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Central African Republic

Foreign Direct Investment

According to UNCTAD’s World Investment Report 2021, FDI flows to the Central African Republic (CAR) have resumed since the 2013 civil war (which had caused almost all economic activity to stop and led investors to withdraw from the country), rising from USD 26 million to USD 35 million between 2019 and 2020, despite the economic and health crisis triggered by the Covid-19 pandemic. The FDI stock has also increased, reaching a total of USD 718 million in 2020. In 2021, global FDI flows rebounded strongly, but FDI flows to African countries (excluding South Africa) rose only moderately (UNCTAD’ Investment Trends Monitor). The wood and diamond sectors attract most of the FDI and France as well as China are the two main investors in the country.

In the latest available Doing Business ranking from the World Bank, CAR was ranked 184th worldwide, down one place from the previous ranking. The country has abundant natural resources (diamonds, gold, uranium and wood), which are largely untapped, as well as huge arable land. However, the unfavorable security climate and political instability are a source of concern for investors, in this country where the majority of underground wealth is controlled by armed gangs. Other factors limiting its attractiveness include insufficient infrastructure and a shortage of skilled labor. The country has, however, undertaken various reforms to attract investment, in addition to the ongoing efforts under the peace agreements. Among these reforms are the establishment of a public-private dialogue framework, tax incentives for businesses, the reduction of the minimum capital required to start a business and measures to protect minority investors. However, renewed violence and insecurity in 2021 could delay their implementation (Coface).

 
 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 182635
FDI Stock (million USD) 658684718
Number of Greenfield Investments* 100
Value of Greenfield Investments (million USD) 600

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Country Comparison For the Protection of Investors Central African Republic Sub-Saharan Africa United States Germany
Index of Transaction Transparency* 7.0 5.5 7.0 5.0
Index of Manager’s Responsibility** 1.0 3.5 9.0 5.0
Index of Shareholders’ Power*** 5.0 5.5 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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