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Central African Republic - Economy

The C.A.R. is heavily dependent on foreign aid, particularly from French sources. Most of the population relies on subsistence agriculture to satisfy basic needs. The agricultural sector generates half of the country's gross domestic product (GDP). Diamonds (54 percent) and timber (16 percent) account for the majority of the country's exports. The C.A.R.'s transportation and communication network is limited.

With an abundance of arable land, rainfall, a plethora of minerals and wildlife and a low population, the Central African Republic (CAR) should be a wealthy nation. However, despite this potential, most of its population lived in increasing poverty. Male life expectancy declined six months every year and in 2009 the CAR dropped from number 172 to 177 out of 178 on the Human Development scale and now has a GDP per capita of $456. Why is the CAR declining at a time when so many other African states are advancing? While factors such as the CAR's landlocked location and low levels of assistance are certainly important, the fundamental problem was that President Francois Bozize, and his government (CARG), never made national development and good governance a priority. He appeared instead to concentrate on schemes to enrich himself, his family, and his clan; schemes which not only retarded development, but actively destroy commercial enterprises essential to the economy.

President Bozize's kleptocratic government appeared content to control Bangui, the wood and diamond reserves of the southwest, and isolated regions with diamond, uranium and mineral deposits in the east. From this, they were able to steal enough money to buy large properties in Burkina Faso and South Africa and live comfortably, if not particularly luxuriously, in Bangui.

The Central African Republic is classified as one of the world's least developed countries, with an estimated 2010 per capita GDP of $457. Sparsely populated and landlocked, the nation is overwhelmingly agrarian, with the vast bulk of the population engaged in subsistence farming; 56% of the country's gross domestic product (GDP) came from agriculture (including timber) in 2009. Principal crops include cotton, food crops (cassava, yams, bananas, maize), coffee, and tobacco. From 2002 to 2007, timber accounted for an average of 48% of export receipts. More than 4,000 Central Africans work in the forestry sector, more than in any other private sector.

The C.A.R. is 1 of 12 central and western African countries that use the CF AF. This currency is pegged to the French franc (FF) at a rate of 100 CF AF to 1 FF. Though the currencies of the central and western groups are of the same value, different notes are used in each region. The central African countries, C.A.R., Chad, Congo, Cameroon, Gabon, and Equatorial Guinea, share notes through a central bank; the western African countries, Senegal, Guinea, Cote d'Ivoire, Mali, Benin, and Togo, share notes through another. The devaluation of the CFAF in January 1994 provoked increased inflation and external debt costs.

In the half-century since independence, the C.A.R. made slow progress toward economic development. Economic mismanagement, poor infrastructure, a limited tax base, scarce private investment, and adverse external conditions have led to deficits in both its budget and external trade. The country saw a 30-year decline in per capita gross national product (GNP), and its debt burden is considerable. Structural adjustment programs with the World Bank and International Monetary Fund (IMF) and interest-free credits to support investments in the agriculture, livestock, and transportation sectors have had limited impact.

The World Bank and IMF are encouraging the government to concentrate exclusively on implementing much-needed economic reforms to jumpstart the economy and defining its fundamental priorities with the aim of alleviating poverty. As a result, many of the state-owned business entities have been privatized and limited efforts have been made to standardize and simplify labor and investment codes and to address problems of corruption. The IMF recognized the C.A.R.’s achievements in these domains by certifying its attainment of the Heavily Indebted Poor Countries (HIPC) completion point in 2009. The C.A.R. Government has adopted the Central African Economic and Monetary Community (CEMAC - Communaute Economique et Monetaire de l'Afrique Centrale) Charter of Investment, and is in the process of adopting a new labor code.

During the 1996-97 military mutinies, small factories and enterprises were looted and destroyed; public revenues declined sharply and unemployment rose. The International Monetary Fund (lMF) approved an Extended Structure Adjustment Facility in 1998, but funds were misappropriated by corrupt government officials. The state's inability to meet its salary obligations to civil servants and soldiers has led to unrest. As of late 1999, the country was beginning to resolve issues that sparked the conflict in 1996.

