Documentof TheWorldBank FOR OFFICIAL USEONLY ReportNo. 48514 CF - CENTRAL AFRICAN REPUBLIC POVERTY REDUCTIONSTRATEGY PAPER ANNUAL PROGRESSREPORT (APR) AND JOINT IDA-IMFSTAFFADVISORY NOTE MAY1,2009 2 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY INTERNATIONALDEVELOPMENT ASSOCIATION INTERNATIONALMONETARY FUND CENTRAL AFRICAN REPUBLIC Joint StaffAdvisoryNoteon the PovertyReductionStrategyPaper: AnnualProgressReport Prepared by the Staff o f the InternationalDevelopment Association (IDA) andthe InternationalMonetary Fund(IMF) Approved by Obiageli K.Ezekwesili (IDA) andMichael Atingi-Ego andDhaneshwar Ghura (IMF) May 21,2009 I.OVERVIEW 1. This Joint Staff Advisory Note (JSAN) reviews the first annual progress report (APR) on implementation of the Poverty Reduction Strategy (PRS) of the Central African Republic(C.A.R.), presentedto the Boards o fthe IMF on April 29, 2008, and IDA on May 27, 2008. The APR (for the period September 2007-December 2008) describes the results o f implementation and monitoring o f the PRS. It incorporates inputs from representatives o f civil society and the donor community. 2. The Government conducted a mid-year assessment of PRS implementation in August 2008, sharing a draft APR with stakeholders in December 2008. Following extensive internal discussion and consultation with donors, the APR was formally shared with staff inMarch2009. Staffnote that the APR would have beenmore useful ifit hadbeen released before the beginning o f the budget cycle to inform policies and spending priorities o f the budget for the next year. The C.A.R.'s PRS has four strategic pillars: (i) restore security, consolidate peace, and prevent conflict; (ii)promote good governance and the rule o f law; (iii)rebuild and diversify the economy; and (iv) develop human capital. The APR confirms that these pillars remain valid and that the poverty reduction strategy paper (PRSP) i s a fundamental point of reference for the dialogue between the government, civil society, and donors. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. 2 3. The APR shows that although the financing needs exceed by far the overall financing commitment pledged by donors in Brussels in November 2007,' donor funding was responsive to PRS priorities in 2008. As o f November 15, 2008, US$755 million has been committed to finance PRS activities for 2008-10, o f which US$408 million was disbursed in2008. 4. The APR gives information on progress toward restoring peace, access to basic services and governance, and sector performance. It shows that overall, the C.A.R. has made good progress in implementing its PRS in 200'8, and the direction o f its policies and programs seems appropriate. The authorities have started addressing the most critical binding constraints to poverty reduction and growth, in key areas including political reconciliation, infrastructure, the social sectors as well as governance. However, the year 2008 was also marked by a slowdown ineconomic growth, to 2.4 percent in2008 from 3.7 percent in2007, as a consequence o f the deteriorating international economic environment coupled with domestic shocks.2 Given the recent economic development and the overall PRSP financing gap, there i s a need to revise the macroeconomic framework for the PRS. Another missing element in the APR is an updated poverty profile, mostly because there was a delay in producing and analyzing the household survey. Equally important is the need for updating the status o f the Millennium Development Goals, which is expected to be included in the next APR. 5. This JSAN on the first APR offers staff advice on priorities for advancing PRS implementation. Section I1highlights progress to date and suggestions for making further progress. The concluding section summarizes staff recommendations in key areas to strengthen the PRS implementation and suggests points for Boarddiscussion. 11. PROGRESSINIMPLEMENTINGTHEPOVERTYREDUCTIONSTRATEGY AND THE WAY FORWARD SUCCESS FOR A. Macroeconomic Performance 6. The acceleration of growth envisaged in the PRSP did not materialize due to a number of shocks. As the APR demonstrates, 2008 was a particularly difficult year for C.A.R.: social tensions and serious power shortages domestically and global food and fuel price hikes and financial shocks together pummeled the economy. Consequently, growth slowed significantly; inflation accelerated to almost 10 percent; and the external current account balance deteriorated. 'The financing needs for the PRSP were estimated at U S $ l.lbillionina pledging conference held inBrussels inNovember2007. These figures reflected the most recent estimates for real GDP growth rates, updated since the release o f the APR. 3 7. Despite the difficult economic conditions, C.A.R.3 fiscal performance was broadly satisfactory. Domestic revenues increased enough to realize a continuous improvement in the revenue-to-GDP ratio. Spending was carefully managed in general, poverty-related spendingwas well-executed and a significant amount o f domestic arrears was cleared. However, there i s scope for controlling the use o f commercial bank credit and improving the timeliness o f external debt service payments. Debt relief under the enhanced HIPC Initiative, grantedinthe form o f interim reliefinthe period between decision point and completion point, has beenbeneficial to smooth execution o fthe budget. 8. Structural reforms in the first.year of PRS implementation have helped make the governmentbudget more resilient to negative shocks. The improvement in domestic revenues i s attributable to a number o f improvements in tax and customs administration, including measures taken by the government following the audit o f Guichet Unique in Douala, as recommended in the previous JSAN. The use o f an automatic adjustment mechanism for petroleum product prices has recently allowed the government to insulate its budgetfrom fluctuations ininternational oil prices and secure resources for priority spending. Moreover, after several adjustments o f retail prices based on the mechanism, the government i s now generating significant revenues from petroleum consumption and is able to partially offset the revenue losses from external shocks to primary production sectors. The staff encourage the authorities to continue applying the automatic adjustment mechanism every quarter and avoiding deviations. 9. Given continued determinedefforts by the authorities,C.A.R. shouldbe able to recover and accelerate growth. The APR does not provide an updated assessment o f growth prospects; it i s important that future APRs include an up-to-date macroeconomic framework based on the most current assessment. It should be recognized that its growth prospects depend on such factors as security, weather, and global economic conditions. The authorities are committed to keeping the economy stable and strengthening their structural reform efforts. Keeping the fiscal stance prudent to ensure debt sustainability and containing inflation are vital for sustainable acceleration o f growth. Donor support is critical for addressing bottlenecks inthe social and economic sectors andinfrastructure. B. RestoreSecurity,ConsolidatePeace, andPreventConflict 10. The APR describes the efforts the government has made to restore peace and security. Staff agree that these have been significant. Efforts toward political stability culminated in the Inclusive Political Dialogue in which all major political actors (social, political, and rebel groups) participated in December 2008, and the creation o f coalition government including members from the civil society and the opposition as well as the rebel groups. Such initiatives followed on the Libreville Agreement o f June 2008, and an Amnesty Law was promulgated inOctober 2008 covering crimes committed since 2003 by political or military leaders (except for war crimes and crimes against humanity that are under the jurisdiction o f the International Criminal Court). Restoring peace throughout the country 4 remains a challenge, particularly in the northern areas. However, it is expected that the government will be able to move toward another round o f elections in 2010 with the support o f the international community-especially the three peacekeeping missions (MINURCAT, EUFORandMICOPAX) andthe UNPeaceBuildingOffi~e.~ 11. In parallel with the political process the government has taken steps to consolidate security and the rule of law. Under the supervision o f an ad hoc government and InternationalPartner Committee, some o f the recommendations from the Security Sector Reform (SSR) national conference o f April 2008 have been implemented: the capacity o f military and security personnel and civilian staff in the Ministries o f Defense, Interior, and Justice has been built up, prisons and public offices rehabilitated, and illegal traffic barriers dismantled. Disarmament and demobilization efforts have started to produce positive results, including integration of 4,590 ex-combatants and destruction of small arms. Still, much remains to be done. 12. The priority for the government in the next few months is rapid action on the disarmament, demobilization, and reinsertion (DDR) program to ensure political stability and sustain peace. The government and donors are discussing design and implementation o f the program. UNDP is leading the discussion. Although a total o f US$20 million has been identified, the total costing is not yet completed. The recommendations o f the SSR need to be implemented, inparticular revision o f the documents governing C.A.R. 's security sector to improve public financial management and budgetary processes andminimize leakages inC.A.R.'s security agencies. C. PromoteGood Governanceandthe Ruleof Law 13. Corruption has been identified by the population as the first cause o f poverty, as spelled out inthe Poverty Analysis (2006). Staff welcome the government's determination to reinforce the legal framework for the fight against corruption. Staff note the creation o f an Anti-Corruption Committee (ACC) in March 2008, which is comprised by representatives from the government, anti-corruption bodies, audit and control agencies, civil society, and private business. The development o f an Anti-Corruption Strategy i s currently being finalized. Staff commend the authorities for having enforced the official dispositions requiring members o f the C.A.R. government and high-ranking officials managing public resources, as required by respectively the Constitution and a decree issued in March 2008. Staff support the government's action plan to address fraud and corruption in mining, forestry, and the treasury under the coordination o f the ACC and encourage the government to gradually expand such a program to other critical areas. Already, this work has led to the uncovering o f corruption cases inthe treasury and the tax directorate that involved more than MINUCART: Missioninthe CentralAfrican RepublicandChad; EUFOR:EuropeanUnionForce; MICOPAX:Missionfor the ConsolidationofPeace inCentralAfrica. 5 50 agents. Staff consider it important that the authorities continue to improve the anti- corruption laws through a gap analysis to bring C.A.R. laws inline with the UNconvention. In particular, the declaration of assets needs to reflect international practice and be done annually-the frequency i s not addressedby the Constitution or any other law - and a Law to protect whistleblowers needs to be adopted. Staff also encourage the government to finalize its Anti-Corruption Strategy and the related implementation plan. Due to several visible initiatives, C.A.R.'s Transparency International Index has improved from 162 of 180 countries in2007 to 151o f 180 countries in2008. 14. The authorities have made commendable progress inprocurement andpublic financial management: I n procurement, staff commend the authorities for the operationalization o f the new Procurement Code promulgated in June 2008. The challenge o f the government now is to implement the National Action Plan validated in December 2008, including capacity building for procurement units in key ministries, and the procurement regulation and oversight unit. Staff also encourage the government to ensure timely payment o f suppliers in order to attract the private sector into public biddings and bringmore competition. I n fiscal management, the APR observes that the government has made significant progress in buildingits capacity to mobilize revenue and improving the integrity o f public financial management. Staff note progress toward aligning the budget with PRS priorities; adoption o f a new chart o f government accounts inmid-January 2009; preparation o f a medium-term expenditure framework (MTEF) for health, education, infrastructure, and agriculture for the 2010 budget; and development o f medium-term sectoral programs using the indicators for the PRSP monitoring and evaluation system. However, the process needs to be strengthened because budget allocations remain ~ n e v e n . ~ 15. The progress in public financial management (PFM) is commendable. The autonomy o f the financial control directorate has been restored and cash management i s being supervised by a liquidity committee at the technical level and a treasury committee headed by the President at the strategic level to better align expenditures with available resources. The closing o f commercial bank accounts that are not donor mandated i s also welcome, as i s the significant effort toward consolidating a treasury single account (TSA). The share of key sectors in the budget (education, health, social welfare, infrastructures, and rural development) increased from 34 percent in2007 to 38 percent in2008, with a notable increase inthe allocation to infrastructure, health, and education. However, the allocations for rural development, the fight against diseases and epidemics, and potable water in small towns and rural areas fell in 2008. Government is lacking comprehensive budget data that would include external donor support. It is therefore not clear to what extent declining allocations inthe official budget reflected expected donor support inthese areas. 6 The accounting and reporting systems have been improved, resulting in publication o f quarterly budget execution reports. These first reports ever for C.A.R. use comprehensive budget classifications for the 2008 budget, and the budget directorate has adopted new accounting classifications and a computerized financial management system to record expenditures (GESCO). The strengthening o f basic functional processes, the regulatory framework, andthe organizational structures responsible for capturing data is welcome. 16. To consolidateanddeepen the procurementandPFMreformagenda outlinedin the APR, key actions for the next12 months are to: 0 implement the actions identified inthe procurementNational Action Plan; 0 buildcapacity inpriority ministries (e.g., education, health, infrastructure) to prepare and execute the budget, and roll out a MediumTerm ExpenditureFramework; 0 ensure coherence between budget and accounting nomenclatures and integrate all the stages o f expenditures from commitment to payment into the computerized financial management system; 0 complete the 2008 government accounts and execution law for presentation to the Courts o fAccounts andparliament inthe second semester o f 2009; and 0 implement a treasury single account to improve transparency o f government financial operations. Staff recommend that a Public Finance Management National Action Plan be prepared to ensure that donors' programs are aligned with government priorities. 17. The needfor further actions in strengtheningpublicdebt managementshould be highlighted. The APR should include a full discussion o f debt management issues. In addition to the installation o f a computerized debt management system, the APR could usefully describe developments inthis area such as the establishment by the debt department o f a comprehensive debt database, covering both domestic and external debt data, and the publication o f a statistical debt bulletin. Going forward, the APR could point to the fact that the National Committee for Public Debt, created by a presidential decree, should play an active role in designing and implementing the government debt strategy with the technical support o f the debt department. D. RebuildandDiversifythe Economy 18. Growth is central to achievement of C.A.R.'s ambitious PRS. The APR rightly discusses the key growth sectors: forestry, miningand mineral exploitation, agriculture and tourism. It makes it clear that progress has been made in key areas, in particular 7 infrastructure and governance in natural resources, which i s critical for growth and poverty reduction. 19. The governmenthas madesignificantprogressin improvingthe legal framework for naturalresources;its commitment to goodgovernanceinthesesectors is commendable. e In mining, recent efforts in improving governance are expected to strengthen C.A.R.'s attractiveness. Key features o f the recent development include the selection o f C.A.R. as an official EITI member, the suspension o f issuance o f new mining licenses until the adoption o f the revised mining code and the adoption o f standard investment agreement in April 2009. While these initiatives are good, staff agree, as spelled out inthe APR, that more work i s needed to buildcapacity at the Ministryo f Mines to enforce the laws; ensure more efficient administrative, geological, and engineering services; and establish a robust geological database. Lastly, staff encourage the government to address tracking o f diamond exports which could yield significant increase inrevenues to the government. In forestry, the adoption of the new forestry code in October 2008 and the implementing texts in April 2009 give C.A.R. a modem legal framework which is expected to enhance transparency in the utilization o f C.A.R.'s natural resources. Staff encourage the government to sustain reform toward transparent management o f forest taxes, inparticular ensuring continued transfer o f resources to communities to sustain construction or rehabilitation o f basic infrastructure. Additional priorities for the coming months consist o f(i) forward the government's Africa Forest Law moving Enforcement and Governance (AFLEG) actionplan inorder to reinforce the laws that combat threats to forests from illegal logging and trade and wildlife poaching and to ensure access to the EUmarket in the future; (ii) and seeking bids for the remaining concessions under the new code. 20. The APR correctlynotes progressin electricity and water supply and sanitation, but these areas still constitute huge challenges, especially outside the capital. Yet, currently, only a small portion o f the population in C.A.R. i s served by the national public utilities for water (SODECA) and electricity (ENERCA). Even though electricity supply appears to have stabilized inthe aftermath o f the power shortages throughout 2008, it is not nearly sufficient to satisfy the existing demand. The priority lies in a rapid rehabilitation o f the power stations serving Bangui and the implementation o f the planned loss-reduction programs, including the introduction o f pre-payment metering. The electricity sector needs significant additional investment in order to increase coverage. There is also a need for stepped up efforts to further improve access to clean water and sanitation, which inturn will support improvement to health indicators. Recent efforts include the construction o f infrastructure to give access to water supply to 170,000 people, 1,670 latrines, and the distribution o f 15,000 hygiene kits to households. The APR appropriately emphasizes the 8 financial and structural problems facing public utilities. Untilarrears are paid to utilities, bill collection i s improved, and the institutional set up i s addressed, service delivery cannot be sustained. Fullprovision o f utility consumption inthe 2009 budget i s praiseworthy: because government institutions are by far the largest clients o f ENERCA and SODECA, this will gradually improve the financial position o f the companies, thereby helping provide resources for muchneeded maintenance, repairs and investment. 21. The APR highlights the government's commitment to the road program but does not discuss other transport infrastructure.It is commendable that the government is providing a stable source o f funding for road maintenance. Although the targets for 2008 have not been achieved, the APR notes that 1,500 km o f roads were rehabilitated, which has reduced the share o f unrehabilitatedroads from 42 percent to 17percent. Inaddition, 206 km o f rural roads were rehabilitated and 52 km constructed, which has increased the share o f rural roads ingood condition from 5 percent to 12percent-above the 2008 target. Staff note that the APR does not discuss progress on urban road rehabilitation and urban drainage in Bangui. Among the key priority activities for the coming year feature completing the rehabilitation o f the corridors linking Banguito the Port o f Douala. Staff also encourage the government to finalize the measures necessary to bring national regulation o f the sector into compliance with regional and international regulations andthe Transport Roundtable inorder to mobilize financing for transport programs. 22. While staff encourage the government to sustain efforts in tackling growth- enhancing constraints as described above, greater attention is now needed to ensure support to income generating activities, in particular in agriculture, given the high percentage o f poor earning their livings from this sector. So far, achievements in this area span payment o f arrears to cotton farmers, the provision o f a range o f services (agricultural inputs and extension services) and machinery to farming families in the "Development Poles" targeted areas; and initiation o f livestock restocking and pilot programs. Staff note that significant improvement in the agricultural sector will also require revamping the shrinking cotton and coffee sectors, and diversifying farmers' activities, which are not discussed in the APR. As noted in the document, the government has drafted a comprehensive medium-term priority action plan following the national workshop (Etats Generuwc) o f agriculture, the implementation o f which i s expected to take effect with the launching o f the "Development Pole" project and other donor-supported programs. 23. Some progresshas been made in improvingthe business environment but more i s needed. C.A.R. ranked last in the latest Doing Business report, but the authorities are determined to address the problems. They have effectively facilitated business creation with the one-stop window (Guichet Unique) and shortened the time (from 4 months to 15 days) and number o f procedures required. They have also translated recommendations o f the Diagnostic Trade Integrated Studies (DTIS) into concrete policies and projects including the reorganization o f the customs department and the ongoing revision o f the commercial and national investment charts; some important recommendations have not yet been carried out, 9 particularly strategies to revamp agriculture including the coffee and cotton sectors. The APR does not discuss support to investment climate reforms and the local small- and medium- sized enterprise sector through IFC-supported programs. Staff encourage the authorities to start implementing the action plans finalized with partners, especially those for IFC- supported programs and those identified during the private sector sectoral round table in February 2009 with support from multilateral and bilateral partners. E. DevelopHumanCapital 24. The APR reports some progress on the government human capacity program but did not make good use of the data available. The APR could have used the recently updated statistical book for education to assess other efficiency indicators. Among the recent achievements feature the rehabilitation o f few schools, the hiring o f 750 new contractual teachers, andthe distribution o f 4,500 manuals. Coupled with administrative and pedagogical measures, including training o f teachers and special programs for students that need support, this reduced the repetition rate from 30 percent to 26 percent in some academic inspectorates innon-conflict areas-a fact not mentioned inthe APR. Inline with donors' endorsement o f the National Education for All (EFA) plan which lays out the priority for the coming years, staff agree with the education strategy outlined inthe APR and with actions planned to meet the PRS goals. C.A.R. will receive US$37.8 million from the FTICatalytic finds to support the EFA plan, as approved by the EFA/FTI Committee in December 2008. Among other things, to directly facilitate changes at the school level these finds will support measures to hire new teachers, enhance the quality o f education through teacher training and education materials, increase the management capacity and internal efficiency o f the education system, andbuildschools. 25. Steady progress has been made in health and HIV/AIDS areas, in particular in preventive efforts to reduce child mortality and HIV-AIDS. As noted inthe APR, DPT3 immunization rates were kept above 80percent until September 2008.5 Thanks to a multisectoral approach including the Ministry o f Health and NGOs, for the first year o f PRS implementation, neonatal surveillance sites generally reported stable HIV prevalence rates, although rates among young pregnant women (ages 25-29) are still high(around 10percent) at some sites;6 the target for HIV-positive mothers receiving prophylactic treatment has been achieved and the target for HIV-infected patients receiving ARV therapy has been exceeded. Programs to combat malaria by distributing treated mosquito nets to children under five and pregnant women throughout the country are in place and anti-tuberculosis drugs are now The immunization rate declined as o f September 2008 but the APR providesjustification for this trend, which is relatedto the WHO recommendationto administer a different vaccine. Significant progress has beenmade inrehabilitating the infrastructure needed to roll out HIV/AIDSincluding mother-to-child-transmission-preventioncenters, counseling, testing, and treatment, which was complemented by training for healthagents anddistribution of condoms through a socialmarketing programinvolving NGOs. 10 available free. Staff note that the APR does not discuss outcomes in the latter areas due to lack o f data. The next priorities are to (i) put into operation a monitoring and evaluation action plan for the health sector to inform activities for the coming years and measure the progress made; ($and prepare the MTEF for the health sector, as recommended by the PRSP JSAN to sustain the multi-sector national health program including the National Plan for the Development o f Sanitation 2006-2015, the National Strategic Plan to Reduce Malaria, the Comprehensive and Extended Multi-Annual Vaccination Program 2007-2011, and the updated National Strategy against HIV/AIDS (2006-1 O).' 111. FRAMEWORKPRSPIMPLEMENTATION, MONITORING,EVALUATION FOR AND 26. Staff encourage the government to continue reinforcing the monitoring and evaluation framework. As recommended in the previous JSAN, the authorities have identified measurable result and outcome indicators for all sectors o f the PRSP (Annexes 1 and 2). The APR documents (i) progress in simplifying the institutional structure for monitoring and evaluation, including a reporting structure that applies to key sectors at all levels o f government, and (ii) the participatory nature o f PRSP monitoring, including thematic and regional workshops. However, it candidly states that the monitoring structures demonstrated a number o f weaknesses when the PRS was being monitored. For instance, the synthesized analysis o f the National Technical Committee (NTC) in charge o f producing the APR, has been affected by lack o f efficient coordination with the National Sectoral Committees (NSC) in charge o f coordinating the regional Committees and transmitting aggregated data to the NTC, as evidenced bymissing data for 2008 inAnnexes 1and2 o f the APR. Inaddition, inputs feeding into the elements required to carry out a proper evaluation o f the PRSP and including a series o f surveys (household, agricultural survey, employment, health and education) have not yet been completed. Therefore, some core indicators to report on still have to be finalized. 27. Staff urge government to enhance its effort to monitor outcomes and impacts of PRS programs.Operationalization o fthe monitoring framework needs further strengthening relevant institutions and entities, in particular the coordination between the N T C and NSC. Similarly, the implementationo fthe recently adopted training programs for capacity building among PRS committees, and the strengthening o f the statistical institute to analyze and interpret data feature among the priority activities for the next year. Since the impact o f the PRS is yet to be effectively measured, staff believe that highpriority should also be given to timely analysis o f the recently completed 2008 integrated household survey and the completion o f other key surveys in order to update the poverty profile, ensure adequate targeting, and inform future activities. 'In health, the Government's main objectives are to refurbish the sanitation infrastructure, increase the availability of basic health care, reduce infant and maternal mortality, fight endemic diseases, and promote a multisectoral approach to initiatives aiming at combating HIV/AIDS. 11 28. Staff note that the recent increase in the frequency and intensity of natural disasters due to climate change has proven to be a major challenge to sustainable development and economic growth in C.A.R. Staff therefore suggest that the government develop an effective and proactive disaster risk management (DRM) framework to help reduce the country's human and economic vulnerability against natural hazards and to strengthen national disaster risk reduction strategies. IV. CONCLUSION 29. Staff consider that the requirement of satisfactory implementation of the PRS for at least a year has been met. The APR adequately reflects accomplishments and shortcomings in the implementation o f the PRS since September 2007. The APR identifies the main obstacles and risks to hrther progress, which, in addition to specific sector constraints, include (i) the impact o f the changing international environment in terms o f oil shocks and food and financial crises; (ii) difficulty in mobilizing external resources to finance key activities, inparticular the DDR programs; and (iii) inadequate capacity not only to implement the PRS but also to evaluate its impact. 