Regional Portfolio Performance Review23 i) Bank’s Active Portfolio in the Central Region (RDGC) 3.3.4 The active portfolio of multinational operations in Central African consisted of 44 operations for a total of UA 779.55 million as at 31 August 2018, compared to 29 operations and UA 676.86 million in May 2017 (date of the last portfolio review). The 15.2% increase in the volume of commitments shows the Bank's willingness to support integration activities in the region through several financing windows (AfDB, ADF, TSF, AWF, and NEPAD-IPPF). The Bank thus wants to develop the poor intra-regional infrastructure, which is one of the main obstacles to integration and trade within ECCAS. The transport and energy sectors alone received 92.7% of commitments for 26 projects, or 59.1% of the portfolio in terms of number of projects. This distribution is in line with the guidelines of RISP 2011- 2017, the first pillar of which concerns the development of regional infrastructure, as well as with the first pillar of the Bank's Ten-Year Strategy, which is consistent with the Bank's five priorities (High 5s) (see Graph 5). The detailed composition of the multinational operations active portfolio as at 31 August 2018 is presented in Annex 7. ii) Portfolio Monitoring and Evaluation 3.3.5 The performance of the active portfolio (i.e. ongoing projects that had become effective) is deemed satisfactory at least with an overall score of 2.5 on a scale of 1 to 4 (see Annex 8)24. This performance is slightly lower than in 2017, when it stood at 3. A qualitative analysis of projects not yet implemented shows that the proportion of projects requiring close monitoring is still high, due mainly to delays in signing financing agreements and delays in fulfilling the conditions precedent to the first disbursement. It should also be noted that, at the Bank’s institutional and internal level, the deterioration is partly due to lack of key staff dedicated to monitoring operations in the region. Regular meetings are held between the new Implementation Support Division and the sector teams on identified weaknesses, and an action plan is being implemented to improve project performance. The preparation of the indicative lending programme for 2019-2015 was based on maturity of the projects to guarantee their quality at entry and rapid implementation. Portfolio issues are also monitored between the

22 African Development Bank: Addressing Regional Integration Challenges in Central Africa: Evaluation of the Regional Integration Strategy and Operations of the African Development Bank, 2011-2016 - Summary Report. IDEV, March 2018. 23 The Central Africa Regional Portfolio Review covers 7 countries: Cameroon, Congo, Equatorial Guinea, Gabon, CAR, DRC and Chad. 24 The portfolio performance review was based on 15 of the 44 supervised projects in the active portfolio in the Central Region. 11

Bank, RECs and the countries during dialogue missions organised by the RDGC. The key project performance indicators are analysed in Annex 6. iii) 2018 Portfolio Performance Improvement Plan 3.3.6 Following the Regional Portfolio Performance Review (RPPR) conducted in May 2017, a Performance Improvement Action Plan (PIAP) was prepared. However, the monitoring of its implementation suffered from lack of staff (only one Country Programme Officer out of the 6 proposed for the Directorate General in charge of Central Africa). The supervision missions did not allow for regular monitoring of generic measures, with the exception of project-specific actions. Such lack of concerted action between the Bank's various departments (RDGC, ECAD, SNFI, FIFC, etc.) did not allow for implementation of the generic measures set out in the May 2017 review action plan. Thus, following analysis of the current portfolio, the same actions were recommended and a monitoring system was established (see Annex 9). iv) Bank Group Performance 3.3.7 The supervision of regional projects should be reinforced. Fourteen (14) active operations were not supervised in 2018. This is due to persistent socio-political unrest in CAR and the presence of Boko Haram in the Lake Chad Basin region. However, with the Bank's presence in the countries, arrangements should be made with Sector Divisions to conduct project supervision. DBDM operationalization will also help to solve monitoring difficulties. In this regard, the transfer of RDGC from to Yaoundé is under way. The missions programme for the last quarter of the year was prepared with particular emphasis on projects lagging behind in terms of supervision. The "Delivery Team" established by Management, as well as the appointment of all Division Managers will ensure that the frequency of at least two supervision missions each year for regional projects is respected by reinforced multidisciplinary teams. In addition, the recruitment of a Chief Development Economist in RDGC will strengthen the measuring and monitoring of employment indicators to underscore the impact of the regional integration strategy on inclusive . In addition, increasing the frequency of dialogue and coordination missions to support the Country Offices will improve the Bank's performance in portfolio management and mobilization of co-financing. v) Performance of RECs and executing agencies in portfolio management and aid coordination 3.3.8 RECs do not have adequate internal expertise with a good understanding of project implementation rules and procedures. As a result, they often use ad hoc Implementation Units (PIU) within their technical departments to implement projects. Despite such reinforcement, PIUs continue to have procurement and financial management shortcomings. The Bank's support for ECCAS institutional capacity building (PARCI) falls within such efforts, and the Bank will organize a fiduciary clinic in 2019 for all RECs and supra-State structures in charge of project implementation to identify appropriate training modules. The fiduciary clinic will be preceded by reflection on the effectiveness and limits of REC intervention in project implementation, for both physical and intangible components (trade and transport facilitation). The reflection should help to better define the role of RECs in the coordination and supervision of regional integration projects/programmes. c) Bank’s Comparative Advantage and Positioning 3.3.9 The Bank has positioned itself as an essential partner in supporting economic diversification and deepening regional integration in Central Africa. The presence of Country Offices has facilitated close dialogue with national authorities, and consultations have been organized with ECCAS, CEMAC, and specialized regional institutions (PEAC, COMIFAC, BEAC, COBAC, etc.). Dialogue has been underpinned by the fact that the Bank

12

plays a leading role in supporting infrastructure development, improving people's living conditions, and preserving the environment. However, the Bank should also carefully explore how it can help the countries to better integrate. Due to constraints related to debt limits in some countries (Congo, Cameroon) and low allocations in others (CAR and Chad, in particular), the Bank should be engaged alongside other partners such as the , IMF, ECA, EU, AFD, etc. to identify opportunities for co-financing in favour of regional integration. IV. BANK GROUP’S REGIONAL INTEGRATION STRATEGY IN CENTRAL AFRICA 2019-2025 4.1 Rationale for Bank Intervention 4.1.1 Central African countries have joined RECs to bring their economies closer together and promote development based on cooperation and solidarity. Consequently, in addition to the political objective of regional and continental unity, Central African leaders are seeking to overcome three major obstacles to development, namely: (i) the small size of markets; (ii) the lack of structural complementarities as evident in the limited number of low value-added primary export products and basic minerals; and (iii) dependence on imports of intermediate and finished goods. Regional integration is therefore the best way for the region to accelerate economic diversification, strengthen governance, and support structural transformation in the countries. 4.1.2 The African Union's Agenda 2063 and the "Stimulating Intra-African Trade" Initiative mainly seek to make regional integration effective in the various regions of the continent. Agenda 2063 sets an ambitious target for intra-regional trade growth from 10% in 2012 to around 50% by 2045, as integration deepens. RISP-CA 2019-2025 will support this vision in the Central Region with a target of 6% by 2025. It also is in this light that 49 African countries in March 2018 signed the AfCFTA Agreement, which could play a key role in increasing intra-regional trade from 15% to 25% in 2040 (depending on efforts towards liberalization). Intra-African trade alone is expected to increase by about 25-30% for industrial products; as for agricultural and food products, the increase is expected to be between 20% and 30%, and between 5% and 11% in the energy and mining sectors. The industrial sectors that would benefit most from the AfCFTA reforms as regards trade expansion are , clothing, leather, wood and paper, vehicles and transport equipment, electronics and metals25. 4.1.3 In March 2018, the Bank adopted a new Regional Integration Strategic Framework (RISF 2018-2025) for all regions of the continent. The Bank's new RISF 2018- 2025 comes after the adoption of its High 5s and a new Development and Business Delivery Model (DBDM), two mechanisms designed and implemented following the Regional Integration Policy and Strategy for 2014-2023. Given its alignment with the High 5s and DBDM, the new RISF is based on three pillars, namely: (i) connectivity of the electricity network and infrastructure (transport and ICT); (ii) trade and investment; and (iii) financial integration. The RISF operationalization in each of the 5 regions of Africa will be based on the RISPs. 4.1.4 The RISP is the Bank's instrument for operationalizing the RISF, taking into account the specific integration priorities of each region. As regards implementation of the previous RISP (2011-2015, extended to December 2017), the Bank demonstrated its capacity to support regional integration in Central Africa by financing transport, energy, capacity building and environmental protection projects. The RISP also provides an opportunity to integrate national priorities into regional strategies, while maintaining the principle of subsidiarity. Under the new DBDM, harmony between national and regional priorities will be strengthened through strategic mechanisms and effective dialogue with national, regional and

25 ECA: An empirical assessment of arrangements for goods in the African Continental Free Trade Area (AfCFTA), June 2018. 13

continental institutions. In this regard, the Bank's field offices will contribute directly to regional integration by integrating regional dimensions into their CSPs. Annex 10 highlights the links between the various CSPs in the region and the Central Africa RISP 2019-2025. 4.1.5 Regional integration can reduce pockets of fragility in Central Africa and strengthen its resilience. Given the security, economic and social challenges, a well coordinated and effective regional approach is likely to create more impacts, offer economic opportunities to the population, and improve the situation of women and young people. 4.2 Overall Goal and Pillars of RISP-CA 2019-2025 4.2.1 As mentioned in the combined completion report of the Regional Integration Strategy Paper (RISP) 2011-2017 and the Regional Portfolio Performance Review26, Central Africa is still grappling with many challenges or weaknesses that it must overcome to establish the foundations for successful regional integration. In addition to the challenges and constraints, the Bank's strategy will need to take advantage of the significant potential of highly diversified ecosystems and abundant forest and water resources. These challenges and opportunities are analysed in section 3.2. 4.2.2 Given the overall challenges facing Central Africa, RISP-CA 2019-2025 aims to "support economic diversification and structural transformation through the improvement of intra-regional trade." The Bank intends to achieve this objective through two pillars that were approved by CODE in June 2018, namely: (i) Reinforce regional infrastructure (energy, transport and ICT); and (ii) Support reforms for intra-regional trade development and build REC institutional capacity (see Figure 1 below). Figure 1. Overall Goal and Pillars of RISP-CA 2019-2025

Support economic diversification and structural Overall Goal transformation through the improvement of intra- regional trade Two Pillars Reinforce regional infrastructure Support reforms for intra- (Energy, Transport and ICT) regional trade and build REC institutional capacity

4.2.3 Through this strategy, the Bank is seeking to triple intra-regional trade in Central Africa (within ECCAS in general), from the current 2% to 6% by 2025. To that end, the Bank intends to use some selectivity criteria to provide a rational basis for the RISP's strategic and operational choices, in particular: (i) lessons learned from the previous RISPs and IDEV evaluation; (ii) sector diagnostic studies; (iii) two economic sector works on industrialization of the timber sector in the Congo Basin and the investment environment respectively; (iv) comments from regional stakeholders; (v) coherence with the AU Agenda 2063, the strategic priorities of CEMAC and ECCAS, the Bank's Ten-Year Strategy, the High 5s, RISF 2018-2025, and the Bank's relevant strategies; (vi) complementarity between the Bank's support and the interventions of other development partners; and (vii) the Bank's comparative advantage. 4.2.4 Finally, taking into account the numerous fragility factors and diversity of ecosystems, the RISP implementation will require attention to the rational management of natural resources, as well as climate and environmental protection.

26 African Development Bank: Central Africa, Combined Completion Report of the Regional Integration Strategy Paper (RISP) 2011-2017 and the Regional Portfolio Performance Review. June 2018. 14

4.3 Strategic Intervention Areas and Results Framework a) Strategic Intervention Areas Pillar 1: Reinforce regional infrastructure (energy, transport and ICT). The construction of quality infrastructure that is easily accessible to the population is a strong basis for regional integration. Under this pillar, the Bank's activities will focus on access to energy and water, electricity, transport corridors and ICT. The activities will be grouped around three strategic thrusts, namely: (i) optimise multimodal transport networks by focusing on the emergence of development corridors, as well as contribute to the security and sustainable improvement of air transport; (ii) increase energy and improve cross-border water resources management; and (iii) improve information and communication technologies to link the markets. 4.3.1 Strategic Thrust 1: Optimise multimodal transport networks: The main purpose of this strategic priority is to develop surface (roads, bridges, railways, inland waterways) and air infrastructure in order to support competitiveness and sustainable economic growth. Infrastructure investments will be essential for the structural transformation and diversification of Central African economies. - Support for the preparation of infrastructure projects 4.3.2 The Bank will assist ECCAS and CEMAC in preparing and implementing projects under the Consensual Transport Master Plan for Central Africa (PDCT-AC)27 and the Infrastructure Development Programme for Africa (PIDA). As such, it will support periodic evaluations of the PDCT to identify implementation difficulties and make recommendations. Project preparation will be supported by resources from NEPAD-IPPF and Africa 50.28 The Bank, in consultation with the regional authorities, will ensure that its interventions focus on projects that contribute significantly to regional integration. Sustained efforts will be made to seek partnerships and co-financing. - Support for the promotion of multimodal transport networks 4.3.3 The Bank intends to adopt the development corridors approach by focusing on road, rail and water networks. Indeed, regional transport networks are no longer used solely for the transportation of goods, but also as a means of fostering social and economic development in the surrounding areas. Consequently, the competitiveness of several sectors depends heavily on transport cost levels. Such dependence is becoming increasingly significant for export sectors from areas far from the coastline or from landlocked countries (CAR/Chad). In the absence of effective facilitation mechanisms, transporters often incur additional costs due to the lack of infrastructure or poor state of existing infrastructure. Consequently, attention will be paid to economic linkages and opportunities in and around corridors by combining their financing with parallel investments in trade facilitation. The specific objectives of the transport sector include: (i) facilitation of the free movement of persons and goods; and (ii) physical integration of countries through quality infrastructure to promote and enhance inter-State and regional trade. The Bank will support private sector activities along the cross-border corridors, especially SMEs and women engaged in cross-border trade, as well as the implementation of the WTO Trade Facilitation Agreement (TFA). Certain rail networks, particularly between Cameroon and Chad, will be extended and/or modernized. In this regard, preference will be given to a PPP

