Thursday, July 17, 2014

Economy of the Central African Republic

The Central African Republic is one of the poorest countries in the world. They rank at 188/189 on the ease of doing business index, have a GDP per Capita (PPP) of $700, and unemployment of 8%, with 23% unemployment in Bangui, the capital.

Demographically this is a classic case of a country which is not unified by tribe, with the largest tribe being the Gbaya at 33% of the population, with hundreds of other groups with their own languages and cultures. 80% is Christian, and 10% are Muslim. The Gbaya and Banda together make up 60% of the population. Only 4% of the population is over 65 years old.

The CAR became independent in 1960. They were under an extremely mismanaged dictatorship by Bokassa from 1965-1979 who held the country back economically, and was overthrown by the French. The 1980s were unstable under General Kolingba. The first free elections were held in 1993 when Patassé was elected. He led a violent and corrupt government until 2003. 2003 saw Bozize overthrow Patassé. The Bush War that followed ended in 2007. There continue to be Rebel Groups operating in the country that prevents development. They are currently under an interim government.

The CAR is currently in a period of transition with an interim government being formed, and this is a period of incredible potential for the country.

So, what to do? Well, the first step is to make sure that all people are included in the government. This is best done using a ranked voting system which will allow the establishment of parties that represent each group of the population and ensure all voices can be heard. I recommend Single Transferable Vote and multi-member districts because it will prevent artificial quotas and ensure that there will be less corruption because people will be able to elect opposition parties. Their legislature should be unicameral and be composed of regional representatives. They should reduce the term of the President so that there are more frequent elections. The President should be directly elected using IRV. The President can only act within the law. The court system should be independent and there should be trial by jury to separate the courts from politics. The Supreme Court should be directly elected by the people. Elections should be publically financed. Voting should be made convenient to people so everyone can vote.

When it comes to economic policy they have more work to do than almost every other country. Their Doing Business ranking is the second worst in the world, and they need to make it easier for people to start their own businesses. This will increase employment and allow them to advance technologically. Tax payments should be moved to an annual cycle which will save a lot of money in hiring accountants and allow business owners to put more time into doing things that are productive. They need to reduce the initial cost of getting electricity which is a significant barrier to development. They should have a simple tax system combined with a progressive income tax (which treats capital gains as income), progressive inheritance tax, and a carbon tax. They need bank reform so banks can be a safe place for people to deposit their money along with insurance for depositors, along with laws against financial devices that damage the economy. An example of dangerous financial devices are Ponzi Schemes. They need to protect unions so that workers can be competitive and get paid a living wage. This will create the economic growth to free up labor and resources to solve other major problems.

A major threat to the economy is illiteracy. The government should set up schools for adults to learn how to read and write and continue to mandate education for children. They should work with education organizations to ensure that education is done in a way to benefit children the most given their resources.

Healthcare is an incredibly important issue and a major problem for the economy. Access to contraceptives is important to help bring down their birth rate which is currently around 5 children per woman. This will make a significant improvement to the livelihood of everyone in the country when people have fewer children. They need to attract more doctors and keep working with the WHO to implement reforms. Developing the economy by eliminating unnecessary regulation and streamlining what is left will create the revenue needed for the government to make massive improvements in health care.

The CAR among other African countries has the potential to be a model green economy if developed correctly. The largest and most immediate hurdle is the extreme corruption which hurts workers and business owners and need to be reduced. Then they will have the ability to cover other issues such as their dire healthcare system. If they don't improve their economy they will like many other countries not have the ability to fix the other problems which perpetuate misery for far too many millions of people.

This is a time of incredible opportunity for the Central African Republic and hopefully they will make a large step towards democratic elections.


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