30. To pursue PRS objectives better and strengthen its implementation the following recommended actions are critical: (i)Keep the macroeconomic and policy framework for the PRS up to date. The current PRS framework might need to be revised inlight o f availability o f financing; (ii) uptheimplementationoftheDDRandSSRprograms; Speed (iii) theAPRinatimelymannerwithallrelevantstakeholderstoreceiveadvice Share and to provide information on implementation progress in a sequenced manner: a mid-year assessment before the beginning o f a new budget cycle would be most usehl to strengthen the links between PRSP programs, the MTEF and the annual budgets; (iv) Strengthen coordination among all relevant entities to improve the monitoring and reporting systems inorder to informpolicies and future actions; and (v) Finalize the analysis o fthe household survey and completing other key surveys in order to evaluate the impact o f the PRS. 31. Do Directors agree with staff assessment regarding(i) satisfactory implementation o f the PRS; and (ii) recommended actions critical to strengthening PRS implementation? on Central African Republic POVERTY REDUCTION STRATEGY PAPER (PRSP) 2008-2010 REPORT ON FIRST YEAR OF IMPLEMENTATION March 2009 CAR APR - EnglishTranslation.docjuin 15, 2009 (7:45 ) - -2- List of abbreviations and acronyms ACDA Agence Centrafricaine du DCveloppement Agricole [Central African Agency for Agricultural Development] ACFPE Agence Centrafricaine pour la FormationProfessionnelle et 1'Emploi [Central African Agency for Vocational Training and Employment] AFD French Development Agency AfDB African Development Bank AFRISTAT Economic and Statistical Observatory o f Sub-SaharanAfrica AIDS Acquired Immuno-Deficiency Syndrome ALPC Armes LBgkreset de Petit Calibre [Light and Small Caliber Weapons] APE Association des Parents d'El&ves [Association of Parentso f Students] ARCAD Appui au Renforcement des Capacitespour lamise en auvre du DSRP [Capacity- Building Assistance with respectto PRSP Implementation] ARV Anti Retro Viral ASECNA Agence pour la SecuritC de laNavigation ABrienne en Afrique et Madagascar [Agency for the Security o fAir Navigation inAfrica and Madagascar] BADEA Arab Bank for Economic Development inAfrica BDEAC Central African States Development Bank BEAC Bank of Central African States BEC Bureau d'Evaluation et de Coordination [Assessmentand Coordination Office] BONUCA U.N.Bureau inCentral African Republic CAR Central African Republic CAS/DFT Compte d'Affectation SpCciale de DCveloppement Forestier et Touristique [Special Earmarked Account for Forestry and Tourism Development] CBO Community-Based Organization CCIMA Chambre de Commerce, d'Industries, des Mines et de 1'Artisanat [Chamber o f Commerce, Industries, Mines, and Crafts] CEMAC Economic and Monetary Community o f Central African States CIMIC Civic Military Cooperation CNLS ComitCNational de Luttecontre le Sida [National Committee against AIDS] CNPT ComitCNational Permanentde Travail [Standing National Committee on Work] CNS Comit6 National StratCgique [Strategic National Committee] CNT ComitC National Technique [National Technical Committee] CNTS CentreNational de Transfusion Sanguine [National Blood Transfusion Center] COGES ComitC de Gestion [Management Committee] COOP1 Italian Cooperative CPR Centre PddagogiqueRegional [Regional Educational Center] CRESMIC Cadre de RCfCrence et Support MCthodologique MinimumCommunpour la conception d'un systkme d'Informations pour le suivi des DSRP et des OMDs [Frame o f Referenceand Common Core Methodological Support for Designingan Information System for Tracking the PRSPs andthe MDGs] CTP-PAS Comite Technique Permanentde suivi des Programmes d'Aj ustement Structure] [Standing Technical Committee for Monitoring Structural Adjustment Programmes1 DAD Development Assistance Database DCP Document Cadre de Partenariat [Framework Document on Partnership] DEA Dipl6me d'Etudes Approfondies [Advanced Degree] DEC Delegationo fthe European Commission DPI Dialogue Politique Inclusif [Inclusive Political Dialogue] -3- EDF EuropeanDevelopment Fund EITI Extractive Industries Transparency Initiative ENAM Ecole Nationale d'Administration et de Magistrature mational School of Administration and the Courts] EN1 Ecole Normale d'Instituteur [Teacher Training College] EPA EtablissementPublic Administratif [Administrative Public Entity] EU EuropeanUnion FA0 Foodand Agriculture Organization FDS Forcesde Defense et de Sdcurite [Defense and Security Forces] FER Fonds d'Entretien Routier [Road and Highway Maintenance Fund] FOSA Formation Sanitaire [Public HealthUnit] GAVI Global Alliance for Vaccines and Immunization GDP Gross Domestic Product HIPC Heavily Indebted Poor Country ICASEES InstitutCentrafricain des Statistiqueset des Etudes Economiques et Sociales [Central African Institute for Economic and Social Studies and Statistics] ICRA InstitutCentrafricain de Recherches Agronomiques [Central African Institutefor Agronomic Research] IFAD International Fund for Agricultural Development IIMM Insecticide Impregnated Mosquito Net IMCI Integrated Management of Childhood Illness JPN Jeunesse PionniBre Nutionale LAC Less Advanced Country LIW Labor-Intensive Work MDGs MillenniumDevelopment Goals MICS Multiple Indicators Cluster Survey MINURCAT United Nations Mission inthe Central African Republic and Chad MNNH Maternal-Neonatal Health MNT Maternal-Neonatal Tetanus MPECI Ministry of Planning, Economy and International Cooperation MTEF Medium-Term Expenditure Framework NGO Non-Governmental Organization ODA Official Development Assistance OEV Vulnerable Orphans and Children OMS World HealthOrganization PIR Programme Indicatif Regional [Regional Indicative Program] PLHIV Persons Living with HIV PPBMS Planning, Programming, Budgeting, and Monitoring System PRAC Projet de Reinsertion des ex-combattantset d'Appui aux Communautes [Project for the Reintegration o f Ex-Combattants and Support for Communities] PRGF Poverty Reduction and Growth Facility PRSP Poverty Reduction Strategy Paper PSES Projet Sante Education et SIDA [Health, Education, and AIDS project] TFP Technical and Financial Partner QUIBB Unified Questionnaire on Basic Welfare Indicators REP Regional Economic Program ROM ResultsOriented Management -4- RSS Rtforme du Secteur de la SBcuritC [Security Sector Reform] SNDS StratCgie National de Dheloppementde la Statistique [National Strategy for the Development of Statistics] SSN Systeme Statistique National [National Statistical System] ssv Suivi des Servicesde Vaccination [Tracking o f Vaccination Services] STN Secretariat Technique National [National Technical Secretariat] STP SecrCtariatTechnique Permanent [Permanent Technical Secretariat] SYDONIA ASYCUDA SYSGAD Automated Debt Management System UCM Unit6 de Cession du MCdicament [Medication Delivery Unit] UFDR Union des Forces De'mocratiquespour le Rassemblement UFVN Union des Forces Vives de la Nation UNDP United Nations Development Programme UNFPA United Nations Fund for Population Activities UNICEF UnitedNations Fund for Children U N S United Nations System USA United States o fAmerica USD United States Dollar (USD = CFAF 500) WCBA Women o f ChildbearingAge WFP World FoodProgramme -5- Contents Page LIST OF ABBREVIATIONSAND ACRONYMS ............................................................................................... 2 EXECUTIVESUMMARY ......................................................................................................................... 7 INTRODUCTION ........................................................................................................................................ 13 1 PRSPIMPLEMENTATIONCONTEXT . ....................................................................................... 15 1.1Generalinformation ................................................................................................................................... 15 1.2 Social and economic characteristics ........................................................................................................ 15 1.3 Review ofthe conclusions ofthe Brussels Round Table .................................................................... 16 1.4 Review ofthe midterm conclusions ......................................................................................................... 17 1.4.1Key governmentachievements ....................................................................................... 17 1.4.2 Key commitmentsof the developmentpartners ............................................................. 17 1.5.Conclusionsof the annual review ............................................................................................................ 17 2 EVALUATIOND'RACKINGAND INSTITUTIONALMECHANISM . ............................ 19 2.1 Institutional mechanism ............................................................................................................................ 19 2.2 Evaluationkrackingtools and statistical apparatus ........................................................................... 19 2.2.1 Statistical apparatus ... 2.2.2 Evaluation/tracking to 2.3 The participatorytracking mechanism and active communications ............................................. 21 2.3.1 Key outcomes ................................................................................................................. 21 2.3.2 Results obtained .............................................................................................................. 22 2.4 Capacity-building ........................................................................................................................................ 23 3 MACROECONOMIC SITUATION . ................................................................................................ 24 3.1 Macroeconomic trends ............................................................................................................................... 24 3.2 Foreigntrade ................................................................................................................................................ 26 3.3 Monetary situation ...................................................................................................................................... 26 3.4 Fiscalposition ............................................................................................................................................... 26 4 PRSP FINANCING . ................................................................................................................................. 27 4.1 Mobilization of domestic resources ......................................................................................................... 27 4.2 Structure of public expenditure ............................................................................................................... 28 4.3 Mobilization of external financing .......................................................................................................... 29 4.4 Status of commitments.payments. and expenditures in 2008 .......................................................... 31 5 ASSESSMENTOFPRSP IMPLEMENTATION . ....................................................................... 35 5.1. Restore security. consolidatepeace. and prevent conflict ................................................................ 35 5.1.1. Strengtheningthe humanand material capacities o f the FDS and thejustice system ...35 5.1.2. Reform. restructuring.territorial reorganizationand coordinated.participatory transformationo fthe FDS..... .................................................... 5.1.3. Sub-regionalsecurity. a ontain the proliferation of sma 5.1.4. Education. developmentand restoringtrust in the FDS ..................... 5.2. Promotegood governanceand the rule of law .................................................................................... 40 5.2.1. Promotion of good governance...................................................................................... 40 5.2.2. Create a favorable businessenvironment ...................................................................... 45 5.2.3. Promoting gender equality and equity ............ .......................................................... 46 5.3. Rebuildingand diversifyingthe economy ...................... ................................................................. 47 5.3.1. Modernizing agriculture and livestock raising ............................................ 5.3.2. Making better use of forest resources ............. .......................................................... 49 5.3.3. The mining sector ........................................... .......................................................... 49 5.3.4. Promoting the arts and cultural heritage ......... 5.3.5. Tourism development.................................................................................................... 51 5.3.6. Transportationinfrastructure ......................................................................................... 52 -6- 5.3.7. The energy sector........................................................................................................... 53 5.3.8. Telecommunicationsand ICT...................... ..................... 53 5.4. Developing humancapital ............................................... 5.4.1. Education ....................................................................................................................... 55 5.4.2. Health and HIV/AIDS ................................................................................................... 56 5.4.3. Youth and sport ..... ............................................... 5.4.4. Employment ... ............................................................. ..................... 59 5.5. Poverty assessment indi .................................................................................................... 60 5.5.1. Income indicators ........................................................... 5.5.2. Standard-of-living indicators...... ............................ ......................... 61 6 CONSTRAINTSAND OUTLOOK . .................................................................................................. 62 6.1 Main constraints and threats .................................................................................................................... 62 6.2 Outlook and main opportunities .............................................................................................................. 64 CONCLUSION .............................................................................................................................................. 68 N.B. The data for 2008 are estimates.The datafrom growing seasonn-llnwere not affectedduring year n ...................................................................................................................................................................... 81 Annex 4: Developmentsin the real GDP growth rate by sector ................................................................... 81 Annex 5. Foreigntrade by major group and product (in millions o f CFAF) .............................................. 82 Annex 6 Matrix of PRSP Priority Measures . .............................................................................................. 83 Annexes Annex 1 PRSP ImplementationMonitoring Matrix (draft version e) . .......................................................... 70 Annex 2.PRSPperformancemonitoring matrix.................................................................................................. 77 Annex 3 Development of key production activities . ............................................................................................ 81 Annex 4: Developmentsin the real GDP growth rate by sector ........................... Annex 5. Foreign trade by major group and product (in millions o f CFAF) ....... Annex 6 Matrix of PRSPPriority Measures . ....................................... -7- Executive summary 1. PRSP implementation'context The Central African Republic (C.A.R.) is a landlocked country in Central Africa that was profoundly affected by political and military crises during the period 1996-2003, leading to a serious deterioration inits economic fabric. An economic recovery began in 2006 with the support of the international community, but it remains slow. The reforms undertaken by the government and satisfactory implementation o f successive adjustment programs have enabled the C.A.R. to begin fiscal consolidation efforts, have led to a recovery of investment in the secondary and tertiary sectors and an upturn in consumption, and have allowed the government to make poverty reduction a priority in all policies. The PRSP was adopted against this backdrop during a national seminar in September 2007 and the HIPC Initiative decision point was reachedthat same month. To seek support for its post-conflict recovery efforts, the government organized a Round Table Conference inBrussels on October 26,2007 to mobilize its key partners around its PRSP objectives. It was followed by atwo-stage assessment ofthe commitments made: (i)aJune 2008 midtermreview took stock ofPRSP outcomessince October 2007 and ledto the adoption of a roadmap laying out the main stages for implementingthe priority PRSP actions in 2008. This review revealedthat 14 percent ofthe financing announced inBrussels had beenobtained; and (ii)a November 2008 annual review, which indicated that 80percent of commitments had been mobilized. 2. Evaluation/tracking and implementationmechanism Effective implementation o f the PRSP programs and projects is managed using an institutional framework that is currently being put into operation, a statistical apparatus, and a participatory mechanism. Five bodies make upthe institutional framework: The National Strategic Committee (CNS) is responsible for establishing the key PRSP implementation thrusts and is chaired by the Prime Minister.The U.N.Resident coordinator i s the vice chair. The National Technical Committee (CMT) i s responsible for maintaining a permanent dialogue between the government and each development partner and is chaired by the Minister of State for Planning, Economy, and International Cooperation; The National Technical Secretariat (STN) is responsible for technical coordination of PRSP evaluationhracking and implementation'and i s headedby an Expert Coordinator; The Sectoral Committees (CS) are responsible for developing and implementing sectoral strategies and are chaired by ministerial department heads, who are supported by lead managersfrom the development partners intervening inthe sector; The Regional Committees (CR) are responsible for participatory evaluationitracking of the PRSP and regional projects and are chaired byprkfets. A representative of civil society i s the vice chair. The statistical apparatus for tracking the PRSP is based on AFRISTAT's Reference Framework and Common Minimum Methodological Guidelines with three subsystems: (i) household living the conditions tracking subsystem; (ii) the program and project tracking subsystem; and (iii) program the and policy impact assessment subsystem. These subsystems complement each other and are an integral part of the results-basedmanagementapproach. -8- The main PRSP evaluatiodtracking tools are the reporting system, the performance indicators, the DevInfo database, andthe aid management andtracking system. Participatory tracking provides ownership o f the PRSP by communities, making them aware o f their role in ensuring effective participation and involvement in the selection o f policies and programs, priorities, and resources. Communication has been identified as a key tool for creating discussion and dialogue for sharing knowledge, expertise, and experience. The constraints affecting the proper finctioning o f the various components o f the mechanism are the result mainly o f capacity weaknesses, while the current capacity-building strategy has not yet filly achieved its results. 3. Macroeconomic situation In 2008, the C.A.R. economy was affected by the serious shocks at the international level: oil price fluctuations, the international financial crisis, the instability o f prices for its main export products, and the world food crisis, which resulted in a build-up of inflationary pressures. At the national level the persistence o f the energy crisis and the slowdown in economic growth resulted in a growth rate o f 2.8 percent, compared with 4.3 percent in2007. Prices rose in 2008, and the inflation rate was estimated at 9.3 percent, compared with 1percent in 2007. The resultant inflationary pressures were eased by government measures to lower taxes on certain staples. The foreign trade deficit increased 102.6percent from 2007 to 2008. The C.A.R. monetary situation in December 2008 was characterized by a 26.5 percent decline in net foreign assets from December 2007. For the period under review, credit to the economy increasedby some 10.3 percent Primary expenditure increased by 15.5 percent in 2008 as compared with 2007, and revenues by 10 percent owing to the improvement intax revenues. The gradual restoration o f external solvency continued with the clearance o f arrears and a three-year grace period for Paris club bilateral debt. Outstanding debt rose 0.7 percent from 2007 to 2008 while debt service declined 23.9 percent inthe same period. 4. PRSP financing PRSP financing needs are assessed at CFAF 633 billion in September 2007, or USD 1.3 billion, of which 66 percent has been allocated to Pillar 111, which focuses on economic recovery and diversification, and 23 percent to Pillar IV, which relates to development of human capital. Under the terms of the Brussels Round Table Conference, announced financing covers close to 40 percent o f expressed needs, leaving a financing gap o f 60 percent. Analysis of the financing gap shows that it is largest in Pillar I11(55 percent). As o f November 15,2008, USD 840 million had been mobilized under financing agreements signed in the context o f cooperation programs ranging from 3 to 6 years. To increase the share of domestic PRSP financing, the government has undertaken to improve its fiscal management and streamline budgetary allocations by nature and by sector. These commitments have led to: the introduction oftax and customsmeasures; effective implementation o fthe recommendations o fthe audit reports on the one-stop shop in Douala; -9- reform o f the Public Treasury; and increase in the share o fthe social sectors inthe overall budget. Inaddition, tax revenuesand investment expenditures included inthe government budget in2007 and 2008 rose 21.3 percent and 21.6 percent, respectively. Tracking the budgetary allocations for the priority sectors over the mediumterm will be facilitated by the introduction of aMedium-TermExpenditureFramework (MTEF), creating a link betweenthe PRSP programs and the budget. An appropriate mechanism has been put inplace for this purpose. 5. Status of PRSP implementation 5.1 Restoration of security, consolidation of peace, and conflict prevention The major actions undertaken by the government in this sector arise from the Security Sector Reform (SSR) and relate to: Central African Armed Forces (FACA) and the Gendarmerie personnel who have reachedthe age limit have been retired; the agreement with the donor to support the government in the payment o fwage arrears has been finalized; recruitment by competition at the national level; results are monitored by the local authorities and an external observer; a committee to review and update laws and regulations has been created and is operational; the multiyear sectoral estimates law (Zoideprogrammation) is being finalized; 960 memberso fthe Defense and Security Forces (DFS) have beentrained; 12 public awareness campaigns have beenorganized; "open doors" days have been organized; 25 illegal barriers have been dismantled. National Police the special status ofthe police has beenenacted(Law 08.016 ofMay 20,2008); public awareness campaigns have been organized for the judicial, administrative, and political authorities; 300 uniforms have beenprovided for the police by the Frenchtechnical assistanceauthorities. Justice 4 managersand 12 female prison guards have beentrained; the Legal Security Support Project (PRASEJ) is being implemented. Water and forests the Forestry Code has beenenacted(Law 08.022 ofOctober 17,2008); social mediators in the PEA management units under management agreements are making waterfront populations aware o f the distribution o f forestry taxes paid to the communes by the committee responsible for validation of the employment program and also host public awareness broadcasts on local rural radio. At the department level this campaign is taken up by the communications and extension unit, which hosts a radio and television broadcast, and by the Ministry of Water, Forestry, Hunting, Fishing, and the Environment, which has a column entitled "PENDERE GBAKO" in the print media. An economic observatory hasjust been created for this purpose, grouping various ministerial departments (Ministry o f Planning, Ministry of Finance, and the CTPPAS). The partners have recommended that information on resources flowing to the communities be posted inthe communes. -10- These efforts led to the inclusion of the Central African Republic on the agenda o f the United Nations Peacebuilding Commission (PBC) in June 2008. The main recommendations from the Inclusive Political Dialogue held in Bangui from December 8 to 20, 2008 have begun to be implemented with the: (i) establishment of the broad consensus government, (ii) introduction o f the committee monitoring the recommendations of the Dialogue, and (iii) upoftheDisarmament, DemobilizationandReintegration(DDR)processwiththecensusof start ex-combatants. 5.2 Promoting good governanceand the rule of law To promote a cultureo f democracy, respectof human rights, effective government, and effective fiscal management, continued efforts inthese areas have led to the following results: Promotinga culture o f democracy: an information sciencesdepartment has been created at the University o fBangui; a social dialogue has been initiated with the unions; the Inclusive Political Dialoguehas beenorganized. Promoting respect of human rights: 10 managers of units in the Office o f the High Commissioner for Human Rights have been trained; the draft Criminal Code, Code of Criminal Procedure, and Military Justice Code are under revision; the Central African Republicis inthe processofjoining the global information network. Enhancing the effectiveness o fthe government: the simplified government hiringprocedure is being applied; audits o fthe seven pilot ministriesare being organized. Fiscal consolidation: the SYSGAD software has beeninstalled inthe Debt Directorate; a computer system has been installed inthe General Directorate o fthe Budget and Treasury; a liquidity monitoring committee has been created; the law on the procurement code has beenadopted; the procurement regulatory authority has beencreated. Promotion o f gender equality and equity by means o f a national legal instrument promoting equal opportunities was continued with the organization of: (i) two training sessions on gender, reproductive health, HIV, and trackingievaluation inJune and July 2008, (ii) a training session on data collection in November 2008, (iii) public awareness sessions on two laws on reproductive health and the three protection of women against violence in September2008. 5.3 Rebuilding and diversifying the economy As part of the recovery and diversification of the economy, the government has focused its attention on agriculture and livestock, mining, forestry, tourism, energy, infrastructure, trade and the private sector, water and sanitation, and housing. Inthe mining sector, an audit was carried out for purposes of revising the MiningCode and a decree created an institutional framework for the Extractive Industries Transparency Initiative (EITI). Work was begun in the technical unit established for that purpose toward the adoption o f the standard agreementand its alignment with the Mining Code. -11- In the forestry sector, an interministerial technical committee including representatives of local communities was created to manage forestry and hunting taxes, the proceeds o f which will be deposited in an account opened with the Bank for Central African States (BEAC). In addition, a new Forestry Code was enactedon October 17,2008 and an economic observatory was created. Inthe tourism sector, 50 staff members of hotels and restaurantswere trained inreceptionand culinary arts techniques and 20 were trained intaxidermy. Inthe energy sector, a law creating the Agency for the Stabilization and Regulationof Oil Prices was adoptedand implemented. Inthe areaof infrastructure, activities focused on the rehabilitation of five roadstotaling 1177km, and the construction andrehabilitationofthree busterminals. In the area of trade, the creation of the one-stop shop for the formalities of setting up a company (GUFE) i s a significant step toward promoting the private sector by significantly reducing the time required to create a production unit, as are the establishment o f the Project Management Unit and the startup o fthe Integrated Framework. Two agencies have been created in the water and sanitation sector: the Water and Sanitation Sector Regulation Agency and the National Water and Sanitation Agency. The activities of these agencies have helped improve the living conditions o f beneficiaries and strengthened the capacities of the participants. Inthe housing sector, the blueprint for the city ofBangui has beenprepared. 