27 Adopted in Brazzaville on 24 January 2004, the Consensual Master Plan for Transport in Central Africa (PDCT-AC) has three components: (i) infrastructure; (ii) transport facilitation; and (iii) Geographic Information System. 28 In 2012, in their Declaration on the Programme for Infrastructure Development in Africa (PIDA), African Heads of State called for innovative solutions to facilitate and accelerate infrastructure development in Africa. In response, and following extensive consultations with African stakeholders, the African Development Bank proposed the establishment of a new delivery vehicle known as Africa 50. Africa 50 is an investment bank for that focuses on high-impact national and regional projects in the energy, transport, ICT and water sectors. 15

approach to financing corridors combining roads, railways and inland waterways, as well as maritime and port interfaces. - Facilitation of air transport 4.3.4 As a reliable and significant alternative to surface transport modes, this sector can be a lever for economic growth and development, as well as promote regional integration In line with the Bank's policy, this will include supporting the establishment of appropriate air safety frameworks to ensure that air transport plays a role in supporting regional competitiveness. The key proposed activities are: (i) the improvement of the institutional and regulatory framework;(ii) supporting the implementation of the Decision on liberalisation of the air transport market; and (iii) improving civil aviation safety and security to reduce accidents. These activities are in line with the Action Plan for the Improvement of Air Transport in Central Africa, which was adopted on 16 September 2008 by the Ministers of Transport and endorsed by the Conference of ECCAS Heads of State and Government in on 24 October 2009. - Facilitation of waterborne transport (on and lakes) 4.3.5 The Bank will support the development of inland navigation in efforts to secure multimodal transport systems. The river network in Central Africa includes more than 22,000 km of inland waterways, which are also part of PDCT-AC's first priority programme network, and constitute one of the strategic and vital links in the region's transport and service system. The waterways provide a form of transport that is cheap, energy efficient and eco-compatible. 4.3.6 Strategic Thrust 2: Increase access to energy and improve the management of transboundary water resources. Energy, including the interconnection of electricity grids, is essential for accelerating industrialization. Consequently, the Bank will target: - Capacity building for the Central African Power Pool (PEAC), as well as an increase in energy production and grid interconnection 4.3.7 Specifically, efforts will be made to: (i) improve the design and implementation of regional energy production and interconnection projects; (ii) improve the preparation of energy projects for financing, including through partnerships and co-financing; (iii) harmonize the legal and regulatory frameworks; (iv) increase electricity production and grid connections, as well as electricity distribution; and (v) expand access to electricity for households and SMEs. - Support for the development of transboundary water resources 4.3.8 Transboundary water resources offer important opportunities for development of the industrial, agricultural and sectors, improvement of food security, and sustainable management of resources. In addition, they contribute to hydropower production. As such, the Bank will support the development of water resources and their integrated management. 4.3.9 Strategic Thrust 3: Improve information and communication technology. ICT has the potential to transform businesses through innovation. It is therefore essential for promoting regional trade and the free movement of persons by helping to reduce administrative costs and delays in import, export and transit procedures for goods. It would be appropriate to deploy wireline broadband infrastructure (optical fibre) to ensure terrestrial interconnections between countries in the sub-region, as well as support the development of intra-regional and international data flows. - Support for the development of broadband ICT networks and cross-border broadband interconnections 4.3.10 The Bank's main interventions will be to promote a regional digital market through data, particularly through: (i) support for a coherent and harmonised regional ICT policy and a 16

regulatory environment conducive to the creation of a secure and competitive regional data market; (ii) development of wireline broadband infrastructure ecosystems (paying special attention to the specific needs of landlocked countries such as Chad, Central African Republic (CAR), etc.), as well as access networks, including in rural areas, to foster digital inclusion of the population; (iii) promotion of digital technologies to reinforce regional infrastructure (e. g. the use of capacity provided by optical fibre installed along electricity transmission links within and between the countries, railway lines, etc.); (iv) development of data storage and transmission facilities, including regional Internet exchange points and data centres, and support for a regional data regulatory framework that can promote regional solutions; (v) capacity building for digital continuous and initial training institutions/centres to fill the huge gap in digital infrastructure, applications and services; and (vi) contribution to the establishment of regional technology parks, business incubators/accelerators, etc. to address the problem of youth unemployment in the sub-region. - Support for the establishment of harmonized National Digital Identity Systems (SNID) 4.3.11 This will mainly facilitate the free movement of persons within the Community area. The Bank's interventions will seek to: (i) support the establishment of regional and national data storage centres; (ii) develop the foundations of e-government for the establishment of e- government services such as e-Visa; (iii) promote the use of common and open standards and norms for interoperability of the various SNIDs; and (iv) support the establishment of a regulatory framework for data protection and security. - Support for the establishment of interoperable Digital Financial Services (DFS) 4.3.12 This will help to develop national and regional financial transactions. The Bank's interventions will consist in: (i) supporting the establishment of interoperable DFS at country and sub-regional levels; (ii) fostering a coherent and harmonised regional framework for co- regulation between the digital and banking sectors; (iii) supporting regional initiatives so as to build the capacities of national and regional actors involved in DFS; and (iv) helping to provide incentives for DFS development. 4.3.13 Pillar 2: Support reforms for development of intra-regional trade and strengthen REC institutional capacity. More specifically, this pillar aims to foster trade, investment and human and institutional capacity building in the region. As such, three strategic thrusts have been selected: (i) trade and investment development, (ii) financial sector development, and (iii) human and institutional capacity building. 4.3.14 Strategic Thrust 4: Develop intra-regional trade and investment. The Bank will promote integration based on markets and intra-regional trade. In this regard, it will work with ECCAS, CEMAC and other partners to stimulate productive sectors by developing regional value chains, as well as support the harmonization of market rules and structures to facilitate the movement of goods and people. - Support for REC streamlining 4.3.15 The streamlining of CEMAC and ECCAS, which overlap, is vital to deepening economic integration in Central Africa. This initiative stems from the 13th Conference of ECCAS Heads of State and Government, held in 2007 in Brazzaville (Congo). A Steering Committee for Streamlining Regional Economic Communities in Central Africa (COPIL CER- AC) was established by the ECCAS Chairman in 2012 and the current Chairman of CEMAC on 31 March 2015. The Bank will continue to provide technical and institutional support for the streamlining, particularly as regards customs regulations, common external tariffs, rules of origin, sanitary and phytosanitary standards, PPP regulations, etc. In addition, the Bank will

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help to implement the ZLEC through technical support (capacity building and knowledge products). - Support investment climate improvement and private sector development 4.3.16 The private sector has played a key role in all markets where regional integration has been initiated and accelerated. Central Africa should not be an exception. Indeed, the role of the private sector is crucial in mobilizing private investment in tradable goods, which will be essential for sustained productivity growth, increased exports, and the enhancement of export know-how. In addition, to increase intra-regional trade in Central Africa, it is imperative to attract more investments and promote greater private sector participation. These investments are needed for further processing of local products on the spot in regional-scale industries that can create value and jobs. At regional level, the Bank will support the adoption and implementation of reforms, as well as the harmonization of policies on investment, public- private partnerships, public procurement, industrialization, etc. 4.3.17 The reforms aim to provide substantial protection for investors by guaranteeing them nondiscriminatory and fair treatment, full protection and security, compensation in the event of expropriation and the possibility of repatriating the income generated by their investments, among others. It also involves giving them access to dispute settlement mechanisms, for example in the context of arbitration procedures at regional or international level, which allow them, in the event of a violation of substantive provisions at State level, to initiate litigation directly against the State hosting their investments. Lastly, the Bank will also support the training and awareness-raising of national and regional stakeholders on the Organisation for the Harmonisation of Business Law in Africa (OHADA), through the OHADA National Commissions and RECs. - Support for the development of regional value chains 4.3.18 If Central Africa wants to accelerate economic diversification and integrate effectively into the global economy, priority should be given to the development of regional value chains in several sectors. This will be another opportunity for the countries of the region to increase cross-border trade in intermediate goods, which is essential for strengthening the industrial fabric. However, access to these value chains depends on many factors, particularly logistics and the institutional and legal environment. As such, the Bank has financed a study on the sustainable industrialization of the timber sector in the Congo Basin countries. The Bank will also support the development of value chains in the areas of timber, and fisheries, , etc. over the next seven years. - Support for the elimination of non-tariff barriers (NTB) and trade facilitation 4.3.19 The reduction or, at best, elimination of non-tariff barriers is a prerequisite for deepening economic cooperation in the region. Barriers to the movement of factors of production and intermediate goods represent additional costs for economic operators. In the central region, the problem of NTBs is very acute. The Bank will conduct a major economic and sector work on transport and transit costs and times along the Central African corridors, and this will contribute to establishing a sub-regional mechanism for electronic monitoring and elimination of the barriers. In addition, the Bank will increase its support to ECCAS for the implementation of the WTO Agreement on Trade Facilitation. This Agreement aims to simplify, standardize, harmonize and make countries' trade procedures more transparent. - Support for the development of trade in services and intellectual property 4.3.20 The Bank seeks to support the development and circulation of goods and services in the Central Region. It will help RECs to remove obstacles to the cross-border movement of people, including skilled labour, as the obstacles aggravate skills deficits and unduly restrict 18

intra-regional trade. In addition, the protection of Intellectual Property Rights (IPR) is essential for establishing an enabling environment for investment and trade, as well as facilitating African efforts to promote economic development through innovation. IPR protection encourages the development of new technologies for the growth of agricultural and industrial production, promotes domestic and foreign investment, and facilitates technology transfer and trade - all of which are vectors of economic and social growth. In order to develop globally recognized value-added products, attract investment in knowledge-based industries, motivate innovation and increase trade, Central Africa needs to build and improve its capacity to protect intellectual property rights. In addition, effective IPR protection is vital for protecting public health and safety. The Bank will support CEMAC, ECCAS, and the African Intellectual Property Organization (OAPI) to develop ways of increasing and improving capacity as regards intellectual property. 4.3.21 Strategic Thrust 5: Develop the financial sector and support domestic resource mobilization. As regards challenges, the countries of the region need to develop domestic savings and optimize capital mobilization mechanisms. This requires better economic governance through reforms, the creation of appropriate financial products and the development of specialized financial institutions to accelerate financing of the economies. When these financial products operate effectively and are led by well-capitalized and properly regulated financial institutions, they foster the growth and dynamism of the private sector. The Bank will support the deepening of the financial sector, the strengthening of financial integration, and the development of financial inclusion in the CEMAC region, whose achievements will be extended to the ECCAS region. In practical terms, these will include operations to improve regional financial governance, reinforce mechanisms for building and mobilizing local savings, and strengthen financial inclusion. In this regard, the Bank will also support capacity building for regional institutions, as well as help to establish long-term financing. Ultimately, a more integrated financial sector that is able to carry out transactions in complete security will be essential in increasing intra-regional trade and investments in the region. 4.3.22 Strategic Thrust 6: Build institutional capacity. The Bank will provide support to CEMAC and ECCAS to foster knowledge generation and technical capacity building to enable them to better fulfill their missions, particularly the monitoring of infrastructure projects, as well as the coordination, harmonization and streamlining of regional programmes. In addition, the pillars and operational sectors targeted in this strategy have great potential to create jobs and economic opportunities, especially for young people. This will contribute to inclusive and sustainable growth, and it will be necessary to build the capacity for measuring, monitoring and ensuring the quality of jobs and economic opportunities that would be generated. To increase employability, it will also be necessary to develop skills through vocational training and technical education in targeted investment sectors (transport, energy, ICT, water, etc.). Taking into account past experiences, the Bank will focus more on specialized institutions such as the River Basin Commission, the Central African Power Pool, OHADA, the African Intellectual Property Organization, etc. Given the importance of infrastructure projects within the RISP-CA 2019-2025 framework, the Bank would seek to build the capacity of RECs to maintain the region’s road networks and corridors. 4.3.23 Integrate climate change and gender, and reduce fragility. The Bank will pay special attention to fragility issues and support resilience building activities. This will, for example, require operations to support ecosystem conservation in the Congo Basin, build resilience to food insecurity or support the socio-economic reintegration of vulnerable groups. The Bank will also pay special attention to assessing jobs and economic opportunities created and/or to be created through the operations, and support women engaged in cross-border trade.

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4.3.24 Economic and sector work. The Bank plans to carry out three major economic and sector studies during the strategy implementation period, as follows: (i) the in-depth study on transit and transport costs and non-tariff measures along the main corridors of Central Africa; (ii) the assessment of the impact of trade facilitation measures and the Continental Free Trade Area (AfCFTA) in Central Africa; and (iii) the study on employment and labour market outcomes in Central Africa. In addition to these studies, the Bank intends to produce a yearly report on the state of regional integration in Central Africa, in collaboration with CEMAC, ECCAS and other development partners. This report will serve as a basis for the organization of an annual regional forum on regional integration, as a framework for dialogue among countries, RECs, the private sector, civil society and development partners. 4.3.25 The implementation of the strategy will require investments amounting to UA 3.185 billion, corresponding to 30 operations over a seven-year period (2019-2025). About 88% of the planned funding would be devoted to strengthening regional infrastructure (energy, transport and ICT), compared to 12% for support to the development of intra-regional trade and build institutional capacity in RECs. With regard to the risk of fragility in the region, the proposed indicative programme, in its infrastructure and institutional capacity building components, will support the resilience of the countries of the region. Beyond these interventions, specific operations are also planned, for example, to strengthen resilience to food insecurity, the socio-economic reintegration of vulnerable groups, or the conservation of ecosystems in the Congo Basin. This approach is in line with the Bank's vision of reducing fragility and building resilience in states. It also complements the value chain supports projects financed by the Bank as part of the Country Strategy Papers.. The indicative multinational project programme for 2019-2025 is presented in Annex 1. Its implementation will depend on the effective availability of resources and countries’ interest in regional and multinational projects. b) Monitoring and Evaluation and Results Measuring Framework 4.3.26 The implementation of RISP-CA 2019-2025 will be monitored on the basis of a results measuring framework (Annex 2). The framework summarizes the key causal chain factors of the Bank's sector interventions, from inputs to short and medium-term effects and impact. It presents baseline data and sets targets for each outcome indicator. 4.3.27 The RISP implementation and progress towards the objectives indicated in the results matrix will be monitored through a mid-term review in 2022 and the preparation of the completion report in 2025, in addition to regular monitoring of the operations in accordance with the Bank's other internal procedures. The monitoring will be conducted by the Bank in close consultation with the regional authorities (CEMAC and ECCAS). The mid-term review will be prepared in collaboration with regional stakeholders to take into account the intermediate outcomes and adjust the strategy for the region accordingly. Reports on the achievement of outputs and outcomes will be prepared regularly by RDGC in coordination with RDRI and the Bank's country offices. The change theory is presented in Annex 3. 4.3.28 The major expected outcomes of RISP-CA 2019-2025 implementation are as follows: (i) improved transport quality for better access to regional markets; (ii) improved access to reliable and affordable energy for the population and private sector; (iii) improved connectivity of transport infrastructure; (iv) increased density of terrestrial interconnections and national fibre-optic backbones; (v) a harmonized and operational institutional framework that promotes intra-regional trade and investment; (vi) a more dynamic financial sector with increased domestic financing for the private sector; (vii) increased decent employment and sustainable economic opportunities, especially for young people, and (viii) strengthened REC capacities to improve the management and implementation of regional projects.

