2018 Index of Economic Freedom

Central African Republic

overall score49.2
world rank163
Rule of Law

Property Rights17.9

Government Integrity24.6

Judicial Effectiveness28.2

Government Size

Government Spending94.6

Tax Burden64.6

Fiscal Health96.4

Regulatory Efficiency

Business Freedom27.2

Labor Freedom34.5

Monetary Freedom70.5

Open Markets

Trade Freedom57.2

Investment Freedom45.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 4.9 million
  • GDP (PPP):
    • $3.2 billion
    • 4.3% growth
    • -4.4% 5-year compound annual growth
    • $652 per capita
  • Unemployment:
    • 6.9%
  • Inflation (CPI):
    • 4.6%
  • FDI Inflow:
    • $31.2 million
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The Central African Republic’s economic freedom score is 49.2, making its economy the 163rd freest in the 2018 Index. Its overall score has decreased by 2.6 points, with a plunge in investment freedom and smaller declines in labor freedom, judicial effectiveness, and government integrity overwhelming solid improvements in fiscal health and property rights. The CAR is ranked 39th among 47 countries in the Sub-Saharan Africa region, and its overall score is well below the regional and world averages.

The CAR scores very poorly on such regulatory factors as labor market flexibility and taxation. Progress to achieve a more welcoming business environment has been marginal. The landlocked CAR is one of the world’s least-developed countries, constrained by a poor transportation system, a largely unskilled work force, and a legacy of misdirected macroeconomic policies. More than half of the population lives in rural areas and is dependent on subsistence agriculture.

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Background

A former French colony, the Central African Republic became independent in 1960. After more than 30 years of mostly incompetent military regimes, democracy was established in 1993, but it lasted only a decade. Muslim Seleka rebels led by Michel Djotodia ended the decade-long rule of President François Bozizé in 2013. Subsequent sectarian violence precipitated a French military intervention and the deployment of U.N. peacekeepers. Djotodia stepped down in 2014, and voters overwhelmingly approved a new constitution in 2015. Former Prime Minister Faustin-Archange Touadéra was elected president early in 2016. Resurgent militia violence in 2017 fueled displacement and hunger. The CAR has abundant timber, gold, and uranium, and previously banned exports of diamonds have resumed.

Rule of LawView Methodology

Property Rights 17.9 Create a Graph using this measurement

Government Integrity 24.6 Create a Graph using this measurement

Judicial Effectiveness 28.2 Create a Graph using this measurement

Traditional norms of property rights protection and contract enforcement failed in the face of increased violence in 2017 by armed militias that included massacres, gang rapes, property seizures, evictions, and entire villages being burned to the ground. The constitution provides for an independent judiciary in civil matters, but the courts are poorly resourced, and citizens have limited access to justice. Corruption remains pervasive.

Government SizeView Methodology

The top personal income tax rate is 50 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax. The overall tax burden equals 11.8 percent of total domestic income. Over the past three years, government spending has amounted to 13.4 percent of total output (GDP), and budget surpluses have averaged 1.4 percent of GDP. Public debt is equivalent to 42.5 percent of GDP.

Regulatory EfficiencyView Methodology

Factional fighting between the government and its opponents makes it hard to conduct business in the Central African Republic The majority of employment is in subsistence agriculture, forestry, and mining. Government distortions of the economy through subsidies and wage and price controls are aggravated by persistent political volatility that undermines the basic functioning of state institutions.

Open MarketsView Methodology

Trade is moderately important to the Central African Republic’s economy; the combined value of exports and imports equals 43 percent of GDP. The average applied tariff rate is 13.9 percent. Nontariff barriers impede trade. Government openness to foreign investment is below average. The high cost of credit and scarce access to financing deter private-sector development. A large part of the population remains outside of the formal banking sector.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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