Challenges and Opportunities for Enhancing Trade in The CEMAC Sub-Region
By Affuembey Enow Affuembey
Trade is primordial for economic development. A successful use of trade can boost a country's development. Countries that develop invariably increase their integration with the global economy, while export-led growth has been a key part of many countries’ successful development strategies, especially in Asia. However, it is challenging and thorny for low income countries to access the markets of older high income countries in the northern hemisphere. Deliberately imposed barriers to trade with exorbitant tariffs, quotas, and tariff escalation; and domestic and external producer support, primarily in the form of subsidies and export credits combine to impose bizantine resistance for countries in Africa to access lucrative markets. Nonetheless, looking inward and exploiting local potentials provide unexploited vista for domestic growth, empowerment and development. No region is richly endowed as the Central African subregion to exploit its inherent potential.
CEMAC (Communauté Economique et Monétaire de l’Afrique Centrale) according to the World Bank (1) combines a GDP of $77,567,370,230 US. The CEMAC treaty which was signed on the 16th of March 1994 in Ndjamena (Chad), fully came into existence in June 1999; and created with the objective of harmoniously developing member states within the framework of the institution of an economic union and a monetary union, with the willingness of member states to move from a state of cooperation to a state necessary to complete the process of economic and monetary integration (2).
Trade can be a major catalyst for socioeconomic development, and so measures to enhance it need to be identified, packaged, implemented and evaluated. Meaningful planning for development makes it necessary to take stock of what has been done, and project what needs to be done, the model being that trade facilitation measures can lead to more and better trade because trade has a great role to play in economic development.
Martijn et al. (3) reiterate that the creation of CEMAC itself was a major step, taking place shortly after the devaluation of the CFA franc, in boosting policy effectiveness. They explain that CEMAC reforms introduced a common external tariff (CET), the gradual removal of tariffs on trade completed in 1998 within the community, the harmonization of indirect taxation and the replacement of quantitative import barriers by temporary import surges. Implementation of the measures is considered unsatisfactory because of costly border procedures, defiance of common rules through national restrictions & exemptions, lack of transportation infrastructure and security problems.
The CEMAC Commission has been involved in negotiating the Economic Partnership Agreements as one block, and has launched studies to assess the impact of these agreements on various sectors. It has taken initiatives to build the capacity of civil servants of member countries in trade issues.
The member states have created a common sugar market, so as to guarantee constancy of supply, efficient costs of production for industry, competitive prices for consumers and to improve the predictability and certainty of the market. Within this framework, sugar and related products benefit from free movement within the community, subject to their production in a member state, free of tariffs and quotas. Measures are equally in place to protect the local producers from competition through import, and common external tariffs have been agreed.
CEMAC Member states have equally adopted a regional program for transport and transit facilitation which aims notably to interconnect the computerized customs systems of member states, establish transit corridors for landlocked countries (Douala-Ndjamena and Douala-Bangui) and areas of difficult accessibility (Douala-Ouesso and Bangui-Brazzaville), put in place an inter-state transit regime, improve border crossing, improve the rail and bridge infrastructure, invest in roads and put in place the necessary support structures. The authorization of land transporters for various goods across countries in the sub-region is done collectively by the member states. Initiatives are in place to facilitate free movement of persons and goods within the community. In that light, a certain category of persons do not require visas to move within the community.
A road network intended to facilitate integration has been adopted and integrated with the Central African consensual highway. The member states have gone as far as harmonizing the training received by their customs officers. All these measures are aimed at ensuring that transport logistics and customs administration associated with cross-border trade (within CEMAC) work efficiently and effectively to promote trade.
CEMAC countries have been trading among themselves even before the creation of the unions. Looking at flows from 1995 to 2006 of commodities which the countries produce and which enter the basket of basic commodities the participation of member countries in the volume of trade flow has been dominated by a few.
Cameroon’s domination of the flows is evident over the period, followed by Congo. The participation of Chad, Equatorial Guinea and Gabon has been quite uneven over the period.
The general trend was for trade to drop between 1995 and 1999, pick up by 2003 and increase tremendously in 2006. Products imported moved into direct consumption and are hardly ever re-exported.
The trade data confirms that trade facilitation measures engaged in the late 1990s and early 2000s bore fruits and not only picked up but maintained the growth in trade values within the sub-region. The 1995-1999 drop can be explained by the economic crises and subsequent structural adjustment programs that affected most if not all the member countries.
As concerns the participation of individual countries, although Cameroon maintained a superior position, its share has been fluctuating and later ending in a downward trend. Central African Republic has moved out, while Chad and Equatorial Guinea have struggled with a dwindling share. Gabon however has succeeded to grow its share of the trade from 1% in 1999 to 14% in 2006. We can thus say that, the facilitation measures have led to more trade, but whether it has led to better trade is subject to further investigation.
Some challenges still need to be overcome to achieve more and better trade. Free movement of persons other than those currently allowed needs to be effective for all to eliminate the cost and time wasted to obtain visas to some countries. The road network on existing transit corridors needs to be improved to ease and accelerate the movement of goods from one country to the next. The road infrastructure needs to be improved at border points still to improve cross-border trade. The networking of customs administrations needs to be hastened so procedures can be simplified and transaction cost related to trade within the community can be lowered. Most importantly, the capacity of producers and traders in some countries needs to be built to enhance their participation in the trade activities of the sub-region.
With a full integration of the sub-region, it becomes a market of over forty million inhabitants. This means that local industry will have a market large enough to start tapping the advantages of economies of scale, and a large and diversified enough market for them to gain experience in satisfying consumer demands making them better able to compete out of the region. With proper legislation and regulation, consumers will be the beneficiaries because producers will be constrained to transfer part of the benefits that they have accrued from the larger market. The sky is the limit as to the things that are possible when the member states will go the extra mile to make full integration of the community a reality.
The institutions of CEMAC need to be strengthened so that each of them can fully play their role, and make free trade within the sub-region a reality. Measures need to be taken to ensure the effective implementation of decisions taken at the highest levels and support structures and programs need to be put in place to monitor and facilitate the success of all the trade facilitation tools used.
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(1) World Bank Data & Statistics. Available: html://data.worldbank.org/country (Accessed: 13/07/2010)
(2) Communauté Economique et Monétaire de l’Afrique Centrale, Traité instituant la Communauté Economique et Monétaire de l’Afrique Centrale (1994)
(3) Martijn, Jan Kees & Tsangarides, Charalambos G., (2007), “Trade Reform in the CEMAC: Developments and Opportunities”, IMF Working Papers (# 07/137)
Affuembey Enow Affuembey is a Researcher at the Centre for Independent Development Research [CIDR], Cameroon
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