Foreign Direct Investment

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), but they remain limited. According to UNCTAD’s World Investment Report 2022, FDI flows decreased from USD 35 million in 2020 to USD 30 million in 2021. The FDI stock increased from USD 718 million to USD 749 million. In 2022, global FDI momentum weakened in the context of the war in Ukraine, rising food and energy prices, financial turmoil and debt pressures (UNCTAD’s 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.

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 could delay their implementation (Coface).