2014 Index of Economic Freedom

Central African Republic

overall score46.7
world rank161
Rule of Law

Property Rights10.0

Freedom From Corruption20.6

Limited Government

Government Spending92.6

Fiscal Freedom65.1

Regulatory Efficiency

Business Freedom33.9

Labor Freedom40.4

Monetary Freedom72.5

Open Markets

Trade Freedom51.8

Investment Freedom50.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 4.9 million
  • GDP (PPP):
    • $3.9 billion
    • 4.1% growth
    • 2.8% 5-year compound annual growth
    • $800 per capita
  • Unemployment:
    • 8.0%
  • Inflation (CPI):
    • 5.2%
  • FDI Inflow:
    • $71.2 million
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The Central African Republic’s economic freedom score is 46.7, making its economy the 161st freest in the 2014 Index. Its overall score is 3.7 points lower than last year, primarily due to significant declines in property rights, trade freedom, investment freedom, and labor freedom. The CAR is ranked 40th out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the regional average.

Since the Central African Republic’s economic freedom was first assessed in the 2002 Index, progress toward greater economic freedom has been uneven. Overall, the country’s economic freedom score has declined by 13.1 points, one of the biggest score drops in the history of the Index. Scores for eight of the 10 economic freedoms, including property rights, investment freedom, and financial freedom, have deteriorated by 20 points or more.

Consequently, the overall entrepreneurial environment remains severely constrained. An overbearing regulatory framework, exacerbated by poor access to credit and high financing costs, stifles economic activity and hurts business expansion and the development of a vibrant private sector.

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Background

An agreement between General François Bozizé, opposition leaders, and some rebel groups established a consensus government in 2008, but Bozizé and parliament remained in office beyond their term limits. Bozizé was re-elected in March 2011, but in 2012, rebel groups accused the government of not abiding by the peace agreement. They captured the capital of Bangui in March 2013 despite the presence of international troops. Bozizé was forced to flee the country, and rebel leader Michael Djotodia declared himself president. More than half of the population lives in rural areas and depends 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. Anti-market economic policies inhibit investment, resulting in poverty, an uneducated workforce, and shoddy infrastructure.

Rule of LawView Methodology

Property Rights 10.0 Create a Graph using this measurement

Freedom From Corruption 20.6 Create a Graph using this measurement

A coalition of rebel insurgents seized power in 2013. They have disrupted the economy, exacerbated the precarious humanitarian situation, and amplified a state of lawlessness, resulting in the spread of violence, looting, and human-rights violations. Corruption remains pervasive. Diamonds account for about half of export earnings, but many sales circumvent official channels. Protection of property rights is weak.

Limited GovernmentView Methodology

The top individual income tax rate has fallen to 50 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT). The overall tax burden is 9.4 percent of GDP. Government spending has moderated to 16 percent of the domestic economy, and public debt amounts to about 30 percent of GDP.

Regulatory EfficiencyView Methodology

Burdensome regulations continue to hinder private-sector development. Overall, the regulatory system lacks transparency and clarity, and regulations are enforced inconsistently. The formal labor market is underdeveloped. Government distortions of the economy through subsidies and wage and price controls are aggravated by political instability that undermines the basic functioning of state institutions.

Open MarketsView Methodology

The Central African Republic’s average tariff rate is 16.6 percent. As with other members of the Central African Economic and Monetary Community, it may take weeks to import cargo. Political instability is a deterrent to foreign investment. The high cost of credit and scarce access to financing hold back development of the private sector. A large part of the population remains outside of the formal banking sector.

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
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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