Agriculture

Although only 3 percent of the land is arable, most of the population is dependent on subsistence agriculture and produces manioc (cassava), peanuts, and various grains for daily consumption. Cash crops include coffee, cotton, and timber. Natural resources include diamonds (accounting for over 50 percent of export revenue), uranium, gold, and oil, although due to lack of infrastructure, the latter resources are not exploited. There is little industrial production, and the principal manufactures are beverages and tobacco products.

Subsistence agriculture, together with forestry, remain the backbone of the economy of the Central African Republic, with more than 70% of the population living in outlying areas. The agricultural sector generates more than half of the GDP. The per capita GDP is $700. Timber has accounted for about 16% of export earnings, and the diamond industry for 40%. Important constraints on economic development include the Central African Republic's landlocked position, a poor transportation system, a largely unskilled workforce, and a legacy of misdirected macroeconomic policies.

As the backbone of the Central African Republic's economy, the agriculture sector is dominated by agro- pastoral production, involving about 75% of the active population and representing 45% of GDP. Agricultural and pastoralist systems are found along a bioclimatic gradient running north to south from the dry Sudanian to the humid Guinean zones with the different agricultural systems, including cattle farming, matched closely with rainfall. Due to its geographical situation, the country produces a wide range of crops, for cash (sugar cane, cotton, coffee) and for food (cassava, rice, sorghum, groundnut, maize). Cattle farming are essentially dominated by extensive herding (transhumance).

Despite significant potential, yields are very low and most of the rural inhabitants, as indicated above, remain in extreme poverty. Several factors affect production such as heavy reliance on rain-fed agriculture and ongoing practices regarding crop selection, water resource management, and agro-ecosystem and rangeland management. Part of the country is already seriously affected by severe land degradation, especially in the region around Bangui where there's high demand for foodstuffs. Co-existence between herders and farmers have been decreasing over the past years due to mismanagement of ecosystem services and natural resources leading to conflicts over competition for access to diminishing stocks of land and water.

Mining

The country has rich but largely unexploited natural resources in the form of diamonds, gold, uranium, and other minerals. There may be oil deposits along the country's northern border with Chad. Diamonds are the only of these mineral resources currently being developed; in 2002, diamond exports made up close to 50% of the C.A.R.'s export earnings. Industry contributed only about 15% of the country's GDP in 2009, with artisanal diamond mining, breweries, and sawmills making up the bulk of the sector. Services accounted for about 29% of GDP in 2009, largely because of the oversized government bureaucracy and high transportation costs arising from the country's landlocked position.

According to the US Geological Survey statistics, the CAR is the 10th largest producer of gem diamonds and 15th largest producer of industrial diamonds. Another estimate from the UN put the CAR's gem diamond production at number five worldwide. One expert asserts that at the rate of current exploitation, the CAR will continue to produce quality diamonds for the next 75 to 100 years. Today, all diamonds are extracted via artisanal panning of open pits as opposed to industrial mining, with the few remaining industrial diamond operations suspended pending sale. Central African diamonds are alluvial, meaning they are found in sand and gravel deposits left by river flows. Diamonds are found throughout southwestern CAR and in the more politically troubled northeast.

During his first term as President, Dacko significantly increased the production of diamonds in the CAR by eliminating the mining monopoly in the hands of the concession companies and decreing that any Central African could dig for diamonds. He also managed to build a diamond-cutting factory in the capital, Bangui . In this way, diamonds became the most important export product, which has persisted to this day, even when almost half of the real production of diamonds is taken away clandestinely from the country.

