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Monthly Archives: December 2016

Reflecting on the precarious economic and security atmosphere plaguing the Central African Economic Monetary Community by Chofor Che, 30 December 2016


The Monetary Policy Committee (MPC) of the Bank of the Central African States (BEAC) met during its fourth ordinary session in Yaoundé, December 20 2016. Top of the agenda of this meeting was a vivid analysis of the macroeconomic situation of the Central African Economic Monetary Community (CEMAC). This meeting held a few days before the Extraordinary Summit of four Heads of States on the Central African Sub region, slatted for December 23 2016.

The outcome of the MPC meeting revealed that the growth rate of CEMAC states which was projected at 1.7 per cent a few months earlier dropped to 1 per cent. According to experts and analysts, two main reasons are to blame for the precarious economic atmosphere in the CEMAC zone. The first reason is the negative impact of the drop in oil prices in the world market. In 2015, the growth rate in the sub region stood at 2.8 per cent. Inflation was at 3 per cent as initially projected. In 2016, the key rate in the CEMAC zone remained unchanged at 2.45 per cent, while budgetary deficit hovered around 4.2 per cent of the sub region’s Gross Domestic Product (GDP). Current external deficit has slightly dropped from 11.4 per cent of the GDP as external monetary coverage dropped from 71.1 per cent last year to 50 per cent.

There is no gainsaying that the economic atmosphere in the Central Africa Sub region is unstable and calls for member states to make important fiscal and economic policy readjustments. Coupled with the economic and fiscal challenges, member states such as Cameroon and Chad are faced with terrorists attacks from the terrorists group Boko Haram. The Central African Republic is still faced with serious security concerns.
A major mistake that member states of the Central African Sub region especially countries like Cameroon and Equatorial Guinea made as far back as 2014 was to depend a lot on oil and neglect other sectors like the agriculture and the tourism industries. According to analysts, though the oil sector is a very lucrative one, it remains a very unpredictable sector. Despite recent stabilisation, oil prices were expected to remain well below pre shock levels in the medium term as production was feared to start falling in the long run.

CEMAC countries have been therefore forced to rethink through their developmental priorities with respect to the new economic context overshadowed by falling oil prices. Countries like Gabon, Equatorial Guinea and Cameroon have decided to scale back their spending plans by reducing public investment and limiting current expenditure. All of the countries in the sub region have also sought advances from the regional central bank. The consequences of these and other debt related developments is that regional public debt is instead on the rise.

Reducing public investment and limiting current expenditure is definitely not the way to go for CEMAC member states. Depending equally on loans from the regional central bank will only make CEMAC member states highly indebted. One of the ways CEMAC member states may overcome such a financial quagmire is by boosting the private sector and focusing more on other sources of revenue. The agricultural sector in most CEMAC countries remains grossly unexploited. There is need for CEMAC member states to improve and mechanise their agricultural sector.

CEMAC member states need to ensure macroeconomic sustainability by boosting non oil revenue, curbing on public spending and encouraging serious competition in the non-oil sectors like tourism and agriculture. There is equally a need for unnecessary trade barriers to be dismantled and/or curbed so as enable fluid business transactions between member states. A drop in imports related to the public investment programmes will contribute in improving current accounts. Because of the magnitude of the necessitated adjustments, maintaining this course of action will be a challenge. Additionally, the degradation of the security situation in the sub region especially with the conflict in the Central African Republic and terrorist attacks in the North of Cameroon, could weaken an already complex business environment and hamper further efforts to invest in regional infrastructure, a major element for non oil growth. CEMEC member states thus have a serious challenge to embark on a very ambitious but realistic reform agenda to enhance macroeconomic stability as well as encourage inclusive and sustainable growth. Domestic and regional institutions need to play a major role in such efforts.

Chofor Che is co-founder and Chair at the Central African Centre for Libertarian Thought and Action Cameroon, an affiliate of the Washington DC based Atlas Network. He is also an associate of Africanliberty.org and LibreAfrique.org.