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4.4 Alignment with the priorities of the continent, Bank and region 4.4.1 The objectives of RISP-CA 2019-2025 are in line with the Bank's priorities, particularly the “High 5s”, whose "Integrate Africa" pillar needs to be supported by the other 4 ("Feed Africa", "Light up and power Africa", "Industrialize Africa" and "Improve the quality of life for the people of Africa"). Furthermore, regional integration in turn supports the operationalization of the other four priorities. The Bank's Ten-Year Strategy (2013-2022) also aims to support Africa's progress towards real economic development and social cohesion (inclusive growth), while fostering sustainable use of natural resources (green growth)29. In this regard, the Bank recognises 5 (five) key operational priorities that enable it to carry out its actions: Infrastructure development; Regional economic integration; Private sector development; Governance and accountability; Qualifications and technologies. In addition, the pillars of RISP-CA 2018-2025 are aligned with those of RISF 2018-2025, approved in March 2018, namely: (i) energy and infrastructure connectivity; (ii) trade and investment; and (iii) financial market integration. 4.4.2 At continental level, the objectives and pillars of RISP-CA are consistent with those of the AU as regards integration. Indeed, under its Agenda 206330, the AU mainly seeks to strengthen continental integration through: (i) facilitation of cross-border trade in goods; (ii) development of transport, energy and telecommunications infrastructure to connect more people; (iii) greater freedom of movement for people; (iv) growth and capital flows across national borders; and (v) production of information and knowledge data to promote economic competitiveness and social well-being. 4.4.3 At regional level, the RISP takes into account the ECCAS strategic vision for 202531 and CEMAC’s Regional Economic Programme (REP) 2017-2021.32 The overall goal of ECCAS Vision 2025 is to promote and strengthen harmonious cooperation and balanced and self-sustaining development in economic and social activity, while raising people's living standards. The implementation of this vision is underpinned by a medium-term strategic plan, adopted in July 2017. CEMAC's REP operational plan for 2017-2021 is based on two missions, namely: (i) reinforce physical integration by developing regional transport corridors, increasing energy production and interconnection, and ensuring the emergence of a digital market; and (ii) accelerate trade integration by facilitating the free movement of goods, services and people, as well as accelerating economic diversification and job creation. V. IMPLEMENTATION OF THE STRATEGY 5.1 Country dialogue issues and regional economic communities 5.1.1 There is as yet no formal framework for consultation between key development partners on regional integration in Central Africa. However, the Bank, ECA and the European Union (EU) have recently taken a number of collaborative initiatives to better coordinate their operations. Furthermore, in November 2018, ECA (through RDGC) invited the Bank to participate in the sub-regional coordination mechanism for technical and financial partners in Central Africa. Similarly, the Bank remains at the forefront of innovative approaches to infrastructure financing that would mobilize additional financial resources, as is the case with Africa 50. The private sector can significantly help to address the challenges of employment and wealth creation, particularly by focusing on integration into regional value chains, especially in the area of timber and green jobs. The Bank also supports the establishment of appropriate frameworks to promote public-private partnerships, the sharing of knowledge and

29 African Development Bank: Strategy for 2013-2022; October 2013. 30 African Union: Agenda 2063, the Africa we want; October 2014. 31 ECCAS: Strategic vision for 2025; 2007. 32 CEMAC: Regional Economic Programme; Operational Plan 2017-2021 21

best practices, access to strategic networks and databases, the development of investment platforms and business opportunities, etc. 5.2 Internal and External Arrangements 5.2.1 Internally, RDGC and RDRI will monitor the implementation of the strategy with the support of the Bank's field offices in the Central Region. Externally, the 7 RDGC countries (Cameroon, Chad, Congo, Gabon, Equatorial Guinea, Central African Republic and Democratic Republic of Congo), members of ECCAS, will implement the RISP-CA under the supervision of ECCAS and CEMAC, in close collaboration with the other development partners. 5.3 Allocation and Financing 5.3.1 The Bank will play a catalytic role in mobilizing resources needed to implement RISP- CA 2019-2025, thereby improving on its role as Co-financier. This role will be underpinned by the leverage effect of the Bank's financial contributions to projects and programmes. To that end, the Bank will use ADF country resources, the ADF Regional Operations (RO) window, AfDB resources and a number of mechanisms such as the TSF, AWF, IPPF, the MIC Trust Fund and other multilateral and bilateral trust funds. In the same vein, the Bank will pay particular attention to the promotion of the private sector, particularly through operations that include the private sector and support for domestic resource mobilization, which would promote economic diversification and intra-regional trade. In this perspective, the Bank will also continue its exchanges within the framework of the African Investment Forum (AIF) with a view to mobilizing more private financing for the implementation of the indicative programme. Alongside other development partners, the Bank will strive to incorporate resource mobilization into the operations cycle, in order to increase co-financing; while the relocation of the Central Africa Business Delivery office in Yaounde, Cameroun, will enable it to strengthen dialogue with other development partners to increase co-financing. Furthermore, the Bank plans to improve its internal coordination with a view to making a better use of trust funds that it manages. Lastly, the Bank’s support for the merger of Central Africa’s stock exchanges should enable the private sector (especially pension funds) and the population to contribute to financing projects that support diversification and regional transformation. The indicative regional and multinational operations programme is proposed in Annex 1. The key factors for success will be to ensure that operations are coordinated and prioritized and that the required resources are mobilized, both internally and externally. 5.4 Potential Risks and Mitigation Measures 5.4.1 The major risks lie in the continuing deterioration of the political and security environment, the low oil prices and the poor capacity of human and organisational resources. Moreover, at country level, multilateral operations - which are implemented over the long term - are often in competition with domestic investments that may appear financially and politically more profitable in the short term33. Governments sometimes tend to favour the Bank's domestic operations over programmes to promote intra-regional trade and strengthen regional integration. The Bank will establish and strengthen frameworks for dialogue on regional integration, particularly the organization of an annual regional forum on integration and the presence of the Regional Office in Yaoundé, Cameroon. 5.4.2. Relative flexibility should be exercised in the implementation of operations in transition countries, in accordance with the Bank's guidelines34. Finally, RISP-CA 2019- 2025 will be implemented on the basis of strengthened partnerships, particularly with RECs,

33 AfDB: Regional Integration Policy and Strategy (RIPS) 2014-2023 34 AfDB: Operational Guidelines for the Fragile States Facility (FSF); AfDB Group Strategy: Addressing Fragility and Building Resilience in Africa, 2014-2019 22

governments, the private sector and the other development partners. The Bank will continue to act as leader in areas where it has a proven comparative advantage. Table 3: Risks and Mitigation Measures Obstacles Mitigation Measures 1. Continued deterioration of the political and Monitor and support the stabilization efforts of security environment Central African countries through the Peace and Security Council (COPAX), the operations of the Central African Multinational Force (CAPF), as well as mobilization of the international community in several countries in the region (CAR, DRC, etc.). Emphasis will also laid on making appropriate use of the Bank's instruments for fragile States. 2. Non-recovery of oil prices, and other low Support ongoing stabilisation initiatives in the region, commodity prices such as CEMAC's Economic and Financial Reform Programme (PREF) and budget support programmes, and strengthen country dialogue on the need for economic diversification. 3. Weak human and organisational capacities of Continue capacity building for RECs and strengthen RECs, particularly for monitoring the support for human capital development in the region. implementation of multinational projects 4. Limited Bank's financial and human resources Identify additional financial resources to be dedicated dedicated to multinational operations to multinational operations, including Trust Funds. 5. Vulnerability of the region to climate change, Ensure inclusion of climate analysis and adaptation which may have an impact on extractive measures in projects/programmes. projects VI. CONCLUSION AND RECOMMENDATIONS 6.1.1 RISP-CA 2019-2025 allows the Bank to define a framework for guiding its actions to promote economic cooperation and deepen regional integration in Central Africa over the next seven years. It will operationalize the Bank's RISF 2018-2025 in the region, taking into account recent developments, the willingness expressed by political authorities in the countries and the priorities of institutions supporting regional integration, the increased role of the private sector as the main engine of growth, and the role of governments as agents and facilitators of structural reforms to achieve the objectives of economic diversification and structural transformation. The strategy is aligned with the operational priorities of ECCAS and CEMAC. The Bank has also drawn on the experience of its past interventions in support of regional integration processes, while building on current regional and continental initiatives. 6.1.2 RISP-CA 2019-2025 will be underpinned by more interventions to reduce the infrastructure deficit and connect markets, as well as harmonize and streamline policies at regional level to promote intra-regional trade and cross-border investment. In addition, the Bank will support the development of human and institutional capacity, as well as sustainable management of natural resources for inclusive and green growth. 6.1.3 The preparation of the strategy went through the following stages: preparation of the Concept Note in May 2018, the peer review of the Concept Note on 8 June 2018, the Regional Team’s review of the Concept Note on 13 June 2018, CODE’s approval of the proposal concerning RISP-CA 2019-2025 pillars on 25 June 2018, the preparation mission and consultations with ECCAS and CEMAC from 9 to 10 July 2018 and from 10 to 13 September 2018 respectively. The RISP-CA 2019-2025 was then reviewed by the Regional Team on 18 October 2018 and by OPSCOM on 12 December 2018. Its submission to the Boards of Directors is scheduled for January 30, 2019.

23

6.1.4 Management requests the Boards of Directors to approve the Regional Integration Strategy Paper for Central Africa (RISP-CA) covering the 2019-2025 period, as well as the level of proposed assistance.

24

Annex 1: Indicative Multinational Operations Programme 2019-2025

FINANCING INSTRUMENT (UA 35 TYPE Million) No. PROJECT NAME SECTOR YEAR BENEFICIARIES (SO/NSO AfDB ADF OTHERS CO-FIN TOTAL COST

PILLAR 1 : REINFORCE REGIONAL INFRASTRUCTURE (ENERGY, TRANSPORT AND ICT)

1 Project to build the bridge over the Ntem River and facilitate Transport SO 2020 223 0 0 0 223 Cameron, Equatorial transport on the -Campo-Bata corridor Guinea 2 Tshikapa-Kandjaji-Kandjaji-Kamako-Angola Border Road Transport SO 2022 0 150 0 0 150 Angola, DRC Development Project (219 km) 3 Road-Rail Bridge Project Transport NSO 2021 40 60 0 400 500 Congo, DRC

4 Project for construction of the Ouesso--Ndjamena road and Transport SO 2022 40 80 50 170 Congo, CAR, Chad, river navigation DRC 5 Rehabilitation of the Goma-Rutshuru-Bunagana- border road Transport OS 2022 25 25 0 0 50 DRC, Uganda (219 km) 6 Study for the construction of a bridge between Bangui and Zongo and Transport SO 2020 0 0 3 0 3 CAR, DRC, development of Bangui-Zongo-Kisangani-Bujumbura and Kisangani- Burundi, Uganda roads and transport facilitation 7 Air transport sector support project in Central and West Africa, Phase Transport SO 2021 0 20 0 0 20 ECCAS II 8 Access roads project for the road-rail bridge over the Transport SO 2022 30 30 0 0 60 Congo, DRC 9 Study on interconnection of electricity networks of Cameroon, Gabon Energy SO 2020 0 0 2 0 2 Cameroon, Gabon and Equatorial Guinea and Equatorial Guinea 10 Study on Chollet hydropower development project and associated Energy SO 2021 0 0 3 0 3 Cameroon, Congo lines 11 Dimoli hydropower development project and associated lines Energy NSO 2025 100 160 186 400 846 CAR, DRC, Cameroon and Congo 12 Construction of a 110/132 kV interconnection line between CAR and Energy SO 2021 0 30 0 0 30 CAR, DRC DRC 13 Study on the dam construction project and development of Palambo Energy SO 2023 0 0 3 0 3 CAR, Congo, DRC power plant

14 Interconnection of Gabon-Congo power grids Energy SO 2024 143 0 0 143 Gabon, Congo

35 The amounts are indicative and will depend on country absorptive capacities. I

15 Central African Regional Fibre Optic Backbone Project (CAB), ICT SO 2021 100 150 50 200 500 ECCAS components for Gabon (Phase 1), DRC (Phase 1), Cameroon (Phase 2) and Congo (Phase 2) 16 Multinational Trans-Saharan Fibre Optic Backbone Project, Chad and ICT SO 2022 0 60 0 40 100 Chad and CAR CAR Components 701 765 247 1090 2803 Sub-Total Pillar 1

PILLAR 2: SUPPORT REFORMS FOR THE DEVELOPMENT OF INTRA-REGIONAL TRADE AND BUILD REC INSTITUTIONAL CAPACITY

17 CEMAC Financial Sector Deepening Program, Phase 1 Finance SO 2019 0 8 2 0 10 CEMAC (Cameroon, Congo, Gabon, Equatorial Guinea, CAR, Chad) 18 CEMAC Payment Systems Interoperability Project Finance SO 2020 0 22 0 0 22 CEMAC (Cameroon, Congo, Gabon, Equatorial Guinea, CAR, Chad) 19 CEMAC Financial Sector Deepening Program, Phase 2 Finance SO 2023 0 16 4 0 20 CEMAC (Cameroon, Congo, Gabon, Equatorial Guinea, CAR, Chad) 20 Programme to support integrated development of the timber sector in Industry SO 2020 10 30 0 10 50 Cameroon, Congo, the Congo Basin (PADIB-BC) Gabon, Equatorial Guinea, CAR, DRC) 21 Programme for sustainable integrated livelihood management Agriculture SO 2024 0 30 0 0 30 ECCAS (livestock, fisheries and forestry) in the Congo Basin 22 Regional integration support project in Central Africa (PAIR-AC) Capacity SO 2020 0 15 10 0 25 CEMAC/ ECCAS Building 23 In-depth study on transit and transport time and costs in Central Trade ESW 2020 0 1.5 0 0 1.5 CEMAC/ ECCAS Study on the employment situation and labour market dynamics in Economic and ESW 2024 0 0 1 0 1 ECCAS /CEMAC Central Africa Sector Work

25 Project for establishment of technological and academic centres of Capacity SO 2022 0 10 0 0 10 ECCAS excellence (PETU) in Central Africa Building 26 Youth entrepreneurship support project in rural and semi-urban areas Capacity SO 2019 0 40 0 0 40 ECCAS in Central Africa (PREJAC) Building 27 Capacity building support project for ECCAS General Secretariat Capacity SO 2020 0 15 0 0 15 ECCAS (PARC-CEEAC) Building

