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Central African Republic

Authors : Kalidou Diallo, David Tchuinou

  • Despite a downward revision, real GDP in 2016 was estimated to have increased by 5.1%, buoyed by recovery in extractive industries.
  • The country is experiencing a degree of macroeconomic stability and taking measures to implement structural reforms, but the authorities still do not have control of the entire territory and people still fall victim to violence.
  • Due to recurring political crises, the development of entrepreneurship, industry and the private sector is extremely risky and unattractive, even for Central Africans.

The tentative economic recovery that began in 2014 is strengthening gradually, with a real GDP growth rate that should reach 5.1 % in 2016. This improvement is rooted in the recovery of the extractive sector, which surged by 22.8% after the partial suspension of the Kimberley process was lifted. Inflationary pressures, which were strong during the crisis, should lessen in 2017 and 2018 due to the recovery of transport in the Douala-Bangui corridor, and notably thanks to improved food supply.

The country is still facing violence among the former factions of the Seleka, notably over control of mining zones. Roadblockers and other armed individuals also set up illegal barriers to collect taxes from merchants or steal farmers’ livestock. Non-governmental organisations are not spared, even though they are aiding the population. The situation can only be calmed once appropriate policies are in place, along with the programme for the disarmament, demobilisation and reintegration (DDR) of former fighters. The Central African Republic (CAR) has nonetheless maintained a degree of macroeconomic stability and made progress in implementing structural reforms. With the support of development partners, it has produced a national plan for recovery and peace-building – plan national de relèvement et de consolidation de la paix – with a budget of USD 3.16 billion, which it presented to the international community on 17 November 2016 in Brussels. It made its case successfully and received resource commitments, essentially from its traditional funders.

The recurring crises in CAR are preventing development of the private sector and undermining the foundations of the country’s industrialisation and development. They have created such a high-risk environment that even citizens are refraining from investing. This negative context has tended to encourage the expansion of “destructive” entrepreneurial activities against a backdrop of trafficking and fraud, notably in natural resource sectors like mining and forestry. Beyond the prospect of its businesses disappearing, the CAR faces deindustrialisation and the impoverishment of its population. The process can be reversed only through a return to sustainable security and the implementation of appropriate reforms.

CAR

 

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Unlock the potential of African entrepreneurs for accelerating Africa’s industrial transformation, says the African Economic Outlook 2017

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