Is the Economic and Monetary Union of Central African Countries Faltering?



The Economic and Financial Community of Central African States (CEMAC) was created in 1994 to foster the economic and financial integration of its members (#Cameroon, #Gabon, Central African Republic, #Chad, Equatorial Guinea, and the Republic of Congo). More than twenty-five years after its creation, there seems to be little to show in terms of robust integration and economic development. There is limited movement of goods and people, maritime and road infrastructures remain poor and the political will to enforce compliance is almost nonexistent. The region has been plagued by coup d’état, civil wars, and strongman rule. These political forces reinforce maintaining political power over strengthening economic and monetary ties among member states.


Key Statistics

Oil revenue is the one bright spot for the region with uptake of about 10% year-to-date. This can be attributed to the Russia-Ukraine war and the subsequent demand for additional crude to make up for the constrained supply from #Russia. The annual trade volume fell from 28.8 billion to 27.9 billion USD compared to the same period last year, due in large part to the covid-19 pandemic. Intercommunity trade has risen a dismal 3% since 1994.




Reasons For the Lack of progress

Political Will:

One of the reasons for the slow progress of the union can be attributed to the lack of political will to implement sanctions on members who bridge the terms of the accord. The parliamentary council has the power to investigate and present its findings. But the true decision-making power lies with the council of presidents. The Presidential Council has been reluctant to sanction any member state. The common currency CFA Franc is still heavily controlled by France and is pegged to the Euro. This limits the independence of the member countries in setting monetary policies. The civil war in Central Africa, coup d’états in Chad, and the strongman rule in Equatorial Guinea and Cameroon put political priorities over true economic and monetary integration.


Inadequate Infrastructure:

The CEMAC region suffers from poor infrastructure. The region has less than 20% of tarred roads. Waterways remain underdeveloped. Advance seaports with automation and robotics are nonexistent. The creation of the CEMAC vehicle registration number plates for cross-border trucks is a welcome relief. The pink insurance card for cross-border vehicles is also a step in the right direction. But more has to be done to integrate and modernize land, air, and sea infrastructure.


Protectionism:

CEMAC was supposed to eliminate tariffs among member countries. This is true in principle. There is a community customs code and a Generalized Preferential Tariff (GPT) among CEMAC members. There is also a Common External Tariff applicable to all CEMAC members. This makes CEMAC a true customs union. The table below shows the external tariff.


Source: UNU-CRIS Working Papers / W-2014/16 / Integration Efforts in Central Africa: The Case for CEMAC


In reality, trade between CEMAC members is still heavily taxed in the form of VAT and other destination internal taxes. Agriculture is the most protected sector with an average 23.6% tariff, followed by manufacturing at 17.8%, and extractive industries at 11.2%. The products with the highest tariffs include textile/clothing at 30%, coffee and tea at 28.6%, tobacco, and beverages at 27%, and fruits, vegetables, and garden produce at 26.4%.


Limited Movement of Citizens:

The creation of CEMAC brought hopes for a true economic union with free movement of citizens from member countries. There has been some progress on this front as citizens from Cameroon, Chad, the Central African Republic, and the Republic of Congo can freely move about with a digital passport without a visa. Equatorial Guinea and Gabon still require entry visas for CEMAC citizens. This is understandable due to its small population and the need to protect the jobs of its citizens. However, true integration will require these countries to adopt the digital passport policies of the other four member countries.





Lack of Regional Economic Structures:


True integration requires regional structures beyond political organs that can implement the objectives of the community. BEAC, the regional bank and a carryover from UDEAC, is an example of such a structure. There is a need for structures that can harmonize the energy, transport, mining, forestry, aviation, advanced manufacturing, and agricultural sectors of the community. The implementation of the digital passport in 2010 requires citizens of the community (with the exception of Gabon and Equatorial Guinea) to travel freely without a visa is a step in the right direction. The current construction of community roads that cut through national borders, such as the Touboro (Cameroon—Moundou (Chad); Yaounde-Ebolowa-Ambam (Cameroon)—Oyem (Gabon); Ebolowa-Kye Ossi (Cameroon)—Ebebiyin (Equatorial Guinea), and Sangmelima (Cameroon)—Congo Border to name a few. The introduction of CEMAC vehicle registration and a database for this registration has helped law enforcement and Interpol to collaborate on cross-border law enforcement. This is also laudable.


Conclusion

The creation of CEMAC was supposed to be an improvement of UDEAC, which was an economic and Customs union, to true integration with free movement of citizens without visas, elimination of import tariffs, strengthening of the common currency (the CFA Franc), and regional negotiation of treaties with other regional and global economic unions. More than 25 years after its creation, there has been limited progress. The GDP for the region remains low compared to other economic unions.




There are limited regional structures to push integration. Corruption and lack of politics will continue to plague the community. But there is hope. The region’s location makes it a good transit point in Africa. The region also has the second largest, continuous forest region after the Amazon. Mineral deposits abound, and its fertile soil makes for a bountiful harvest of food and cash crops. The leaders and citizens of the CEMAC community must resolve to march strategically, taking into account the needs of individual member states, to create a self-sustaining regional economy and provide leverage in negotiating with other nations and regional blocks.


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