5.4 Developing human capital To tackle supply problems in the education sector, activities have focused on the rehabilitatiodconstructionand equipment o f schools. Measures have also been taken to improve the quality of teaching: reading (4625) and mathematics textbooks (4625) have been purchased, 850 contract teachers have been recruited at the primary level, and the pupil/ teacher ratio was reduced from 96 to 82 between 2007 in 2008. To strengthen the partnership among the various participants in the educational system, 300 members of parent teacher associations in target zones were given awareness training on education for children, particularly girls. In the health sector, activities have focused on the rehabilitatiodconstruction and equipment of infrastructure inthe healthregions. For infant and maternal health, aplanto extend Integrated Care for Childhood Diseases (PCIME) was prepared for the period 2007-2011 and a new policy introduced five-in-one vaccines in September 2008. A tracking/evaluation plan for the national strategic framework for combating HIViAIDS was prepared in March 2008. More than 89 percent of condoms that were to be distributed were actually distributed in 2008, and 13 new management units were created. Inthe areas of employment, vocational training, and entrepreneurship, atechnical committee that will be broadenedto include other ministriesi s being createdto prepare for the national forum that will be tasked with preparing a national policy on employment and vocational training. The new draft Labor Code is being studied by the National Assembly. Sixty young people benefited from apprenticeship training with artisans, and 12 young people received assistance from the support fund for revenue- generating activities. -12- In the area of youth and sports, one youth and culture center has been rehabilitated and another has beenconstructed. As part of the Microprojects Program (PMR), experts in the guidance of managers of microprojects and Grassroots Community Organizations (GCO) have been trained, and 20 percent o f the economic and social microprojects put forward have been carried out. 6. Constraints and outlook Effective implementation of the PRSP is dependent on a series of conditions, including, in particular, the mobilization of resources, the effectiveness of the institutional framework, and the national and international economic context. After one year of PRSP implementation the main constraints and threats have been as follows: (i) mobilization o f resources, (ii)weakness o f human capacities, (iii) the international economic and financial crisis, and (iv) specific constraints in particular sectors, namely, agriculture, energy, and infrastructure, which are not yet fully playing their role. Despite these constraints and threats, the medium-termexercise i s beingcarried out against a backdrop o f opportunities that must be seized to ensure that poverty trends are reversed: (i) start-up o f large projects, (ii)establishment of the development centers, (iii) impact of the HIPC Initiative (reaching o f the decision point and completion point), (iv) more rigorous fiscal management, (v) gradual easing of the political climate, (vi) the Gleneagles scenario of more rapid achievement of the Millennium Development Goals (MDG), and (vii) subregional integration. -13- Introduction In September 2007, the Central African Republic adopted its first Poverty Reduction Strategy Paper (PRSP) prepared using a participatory approach with the support o f its development partners. This approach allowed for a consensus among the various stakeholders in the country and the developer partners, making this document a unique reference framework for government action. The PRSP includes both post-conflict recovery imperatives and measures to achieve the Millennium Development Goals (MDGs). The key objectives remain consolidating peace, creating wealth, and broadening accessto basic social services. The Central African Republic's PRSP was adopted as areference framework for fiture intervention by all the development partners during the Round Table Conference organized by the government in Brussels on October 26, 2007. The government received frank backing from the partners, which encouraged it to continue its efforts to implement its economic program supported by the Poverty Reduction and Growth Facility (PRGF). In implementation o f the recommendations o f this Round Table, in November 2007 the government drew up a list o f 155 priority programs and projects to be put forward for donor financing inthe context of sectoral consultations that will take place in sectoral round tables. The PRSP evaluatiodtracking and implementation institutional framework was formalized in Prime Ministerial Decree 003 of March 12,2008. This decree provides a mechanism consisting of five bodies namely: (i)a National Strategic Committee; (ii)a National Technical Committee; (iii)a National Technical Secretariat; (iv) Sectoral Committees; and (v) Regional Committees. The implementation o f this mechanism, which i s currently under way, will lead to ownership and affirmation of the national leadership, as well as real involvement o f all national stakeholders in the PRSP implementation process. As part of the PRSP implementation mechanism and the actions decided during the Brussels Round Table, a midtermreview o f the commitments made by the government and the partners was organized on June 26, 2008 in Bangui to measure progress made. At the conclusion o f this midterm review, a roadmap was prepared and adopted, setting out the major actions to be taken by the government in 2008. As a direct outcome o f the permanent dialogue with the partners and concerted implementation o f the PRSP, an annual review o f the implementation o f the PRSP commitments and actions was also organized on November 20, 2008 in Bangui with a view to: (i) taking stock o f progress made in achieving the poverty reduction goals and (ii) proposing any necessary adjustments to improve the results. This PRSP implementation reporthas a dual purpose: (i) take stock ofPRSP implementation in to 2008 and (ii) identify the constraints and difficulties that hampered action during this period and the outlook for the Central African Republic inpursuing its PRSP implementation ina more satisfactory manner. The participatoryprocess, which is the principlethat has prevailed untilnow, was again implemented in accordancewith the tradition o f promoting participationand involvement o fthe various stakeholders. From amethodological viewpoint, this first PRSP implementation report was prepared in several stages: establishment in August 2008 of an interministerial committee in the Ministry o f Planning, Economy, and International Cooperation (MPECI) responsible for preparing the annual review. In a series o f meetings, this committee prepared a pre-report based on the various implementation reports from the ministerial departments; review and expansion o f the implementation pre-report in September 2008 by the sectoral and thematic committees inaccordancewith their mandates; submission of the pre-report to the Technical and Financial Partners (TFP), private sector organizations, and civil society for their comments and contributions in October 2008; -14- preparation o f the draft report in mid-October 2008 by a small team o f MPECI experts, which proposed revisions to take account o f the comments and amendments received from the TFP and other stakeholders; presentation o f the various sectoral reports on November 20, 2008 to the National Strategic Committee followed by finalization of the first draft with the assistance o f the World Bank and UNDP; release o f the report by the Minister of State for Planning, Economy, and International Corporation during the seminar organized on February 11, 2009 as part of the ongoing dialogue with all the stakeholders. This report focuses on six key points: the general context for the exercise, with an overview of the general and socioeconomic characteristics of the Central African Republic, the conclusions o f the Brussels Round Table, and the midterm review; the institutional mechanism for PRSP implementation, particularly the institutional framework, the statistical apparatus, and aspects related to the participatory approach and capacity-building; the current macroeconomic situation, comparing it to the reference framework used for the PRSP; PRSP financing, with a focus on resource needs and their mobilization; the structure of this report, describing in detail, pillar by pillar, in the form of a status report, the objectives pursued, outcomes, and any results; the constraints and outlook for the PRSP evaluatiodtracking and implementation exercise, to shed more light on the difficulties encountered so as to identify the adjustments needed to continue the exercise under more favorable conditions. This report on the first year o f PRSP implementation could not take account o f all the indicators on which it was supposedto be basedowing to: (i)delayed adoption o fthe list of these indicators, (ii) the weakness o f some structures in the national statistical apparatus, and (iii)insufficient resources for implementationo f some priority actions. By presenting its report in the form of a comparison between objectives, outcomes, and results, the aim ofthe government was to call on all its development partners and donors to draw lessonsfrom this first year o f PRSP implementation and, if necessary, adjust the programs and strategies for the coming years. -15- 1. PRSPimplementationcontext 1.1 General information The Central African Republic i s a landlocked country in Central Africa. It measures 623,000 km2and i s bordered in the north by Chad, in the east by Sudan, in the south by the Congo and the Democratic Republic o f the Congo, and in the West by Cameroon. It is located between 2' and 11' latitude north and 13" and 27' longitude east. The population o f the Central African Republic is ethnically diverse and the unifying factor i s Sango, the national language, which is spoken throughout the country. The population, which was estimated at 4,250,000 inhabitants in 2007, is unevenly distributed, with an average density of 7 inhabitants per km2.The dependent populationis inthe majority, to the extent as those under 18 years of age and over the age of60 represent 50 percent and4 percent, respectively, ofthe total population. Because of its geographic location, the Central African Republic benefits from favorable climatic conditions and i s endowed with rich agricultural lands and enormous natural resources, such as wood, gold, and diamonds, the exploitation o fwhich remains rudimentary and artisanal. However, numerous military and political crises have seriously damaged the social and economic fabric and weakened the economic capacity o f the government and the private sector. As a result, the Central African Republic is one o f the least developed countries (LDCs), ranked 171st out of 177 countries according to the UNDP Report on the Human Development Index for 2007. The returnto constitutional order in2005 with the holding o f free and transparent elections and the establishment o f most o fthe republican institutions led to an easing o fthe political climate. In this renewed climate of peace, the government has made poverty reduction the priority of its development policy since 2006, adopting its PRSP in September 2007 and reaching the decision point o fthe Heavily IndebtedPoor Countries Initiative (HIPC) that same month. 1.2 Social and economic characteristics Currently, a recovery is under way with the support of the international community, but it has been slow because o f the enormous task o f bringing the productive apparatus back into operation, particularly the basic infrastructure. However, the reforms undertaken by the government and implementation of successive programs have led to some progress with fiscal consolidation, a resumption o f investment, and a recovery of consumption. In 2007, the economy remains dominated by the primary sector, particularly food production, livestock, hunting, and forestry, which produced more than 50 percent o f national wealth. In the secondary sector, the extractive industries are dependent on global prices for metals. In the area of trade, the Central African Republic offers basic cash crops (coffee and cotton), diamonds, gold, and timber as its main exports. Diamonds and timber represent almost 80 percent o f export revenues. The share o f national exports in world exports is 0.002 percent today, compared to 0.14 percent in 1965, and the most important imports are oil products and food products, which explains the country's vulnerability to the global food and energy crises. These two groups of products represent40 percent ofthe value o f imports. As for the budget, as an imperative for post-conflict recovery, the reforms undertaken by the government are today giving the public authorities access to greater budgetary resources for the operation o f public services and investment. In2007 revenues mobilized totaled CFAF 83.6 billion, or USD 167.2 million, against expenditures onthe order of CFAF 68.5 billion, or USD 137 million. Looking at the social situation, poverty affected close to 67.2 percent of the population in 2003. This endemic poverty i s more pronounced in rural areas, where the rate stood at 72 percent, than in urban -16- areas (59 percent). Geographically, three regions have been identified as the most vulnerable in comparison with the rest of the country: region 3 (Ouham and Ouham-Pendk), region 5 (Haute-Kotto, Vakaga and Bamingui-Bangoran) and region 6 (Basse-Kotto, Mbomou and Haut-Mbomou). These are either regions with little economic potential, or areas affected by conflict. The educational situation in 2007 was characterized by a net enrollment ratio o f 51.4 percent at the primary level and a completion rate of 31percent. The literacy rate for persons 15 to 24 years of age i s 45.7 percent for boys and 25.9 percent for girls. In2006 inthe health sector, the key indicators showed the infant mortality rate at 106 per thousand, the infant andjuvenile mortality rate at 176per thousand, the maternal mortality rate at 1355 per hundredthousand live births, and the rate of births attendedby medical personnel at 53.4 percent. Access to road infrastructure remains very limited, with a density o f paved roads of 0.17 km per thousand inhabitants. Similarly, just 7.8 percent of householdshave access to electricity. 1.3 Review of the conclusions of the Brussels Round Table The Brussels Round Table Conference, held on October 26, 2007 at the initiative of the government, was aimed at launching an appeal to the international community to make it aware o f the dramatic situation that Central African Republic could face and to invite it to support the C.A.R. in its post- conflict recovery efforts. The C.A.R. was supported in this approach by the European Commission, the UNDP, and the World Bank. The conference brought together representatives of 17 countries, 25 international organizations and financial institutions, and 2 NGOs. Presentationsmade on (i) the economic and financial situation, (ii) PRSP, and (iii) new vision the the of a better partnership for coordination o f ODA gave the participants an opportunity to assess the situation inthe Central African Republic. The government reaffirmed its intention o f making poverty reduction the priority of all its development actions through implementation o f the PRSP. It made commitments to the international community to create an environment favorable to mobilization o f the necessary resources to implement the PRSP projects and programs. These commitments related inparticular to: 0 pursuit o fthe structural reforms undertakento restore security and the rule o f law, macroeconomic stabilization, completion o f the HIPC Initiative, and improvement o f governance with greater involvement ofthe private sector, civil society, and the general population; formal introduction and implementation o f the institutional framework to accelerate the affirmation o f national leadership inthe implementation and evaluatiodtracking o fthe PRSP, with an information system to track the living conditions of households, project and program implementation, and the impact o fthe strategy; prioritization o f programs and projects, and organization of sectoral round tables and regular consultations to accelerate and consolidate the dialogue with the development partners. The developer partners congratulated and encouraged the government in its efforts. They also promised bring their full support to the implementation of the PRSP and some gave quantitative indications o f their financial contributions for the coming years, specifically the European Commission (EC), the World Bank, the AfdB, France, and the United Nations agencies. Other development partners indicated their willingness to make commitments later. Promised donations for the period 2008-2010 totaled more than USD 600 million. This support from the developer partners included: a financial contribution for the completion of programs and projects; technical and financial support for the PRSP evaluatiodtracking and implementation institutional framework; -17- support for the organization o f sectoral round tables and regular consultations for the financing of PRSP programs and projects; consideration o f all forms o f bilateral and multilateral cooperation that could help with PRSP evaluation/tracking and implementation. 1.4 Review of the midterm conclusions A midterm review ofthe Brusselscommitments was organized on June 26,2008 inBangui to measure progress made. The PRSP outcomes since October 2007 were measured as well as the fulfillment of commitments, and a roadmap was prepared to frame the priority actions to be taken for the remainder o f2008 This initial assessment made it possible to measure progress made in achieving the programmed actions and to track mobilization o f the announcedresources. 1.4.1 Key government achievements The review showed that substantial progress had been made in the areas o f political, economic and financial governance and security: the preliminary global agreement to hold the Inclusive Political Dialogue was signed with the political and military groups, and the measures to ease tensions had been taken to promote this forum, which was intended to place the Central African Republic on the road to sustainablepeace; financial and economic reform efforts were followed by fiscal measures, steps to manage the payroll, the securing of customs revenues, the Kimberly process, and the Extractive Industries Transparency Initiatives (EITI); the PRSP implementation lawshegulations were prepared and signed by the government, as well as lawshegulations specifying the missions, composition, and functioning of the sectoral committees. The national leaders of the sectoral committees and the lead managers o f the ' development partnersguiding the processfor implementing the PRSP were also appointed; the National Seminar on the Reform of the Security Sector was organized, and its conclusions were translated into actions inthe short and mediumterm to preparethe strategy for the sector. 1.4.2 Key commitments of the development partners The assessment showed that USD 96 million, or 14percent o f the funds announced during the Round Table, were confirmed by the partners in agreements signed essentially by the United Nations agencies. Other more recent agreements have been concluded with the bilateral and multilateral partners and could increasethe level of contributions. 1.5 Conclusions of the annual review An annual review of the commitments of the Brussels Round Table for PRSP implementation was organized by the government on November 20,2008 in Bangui. It respondedto the concern expressed by the participants in the Brussels Conference for the need for ongoing dialogue and made it possible, one year after this important conference, to assess progress made in the implementation o f the PRSP againstthe Brussels commitments. This review gave the government, the development partners, and representatives o f civil society and the private sector an opportunity to assess the start-up of the PRSP implementation process and the level of national ownership through presentations by the heads of the Sectoral Committees, on the basis o f the four strategic pillars o f the PRSP, the constraints hampering the process, and the volume and nature o f resourcesmobilized. -18- The nine chairmen o f the Sectoral Committees reviewed progress with PRSP implementation in their respective sectors namely: (i) reform o f the security sector; (ii) governance; (iii) private sector, trade, regional integration, and employment ; (iv) gender equality and poverty reduction; (v) rural development and food security; (vi) basic infrastructure; (vii) water and sanitation; (viii) education; and (ix) health and HIV/AIDS. The main constraints revealed by these presentations are found both at the national level and with the development partners. At the national level: (i) difficulties related to the establishment o f the PRSP institutional framework, particularly the Sectoral Committees, including their Thematic Groups, and the Regional Committees, which constitute the basic structures for implementationofthe national poverty reduction strategy; (ii) the still incomplete ownership ofthe strategy by the national stakeholders; (iii) national weaknesses inthe area of resource managementand mobilization. With the partners: (i) often long and complex procedures hampering the rapid mobilization of resources needed for the programmed activities; and (ii) the weakness ofexistingtechnical support to the sectoralcommittees. The developer partners reaffirmed their commitment to supporting the government in the PRSP implementation process, and the stakeholders agreed to continue the dialogue on preparation o f the Action Plan for implementation o fthe Paris Declaration. The resources mobilized in late 2008 totaled USD 840 million, as compared USD 96 million at the midyear review. The share o f resources corresponding to the PRSP period totaled USD 755 million, or 56.5 percent ofthe needs expressedat the BrusselsRound Table. -19- 2. Evaluation/trackingand institutional mechanism The general objective of the mechanism i s to track and report on the impact o f poverty reduction programs and policies on the living conditions of the population. Specifically this involves: (i)establishing an institutional PRSP tracking/evaluation mechanism, (ii) creating an information system to tracwevaluate poverty reduction programs and results, and (iii) organizing community participation of all the stakeholders in developing programs and policies, tracking their implementation, and evaluating their impact. 2.1 Institutional mechanism The implementation of PRSP programs and projects remains an ongoing concern o f the government, and the establishment o f an operational institutional framework is an important step in creating the permanent mechanismsfor tracking the government's commitments and implementation.ofthe priority programs. The pilot institutional framework to track PRSP implementation was created by Prime Ministerial Decree 003 of March 12,2008 and constitutes a step toward greater accountability at the national level and institutionalization of a dialogue framework with the Technical and Financial Partners (TFP). It includes: (i) National Strategic Committee (CNS), (ii) National Technical Committee (CMT), a a (iii)NationalTechnical Secretariat (STM), (iv)9 SectoralCommittees (CS), and (v)7 Regional a Committees (CR). The National Strategic Committee is chaired by the Prime Minister, giving it the ability to make decisions in real time. The fact that the secondvice chairman i s the U.N.Resident Coordinator i s an indication of the government's commitment to maintainingthe dialogue ina spirit o f transparency. Likewise, the requirement that this committee report to the National Assembly on the results o f its work helpsto strengthenthe participatory process. The National Technical Committee and the Sectoral Committees are balanced intheir membership betweenthe public sector, the development partners,the private sector, and civil society organizations. This structure makesthe Regional Committees the foundation o f participatoryevaluation of implementation o f the PRSP inparticular and development projects ingeneral and ensures their effectiveness in organizing and taking into account the necessaryrelations with the various parts o fthe government. The complete mechanism i s gradually being put inplace. The CNS held its two annual sessions for 2008 (June andNovember). The chairman ofthe CMT organized awareness meetings with the development partners. The S T N played its role inpreparing the reports on the sessions of the CNS and the CMT and it also preparedand implemented awork program for the secondhalfof2008 and organized periodic meetings with the experts and Sectoral Committees. The Permanent Technical Secretariats (STPs) o fthe Sectoral Committees that are operating (security sector reform, gender equality and poverty reduction, trade, private sector and employment, water and sanitation, and basic infrastructure) haveheldtheir first sessions. The constraints hampering the operations ofthe Sectoral Committees and other bodies are: (i)insufficientqualifiedstaff,(ii)lackofpremisesandequipment(computersandperipherals),and (iii)insufficientfinancialresources. 2.2 Evaluation/tracking tools and statistical apparatus 2.2.1 Statistical apparatus The evaluation/tracking mechanism provided in the PRSP follows the Results-Based Management (RBM)approach, which focuses on ongoing tracking of inputs, outcomes, outputs, results obtained from these outputs, and anticipated impact ofthe results. -20- For purposes o f PRSP evaluatiodtracking, the various participants were grouped in an information system with three subsystems proposed by AFRISTAT in the Reference Framework and Common Minimum Methodological Guidelines (CRESMIC): (i) "household living conditions tracking" the subsystem; (ii) the "project and program implementation tracking" subsystem; and (iii) "program the and policy impact assessment" subsystem. These three subsystems complement each other and fit together perfectly. The "household living conditions tracking" subsystem i s headed by the C.A.R. National Statistical Institute(ICASEES) and groups the sectoral statistical units andthe planning andresearchdirectorates of the sectoral ministries. This subsystem will be used to (i) produce reports on the results of the statistical survey operations, (ii) preparethe poverty tracking report, (iii) update the DevInfo database, and (iv) produce the report on progress and achievement o f the MDGs. The programmed statistical operations are listed inthe following table. Table 1:Multiyear program of statistical surveys and operations for PRSPtracking Source CA R PRSP 2008-2010 Completion of the statistical operations planned for 2008 was expected to provide most of the PRSP evaluation/tracking indicators. However, only the CWIQ survey was carried out. The results will be available in May 2009 owing to constraints relating to: (i)the delayed purchase and availability of equipment (scanner and scales), (ii) the lack of technical assistance, and (iii)failure to master the technology and insufficient financial and logistical resources. The data collected are currently being processed and analysis will take place in May 2009 with the assistance o f a World Bank consultant. The results will be used to define reference indicators (including the poverty profile) for tracking the PRSP. To enable ICASEES to carry out its mission effectively, it must finalize and implement the National Statistics Development Strategy (SNDS). The "project and program implementation tracking" subsystem concentrateson physical and financial tracking. It is under the coordination of the General Director for Economic Programming, and the secretariat is provided by the Programming Directorate and Budget Directorate. It i s responsible for production of (i) a project database, (ii) report on the aid management system (Development Assistance Database-DAD), (iii)a Development Cooperation Report (DCR) and (iv) a report on implementation o f the Paris Declaration. The definition and choice o f indicators for tracking poverty reduction projects carried out is one of the priorities of this subsystem, and for that purpose it must track the list of approximately 150 results and outcome indicators that were selectedintwo workshops (June and September 2008) and working sessions organized with the sectoral departments. These matrices have three key functions, namely, to enable: (i) ICASEES to feed the DevInfo database; (ii) managers to track and guide PRSP implementation; and (iii) development partners to track efforts the made and results obtained by the government The "program and policy impact assessment" subsystem should make it possible to measure poverty reduction progress through (i)selective research reports on the impact of policies and programs, (ii)thePRSPimplementationimpactreport andannualreports.This subsystemiscoordinatedbythe STN and includes ICASEES, the General Directorate for Strategy and Policy, the planning directorates o fthe various ministries,civil society, and the private sector. -21- 2.2.2 Evaluatiodtracking tools The main evaluatiodtracking tools for the PRSP are the reporting system, the performance indicators, the DevInfo database, and the aid managementand tracking system (DAD). The reporting system has been developed and includes all outputs of the three subsystems mentioned above and the performance indicators ofthe sectoral and regional committees. The current version of the performance indicators for tracking the PRSP and MDGs includes output indicators and results indicators. The DevInfo database developed with the support o f the U.N. agencies includes as many sub- databases as are needed. A provisional version o f the database is gradually incorporating the PRSP tracking indicators. The aide management system (DAD) that is being finalized should make it possible to provide better coordination and tracking of Official Development Assistance (ODA). 2.3 The participatory tracking mechanismand active communications Development o f the PRSP has given rise to many consultations and evaluations with all the stakeholders: the population, the government, nongovernmental organizations, civil society organizations, the private sector, and external partners. The government has undertaken to continue this participatory process during implementation of the strategy. Thus the aim of the communications and participation components is to create a dialogue that will promote involvement of all the development partners in the implementation and evaluation/tracking o f the PRSP strategies and programs. The participatory approach seeks to ensure ownership of the PRSP by the communities (representatives of grassroots communities, the private sector, civil society, the decentralized and devolved units of the government, and specific groups such as women, young people, persons living with HIV/AIDS, ethnic minorities, etc.) to make them accountable for their role and encourage their effective involvement and participation in the selection o f policies and programs, priorities, and resources. It also involves identifying and encouraging their effective contributions to the outcomes, the evaluatiodtracking of these outcomes, and consensual assessment of their impact. Finally this participatory approach contributes to the search for self-reliant development that will ensure sustainable reduction of poverty beyond the projects and programs currently under way. In this context, communications becomes a key tool for creating a forum in which to share knowledge, savoir-faire, and experiencethat strengthenthe idea o f a "community of destiny." 