II

28 Ecosystems conservation support programme in the Congo Basin 2 Climate and SO 2019 0 40 0 78.1 118.1 10 COMIFAC (PACEBCO) environment countries (Burundi, Cameroon, Congo, Gabon, Equatorial Guinea, Rwanda, CAR, DRC, Sao Tome and Principe, Chad) 29 Programme for building resilience to food insecurity in the - Fragility and SO 2020 0 10 0 0 10 7 CILSS countries Phase 2 resilience (, Gambia, , , Niger, and Chad) 30 Project to support the socio-economic reintegration of vulnerable Fragility and SO 2022 10 20 0 0 30 Lake Chad Basin groups, Phase 2 resilience (Cameroon, Niger, Nigeria, Chad, CAR, Libya)

Sub-Total of Pillar 2 20 257.5 17 88.1 382.6

721 1022.5 264 1178.1 3185.6 TOTAL RISP-CA 2019-2025

III

Annex 2: Results-Based Logical Framework for RISP-CA 2019-2025 OVERALL SUPPORT ECONOMIC DIVERSIFICATION AND STRUCTURAL TRANSFORMATION THROUGH IMPROVEMENT OF INTRA-REGIONAL TRADE GOAL

Sector Objectives Bank Operations Indicators Baseline Target Means of Risks and Mitigation Indicative Situation Verification Measures Amount (UA Million)

Pillar 1: Reinforce regional infrastructure (energy, transport and ICT)

Optimize Support for the preparation of Number of project studies 0 1 Final reports of the Risks : 3 multimodal infrastructure projects conducted study (PD and FD) transport networks - Further deterioration of the Support for the promotion of New or upgraded cross- 0 2000 Km ECCAS (PCDT- security and socio-political 703 multimodal transport networks border roads (km) AC), CEMAC and context; AfDB reports - Non-recovery of oil prices and further deterioration of Air transport facilitation Air transport, passengers 3 766 240 (2014) 5 000 000 ASECNA the economic environment; 20 transported (2025) statistics, IATA statistics, World - Low adherence of RECs and Bank data Member States;

Number of airports certified 1 4 ICAO Audit - Limitation of the Bank's for ICAO safety and security Reports financial and human standards resources dedicated to River transport Volume of trade by inland 1% 3% CICOS Reports multinational operations. 40 waterways Increase access to Capacity building for the Central Number of studies conducted 0 4 ECCAS and AfDB 627 energy and African Power Pool (PEAC) for the interconnection of reports improve the power grids management of Power generation and grid Power transmission lines 0 1600 ECCAS, AfDB transboundary interconnection constructed (kV) and World Bank water resources reports

Newly created energy 0 1200 ECCAS, AfDB capacity (Megawatt) and World Bank reports

IV

Electricity access rate for the 23% 30 ECCAS, AfDB population and World Bank reports

Support for development of Proportion of the population 1% 3% ECCAS and AfDB 40 transboundary water resources travelling by waterways reports

Improve Support for the development of Proportion of the population 16.95% 22% ITU, AfDB and 360 information and broadband ICT networks and cross- using the Internet (%) World Bank communication border broadband interconnections. reports technologies

Pillar 2: Support reforms for intra-regional trade development and build REC institutional capacity

Develop intra- Support REC streamlining process Number of tariff profiles 0 5 ECCAS, CEMAC Mitigation Measures: 25 regional trade and harmonised and AfDB reports investment - Make appropriate use of the Bank's instruments for Number of community texts 1 12 ECCAS, CEMAC fragile States; harmonized and AfDB reports - Strengthen political dialogue/ Strengthen governance/regional Support for improvement of the Number of laws adopted 0 7 Doing Business integration; investment climate ranking, ECCAS, CEMAC and - Seek and mobilize co- AfDB Reports financing;

Support for development of regional Contribution of the 14.50% 20% ECCAS, CEMAC, - Monitor and support 70 value chains manufacturing sector to World Bank and stabilization efforts of regional GDP (%) AfDB reports Central African countries through the Peace and Security Council Proportion of products 0.69% 10% ECCAS and AfDB (COPAX), operations of exported with value greater reports the Multinational Force than $100,000 (%) for Central Africa Import lead time (hours) 370 259 ECCAS, CEMAC, (FPMAC), 25 Support for elimination of non-tariff World Bank and - Increased mobilization of barriers (NTBs) and trade AfDB reports the international facilitation community in several

V

Export lead time (hours) 319 223 ECCAS, CEMAC, countries in the region World Bank and (CAR, DRC, AfDB reports

Transport costs on road 1484 1038 ECCAS, CEMAC, corridors and inland World Bank and waterways, for imports AfDB reports (Dollar) Transport costs on road 1267 886 ECCAS, CEMAC, corridors and inland World Bank and waterways, for exports AfDB reports (Dollar) Share of intra-regional trade 2% 6% Yearbook of (%) ECCAS statistics, UN COMTRADE

Develop the Deepening of CEMAC financial Total financial sector assets 25% (2015) 30% in BEAC reports 20 financial sector and sector as percentage of GDP 2025 support domestic resource Net credit to private 11% 20% BEAC reports mobilization sector/GDP (%) Strengthening of financial Banking rate (%) 12% 20% BEAC reports 10 integration and development of financial inclusion in CEMAC zone

Build human and Support for Regional Centres of Proportion of students 14% 17% UNESCO, ECCAS 120 institutional Excellence pursuing studies in technical and AfDB reports capacity or vocational education or training (%) REC capacity building Number of technical 5 20 ECCAS, CEMAC 25 assistants provided to and AfDB reports regional organizations

Number of economic and 1 5 Study feedback 5 sector works conducted reports

Include climate Support for ecosystem conservation Degradation rate of the 30% (2018) 22.5% Surveys, AfDB 40 change and gender, in the Congo Basin Congo Basin (conservation (2025) reports and reduce fragility achievements, net deforestation and net degradation) on 2006 basis reduced (%)

VI

Annex 3: Application of change theory in RISP-CA 2019-2025 The change theory presented in the figure below illustrates the links between the activities, outputs and outcomes of RISP-CA 2019-2025. It therefore plays a crucial role in the preparation and implementation of a monitoring and evaluation approach to this strategy, and will assess the Bank's contribution to outcomes achieved in deepening regional integration by identifying and testing causal links. It also focuses on the outcomes achieved and how they will be achieved, as well as on arguments for their being achieved or not and identification of factors that could facilitate or hamper success.

Pilier 1

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(énergie, transport (énergie, transport et TIC)

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otnr e rfre pu l dvlpeet du développement le pour réformes les Soutenir

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VII

Annex 4: Key macroeconomic and socioeconomic data of Central Africa

Table 1: Basic macroeconomic data for Central Africa, 2008-2020

Real GDP growth rate (%)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(e) 2019(p) 2020(p) Cameroon 2.9 1.9 3.3 4.1 4.5 5.4 5.9 5.7 4.6 3.5 3.8 4.4 4.7 Central African Republic 2.1 1.7 3.0 3.3 4.0 -36.7 1.0 4.8 4.5 4.0 4.3 5.0 5.0 Chad 3.1 4.2 13.6 0.1 8.9 5.7 6.9 1.8 -6.4 -3.8 2.8 4.2 5.8 Congo 5.6 7.8 8.7 3.4 3.8 3.3 6.8 2.6 -2.8 -3.1 2.0 3.7 -0.1 Democratic Republic of Congo 6.2 2.9 7.1 6.9 7.1 8.5 9.5 7.7 1.7 3.7 4.0 4.5 4.6 Equatorial Guinea 17.8 1.3 -8.9 6.5 8.3 -4.1 0.4 -9.1 -8.6 -2.9 -7.9 -2.7 -2.5 Gabon 5.3 -2.3 6.3 7.1 5.3 5.5 4.4 3.9 2.1 0.5 2.0 3.4 3.4 Central Africa 6.8 2.4 4.2 4.9 6.1 4.0 5.9 3.3 0.2 1.1 2.2 3.6 3.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(e) 2019(p) 2020(p) Central Africa 6.8 2.4 4.2 4.9 6.1 4.0 5.9 3.3 0.2 1.1 2.2 3.6 3.5 East Africa 5.4 4.8 8.0 5.4 3.0 7.2 5.8 6.5 5.1 5.9 5.7 5.9 6.1 North Africa 5.1 3.0 4.1 -0.2 12.0 0.8 1.5 3.7 3.2 4.9 4.3 4.4 4.3 Southern Africa 4.5 0.1 4.3 3.9 4.1 3.6 3.0 1.6 0.7 1.6 1.2 2.2 2.8 West Africa 5.8 5.9 9.2 5.0 5.1 5.8 6.1 3.2 0.5 2.7 3.3 3.6 3.6 Africa 5.3 3.3 5.8 2.9 7.3 3.6 3.7 3.5 2.1 3.6 3.5 4.0 4.1

Inflation (%) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(e) 2019(p) 2020(p) Cameroon 5.3 3.0 1.3 2.9 2.4 2.1 1.9 2.7 0.9 0.6 1.1 1.1 2.0 Central African Republic 9.3 3.5 1.5 1.2 5.9 6.6 11.6 4.5 4.6 4.1 3.9 3.3 3.2 Chad 8.3 10.1 -2.1 1.9 7.7 0.2 1.7 6.8 -1.1 -0.9 2.1 2.3 2.3 Congo 6.0 4.3 0.4 1.8 5.0 4.6 0.9 3.2 3.2 0.5 1.5 1.6 2.0 Democratic Republic of Congo 18.0 46.1 23.5 14.9 0.9 0.9 1.2 1.0 2.9 41.5 27.7 14.9 10.5 Equatorial Guinea 4.7 5.7 5.3 4.8 3.4 3.2 4.3 1.7 1.4 0.7 0.6 1.4 1.9 Gabon 5.3 1.9 1.4 1.3 2.7 0.5 4.5 -0.1 2.1 3.0 2.8 2.3 2.5

VIII

Central Africa 8.1 11.4 5.5 5.0 3.2 1.9 2.4 2.3 1.6 9.3 7.3 4.7 4.1

Overall Budgetary Balance (% of GDP) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(e) 2019(p) 2020(p) Cameroon 2.2 -0.3 -0.6 -1.6 -0.8 -3.6 -3.5 -2.2 -5.7 -4.9 -2.6 -2.1 -1.6 Central African Republic -1.3 -0.6 -1.5 -2.4 0.0 -6.6 3.0 -0.7 1.7 -1.5 1.0 0.6 0.2 Chad 3.6 -9.2 -4.2 2.4 0.5 -2.1 -4.2 -4.7 -2.5 -0.8 0.1 0.2 0.5 Congo 27.2 4.9 15.7 16.0 7.3 -4.5 -11.3 -41.7 -12.9 -12.5 -4.8 -5.2 -3.6 Democratic Republic of Congo -1.1 0.9 -1.0 -1.0 1.7 3.1 1.2 -0.3 -0.9 0.1 -0.6 0.0 0.3 Equatorial Guinea 20.4 -3.1 -4.5 0.8 -7.3 -5.9 -4.8 -3.3 -3.7 -2.9 -0.9 -0.5 0.3 Gabon 11.0 6.8 2.7 1.7 6.2 -3.1 6.0 -1.1 -4.7 -3.6 -0.3 0.5 1.8 Central Africa 8.7 0.0 0.7 1.9 0.6 -2.2 -2.0 -4.7 -4.0 -3.0 -1.4 -1.0 -0.3

Current Account Balance (% of GDP) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018(e) 2019(p) 2020(p) Cameroon -1.2 -3.1 -3.1 -2.6 -3.3 -3.5 -4.0 -3.8 -3.2 -2.7 -3.2 -3.1 -3.1 Central African Republic -9.9 -9.1 -10.2 -7.5 -4.6 -3.1 -5.6 -9.5 -10.0 -9.4 -8.3 -7.3 -7.0 Chad 3.7 -9.2 -9.0 -5.6 -8.7 -9.2 -9.0 -10.1 -10.7 -6.6 -4.3 -4.3 -4.5 Congo -1.2 -14.2 7.8 -3.2 17.7 1.7 -11.6 -42.9 -70.1 -13.2 4.0 5.1 0.8 Democratic Republic of Congo -0.8 -6.0 -10.1 -5.0 -4.3 -5.2 -4.8 -3.9 -3.7 -3.6 -1.1 1.9 2.4 Equatorial Guinea 1.1 -9.7 -20.2 -5.7 -1.1 -2.5 -4.3 -16.3 -0.6 -1.3 -2.7 -2.9 -3.9 Gabon 21.6 4.4 14.9 21.0 17.6 7.0 7.3 -5.7 -10.2 -4.9 -1.5 -0.4 -0.8 Central Africa 3.2 -5.7 -4.2 -0.6 1.4 -2.4 -4.1 -9.0 -9.3 -4.3 -2.0 -1.0 -1.3

Exchange rate (local currency unit per US dollar) Inflation Exchange Rate (%) (LCU / $ ) 2017 2018 (e) 2019 (p) 2020 (p) 2015 2016 2017 2018 (e) Cameroon 0,6 1,1 1,1 2,0 591,4 593,0 582,1 530,2 Central African Rep. 4,1 3,9 3,3 3,2 591,4 593,0 582,1 530,2 Chad -0,9 2,1 2,3 2,3 591,4 593,0 582,1 530,2 Congo 0,5 1,5 1,6 2,0 591,4 593,0 582,1 530,2 Congo, Dem. Rep. 41,5 27,7 14,9 10,5 926,0 1 010,3 1 464,4 1 839,4 Equatorial Guinea 0,7 0,6 1,4 1,9 591,4 593,0 582,1 530,2 IX

Gabon 3,0 2,8 2,3 2,5 591,4 593,0 582,1 530,2 Central Africa 9,3 7,3 4,7 4,1 … … … … Africa 7,4 10,1 9,8 8,3 … … … …

Sources: AfDB Statistics Department, various domestic authorities; International Financial Statistics and AfDB estimates.

Table 2 - Basic Indicators, 2018 GDP based on PPP GDP per Capita Annual real GDP growth Population Land area Population Density valuation (thousands) (thousands of km2) (pop / km2) (US $ Million) ( PPP valuation, $) (average over 2010-2020) Cameroon 24 678 475 52 95 068 3 852 4,5 Central African Rep. 4 737 623 8 3 620 764 0,2 Chad 15 353 1 284 12 30 320 1 975 3,6 Congo 5 400 342 16 30 665 5 679 2,6 Congo, Dem. Rep. 84 005 2 345 36 72 872 867 5,9 Equatorial Guinea 1 314 28 47 29 764 22 654 -2,9 Gabon 2 068 268 8 38 280 18 515 4,0 Central Africa 137 555 5 365 26 300 588 2 185 3,5 Africa 1286 206 30 049 43 6764 685 5 259 4,0

Sources: United Nations, Department of Economic and Social Affairs, Population Division, World Population Prospects, The 2017 Revision. AfDB Statistics Department, various domestic authorities and AfDB estimates.

