Financing urban development in the EMCCA

Abstract

The internal and external financing of urbanisation enables governments to mobilise funds to finance urbanisation and urban infrastructure projects in the Economic and Monetary Community of Central Africa (EMCCA). The objective of this paper is to examine the effects of internal and external financing of the economy on the observed urbanisation rate from a sample of six (6) African countries. To achieve this, we specify and estimate a panel data model using Ordinary Least Squares (OLS) methods over the period 2000-2021. The robustness of the results is tested by adding additional variables. Our results show that internal and external financing of the economy, measured by Foreign Direct Investment (FDI), migrant remittances, official development assistance and investment, significantly increase the urbanisation rate in the EMCCA. We suggest that economies be opened up financially in order to improve urban planning in the EMCCA.

Keywords: EMCCA, Financing; OLS; Urbanisation.

Classification JEL: F65, O55,

Paper type: Empirical Research

* EMCCA is a recent creation that grew out of the defunct Customs and Economic Union of Central African States (CEUCAS). Set up in 1964, it has never really succeeded in achieving its main objective of promoting intra-regional trade. EMCCA comprises six member countries (Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea and Gabon), all of which belong to the franc zone, and its main mission is to achieve real integration between the member states, building on the achievements of their long history of monetary cooperation. It is made up of two unions, each governed by a convention. On the one hand, the agreement creating the Central African Monetary Union (CAMU) is based on a set of rules for monetary cooperation between member countries. Its objective, through the Bank of Central African States (BCAS) which forms its foundation, and according to article 1 of its new statutes ratified in 1998, is to issue currency and guarantee its internal and external stability. Without prejudice to this objective, it also supports the general economic policies developed within the Union. On the other hand, the convention creating the Central African Economic Union (CAEU) has the role of encouraging the achievement of real economic integration through the gradual removal of customs barriers and quotas.