The Central African Republic (CAR) is one of the least developed and poorest countries in the world. Credendo classifies CAR in the highest short-term political risk category (7/7) since the country slipped into a violent conflict in 2013. Although countries of the CFA franc zone like CAR normally have a maximum short-term risk classification in category 5/7, this is not the case for CAR because of its political violence risk in category 7/7. Despite the democratically elected government put in place in 2016, political transition has stalled due to severe instability. Roughly 80% of the country is controlled by 14 different militia groups. Armed groups make substantial profits from illicit exports of diamonds and through illegal taxation. Although a peace deal was brokered in February 2019, the deal is not expected to hold. Armed groups are unlikely to cede territory without gaining other benefits, while fighting between militias and with government troops continues. Moreover, on 21 May there was even a major attack on civilians again.

For the time being, the exports base remains fragile (reliant on private transfers and timber, the illegal diamond trade is not included), leaving the country with a structural current account deficit (9% of GDP in 2018). Oil imports continue to be a heavy burden, absorbing 27% of the total goods imports. Although CAR holds a crude oil field in the north, on the border with Chad, exploration has not been deemed economically feasible (requires a pipeline to Cameroon). For the time being, the IMF projects no oil exports coming on stream in CAR (projections up to 2023).

Analyst: Louise Van Cauwenbergh – l.vancauwenbergh@credendo.com