X

Table 3 - Demand Composition and Growth Rate, 2017-2020 2017 2018 (e) 2019 (p) 2020 (p) Final Gross Capital External Sector Consumption Formation Gross Gross Total Final Total Final Gross Capital Capital Capital Total Final Consump- Exports Imports Consump- Exports Imports Formation - Exports Imports Privat Formation Formation Consump-tion Public Private Public Exports Imports tion tion Total e - Total - Total

% of GDP Real Percentage Growth Real Percentage Growth Real Percentage Growth

Cameroon 68,5 19,1 28,2 9,1 39,1 63,9 4,4 8,2 3,9 7,0 4,0 8,0 4,0 6,1 4,7 8,3 4,4 6,4 Central African 93,5 14,1 8,0 6,6 17,0 39,2 3,2 6,8 4,9 3,3 4,1 8,8 4,5 4,6 4,4 9,1 3,7 5,2 Rep.

Chad 85,8 10,0 1,5 4,8 26,2 28,4 2,2 5,0 5,1 4,3 2,1 6,0 7,2 2,2 4,3 6,0 8,4 4,7

Congo 51,5 21,6 20,2 9,3 65,5 68,1 -2,3 -21,9 4,0 -12,9 -2,6 -0,3 1,9 -10,1 -4,3 -27,2 1,1 -18,1 Congo, Dem. 73,9 5,5 22,0 2,4 35,5 39,3 -22,9 9,8 22,7 -25,8 -8,5 4,6 11,1 -10,4 -2,8 4,6 8,1 -3,1 Rep. Equatorial 49,0 19,8 4,1 10,7 42,4 26,0 -1,3 -0,2 -13,9 0,4 -2,5 -1,4 -3,1 -2,4 -4,4 -2,0 -0,7 -3,8 Guinea

Gabon 47,5 16,1 28,9 5,0 40,6 38,1 3,3 1,6 0,7 2,0 3,6 0,1 3,5 1,1 2,7 1,6 3,5 0,9 Central Africa 66,8 11,5 18,0 4,9 32,9 34,1 -4,2 2,2 6,2 -10,4 -0,1 2,8 5,3 -4,0 1,0 -0,1 4,6 -2,8

Africa 68,7 13,6 13,7 9,5 22,7 28,1 1,3 4,4 2,9 -1,4 2,7 5,3 3,4 2,3 3,5 5,1 2,9 3,3

Sources: AfDB Statistics Department, various domestic authorities and AfDB (e) estimates and (p) projections.

XI

Table 4 - Public Finances, 2017-2020 (percentage of GDP)

2017 2018 ( e) 2019 (p) 2020 (p)

Total Total Total Total Total Total Total Total Overall Overall Overall Overall revenue and expenditure and revenue and expenditure and revenue and expenditure and revenue and expenditure and balance balance balance balance grants net lending grants net lending grants net lending grants net lending

Cameroon 15,6 20,4 -4,9 16,4 19,0 -2,6 16,3 18,4 -2,1 15,8 17,4 -1,6 Central African Rep. 14,5 16,0 -1,5 16,8 15,8 1,0 16,4 15,7 0,6 15,7 15,6 0,2 Chad 14,4 15,2 -0,8 14,9 14,8 0,1 14,6 14,4 0,2 14,7 14,1 0,5 Congo 32,7 45,1 -12,5 30,8 35,6 -4,8 29,2 34,4 -5,2 27,8 31,3 -3,6 Congo, Dem. Rep. 11,6 11,5 0,1 9,5 10,1 -0,6 8,9 8,9 0,0 8,6 8,2 0,3 Equatorial Guinea 21,8 24,7 -2,9 22,0 22,9 -0,9 21,6 22,1 -0,5 21,6 21,4 0,3 Gabon 18,8 22,5 -3,6 19,2 19,4 -0,3 19,7 19,2 0,5 22,4 20,5 1,8 Central Africa 16,4 19,4 -3,0 16,4 17,8 -1,4 16,1 17,0 -1,0 16,0 16,3 -0,3 Africa 21,7 28,0 -6,3 21,2 27,8 -6,6 21,3 26,8 -5,5 22,2 26,7 -4,5

Sources: AfDB Statistics Department, various domestic authorities and AfDB estimates.

Table 5 - Balance of payments Indicators Trade balance Current account balance Current account balance ($ million) ($ million) (as % of GDP) 2017 2018 (e) 2019 (p) 2020 (p) 2017 2018 (e) 2019 (p) 2020 (p) 2017 2018 (e) 2019 (p) 2020 (p)

Cameroon - 426 - 418 - 746 -1 166 - 922 -1 257 -1 306 -1 398 -2,7 -3,2 -3,1 -3,1 Central African Rep. - 244 - 281 - 296 - 314 - 161 - 160 - 154 - 159 -9,4 -8,3 -7,3 -7, Chad 306 777 917 1 074 - 656 - 549 - 588 - 672 -6,6 -4,3 -4,3 -4,5 Congo 1 970 3 877 4 268 4 794 -1 048 383 506 82 -13,2 4,0 5,1 ,8 Congo, Dem. Rep. - 158 3 157 5 228 6 879 -1 349 - 385 686 929 -3,6 -1,1 1,9 2,4 Equatorial Guinea 2 913 3 441 3 196 3 182 - 149 - 344 - 369 - 490 -1,3 -2,7 -2,9 -3,9 Gabon 2 549 3 593 3 739 3 966 - 713 - 267 - 66 - 161 -4,9 -1,5 -0,4 -0,8 Central Africa 6 909 14 144 16 305 18 414 -4 999 -2 579 -1 291 -1 870 -4,3 -2,0 -1,0 -1,3 Africa -132 249 -145 208 -131 203 -123 546 -156 015 -150 609 -121 383 -104 063 -6,8 -6,5 -5,0 -4,0

Sources: AfDB Statistics Department;

Table 6: Production contributions to GDP growth (%) 2014-2018

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Agriculture Industry Services Cameroon 0,9 1,8 2,3 Central African Rep. -0,1 0,3 3,1

Chad 1,6 1,0 -1,0 Congo Rep. of -0,1 1,1 1,3 Average 2014-16 Congo Dem. Rep. 0,8 3,2 2,4

Equatorial Guinea 0,1 -5,6 -0,5 Gabon 0,5 0,5 2,5 Central Africa 0,7 0,9 1,6

Cameroon 0,9 0,4 2,1 Central African Rep. 0,6 0,9 1,3 Chad 1,3 -3,2 -1,8

Congo Rep. of -2,0 -2,6 0,1 2017 Congo Dem. Rep. 0,3 3,5 0,8 Equatorial Guinea 0,1 -3,5 1,0 Gabon 0,2 -0,6 1,2 Central Africa 0,5 -0,2 0,7 Cameroon 1,0 1,0 2,0 Central African Rep. 3,7 1,0 -1,0 Chad 2,3 0,5 -2,6 Congo Rep. of 0,3 -1,1 1,6 2018 Congo Dem. Rep. 0,7 1,6 1,9 Equatorial Guinea 0,2 -5,6 -1,5 Gabon 0,3 0,3 2,3 Central Africa 0,3 1,4 0,8 Sources: AfDB Statistics Department;

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Table 7: External debt accumulation in Central African countries, 2008-18 (% of GDP)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cameroon 4,5 4,9 5,6 6,3 8,2 11,4 14,9 19,4 19,6 22,5 23,6 Central African Rep. 25,6 9,0 9,0 8,0 9,9 15,0 35,0 32,6 28,2 27,9 23,6 Chad 15,6 27,4 24,6 20,7 20,5 21,8 29,1 25,0 27,1 28,7 26,0 Congo Rep. Of 64,0 58,8 19,7 21,2 25,9 32,1 36,0 80,5 87,1 86,7 67,4 Congo Dem. Rep. 71,0 74,8 26,3 22,6 21,4 19,5 18,9 20,8 22,4 21,5 21,0 Equatorial Guinea 0,5 4,5 8,0 6,7 7,3 6,2 5,6 8,8 9,1 9,0 10,3 Gabon 13,8 20,3 16,8 15,4 16,6 24,2 25,3 33,3 35,6 40,6 37,4 Central Africa 24,8 28,6 15,4 14,3 15,3 17,5 19,6 25,5 26,7 28,1 27,1 Sources: AfDB Statistics Department;

Table 8 - Demographic Indicators 2018 Population Urban Population Distribution by age (%) fertility rate Growth rate (% of total) 0-14 15-64 65+ (per ) Cameroon 2,6 56,4 42,5 54,3 3,2 4,6 Central African Rep. 1,7 41,4 42,8 53,5 3,6 4,7 Chad 3,0 23,1 46,9 50,6 2,5 5,7 Congo 2,6 66,9 42,1 54,5 3,4 4,5 Congo, Dem. Rep. 3,3 44,5 46,2 50,8 3,0 5,9 Equatorial Guinea 3,6 72,1 37,0 60,1 2,8 4,5 Gabon 2,1 89,4 35,9 59,7 4,4 3,7 Central Africa 3,0 46,0 45,1 51,9 3,0 5,5 Africa 2,5 42,5 40,6 55,8 3,5 4,4

Sources: United Nations, Department of Economic and Social Affairs, Population Division, World Population Prospects, The 2017 Revision. AfDB Statistics Department, various domestic authorities and AfDB estimates.

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Table 9 - Poverty and Income Distribution Indicators National poverty line* International poverty line Gini Survey Population below the Survey Population below the Survey Index** year poverty line (%) year poverty line (%), $1.9 year Cameroon 2014 37,5 2014 23,8 2 014 46,6 Central African Rep. 2008 62,0 2008 66,3 2 008 56,2 Chad 2011 46,7 2011 38,4 2 011 43,3 Congo 2012 63,9 2011 37, 2 011 48,9 Congo, Dem. Rep. 2011 46,5 2012 77,1 2 012 42,1 Equatorial Guinea 2006 76,8 ...... Gabon 2017 33,4 2017 3,4 2 017 38,0 Central Africa ...... Africa ...... Notes: * The national poverty line is defined as two-thirds of the average consumption. ** The is defined on income distribution. Sources : Domestic authorities and World Bank, Online Database, Country DHS,

Table 10 - Basic Health Indicators at birth

(years) Prevalence of Health personnel (per 100 000) 2018 Undernourished 2010-2016 in Total Population, Nurses and Total Male Female Physicians 2016 Midwives Cameroon 59,1 58,0 60,2 7,3 8,3 52,0 Central African Rep. 53,6 51,6 55,6 61,8 ...... Chad 53,5 52,3 54,8 39,7 4,4 30,9 Congo 65,5 63,9 67,2 37,5 9,5 82,4 Congo, Dem. Rep. 60,4 58,9 62,0 ...... Equatorial Guinea 58,2 57,0 59,7 ...... Gabon 66,8 65,2 68,5 9,4 40,6 289,8 Central Africa 59,5 58,0 60,9 24,9 8,5 58,0 Africa 63,1 61,4 64,9 18,5 33,6 123,3

Sources: ADB Statistics Department, Life expectancy at birth and HIV/AIDS from UN Revision 2015, Undernourishment prevalence and food availability: FAO, Food Insecurity Online Database Total health expenditure and public health expenditure: WHO Online Database.

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Table 11 - Basic Education Indicators Public Estimated adult rate, 2010- Gross enrolment expenditure

2017 (%) ratio, Primary on education (people over 15) 2010-2017 2000-2016 Total Male Female Total Male Female (% of GDP)

Cameroon 71,3 78,3 64,8 113,2 119,0 107,2 3,0 Central African Rep. 36,8 50,7 24,4 105,7 120,0 91,5 1,2 Chad 22,3 31,3 14,0 88,1 99,0 77,0 2,8 Congo 79,3 86,4 72,9 104,2 100,6 107,8 6,2 Congo, Dem. Rep. 77,0 88,5 66,5 108,0 108,4 107,6 2,2 Equatorial Guinea 95,0 97,3 92,4 61,6 61,8 61,3 ... Gabon 82,3 84,9 79,9 138,7 140,8 136,6 2,7 Central Africa 68,8 78,9 59,5 106,5 109,5 103,5 2,1 Africa 65,5 77,0 62,6 99,5 101,6 97,4 4,9

Sources : ADB Statistics Department ; UNESCO Institute for Statistics (UIS) Database November 2018; Domestic Authorities.