Diamonds and gold were discovered for the first time in the Central African Republic in the early twentieth century, when the country was still under French colonial rule. The colonial administration exerted strong control over access to the natural resources and granted concessions to private companies to exploit rubber, coffee, cotton and mineral resources. Diamonds soon became the CAR’s second export product, after cotton. International mining companies experienced their heyday in the CAR in the 1950s, with diamond production figures amounting to 147,104 carats in 1954.

As these figures declined and exploration results flagged towards the end of the 1950s and early 1960s, mining companies confined their operations to the commercialisation of minerals extracted from their concessions by artisanal miners. During the colonial period, exploration exercises were carried out for gold and diamonds. After independence, however, international mining companies retreated from the country and investments in exploration disappeared.

Diamond production, on the other hand, increased considerably after the end of colonial rule in 1960. The new Central African government liberalized the diamond sector, opening the mines to all citizens, which resulted in a rush to mining zones. Annual diamond exports consequently rose from 70,000 carats in 1960 to almost 537,000 in 1965. After CAR’s independence, successive rulers treated the country’s mining sector as an important cash cow to sustain their patron-client network. Export statistics were revived once again with the introduction of a certification system developed by the World Bank, the creation of the Bureau d’évaluation et de contrôle de diamant et d’or (BECDOR) , the lowering of export taxes, and the tapping of deposits that are less easily exploitable.

The Extractive Industries Transparency Initiative (EITI) is a voluntary multi-stakeholder initiative which brings together business, governments and NGOs. In order to be compliant, member-countries need to publish their revenues from the extractive industries on a regular basis. Companies, on the other hand, should publish all the payments that they have made to governments. In Central Africa, the CAR is currently the only EITI compliant country. It achieved this statute in March 2011. The DRC, Gabon, the Republic of Congo, Cameroon and Chad are all candidate countries, meaning they are implementing.

The Uranium exploration history of the Central African Republic (CAR) extended through two periods separated by the independence in 1960, of the ex-Ubangi-Chari, a colony of French Equatorial Africa. The uranium research is contemporary of the French Atomic Energy Commission (CEA) implementation in this country in 1947 and done by the CEA. There began the first period. The second period started after the 1960 year. Before the independence, the exploration works were realized in two stages from 1947 to 1957 and from 1958 to 1961. The first stage regarded the recognizing of uranium occurrences in the magmatic and pegmatitic formations. For this, three missions were organized in the east of the CAR. The first mission took place from March to July 1947. The second mission was realized from April to June 1949, and the third mission from November to April 1956. The second stage had concerned the uranium research in sedimentary basins by the prospecting Mbaïki Series (January 1958-January 1960) and Fouroumbala Series (August 1959-June 1961).

These series offered the chance to CEA to discover the Bakouma uranium deposits. After this discovery in 1965, the falls of prices of the uranium provoked altered stoppings and resumptions of works with the following societies: the Company of uranium ores of Bakouma (URBA) 1969; Centralafrican uranium (URCA) in 1975 but dissolved in 1981; in 1989-1991, the Japanese Nuclear Power Corporation (PNC) for a deposit re-examination; URAMIN Centrafrique in 2004-2005 and AREVA Resources Centrafrique in 2007. The last-mentioned had stopped works since 2012.

Energy

The C.A.R. has an underdeveloped infrastructure. Basic utilities such as clean water and electricity are unreliable and rarely found outside Bangui. Garbage collection is rare. Most urban areas do not have municipal sewage systems, and few buildings have septic systems.

Hydroelectric plants based in Boali provide much of the Bangui’s limited electrical supply, with towns in the rest of the country relying on diesel generators to provide electricity. Fuel supplies must be barged in via the Ubangui River or trucked overland through Cameroon, resulting in frequent shortages of gasoline, diesel, and jet fuel.

The import and distribution of fuel is controlled by PETROCA, a company that is 75 percent stateowned. The company can store about 50,000 cubic meters of fuel, and there are 47 service stations throughout the country, although at times the trucks break down and towns can run out of fuel.

