Since independence in 1960, the Central African Republic’s (CAR) economy has hardly developed. Today, two in three Central Africans live on less than one dollar a day and in rural areas it is three in four. Time has also not brought much improvement to CAR: people are not any better-off today than they were more than two decades ago.
First and foremost, CAR’s GDP is one of the lowest in the world. At nearly $1.8 billion, it is the same as Sierra Leone’s and only one fifth Haiti’s. For the people of CAR, this low GDP translates into an average personal income of $400 per year, on par with Bangladesh.
Moreover, as the rest of Africa has improved steadily since the 1980s, economic development in CAR has languished: GDP in sub-Saharan African countries has risen an average of 80% since 1985, but in CAR, growth was 10% and was entirely erratic. This stagnation in growth is closely related to the complicated business and tax regulations in CAR. A recent study concluded that the Democratic Republic of the Congo was the only place more difficult than CAR to do business in. From enforcing contracts and employing workers to trading across borders, paying taxes, and corruption, CAR ranks at or near the bottom when compared to other countries.
Making matters worse, Transport infrastructure, critical to maintaining trade, is also in a state of complete disrepair. Of 5,400km of roads, only 700km are actually in serviceable conditions. Perhaps most importantly, because CAR is landlocked, it depends on Cameroon for trade; the 1500 km road linking the two countries takes two weeks to travel and is constantly under threat by bandits. Further complicating trade, during the rainy season, many roads become impassable, cutting of large swaths of the country for months on end.
CAR also has weak and unstable electrical infrastructure making businesses extraordinarily difficult to operate. At last count, only 3% of the population had access to electricity and in July 2008, the system failed catastrophically, leaving the country almost completely in darkness.
Conflict has also had a terrible impact on the economy; the production of cash crops and extraction of natural resources collapsed after the most recent civil war in 2002 and 2003. The instability that ensued made it difficult for the country to capitalize on its enormous wealth of natural resources which include timber, gold, diamonds and uranium. Cotton production, for example, plummeted from 49,000 metric tonnes in 1997 to only 3,000 tonnes 2003. This underdevelopment has translated into low performance on every social indicator (health, education, agriculture, et cetera) making recovery even more difficult.
As the conflict has diminished during the first half of 2008, economic recovery has begun to take its place. There is, however a very long way to go before CAR can be said to be keeping pace with the rest of Africa.
As such, the government has committed itself to several key initiatives, designed to improve the business climate in CAR. Principle among them are: establishing legal and institutional frameworks and incentives that reward private enterprise; build the institutional capacity of institutions servicing the private sector; strengthening public/private partnerships; establishing a financial system conducive to economic operators; and building the capacity of economic operators and human resources to suit the needs of business.
For further information on the economy in CAR, please read:
