Previous Quarterly Editions
Expropriation Risk: 66 66 69 70 ► Political Violence Risk: 68 68 68 68 ► Terrorism Risk: 35 35 35 35 ► Exchange Transfer and Trade Sanction Risk: 64 64 64 64 ► Sovereign Default Risk: 75 75 83 75 ▼
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Government's commitment on climate policy Weakest 1 2 3 4 5 Strongest
Amid ongoing civil conflict and instability –with the army and the personnel of the Russian mercenary company Wagner Group still engaged in regular confrontations with the rebel Coalition of Patriots for Change (CPC) – action to tackle climate change is certainly not a high priority for the national government. Moreover, the civil and political climate remains fragile and far from conducive to a serious technical focus on this issue.
However, climate change clearly has major implications for the country, and it has some connection to the drivers of the conflicts that have plagued the country for more than a decade. Rising temperatures and increasingly unpredictable patterns of rainfall could affect vegetation growth, with a consequent impact on grazing conditions and the routes and timings of pastoralist transhumance.
There have been numerous security incidents and moments of tension related to the movement of pastoralist groups, however, this should not be overstated. The Central African Republic’s long-running crisis is also fuelled by many other factors, such as warlord business interests and predation of traders and herders,
the dislocating side-effects of artisanal and small industrial mining in northern and eastern regions, and inter-communal tensions. This said, it is certainly plausible the side effects of climate change are a significant contributor to the ongoing instability.
The south of the country contains large tracts of rainforest, part of the wider Congo basin forest that is a globally critical reserve of tree cover and biodiversity. Measures to better regulate logging and help farmers to reduce reliance on slash-and-burn land clearance could be useful but may pose political interest challenges.
Last October, in the run-up to the COP26, the 2021 United Nations Climate Change Conference , the environment ministry and United Nations Development Programme organised a workshop at the national assembly to discuss how farmers and livestock herders could face the challenges of climate change and consolidate peace. Government officials, civil society and international partners staged a climate march through Bangui and an updated set of Nationally Determined Contributions climate policy goals was presented to President Faustin-Archange Touadéra. An implementation roadmap was finalised in December.
Overall, the government gives relatively low priority to action on climate change, but only because it lacks the capacity to do much about this issue at present; it is not in full control of national territory and is desperately short of resources for other key needs such as basic national security, poverty reduction or the improvement of health and education. However, the government has recognised the importance of the issue.
TREND ►
The Central African Republic badly needs external investment, to inject capital, knowhow and technology into infrastructure, the agricultural and forestry value chain and economic diversification. However, the small size of the domestic market, poor security conditions and weak governance are powerful disincentives. Therefore, if the country does manage to attract investment, the risk of expropriation will be low. For the government, the priority will be retaining what little investment it can attract.
Yet conditions could be different in the diamond and gold mining sectors, where valuable resources are at play, and the weakness of state governance is an attraction for competing actors, some linked to armed groups or security interests, including Wagner. Given the extent of Russian influence over government actions, it is certainly possible that assets or licences could be removed from certain actors and reallocated to others better connected to decision-making circles in Bangui.
Although the CPC has lost most of the territory it briefly controlled, violence and insecurity remain widespread. Conditions are particularly difficult in mining areas around Bria where Wagner mercenaries are reported to have killed numerous villagers in recent weeks (as of March 2022) amid what appears to be a tussle with residual elements of the CPC and the former Seleka rebellion for control of mining sites. Last month, they are alleged to have killed Zakaria Damane, a former Seleka commander who had stayed out of the CPC and concentrated on his mining business interests.
The European Union threatened to pull its military training mission (EUTM) out of the country because of concern troops from the national army were in fact being used to help Wagner protect its own commercial interests. The European Union has now agreed to maintain EUTM, on the condition the troops it trains are used only to carry out official government defence and security duties.
Wagner and government forces have also been accused of hampering the work of the UN peacekeeping force, the MINUSCA (United Nations Multidimensional Integrated Stabilization Mission in the Central African Republic). This will be one of the challenges facing the incoming head of the UN operation, Valentine Rugwabiza, a Rwandan. Her country has a strong bilateral defence partnership with the Central African Republic and has provided troops to help fight the CPC and also provide personal protection for President Touadéra. This may give her some additional leverage, compared with her Gabonese and Senegalese predecessors.
In February, the finance minister, Félix Moloua, was promoted to Prime Minister, succeeding Henri-Marie Dondra, who had resigned, frustrated at his lack of influence with Touadéra and troubled by the Russian role.
There has been no significant evidence of terrorist activity or infiltration, but the risk cannot be totally ruled out. The Seleka rebels were largely Muslim, but not motivated by jihadist ideology. The Anti-Balaka Christian militias did engage in sectarian violence, but the more recent rebellions of the CPC have been motivated by a variety of political, factional, and vested interest grievances. Although the Central African Republic neighbours Chad, it is distant from the areas of Boko Haram and Islamic State of West Africa Province activity in the Lake Chad basin.
The Central African Republic is one of six members of the Central African Economic and Monetary Community (CEMAC), whose CFA franc single currency is pegged to the euro at a rate guaranteed by the French state. This arrangement should ensure monetary stability and untrammelled exchange transfer. There have been some reports of foreign investors facing transfer delays in the CFA franc bloc, but probably in oil-dependent countries with significant debt pressures. The risk of delays is probably much lower in the Central African Republic, which has no oil and is largely sustained by foreign aid.
There is a high risk senior rebel figures could face international personal financial sanctions if they fail to collaborate with efforts to revive the peace process. There is also a risk individuals linked to Wagner might be sanctioned because of the group’s reported human rights abuses.
The Central African Republic state is not a likely sanctions target, despite flaws in civil political rights, but individuals within the government machine or its political entourage may risk personalised sanctions if they are linked to human rights abuses by pro-government forces.
The International Monetary Fund (IMF) projects 4% real gross domestic product growth for this year as the country recovers from the twin impacts of COVID-19 and the security crisis that dominated much of 2021. In December, the IMF approved a seven-month Staff Monitored Programme (SMP) under which it will provide no new money but monitor the Central African Republic’s performance against key economic and financial criteria.
Successful performance under the SMP will pave the way for the IMF to provide financial support under a new Extended Credit Facility programme from mid-2022 onwards. The debt position was significantly eased by the G20 Debt Relief Initiative and support from the IMF’s own Catastrophe Containment and Relief Trust. The country also benefitted from the new Special Drawing Rights allocation.
However, the Central African Republic is hugely reliant on international aid, particularly in the current unstable conditions. Even in more peaceful circumstances, taxation of diamonds (a key domestic revenue source) is notoriously difficult to apply, and the country will remain heavily reliant on external support to finance capital expenditure on development. Although the government has a close security partnership with Russia, it remains very much dependent on financial support from key Western development partners and the United Nations system.
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