Why the Central African Republic should invest now in its human capital to give itself a future

The Central African Republic (CAR) is a chronically fragile country. Endowed with impressive natural and mineral resources, the country is potentially rich, yet trapped in a regionally, and increasingly globally fueled system of violence and elite capture, of which the impoverished population is the ultimate victim. 

The performance of CAR’s economy is directly correlated with its security situation and political (in)stability. When President Touadera’s election victory in 2016 provided hope for the country and mobilized the international community, CAR started to enjoy steady economic growth contributing to a decline in extreme poverty.  With growth averaging 4.1% in 2015–19, the highest five-year average since independence, CAR’s economic performance seemed to be on a sustainable path. The steadfast implementation of structural reforms; the signing of a Peace Accord between the government and the 14-armed Groups in February of 2019; higher levels of foreign trade and investment; and massive investments of the international community led to a decline in extreme poverty, from 73.7% in 2015 to 70.7% in 2019. 

When conflict erupted in the lead up to the presidential elections of 2020 and hopes for a first peaceful transition of power faded away, all amid the COVID19 pandemic, the socio-economic consequences were easy to predict. With the disruption in global value chains and the blockade of the vital Bangui-Douala corridor, essential goods became scarce, directly affecting prices and vulnerable households. The income per capita contracted by 1.1 percent in 2020 and is projected to contract by 1.3% in 2021, pushing additional Central Africans into extreme poverty and reversing years of hard-won progress in poverty reduction. 

In a country where fragility is chronic, the population suffers. CAR scores extremely low on human capital indices. The Human Capital index suggests that children born in 2020 will most likely realize 29% of their maximum productivity as adults. Productivity is low and has been declining over the past three decades. 

Persistent underinvestment in social sectors and poor service delivery explain the low level of human capital and significant gaps in all components of the Human Capital Index. As many as 1 in 10 children do not see their fifth birthday due to food insecurity, malnutrition, lack of hygiene, and inadequate access to safe water. According to the latest learning outcomes assessment, 57% of students in grade 2, 41% in grade 3, and 20% in grade 4 could not read a single familiar word in French in one minute—implying poor learning outcomes. Under the current circumstances, human capital growth in CAR is expected to fall from 0.6% in 2020 to 0.15% in 2050, driven by persistent underinvestment in social sectors. For instance, in 2018, public spending on education accounted for only 1.9 percent of GDP and 10.6 percent of total public spending in CAR, much lower than 3.1 percent and 16 percent, respectively, in the Central African Economic and Monetary Community (CEMAC); 4.1 percent and 16 percent, respectively, in other countries affected by fragility, conflict and violence in the region; and 4.3 percent and 18 percent, respectively, in Sub-Saharan Africa. 
 

Figure 1. Human capital accumulation is strongly associated with poverty reduction

However, the good news is that CAR has a demographic dividend to seize. The share of the working-age population (15–64) has increased over the last three decades, from 62.5 percent in 1990 to 66 percent in 2020. Primary-school-age children are projected to almost double, from 0.8 million in 1990 to 1.8 million in 2050. So far, CAR hasn’t benefited from having a growing working-age population. In fact, total factor productivity has been reduced by almost half since 1990, which means the increase in the working-age population has only had a modest impact on economic performance. In the long term, the working-age population will reach 75 percent in 2050. This trend gives the country about 35 years to take fully advantage of its young working-age population and make the most of its demographic dividend. 

More than in any other country, harnessing the country’s demographic dividend is a must, because the adverse risks of strong demographic growth are very high. While the youth is one of the major assets to rely on to leverage a demographic dividend, a rising working-age population can generate adverse effects, especially if it is combined with a lack of economic opportunities in a country such as CAR. Unemployed youths are more vulnerable to be recruited by armed groups, as these groups constitute a source of employment and a way to feel empowered. A growing group of unemployed and illiterate working age youth can be devasting for a country already mired in a complex web of fragility and violence.

So, what will it take to seize this dividend? It will take bold reforms and coordinated multisectoral interventions in social sectors. The Fourth  Economic Update for the Central African Republic identifies opportunities and ways to accelerate human capital accumulation. Here are six main recommendations:  

1. Addressing early childhood development challenges to ensure Central Africans can leverage future economic opportunities. CAR should invest more and better in early childhood development to lay a solid foundation for both adult prosperity and resilience and the country’s economic growth and competitiveness;
    
2. Empowering women and girls to accelerate the demographic transition. A fertility transition is among the determinants of human capital outcomes. Households with many children invest, on average, less in each child, indicating a quantity-quality tradeoff.  CAR needs to facilitate women and girls’ empowerment to accelerate CAR’s demographic transition by keeping girls in school, reducing child marriage, increasing access to family planning, delaying pregnancy into adulthood, and reducing child mortality;
    
3. Focusing on efficient and inclusive service delivery to reduce regional disparities and addressing grievances of previous crises. With the overarching objective of supporting a more efficient deployment of social-sector workers across the country, CAR would need in the long term to enable the recruitment and training of social-sector workers in areas where the security conditions allow, improve the condition of education and health facilities while transforming and expanding the capacity of training institutes in provinces to enable the decentralized recruitment of social workers. The government pays the salaries of an estimated 37 percent of public primary teachers, while households finance the remainder, so called community teachers. In the short and medium term, there is an urgent need for the government to tap into the potential of community teachers by providing appropriate training and investing in making them better. 
    
4. Adopting adequate policies aimed at minimizing and eventually reversing the adverse effects of recurrent conflicts on learning. Despite successive periods of school closures during times of crisis (e.g., armed conflict or a pandemic such as COVID-19), there are still no clear mechanisms to mitigate and ultimately remediate the loss of education.. Priorities for managing the continuity of education in the immediate aftermath of a conflict or pandemic include ensuring that all students have the opportunity to re-start their education, providing incentives to maximize reenrollment, and supporting teachers through clear guidance on curriculum prioritization, assessing learning gaps and identifying and supporting at-risk students;
    
5. Reinforcing governance and institutions in human capital sectors while strengthening coordination among technical and financial partners. The authorities need to improve the management of social sectors, as it is weak and too centralized to be effective in a large and sparsely populated country like CAR. The proliferation of ministries and central administrative structures has resulted in duplication of roles, with limited qualified human resources. Humanitarian and development partners from their side need to commit to abide by and coordinate with government policies and strategies and
    
6. Securing domestic revenue to unlock fiscal space and the ability of the government to invest in human capital. CAR will not be able to invest in human capital without strengthening domestic revenue mobilization sustainably. The government can increase revenues in the short term by curtailing tax exemptions, closely monitoring tax expenditures, and aligning them to a development strategy.

However counterintuitive it may sound for a country struggling with recurrent security emergencies and caught in destructive geopolitical dynamics, the time to invest in human capital is now. Investing in human capital now with the objective to create economic opportunities for youth ten to twenty years from today might hold the promise to drag the country out of its chronic fragility. Not doing so will draw more and more youth to the “easy” alternative provided by Armed Groups. Tipping that balance into the right direction is at the core of the World Bank engagement in the Central African Republic.