2.3.1 Key outcomes Following the Brussels Round Table Conference, a campaign to disseminate and publicize the contents of the PRSP was launched. This campaign, which was directed at all stakeholders in the PRSP preparation process, took the form of meetings and workshops to enable the stakeholdersto take ownership o fthe implementation strategies. The regional workshops, which were held in the seven regional capitals, lasted four days each. An average o f 60 persons participated in each workshop from all the communes in the regions concerned and identified by their status and/or professional activities. The operational objectives o f the regional or local workshops were: to explain the stakes involved and implementation o f the PRSP to representatives o f the population, civil society and nongovernmental organizations (NGOs), the government, the private -22- sector, associations representing specific social groups (young people, women, persons living with HIV aids, etc.) to mobilize them around the national poverty reduction strategy; on the basis o f an analysis, to assess local priorities, related problems, and the best possible solutions; to encourage the participants to take ownership o f the PRSP evaluatiodtracking and implementation process by committing to it formally. During the first dissemination campaign, which took place from January to March 2008, 2500 national strategy documents were distributed in six regional workshops. Workshops were organized in Bangui for the 120 members of the National Assembly, 40 representatives o f the media (public and private), 35 civil society organizations, 40 junior parliamentarians, and 1500public service managers. To consolidate the PRSP institutional framework, missions were organized to help the population establish their Regional Committees. These missions provided an opportunity to meet/discuss with representatives o f the various local stakeholders and exchange views with them on the modalities for establishing the Regional Committees. The discussions focused on interpreting the responsibilities of the Regional Committees described in Title V of Decree 003 of March 12,2008 creating the Poverty Reduction Strategy Paper (PRSP) EvaluatiodTracking and ImplementationFramework. The main objective was to provide technical support to the populations in the regions as they established the PRSP Regional Committees by working with them to identify individuals to chair the governing bodies of the RegionalCommittees. The interministerial missions, placed under the aegis of the Office of the Prime Minister, included representatives o f the following departments: Ministry o f the Interior and Public Security, the Office o f the High Commissioner for Decentralization and Regionalization, and the Ministry of Planning, Economy, and International Cooperation. They were held inthree phases and led to the establishment o fthe 7 Regional Committees inthe administrative regions. All the activities organized were covered by the public and private media. A communications strategy and action plan were prepared to disseminate information on the PRSP activities at all levels: national, regional, local, and international. For communications purposes, time was reserved on radio and television for occasional broadcasts by the PRSP communications team and other stakeholders on PRSP activities. For the radio broadcasts, two hours were reserved on listener call-in talk shows twice a month, one hour for each language: Sango and French. The first broadcasts involved the PRSP dissemination missions in December 2007. The MPECI website was also used to disseminate PRSP documentation. The creation of a magazine entitled "DSRP ActualitC" (PRSP Update) completesthe range o f communications tools on all poverty reduction issues inthe Central African Republic. 2.3.2 Resultsobtained Completion o fthe various programmed activities createda real interest on the part o fthe populationin all the regions visited, and the people expressed their willingness intaking part in the implementation o fthe national poverty reduction strategy. The public and the sectoral committees are becoming aware and beginning to involve themselves in the PRSP implementation process. In fact, some sectoral committees have developed their strategies and preparedawork program that could result in sectoral round tables. The actions taken have begun to produce results. The participants (grassroots communities, local authorities, and civil society organizations) have recognized this as "an opportunity for each region to become involved inthe development process and that not to take advantage o f would be self-defeating given the healthy competition developing among the regions." As a result, each o f them intends "to -23- assume all its responsibilities," provided, they say, that the necessary resources are mobilized and that their effective involvement inthe implementation ofthe strategy is guaranteed 2.4 Capacity-building Capacity-building is the key to PRSP implementation, and a capacity-building program has been developed to ensure the institutional and technical effectiveness of the mechanism. It has six components: (ii) organizational and institutional capacity-building, (ii) technical capacity-building, (iii)development ofthecapacitiesoftheparticipants, (iv) strengtheningofthecapacitiesofregional delegations responsible for two-way communications, (v) logistics, and (vi) management of motivations. Organizational and institutional capacity-building should make it possible to establish and improve the functioning o fthe dialogue and guidance structures, particularly the National Statistics Council (CNS), the mission of which will be coordination and standardization. This council will be responsible for establishing nomenclatures, methodologies, concepts, and definitions for statistics and for conforming to international regulations. Organizational and institutional capacity-building also involves accurately defining the data-sharing responsibilities o f the CNS, the CMT, the Sectoral Committees, and the Regional Committees. Capacity-building i s aimed at training all those involved in producing, processing, analyzing, and disseminating data to lead the three subsystems o f the tracking/evaluation statistical apparatusthrough training workshops, seminars, and specific education programs leading to diplomas. To revitalize the regional delegations, whose role is essential in the operation o f the Regional Committees, capacity-building actions (training, provision of equipment and supplies) are proposed. Officials in these regional delegations will be trained in data collection using surveys and analysis of administrative records. This capacity-building will take place at the same time as that of the Sectoral Committees. Logistical support will involve providing the PRSP structures with computer equipmentisoftware and peripherals to support real-time processing o f the data collected. Management of motivations is an important part o f providing encouragementto the staff of the bodies making up the PRSP evaluatiodtracking institutional framework, in order to reward the true value o f the efforts requiredto achievethe results. Concrete capacity-building actions are already under way, with the training o f middle management in statistics at ENAM, the launching o f activities for the preparation o f the National Statistics Development Strategy (SNDS), and multifaceted support from AFRISTAT on prices, national accounts, surveys, etc. Finally, the PRSP Implementation Capacity-Building Project (ARCAD) is part o f the capacity- building process. Focusing on capacity-building in the areas o f planning, programming, budgeting, and tracking/evaluation, its contribution is key in the preparation of realistic, operational priority action plans. -24- 3. Macroeconomic situation The Central African Republic's PRSP provides two reference macroeconomic frameworks. The first, the prudent scenario, is based on recent economic trends and underpins the economic program receiving assistance under the Poverty Reduction and Growth Facility (PRGF). The second so-called dynamic scenario i s based on the government's commitment to reduce poverty substantially in the medium term. Covering the period 2008-2010, the second scenario is based on a global recovery in all sectors and anticipates an annual average growth of 8.5 percent. This growth, which i s intended to be pro-poor, should make it possible to significantly increase the income and well-being of the population. It i s basedon arecovery inthe primary sector, essentially agriculture, whose contribution to overall growth is estimated at approximately 50 percent, and increased activity in the forestry and mining sectors. A recovery i s also anticipated in the secondary sector, along with an increase in public investment in favor of the reconstruction o f roads and production infrastructures and a resumption o f private investment. In the tertiary sector, growth should result from the restoration of telecommunications services; reform o f the trade sector with the promotion o f forestry, mining and agricultural exports; and a recovery inthe tourism sector. '3.1Macroeconomic trends According to 2008 estimates (see Table 2 below), this year has been characterized by a slowdown in growth and a resurgence o f inflation. The real GDP growth rate i s estimated at 2.8 percent, compared with 4.2 percent in 2007, a decline due in part to: (i) climatic conditions that were unfavorable to certain agricultural activities (irregular rainfall); (ii) a decline in activity in the water, electricity, and mining subsectors; (iii)delayed disbursements from the international community, despite the effective mobilization o f donors at the Brussels Round Table in support o f PRSP implementation; (iv) a high degree of dependence of government finance on the banking system notwithstanding the observed improvement in the mobilization of domestic resources; (v) the international financial crisis in the developed countries (United States and European countries) early inthe second half ofthe year, which ledto a contraction in global demand for basic export products; and (vi) the recent rise inthe exchange rate of the euro against the American dollar, which had a negative impact on the competitiveness o f export products. Even the tertiary sector, which had seen sustained growth.in 2007, slowed considerably. Annex 4 provides data on trends inreal GDP growth rate by sector and indicates that very few sectorswere able to sustain growth between2007 and 2008. 7 Table 2: Key macroeconomic indicators Indicators 2007 2008 Spreadbetweenannual variations in 2008 (estimates) Estimate PRSP framework 4.20% 2.80% 8.50% -1.40% 4.3% 2.6% 1.3% -1.30% 5.2% 1.3% -3.90% -Tertiary 3.8% 7.6% 5.0% -2.60% Investmentrate 10.2% 10.3% ~ 12.1% 23.8% 1.80% Inflation rate 6.6% 1.0% 9.3% 8.30% Source: CTP/PAS, CEMAC -25- The resurgence of inflation results from (i) world food crisis that followed the increase inthe price the o f staples, and (ii) the rise in oil prices in the first half of 2008 to the record level of USD 147 per barrel inJuly before beginninga downward trend. Box 1below presents the dynamic PRSP scenario. Box 1: Monitoring of the dynamic scenario for the macroec omic famework 2008 objectives and conditions for success 2008 outcomes andconstraints (i) real growth rate of 8.5 percent (i) real growthrate of 2.8 percent (ii) investmentrate of 23.8 percent (ii) investmentrate of 12.1percent (iii)moderateinflationrate (iii) inflation rateof 9.3 percent (iv) conditions for success: (iv) difficulties and constraints: - two new companies in the timber sector receive their - the two timber operatinglicenses were canceled licenses andwill beginoperatingin 2008 - the hunting and fishing sector should benefit from - real GDPof the huntingand fBhing sector declined capacity-building in 2008 as well as the restoration of securityto increase its production - the distribution of fertilizer and seeds and promotion of - some actions, particularly humanitarian actions, were animaltractionresultedinincreased cottonproduction sustained, but did not allow the reconstruction sector to achieveits objective - new planting and the rehabilitation of collection channelsresultedinincreased coffeeproduction - coffee production instead trended downward in 2008 by comparisonwith 2007 (Annex 2) - increased security onthe routes taken by livestock raisers andrehabilitationof health control posts shouldencourage - the livestocksector continued to grow, but at a slower pace livestockraising than anticipated - increased mining output from artisans, intensificationof the effort to combat fraud, and start-up of operations of - diamond production declines, while gold production Aurafrique, Uramin-Areva,and Gem Diamond. increases. Aurafrique and Uramin-Areva are still in the exploration - rehabilitation of the Boali 3 plant should result in a stage 15percent increaseinenergy - the Boali 3 plantwas notrehabilitated Estimated growth rate trends in 2008 also show the gap with the PRSP framework forecasts. The PRSP framework, which anticipated a growth rate o f 8.5 percent, was justified by a vast investment program in key sectors such as (i)rural development and the development centers, (ii)transportation and infrastructure, (iii)energy and mining, and (iv) security. The growth rate of 8.5 percent corresponded to an investment rate of 23.8 percent. Outcomes show that it could not be met. The government recognizes that the conditions for achieving the projected economic growth rate were not there in 2008 and some obstacles remain, in particular: (i) structural environment o f the C.A.R. the economy (landlocked, underequipped, lack of security, etc.), (ii) delays in the rehabilitation of basic infrastructure (roads, energy, communications, etc.), (iii)delays in the improvement o f absorptive capacities, and (iv) constraints still hampering the effectiveness o f ODA. Aware of the fact that poverty reduction will not be achieved without strong, sustainable growth, the government intends to revise this dynamic scenario to channel opportunities that will enable it to double the investment rate inthe mediumterm. Prices rose in2008 andthe inflationrate was estimated at 9.3 percent, compared to 1percent in 2007. This was due inpart to the commodity crisis, particularly the sharprise in oil prices, which reacheda record level of USD 147 in July 2008, as well as shortagesof some food products owing to global price increases.Government measuresto lower the Value Added Tax (VAT) from 19 percent to 5 percenton food and oil products helped to ease inflation. -26- 3.2 Foreign trade The international economic context in 2008 affected the Central African Republic's foreign trade, both imports and exports. The value of exports of goods and services in 2008 was estimated at USD 202.4 million, or CFAF 101.2 billion, compared with USD 244.4 million, or CFAF 122.2 billion, in 2007, a decline of 17.2 percent from 2007. Two factors help to explain this trend: (i) the declining volume for the main export products, particularly timber, diamonds, and coffee, and (ii) the depreciation ofthe dollar vis-a- vis the euro. Imports o f goods and services totaled USD 455 million (CFAF 227.5 billion) in 2008 compared with USD 369 million (CFAF 184.5 billion) in 2007, a 23.3 percent increase explained by: (i) higher the volume o f imports of key staples and investment goods, and (ii)the rise in import prices, particularly owingto higher transportation costs. The rise in imports combined with the decline in exports led to a deterioration in the trade balance. The overall trade deficit increased from USD 122 million (CFAF 61 billion) in 2007 to USD 226 million (CFAF 113 billion) in 2008. The impact of this worsening deficit on the country's foreign assets has beenmitigated by the fact that these imports come for the most part from the CEMAC zone. 3.3 Monetary situation The monetary situation as at December2007 was characterized by: (i) 3.8 percent contraction inthe a money supply, which was estimated at USD236.8 million, or CFAF 118.4 billion, in2007, compared with USD246 million, or CFAF 123 billion, one year earlier; (ii) a decline innet foreign assets of 26.5 percent during the same period, from USD 86 million (CFAF 43.0 billion) to USD63.2 million (CFAF 31.6 billion); and (iii) a 6 percent increase in domestic credit owing essentially to government borrowing from local banks to cover the payroll taxes on its operations. At the end o f2008, net foreign assetshaddeclined2.8 percent from 2007 levels, although this decline is modest compared to the average inthe CEMAC subregion. During the period under review, credit to the economy rose 10.3 percent, from USD 118.2 million, or CFAF 59.1 billion, to USD 130.4 million, or CFAF 65.2 billion. The C.A.R. has the lowest rate of coverage o f lending by deposits (93.9 percent) o f the CEMAC zone. Finally, the government's indebtednessto the banking system deteriorated by 17.2 percent in a region where governments are generally creditors, although the situation inthe zone has worsened somewhat from 2007. 3.4 Fiscal position The government undertook to boost the level o f public revenues from 9.0 percent o f GDP in 2006 to 12.6 percent in 2010. This increasewas to be basedessentially on increasedeconomic activity, expansion o f the tax base, and improved performance o fthe tax administrations, and it was to lead to a better distribution o f national revenue in favor o fthe poorest segmentso fthe population. The strategy to be put inplace in support o fthis objective was to continue the reforms begun with the Bretton Woods Institutions, particularly government divestiture and reform o fthe financial administrations, which were also supported by the European Union. Fiscal revenueshave beenincreasing since 2006, rising from USD 146.8 million, CFAF 73.4 billion, in2006, to USD 167.2 million, CFAF 83.6 billion, in2007, an increaseof 14 percent.Expenditure in 2007 stood at USD206.2 million, or CFAF 103.1billion, a decline o f 5.2 percent from 2006. This contraction is explained by the drastic drop ininvestment expenditure owing to the difficulties in mobilizing external financing, the amount ofwhich at USD 40.4 million (CFAF 20.2 billion) in2007 was a 33.2 percent decline from 2006 (USD 60.4 million, CFAF 30.2 billion). -27- The 2008 budget calls for USD 197 million, or CFAF 98.5 billion, in revenues(11percent o f GDP), an increaseof 17.8 percent over 2007. Domestically financed expenditure is set at approximately USD 194.4 million, or CFAF 97.2 billion, an annual increaseo f 11 percent. This will lead to an overall fiscal deficit o f about USD 32 million, or CFAF 16 billion, for 2008. Primary expenditure in2008 totaled USD 161.2 million (CFAF 80.6 billion) compared with USD 136.2 million (CFAF 68.1 billion) in2007, an increaseo f 18.3 percent. Revenues collected totaled USD 184million(CFAF 92 billion), comparedwith USD 167.2 million(CFAF 83.6 billion) in2007. This 10 percent increasei s the result of improved tax revenues, while nontax revenues declined slightly. The gradual restoration of external solvency has been achieved through the clearance of arrears and a three-year grace period on bilateral debt to the Paris club. Inaddition, the Central African Republic could soon benefit from the HIPC Initiative. Outstanding debt increased by 0.7 percent between 2007 and 2008, from USD 961.4 million (CFAF 480.7 billion) to USD 968.6 million (CFAF 484.3 billian), while debt service declined by 23.8 percent over the same period from USD 56.4 million (CFAF 28.9 billion) to USD44 million (CFAF 22 billion). In2007, the Central African Republic satisfied two ofthe four convergencecriteria for the CEMAC: (i)basicfiscalbalanceasapercentageofGDPof0.5 percent(standard>zero)and(ii)averageannual inflationrate o f 1 percent (standard < 3 percent). For the other two criteria, namely, (iii) total outstanding public debt as comparedto nominal GDP (85.4 percent) and (iv) accumulation of external arrears (USD 16 million or CFAF 8 billion), the situation deteriorated somewhat from the previous year. The first two criteria showed a marked improvement, continuing the trend o f recent years, while the deterioration inthe thirdcriterion marks a contrast with the strong downward trend ofthe past three years. Although the first convergencecriterion was achieved in2008 (fiscal balance equal to 0.56 percent o f GDP), the inflation, rate of 9.3 percent is above the community standard (3 percent). Likewise, while the debt/GDP ratio declined from 84.5 percentin2007 to less than 80 percent in2008, this still above the community standard. 4. PRSP financing 4.1 Mobilization of domestic resources The state budget is the main source o f financing for the government's strategy. Domestic resources remain relatively modest, owing to the various conflicts that the country has faced in recent years, which considerably weakened the government and its apparatus. When it presented its PRSP at the Brussels Round Table, the government hoped its partners would provide the necessary resources for its implementation. Despite the difficult economic situation, it i s committed to continuing its own efforts toward poverty reduction, some o fwhich were begun long before the adoption ofthe PRSP. As soon as the strategy was adopted, the government rapidly took steps to implement certain actions with domestic financing, particularly reform measures, reflecting the political will o f the public authorities to do everything possible to implement the key pillars of its strategy to substantially reduce poverty. The following table shows its fiscal potential inthe pasttwo fiscal years. -28- Table 3: Domestic resources2007-2008 (inCFAF billion) 2007 2008 Headings Outcomes Estimates Rate of change Total revenues 83.6 92.5 10.6% Tax revenues 66.6 70.7 6.1% Taxes on income and profits 13.1 14.6 11.5% Taxes on goods and services 31.9 33.9 6.3% Taxes on internationaltrade 14.5 16.5 13.8% Other tax revenues 7.1 5.7 -20.2% Nontax revenues 17.0 21.8 28.5% 4.2 Structure of public expenditure Budgetary allocations have been rationalized, both by nature and by sector. Looking at 2007 and 2008, it is evident that allocations have been maderationally to achievethe objectives o fthe strategy. Investment expenditure allocations in the budget increased 21.6 percent from 2007 to 2008, although total resourcesrose only 10 percent in the same period (see Table 4). This budgetary structure reflects the willingness of the public authorities to control operating expenditures seen as unproductive, while favoring investment, which finances the creation o fwealth and development. Investments totaled USD 86.6 million (CFAF 43.3 billion) in 2008, compared with USD 38 million (CFAF 19 billion) and USD 75 million (CFAF 37.5 billion) for purchases of goods and services and remuneration of personnel, respectively. Wages increased 7 percent over 2007 in the context o f recruitment and training in the education sector. Table 4: Budgetary allocations by type ofexpenditure (inCFAF billion) Source: GeneralDirectorate ofthe Budget The share o f resources allocated to debt repayment declined by 14 percent from 2007 to 2008, reflectingthe negotiations for debt cancellation and relief after the C.A.R. reachedthe decision point underthe HIPC InitiativeinSeptember2007. As far as sectoral allocations o f expenditures are concerned, analysis of the situation in the priority sectors, namely, national education, public health and population, social affairs, and rural development, between 2007 and 2008 shows an improvement in the resources allocated to these sectors(see Table 5 below). -29- Rate of achievement during the first nine months of 2007 2008 2008 in YO Allocations Share Allocations Share Without With arrears Priority sectors in percent in percent arrears National education 11,382 13.6 13,256 13.5 74.8% 92.0% -Operations 10,924 13.1 11,990 12.2 89.7% 110.3% -Investment 458 0.5 1,266 1.3 0.0% 0.0% Public health and population 6,798 8.1 12,061 12.2 40.1% 43.7% -Operations 6,501 7.8 7,130 7.2 109.9% 120.1% -Investment 297 0.4 4,93 1 5.0 1.5% 1.5% Social affairs 831 1.0 3,063 3.1 12.8% 17.0% -Operations 730 0.9 802 0.8 89.7% 119.1% -Investment 101 0.1 2,26 1 2.3 0.0% 0.0% Rural development 2,438 2.9 3,134 3.2 54.6% 65.3% -Operations 2,193 2.6 2,373 2.4 89.6% 108.2% -Investment 245 0.3 761 0.8 6.9% 6.9% Total for priority sectors 21,449 25.7 31,514 32.0 51.2% 1 60.8% TOTAL 83,600 100.0 98,500 100.0 GOVERNMENT BUDGET 4.3 Mobilization of external financing To promote strong, sustainable growth at an average annual rate o f 8.5 percent beginning in 2008 and to improve the well-being o f the population of the Central African Republic, the government has set a very ambitious macroeconomic and budgetary framework in the Poverty Reduction Strategy Paper (PRSP). This stated willingness o f the government to confront the situation head on gave rise to the dynamic PRSP scenario. The resources that need to be mobilized to achieve the objectives of growth and poverty reduction for the period o f2008-2010 under this scenario are substantial. Based on September 2007 estimates, the expenditures neededto implement the PRSP four pillars total approximately USD 1.3 billion, or CFAF 633 billion, distributed as shown inTable 6 below -30- Table 6: Project costs by PRSP pillar (USD 1= CFAF 475) Pillars -e: Ministry of Planning, Economy,and International Cooperation Analysis of the distribution o f needs by pillar shows that Pillar 111, which deals with economic recovery and diversification, captures 66 percent o f total resources, reflecting the importance of the pillar in terms o f areas covered and the priority given to promoting growth (see Chart 1). The challenge for this pillar encompasses the challenge o f attracting the private sector, whose investments are essentialto extending the action of the government in favor o f the productive sectors. Next, Pillar IV on development of human capital requires 23.6 percent, showing the interest in boosting the social sectors and supporting improvements in productivity. These two pillars capture more than 90 percent o f the overall allocation, with the other two pillars (Iand 11) sharing the remaining 10 percent of resources. Chart 1: Distribution of financing needs by pillar Pillar 1 5% Pillar2 Pillar4 6% 23% /' ,________jj/_j_ \ The trend observed in the expression o f needs over the period 2008-2010 shows a rate o f increasethat is in line with the gradual maturation o f projects to be carried out as the PRSP is implemented, which is no longer reflected inthe rate o f commitments (see Table 7). -31- Table 7: Financingobtained compared with estimated commitments Commitments in USDmillion Mobilizations inUSDmillion Financi Pillar 2008(*) 2009 2010 Beyond Total 2008(*) 2009 2010 Beyond Total nggap Consolidation ofpeace 31.2 4.5 12.3 48 49.7 12 11.3 19 34.2% Governance andthe rule 15.3 I 23.2 45.5 31.9 6.8 44.1 39.5% of law Economicrecovery 212.3 93.9 32.1 69 467.3 180.1 202.2 21.1 20.1 423. 54.9% 5 Human capital 11.3 48 51.6 116.9 135 53.6 39.1 64.5 292. 41.4% 8 I Total , 390.1 , 153.4, 125.2 , 6 9 , 737.7, 402.7, 274.6, 78.1 , 84.6, 840, 49.9%, m:Ministryof (*) Includingprior to2008 Planning, Economy,and International Cooperation Committed or announced financing corresponds to close to 55 percent of total needs expressed, leaving a financing gap o f 45 percent. However, if we look only at PRSP implementation, this gap increasesto almost 50 percent. An analysis shows that the financing gap is largest for the third pillar (55 percent), showing how little the sectors for this pillar were considered inthe areas of concentration of ODA in the Central African Republic. The government hopes to take this into account when budgetary allocations of domestic resources are made, while at the same time it will plead with some donors to ask them to support these growth sectors. The resourcesactually mobilized by the signing of a financing agreement on November 15, 2008 total USD 840million, including USD 402million for 2008. The 2008 amount takes into account the resources mobilized for 2007 and 2008, in the amount of USD 203 million and USD 199 million, respectively. The fact that some pillars have committed resources exceeding needs or mobilized resources exceeding commitments is explained by the cooperation frameworks signed between the government and some donors prior to 2008, and humanitarian aid, the flow o f which is growing. The same explanation holds true for the pillars that benefit from disbursed resources exceeding mobilized resources. USD 755.4 million have been mobilized for the period 2008-2010. The mobilization of resources involves both the government and the development partners. The government intends to takes various actions to meet these challenges, particularly structural reforms under the PRSP, preservation o f the climate o f peace and socioeconomic stability that are essential for all development actions, development and implementation of sectoral strategies and policies that are consistent with the PRSP and that take account of the MDGs, and development and launching o f an intense communications campaign to mobilize the additional resources needed for implementation of the PRSP and MDGs. The partners for their part are askedto increasetheir financial support, to align that support to national priorities, and to ease disbursement conditions and procedures. 4.4 Status of commitments, payments, and expendituresin 2008 Provisional data on commitments, payments, and expenditures distributed among the four pillars of the PRSP for 2008, and their respective areas, are indicated inTable 8 below, which shows the various outcomes achieved with development aid as compared with humanitarian aid. -32- Table 8: Status o f commitments, payments, and expenditures in 2008 (USD million) 21.53 I 47.46 44.66 the rule o flaw Pooulationand eender 0.62 I 1.11 I 1.06 1 Arts and culture I 1.04 1 1.04 1 0.98I World development 6.70 3.87 4.53 I Developmentaid Water and sanitation 5.71 I 4.78 I 4.48 Economy Energy 1.19 1 2.25 I 1.08 Forests 3.06 I 7.70 I 4.54 Human capital Coordination,logistics, and commonfund 17 89 I 7 03 8 44 1 Water and sanitation 292 I 240 I 160 Humanitarian Education I 8.51 I 2.76 I 2.68I Protection I 1.33 1 1.21 I 1.29I Recovery and infrastructure 3 06 2 46 147 Health 457 I 484 1 5 45 Food security and agriculture I 43.13 1 42.39 1 26.77I m:Ministryof Grand Total 260.85 249.99 198.78 Planning, Economy, and International Cooperation (DAD). I Box 2. Definition o fOECD terminologv ' Commitments: A firm obligation, expressed in writing in the year in question, undertaken by an official donor to provide specified assistance to a recipient country, multilateral organization, or nongovernmental organization, along with specific financial conditions and for specific purposes Commitments are recorded in the full amount of the expected transfer, irrespective of the time required for the completion o fpayments. " Payments: The provision o f resources to an implementation agency or disbursement o f funds by the public sector. Payments are recorded in the full amount o f the transfer, irrespective o f the time requirement to complete the expenditures. For regular resources o fU.N.agencies, the inclusion o f the resources inthe accounting system constitutes payment. I"Expenditures: Transfers in cash or in cash equivalents to beneficiaries or implementation agencies for the provision o f goods or services as shown in invoices. receiots. vouchers or other similar accounting documents. -33- Box 3. Constraints owing to the provisional nature o f the DAD data It should be noted that commitments and payments may cover multiyear actions. This makes it di fficult to compare commitments, payments, and expendituresat this time owing to the following cons@aints: the transition toward the ODA management system (DAD) began only in the third quarter of 2008. As a result, the figures used in the DAD based on the OECD codification are not necessarily comparable to those initially collected manually, although the DAD was able to record 80 percentof data for 2008; the accountingsystems of many of our partnersdo not for the momentprovide reliabledata prior to March 15,2008; the deadline for the release of the first reports with 95 percentreliability by the DAD system i s expected in April 2009; this constraint nonetheless puts us a step aheadof the OECD, which typically will present its 2008 figures during the third quarter of 2009. Humanitarian aid continued to account for a substantial share of the foreign assistance received by the Central African Republic in 2008 (see Chart 2), at 26 percent. It is concentrated in the area of food security and agriculture. The distribution of development aid expenditures confirms the critical situation inPillar 3 (25 percent), although it i s wealth-creating for poverty reduction (see Chart 3). The governance sector was a focus in 2008 with 35 percent o f expenditures targeting the many reforms conducted by the government during the period. The security and peace and health sectors follow with 15 percent, respectively, o f expenditure. Chart 2: Distributionof expenditurein 2008 (in YO) Develop- mentAid 146 4 (74%) HumanitarianAid 52 3 (26%) I Source: Ministry of Planning, Economy,andInternational Corporation (25%) Governance and the rule of law, 51.1 (35%) Source:Ministry of Planning, Economy, and International Corporation -34- Charts 4, 5 and 6 below show that comparedto the various PRSPpillars, humanitarian aid receives the largest share, interms o f commitments signed, payments received, and expenditures made. Chart 4: Commitments signed in 2008 (in USD million) 0 10 20 30 40 50 60 70 80 90 100 Security, peace, and justice 28.8 Governance and the rule of 28.3 law 1 Economy 55.1 Human capital 62.5 1 Humanitarian aid 86.2 -e: Ministry of Planning, Economy, and International Cooperation Chart 5: Payments receivedin 2008 (in USD million) 0 10 20 30 40 50 60 70 80 90 100 Security,peace,andjustice Governanceand the ruleof law Economie Economy Humanitarianaid 77.8 m:Ministry of Planning, Economy, and International Cooperation -35- Chart 6: Expenditures made in 2008 (USD million) 0 10 20 30 40 50 60 70 80 90 100 Secunty,peace, andjustice Governanceand the rule of law Economy Humancapital Humanitarian aid m:Ministryof Planning, Economy, and International Cooperation 5. Assessmentof PRSPimplementation 5.1. Restoresecurity, consolidate peace, and prevent conflict The security and peace situation inthe CAR is very fragile, undermined by the weakness and the high degree of politicization ofthe security forces, a defectivejudiciary system, and poor governance. Without a modicum of peace and security, and some assurance againstthe outbreak of new conflicts, it is utopian to think that the programs and projects included inthe poverty reduction strategy can be implemented satisfactorily. Aware of this situation, the governmenthas made it the first pillar of its PRSP to restore security, consolidatepeace, and prevent conflict. The four areas of focus selectedfor implementing this pillar are: Strengtheningthe humanand material capacities of the FDS (defense and security forces). Reform, restructuring, territorial reorganization and coordinated, participatory transformation ofthe FDS, including preparationof a white paper. Sub-regional security, and efforts to contain the proliferation of small arms and light weapons. Education, developmentand restoring trust betweenthe public and the FDS. 5.1.1. Strengtheningthe humanand materialcapacitiesof the FDS and the justice system During the period under review, the government has taken a series of measuresto strengthen the FDS, including: 0 Reinforced staffing for the gendarmerie, where 196 new agents ("student gendarmes") are now being trained. 