Table 12 - Basic Labour Indicators, 2018

Employment to population ratio, 15+ Labour force participation rate, 15+ Unemployment rate, Total

Total Female Youth Total Female Male Cameroon 73,0 67,6 50,6 76,4 71,4 81,4 4,2 Central African Rep. 67,4 59,2 48,4 76,8 70,8 83,1 5,8 Chad 66,9 60,3 49,7 71,6 64,0 79,3 5,9 Congo 61,8 59,2 34,3 70,4 67,6 73,2 11,3 Congo, Dem. Rep. 69,7 68,3 43,9 71,4 70,6 72,3 3,7 Equatorial Guinea 54,7 51,3 24,7 83,1 72,0 92,9 7,6 Gabon 41,6 31,2 10,8 52,4 42,9 61,7 19,5 Central Africa 69,1 65,9 45,1 72,3 69,5 75,3 4,7 Africa 59,6 51,0 40,1 65,9 55,5 75,9 7,8

Sources: International Labour Organisation, ILOSTAT Database

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Table 13 - Intra-Central Africa Trade in 2017

Dem. Rep. Central African Equatorial Central Cameroon Chad Congo of the Gabon Africa World Republic Guinea Africa Exports to =====> Congo (Millions of US $) Cameroon .. 27,7 135,5 49,4 18,5 38,4 43,9 313,4 480,5 3 233,0 Central African Republic 3,3 .. 1,6 0,1 .. .. 0,0 5,0 17,8 124,3 Chad 7,5 0,5 .. 0,3 .. .. 0,1 8,3 10,8 1 343,7 Congo 145,7 1,2 0,1 .. 19,5 6,2 40,3 213,0 656,9 5 428,0 Dem. Rep. of the Congo 0,0 .. .. 97,0 ...... 97,0 2 199,1 7 764,6 Equatorial Guinea 27,4 .. .. 265,1 ...... 292,5 387,1 5 200,0 Gabon 16,7 5,9 3,7 54,1 3,6 22,9 .. 106,9 325,7 5 477,0

Dem. Rep. Central African Equatorial Central Cameroon Chad Congo of the Gabon Africa World Republic Guinea Africa Imports <===== from Congo (Millions of US $) Cameroon .. 1,6 5,6 147,8 0,0 28,5 6,5 190,0 973,9 5 104,7 Central African Republic 27,5 .. 0,6 1,6 .. .. 1,6 31,2 61,1 351,0 Chad 247,4 1,8 .. 0,1 .. .. 40,5 289,8 426,7 1 964,5 Congo 96,8 0,1 0,3 .. 99,4 281,6 154,9 633,1 1 979,3 6 398,2 Dem. Rep. of the Congo 22,4 .. .. 23,2 ...... 45,7 2 362,1 5 215,9 Equatorial Guinea 110,6 .. .. 16,8 ...... 127,4 169,0 3 108,6 Gabon 62,6 0,0 0,1 23,4 0,0 8,5 .. 94,7 269,1 2 822,6 Source: UNCTAD

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Annex 5: Central Africa Infrastructure Data Table 1. Infrastructure development indices in Central Africa, 2010-2018 Country/Region Indicator 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cameroon Africa Infrastructure Development Index 15.02 15.74 16.58 16.79 18.20 18.98 19.03 19.29 19.81 (AIDI)36

I. Transport composite index 2.96 2.92 2.89 2.86 3.75 3.70 3.65 2.62 2.59 II. Electricity composite index 4.95 5.24 5.19 5.16 5.19 5.25 5.27 5.21 4.81 III. ICT composite index 0.71 1.01 2.26 3.94 5.83 10.79 11.88 18.01 21.50 IV. WSS composite index 58.28 59.00 60.44 60.44 54.28 55.19 56.03 56.97 57.22 Central African Africa Infrastructure Development Index 9.06 9.59 10.19 10.52 11.20 11.72 11.87 11.83 11.95 Republic (AIDI) I. Transport composite index 2.27 2.25 2.24 2.22 3.17 3.03 3.00 3.04 3.01 II. Electricity composite index 0.58 0.57 0.55 0.54 0.59 0.60 0.62 0.61 0.49 III. ICT composite index 0.19 0.38 1.06 1.92 2.45 3.98 2.52 3.30 4.26 IV. WSS composite index 44.12 45.83 45.83 45.83 38.50 39.13 39.30 40.53 40.67 Chad Africa Infrastructure Development Index 4.18 4.78 5.28 5.46 6.05 6.76 6.64 6.81 7.24 (AIDI) I. Transport composite index 1.13 1.13 1.12 1.12 1.14 1.13 1.12 1.26 1.26 II. Electricity composite index 0.07 0.10 0.14 0.16 0.17 0.17 0.17 0.13 0.13 III. ICT composite index 0.23 0.42 1.03 2.01 3.26 5.20 2.82 4.42 5.38 IV. WSS composite index 21.97 22.70 23.91 23.91 21.47 21.98 22.09 22.89 22.94 Congo Africa Infrastructure Development Index 10.19 10.82 11.29 13.12 13.40 14.17 14.47 14.95 17.53 (AIDI) I. Transport composite 2.48 2.43 2.38 2.34 2.37 2.33 2.30 2.88 2.27 II. Electricity composite index 2.32 2.15 2.16 2.10 2.03 1.99 1.93 6.61 6.19 III. ICT composite index 0.86 1.35 3.59 7.05 9.14 13.62 3.06 6.19 14.66 IV. WSS composite index 40.83 40.83 40.83 40.83 40.17 40.72 41.25 43.22 43.44 Democratic Republic Africa Infrastructure Development Index 5.96 6.46 6.56 6.81 7.57 8.09 8.16 8.17 8.15 of Congo (AIDI) I. Transport composite index 1.55 1.54 1.54 1.53 1.56 1.55 1.54 1.64 1.64

36 The African Infrastructure Development Index (AIDI) is produced by the African Development Bank. It has several key objectives, including: (i) monitor and evaluate the status and progress of infrastructure development across the continent; (ii) assist in resource allocation within the framework of ADF replenishments; and (iii) contribute to policy dialogue within the Bank and between the Bank, RMCs and other development organizations. The AIDI database includes: [1] the global AIDI index,[2] the transport composite index,[3] the electricity composite index,[4] the ICT composite index; and[5] the and sanitation composite index. These components are broken down into 9 indicators that have a direct or indirect impact on productivity and economic growth. The observations are based on data collected under the Infrastructure Knowledge Programme for Africa (AIKP) hosted by the African Development Bank (see http://www.infrastructureafrica.org/), as well as other data sources. A full description of IDIA is available in English at the following address: https://www.icafrica.org/fileadmin/documents/Knowledge/AFDB/Economic_Brief_- _The_Africa_Infrastructure_Development_Index_01.pdf XVIII

II. Electricity composite index 1.90 2.25 2.37 3.40 5.56 5.62 7.60 1.94 1.85 III. ICT composite index 0.24 0.40 0.70 1.41 2.37 4.17 7.89 11.23 6.99 IV. WSS composite index 24.51 24.51 25.00 25.00 29.85 30.31 30.71 31.51 31.93 Equatorial Guinea Africa Infrastructure Development Index 14.55 14.76 14.90 17.30 17.03 17.71 17.93 17.97 18.21 (AIDI) I. Transport composite index 2.62 2.62 2.61 2.61 2.57 2.56 2.55 2.73 2.74 II. Electricity composite index 2.54 2.46 2.38 2.38 2.31 2.31 2.29 2.00 8.61 III. ICT composite index 0.61 0.79 1.57 5.53 9.21 13.58 8.02 11.84 14.67 IV. WSS composite index 61.37 61.37 61.37 61.37 51.57 51.34 51.09 50.02 50.07 Gabon Africa Infrastructure Development Index 24.14 24.85 25.27 25.90 26.97 27.98 27.75 28.08 30.67 (AIDI) I. Transport composite index 4.54 4.46 4.39 4.31 4.32 4.24 4.16 4.01 3.93 II. Electricity composite index 21.97 22.72 22.49 23.27 23.74 24.67 25.44 24.23 20.61 III. ICT composite index 2.13 2.60 5.21 9.04 15.09 24.65 15.91 20.79 25.97 IV. WSS composite index 59.78 59.78 59.78 59.78 65.51 66.07 66.60 68.43 68.49

Source: AfDB Department of Statistics

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Table 2 - Access to Services Access to People using at least People using electricity, basic at least basic Telecommunications, 2016 2016 (% of services , sanitation Main telephone Percentage of population 2015 services, 2015 line Mobile line Individuals ) per 100 per 100 using the (% of (% of population) inhabitants inhabitants Internet population) Cameroon 4,5 79,9 25,0 60,1 65,3 38,8 Central African Rep. 0,0 27,2 4,0 14,0 54,1 25,1 Chad 0,1 38,6 5,0 8,8 42,5 9,5 Congo 0,3 105,8 8,1 56,6 68,3 15,0 Congo, Dem. Rep. 36,7 6,2 17,1 41,8 19,7 Equatorial Guinea 0,9 47,1 23,8 67,9 49,6 74,5 Gabon 1,0 149,6 48,1 91,4 87,5 40,9 Central Africa 0,9 49,0 10,3 27,1 48,5 22,9 Africa 2,1 78,5 23,7 51,6 63,3 38,0

Sources: ADB Statistics Department; Telecommunications : International Telecommunication Union - ICT Indicators Online Database. Electricity : United Nations Statistics Division, Energy Statistics Database - online database Water supply coverage and sanitation coverage: WHO / UNICEF Joint Monitoring Programme (JMP) for Water Supply and Sanitation, 2015 Update. Domestic authorities

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Table 3. Obstacles to Trade in Africa Sub-Saharan Developed North America South America Central America Africa Countries Variable Africa Asia Infrastructure Level: Container port traffic (WDI) 0.09 0.07 0.75 0.11 0.12 0.38 0.65 Air passengers, per capita (WDI) 0.23 0.25 2.6 1.6 1.43 0.93 1.18 Quality of port infrastructure (1 = low to 7 = high) (WDI) 3.64 3.64 5.35 5.21 3.65 4.15 4.17 Line navigation connectivity index (WDI) 14.38 12.72 50.64 58.51 24.16 16.36 35.11 Infrastructure efficiency rating (LPI) 2.32 2.34 3.75 3.73 2.56 2.43 2.92 Customs efficiency rating (LPI) 2.35 2.39 3.58 3.53 2.52 2.5 2.88 International navigation efficiency rating (LPI) 2.52 2.52 3.56 3.4 2.76 2.81 3.01 Timeliness rating (LPI) 2.87 2.86 4.09 3.88 3.21 3.1 3.44 Overall logistics efficiency rating (LPI) 2.49 2.51 3.74 3.68 2.77 2.69 3.05 Trade Costs: Customs bureaucracy (1 = inefficient to 7 = efficient) (WDI) 3.6 3.6 5 4.6 3.5 3.7 4.3 Export lead time (days) (DB) 29.3 30.9 10.2 9.8 19.8 15.4 20 Import lead time (days) (DB) 36.4 38.5 9.3 9.7 24.3 15.3 21.6 Export costs (dollars per container) (DB) 2.149 2.302 1.054 1.395 1.809 1.181 1.026 Import costs (dollars per container) (DB) 2.819 3.056 1.102 1.570 2.020 1.329 1.092 Others: Starting a business (days) (DB) 31.2 33.3 11.2 6.5 72.4 26.9 30.5 Starting a business (cost as % of ) (DB) 69.7 74 4.1 7.2 27 39.8 24.1 Sources: World Bank, Doing Business (DB) Indicators, database on logistic performance (LPI) and Development Indicators in the world (WDI).

Table 4: Doing Business Ranking in Central Africa in 2018 Distance from the border Cross-border trade ranking Export lead times Export Costs (USD) Import lead times Import Costs (USD) (time) (time) Region Sub-Saharan Africa 53 137 188 807 239 987 ECCAS 44.7 160 319 1267 370 1484 ECOWAS 56 138 163 657 216 930,47 EAC 49 141 167 603 364 1064 SADC 60 118 210 944 195 842 and Central Asia 84 58 56 305 53 280 OECD 94 25 15 185 12 137 Source: World Bank, Doing Business (DB) Indicators

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Figure 1: Consensual road network of Central Africa

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Annex 6: Key performance indicators of multinational projects under review in 2018 Conditions/compliance with clauses. As regards the overall portfolio, it should be noted that the average time for signing financing agreements is 4.6 months. When the time exceeds three months, it exposes projects to cancellation as stipulated by Presidential Directive (PD 02/2015). In addition, the average time taken to fulfill the conditions precedent to the first disbursement has been reduced by two months since the last review, from 15.8 months to 13.5 months. However, the average time for actual disbursement is 17.6 months, which is above the 6 months stipulated by PD 02/2015. Urgent action is needed for the 12 projects that have not yet received any disbursement because this situation is likely to result in extension of the initial implementation schedule. If a project can no longer be implemented during the initial period, the Bank and donor will either cancel the balance at closure, with loss of 30% of the resources already mobilized, or extend the implementation period with the consequence of very high transaction costs (excessive commitment fees, higher administrative costs, and postponed response times to development issues). It should be mentioned, however, that some of the difficulties that reduce countries' ability to honour certain commitments are external, such as the economic crisis linked to the fall in oil prices (Congo, Cameroon, Gabon, etc.) or the conclusion of a programme with the IMF that limits countries' debt capacity. However, the quality of operations at the entry needs to be improved to have good knowledge of design parameters and improve knowledge of the institutional environment. With regard to compliance with the general conditions, the projects are up to date in the submission of quarterly activity reports, although efforts are needed to ensure that audit reports are submitted on time. Procurement of goods and services/project systems and procedures: Despite the Bank's efforts in supporting CEMAC and ECCAS and an overall satisfactory performance rating (a score of 3 out of 4), there is still a high rate (38%) of operations facing procurement difficulties. This is due to: (i) poor programming of procurement activities without an adequate and regularly updated procurement plan; (ii) weak capacity of the Implementation Units located in RECs to control procurement procedures and submission of low-quality documents to the Bank for review. In addition to these aspects, there are delays in works execution, supply and consultancy contracts and the Bank takes a long time to give no objection opinions. Financial performance/project implementation and financing: Financial performance has improved in light of the declining percentage of operations that receive disbursements late. 13.3% of the rated operations were deemed unsatisfactory and 27.3% of the operations were noted in the "Flashlight" report compared to 54% in the previous review, for various reasons: signed but no disbursement after more than 3 months, or no disbursement for more than 2 years, or less than 50% disbursement after three years; 12 operations (34% of the portfolio) have not yet received any disbursement at all. Consequently, the disbursement rate stands at only 13.04% after 3.5 years of implementation. This reflects long delays in fulfilling the conditions precedent to the first disbursement (13.5 months on average) and to signing of the loan agreement (4.6 months on average). The regional portfolio is also facing delays in providing justifications for use of revolving capital funds, difficulties in mobilizing countries' contributions to ECCAS budget, and delays in the submission of audit reports. Activities and achievements/progress towards RBLF outputs: The low capacity of REC staff to implement projects is reflected in the fact that many projects are behind schedule. Indeed, the deadline for the last disbursement for 8 projects was extended. In addition, the performance of some contractors was poor. With the exception of projects that have not yet started, the performance of the evaluated operations is generally satisfactory. Development impact/progress towards RBLF effects: Projects currently having a tangible development impact include: (i) the Ketta Djoum Road Construction Project; (ii) the Cameroon-CAR-Chad Corridor Transport Facilitation Project; (iii) the Cameroon-Nigeria Transport Facilitation Project, PACEBCO and PRODEBALT. The impact of the other projects is not yet visible on the ground due to delays in their implementation schedule (delays in procurement) or to the fact that they are in the start-up phase. Nevertheless, the development impact of these operations should be more visible as the Bank, RECs and the countries concerned combine their efforts to improve the pace of project implementation. To that end, a monitoring system will be established by the Central Africa Regional Office (RDGC).

