The Central African Republic (CAR) is a land-locked, conflict-ridden and desperately poor country the size of France, which has gone through 30 years of economic and social decline. In 2008 it ranked 178 out 179 on the UN’s Human Development Index, making CAR one of only two African countries that have not seen any development progress since the early 1980s.

Heavily dependent on diamond and wood exports, CAR has been hit quicker and harder by the global economic crisis than most other African states. High production costs – due to small-scale methods, prohibitive transportation costs and very high costs of doing business – severely limit the competitiveness of CAR’s exports. Reductions in global demand therefore quickly translate into production cuts, layoffs and declining government revenue. The global economic crisis represents a severe risk for CAR’s fragile economy and political system.

Source: World Bank Country Assistance Strategy CAR (2009)

Heavily concentrated in the South, diamond production (in carats) declined almost 80 percent from peak to trough during the course of 2008, or 21 percent compared to 2007. Wood production declined more than 70 percent from peak to trough, or 20 percent compared to 2007. There are no reliable unemployment statistics. Yet, companies working in the South confirm that most of Central Africans previously working in mining and forestry have been laid off.

The social impact on the previously stable southern regions has been severe. Collapsing incomes have led to increasing social tensions among the unemployed population. Malnutrition rates among children have risen rapidly, as parents are no longer able to provide for their children. About 16 percent of children under five are acutely malnourished in the three most heavily affected provinces. Alarmingly, almost 7 percent are severely acutely malnourished. With the northern parts of CAR locked-down in rebellion, possible social turmoil in the South would put a definite end to the country’s fragile progress since the democratic elections in 2005.

Source: CAR Government, DAD Aid Management System (2009)

CAR’s crisis is compounded by a possible reduction in direct foreign support. After reaching more than $310m in 2008, total foreign assistance is likely to decline 20 percent to less than $250m in 2009. Humanitarian assistance, as documented in CAR’s aid management system, has been falling sharply during the first semester 2009. Long-term development assistance, hampered by delays and poor implementation capacity, will not to compensate for the steep reduction.

Large-scale debt relief, granted in June 2009 under the HIPC initiative, is of little immediate help in freeing up internal resources. CAR has hardly ever fully serviced its debts. The immediate reduction in debt payments is thus negligible.

CAR’s dependence on foreign assistance remains exceptionally high. More than 95 percent of public investment in infrastructure, education and health is financed with foreign support. The government depends on aid for paying every third salary bill.

In 2009, several years of international investment in CAR’s fragile peace and hard-won progress might come undone, as a direct result of the global economic crisis. The most vulnerable Central Africans, those who benefited from humanitarian aid and those who live in the South, will be hit hardest by the reduction in social services.

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For more information on aid management in CAR contact

Kersten Jauer
Senior Information Manager
UNDP
kersten.jauer@undp.org
+236 75 57 50 34

Or visit http://dad.minplan-rca.org