The World Bank’s 7th CEMAC Economic Barometer forecasts modest economic growth of 3.4% for 2024. Despite recovery in some areas, poverty remains high, with heavy reliance on extractive sectors. The forestry sector, while rich in potential, currently underperforms and faces challenges from unsustainable practices. Proposals to reform taxation and promote sustainable forestry practices may enhance economic viability and environmental protection in the region.
The World Bank has launched the 7th edition of the CEMAC Economic Barometer, a biannual report assessing the economic conditions in the Central African Economic and Monetary Community (CEMAC), which includes Cameroon, the Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of Congo. This edition primarily addresses fiscal policies aimed at enhancing the forestry sector amidst economic challenges.
CEMAC region’s anticipated growth for 2024 is modest at 3.4%, improving from 1.8% in 2023. Growth varies, with the Central African Republic stagnating at only 0.7% due to persistent challenges. In contrast, Equatorial Guinea expects a growth surge to 4.7% driven by oil sector recovery. High poverty rates persist, with 33% of the population living under extreme poverty.
The CEMAC economies are heavily reliant on extractive industries, which dominate exports but create inadequate job opportunities for the region’s youth. The reliance on finite oil, gas, and mining resources makes the region’s economies vulnerable to price fluctuations. Transitioning extractive revenue into investments for human and physical capital is crucial for building resilience and inclusivity.
Despite being situated in the Congo Basin, the forestry sector’s economic contribution across CEMAC remains underwhelming. Countries like Cameroon and Gabon lead in wood product exports; however, Gabon’s attempts to boost processed wood exports face challenges in moving up the value chain. A significant share of wood exports comprises industrial round logs, offering limited job creation and financial benefits.
Forestry revenues in CEMAC countries remain low, accounting for merely 1% of total tax revenue. The sector faces challenges from illegal logging, a robust informal market, and inadequate governance, resulting in considerable revenue loss. In 2022, forestry represented only 0.2% of GDP for the Congo Basin countries, highlighting the untapped potential for revenue generation through reforms.
As guardians of the Congo Basin, CEMAC countries struggle with deforestation driven by illegal activities. While deforestation rates have remained moderate, sustainable management is crucial due to pressures from logging and agricultural expansion. The timber industry holds potential to replace oil sector revenues, but balancing economic activity with forest conservation presents significant challenges and trade-offs.
Proposed reforms to boost forestry revenues include adjusting tax structures based on environmental impacts to encourage sustainable practices. Implementing targeted subsidies for sustainable techniques and tax rebates for certification can enhance governance efforts for CEMAC’s forestry sector. Collaboration and transparent regulations across member states can improve implementation and bolster conservation efforts.
The Central African Economic and Monetary Community (CEMAC) consists of six member countries that are primarily reliant on extractive sectors for economic stability. The CEMAC region is rich in natural resources, notably in forestry and oil, yet faces challenges of poverty and underutilization of its forestry sector. This report identifies ways in which fiscal policies can drive the economic potential of the forestry sector, while also considering environmental sustainability and governance structures crucial for effective management and economic resilience.
The 7th CEMAC Economic Barometer reveals a pressing need for reforms in the forestry sector to enhance economic contributions and sustainability. Recommendations emphasize the importance of tax reforms, sustainable practices, and strong governance to tackle illegal activities in logging and encourage responsible exploitation of forest resources. By integrating these strategies, CEMAC countries can significantly improve revenue generation while preserving their vital forests for future generations.
Original Source: www.worldbank.org
