Document of The World Bank Public Disclosure Authorized Report No. 125268-CF CENTRAL AFRICAN REPUBLIC PRIORITIES FOR ENDING POVERTY AND BOOSTING SHARED PROSPERITY Public Disclosure Authorized SYSTEMATIC COUNTRY DIAGNOSTIC Date: June 19, 2019 Public Disclosure Authorized International Development Association Country Department AFCC2 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency Public Disclosure Authorized Sub-Saharan Africa Department CENTRAL AFRICAN REPUBLIC - GOVERNMENT FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective as of June 1, 2019) Currency Unit = CFA Franc (CFAF) US$1.00 = CFAF 580 ABBREVIATIONS AND ACRONYMS BEAC Banque des États de l'Afrique Centrale (Central Bank for Central African States) CAR Central African Republic CEMAC Communauté Économique et Monétaire de l'Afrique Centrale (Economic and Monetary Community of Central Africa) CPIA Country Policy and Institutional Assessment DDR Demobilization, Disarmament, and Reintegration DDRR Demobilization, Disarmament, Reintegration, and Repatriation DRC Democratic Republic of Congo ECCAS Economic Community of Central Africa States ENMC Enquête Nationale sur les Monographies Communales (National Survey for District Monographies) EU European Union EWS Early Warning System FACA Forces Armées Centrafricaines (Army of the Central African Republic) FPRC Front Populaire pour la Renaissance de la Centrafrique (Popular Front for the Revival of the Central African Republic) GDP Gross Domestic Product GNI Gross National Income HDI Human Development Index ICAO International Civil Aviation Organization ICC International Criminal Court ICT Information and Communication Technology ICGLR International Conference on the Great Lakes Region IDP Internally Displaced Person ID4D Identification for Development Initiative IMF International Monetary Fund ITTO International Tropical Timber Organization ITU International Telecommunication Union LDI Local Development Index LRA Lord’s Resistance Army MICS Multiple Indicator Cluster Survey MINUSCA Multidimensional Integrated Stabilization Mission in CAR MOH Ministry of Health NGO Nongovernmental Organization NRPBP National Recovery and Peace Building Plan ODA Official Development Aid OECD Organisation for Economic Co-operation and Development PBF Performance-Based Financing PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PFM Public Financial Management PPP Purchasing Power Parity PSG Peacebuilding and State-building Goal SCD Systematic Country Diagnostic SODECA Société de distribution d'eau de Centrafrique (Central African Republic Water Utility) SSR Security Sector Reform TDRP Transitional Demobilization and Reintegration Program UN United Nations UNDP United Nations Development Programme UNICEF United Nations Children's Fund UPC Union Patriotique pour la Centrafrique (Patriotic Union for the Central African Republic) UPDF Uganda’s People Democratic Forces WDR World Development Report WFP World Food Programme WHO World Health Organization IDA IFC MIGA Vice President Hafez Ghanem Sérgio Pimenta Keiko Honda Director Jean-Christophe Carret Aliou Maiga Merli Baroudi Manager Andrew Dabalen Mehita Sylla Dan Biller Task Team Leaders Johannes Hoogeveen Marcos Vaena Conor Healy and Emilie Jourdan Living within a specific human environment evolves a person’s character, affecting the physiognomy of his emotions, the density of his confidence, the size of his trust, as well as his proclivities, his memories, what occurs to him, and what he would never dream of. The human environments of resource-cursed countries are heavily contaminated by the unchecked power of resource-enriched men. The vicious policeman beating a woman on a false pretext of impiety is displaying a divisive character well-adapted to the human environment in which he has always lived. A person’s identity does not set that person’s fate - a child soldier can become an Oberlin political science major. And humans can change their own environments, by convening peace talks, say, or marching for civil rights. Still, unchecked power in resource-cursed countries is a strong environmental force, like floods or locusts, difficult to ignore or counteract. Leif Wenar i TABLE OF CONTENTS FOREWORD ................................................................................................................................. V EXECUTIVE SUMMARY ...................................................................................................... VIII 1 INTRODUCTION .............................................................................................................. 1 2 SOCIOECONOMIC CONTEXT ..................................................................................... 7 2.1 A Brief History ................................................................................................................................. 7 2.2 Present situation ............................................................................................................................... 9 2.3 Toward a more inclusive political settlement ................................................................................. 13 2.4 Governance Challenges .................................................................................................................. 17 2.5 Poverty And Human Capital .......................................................................................................... 23 2.6 Livelihoods of The Poor ................................................................................................................. 29 2.7 Economy And Economic Opportunities ......................................................................................... 35 3 PATHWAYS TO STABILITY AND POVERTY REDUCTION ................................ 41 3.1 Analytical Framework .................................................................................................................... 41 3.2 Working in the Presence of Armed Groups ................................................................................... 43 3.3 Working nationwide in a context of conflict and low population density ...................................... 45 3.4 A pragmatic and innovative approach to delivering services ......................................................... 47 4 BINDING CONSTRAINTS AND PATHWAYS TO POVERTY REDUCTION ...... 52 4.1 Process of identifying binding constraints and key interventions .................................................. 52 4.2 Core binding constraints ................................................................................................................. 52 4.2.1 Binding constraint 1: Low levels of security ....................................................................... 53 4.2.2 Binding constraint 2: Grievances and spatially inequitable service provision ................... 58 4.2.3 Binding constraint 3: Inadequate growth and job creation ................................................ 64 5 EPILOGUE ....................................................................................................................... 71 ANNEX 2: GDP COMPOSITION (2010–2017) ....................................................................... 80 ANNEX 3: CAR RELATIVE TO REGIONAL COMPARATORS (2018 OR LATEST) ... 81 ANNEX 4: OVERVIEW OF IDEOLOGY, AFFILIATIONS, OBJECTIVES, AND STRATEGY OF ARMED AND REBEL GROUPS ACTIVE IN CAR .................................. 82 MAP ............................................................................................................................................... 83 ii Boxes Box 2.1: CAR Fragility Assessment .......................................................................................................... 11 Box 2.2: The Obo and Haut-Mbomou prefectorates enter an era of uncertainty ....................................... 12 Box 2.3: Peace, justice, and impunity: The challenges of the African Union peace initiative ................... 14 Box 2.4: Lessons learned from the 2008 DDR ........................................................................................... 17 Box 2.5: Did aid fail in CAR? .................................................................................................................... 21 Box 2.6: The country where teachers have disappeared ............................................................................ 29 Box 2.7: Obtaining poverty data and statistics in a conflict-affected country ............................................ 33 Box 3.1: Complementarities between development, security, and humanitarian actors ............................ 50 Box 4.1: Gender and sexual violence ......................................................................................................... 56 Box 4.2: Trade corridors and the need for regional collaboration .............................................................. 66 Box 4.3: Climate change ............................................................................................................................ 67 Box 5.1: Climate-friendly project design can enhance mobility and put more assets in the hands of beneficiaries ................................................................................................................................. 76 Figures Figure 1.1: Violence and conflict ................................................................................................................