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Posted by on December 30, 2016 in Africa Development, CEMAC, Uncategorized

 

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Involving African Think Tanks in the African Tax Dialogue, by Chofor Che, 6 December 2016


Africa is still plagued with robust taxation laws as well as state practice on taxation. The constitutions of African countries especially the 1996 Constitution of Cameroon do not create an adequate tax friendly environment that encourages favourable investment opportunities especially for local investors. International investors have to go through vigorous lobbying procedures to benefit from investment opportunities in the country. Trade and taxation bottle necks are a major reason for the country’s poor doing business ranking as evidenced in the World Bank’s Doing Business report of 2016 and other reports like the Fraser Institute’s Economic Freedom of the World : 2016 Annual report.

The Central African Centre for Libertarian Thought and Action (CACLiTA), Cameroon, amongst other African based think tanks, was invited to the International Tax and Investment Center’s (ITIC) 8th Africa Tax Dialogue that took place in Cape Town on the 15th and the 18th of November 2016. The meeting was aimed at bringing together African and international taxation experts, academics, think tank experts as well as industry tax and finance officers to reflect upon salient issues on taxation and investment with Ministry of Finance and Tax Administration officials from across Africa. CACLiTA was represented at this very important meeting by its President Mr. Asanji Burnley Nguh. Other high profile participants included the Commonwealth Association of Tax Administrators. Mukhisa Kituyi, Secretary-General of the United Nations Conference on Trade and Development (UNCTD) delivered the opening speech of the meeting.

The agenda included a mix of Africa-specific taxation challenges, as well as how global tax reform initiatives such as base erosion and profit sharing (BEPS) should be considered in an African context. Discussions also centered on Africa’s Regional Economic Outlook. Concerning Africa’s Regional Economic Outlook, the continent’s medium-term prospects for economic growth remains favourable but the sharp decline in commodity prices, tighter financing conditions, conflict in the Central African Republic, terrorist attacks by the Boko Haram in North Cameroon and a severe drought in Southern and Eastern Africa imply that many countries need to reset their policies. There was therefore need to engage in discussions on the adjustments in fiscal and monetary policies that are needed and the contours of economic diversification that should be pursued. Other sessions included discussions on retirement savings, taxation of mining, oil and gas, as well as discussions on tax consumption. A special workshop was also held on ‘Combatting the illicit Trade of Excisable Products’.

In addition to attending the African Tax Dialogue, the ITIC also invited six African based think tanks present to attend the launch of a new initiative-the Africa Tax and Investment Network. This initiative includes the Cameroon based CACLiTA, the Namibian based Chevauchee, the Tanzanian based Uhuru Initiative for Policy and Education (UIPE), the Kenyan based East African Policy Centre (EAPC), the Malawian based Center for Free Market Enterprise (CFME) and the Mozambican based Center for Mozambican and International Studies. The aim of this initiative was to engage the invited think tanks to investigate on the tax and investment climate in Africa, as well as reflect and propose solutions to the ongoing challenges. It was also an opportunity to involve the concerned African think tanks in monthly and bi-monthly conference calls, information sharing sessions, ITIC Africa programs as well as the upcoming Spring 2017 International Monetary Fund (IMF) and World Bank meetings.

It is believed that it is important to have pro-growth, taxpayer organizations like CACLiTA participate in such encounters, not only to share own country experiences, but to equally propose solutions to the robust tax atmosphere witnessed in countries in the Central African region especially Cameroon. It is hoped that participating in such meetings will advance CACLiTA’s pro-growth reform agendas in Cameroon and in the Central African region.

Chofor Che is contributor to Africanliberty.org and co-founder and Chair at the Central African Centre for Libertarian Thought and Action, (CACLiTA), Cameroon. He is also contributor and consultant with other initiatives like the Moroccan based LibreAfrique.org and the South African based, In On Africa. He has over 10 years of working experience with the government of Cameroon.

 
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Posted by on December 6, 2016 in Uncategorized

 

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