0 Establishmentof a school for officers and sub-officers: 60 students have been admitted inthe first cohort and are undergoingtraining. -36- a Continuation training of2 to 8 weeks for members ofthe FDS: 960 agents have receivedtraining in civics, ethics and international humanitarian law, financed by the government. a Provision of uniforms and various materialsto the police force: 300 police officers have been,outfitted by the Frenchtechnical cooperationauthorities. a A national commission has beenestablishedto draw up a legislative framework for the municipal police. a Introduction of a refresher training system for national police agents inpartnership with BONUCA. a 12 outreach campaignsfor people in areas where garrisons are to be reestablished. a Lobbying for funds (US$lO million raisedthrough the Peace Consolidation Fund). a Prime ministerial order instituting the framework of action for sectoral implementation and follow-up. a The military programming law is being finalized. a A committee has been establishedto publicize international humanitarian law (IHL). a Guidelines are under discussion for preparationof the national defense white paper. Inthejustice area, the following efforts have been supportedby UNDP, the EUandthe World Bank: The high courts of Bozoum, Bossangoa, Kaga Bandoro and Sibut have beenequipped with vehicles, office furnishings and computers. Two courthouseshave beenbuilt at Bossangoaand Kaga Bandoro, andthose of Bozoum and Sibut havebeenrehabilitated. 22 regional courts are operational. Continuation training has beenprovided for magistratesat ERSUMA inBenin. 42 magistrates and 5 court clerks have been trained at ENAM in Bangui. Other court officers havebeentrained at NdClC and Birao by MINURCAT. Judges ofthe Court of Accounts havebeen sent for professional development in Paris and Cotonou. The Court ofAccounts budget has been increasedfrom US$lO,OOO (CFAF 5 million) in 2008 to US$40,000 (CFAF 20 million) in2009. These measures are targeted at the police, the army and thejustice system, which are the key iinksinthe chain responsiblefor preserving law and order andthe observanceofhuman rights. These measures are expectedto improve the behavior of the FDS and prison guards, and thereby help create a climate ofconfidencethat will reassure the public and reducethe number o frepeat offenders in detention. 5.1.2. Reform, restructuring, territorial reorganizationand coordinated, participatory transformationof the FDS The purposeofthis initiative is to establish a secure environment that will foster development ina context that is democratic, transparent, equitableand respectful ofthe rule of law, by strengtheningthe management of security institutions and establishing FDS that are competent, professional, and respectful of the country's laws. The most important activity in2008 was the national seminar on reforming the security sector, held inApril in Bangui. The conclusionsfrom that seminar will be usedto address the challengesidentified with respectto this pillar. Inpreparationfor the seminar, 11members of -37- the preparatory committee receivedtraining with UNDP support. The conclusions from the seminar were submitted to the CARStechnical and financial partners at a meeting in YaoundC, May 25-27, 2008. The final report was officially submitted to the authorities and published on August 23,2008. Since that time, the governmenthas been working to implement the various conclusionsand recommendationsfor addressingthe challenges identified. An adhoc committee has beenset up to review all laws andregulations relatingto the FDS. The upgrading ofthe CentralAfrican Police has beenenshrined inLaw 08.016 ofMay 20, 2008, the Special Police Statute. 5.1.3. Sub-regionalsecurity, and efforts to contain the proliferation of small arms and light weapons The unfortunate security situation inthe CAR is attributable in part to the proliferation of small arms and light weapons resulting from recurrent conflicts inneighboring countries, especially Chad, Democratic Congo, and Sudan. The government intends therefore to work with its neighbors at the sub-regional level and to pursue cross-border initiatives to consolidatethe peace. The processofreducing and controlling small arms and light weapons saw the collection of 921 weapons by the PRAC and MINURCAT. Under the PRAC, 4,590 former combatants have beendemobilized and socially reintegrated; 429 weapons collected were incineratedon August 23, 2008. The government has launcheda series of steps that it will be pursuing with the aid ofits partners. Inparticular, it has enormousand pressingneeds for surveillanceofthe territory in generaland of its borders in particular. The admissionofthe CAR onJune 12, 2008 intothe action plan ofthe UnitedNations Peace Building Commission marks the international community's recognition ofthe efforts the government has already, and ofthe challengesthat must be overcome to achieve the objective of consolidating peace in what is a very unstableregion. 5.1.4. Education, development and restoringtrust in the FDS The lack of professionalism inthe FDS andthe absence oftrust betweenthe security forces and the people have been identified as the main obstacles to reconciliation and the restoration of peace and a sustainable climate of security. The government intendsto pursue actions already underway to protect the public andto develop a police force that is focusedon prevention and that can work with the local community. To reestablishand strengthentrust betweenthe public andthe FDS, 12outreachsessions for local people have beenorganized, funded by the government, inareas where garrisons are to be reestablishedandthe FDS are to be redeployed. These sessions include CIMIC (Civilian- Military Cooperation), sporting and culturalactivities. At the initiative ofthe Ministryof Defense, several dismantling and control missionshave been conductedthroughout the country, and 25 illegal roadblockshave been removed. Inaddition, training hasbeenprovidedto make village and neighborhoodchiefs inthe cities of Bossangoa,Bozoum, Kaga Bandoro and Sibut aware of the limits oftheir powers, and discussionsessions have beenheld inthe schools betweenthe police and national NGOs. -38- These activities have created a more relaxed environment that now needs to be rapidly consolidatedby seekingconsensus on the country's major problems. This is the desire of most Central Africans, who have focused their sights on implementing the conclusions from the Inclusive Political Dialogue. Several steps have been takento lay the groundwork for this dialogue: A peaceaccordbetweenthe Central African Government andthe Front Democratique du Peuple Centrafricain (FDPC) was signed at Syrta inLibya on February 1, 2007. A peaceaccordwas signedwith the Uniondes ForcesDdmocratiquespour le Rassemblement(UFDR) on April 1, 2007, at Birao, the capital of the Vakaga. A peaceaccordwas signedwith the ArmCe Populaire pour la Restaurationde la Democratie (APRD) on May 9, 2008 at Libreville, Gabon, mediatedby the President, El Hadj Omar Bongo Ondimba. A Global Accord was signedonJune 21, 2008 at Libreville, mediatedby the GabonesePresident. Three amnesty laws were voted on September 29,2008 by the National Assembly and were promulgatedby the Head of State on October 13, 2008. The Inclusive Political Dialogue (IPD) was held in Bangui from December 8 to 20, 2008, involving all Central African political protagonists.It producedfrank discussion and a consensus on the country's major problems, and strong recommendationswere adopted inthe following areas: (i) politics and governance, (ii) security and armed groups, and (iii) socioeconomic development. Of particular importancewas the adoption of the principle of establishinga new government that would runthe affairs of state by consensus. Among the first fruits ofthe IPD recommendations was the establishment in January 2009 of a government basedon broad consensus, and a census of former combatants as part ofthe DDR program. -39- Activities/measures 2008 achievementsand constraints Retirement of personnel at the age limit Personnelat the age limit have been and multiethnicrecruitment, finalization retired, and the agreementwith the donor of an agreementwith the donor to help for helping the government pay salary the governmentpay salary arrears. arrearshas being finalized. A national recruitment competition is being supervisedby the local authorities and an external observer. Create an ad hoc committee to revise and A committeeto review and update laws update all laws and regulations and regulations is now operating Prepareand adopt a military The Financial ExpendituresProgramLaw programming budget law is now being finalized Develop a program of civic and ethics 960 FDS members have beentrained instruction (International Humanitaria.n Law) for the Army Hold monthly press briefings on the Not achieved status of government reform activities Conduct local outreachactivities in 12 outreach campaigns have been garrison reestablishmentzones, including organized. CIMIC, sporting and cultural events. "Open door" days have been instituted Review the mechanismfor dismantling 25 illegal roadblocks have been illepal roadblocks dismantled - Adopt a special statute for the police Natioi 11Police - The special police statutehas been promulgated (Law n"08.016 of May 20, 2008) - Hold periodic meetings betweenthe press - Awareness campaignshave beenorganized and the FDS for political, administrative andjudicial authorities - Equip the FDS with uniforms and - 300 police kits suppliedby the French materials technical cooperation authorities. - Justice Train and assign wardens and guards to - 4 wardens and 12 guardshave beentrained women's prisons for women's prisons -Implement the RSS (security reform) - The Judicial Security Support Program project (PRASEJ) is underway (Law 08.022 of October 17, 2008) -Community awareness campaign and a permanentsystem of public information ' Social communicatorsare working under on forestry sector activities contract inthe PEA (forest operation and -40- managementpermit) unitsto make local people aware of how forestry taxes are being distributed to the communes by the committee responsiblefor vetting the employment program, and they are hosting awareness programs over local radio. This campaign is being repeatedat the departmental level by the outreachand awareness service which sponsors radio and TV broadcastsand publishes articles inthe press, under the "Pendere Gbako" program initiated by the Ministry of Water and Forests, Hunting, Fishing andthe Environment. An economic observatory has beencreated for this purpose, embracing several ministerial departments (Ministry of Planning, the Ministryof Finance, CTPPAS). The partnershave recommendedthat information on financial flows to the communities should be posted inthe communes. 5.2. Promotegood governance and the rule of law Restoring peace and security is a prerequisitefor any development activity. Good governance and restoration ofthe rule of law are thus the secondpriority, and they constitutethe second pillar ofthe PRSP. This pillar is expectedto restore private sector confidence andto boost investment. It is also intendedto promote democracy and humanrights, to combat corruption, to improve fiscal management, etc. Intime, the government hopes to use the outcomes ofthis pillar to increasepublic investment in infrastructure,by devoting fewer resourcesto defense, armaments and security.The two key themes of this pillar are the promotion of good governanceand of gender equality and equity. 5.2.1. Promotionof good governance Promotionof a democratic culture.The planto promote a democratic culture embraces four activities: (i)introduction of a support planfor the National Assembly, the Constitutional Court, the High Council of Communication, and the National Dialogue Follow-Up Committee (CDADN); (ii) reorganizationand capacity building for civil society; (iii) developmentof media capacitiesto communicatea democratic culture; and (iv) promoting a permanentpolitical and social dialogue. All ofthese activities have now begun. Measures have been taken to support public institutions and civil society and to strengthen their capacities.Among other moves, the Media Observatoryhas been establishedand outfitted, a department of information and communication sciences is being createdat the University of Bangui, community radio stations are being set up in rural areas (Paoua, Kaga- Bandoro, Birao) and the broadcastingcenter at Bimbo is being expanded. Inconnection with the Inclusive Political Dialogue, a preparatorycommittee hasrecordedsignatureofaccords with four rebel movements, a generalamnesty has been issuedfor all involved, and a political conference was held inDecember2008. Severaldialogues have also been launchedwith the -41- labor unions. UNESCO and China have provided funding for these activities inthe order of US$1.6 million, or CFAF 790,706,000. Promoting human rights. 10 officers have beentrained for the High Commission for Human Rights. To improve public administration and make it more effective, the general statute of the civil service is being revised andorganizational audits of seven pilot ministries are being finalized. Strengtheningthe rule of law. Three activities were planned: (i) revision and update of legislation, digitization ofthe Official Gazette, and membership inthe Global Legal Information Network (GLIN); (ii)construction of courthouses and detention centers throughout the country; and (iii)reinforcing the capacities ofjustice officials and auxiliary staff. Improving fiscal management.Fiscal reforms are designedto addressthe constraints inherentinthe structuralweakness of public revenuesand investment, inadequaterules and proceduresfor managingthe public finances, and the low level of computerization. Seven activities were planned: (i)preparation and adoption of new budgetary and accounting classifications; (ii)preparationand introduction of guidelines and manuals of expenditure proceduresand control; (iii)update of the tax base and taxation regimes; (iv) strengthening the customs clearing house at Douala andestablishingthose for Pointe-Noire and Garoua; (v) upgrading the customs facilities at Bamboula and BCloko; (vi) introducing an integratedfiscal managementsystem (SIGFIP); and (vii) establishinga transparent framework for government procurement. These reforms will make it possibleto achievethe program objectives supportedby the Poverty Reduction and Growth Facility (PRGF) under the "prudent" (trend) scenario of the PRSP. The principal objectives for fiscal managementare to enhance State revenuesby 0.7 percentagepoints to 10.9% of GDP in 2008, and to bring public investmentto 4.6% of GDP in 2008. Inaddition, measureshavebeentaken to comply with the treasury audit recommendations (AFRITAC CENTER mission), with the following results: The legal framework for fiscal managementhas been strengthenedwith adoption and signature of Organic Budget Law 06.013 of June 3, 2006, the signatureof several decrees including those governing the organization and functioning of the Ministry of Finance and those establishing generalaccounting rules for government and regulating government expenditureprocedures. 0 Budget reconciliation law: accounting records for 2007 and 2008 have beenupdated and recorded, andthe resulting managementaccounts will be available in June 2009. 0 Budgeting: the initial draft of the Medium-Term Expenditure Framework (MTEF) was revised following the workshops held inMarchand April 2008; the technical monitoring committee was establishedin September 2008 by inter-ministerial decree 618, and is now operational. Revenueenhancement:the GeneralDirectorate ofTaxation is now using the SYSTEMIF software to improve its taxpayer records; the General Directorate of Customs is using the SYDONIA software; tax compliance has been improved and tax -42- audits increased; humanresources at the Douala customs office have beenreinforced, and a formula for quarterly determination of oil prices at the pump has been introduced. 0 Expenditure control: a simplified procedurefor administrative and financial managementof government civilian and military personnelhas been instituted by decree; new budget and accounting classifications have beenpreparedand harmonized; the SYSGAD software has been installed inthe debt managementoffice; an interagencycommittee has beencreatedto examine requestsfor tax waivers and exemptions; cash managementhas been improved with the creation of a liquidity monitoring committee; a planhas been adoptedto clear the government's domestic arrears; and the treasury has stopped issuingchecks not coveredby cash balances.The GESCO software has been installed inthe General Directorate of Budget and Treasury for tracking expendituresthroughout the budget chain. 0 Transparency: the treasury's asset accountswith commercial banks have been audited, andthe report is available; the decree restricting the opening and managementof State bank accounts is being enforcedas an important step to reestablishinga single treasury account (CUT); Law 08.017 of June 6, 2008 was adopted, establishingthe government procurementcode andthe delegationof public services; Decree 08.321 of September 5, 2008 governs the organization and operation of the General Directorate of Procurement; and Decree 08.335 of September 20, 2008 governs the organization and functioning of the procurement regulatory authority. 0 Customs: training has been provided for customs officers; codes governing procedures for the movement of merchandiseand surveillance personnelhave been prepared; the customs office at Douala was shut down following complaints againstthe contractual operator (UNITECH Benin)andthe exemptionscommittee has beenmade operational. 0 Corruption: Decree 08.133 ofMarch 31, 2008 created the National Anti-Corruption Committee (CNLC), which has been operational since July 31, 2008; a national expert was recruited inJuly 2008 under the ARCAD program, with UNDP financing, to provide standing supportto the CNLC; work has begun on preparing a national anticorruption strategy; an inter-ministerial committee was establishedinJune 2008 to consider ways of combating corruption inthe revenue-collecting agencies, as a result ofwhich severaltaxation andtreasury officials have been investigatedand arrested. 0 Data management: a decree ofthe Minister of Financeand Budget createda user service bureauwithin the Office ofthe GeneralInspector of Finances, dealing with debt questions; a plan for clearing domestic arrears has been implemented; the SYSGAD management software has been acquired; adatabase for the public and State-guaranteeddebt has beenupdatedwith support from UNCTAD. In December 2008, the updatedvalue of domestic debt service (including debt to the IMF) stood at US$36 million or CFAF 18 billion, of which US$28.8 million (CFAF 14.3 billion) is currently up-to-date. Settlementsto date havetotaled US$15 million (CFAF 7.5 billion), including US$2.2 million (CFAF 1.1 billion) to the IMF, US$1.8 million (CFAF 0.9 billion) to the BEAC, and US$11 million (CFAF 5.5 billion) to banks and to endorsementsand loans. Confirmed government arrearsto public enterprises from 2005 to 2007 stand at US$827,531 or CFAF 413,765,539 (SODECA), US$105,925 or CFAF 52,962,790 (ENERCA) and US$387,165 or CFAF 193,582,664 (SOCATEL), -43- against invoices of US$1.9 million (CFAF 962,023,352), US$446,354 (CFAF 223,177,414) and US$2.8 million (CFAF 1,395,43 1,679), respectively. -44- Box 5: Follow-up to priority action 01 governance and combating corruption Priority actions Results :i)Applytheprovisionsof articles44 (i)21membersofthegovernmentand12General md 75 of the Constitution governing Directors of public enterprises and revenue- :he declaration and disclosure of collecting agencies have declared their assets to issets of the Prime Minister, members the Clerk of the Constitutional Court and to the 3 f the government, the Constitutional Office o fthe Inspector General. Court, and managers of public znterprises and revenue-collecting igencies [rkgiesjnancidres]. (ii)the 2008 budget law has been promulgated, using the new classification. (ii)preparethe budget using the new Aassification and submit it to (iii)Decree n"08.146 of April 11, 2008, regulating parliament. public expenditure procedures, defines the tasks assignedto the responsiblestaff, (iii)implement a new expenditure tracking system from commitment (engagement) to payment order (ordonnuncement) in the budget (iv) a simplified procedure for the administrative directorate (using the new and financial management of government classification). personnel was officially launched by the Prime Ministeron May 29, 2008. (iv) implement the simplified government personnel management (v) The Procurement Code has been promulgated system. (Law no08.017 of June 6, 2008). The General Directorate of Procurement and the public procurement regulatory agency have been created, (v) have parliament adopt a new and Decree no08.382 governs the appointment of procurementcode and begin using it.. their staff; a decree governing procurement officers in key ministries is expected shortly. (vi) combat corruption : - create a National Anticorruption Committee - The National Anticorruption Committee is (CNLC) operational (Decree no 08.133 of March - prepare a national 31, 2008); anticorruption strategy - The national strategy(Draft 0) is available - declare a national anticorruption day - The first National Anticorruption Day was held on December 9,2008. (vii) combat fraud: - Institute an antifraud committee - make the "Financial Hub" - The Antifraud Committee is inplace (Pdefinancier) operational - Legal proceedings are underway against 50 managersof revenue-collecting agencies. -45- Revitalizingthe processof decentralizingand reorganizingthe territorial administration.Activities to revitalize the decentralizationprocess have included:(i) strengtheningthe institutions responsiblefor decentralization and boosting the capacities of the local andadministrative authorities; (ii)basic studies to gain a better understandingof the conditions that make decentralization feasible; (iii)public consultation sessions (e'tuts ge'ne'ruwc)on decentralization; (iv) preparationofbasic legislation governing the reform; (v) organization of municipal elections; and (vi) the creation of secondary "development hubs". Activities to date have resultedinthe overhaul and outfitting ofthe High Commission for Decentralization, the equipping of three local radio stations vola, Berberati, Bambari), arrangementsfor training 100mayors, the fielding of missionsto study and learn from foreign experience with decentralization,programming ofactivities ofthe inter-ministerial committee of experts to examine basic legislation, and organization ofmunicipal elections. The UNDP has provided nearly US$286,000 (CFAF 143 million) for these activities. 5.2.2. Createa favorable businessenvironment The government is determinedto improve the business climate, and to this end is taking action on the three aspects of governance:political, administrative and economic. It has focusedon securing the rule of law, a properly functioning civil service, a sharp reduction in corruption, improved fiscal management,and pursuing decentralization so as to unleash local energies and foster participatory development basedon local resources. These efforts should bring significant changes, internally and externally, to the country's development process. Six specific activities were plannedto createthis favorable business environment: (i) preparing industrial and trade policy documents and a private sector development strategy; (ii) strengthening legal security for businesses; (iii) creating a "one-stop shop" for handling businessformalities; (iv) developing public-private partnership; (v) restructuring the Chamber of Commerce and making it operational; and (vi) reviving structures of promotion and support for the private sector. The CAR'Strade policy paper has been preparedand validated, a study ofcommercial integration has been conducted, the commercial code has been prepared and harmonizedwith regional and international codes, the investmentcharter is being revised with EUfunding, and the "one-stop shop" for businessformalities (GUFE) is now operating inthe city of Bangui. Funds raised for these activities amount to 1.245 million, or US$1.63 million. The "one-stop shop" for businesses was createdby Decree 07.371 of December 17, 2007. It has already produced some very encouraging results: the time neededto create an enterprise has beenreducedfrom an average of 1-4 months to an average of 1-2 weeks, and this will placethe CAR in a better position to attract foreign and domestic investors and economic operators. In2008, the GUFE processed500 applications from enterprises registeredinthe city of Bangui alone-as many as for the entire country in2007 (269). This performance should have an impact on the level of investmentandjob creation, helping thereby to improve living conditions. During the course of 2008, the Action Plan for the IntegratedFramework was made operational. Ofthe US$1 million raisedfrom the WTO, US$630,000 has been usedwith the following results: 0 1 project management unit createdand operational. -46- 27 economic operators trained. 0 3,000 tons of sesame harvestedand sold. 350 businesspeoplein seven regions ofthe CAR trained and made aware of the importance of commercial information. 0 900 voters and 50 businesscandidates registeredfor consular elections. Roundtable on the trade sector held on February 19, 2009, which enlistedthe support of new bilateral partners (Algeria, Turkey, SouthAfrica, India) and multilateral ones (BDEAC, UNIDO, ECA, ADB, WIPO, JEICPDLEAP - International Lawyers and Economists against Poverty). 5.2.3. Promotinggender equality and equity The government is aware that women are more exposedto poverty because of the many disparities they face interms of access to basic social services, to credit, to the factors of production, to urban management,etc. The government is therefore committed to strengtheningand enforcing legal,judicial and institutional provisions relating to women's participation. Three activities were plannedfor 2008 to this end: (i) capacity building for female leaders; (ii)strengtheningthe legal, judicial and institutional framework relating to women's participation; and (iii) enlisting women in conflict resolution, pursuantto Resolution 1325. The secondofthese three activities has beenfully realized, while the first andthird are underway. They have resultedin: The holding of sessions to publicize the two laws relating to reproductive health and protection of women against violence: the sessions were targeted at legal professionals,judicial police officers (OPJ), health professionals, social workers, public and private media professionals, youth andwomen's organizationsand associations. 20 women have beenrecruited for training as auxiliary police officers and gendarmes over a period of six months, and associationsand groups of female victims of violence have receivedsupport for income generating activities. These activities were supportedby a grant of US$180,000 (CFAF 90 million) from the Finnish fund for peace building. Becausegender equality and equity are so important for governance, the government intends to overcome the various constraints that held back the activities programmedfor 2008, in particular the shortage and weakness of humanresources, delays in delivering program support (disbursements, materialsetc.), the lack of funding for some operations, social and politicalresistance, the inadequateflow of information and communication, organizational problems inmobilizingresources, failure to enforce regulations, social andcultural obstacles (the lack of collective thinking and interests), and shifting points of focus inthe PRSP. The following factors should work in favor of these efforts: there is strong politicalwill and determination to implementthe PRSP, the people have great aspirations for peace and reconciliation, and civil society is insisting on participatory involvement ineconomic and democratic governance. This setting lends added strength to the structures for monitoring the activities of the sectoral committee concerned, and the committee has already identified its -47- needs interms of support missionsand assistance in conducting feasibility studies for the various projects and in preparingfor the sectoralroundtable. 5.3. Rebuildingand diversifyingthe economy The government is looking to strong, sustainableand pro-poor growth to reversethe perverse effects of poverty at the national and regional levels. It therefore intendsto pursuea prudent set of macroeconomicpolicies in order to achieve a lasting recovery, inaccordancewith the guidelines of the programs concludedwith the Bretton Woods institutions. With the gradual restoration of security, the reconstruction and diversification ofthe economy will focus on the development of production, especially inrural areas where most ofthe poor are concentrated. Programs and projects are targetedbroadly at the following areas: Modernizing agriculture and developing livestock production. Making better use of forest resources. Developing the mining sector. Promoting cultural industriesand arts. Promoting tourism. Developing transport infrastructure. Developing energy resources. Developing telecommunications and ICT. Developing basic public services. 