Much remains to be done to unlock the full economic potential of the countries of the Central African region and according to the African Development Bank (AfDB), the negative impact of lower oil prices on African economies underscores the need to accelerate and deepen structural reforms to create more jobs for young people and build more resilient economies.
According to news du camer, despite the measures already taken and the abundance of natural resources, "unemployment and economic exclusion remain high," says the institution, which attests that economic development has been hampered by limited diversification and a sluggish private sector. Even though some countries are trying to redistribute oil wealth through a social benefits system, including public employment and social safety nets. Still, there are still several measures to promote faster and more inclusive economic development.
Improve job creation
To create more jobs and greater resilience, according to the AfDB, diversify the economy by ending the heavy dependence on oil and other commodities, and by creating space for a dynamic private sector. A 2012 Bank study on the business climate in Central African countries indicated that these countries had not given enough attention to stimulating the growth of small and medium-sized enterprises (SMEs), the real drivers of job growth, as per news du camer.
The study specifically recommends that countries should improve institutional frameworks and business climate. In addition, to reduce poverty and income disparities in the region, countries must consider the introduction of a more progressive taxation, the improvement of equitable access to land and its products, and the development of targeted social protection programs.
Policies are also needed to create a favorable business environment for private investment, especially Foreign Direct Investment (FDI) in the region.
Diversification in Central Africa could also be strengthened by promoting regional economic integration, notably by accelerated implementation of the free trade area of the Economic Community of Central African States, initiated in 2004, as per news du camer. The economic impact of this free trade zone could be significant. "Economic integration offers opportunities for growth in productive sectors that can stimulate employment and promote a more equitable distribution of wealth," says the Bank.
According to the institution, these opportunities are even greater in the oil-producing countries, because the oil and gas sectors require very little labor. However, new options need to be explored to finance and manage market infrastructures and utilities, including public-private partnerships (PPPs), to create budget margins and improve the quality of services, reports news du camer.
The report also indicates that the combined effects of reduced budget spending and increased public revenues from PPP related fees and taxes could allow some of the budgets to be spent on investment in building human capital, and stronger and more inclusive growth.
As a result, attracting private sector participation in the financing and management of infrastructure and public services will require institutional and regulatory reform. AfDB experts continue to support Central African countries in developing national PPP provisions and building their national capacities through a regional PPP center.