2013 Index of Economic Freedom

Central African Republic

overall score50.4
world rank142
Rule of Law

Property Rights20.0

Freedom From Corruption22.0

Limited Government

Government Spending92.4

Fiscal Freedom65.1

Regulatory Efficiency

Business Freedom35.2

Labor Freedom47.9

Monetary Freedom78.1

Open Markets

Trade Freedom57.8

Investment Freedom55.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 4.7 million
  • GDP (PPP):
    • $3.6 billion
    • 3.1% growth
    • 2.8% 5-year compound annual growth
    • $768 per capita
  • Unemployment:
  • Inflation (CPI):
    • 0.7%
  • FDI Inflow:
    • $109.2 million
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The Central African Republic’s economic freedom score is 50.4, making its economy the 142nd freest in the 2013 Index. Its overall score is 0.1 point higher than last year, primarily due to an improvement in monetary freedom that offsets declines in four other economic freedoms including business and labor freedoms. The CAR is ranked 31st out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the regional average.

Economic freedom has been growing in the Central African Republic over the past five years but from a very low base. Stronger momentum for reform is critical to build on the progress and maintain moderate GDP growth rates. Even with improvements, the CAR performs poorly in many areas of economic freedom, and the economy lags behind many other developing countries in terms of economic and human development. The rule of law is particularly weak. There is little protection of property rights, and corruption is pervasive.

The effectiveness of government remains low, and the management of public finance has deteriorated. Monetary stability remains fragile, and government interference with market prices is extensive. Much-needed private-sector development is held back by an inefficient and unstructured regulatory system and further undermined by limited access to financing.

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Background

A December 2008 agreement between General François Bozizé and opposition leaders and some rebel groups established a consensus government. Elections scheduled for April 2010 were postponed, and Bozizé and parliament remained in office beyond their term limits. In March 2011, Bozizé was re-elected, and his party won 61 percent of available legislative seats. Rebel groups, including the Lord’s Resistance Army, remain active, and unrest in Sudan, South Sudan, and the Democratic Republic of Congo continues to affect security. The CAR lacks infrastructure and transport resources. More than half of its people live in rural areas and depend on subsistence farming and forestry. Despite timber, diamonds (about 50 percent of exports), gold, uranium, and prospects for oil exploration, the CAR is one of the world’s least-developed countries.

Rule of LawView Methodology

Property Rights 20.0 Create a Graph using this measurement

Freedom From Corruption 22.0 Create a Graph using this measurement

Protection of property rights is weak. Most of the country’s territory is not under central government control, and there is a high risk of renewed violence in rebel-controlled areas. The judiciary is subject to executive interference, and courts barely function. In mid-2012, President Bozizé fired his justice minister and the director-general of the police force in a purge of former allies. Misappropriation of public funds and corruption are common.

Limited GovernmentView Methodology

The top income tax rate is 50 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT). The overall tax burden amounts to 9.3 percent of total domestic income. Government spending is equivalent to 15.9 percent of total domestic output. The government budget has been in deficit in recent years, and public debt stands at 40.9 percent of GDP.

Regulatory EfficiencyView Methodology

Despite progress in simplifying the business start-up process, private enterprises still face costly regulatory hurdles. Minimum capital requirements to launch a company exceed four times the average level of annual income. The formal labor market is not fully developed. The government influences most prices through the public sector and subsidies. Arbitrary price controls cause food shortages and foster black-market exchanges.

Open MarketsView Methodology

The trade-weighted average tariff rate is 13.6 percent, and non-tariff barriers add to the cost of trade. Foreign and domestic investors are treated equally, and all sectors of the economy, including real estate, are open to foreign investment, typically without screening. The financial system is underdeveloped, and access to financing for businesses remains very limited. Loans to the private sector are equivalent only to about 10 percent of GDP.

Country's Score Over Time

Bar Graph of Central African Republic Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Central African Republic to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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