5.3.1. Modernizing agricultureand livestockraising The rural sector holds the potential for great leverage infighting poverty, because of its weight in the economy and because ofthe geographic distribution of poverty (72% of poor people live inthe countryside). The government intendsto promote and modernize agriculture and livestock raising, focusing on the following key aspects: (i)assisting farmers, (ii) strengthening rural institutions, (iii)intensifying and diversifying output, (iv) breaking down rural isolation, and (v) establishinginfrastructure insupport ofproduction, storage, processing and marketing. In its efforts to assist farmers, the governmentwill pursuemeasuresthat were first introduced inthe initial post-conflict years: (i) providing the hardest hit population groups with the assistance they need to revive their activities; (ii)establishing linkages betweenemergency responses and efforts to revive the agricultural sector; (iii)harmonizing its interventions around national priorities andthe PRSP inorder to lay the basisfor providing servicesto producers and reviving agriculture on a sustainable basis. The FA0 supportedthese interventions inthe initial post-conflict years with a total of US$9.42 million (about CFAF 3.9 billion). Nearly US$8.12 million (around CFAF 3.37 billion) was reservedfor humanitarian assistance through the supply of farming inputsto the poorestfamilies and those most affected by the political and military conflicts, so that they could resume food production and revive farming and the rural economy. Ofthis amount, some US$5.4 million (CFAF 2.7 billion) was earmarkedfor crops and slightly over US$1.31 million (CFAF 655 million) for livestock production and reinforcing the capacities of partner institutions (NGOs),including government services (ICRA [Intitutcentrafricain de la recherche agronomique], ACDA). Inaddition, steps were taken to clear producers' arrears in the amount ofUS$4.7 million (CFAF 2,333,451,000), ofwhich US$4.6 million (CFAF 2.3 billion) was provided by the EuropeanUnionand US$lOO,OOO (CFAF 33,451,000) by the -48- CAR government in 2007, with a view to reviving cash crops, and more particularly cotton, which is widely grown inthe heavily populatedprefectures of Ouham, Ouham-PendC, Ouaka, KCmo andNana-GrCbizi(which account for 34% ofthe national population). Programsand projects implemented in2008 were targeted primarily at moving the country toward the Millennium Development Goals, especially those relating to food security andthe reduction of extreme poverty, and sustainable and equitable managementof natural resources, in particular improved governance inthe forestry sector. To strengthen agricultural institutions, the government createdthe Agricultural and Livestock DevelopmentFund (FDAP, Law 07.015 of June 19, 2007) and the National Agriculture and Livestock Materials Office (ONMAP, Law 07.016 of 19 June 2007). Inorder to harmonize the various partners'interventions and create synergy with UnitedNations agencies, NGOs and other development partners, and to lay the basis for sustainabledevelopment, the government has beenworking with F A 0 supportto prepare a National Medium-Term Priorities Framework (NMTPF). This programming framework will haveto be articulated with the PRSP 2008-2010, the UNDAF (United Nations Development Assistance Framework) 2007-2011, and other relatedstrategy documents. Institutional capacity building began in2008 with the establishment of thematic working groups to propose priority reforms inagriculture and the rural economy. The recommendationsfrom the Etats Ge`ne`rauxfor RuralDevelopment andthe results ofthe Priority Reforms Committee'swork will makethe poverty reduction and growth strategy more efficient by updating strategiesfor rural development and food security. Despitethe importancethat donors have given to emergency assistanceduring this post- conflict phase, the F A 0 considersthat its RegularProgram should receive more attention. That portfolio focuses on developing pilot projects and strengtheningthe capacities of national institutions by preparing strategy documents and action plans as well as specific or thematic studies of different economic activities. For example, there is a pilot project for post- conflict economic reintegration through the revival of small animal husbandry (poultry, cane rats [aulacodes],small ruminants). Five agricultural intensification and diversification projects have been launched in collaboration with the FAO, with financing from partners. Inthe area of crop production, inputs and small implementshave been suppliedto 8,500 vulnerable farming families as part ofthe initiative to counter the food crisis and rising food prices by reviving output inthe prefectures of Ombella M'Poko, Lobaye, KCmo and Bangui. Some 16,000 horticultural kits were also distributed to families at risk because of HIV/AIDS, 5,000 animal traction teams [chines de traction animale] havebeen suppliedthrough the food crisis response fund, 224 ha of seed multiplication plots have beenestablishedinfive "development hubs" (Bouar, Kaga Bandoro, Sibut, Bambari and Bossangoa), and a strategic stockpile of food crop seeds and farm implements has been constituted for 30,000 families. On the livestock front, (i)104 pilot production unitshave been establishedas the first step ina muchbroader investment program for reviving small livestock raising, and (ii) financing has beenprovided for units in disaster areas that will produce eggs, day-old chicks, poultry, Guinea fowl, swine, goats and small ruminants. The newly-createdAgriculture and Livestock Development Fund (FDAP) and the National Agriculture and Livestock Materials Office (ONMAP) representthe most important steps for reviving the sector. These actions, taken together, should spark the revival of agricultural and livestock output and the recovery of exports. -49- 5.3.2. Making better use of forest resources The government's aim here is to enhance the transparencyofforest andwildlife resource management, while creatinga more attractive business environment. This calls for establishing a sectoralpolicy for the sustainablemanagementof forest resources that will: (i) rationalize their potential and their exploitation, (ii)protect biodiversity, (iii)combat desertification and its damaging effects, and (iv) increase the sector'scontribution to growth andjob creation. The new forestry code was preparedthrough aparticipatory approachthat involved all stakeholders, includingthe development partners, and was promulgatedby the Headof State on October 17,2008. Decreesno003/MEFCPE/DIRCAB/GEFP of January 22,2008 and no026/MEFCPE/DIRCAB/GSADRI of July 23, 2008 appointed border control inspectors and createdmobile "forestry and wildlife" intervention and verification brigades.Their main purpose is to control all movementsof lumber leaving the national territory, to secure forestry and wildlife revenues, and to strengthenmonitoring and control capacities inthe forest and wildlife sectors. The forest industry Observatory, createdwithin the Ministry of Water, Forests, Hunting, Fishing and Environment by Decree no027/MEFCPE/DIRCAB/CMEFCPof July 24,2008, representsan economic intelligence gatheringtool that will support decision-making and supply reliable and relevant economic information on the industry. Forestry and wildlife revenueswill now be deposited ina bank account opened inthe Central Bankinthe name ofthe communes. These revenuesare supervisedby atechnical committee comprising representativesofthe ministries concerned(Interior, Finance and Budget, Water and Forests), intendedto institutelocal management ofthose funds. The principal task ofthe technical committee is to validate the employment programs developedby the municipalities and to monitor projects financed from these funds as part ofthe campaign against rural poverty in communities inor bordering on forest lands under operating permits. The government expectsthese activities to produce benefits interms of environmental protection, increasedforestry output, and improved living conditions in neighboring communities. 5.3.3. The mining sector The strategy for reviving the mining sector -often regarded as the backboneof the Central African economy -calls for a significant and lasting increase in output that will sustainthe economy by boosting government revenuesand will helpto reduce poverty among people living inmining zones. To this end, the government is planning a series of actions based on an exhaustiveanalysis ofthe sector: 0 Improving and reforming the legal, institutional and fiscal framework governing the mining sector. 0 Developing both small-scale (SME) operators and large mining companies. 0 Raising incomes inrural areas and diversifying activities in mining zones. -50- 0 Strengthening the capacities of the institutionsresponsible for mining management and supervision, and involving local people. During2008, the governmentreceivedthe final report from the consultants hiredto audit the mining sector as part ofthe work of strengtheningandupdatingthe miningcode. It subsequently establishedan inter-ministerialcommitteeto examine that report and sendits observations backto the consultants. Once the audit report is adopted, its recommendations will be usedto revise the miningcode. The government has also createdan ad hoc committeeto draft legislationand make preparations for establishingthe Office of GeologicalandMining Research.That office is to overseethe projectfor modernizingthe country'sminingmanagementandto see to the establishment of a reliable geologicaldatabase. Decree 08.260 of July 18, 2008 established an institutionalmechanism for the Extractive IndustriesTransparency Initiative inthe CentralAfrican Republic ("EITI-CAR'), with a view to bringinggreater transparencyto management ofthe sector. The government has thereby implementedthe fourth ofthe five criteria requiredfor EITIparticipation.This activity has receivedsupport from the ADB and UNDP. The government has also updatedlegislationestablishingthe BanguiInternationalDiamond Exchange, which is intendedto increaseminingoutputand improveincomes inminingzones. This revisedlegislationwill be submittedto the CouncilofMinistersfor adoption.A law on radioactiveores [radios minerais] has beenpromulgated,in order to preservethe environment, and an adhoc committeehas beenestablished. To strengthencapacities andmake up for the delay in establishingthe monitoringand evaluationcommitteefor the sector, a "mining issues committee" (comite' the'matique mine) is plannedto supportthe STP in preparingsectoral guidelinesand coordinatingprogramand projectmonitoring. Box 6 :Priority measures of str icturalreform Priority actions Achievements to date (i) publication on the (i)The Technical Secretary, managers and members of government's Internet site of the the EITI-CAR Technical Secretariat have been appointed report on mining revenues since by decree. Membersof the NationalCouncil and Steering 2006, prepared by the EITI Committee have also been appointed by decree. A data administrator collection and reconciliation unit has been created by decree. That unit will assist the administratorincollecting and reconciling data before they are validated and published at the EITI website. Terms of reference for hiring the administrator have been finalized. This informationhas beenpostedat the government website. (ii) Signature o f a decree establishing a standard mining (ii)Preparatory work for revising the mining code is convention, and adoption by underway. The unit responsible for revisingthe code and Parliament of amendments to preparingits applicationdecree is inplace. the mining code to bring it into line with the convention -5 1- These organizational and capacity-building measures should allow the.Uramin Areva and Aurafrique companies to begin operations as plannedin2009-20 10 and will encouragesmall- scale minersto organize and contribute significantly to increasing production. Box 6 below summarizes progress made inreforming the mining and forestry sectors. 5.3.4. Promotingthe arts and cultural heritage The arts and cultural heritagehave beenthe "poor relatives" of the Central African economy, and yet they have a role to play in conveying ways of thinking, acting, producing and consuming. The government has taken them into account inthe PRSP and has been pursuing action inthis field since 2006, when the "Cultural Charter of the CAR" was promulgated, creating a framework setting out the main lines of government policy for the arts, culture and heritagesector. There is also a document on sectoralpolicy guidelines and a cultural action program for economic and social development, the priority areas ofwhich are fully consistentwith the PRSP. Activities to date have focusedon implementing the Reading and Cultural Life Center (CLAC) network, with funding from the OIF (Organisation Internationale de la Francophonie). Domestic counterpart funding, which was to come from the Special Capital Budget (BEC), has beenheld up by disbursementproblems, and this has impededactions to date. That counterpart funding is earmarkedfor rehabilitation and construction of 11cultural centers. The sectoral committee is tasked with revivingthe artistic and cultural heritageas a lever for development activities of all kinds, and this should pave the way for the financing of the cultural programs included inthe PRSP. 5.3.5. Tourism development The CAR'Stourism potential lies inthe abundance and diversity of its resources, which hold great promise for ecotourism. Despite the country's many parks and reserves, the rare animal and plant species found there are not sufficiently recognizedand valued. Inorder to create an environment conducive to the tourism and handicraft industries,the government has prepared draft legislation and regulations, including a proposedtourism investment code and a tourism code ofethics. A feasibility study on the construction of a cultural tourism center is now available, financed by the Compte d'Affectation Spe'ciale/De'veloppementForestier et Touristique (special forestry andtourism developmentaccount, CASDFT) inthe amount of US$16,000 or CFAF 8 million. Two permits have been issuedto private partnersto open and operate atourism and food services agency. Conventions and protocols have also been signed with private partners for renovation o fthe Oubangui Hatel and the H8tel du Centre, rehabilitation of a former 500- room hotel, and the construction of hotels near the airport and at Kolongo. Handicrafts. A pilot survey of handicraft institutions and activities inBangui and cities ofthe interior is now under way. The Ministry of Trade has conducteda study of integratedtrade, including a tourism component, and its conclusionshave been submitted to the sectoral donors' roundtable. As part ofthe Dzanga Sangha project, tenders havebeencalled for management ofthe Doli Lodge at Bayanga.A land-useplan for the lower Oubanguihills has beenpreparedand should -52- contribute to the development of local tourism. Interms of community projects, an outline of a project for the use and protection of the Alimbou forest, preparedby an associationof inhabitants of that forest, has been submittedto the Ministry for review, together with some tourism promotion projects. Training. 70 staff members from the Boali Falls hotel, the HotelAzimut and the La MCditerraneerestauranthave receivedtraining inhospitality and culinary techniques, and 20 others are now being trained under the program to launchtaxidermy activities. Through its support for these activities, the government hopes to be able to: (i) make available documentationon Central African tourism, (ii)create a favorable environment for investment intourism, (iii) encourageinvestors, particularly tour operators, to set up shop, (iv) presenta more positive image ofthe CAR internationally, and (v) conduct marketing in favor of Central Africantourism. 5.3.6. Transportationinfrastructure An economic analysis ofthe CAR'Stransportation infrastructure-road, river andair -is now under way, focusing on factors of production (supply, market access, fishing etc.), and on local people's access to basic social facilities such as schools, health centersand other institutions, and tools of sovereignty for territorial surveillance and control. The government's plan for the sector is to break down the country's internal and external barriers by 2015, through a coherent framework for the managementand maintenanceof transportation infrastructure. The strategy focuses on three themes: (i)strengtheningthe institutional framework, (ii)seekingfinancing, and (iii)building, rehabilitating and upgrading transportation infrastructure. With the support of its partners, the government has beenreinforcing the institutional framework for the sector and its capacity to formulate and implement policy. Thanks to that support, transport regulations are now being brought into line with sub-regionaland international rules. Preparationsare also underway for the transport roundtable. Inparticular, the statutes ofthe BTP (public works andcivil engineering) laboratory are being revised, and its staff are being trained, with funding of US$160,000 (CFAF 80 million); sampling and quality control materials have beenacquired, for US$98,800 (CFAF 494 million); and the National Materials Office has been equipped, at a cost ofUS$3 million (CFAF 1.5 billion) by the EU. Other actions include: (i) making the transportation information system operational; (ii) managing transportation infrastructurewithin the Inter-Ministerial Equipment and Transport Planning Unit; and (iii) preparationsfor conducting feasibility studies ofprograms and projects. Roadterminals have beenbuilt or rehabilitated at Bossangoa,Bangui and Berberati. The VIP lounge at Bangui Airport has been renovatedby ASECNA. Rehabilitation and maintenance work has beenperformed, with domestic funding from the Highway MaintenanceFund (FER) and support from external partners, on five major highway segments: Berberati-Bayanga(232 km), Sibut-Kaga Bandoro-NdClC (465 km), Sibut-Bambari (200 km), BossembClC- Bossangoa-BenzambC(195 km) and Mbalki-Boda (85 km).Ruralroads have been improved (206 km) and bridges and culverts improved or rebuilt (52). -53- Tenders have been called for paving the Bouar Garoua-MboulaYHighway (154 km), with joint financing from the EU, the ADB and the World Bank. 5.3.7. The energy sector Inthe energy sector particular attention is being paidto electricity, where supply falls far short of demand, and to hydrocarbons, where management is very weak and where storage capacity, at 48,000 m3per year, representsbarely halfof demand. Development ofthe energy sector has beenheld back by several factors: (i)the regulatory framework is inadequate, (ii) there is no energy information system, an essential decision-making tool; (iii) the performanceof ENERCA has been weak; (iv) the technology currently inuse is unsuitable; (v) humanresourcesare inadequate; (vi) there is no national energy policy; (vii) investmentin the sector hasbeenlow; and (viii) internal and externalbarriersexacerbatethe country's isolation. The PRSP focuses on the following aspects: (i)further restructuring ofthe sector, (ii)diversificationofenergysources,and(iii)improvedcapacityforhydrocarbons management. Interms ofrestructuring the sector, the following agenciesare now upandrunning: (i) Central AfricanRural Electrification Agency (ACER); (ii)Central African Electricity Regulation Agency (ARSEC); (iii)Central African Oil Products Storage Company (SOCASP); and (iv) Oil Product Price Stabilization and Regulation Agency (ASRP). In addition, a national policy document on the energy sector has beenadopted, and the biofuels law has beenpromulgated. To strengthenmanagementcapacities, four officials havereceivedtraining in GIS (Geographic Information Systems) and inthe use of computer equipment acquired with EuropeanUnion support. For strengtheningproduction capacities, the governmentplansto rehabilitate the power generating facilities at Boali Iand 11. The following studies are also underway: 0 Study of institutional arrangements for the Boali-Bangui interconnectedgrid. 0 Feasibility study for building the dam on the Kotto River (at Kembe). 0 Analytical study for promoting poor people'saccess to energy services at the decentralizedlevel. Finally, in terms of improving hydrocarbon managementcapacities, the Sal0 storage terminal has beenrehabilitated. The energy crisis that has lastedsince June 2008, and that was due inpart to the sharp deterioration of installations, makes it all the more urgent now to implement the actions planned for this sector. While the real impact ofthe crisis on current and future activities has not beenthoroughly evaluated, it is certain to hit hard at the economic fabric and at basic public services such as health, andto pose a serious threat to achievementofthe PRSP objectives. 5.3.8. Telecommunications and ICT It is now recognizedthat telecommunications can speedthe growth and developmentof countriesthat know how to seize the opportunities they offer. The governmenthas -54- accordingly createdthe Telecommunications Regulatory Agency, which has begunthe work of clarifying the legislative and regulatory framework for the sector. The government'spriorities here are to promote healthy competition, improve the legal and regulatory framework, and expandthe basic infrastructureso as to maketelecommunications, Internet, postal and financial services more widely available across the country. 5.3.9. Basic public services Basic public services include water and sanitation, housing and employment, inaddition to healthandeducation. The problem of access to water and sanitation services hastwo aspects: they constitute a final consumption goodthat has a direct impact on public health, andthey are usedas a factor of production inagriculture and livestock raising. Housing is regardedas a primary humanneed, and concerns over its quality and cost raise the question of social housing that will supply decent and affordable dwellings. The rate ofaccess to basic water and sanitationservices, as a function of locality and living environment, is an important indicator of public well-being. There are severalchallengesto be addressed here: 0 Boosting investment to improve people'saccess to basic water and sanitation services. 0 Improved managementand coordination of activities inthe sector. 0 Encouraging local people to assert ownership over works and infrastructure. 0 Putting facilities on a solid footing through an appropriate cost recovery mechanism. The Water and SanitationRegulatory Agency (ARSEA)andthe National Water and SanitationAgency have beencreated, and ad hoc committees are at work to make them operational. A National Action Plan for IntegratedWater Management (PANGIRE) has been preparedto improve the sector's information system, to develop professional planning capacities, and to train users inthe private sector and civil society. Interms ofthe construction andrehabilitation ofwater and sanitationworks, the governor's record in 2008 is as follows: 0 Water: 144 boreholes drilled, 280 boreholesrehabilitated, 184wells rehabilitated, 21 springs improved, and 15 sand filters built on an experimental basis inthe prefectures of Nana-Gribizi, KCmo, Ouham, Ouham-PendC, Haute Kotto, Basse-Kotto, Bamingui- Bangoranand Vakaga. These works are expectedto provide drinking water for 168,150 people under the Urban Development Master Plan for Bangui and secondary towns, at a projected cost of US$28.6 million (CFAF 14.3 billion). Sanitation: 1,630 improved traditional latrines, 66 ventilated pit latrines (VIPs), 4 incinerators at sanitary facilities, distribution of 15615 hygiene kits (soap, bucket, basin, kettles). To ensure maintenanceofthese facilities, 44 members of district management committees (COGES) in the health centers have beentrained inthe managementofwater and sanitation facilities, 132 local masons have beentrained infamily latrine construction techniques, and 28 social communicators have beentrained in hygiene and sanitation. Inan effort to provide diversified, stable and regular funding for the sector, the government has preparedterms of reference for a feasibility study to establishthe National Water and -55- Sanitation Fund. The African Development Bank is now examining the request to finance that study. The governmenthas paid particular attention to housing: It has drawn up a masterplan for urbandevelopment inBangui, extendingbeyondthe city limitsto embrace an area of some 35,000 ha. Draft laws and regulations for the sector are now under study. Under the Programme de Microrialisations ("micro-projects program", PMR), supportedby the EuropeanUnion, training inproject designand implementation has beenprovided for coaches and managersof Organisations Communautaires de Base ("grassroots community organizations", OCB) in four prefectures (Lobaye, Nana-Mambere, Ouham and Ombella- M'Poko). 5.4. Developinghuman capital The PRSP recognizes humancapital as an essentialelement that, through its contribution to well-being and productivity, can create the wealth neededto combat poverty. The government is committed to boosting the humancapital of the entire population, in particular women and vulnerable social groups such as persons with disabilities, victims of conflict, and orphans. The aim i s to enhance their capacityto act independentlyand to lift themselves out of extreme poverty. The mainthemes of this pillar are education, health and HIV/AIDS, youth and sports, and employment. 5.4.1. Education The poverty diagnosis conducted in2003 left no doubt that the level of education is a determinant of poverty, and that householdsheadedby persons with a good level of education are less vulnerable than those headed by persons with no schooling. This explains the importancethat the government attaches to education inthe PRSP, where the objective is that "all children of both sexes, wherever their place of residence, will receive a complete and high-quality elementary (Fondamental-I) education". The following actions are planned: Expand the availability of education. Create the conditions for attracting the maximum number of girls and boys. Increase the percentageof pupils completing primary school. Improve the retention rate. Raise awareness and mobilize all partners. The government's education strategyaims inparticular to improve educationalaccess and quality andto reduce disparities, with the following targets for 2010: Elementary schoolenrollment ratio of 73% for children ages 6 to 11years, and a reduction inthe current disparity betweengirls and boys. A primary level completion rateof 74%. A decrease inthe drop-out rate to 9% for girls and 6% for boys. Greater mobilization of stakeholders and partners in the educationsystem. The main results to date appear inthe context ofthe Education ProgramSupport Project (PAPSE) that emergedfrom the RESENstudy ofthe educationsystem: three buildings have -56- been renovated, a full (six-year) primary school has beenbuilt, and four schools in areas affected by conflicts have beenequippedwith furniture (5,590 units). The government has also used its own funds to provide acceleratedtraining for 450 elementary (F-1) school teachers inthe regional CentresPe'dagogiques (normal schools), and 832 qualified F-1teachers have been hired. Refresher courses have beenorganized for educationofficials and parent-teachersinthe prefectures of Lobaye, KCmo, Nana GrCbiziand Haute Kotto. Selected schools have received2,925 readers and 2,925 mathematics textbooks. As well, 5,680 teachingkitshavebeen acquiredfor all F-1teachers. Duringthe schoolyear 2007/2008, there were 790 latrines and 528 water points constructed, 577 canteens were establishedin 423 F-1 schools and in 54 kindergartens, serving 98,000 pupils in areas not affected by conflicts. These canteens were built by the WFP, inaddition to its humanitarian work. To improve primary school completion rates, the government, with the support of various educationpartners, has establisheda committee to consider the potential of using school buildings as preschoolcenters for the protection and training of young children inNana- GrCbizi and the preparationof exercisebooks for teachers and pupils. These activities are supported, respectively, by the NGO International Rescue Committee and by UNICEF. Efforts to improve retention rates and girls' enrollment ratios have included awareness campaigns and support for school canteens, the buildingof latrines, the drilling of wells and the distribution of school kits inselected establishments. The following activities have beenundertakento raise awareness and mobilize all partners: 0 Training and coaching for 300 membersof parents' associations(APES)inLobaye Prefecture. 0 With funding from Italian cooperation, the international NGO COOP1has established a 1-ha manioc field, tendedby the APE, to generate income to cover high-school operating costs. 0 A partnershiphas beenestablishedwith the municipal governments of KCmoand Nana Gribizi and with their legal services to deliver birth certificates at low cost to pupils. 0 100 village community representativeshave beentrained inenvironmental, development and reproductive healthissues. 0 Local radio broadcastshave beenraising parents' awareness ofthe importance of schooling for all children, and particularly for girls. 5.4.2. Health and HIV/AIDS Efforts to reinvigorate the health system are being pursuedinthe field through recruitment, ongoing training and refresher courses for health personnel, dealing with priority programs for improving service. There has also beena new round of hiring inthe civil service. Other activities have included: (i)the supply ofconsumables(condoms, laboratory reagents,ARV, antibiotics, anti-malaria and anti-TB drugs) by the Global Fund; (ii)support for NGOs, associations and community organizations (OACs) inthe prevention oftuberculosis; and (iii) renovation or construction and equipping of the FOSAs (healthcenters). For the priority maternal-child health programs, the government decided, after a review ofthe program, to move to the PCIME (Integrated Care for Childhood Diseases) level, and to this -57- enda PCIME expansionplan has beenintroducedfor 2007-2011. The expansionunit selected is the health district. Expansionwill involve all the health districts, but priority will be given to those that are operational andto those that have limited accessibility to health services and those inwhich the funding has beenarranged. The pace of expansionwill be as follows: five districts for the first year, eight districts for the second year, five districts for the third year, and three districts for the fourth year; the fifth year will be reserved for evaluating the expansion phase. The ExpandedProgram on Immunization has receivedfinancing from GAVI SSV and other partners for introducing new vaccines (Hepatitis B, Haemophilus influenzae) throughout the country. During 2008 several mass campaigns were conducted against poliomyelitis in childrenupto five years of age, as well as amaternal-neonataltetanus campaign among women of childbearing age. A campaignagainst measles, coupled with distribution of at least 800,000 insecticide-impregnatedmosquito nets, was held in December. HIV/AIDS. Onthe institutional level, a National Plan for Monitoring andEvaluation of the National Strategic Framework againstHIV/AIDS was validated in March2008. To facilitate the plan's implementation, a user guide has beenpreparedto make it operationalat the prefecture level. The prefecturetechnical teams will have computerized support by the end of the year. Technical documentationfor strengthening capacities is now being prepared, and includes a manual of proceduresfor coordinating the campaignat the central and prefecture levels. Box 7 :Priority actions in the social and 3IV/AIDS sector Priority actions Achievements (i) Recruitment of 750 additional teachers (i) 850 qualified teachers have been recruited for primary school. and deployed in the field. (ii)Introduction of educational and (ii) The primary school curriculum administrative measures to achieve a (Fondumentul I)has been revised in accordance repetition rate below 20% in primary with the "skills approach" paradigm and Decree school in areas where schools are No032/MENAESR/D.CAB/GEFP of May 3, functioning normally. 