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Project Status: The portfolio under review has five (5) problematic projects (PP) and one (1) Table 1. Some Key Performance Indicators potentially problematic project (PPP) compared (August 18) RPPR to 4 PPs and 1 PPP during the last review in Indicators 2017. Thus, the rate of projects at risk fell from 2017 2018 17.2% to 13.6%, while the rate of commitments Operations (#) 29 44 at risk deteriorated from 5.6% to 9.2%. The Total commitment (UAM) 676.9 779.5 average age of the portfolio projects has Total disbursement (UAM) 257.2 101.6 reduced from 5.1 to 3.5 years since the last Disbursement rate (%) 38.0 13.04 review. This reduction is due to the entry of new Potentially problematic project (#) 1 1 operations and the closure of several projects, Problematic projects (#) 4 5 including three (3) old projects. However, the portfolio still has two old operations (at least 8 Projects at risk (#) 5 6 years) and a significant number of older Average age of projects (years) 5.1 3.5 operations that require concrete and proactive Old projects 5 2 measures to accelerate their implementation. Conditions precedent to first disbursement 1 8 not yet fulfilled (#) Approved but not signed after more than 1 3 90 days Project to be closed in 12 months with less 3 3 than 60% disbursement Less than 50% disbursement after three 0 1 years of effectiveness Less than 50% commitment (contracts signed) after two years from the effective 4 5 date No disbursement for more than 2 years 4 2 Signed but no disbursement after more 4 6 than 3 months

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Annex 7: Multinational Operations Portfolio as at 31 August 2018

Project Code Country Project Name Sector Window Approval Commit. Into Force Eff.1st Dis Act 1 FinDisbDat Net Disb. Age # Date Date Disb Loan P-Z1-AAF- 1 006 Multinational DRC- LAKES EDWARD AND ALBERT INTEGRATED FISHERIES & WATER R Agriculture ADF 20/05/2015 14/09/2015 14/09/2015 08/06/2016 12/10/2016 30/06/2021 6.00 19.1 3.3 P-Z1-AAZ- 2 024 Multinational CHAD - PROGRAMME TO STRENGTHEN RESILIENCE TO INSECURITY Agriculture ADF 15/10/2014 04/12/2014 04/12/2014 05/08/2015 23/12/2015 30/06/2020 9.77 20.4 3.9 3 P-Z1-C00-029 Multinational CIVIL SOCIETY AND GOVERNMENT CAPACITY BUILDING WITHIN THE RE Environment OTHERS 13/07/2011 31/08/2011 15/10/2012 15/10/2012 27/11/2012 30/09/2018 2.66 85.8 7.1 4 P-Z1-C00-031 Multinational INTEGRATED REDD PILOT PROJECT AROUND BIOSPHERE RESERVE Environment OTHERS 22/07/2011 31/08/2011 31/08/2011 09/08/2013 12/09/2013 30/09/2018 1.95 98.4 7.1 5 P-Z1-C00-054 Cameroon BIODIVERSITY CONSERVATION PROJECT IN CENTRAL AFRICA Environment ADF 22/07/2013 16/12/2013 16/01/2015 16/01/2015 30/04/2015 31/12/2018 0.25 80.6 5.1 6 P-Z1-C00-056 Multinational BIODIVERSITY CONSERVATION PROJECT IN CENTRAL AFRICA Environment ADF 22/07/2013 17/12/2013 17/12/2013 16/01/2015 06/05/2015 31/12/2018 0.25 84.6 5.1 7 P-Z1-C00-059 Multinational BIODIVERSITY CONSERVATION PROJECT IN CENTRAL AFRICA Environment ADF 22/07/2013 11/11/2013 11/11/2013 16/01/2015 30/04/2015 31/12/2018 2.50 96.4 5.1 8 P-Z1-CZ0-013 Cameroon SYSTEM RESILIENCE REHABILITATION AND STRENGTHENING Environment ADF 17/12/2014 02/07/2015 11/11/2015 15/03/2016 25/07/2016 30/09/2019 12.50 10.1 3.7 9 P-Z1-CZ0-015 Multinational SYSTEM RESILIENCE REHABILITATION AND STRENGTHENING Environment ADF 17/12/2014 14/05/2015 14/05/2015 15/03/2016 25/07/2016 30/09/2019 2.19 28.4 3.7 10 P-Z1-CZ0-016 Multinational SYSTEM RESILIENCE REHABILITATION AND STRENGTHENING Environment ADF 17/12/2014 09/03/2015 09/03/2015 15/03/2016 25/07/2016 30/09/2019 5.35 16.5 3.7 P-Z1-DA0- 11 012 Multinational AIR TRANSPORT SECTOR SUPPORT PROJECT IN CENTRAL AFRICA Transport ADF 06/07/2015 18/09/2015 23/12/2015 23/12/2015 14/01/2016 31/12/2019 2.00 13.1 3.2 P-Z1-DB0- 12 083 Multinational CONSTRUCTION OF KETTA-DJOUM ROAD PHASE 2 - CAMEROON Transport ACFA 30/05/2017 30/05/2017 26/01/2018 26/01/2018 26/01/2025 37.90 0.0 1.3 P-Z1-DB0- 13 083 Cameroon CONSTRUCTION OF KETTA-DJOUM ROAD PHASE 2 - CAMEROON Transport AfDB 21/10/2015 05/04/2016 05/08/2016 06/09/2016 01/11/2016 31/12/2020 51.62 10.3 2.9 P-Z1-DB0- 14 088 Multinational CONGO- NDENDE-DOLISIE ROAD PROJECT AND FACILITATION Transport OTHERS 23/02/2015 25/04/2016 25/04/2016 24/02/2017 21/06/2017 30/06/2019 2.83 19.3 3.5 P-Z1-DB0- 15 088 Congo CG CONGO- NDENDE-DOLISIE ROAD PROJECT AND FACILITATION Transport ADF 18/12/2013 19/02/2014 22/06/2015 22/06/2015 23/03/2016 30/06/2019 30.49 22.7 4.7 P-Z1-DB0- 16 144 Multinational TRANS-AFRICAN ROAD (RTS) PROJECT - CHAD Transport ADF 11/12/2013 19/03/2014 19/03/2014 15/07/2014 02/06/2015 31/12/2019 20.40 39.3 4.7 P-Z1-DB0- 17 144 Chad TRANS-AFRICAN ROAD (RTS) PROJECT – CHAD Transport ADF 11/12/2013 19/03/2014 24/10/2014 30/10/2014 10/06/2016 31/12/2019 20.90 45.6 4.7 P-Z1-DB0- 18 167 Congo CG CONSTRUCTION OF KETTA-DJOUM ROAD PHASE 2 - CONGO Transport AfDB 21/10/2015 17/12/2015 11/01/2017 11/01/2017 03/03/2017 31/12/2020 101.62 28.1 2.9 P-Z1-DB0- 19 173 Multinational DETAILED STUDY PROJECT FOR CONSTRUCTION OF BRIDGE OVER NTEM Transport OTHERS 22/09/2016 30/03/2017 30/03/2017 29/11/2017 10/04/2018 30/06/2019 2.20 18.6 1.9 P-Z1-DB0- 20 181 Cameroon CAMEROON-REGIONAL INTEGRATING ROAD NETWORK PROJECT IN THE Transport AfDB 11/12/2017 24/05/2018 02/08/2018 31/12/2022 27.72 0.0 0.7 P-Z1-DB0- 21 181 Cameroon CAMEROON-REGIONAL INTEGRATING ROAD NETWORK PROJECT IN THE Transport ADF 11/12/2017 24/05/2018 31/12/2022 9.40 0.0 0.7 P-Z1-DB0- 22 203 Multinational CHAD-REGIONAL INTEGRATING ROAD NETWORK PROJECT IN LOWER Transport ADF 11/12/2017 07/03/2018 07/03/2018 31/12/2022 17.50 0.0 0.7 P-Z1-DC0- 23 021 Multinational CAMEROON - FEASIBILITY STUDIES FOR DEVELOPMENT OF THE LINE Transport ADF 28/11/2017 31/12/2021 2.00 0.0 0.8 P-Z1-DC0- 24 037 Multinational CHAD - FEASIBILITY STUDIES FOR DEVELOPMENT OF THE LINE Transport ADF 28/11/2017 07/03/2018 07/03/2018 31/12/2021 2.00 0.0 0.8 P-Z1-EAZ- 25 047 Multinational SUPPORT PROJECT FOR ESTABLISHMENT OF OBT AND PPI Water Sup/Sanit OTHERS 11/08/2017 25/10/2017 25/10/2017 25/10/2017 25/04/2018 31/12/2019 0.92 08.6 1.1 P-Z1-EAZ- 26 053 Multinational SUPPORT PROJECT TO ECCAS FOR ESTABLISHMENT OF LOW-LEVEL ORGAN. Water Sup/Sanit OTHERS 13/09/2017 11/01/2018 11/01/2018 19/02/2018 31/12/2019 0.77 0.0 1.0 27 P-Z1-FA0-026 Multinational CAR-DRC GRID INTERCONNECTION FROM THE SYSTEM Power ADF 19/09/2012 17/12/2012 17/12/2012 14/08/2014 30/03/2015 30/12/2019 29.73 13.9 6.0 28 P-Z1-FA0-035 DRC NELSAP INTERCONNECTION PROJECT - DRC Power ADF 27/11/2008 28/05/2010 28/05/2010 27/04/2012 11/07/2012 31/12/2018 27.62 33.3 9.8 29 P-Z1-FA0-045 Multinational SUPPORT PROJECT FOR INGA DEVELOPMENT AND ACCESS TO ELECTRICITY Power ADF 20/11/2013 07/01/2014 07/01/2014 29/09/2014 11/09/2015 31/12/2019 39.41 12.6 4.8 30 P-Z1-FA0-045 Multinational SUPPORT PROJECT FOR INGA DEVELOPMENT AND ACCESS TO ELECTRICITY Power ADF 20/11/2013 07/01/2014 07/01/2014 29/09/2014 06/03/2015 31/12/2019 5.00 42.2 4.8 XXVI

31 P-Z1-FA0-047 Multinational CAR-DRC GRID INTERCONNECTION FROM THE SYSTEM Power ADF 19/09/2012 20/02/2013 20/02/2013 14/08/2015 11/09/2015 30/12/2019 5.55 08.7 6.0

32 P-Z1-FA0-054 Multinational SUPPORT FOR INGA - 3 DEVELOPMENT Power NEPAD-IPPF 23/08/2013 07/01/2014 07/01/2014 29/09/2014 12/03/2015 31/12/2019 1.43 78.0 5.0 33 P-Z1-FA0-072 Multinational CAMEROON-CHAD GRID INTERCONNECTION PROJECT Power AfDB 15/12/2017 31/12/2022 182.42 0.0 0.7 34 P-Z1-FA0-072 Multinational CAMEROON-CHAD GRID INTERCONNECTION PROJECT Power ADF 15/12/2017 31/12/2022 6.00 0.0 0.7 35 P-Z1-FA0-078 Multinational RUZIZI III – DRC Power ADF 16/12/2015 14/11/2016 14/12/2016 06/11/2017 19/01/2018 31/12/2022 60.00 0.5 2.7 36 P-Z1-FA0-081 Cameroon STUDY ON CAMEROON-CHAD GRID INTERCONNECTION (CAMEROON) Power ADF 07/10/2013 29/01/2014 03/09/2014 23/10/2014 15/12/2014 30/09/2018 1.25 74.0 4.9 37 P-Z1-FA0-104 Multinational NELSAP INTERCONNECTION PROJECT - DRC - SUPPLEMENTARY GRANT Power ADF 05/07/2016 20/10/2016 20/10/2016 21/06/2017 31/12/2018 8.04 0.0 2.2 38 P-Z1-FA0-152 Multinational CAMEROON-CHAD GRID INTERCONNECTION PROJECT Power ADF 15/12/2017 07/03/2018 07/03/2018 31/12/2022 27.50 0.0 0.7 P-Z1-GZ0- 39 001 Multinational FEASIBILITY STUDY FOR GABON-ICT BACKBONE PROJECT Communication OTHERS 29/12/2017 20/02/2018 20/02/2018 20/02/2018 31/12/2019 0.61 0.0 0.7 P-Z1-HAA- 40 060 Multinational DEVELOPMENT BANK OF CENTRAL AFRICAN STATES (BDEAC) Finance OTHERS 05/02/2010 26/05/2010 26/05/2010 29/04/2011 13/05/2011 31/10/2018 0.72 60.0 8.6 41 P-Z1-IZ0-025 Multinational YOUTH SOCIO-ECONOMIC REINTEGRATION SUPPORT PROJECT Social ADF 25/05/2016 14/10/2016 14/10/2016 23/02/2017 28/04/2017 28/06/2019 0.70 73.9 2.3 42 P-Z1-IZ0-027 Multinational YOUTH SOCIO-ECONOMIC REINTEGRATION SUPPORT PROJECT Social ADF 25/05/2016 06/10/2016 06/10/2016 25/07/2017 26/02/2018 28/06/2019 0.90 33.7 2.3 43 P-Z1-K00-034 Multinational INSTITUTIONAL CAPACITY BUILDING SUPPORT PROJECT Multi-Sector ADF 19/12/2012 24/04/2013 24/04/2013 21/11/2013 13/12/2013 30/09/2018 7.00 62.3 5.7 P-Z1-KZ0- 44 035 Multinational ECCAS TRADE FACILITATION CAPACITY BUILDING Multi-Sector ADF 29/03/2017 21/07/2017 21/07/2017 09/10/2017 08/12/2017 30/03/2020 2.00 12.5 1.4 TOTAL 779.55 13.0 3.5

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Annex 8: Rating of supervised projects using the IPR rating system

Implementation Progress (IP) Rating Development Objective (DO) Rating Overall Project Name Compliance with System and Implementation Progress towards Progress towards DO Status IP Rating Rating clauses Procedures and financing IPR Outputs IPR Outcomes Rating CIVIL SOCIETY AND GOVERNMENT CAPACITY BUILDING WITHIN THE 3,5 2,7 3,0 3,1 3,0 4,0 3,0 3,0 NPPP 1 RE 2 INTEGRATED REDD PILOT PROJECT AROUND BIOSPHERE RESERVE 3,5 3,0 4,0 3,5 4,0 4,0 4,0 3,8 NPPP 3 BIODIVERSITY CONSERVATION PROJECT IN CENTRAL AFRICA - CAMER 3,5 2,0 2,0 2,5 2,0 2,0 2,0 2,3 PP 4 BIODIVERSITY CONSERVATION PROJECT IN CENTRAL AFRICA-CHAD 3,5 2,5 2,5 2,8 2,0 2,0 2,0 2,4 PP 5 BIODIVERSITY CONSERVATION PROJECT IN CENTRAL AFRICA-CAR 3,5 2,5 2,5 2,8 2,0 2,0 2,0 2,4 PP 6 REHABILITATION AND STRENGTHENING OF RESILIENCE – CAMEROON 3,0 3,0 3,0 3,0 3,0 3,0 3,0 3,0 NPPP 7 REHABILITATION AND STRENGTHENING OF RESILIENCE – CAR 3,0 3,0 3,0 3,0 3,0 3,0 3,0 3,0 NPPP 8 REHABILITATION AND STRENGTHENING OF RESILIENCE – CHAD 3,0 3,0 3,0 3,0 3,0 3,0 3,0 3,0 NPPP 9 CONSTRUCTION OF KETTA-DJOUM ROAD PHASE 2 - CAMEROON 4,0 3,0 2,0 3,0 2,0 3,0 2,5 2,5 PPP 10 TRANS-AFRICAN ROAD (RTS) PROJECT - CHAD 3,7 3,7 2,5 3,3 1,0 1,0 1,0 2,1 PP 11 CONSTRUCTION OF KETTA-DJOUM ROAD PHASE 2 - CONGO 4,0 3,0 2,0 3,0 2,0 3,0 2,5 2,5 NPPP 12 PROJECT TO SUPPORT THE CREATION OF AN OBT AND PPI 3,0 3,0 3,0 3,0 3,0 3,0 3,0 3,0 NPPP PROJECT TO SUPPORT THE CREATION OF A TRANSBOUNDARY BASIN 3,0 3,0 3,0 3,0 3,0 3,0 3,0 3,0 NPPP 13 ORGANIZATION

