Gabon is one of the member nations of CEMAC, which was created to integrate regional economies and boost trade. While the bloc has successfully established the free movement of capital, a shared currency and a wide range of common regional institutions, a number of the other aspects of the proposed integration have proceeded sluggishly. This has slowed economic growth and trade, and helped sustain a dependence on oil revenues for some of the member states.
Regional Bloc
The CEMAC zone was founded in 1994 as a more comprehensive successor to a previous bloc, the Central African Customs and Monetary Union. It was officially launched five years later in 1999. CEMAC states are also members of a wider regional bloc, the Economic Community of Central African States (Communauté Economique des Etats d’ Afrique Centrale, CEEAC), which also includes Burundi, Rwanda, São Tomé & Príncipe and the Democratic Republic of the Congo. CEEAC was founded in 1983 before officially entering into operation in 1985.
CEMAC has six members nations, Gabon, Cameroon, Equatorial Guinea, the Republic of the Congo, Chad and the Central African Republic (CAR). Some characteristics of the drive to economic integration that established CEMAC include the free movement of capital, and the existence of a currency union, under which all member states use the Central African franc, which is pegged to the euro.
Institutions
The bloc also shares a central bank, the Bank of Central African States (Banque des Etats de l’Afrique Centrale, BEAC), founded in 1973, as well as a stock market, the Central African Stock Exchange (Bourse des Valeurs Mobilières de l’Afrique Centrale, BVMAC), although Cameroon also operates a rival market of its own, the Douala Stock Exchange. Major institutions are dispersed throughout the community; for example, the headquarters of CEMAC are located in Bangui, the capital of the CAR – although it was temporarily moved to Gabon in 2014 after a period of sectarian fighting in the CAR in 2013 – while the BEAC and the BVMAC are hosted in Yaoundé and Libreville, the capitals of Cameroon and Gabon, respectively. A regional parliament is also planned and will be based in Malabo, the capital of Equatorial Guinea. Policy for the group is set by the Conference of Heads of States, a body that typically meets once a year and is attended by the leaders of each nation. The chair of this body rotates between member countries. The most recent meeting of this conference, which took place in Malabo in July 2016, focused on establishing financial support for the CAR in the aftermath of the 2013 conflict, and on economic partnership agreements being negotiated with the EU.
Geography & Demography
The CEMAC member states are located in western and central Africa. This zone covers around 3m sq km of combined territory – equivalent to almost 13% of the land area of sub-Saharan Africa. The equator bisects this region and passes through Gabon and the Republic of the Congo. The six CEMAC states have a combined population of approximately 49.5m – equivalent to 5% of the total population of sub-Saharan Africa – ranging from 845,000 in Equatorial Guinea, the bloc’s smallest member, to 23.3m in Cameroon, its largest. Four member states – Cameroon, the Republic of the Congo, Gabon and Equatorial Guinea – have coastlines, while the CAR and Chad are landlocked.
Economic Profile
The economic profiles of the member states vary considerably. For example, in 2015 agriculture accounted for about half of GDP in both the CAR (47.5%) and Chad (52.4%), but less than 10% in Gabon (4.7%) and the Republic of the Congo (4.9%), according to World Bank data. Chad, Gabon, Equatorial Guinea, the Republic of the Congo and Cameroon all produce substantial quantities of hydrocarbons, with the value of oil revenues in the four varying from 42.7% of GDP in Equatorial Guinea to 6.1% in Cameroon in 2014, according to the World Bank. The bloc’s combined GDP stood at $73.9bn in 2015, equivalent to around 4.7% of the combined economic output of all sub-Saharan African countries.
In 2015 Cameroon had the largest economy of the six member states, with a GDP of $29.2bn, while the CAR had the smallest, at $1.5bn. The region’s level of economic development is roughly in line with that of the continent as a whole; average gross national income (GNI) per capita in the bloc stood at $1600 in 2015, compared to the sub-Saharan average of $1628. If the bloc were a single country, it would rank as a lower-middle-income state, according to the World Bank. However, these figures mask major disparities among member states, which range from some of the least developed to some of the most developed nations on the continent. GNI per capita in its richest state, Gabon, ran at around 26 times the value of per capita income in its poorest member, the CAR, in 2015, at $9210 and $320, respectively.
Development indicators vary substantially from one member state to another, in line with the disparities in wealth. For example, life expectancy at birth ranges from 51 years in the CAR to 64 years in Gabon. Despite the comparatively wealthy status of Gabon and Equatorial Guinea, around 70% of CEMAC residents live on less than a dollar a day, and 30% lack sufficient food.
Limited Growth
Low levels of economic development in some member states are linked in part to the fact that GDP per capita growth – in purchasing power parity (PPP) terms – has been slow in recent decades when compared to other African frontier markets. The bloc as a whole has remained heavily reliant on hydrocarbons production and is strongly affected by international energy price fluctuations. Indeed, per capita income in PPP terms, adjusted for inflation, has been more or less flat in all member states other than Equatorial Guinea since 1990.
Some of the reasons for this slow growth include a comparatively difficult business environment in member counties. Gabon was the top performer of the six CEMAC member states in the World Bank’s 2017 “Doing Business” report, with a ranking of 164 out of 190 countries on the ease of doing business index, while the worst performing member, the CAR, came in at 185th. Many of the countries in the zone are also currently facing economic headwinds as a result of the sharp fall in global energy prices that began in mid-2014 and accelerated in 2015. As regional oil exports fall by 32% in value terms, regional growth slowed to an estimated 1.6% at constant prices in 2015, down from 4.9% the year before. Oil GDP shrank by 0.4%, while non-oil GDP grew by 2.6%. In dollar terms, the bloc’s combined GDP in 2015 fell by almost 23% . At the same time, the region’s overall combined fiscal deficit grew to 6% of GDP in 2015, and its current account deficit grew by 9%, while currency reserves fell by 41% between the end of 2014 and March 2016, to approximately 3.9 months of import cover.
Integration Efforts
Attempts to integrate the economies of the bloc and boost levels of regional trade have also struggled to get off the ground. While CEMAC was established with the intention of allowing the free movement of goods, people and capital, only the last of these goals is currently fully in place. Customs duties between member states remain for many major goods, though there have been some recent successes in bringing them down, and visa-free travel within the zone is currently only possible between Cameroon and Chad. As a result, trade within the bloc is only around 3% of the total combined value of trade by member states, constraining the development of regional synergies and consequently slowing growth.
However, the regional authorities appear to be taking some steps towards fostering greater integration. For example, in late 2015 the bloc presented a new regional economic convergence framework, based on factors such as a shared fiscal rules and a common public deficit ceiling, to enter into force in 2017.
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