2007, regulating repetition in primary school, was put into effect during the school year 2007- 2008. (iii) Keeping the DTC3 vaccination rate close to 80%. (iii) The DTC3 vaccination rate was close to 84% in 2007, and was 65% at the end of August 2008. As of September 2008 a new vaccine (PENTAVALENT) combining DTC with other antigens was introduced, at the recommendation (iv) Distribution of at least 300,000 ofthe WHO. treated mosquito nets. (iv) 840,000 treated mosquito nets were distributed (a gift from UNICEF and the World (v) HIV/AIDS: improved prevention Bank). through distribution o f condoms (at least 10 million unitsper year). (v) About 9 million condoms were distributed by the Ministry of Public Health and Population, UNFPA and PSI. -58- During 2008 the government also gave considerationto preparing a crosscuttingmedium- term expenditureframework for combating HIV/AIDS. To step up the campaign against HIV/AIDS, tuberculosis and malaria, the government has provided further supportto care facilities for affected persons(orphans and other at-risk children, and widows) living inthe sub-prefecture seats. Comprehensivecare for widows and orphans and for personsliving with HIV is now being provided in seven prefecturesand in Bangui, by a community-basedNGO supportedby the Global Fund and WFP. Awareness campaigns have also been targetedat specific groups: users of roads and waterways, prostitutes, meninuniform, Pygmies, Peulhs, public and private sector workers, and inhabitants of mining areas. Some health centers have been equippedwith rapid testing and fungible materialsto encouragevoluntary screening in healthand community facilities. When it comes to caring for persons living with HIV (ARV, nutritionetc.), including the treatment of opportunistic infections, the responsible unitshave beendecentralized. To this end, 13 new ARV units have been created.Thanks to this decentralization, 700 new PLWHs will receive ARV, inaddition to the more than 7,800 who are already undergoingtreatment. With partner support, a number of steps have been takento prevent andtreat HIV-related opportunistic infections (01). Some 12,000 PLWHs have been treated for 01, and Ministry offices are being supplied with Bactrim pills. To combat the sexual transmissionof HIV and STI, 200 STI kitshave been suppliedto the CNLS and STI guidelines havebeendeveloped. To reinforce the program to prevent parent-childtransmission of HIV, training for health workers was scheduled in30 of the country's healthcenters during 2008. As ofAugust 2008, training had been provided for 113 individuals (58 menand 55 women) in 12 health centers (Kokoro Boeing, Damara, Bogangolo, Boali, Bossembkle, Yaloke, Bossongo, Mongoumba, Baganda, Boganangone, Dekoa and Mala). Finally, to prevent transmissionthrough blood transfusions, reagentsand consumables (blood bags, etc.) have been provided for transfusions at the CMTS and in six regional hospitals. 5.4.3. Youth and sport The governmenthas undertakento upgradesporting facilities andto endow the country with sufficient humanand material resourcesto provide the physical and sports educationneeded to makethe country competitive in sports. Development strategies have paid particular attention to both aspects. Given the current educational conditions inthe country, informal and extracurricular educationfor youth are challengesthat must be addressed. Youth policy objectives are to develop and implement: (i) a citizenship educationprogram for young people, and (ii)a literacy program and support for social and educationalfacilities for young people. Three strategic areas have been defined. Under the youth guidanceprogram (Programme d'Encadrement desjeunes) aNational Policy for the Advancement of Central African Youth has beenprepared. Another aspect is to strengthenthe institutional capacitiesof youth organizationsas partners insocial-educational and socioeconomic activities for young people. Two steps have beentaken to renovateand build social-educationalfacilities: the Sibut Youth and Culture Center is being rehabilitated, and the Birao Youth and Culture Center is under construction. Three readingand cultural centers have been restored. To expandHIV/AIDS work amongyoung people, an exhaustive -59- inventory of youth associations, particularly those involved in combating STI and HIV/AIDS, was conducted, and 54 NGOs working inBangui were identified. Other measures include the holding of a national AIDS forum for youth leaders, a training seminar for "educator peers" on innovative approaches to combating STIand HIV/AIDS, and support for the establishment of "Information, Education and Listening Centers for Youth" throughout the country, following the experimentalmodel tested inthe Third Arrondissement of Bangui. Inthe area of sports, the emphasishas beenon strengtheningthe capacities ofphysical educationteachers in order to meet the enormous needs ofhigh schools and colleges andto equip the regionswith suitable sporting facilities and equipment. A National SportsDevelopmentPolicy has been preparedand is awaiting adoption.A feasibility study was performed in 2008 for rehabilitating and equipping facilities in 17 prefectures, at a rate of four facilities per year. A feasibility study was also done for the construction of facilities to train 150 youth, sports and physical educationworkers per year andto train trainers inthese fields. 5.4.4. Employment To combat poverty more effectively, the PRSP commits the governmentto a full-employment policy. Itcalls for improving the regulatory and institutional framework and adapting it to the socioeconomic context, and for promoting decent and permanentjobs. The government is aware that investmentalone will not be enoughto create thejobs needed, and that specificjob creation policies and programs will have to be introduced. The ACFPE training agency has submittedthree projects under the PRSP: (i)an apprenticeship fund for vocational training; (ii) an employment support fund to help young people enter or reenter the labor market; and (iii)a machine shop ["maison d'outils"]. Progressto date: The agency usedits own funds to do an inventory of all vocational training centers andNGOs working inthis field throughout the country, inApril 2008. Some 60 young people have receivedapprenticeshiptraining with artisans and at the trades school. Through the employment support fund, it has establisheda facility whereby young people can obtain bank loans to finance income- and employment-generating activities; this project has already helped some 20 beneficiaries. It financeda feasibility study for tools depots, now underway in four prefectures (Lobaye, MamberCKadeY, Ouaka and Ouham); a study and information mission to Dakar is plannedto discover how these depots work. 40 labor inspectorsand supervisors have beentrained. A machine shop has beenconstructed. 120young people have beentrained in specializedworkshops. Apart from these activities, the agency has sponsoredlabor-intensive works in local communities ofthe FourthArrondissement ofBangui, Bossangoa, Mbaiki and (coming soon) Berberati. These activities have provided dayjobs for young people. The agency has made approaches to the JPN (National Young Pioneers program) to support training andjob-finding activities. -60- On other fronts, an expandedtechnical committee is being set up to preparethe national forum that is to develop the national employment and vocational training policy, and a new labor code is under study. 5.5. Poverty assessment indicators The PRSP was preparedon the basis of a 2003 poverty profile that establishedthe benchmarksagainstwhich progresswas to be measuredperiodically. The present annual review comes only one year after the PRSP was introduced, andthere is no new poverty profile available for evaluating changes since 2003. Poverty can be assessed, nevertheless, using some indirect elements andthe results of the 2006 Multiple Indicators Cluster Survey (MICS). 5.5.1. Incomeindicators While awaiting the results from the 2008 CWIQ survey, the data from which are now being processed, there are some indicators available for deriving an indirect appreciation of people's incomes and assessing the impact of actions to date. Those indicators are: 0 The characteristicsof growth. 0 The trend inthe public service payroll. 0 The trend in forestry taxes paid to the communes. 0 The trend in subsistencefarming and cash crop production. Economic growth was around2.8% in2008, representinga decline from 2007 inthe rate of wealth creation. An analysis ofthis performanceallows for some assumptionsabout its impact on householdliving standards. First, although it has slowed, the economic growth rate still outstrips the demographic growth rate, which suggests that, ceterisparibus, there was no decline inper capita incomes between2007 and 2008. Second, a sectoral breakdownof growth shows that growth was sustained in 2008, as in 2007, by the livestock andthe public works and civil engineering sectors: livestock operators (farmers, merchantsand other intermediaries), who account for 12% of GDP, can thus be credited with increasingincomes between2007 and 2008, as can construction and public works operators. Inthe latter sector, the government plansto broadenthe incomedistribution base by pursuing labor-intensive public works. The public service payroll showedan upward trend between2007 and 2008, representing higher incomes for an important segment ofthe population. In2008, public servantswere paid atotal of US$73.8 million (CFAF 36.9 billion) comparedto US$72.6 million (CFAF 36.3 billion), for an increase of 1.7%. That increasecan be attributed to public service hiring, to the regular payment of salaries, and to the clearanceof salary arrears. In addition, the 2008 budget retired a good portion ofthe domestic commercial debt. Thanks to these payments, government suppliers were able to meet their commitments.andtheir consumption expenses. On this score, nearly US$3.8 million (CFAF 1.9 billion) in commercial arrears were cleared for the priority sectors (education, health, rural development and social affairs) alone. This analysis confirms that consumption is still driving growth inthe CAR. The forestry tax includes stumpage fees anda reforestation charge. The proceedsgo to the State, to the ministry responsible for forests, and to the communes. The communes receive 30% of the stumpage fee and 25% of the reforestation charge. These funds are paid to the communeswith the primary objective of sustainableforest management. Inprinciple, these -61- taxes are designedto assure a decent standardof living for forest communities by encouraging them to abandonindiscriminate cutting infavor ofrational exploitation and sustainable development ofthe forest. The forestry taxes paid to the communes between2007 and 2008 represent significant financial resourcesfor investing in social infrastructure such as schools, healthcenters, roads and markets. They shouldalso make it possibleto finance income- generatingactivities such as livestock raising, inplace ofthe forest productsto which local people no longer have access. Taxes paidto the communes in2008 amountedto US$1.7 million (CFAF 847 million) versus US$1.9 million (CFAF 961 million) in2007. Despitethis decline, the government intendsto ensure that these resourcesare put to good use in improving local living conditions. For that reasonit has establishedan inter-ministerial committee that will vet the communes' proposals for using these resourcesbefore it authorizes any allocations from the funds, which will now be deposited into a holding account at the BEAC. The governmentalso plans inthe near future to make communes outside the forests eligible for revenuesfrom the tax. The trend in agricultural output, whether of cash crops or of staple foods, is an important indicator inassessing the dynamics of rural incomes, which are more precarious and volatile than urban incomes.Unfortunately, output both ofcashcrops (cotton, coffee andtobacco) and of staple foods (corn, manioc, groundnuts, millet, sorghum and potatoes) was virtually stagnant in2008, and this has been damaging to farmers' living standards.Under these circumstances, the government is seekingto maintain producer prices for key cash crops such as coffee and cotton at a reasonablelevel inorder to save farmers from impoverishment and to give them an incentive not to abandonthese plantations for other crops. 5.5.2. Standard-of-living indicators Indicators of living standards have shown some slight improvement since 2003, but they are still deemed inadequate. In the health field, infantand child mortality ratesremain high. According to the 2006 MICS the infantmortality rate dropped from 130.6to 106 per thousand between2000 and 2006, andthe child mortality rate fell from 220 to 176per thousand between2003 and 2006: the later figures representan improvement from 2000 and 2003, but they are still higher than they were in 1995.The 2006 figure means that, ofevery 1000 live births, 176children died before their fifth birthday, comparedto 157children in 1995, even f they would seem to be better protected. Moreover, 23.2% ofchildren under 59 months were underweight in 1995, while the correspondingfigure was 24.2% in2000 and 28.2% in 2006 The AIDS prevalence rate in 2006, at 6.2%, placedthe country among the most severely affected in the region. This scourge constitutes a growing problem for development, for it is leading to a drastic loss ofhumancapital and declining life expectancy, which was only 39 years in2006, comparedto 41 years in 2000 and 49 years in 1993. The gross enrollment ratio inprimary school (which counts all children registeredat school regardlessof their age) was 102%in 2006, reflecting late enrollment and a high repetition rate: many children enrolled in primary school are of secondary school age. The net enrollment ratio (which measures the percentageof childrenages 6 to 11enrolled inprimary school) is 5 1.4%, meaning that barely one child intwo of primary school age is registeredat school. This ratio is 55.8% for boys and 46.7% for girls. The literacy rate for persons aged 15 to 24 years declined between2003 and 2006, from 56.7% to 45.7% for boys and from 37% to 25.9% for girls. Educational facilities, which were already run-down, have sufferedthe full impact ofthe crisis at all education levels. Moreover, there is a glaring shortage ofteachers andthe erosion of funding has precludedprograms to upgradeteacher qualifications. As a result, the quality of the country's educationsystem is amongthe lowest inthe region. -62- The 2006 MICS data on durable goods ownership show that households are chronically under-equipped.Fewerthan 50% of households have a radio, while only 7.8% have electricity service and 4.4% have a television set. Inonly 8% o f households is there at least one person who owns a fixed or mobile telephone, a very low proportion inthe ICT age. It is expected that the various achievements duringthe first year ofthe PRSP will mean some improvement at least in those indicators that in2006 showed a favorable trend. 6. Constraintsand outlook Substantial progress has been made inPRSP implementation. Inparticular, the implementation of sectoral committees has ledto more consistent government action. A number ofconstraints, however, are still impedingmore effective strategy implementation and may lead to disappointing results. We also note that the outlook reflects opportunities that should be used advantageously to enable the Central African Republic to succeed inthe mediumterm in substantially improvingthe population's living conditions. 6.1 Main constraintsand threats Effective PRSP implementationrequires a series o f conditions-most importantly the mobilization o f resources, and an effective institutional framework and domestic and international economic environment. After one year of PRSP implementation inthe C.A.R., we note that the mainconstraints and threats that have prevailed involve (i)mobilization o f resources, (ii)insufficient human resource capacities, (iii) the international financial and economic crisis; and (iv) a number o f constraints specific to certain sectors, and specifically agriculture, energy, and infrastructure. Mobilization of resources.The now recurring reason for failing to complete PRSP programs and projects is the difficulty in mobilizing external resources, or the shortage o f such resources. The context seems to be one o f shared responsibility (inefficient procedures used by the partners, insufficient control by the national party, and insufficient national capacities to absorb the resources that have been mobilized) when the Paris Declaration on the efficacy o f aid is tentatively being implemented. The essential feature of official development assistancebenefiting the C.A.R. i s reflected with the predominance o f humanitarianand recovery aid which increased from US$10 million in 2005 to US$70 million in2007, and to more than US$lOO million in 2008. Inaddition, this aid i s implemented through multilateral channels and nongovernmental organizations, thereby reducingthe principle o f country ownership o f all program segments. In light ofthis situation, the government and its partners agreed duringthe annual review of commitments at the Brussels Round Table held inBangui on November 20,2008 that the national party would make the necessary effort to control the procedures used by donors and lenders and to meet the other conditionalities for disbursement (counterpart funds, project maturity, etc.) often imposed by donors, while the donors and lenders will make every effort to streamline disbursement procedures as much as possible in light o f the C.A.R.'s "fragile state" status. Insufficienthuman resource capacities The situation interms o f human resource capacities inthe Central African Republic is a substantial constraintagainst development. In2006, 48.6 percent o f school age children (6-1 1 years o f age) were not enrolled in school; the -63- illiteracy rate for persons 15-24 years o f age was 46 percent for boys and 26 percent for girls; and the net primary school enrollment rate was 5 1.4 percent. Labor productivity i s therefore a problem, and it is a challenge to make the C.A.R.'s population into a true engine for socioeconomic development. Although the conditions have yet to be established to make the Central African Republic into a society o f knowledge inthe short or mediumterm, the government, mindfulo f the threat, intendsto focus on human capital formation, particularly through (i) high-quality primary education for all, throughout the country; (ii)high-quality secondary education and preparatory studies for higher education inpriority technological streams to support the development o f national industry; (iii)occupational training focusing on acquiring know-how with priority focus on meeting the requirements o f the local populations; (iv) more professional university education; and (v) extended continuing education supported with a system designed to build on experience. These efforts will facilitate implementation o f the institutional reforms now under way to modernize the administration. Ifnothing is done to strengthen human resource capacities, there i s a risk that the poverty now existinginthe C.A.R. will be handed down to future generations, as human resources are required to transform material, financial, and logistical resources in the process o f development. Internationalfinancialcrisis. Inthe short and mediumterms, the international financial crisis and its economic repercussion have ledto a contraction inthe Central African economy interms ofGDP, which is inconsistent withthe wave of recovery that began in2006. Where foreign trade is concerned, diamond and wood exports, which accounted for 88.8 percent of 2007 export revenue, already registered a downturn in 2008 (86.2 percent), with a revenue decline o f approximately 27 percent. This situation has affected budget resources, and specifically has reducedthe government's investment capacity as it must cover operating expenditure that cannot be reduced. Where the balance o f payments i s concerned, Central African migrants in 2007 transferred just under [...] 6 billion into the country. The wave o f layoffs observed inthe host countries exposes them to the same earned income losses as other workers inthese countries. We can therefore expect a decline in such transfers, with repercussions on family assistance, housing construction, and creation o fthe small and medium-sized enterprises that these transfers normally support. Where donor countries are concerned, we should note that the observed economic slowdown will leadto reduced budget revenue, not including borrowing, and that diminishing resources must be usedto meet numerous requests for financial support to the ailing banking sector and other areas o f the economy in difficulty. This major financial support that donor countries give to their banking systems and enterprises affected by the economic recession may meanthat they will contribute less to official development assistance. We can increasingly expect this crowding- out effect inthe Central African Republic as it must alreadyjustify sufficient domestic capacities for effective mobilization o f the aid flows now granted. Main sectoralconstraints.Agriculture, energy, and infrastructure are sectors the government relies on to boost growthwith a view to raising the general standard o f living and especially to reducing poverty. The dynamic PRSP scenario was quite positive in forecasting sound performance inthese sectors, which unfortunately ran into substantial constraints. As inother sectors, the sector strategy was designed to establish intra-sectoral strategies and inter-sectoralcomplementarities essential for sector development to be integrated harmoniously. Accordingly, project stakeholders focus more on microeconomic than macroeconomic objectives inmaking their decisions'. These sector stakeholders would have preferredfor the liberalization to be achieved with accompanyingmeasuresrelatedto 'Werefer to operatorswho engage in arbitragebetweenincome-generatingproductsand foodproducts. -64- financing, the supply of inputs, and rehabilitated rural infrastructures, which are now the two major constraints to development in this area. Inthe area o fenergy, dependence on petroleum imports andthe electricity deficit, which also registers a downward trend (-3.9 percent for water and electricity in 2008), are considered major structural constraints for the C.A.R.'s economy. The government is aware that it cannot reach its growth objectives unless it finds a sustainable solution to these problems. Infrastructures provide the essential foundation for buildingeconomic development and competitiveness. They reduce production costs, facilitate economic activity, increase production volume, and stimulate social progress. The accessrate to these infrastructures i s very low, whether social (health and education infrastructures) or economic (transportation: roads, bridges, airports, ports; public utilities: energy production and distribution, water distribution systems, sewers; and telecommunications). Their functionality should also be sufficiently advanced to encourage development o f a private sector worthy o f the name. 6.2 Outlook and main opportunities Despite the problems encountered and a number o f threats impeding short-term PRSP implementation, the medium-termcontext for the exercise includes a number of opportunities that the government intendsto exploit to reverse the current poverty trend. These activities specifically include the (i)start o f major works; (ii) implementation o f development poles; (iii)reductionofthedebtburdeninconnectionwiththeHIPCInitiative;(iv) morerigorous fiscal management; (v) gradual settling o fthe political climate; (vi) Gleneagles Scenario in connection with the pursuit o fthe MillenniumDevelopment Goals; (vii) subregional integration; (viii) consideration o f the recommendations from the Inclusive Political Dialog; and (ix) continuation of the consolidation processeswith two important components- security sector reform and Disarmament, Demobilization, and Reintegration, specifically in the areas affected by the conflicts. Start of major works. Inthe medium term, the Central African Republic has sufficient potential to succeed, particularly through investments to be mobilized in support o f the infrastructure sector. Such financing that has been arranged, for which mobilization i s following its normal course to benefit the infrastructure sector, includes the 10thEuropean Development Fund in the amount o f approximately US$184 million, equivalent to CFAF 92 billion, for the period 2008-2012. Disbursement o f some o f these resources and their economic results are expected in 2009. Similarly, inthe context o fthe EC Regional Indicative Program, the C.A.R. will benefit from community infrastructure works estimated at several dozens o f billions o f CFAF in 2009 and 2010. The AfDB and World Bank are now working with the government to prepare ajoint country strategy that will support works inthe infrastructure, education, and health sectors beginning in2009. The Fast Track Initiative Catalytic Fundcommittee agreed US$37.78 million for the education sector for the next three years. Inprimary education, these resources will finance a program to build and rehabilitate schools, to train and hire contractual teachers, to buy textbooks, and to support capacity building for the Ministryo fEducation. Preparation by the French authorities o fthe debt collection program with the Central African Republic and the forthcoming resumption o f cooperation with the International Fund for Agricultural Development (upon the settlement o f payment arrears by the EC) are new factors that bode well for resumedcooperationand investment. Some opportunities may arise ifnontraditional bilateral players become interested the potential the C.A.R. offers. -65- Developmentpoles project.Inconnection with PRSP implementation, the government plans to implement development poles designedto betrue engines for regional economic growth that meet the requirementsto control and steer the national economy toward equitable, harmoniousdevelopment of the country as a whole, to ultimately eliminate regional disparities. Conceptually, the developmentpoles are designedto organize local energiesto support the community development objectives, to ensure that an optimal mix of local resourcesandthose outside the region is usedto optimize its potential inthe use of comparative advantages to promote territorial development, inter-regional trade, andto increase the standardof living. In fact, the consensualchoice of a city as a focus for the initial development efforts can promote the multisector approachto development, participation and ownership of the people, and multiplier effects ofthe results and repercussionsofthese efforts. This development poles project, which inherentlyaims at more direct interventions in support of rural poverty reduction, will register far-reaching accomplishments for 2009 and 2010. Beyondthe questions of revenue inmonetaryterms, the development poles will have the capacity to provide a packageofcommunity services (schools, health centers, housing, roads, water and sanitation, etc.) at more reasonablecosts as the population is concentratedin a small geographic area. A financing arrangement was signedwith the UnitedNations Human SettlementsProgramme (UN-HABITAT) to conduct monographic studies in the cities selectedfor the first phase of this important program. This agency conductedan exploratory mission inAugust 2008 and the monographic studies beganduring first-quarter 2009. HIPC Initiative. The HIPC decision point in September 2007 gives the government grounds for optimism regardingthe release of further budget resourcesfor investment.The debtlexport ratio, which was 541 percent in 2005, is expectedto decline to approximately 66 percent in 2008. The completion point scheduled for June 2009 should still be a major concern for the government anddevelopment partners, in light ofthe 2009 deadline andthe effects of indebtednessincountries inthis extreme context. This could constitute a new start and place the Central African economy ina context of solid recovery. The government intendsto maintain its efforts to mobilize domestic resourcesto meet the conditions to use the portion of the debt subjectto relief inconnection with this initiative. The budget effects ofthe decision point are already apparent with a substantialincreasein debt relief between 2007 and 2008. In fact, the 2008 data indicate US$16.4 million (equivalent to CFAF 8.2 billion) indebt reliefas against US$3.4 billion (equivalent to CFAF 1.7 billion) for all of 2007. This in fact involves supplementary resourcesthe government receivedto address problemsrelatedto investment or direct poverty reduction. 