14 CAR-DRC GRID INTERCONNECTION FROM THE SYSTEM 4,0 3,0 3,0 3,3 3,0 3,0 3,0 3,2 NPPP 15 NELSAP INTERCONNECTION PROJECT – DRC 3,0 3,0 2,3 2,8 2,0 2,0 2,0 2,4 PP 16 CAR-DRC GRID INTERCONNECTION FROM THE SYSTEM 4,0 3,0 3,0 3,3 3,0 3,0 3,0 3,2 NPPP 17 NELSAP INTERCONNECTION PROJECT - DRC - SUPPLEMENTARY GRANT 3,0 3,0 2,3 2,8 2,0 2,0 2,0 2,4 PP PROJECT TO SUPPORT THE SOCIO-ECONOMIC REINTEGRATION OF 4,0 2,7 3,0 3,2 3,0 3,0 3,0 3,1 NPPP 18 YOUTHS 19 INSTITUTIONAL CAPACITY BUILDING SUPPORT PROJECT 3,5 3,0 2,7 3,1 3,0 3,0 3,0 3,0 NPPP TOTAL 3,5 2,9 2,7 3,0 2,6 2,7 2,6 2,8

Sources: Baobab, September 2018

IPR System Legend (rating scale of 1 to 4) Very Satisfactory Performance (3.5-4) Satisfactory Performance (2.5-3.49) Unsatisfactory Performance (1.5-2.49) Very Unsatisfactory Performance (1-1.49)

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Annex 9: 2018 Portfolio Performance Improvement Plan

Issues Actions to Undertake Expected Outcomes and Monitoring Indicators Responsible Deadline

QUALITY OF PROJECTS AT ENTRY

1. Delays in signing the financing 1.1 Further decentralize the signing of financing agreements to DGs 1.1.1 Most of the financing agreements are signed by DGs and Country AfDB (RDVP) 31/12/2018 agreements and Country Managers Managers

2. Delays in fulfilling the conditions 2.1 Take early action to fulfill the conditions precedent to the first 2.1.1 The average time taken to fulfill the conditions precedent to the AfDB 30/12/2018 precedent to the first disbursement disbursement during the project preparation phase first disbursement for new projects is reduced to 3 months, in (RDGC)/RECs accordance with PD 02/2015 concerned

3. Delays in the payment of 3.1 Establish a mechanism for the gradual disbursement of 3.1.1 Counterpart funds are fully paid at the end of the fiscal year GVT/REC 31/06/2018 counterpart funds counterpart funds due for projects. concerned.

4. Delays in the payment of countries' 4.1 Conduct campaigns to encourage States to pay their contributions 4.1.1 States' contributions to ECCAS budget are paid during the year. ECCAS 31/12/2018 contributions to ECCAS budget at workshops organized under the current PARCI and PAI-CEEAC under preparation

4.2 Strengthen dialogue with ECCAS in order to promote the 4.2.1 Regional integration contribution is established to provide a ECCAS/AfDB 31/12/2018 application of the Community Integration Contribution to enable sustainable financing mechanism for operations and functioning of (RDGC) ECCAS to have internal resources at its disposal. ECCAS

EFFICIENT MANAGEMENT OF MULTINATIONAL PROJECTS

6. Inadequate knowledge of project 6.1 Organize a fiduciary clinic for all RECs and supra-State bodies in 6.1.1 Fiduciary clinics are organized to identify training modules AfDB 30/06/2018 management rules and procedures charge of implementing multinational projects specific to the problems identified. (ECAD/SNFI)

6.2 Organize training sessions in accordance with the training 6.2.1 Training sessions on procurement are organized for staff of Project AfDB 31/12/2018 programme prepared by the clinic Implementation Units located in RECs (ECAD/SNFI)

7. Weaknesses of the project 7.1 Establish within ECCAS Secretariat an operational monitoring 7.1.1 All new projects have a monitoring and evaluation mechanism AfDB (RDGC) 31/12/2018 monitoring and evaluation system and evaluation system for all Bank projects thanks to PARCI and PAI-CEEAC support /ECCAS

8. Frequency of supervision and 8.1 Comply with the frequency of project supervision and monitoring 8.1.1 Projects are supervised at least twice (three times for high-risk AfDB (RDGC) 31/12/2018 monitoring missions missions in the field. projects)

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Issues Actions to Undertake Expected Outcomes and Monitoring Indicators Responsible Deadline

8.2 Establish a system for monitoring the implementation of 8.2.1 A system is established to monitor the implementation of AfDB (RDGC) 31/12/2018 supervision mission recommendations recommendations made by supervision missions.

9. Delays in the submission of audit 9.1 Systematically recruit external auditors six months following 9.1.1 Audit reports are submitted on time. PIU/TM Ongoing reports, and poor quality of audit fulfilment of the conditions precedent to the first disbursement for the reports produced first three fiscal years for all new projects.

9.2 Automatically launch the recruitment of new auditors at the end of 9.2.1 All projects have an auditor to audit the accounts at any time. RDGC/SNFI Ongoing the first auditors' current contracts

10. Delays in the submission of 10.1 Match the amount of revolving capital with the pace of project 10.1.1 The amount of revolving is reviewed to ensure that it is in line AfDB 31/12/2018 justifications for use of revolving implementation. with the pace of project implementation. (RDGC/FIFC) capital advance

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Annex 10: CSPs and RISP-CA 2019-2025 Alignment N° Country Period Ongoing CSPs CSP and RISP-CA 2019-2025 Alignment Comments Pillar 1 : Strengthen Pillar 2 : Support regional reforms for the infrastructure development of intra- (energy, transport regional trade and and ICT) strengthen the institutional capacities of the RECs 1 Cameroon 2015-2020 Pillar 1: Strengthening infrastructure for inclusive and In essence, the regional strategy is in line with the sustainable growth; X country's priorities, in that it places particular emphasis Pillar 2: Strengthening sectoral governance for effective on reducing the infrastructure gap and increasing and sustainable investment. X investment. 2 Congo 2018-2022 Pillar 1: Promoting agro-industrial value chains The objectives and pillars of the RISP and the CSP are in line. Indeed, both strategies will focus on supporting X economic diversification to accelerate structural Pillar 2: Strengthening human capital and governance X transformation at regional and national levels respectively, thus demonstrating their perfect synergy. 3 Gabon 2016-2020 Pillar 1: Support for economic diversification through The regional strategy is in line with national priorities. infrastructure development and improvement of the X X In essence, the interventions planned under Pillar 1 of business climate the CSP are reflected in the RISP's strategic areas. Pillar 2: Support for human development strategy 4 Equatorial Guinea 2018-2022 Pillar 1: Supporting the transformation of agriculture to The strategic orientations proposed in the CSP and diversify the economy X RISP aim to support the Government and RECs Pillar 2: Building capacity for public policy formulation respectively in their economic diversification strategy. and implementation X In this respect, capacity building interventions are perfectly aligned. 5 Central African 2017-2021 Pillar 1: Support for agricultural development and X The RISP is aligned with the country's priorities. The Republic infrastructure in support of social inclusion Bank's interventions will build regional infrastructure Pillar 2: Strengthening institutional capacity and (energy, ICT, etc.). The Bank also aims to promote the governance X development of intra-regional trade through support for institutional capacity building and reforms. 6 Democratic 2013-2017 Pillar 1: Development of infrastructure to support private In essence, the regional strategy is in line with the Republic of Congo investment and regional integration X country's priorities, since it places particular emphasis Pillar 2: Strengthening the capacity of the Government to on infrastructure development to support regional increase public revenues and establish an incentive X integration and increased investment; and integrates framework for private investment capacity building. 7 Chad 2015-2020 Pillar 1: Infrastructure development for strong and more The Central Africa RISP 2019-2025 is aligned with diversified economic growth X national priorities. Pillar 1 aims to develop transport Pillar 2: Support for reforms to increase the effectiveness and energy infrastructure at the regional level; while of public action and the attractiveness of the economic X Pillar 2 aims to provide support for trade and framework investment reforms.

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Annex 11: Note on fragility and sources of resilience in ECCAS zone The Economic Community of Central African States (ECCAS) is currently composed of eleven member countries (Angola, Burundi, Cameroon, Central African Republic (CAR), Chad, Congo, DRC, Gabon, Equatorial Guinea, Sao Tome and Principe, Rwanda and Rwanda), four of which are recognized by the Bank as being in Category 1 fragility situation (Burundi, CAR, DRC and Chad). The Economic and Monetary Community of Central Africa (CEMAC) forms an integral part of ECCAS, while RDGC covers 7 ECCAS countries, including all CEMAC countries and DRC. In general, the region’s fragility is multifaceted, and largely reflected at the political, security, socio-economic and institutional levels. At the political and security levels, the region faces challenges concentrated in three geographical poles, namely the Great Lakes region, the Lake Chad Basin, and the . The causes of the region’s political fragility are closely linked to: (i) the absence of political alternation; (ii) weaknesses in the protection of human rights; (iii) lack of transparency in resource management; and (iv) electoral processes that continue to increase political fragility by creating social tensions in several countries (Burundi, Congo, Gabon and DRC). The extreme material poverty of the population, poor governance of soil and subsoil resources (hydrocarbons and minerals), porous borders and the failure of government services in some parts of their are aggravating factors that exacerbate conflicts. The spectre of civil war continues to loom, to varying degrees, over some countries in the region. Regarding the economic situation, most of the countries depend heavily on the oil sector, except Burundi and Rwanda. Such dependence is the root cause of obstacles to economic diversification, which mainly concern: (i) a reduced production base and inadequate transport infrastructure; (ii) low competitiveness and inadequate investment; and (iii) a multiplicity of tariff and non-tariff barriers to trade in the region. On average, 35% of regional GDP is generated by the oil and mining sectors. Crude oil is the region's leading export product and the main source of budgetary revenue, accounting for an average of nearly 70%. There are many obstacles to the economic transformation of ECCAS, most of which are due to poor governance of the countries concerned and the weak capacity of their institutions. Despite the good economic performance recorded, the social situation in the ECCAS community has been a cause for concern; four of the countries (Chad, CAR, DRC, and Burundi) are among the ten worst ranked countries in the world according to the Human Development Index (HDI), and three (CAR, DRC, and Burundi) among the ten worst ranked according to their GDP per capita. In both cases, DRC, Burundi and CAR, with a combined population of just under 100 million, are, on average, driving the region into extreme poverty. Social indicators have deteriorated much more in countries at war where the humanitarian situation of displaced persons and victims of conflicts has worsened significantly, affecting the region with implications for strengthening social exclusion and inequality. Inequalities in the are high, with a Gini coefficient of 45.6 on average. The unemployment rate varies between 20% and 35% depending on the country. The public sector is the main provider of formal employment, and the informal economy employs more than 50% of the working population (80% in DRC, 70% in Chad and Congo). The precarious situation of the population and, particularly, youth unemployment are important factors that contribute to instability in many parts of the region. As regards gender, women are generally among the categories most affected in the region by situations of fragility, especially with widespread gender-based (GBV). Inadequate infrastructure is one of the main causes of the current fragility in ECCAS zone, particularly in energy and transport, which hamper private sector development and inter-regional exports. However, Central Africa is the part of the continent with the greatest hydropower potential, owning 58% of Africa's potential. Despite this potential, the energy situation in the Member States is far from satisfactory, and is an obstacle to the establishment of an efficient industrial structure. Governance in the region is highly deficient; its key indicators remain low and below the regional averages of Africa. This weakness, coupled with the weak capacity of institutions, are hampering economic transformation of the region. Transparency and accountability in the management of public resources are limited because of the weak public institutions responsible for monitoring government action, as well as civil society and lack of information on resource revenues, especially natural resources, in the region. Most of the countries in the region continue to be at the bottom of the World Bank's Doing Business ranking, and the business environment in the region remains unattractive, while private investment remains well below what is required to boost the region's economies. Despite the political will to improve the business climate, the conditions are not yet favourable, and exogenous shocks and socio-political unrest in the ECCAS zone discourage private investors. The ECCAS zone remains the least integrated on the continent; trade between regions is by far the lowest compared to other regional economic communities. The poor integration is mainly due to infrastructure deficit, the maintenance of tariff and non-tariff barriers within the region, the low diversification of economies, and the low human capacity. The foreign trade in ECCAS countries is dominated by commodity exports, particularly oil, mining and agricultural products, for which these countries have no influence over their international prices. Finally, the sub-region remains generally a food-insecure zone, with high rates of malnutrition in some regions. The agricultural sector contributes only 21% to the formation of regional GDP and provides on average only 9% of export revenues. In addition, most countries allocate less than 5% of their budgets to agriculture, contrary to the recommendation of the 2003 Declaration, which recommends that this allocation should be at least 10%. 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Institutional and financial responses have been provided by most governments to avoid slippages and mitigate risks associated with the various sources of fragility despite external conditions and constraints. However, the responses have not been sufficient to stem the situation of widespread poverty affecting all countries in the region and all social categories. However, the region has immense sources of resilience given its great agro-ecological diversity and abundant natural resources, its advantageous geostrategic location in the centre of the continent and its mining natural resources, to name but a few, which could offer reassuring opportunities. Indeed, the region is a distinct area with the co-existence of the Saharan ecological zones, located on the northern borders of the Republic of Chad, the Sahel zones of the Far North of Cameroon and part of Chadian , the forest areas that cover more than 50% of the surface area of the sub-region, as well as mountainous areas and a large coastal area, which extends from the Cameroonian coast to the Angolan coast. In addition, the sub-region has 346.2 million hectares of forest, 135.5 million hectares of pasture, and 26.9 million hectares of arable land. Similarly, the region has the world's greatest untapped hydropower potential, which is a major strategic asset for the sub-region to develop a competitive, low-cost and sustainable energy supply.

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