Power is provided by state-owned and operated ENERCA. In addition to Bangui, 13 towns have electric power. Bangui's power is provided by a hydroelectric dam on the Mbali River near Boali and is available 24 hours daily, except during heavy monsoons. Electricity is provided to provincial towns by means of generators, and the more affluent who are connected to the generator, generally have power from about 1800 to 2200. The hours are extended to 24 hours during holidays or if the president or his wife are sleeping in the town. If this is the case, often the town will run out of fuel for the power generator before the end of the month because fuel is rationed monthly.

In Bangui, less than 10 percent of households have electricity as opposed to less than 2 percent in the provinces. Water is generally obtained from streams and wells, although there are a number of projects to provide clean water for Central Africans. UNICEF builds wells and pumps, and these are used if they are conveniently located. Some towns have a water service. For example, Bossangoa has a water service, SODECA, that was initially started as a Danish foreign aid project. It provides water to limited households and local public fountains.

Transportation

The country has just over 700 kilometers of paved road by one estimate, limited international and no domestic air service (except charters), and does not possess a railroad. Commercial traffic on the Ubangui River is impossible from December to May or June, and conflict in the region has sometimes prevented shipments from moving between Kinshasa and Bangui. The telephone system functions, albeit imperfectly. Eighteen radio stations currently operate in the C.A.R., as well as one television station. Numerous newspapers and pamphlets are published on a regular basis, and at least one company has begun providing Internet service.

There are 22,000 kilometers (13,600 miles) of road in the C.A.R. Only 458 kilometers (284 miles) are paved [by another estimate], and they are marked by potholes and cracks. Of the remaining roads, 10,542 kilometers (6,536 miles) are improved earth (laterite) and 11,000 kilometers ( 6,820 miles) are unimproved earth. Many roads become impassable during the rainy season; small bridges are frequently washed out and impassable for a long time. Important routes include Bangui to Sudan, Bangui to Cameroon via Berberati, and Bangui to Sahr, Chad. The main routes that are surfaced are toll roads. A portion of the Trans-African highway runs through the C.A.R., connecting Cameroon to Zaire. Due to the poor conditions, a four-wheel drive vehicle is essential.

Despite its abundant water resources, the CAR has a very limited river transport network. The goods transport on the Oubangui River, very profitable until the 1980s, became marginal as result of the poor maintenance of the waterways. Fuel continues to be the major import into the CAR, while cattle remains the major export to the two Congos. Although SOCATRAF is the major player of the sector, its limited equipment and poor infrastructure constitute its main constraints.

River transport enjoyed significant development during the colonial era until 1969, with private, or sometimes public, French companies operating in the sector. River transport development work changed to African ownership when the French-owned Compagnies Generale de Transports en Afrique Centrale (CGTAC) was nationalized in 1969 and became Agence Centrafricaine des Communications Fluviales (ACCF). After ten years of operations ACCF faced serious management problems. It was privatized and SAGA Transports, a French company bought 49% of the share capital. The new company became the present-day Societe Centrafricaine des Transports Fluviaux (SOCATRAF). Since 2005, SOCATRAF has been controlled by another French company, BOLLORE, with 66% ownership, the Central African Government and local private investors holding 15% and 19% respectively of the shares.

There are several local ferries on the outskirts of towns. They essentially connect sections of road interrupted by large streams, and there is little warning that they are present until the road ends. The ferries resemble makeshift rafts and can usually transport only one vehicle and several people at a time. They are slow, and it is important to be familiar with their operation. Their hours vary but most close by 1800 and service is often interrupted by siesta. There is little traffic on these roads, so the operators are unhurried. Operators often request fuel money before departure. Foreigners should expect to pay between 1,000 and 3,000 CFAFs for a ferry ride. Some of the towns with ferries are Mongoumba, Bouca, Batangafo, Bossangoa, Bamingui, Bria, Bakala, and Rafai.