2009 budget. Inthe framework o f this budget, establishedwith assumptions that did not include any external shocks, the government intends to strengthen budget management by mobilizing additional domestic resourcesand through more effective resourceallocation. The 2009 budget law is the foundation for the PRSP, reflecting the budgeting ofthe key actions adopted, specifically in priority sectors for the strategy, as well as dissemination of the government contracting code with a view to the preparationofa manualofproceduresfor contracting. To that end, the law provides for substantialbudget increases inthe relevant areas: education(10.12 percent) health (0.11 percent), rural development (53.2 percent), justice (12.6 percent), and defense (20.2 percent). Ina fairly morose economic environment, the Government intendsto redirect resourceallocations to reflect the complimentarity between domestic and external resources. The much-awaitedInclusivePoliticalDialog (IPD)effectively took place inBangui during 08-20 December 2008. The Dialog developedthe following consensual, strong, and operational recommendationsconsistentwith the PRSP strategic focuses. Implementation of -66- some ofthese recommendations has begunwith the government's establishmentof a national union. The former committee responsible for monitoring national dialog recommendations was dissolved and replacedwith a new committee deriving from the IPD recommendations. This effort, which was undertakenwith a peaceful approach, is a source ofhope for the Central African people of regaining unity andcatalyzing new developmentdynamics. The international community will draw lessons from the IPD to provide further support for the local development efforts, particularly against the backdropof a more favorable business climate. The application ofthese recommendations in accordancewith Priority Action Program in PRSP implementation undertaken for the period 2009-2010 should establish linkagesbetween the important Disarmament, Demobilization, andReintegration Program focusing on former rebels and national and community disarmament. GleneaglesScenario. Duringthe G-8 summit held inGleneaglesin2005, developed countriesundertook to double official development assistance in support of Sub-Saharan African countriesto accelerate implementation ofthe MillenniumDevelopment Goals. If maintained, this commitment would meanan increaseinofficial development assistance from US$25 billion in 2004 to US$50 billion in 2010, equivalent to US$85 dollars per person in 2010. To make this commitment operational, the Secretary-Generalofthe United Nations has implemented a committee of 20 donors and lenderswho have selectedapproximately 20 countries, including the Central African Republic, to test the scenario. With UNDP support, the C.A.R. evaluatedthe cost of achieving the MillenniumDevelopment Goals inthe key sectors (education, health, rural development, infrastructures, gender issues, and peace consolidation and conflict prevention). This assessment showedthat the Central African Republic's additional requirementsto achievethe MillenniumDevelopment Goals, taking into accountthe requirementsfor PRSP implementation, amount to US$220 million per annum for the period 2008-2015. The report on this Scenariowas validated at the national level and presentedto the Annual General Assembly of the United Nations in September 2008. The examination ofthe C.A.R.'s case simultaneouslywith the other countries involved led to an initial endowment of US$lO billion inan initial financing stage for 10 countries. The Central African Republic is preparing to use the finalization of this Gleneaglescommitment to acceleratethe processof achieving the Millennium Development Goals and thus further reduce poverty. Subregionalintegration. Inaccessibility is one ofthe constraints to development inthe C.A.R.. Sub-regional integration is an important scenario inreducing these constraints.Inthis connection, the Regional Indicative Program supportedby the EuropeanCommunity in connectionwith the Economic and Monetary Community of Central Africa (CEMAC) provides an opportunity to benefit from the Community's infrastructuresto reduce transaction costs for the C.A.R.'s economy. The Regional Economic Program (REP) is being implemented inthe dynamics of intra-community solidarity. The integrating approach, contribution tojob creation andto sub-regionaltrade, and publidprivate partnershippotential are priority factors in selecting projects to be adopted inconnection with the REP. This context applies to the Central African Republic, from which it stands to benefit. Cotton and the integrated framework. Where cotton is concerned, US$ 1.13 million, equivalentto CFAF 566,100,000, is provided under the Japanese grant to support the 200912010 growing season for hippomobile planting and the purchaseof inputs. Inconnection with the integratedframework, the outlook entails use ofthe remaining US$370,000 (out of the US$1 million initially mobilized by the World Trade Organization), to be devotedto: -67- (i)continuationofprojectslaunchedin2008; (ii)twostudiesontheestablishmentofatrade and credit promotioncenter; (iii) trainingof economic players and sectoral committees members; and (iv) projectcompletionauditmanagement.Similarly, there are plansto migrate to a reinforcedintegratedframework. -68- Conclusion The first year ofPRSP implementation is characterized by an unfavorable international economic environment, with its repercussions on the national economy. The various external shocks, particularly those related to fluctuations inthe price per barrel o f oil, instability in key export prices, the world food crisis, and the international financial crisis have ledto instability inbudget resources, a surge in inflation, an aggravated foreign trade deficit, and slowed growth. Despite this unfavorable economic cycle, with the help o f its development partners, the government has established an institutional framework for PRSP implementation, monitoring, and assessment.The balance o f accomplishments provided in item 5 o f this report indicates that substantial actions, essential to prevent further deterioration in the country's economic situation by end-2008, were effectively taken. This approach has permitted a recovery in various sectors, to optimize their preparation as players inthe national economy. The government simultaneously pursued implementation o fthe Poverty Reduction and Growth Facility program supported by the Bretton Woods Institutions. The main difficulties encountered inPRSP implementationrelate to the mobilization of resources, making the institutional framework for strategy monitoring and assessment operational, and insufficient human resource capacities. Other problems are more peculiar to certain sectors, specifically agriculture, energy, and infrastructures, which are essential factors inthe rehabilitationofthe C.A.R.'s economy, which hasbeenshakenby the many conflicts duringthe period 1996-2003. The government's commitment to make every effort to control the procedures for disbursemento ffunds, and to comply with other conditionalities for the release o f external resources, and the fact that the development partners are considering streamliningthese procedures to reflect the Central African Republic's status as a "fragile state" bode well for an easing o f such difficulties inthe short term. The pursuit ofPRSP implementationexercise fits inthis context, characterized by many opportunities to be taken by the government to reverse the poverty trend. Inparticular, this effort involves (i) start o f major works that will have effectively taken place in 2009; the (ii)implementationofdevelopment polestofederatetheparticipatoryapproach,upgradingof local resources and multisector approaches to boost regional development; (iii)repercussions o f the HIPC Initiative (attainment o f the completion point) that will increase public investment capacities; (iv) continued mobilization o f resources; (v) capacity buildingfor the implementing agencies to enhance the absorption and effective use o f the mobilized resources; (v) more rigorous fiscal management; (vi) gradual easing o fthe political and security climate, which will have repercussions on the business environment; and (vii) subregional integration, through the Regional Indicative Program o f the European Commission and the CEMAC Regional Economic Program, from which the C.A.R. can benefit to eliminate its isolation. Annexes CAR APR EnglishTranslation.docjuin 15,2009 (7:45 ) - - -70- Annex 1. PRSP ImplementationMonitoring Matrix (draft version e) Level PERFORMANCE INDICATORS benchmark 2008 achieved in 2007 Comments Security Number of military personnelreceivingcivic and moraltraining 960 960 Number of press outlets in connectionwith confidencebuilding efforts 4 0 Numberofawareness campaigns targeting the local populationsin garrison rehabilitationareas 12 12 Number ofbarracks built 4 0 Financingsought for barracksconstruction Number ofjudiciary police officers who have receiveda minimumof 9 months Financingsoughtfor training 40 training Numberofuniformsprovidedfor membersof the Defenseand Security Forces This achievement (FDS) 300 300 applies only to the police. Number ofpersons demobilized and reintegrated Source: Projectfor reintegrationof 7,000 4590 veterans and community support (PRW Number ofpolice officers recruited and trained Financingsoughtfor 400 0 training Justice Numberoflegal texts revised 8 0 Inprogress Numberofcodes disseminated 1 1 Number o f codes translatedinto Sang0 0 0 Adoption ofa legal career frameworkfor magistrates 3 3 Number of magistrates recruited and trained 42 42 Number of bailiffs trained 5 5 Number of prison managers and female wardens trained 16 16 Numberof courthousesbuilt 2 2 Number of remandcenters built or rehabilitated Two built and two 4 4 rehabilitated Governanceand human rights Number o fprofessional andtechnical staffwho have participatedin human rightstraining 10 10 Number of awareness and education campaigns for the public, local This indicatorwill administrative authorities, and defense and security forces N A not be measureduntil 2009 Number of legaltexts revisedand adaptedto international standardssubmitted This indicatorwill to the National Assembly N A not be measureduntil 2009 Establishmentof a structure to fight conuption,misappropriation, and other This indicatorwill similar violations NA not be measureduntil 2009 Number ofbuildings built to accommodate decentralizedservices This indicatorwill NA notbe measureduntil 2009 Number ofbuildings rehabilitatedto accommodate decentralizedservices This indicatorwill NA notbe measureduntil 2009 Establishmentof a legalmonitoringand assistance service for victims of human This indicatorwill rightsviolations and corruptionwithin the HighCommission for HumanRights NA notbe measureduntil and Governance 2009 Business climate (trade) Numberofdocumentson industrialand commercialpolicy and development C.A.R.commercial strategy for the privatesectorpreparedby the ministry 2 2 policy document Commercial Code Number oftexts prepared, revised,and harmonizedby the ministry 7 02 Commercialcode -71- 2008 Level PERFORMANCE INDICATORS benchmark achieved in 2007 Comments harmonizedwith regionaland international texts Revisedinvestment charter This indicator will Establishmentofa legal framework for state-privatesector consultation NA not be measureduntil 2009 Number of training seminars organizedby the Ministry ofTrade, Industry,and 0 Financingproblems Small andMedium-SizedEnterprises(MCIPME) targetingthe private sector 5 Promotion of gender equality and equity Revisionoftexts (Criminal code: Code of criminal Existenceof anationallegal instrumentpromotingequalopportunities for both 4 procedures;Labor genders 5 code; Mining code) reflectinggender issuesnow being adopted. The initial reporthas An available not beencompleted draft as UNICEF was Existenceofthe initial reportand periodic reportsof the Convention to A draft is examinedby unable to recruitthe eliminate all forms ofviolence againstwomen (CEDEF) the international interministeri consultantto amend al committee the draft report and for validation the activity hasbeen reprogrammed Rural develooment Numberofregionalunits ofthe chamber of agriculture established NA This indicator will not be measureduntil 2009 Numberoflaws and implementingdecrees (subsidies) in respectofAgricultural NA This indicator will Producers'Organizationsprovidedby the government not be measureduntil 2009 Numberoftractors usedper year 13 Area o f bottomlandsdevelopedand upgradedper year (hectares) 500 Number ofprocessingunits establishedby the government: Mill 300 Huller 100 Press This indicator will NA not be measureduntil 2009 Dairy 1 Oil mill This indicatorwill NA not be measureduntil 2009 Publicationnumber 1 0 Financingproblems Mining Revisionofimplementing texts for the mining code and budget law establishing 2004 mining miningtaxes in supportofminingregionssigned code; Existing budget laws Number of prospectingoperations carriedout to establish geological databases NA Number of miningbrigadeagents equippedwith vehicleshniforms 161 Numberofsmall-scale minerstrained Agency for Reconstruction and Development -72- Number ofminingcompaniesestablishedinthe operatingphase This indicator will NA not be measured until 2009 Infrastructure and transportation No feasibility study 585 0 and financing Linear kilometers, roads rehabilitatedor resurfaced problems Linearkilometers, unpavedroads rehabilitated 2546 733 Linearkilometers, rural roadsrehabilitated 1524 206 Insufficient loan 2 works built 130 52 50 works Number ofengineeringworks rehabilitatedor built rehabilitated Waterways and forestry Number of structures and associationssupportedandtrained in connectionwith forest resourceco-management 5 Number ofleaders trained 20 Number o f awareness sessions andmeetingsorganized 150 Developmentpolicy operations Tracking capability Container exports Number of professionalstrainedby the Ministry 8 Number of professionalsfrom the regionaldepartments trained 175 One ( Forestry One Forestry Number oftexts, codesrevised, adopted, and applied `Ode) and code adopted implementing and texts promulgated Number ofoperating permits grantedto forestry enterprisesby the ministry Number oflocal managementcommitteestrained in resourcemanagement Regulations prepared,adopted, and applied Number offorestry enterpriseshavingforestry development plans Number o f cynegetic village areas established Energy Number of implementingtexts for the electricity code 4 Productionlevel providedby h e capacitiesof Baoli 1and 2 130GWH Number ofprofessionalswho haveattendedGIS training 4 4 Available power (MW) 17 Number oftransport lines rehabilitated, mediumtension (Km) 260 Number of lines rehabilitated, low tension (Km) 500 Number o ftransportation lines rehabilitated(transport lines) (Km) 130 Number ofprice structure audits for petroleumproducts carried out Water and sanitation Number o fboreholesbuilt in rural areas 80 144 Number ofboreholesrehabilitated in rural areas 200 280 Number ofstandpipeenclosures built in urban areas 40 Number ofnew individual hookups in urban areas 300 Number ofVIP latrines built 50 66 Number oftraditional latrinesbuilt or developed 1,800 1,630 -73- Level PERFORMANCE INDICATORS 2008 benchmark achievedin 2007 Comments Arts and culture Number of cultural exchangesestablished .. This indicator will NA not be measured until 2009 Neighbohood culture projectiontwo Project districts of implementa- Bangui Number ofdistricts and localitiesin the provinces servicedby the neighborhood tion in two (Kptttni 1and culture project districts of 2 in the 6th Banguiand district, Bimbo Galabadjain the eighth', and Bimbo (Gbalikola2) Construction of acultural center Feasibility study available FeasibilityFinancingsought to build a cultural study with support center from UNESCO Numberofsites rehabilitated 5 3 Financingsought Tourism -The 70 persons trained are from the following structures: 1,600 70 BAMELEC; Number ofeconomic players subjectto capacity building in the tourismarea AZIMUT, and Le Mkridien Restaurant Number ofpersonnelfrom the National Tourism Association subject to capacity building inthe area ofhospitality Not known 20 Number of inns (1,500 -2,000 rooms) built for tourism or rehabilitated near the stations Number oftourism hotels built inthe provinces havinga capacity of 15 rooms Financing 8 0 problems This indicator will not be measured Number ofsmall, inexpensivetcstaurants built to standards NA until 2009 Number ofecotourism sites developed 1 Financing 0 oroblems Number of artisanal sites built 4 0 Financing problems Education Number of F-1classrooms rooms rehabilitated 200 Numbero f F-1 classrooms rooms built 500 6 Financingproblems 850 have been Numbero f F-1teachers trained andused 750 832 trained, including 18 withdrawals) Numbero f F-1teachers retrained 3,000 2,925 readers and Number of books distributed 6,000 2,925 math textbooks Number o f latrines built in schools (World Food 250 790 Programand UNICEF) Numbero fschools equippedwith water poinutank 150 528 (see UNICEF) Education for Family Number of village communities subject to awareness activities(Information, Life andPopulation Education, and Communication) on environmental, development,and 150 100 (EVFMP) program reproductive health issues supportedby -74- Level PERFORMANCE INDICATORS 2008 benchmark achieved in 2007 Comments teachers trainedon population, socioeconomic development, environmental, reproductivehealth, and quality of life issues inthe school environment Numberof pedagogickits distributed to teachers (Frenchand math textbooks) Requirements: 5,598 Deliveredby DAMECA with 3000 5680 World Bank financingin connectionwith the PSES Fund This indicator will Number ofhealth educationcenters (FOSAs)rehabilitatedby type NA not be measureduntil 2009 Healthunit 453 Healthcenter (C) 124 Healthcenter (B) 52 Healthcenter(A) 39 Prefecthospital 20 Regionalhospital 6 Central hospital 1 This indicator will Number o f FOSAs built (by type) NA not be measureduntil 2009 Healthunit 453 Healthcenter (C) 124 Healthcenter(B) 52 Health center (A) 39 Prefecthospital 20 Regionalhospital 6 Central hospital 1 Number o fhealth personnelby category Number o fgeneral physicianstrained 113 Number o fspecializedphysicianstrained 10 Number o ftechnicianstrained 94 Number ofmidwivesimaternitynursestrained 221 Number ofstate diplomanursestrained 298 Numberofmaternity assistantstrained 253 Numberof staff trainedto treat malaria HIV/AIDS Number of persons receivingHIV counselingand screening 75,000 32,010 Number o f persons receivingHIV counselingand screeningwho know their serological results 67,500 29,100 National Committee to fight AIDS (CNLS)+Central African Association 10,000,000 8,926,198 for Social Marketing (ACAMSYUNFPA Number of condomsdistributed inadditionto 8,804,880 sold by PSI Number o foperational sites for preventionofparentichildtransmissionof HIViAIDS (PTPE) 60 65 Number ofpersons trained in anti-retroviral treatmentand CTM prophylaxis 250 75 PSESproject Number of FOSAs having anti-retroviral treatments, prescribethem, and/or provide clinical follow-ups 50 62 -75- PERFORMANCE INDICATORS 2008 Level achieved Comments Benchmark in2008 Employment Implementation of the preparatory The bureauof the The process for Promulgation of the NationalEmploymentand OccupationalTraining Policy committee for the preparatory preparingthe Paper nationalforum on committeehas forum is under employment and way. occupational beenestablished training Labor code revised, adopted, This indicator will Number oftexts, codesrevised,adopted, andapplied NA and disseminated not be measured inall labor until 2009 inspectorates Implementing decree for the Establishmentofthe PermanentNational Labor Council ordinance Yet to be establishing the No implemented National PermanentLabor Council Number oflabor inspectorsor auditorstrained or retrainedwithin the ministry and operational 40 40 LaborDepartment (DGT) + Central African Agency for Vocational Training and Employment Existenceof a legal framework and partnershipsbetweenthe training One directory One study (ACFPE) organizationsand enterprises available completed The prefecturesof Vakaga, Bamingui Bangoran,and Haut-Mbomou have notbeen covered owing to their inaccessibility Number oftool sheds built 5 1 Lack of financing Number of young peopletrained by type ofapprenticeship 2000 120 Lack of financing Number oftraining centers reinforced 16 0 Lack of financing Number of connections for different sites, simplified procedure Conservation Department (DGPE)-DSM Central African DGPE-DSM Armed Forces FACA+ONI+ Completed (FACA)-National Payroll Information department Technology Office (ONI) 6 ministries audited: Agriculture and Livestock;Civil Activities are in Number of ministry audits conducted 7 Service; Foreign progress Affairs; SGG ; Health; Education Texts revised; the commission Adoption by the has already met Revisionofcivil serviceby-laws government in preparationfor the national assembly plenary session Establishmento fthe Labor MarketManagementand Information System This indicator will (SIGME) NA not be measured until2009 -76- PERFORMANCEINDICATORS 2008 Level achieved Comments Benchmark in 2008 Youth and sport Number of youth leadels trained inentrepreneurialculture 30 0 Number of youth otganizations havingbenefitedfrom technical, material, 0 These activities and financial support 20 have notbeen Number of young persons trained in citizens' educationtopics 300 0 carriedout owing Construction ofan administrative building 1 0 to insufficient Numberofliteracy centers 1 0 financing Numberofsocio-educationalunits havingcitizens' educationprograms This indicator will NA not be measured until 2009 Number of youth missionsbuilt 1 1 Number ofsocio-educationalleaderstrained at the national Instituteof Youth This indicator will and Sport (INJS) NA not be measured until 2009 Numberofcopies of policy documents reproducedand distributed This indicator will NA not be measured -77- Annex 2. PRSP performancemonitoring matrix Level PERFORMANCE INDICATORS Benchmark 2008 (2006 or 2007) Benchmark achievedin Comments 2008 Security - Percentageof prefecturesor regions having oaerational barracks 18 percent 18 percent Number o fcommunities affectedby Civic ,? Military Cooperation activities U L Populatiotdpoliceofficer ratio 2,945 per police 3,004 per 3,004 per officer police officer police officer Populationper gendarme 2,811 per 2,868 per 2,536 per gendarme gendarme gendarme Justice Average duration to process flagrante delicto cases in all three coutts 8 - 15 days 8 - 15 days 15-30days Insufficient number ofjudges Average duration oftrials 8 days 8 days 30 days Insufficient numberofjudges Percentageof criminal trials delayed 0 percent 60 percent Notknown Datanotprocessed Numbero fcases of misappropriation of public Insufficient numberofjudges assetstaken to court 12 40 50 Average preventive incarcerationperiodfor 15 days 3o days Insufficient numberofjudges flagrante delicto cases - 15 days Populatiodmagistrateratio 42,1661 28,682/ 22,4061 + 42 magistrates magistrate magistrate magistrate Populatiodcourt 140,555 143,4121courts 195,562/court The government mustmake substantialefforts Region 1 4 Region2 4 Number of operational courts in each region 4 4 Region3 4 22 courts distributedin the Region4=3 six regions Region5=3 Region6 4 Number o f attorneysregisteredwith the bar 10 new attorneys are association 98 98 registeredwith the office Governance and human rights Number ofreferrals andjudgments issuedfor This indicatorwill not be humanrights violations Not known N A measureduntil 2009 Number ofreferralsandjudgments issuedfor This indicatorwill not be corruption, misappropriation, and other similar Notknown N A measureduntil 2009 violations Number ofjudgments in the area ofhuman rights,corruption, misappropriation, and other This indicatorwill not be similar violations submittedto the High Not known NA measured until 2009 Commission for HumanRights and Governance Business climate (trade) Number o fcases processedby the onastop window Not known 600 500 Number ofenterprisesestablished 356 400 500 Periodoftime requiredto establishan enterprise 1 month 3 weeks 7-15 days Promotion of gender equality and equity Number of women deputies 10 10 9 Number ofwomen ingovernment 4 5 4 Number of women insenior management (Managing Directors, Town councilors, 40 50 42 Ministerial cabinet members, etc.) Rural development Rate ofoperationalagricuhral producers' organizations 8 10 Overall rate ofincrease (in percent)in key food output 4 5 2.6 Number ofhippomobileteams useuyear Not known 2,000 -78- Benchmark Level PERFORMANCE INDICATORS 2008 (2006 or 2007) achievedin Comments Benchmark 2008 Cashcrop production(intons) Notknown Cotton 2,800 4,000 3,636 Coffee 1,600 2000 1,816 Tobacco Tokenentry Tokenentry Annual herd growthrate Cattle 2.2 2.8 5.2 Sheep 5.5 Goats 5.7 6.1 4.3 Pigs 4.8 Poultry 4.2 4.7 Annual rate of increase intruck farming output 4 5.3 Mining This indicatorwill be Geologicaldatabase available Not known NA measuredbeginning in2009. Share o f mining revenuein total revenue 3 percent 3.02 percent Transportation and infrastructure Pavedroaddensity 0.17 0.24 0 Financingproblems Non-rehabilitatednational roaddensity 0.42 0.45 0 0.17 Financingproblems Regionalmaddensity 0.24 0.30 0.05 Financingproblems Ruralroaddensity 0.05 0.06 0.012 Financingproblems -. Level PERFORMANCE INDICATORS Benchmark 2008 (2006 or 2007) Benchmark achieved in Comments 20118 Waterways and forestry Forestrevenuefrom taxes in the state budget 6,500,000,000 7,500,000,000 Rate o f compliance with specifications by forestry companies 45 percent 56.5 percent Developmentin the log processingrate 15 percent 33.5 percent Processingloss rate 60 percent 43.5 percent Developmentin protectedareas 11percent 14percent Number ofvillage cynegetic areas established 8 7 Number ofsmall-scaleenterprisesand industries 10 existing 11 established SME/SMIs Number of studiesordered Not known 8 Energy Number ofcuts (load reductions) Average loadreductionperiod Developments inrevenue from energy produced Water and electricity Drinkingwater coverage rate, rural areas 31 percent 33 percent Drinkingwater coverage rate, urban areas 30 percent 32 percent Populationaccess rate to an adequate sanitary system 52.5 percent 55.0percent Arts and culture Rate of increase in commercial cultural activitiesaroundthe marketplaces 0 15 percent 0 percent Not completed -79- Level PERFORMANCEINDICATORS (2006 or 2007) Benchmark Comments Benchmark 2008 achieved in 2008 Number oftemporaryjobs created 20 10 0 percent Lack offinancing(state budget) - . Number ofpermanentjobs created throughthe 0 20 0 percent Lack of financing development of heritagesites Number ofmanagementplansfor cultural and commercial development ofsites on the 0 3 0 percent No financing(UNESCO) available indicativelist InternationalOrganizationof the Francophonie(OIF) Financingavailable; Numberofreading andactivity centers (CLAR) 11 3 UNICEF supportfor the built or rehabilitated 0 constructionofa building; State budgetand negotiation with UNDP Tourism Number oftourists visitingtourist sites (Bayangal 586 849 Tokenenby Numberoftourists arriving to attendmeetings 3,746 7,052 Token enby Education Studenuclassroomratio 9211 8811 Studenuseat ratio 311 311 Studentdtrained teachers ratio 9811 9811 Studentshookratio 6/1 5.511 Percentageof schools havingsanitary facilities Not known 15 percent Percentageof communitiessubjectto awareness activities Not known 21 percent Percento f teachers havingkits Not known SO percent Studenuclassroom(F-2) ratio 100/1 10011 Completionrate 32 percent 38 percent Health Healthservice access rates inrural areas 62.5 percent 65 percent Rateof births attended by trainedhealth personnel 53.40 percent 58.9 Contraceptive coverage rate 19percent 22.7 DTC 3 immunizationcoverage 84 percent 80 percent 65 percent Vitamin A supplementation rate (childrenaged 60,2 percent 6-59 months) 66.8percent Number ofdistricts applyingthe integratedcare for childhood diseases program(PCIME) 11 8 Malaria prevalency rate 34 percent 29.3 percent Proportionofhouseholdshavinginsecticide- impregnatedmosquito nets (MII) 3 1 percent 47.3 percent Detectionrate, cases of tuberculosis 7 1percent 74 Percent HIV/AIDS The surveys Percentageofyoung persons aged 15-24 who Not required to can correctly identify methodsto preventsexual 24 percent 31percent describethe transmissiono f HIV known indicatorwere not conducted Percentageof HIV positive mothers receiving complete anti-retroviral prophylaxis to reduce 8 2 percent 8 percent the risk of mother-childtransmission percent Percentage of persons with HIV infection 23.33 receivinganti-retrovirustherapy 18 percent 20 percent percent Employment Number o fnewjobs createdin the public sector 798 402 Number ofcivil-service unitsestabiishedwith This indicatorwill basic operational decentralizedservices Not known NA not be measured until 2009 Number ofpersonswho have fcundjobs using This indicatorwill the Job MarketInformation Management Not known NA not be measured -80- Level PERFORMANCE INDICATORS Benchmark 2008 (2006 or 2007) Benchmark achieved in Comments 2008 System(SIGME) until 2009 Youth and sport This indicator will Number o fyoung peoplecoveredby the INJS Not known NA not be measured service until 2009 This indicator will Number ofnetworks establishedinyouth hostels Not known NA not be measured -81- Annex 3. Developmentof key productionactivities Categories 2005 2006 2007 2008* Cash crops ---- Cotton Husk coffee (intons) 3,500 6,500 7,000 6,300 Seed cotton (intons) 3,670 2,26 1 8,000 3,636 fibers (intons) 2,878 1,541 950 3,360 Tobacco 177 142 146 150 Mining - Diamonds(in carats) - Gold 383,295 415,530 417,691 382,076 (in grams) 10,400 10,293 12,506 34,000 Wood - Logs (in m3) 454,402 624,861 537,998 560,985 - Sawntimber and plywood (in m3) 75,620 84,304 92,853 76,206 Source: Technical Committee for Structural Adjustment (CTP-PAS,. N.B. The data for 2008 are estimates. The data from growing seasonn-linwere not affectedduring year n. Annex 4: Developments inthe real GDP growth rate by sector Indicators 2006 2007 2008 2009 Real GDP growth rate 4.0 Yo 4.2 Yo 3.5 Yo 3.9 Yo Primary - Agriculture 4.3 Yo 2.6 Yo 10.3 Yo 10.6 Yo 2.9 Yo 5.4 Yo 2.4 Yo 30.67 - Livestock 0.8 % 2.0 Yo 2.4 Yo 2.3 % - Hunting and fishing 1.0 % 1.8 Yo 1.3 Yo 1.7 % - Forestry 23.6 % ' 7.0 YO 00.8 Yo -6.9 % Secondary - Mining 6.1 Yo 5.2 Yo 10.3 Yo 40.4 Yo 8.0 % 0.5 Yo - 8.2 YO 2.2 Yo - Manufacturing - Water 6.5 % 7.0 % % 3.0 % and electricity 5.5 % 3.0 % - 2.5 3.9 Yo 3.5 % - Buildings and public works 4.0 Yo 6.0 % 7.0 % 8.0 % Tertiary - Transportationandtelecommunications 3.8 Yo 7.6 Yo 5.0 Yo 4.4 Yo 17.9 % 8.0 % 8.0 % 8.0 Yo - Trade 5.0 % - Other 8.0 % 5.0 % 4.0 Yo commercial services 8.0 % 8.0 % 5.0 % - Non-commercial services - 3.0 % 5.7 % 6.4 % 0.1 % 1.8 % Source: CTP-PAS and National Institute of Statistics (ICASEES) -82- Annex 5. Foreigntrade by major group and product(inmillions of CFAF) 2006 2007 2008 Exports Value Structure Value Structure Value Structure Cattle 7,279 8.2 % 7,692 8.2 Yo 8,119 11.5 YD Cotton fiber 836 0.9 % 521 0.6 Yo 634 0.9 % Commercialcoffee 1,042 1.2 % 1,060 1.1 % 1,146 1.6 % Tobacco 73 0.1 % 75 0.1 % 81 0.1 % Diamonds 32,666 36.7 Yo 32,288 34.3 % 22,198 31.4% Logs 29,03 1 32.6 Yo 31,541 33.5 % 23,445 33.1 YQ Other (sawn timber) 17,063 19.2 % 19,691 20.9 % 15,368 21.7 % Other value 8,300 9.3 % 8,900 9.5 Yo 7,900 11.2% Gold 100 0.1 % 100 0.1 Yo 216 0.3 % Enterprises 100 0.1 % 100 0.1 Yo 105 0.1 % Other 8,100 9.1 % 8,700 9.2 Yo 7,579 10.7 % Exportsof goods 89,011 100.0YQ 94,076 100.0 Yo 70,772 100.0 Yo Service exports 26,000 28,100 30,400 Totalexports of goods and 115,011 122.176 101,172 Nonfactor services Source: National statistical yearbook - ICASEES 2006 2007 2008 Imports Value Structure Value Structure Value Structure Petroleumproducts 25,927 25.2 % 29,044 25.8 % 32,231 26.6 % Publicsector 10,200 9.9 Yo 11,800 10.5 % 13,500 11.2% BEAC notes 17,900 17.4% 19,300 17.1 % 17,463 14.4 % Other 48,900 47.5 % 52,600 46.7 % 57,807 47.8 % Imports of goods(FOB) 102,927 100.0 Yo 112,744 100.0 Yo 121,001 100.0 Yo Services 66,400 71,800 106,500 Total importsof goods and nonfactorservices 169,327 184,544 227,501 Balance of goods -13,916 -18,668 -50,229 Balanceof services -40,400 -43,700 -76,100 Overallbalance -54,316 -62,368 126,329 Source: National statistical yearbook - ICASEES 3 ; c f e s K IT D c 5Y 5 'I E W .-S -L I L a U fa E .%4 c m C C e 3 f 5 fa 2M 3 ftC 3 m C r 0 0 9. g! 4 5 e, Lc e 4 i CI v) U rj 9 P m "I Y 8 E .i .*M .* * .*> * m $ 0 c 3W 6 W x c ; c E --a * C : a k U E EE i ci c ff * a E f - v C .c aE E a f Y R 3 S 3 Y BE 0 4E vE E c Y 3 e D 8 Lo Y c C 3 3 E 2 5 ;v cC g i v n c E I 5 c c c c c ; > c R C c c C g c c c a 5e, .-C c * VI 3E * VI 5E u B U .-C w l n -0 5 -0 s