During the last two decades, the average growth of the Economic and Monetary Community of Central Africa (CEMAC) has been slower than the sub-Saharan African (SSA) average.

Given that many CEMAC countries aspire to reach emerging country status within the next two decades, this paper, using a growth accounting approach, identifies the main components of growth and analyzes the differences with respect to comparator countries. Results of the analysis show that convergence of CEMAC countries toward emerging market levels has stalled, while some lower-income, faster-growing economies have been catching up. Decomposing growth by contributing factors, we find that total factor productivity has had a negative impact on CEMAC’s growth.

This paper compares CEMAC countries’ growth performance with that of comparator countries. Specifically CEMAC countries are compared with SSA countries; SSA emerging markets; SSA frontier economies; and a group of selected Asian countries. Although CEMAC’s average per capita income is higher than the average of SSA countries and of SSA frontier markets, because of abundant oil resources, CEMAC’s per capita GDP growth has been slower than in comparator countries.

Improving CEMAC’s productivity requires, among others measures, addressing its challenging business climate and promoting a more diversified economy with a stronger private sector. Because CEMAC lags behind its peers in terms of structural competitiveness and governance, this paper assesses the impact of reforms in specific areas of the World Bank’s “Doing Business” indicators. This is done through an analysis whereby the CEMAC countries catch up with benchmark groups in specific areas of the business climate. By comparing how the regional ranking would improve overall with various scenarios of catching up, this paper identifies which reforms would provide the highest gains in improving the business climate. The last part of the paper analyzes channels through which ongoing shortcomings in the business climate undermine gains in the overall competitiveness of CEMAC economies.

This paper makes three contributions to the analysis of long-term productivity in CEMAC. The first one is the scope as we compute production functions for all SSA countries. Second, the accounting methodology in growth rates allows us to make cross-country and cross-region comparisons. Third, we identify the areas of weaknesses with respect to business climate and competitiveness, and the areas for most effective reforms.

Growth Facts

Per capita GDP growth in CEMAC has been slower than in most SSA countries. Although average per capita income in SSA, African FEs, and Asian peers has risen steadily, average per capita GDP in CEMAC has grown more modestly since the early 2000s. Moreover, a country disaggregation shows that the high average CEMAC per capita growth largely stems from the oil boom in Equatorial Guinea which started in the mid-1990s. CEMAC experienced a convergence process toward SSA EM income levels from the mid-1990s to the mid- 2000’s when its average GDP per capita grew faster than in EMs. However, since 2005, and despite high oil prices until recently, the convergence process has stalled. As a consequence, the per capita income gap has remained at about 30 percent of the SSA EM income level. At the same time, faster-growing, lower-income SSA FEs have been catching up. In 2000-13, the average per capita real GDP growth in CEMAC was 1.4 percentage points slower than in the SSA frontier countries. This comparison shows an even larger decrease when excluding Equatorial Guinea and considers the five other CEMAC countries’; this implies the convergence was largely due to the oil sector.

GDP growth in the CEMAC has been highly volatile and dependent on oil. With the exception of the Central African Republic (CAR), CEMAC economies remain mainly driven by the oil sector; this explains the region’s higher-than-average growth volatility. Oil sector performance explains the very rapid per capita growth in Equatorial Guinea and the severe contraction of the Gabonese economy in 1999. Moreover, the disparity in per capita GDP across CEMAC countries is relatively high and has been widening in the last two decades. While in the early 1990s the regional average per capita GDP was about 20 percent of the average in the two richest countries (Equatorial Guinea and Gabon), in 2013 this ratio was around 16 percent.