Index Trend Previous Quarterly Editions
Expropriation Risk: 75 ► Political Violence Risk: 68 ► Terrorism Risk: 35 ► Exchange Transfer and Trade Sanction Risk: 73 ► Sovereign Default Risk: 83 ►
Overall Risk Temperature TREND ►
Special topic: Protest intensity in 2022 and Q1 2023* 2022 Q1 2023Low Low Low Low
Cost-of-living protest risk in 2023* Medium Low
Many Central Africans suffer from food insecurity, fragile household budgets and humanitarian pressures. The UN Office for the Coordination of Humanitarian Affairs says of the country’s 6.1 million people, some 3.4 million need humanitarian assistance, but international partners expect to assist only 2.4 million this year. Half the population cannot secure adequate nutrition, with 2.7 million people categorised as in acute food insecurity and 642,000 in food emergency.
Prices of basic staples have risen dramatically: maize is up 46%, rice and groundnuts by around 29%, and palm oil by 15%. On the informal market, a serving of cassava has risen from CFA2,500 to CFA3,000. Meanwhile, cooking oil has risen in price from CFA1,000 per litre to CFA1,400, a cube of soap from CFA125 to CFA200, and a small bag of sugar from CFA4,000 to CFA4,500. Formal market prices can be even higher. The cost of meat main meals for a family for a month in Bangui costs CFA120,000. However, an ordinary public servant earns CFA80,000 monthly and a soldier as little as CFA54,000.
Various factors contribute to this situation. Like many sub-Saharan countries, the CAR has been affected by sharp rises in the cost of imported foods and fuel, partly due to the Russian/Ukraine crisis effects since February 2022. Insecurity within CAR also means agriculture, including cultivation and animal husbandry, is disrupted by fear of attack. Weather and plant health problems further complicate matters, as do criminality and armed groups’ activities, including Russia’s Wagner mercenaries. This also challenges the proper functioning of local trade, goods transport, and economic activity, including imports.
Fuel is short, also driving up transport and import costs. Humanitarian and development partners have also seen their
operating costs rise sharply due to local and international conditions, affecting their ability to provide the CAR aid.
Expropriation Risk 75 (High) TREND ►
Relations between President Faustin-Archange Touadéra and the West have been eroded by a loss of trust, as the president relies increasingly on Russian security advice and support. The president has maintained some contact, for example holding a private meeting in March with his French counterpart Emmanuel Macron on the margins of the rainforest summit in Gabon. It seems unlikely that Touadéra’s government would expropriate investors’ assets, but the risk cannot be ruled out.
An economic delegation from the BRICS (Brazil, Russia, India, China, South Africa) visited in April. But the CAR struggles to secure investment due to its isolation, poverty, and insecurity, giving the country an incentive to reassure the few international investors who are present. The government’s decision to adjust its contentious cryptocurrency initiative, in order better to comply with the Central African Economic and Monetary Community (CEMAC)’s requirements, is somewhat reassuring.
The risk of expropriation or the withdrawal of concessions or operating licenses should not be wholly ruled out in the mining sector – which is increasingly prioritised by Wagner, upon which the CAR’s government has become reliant. Licenses and concessions for energy, telecoms, and other core functions should also be regarded as carrying some expropriation risk.
Political Violence Risk 68 ( Medium-High) TREND ►
The Coalition of Patriots for Change (CPC) rebels remain highly active, despite the steady expansion of Wagner’s military footprint. In January, the government ordered the closure of border crossings with Sudan because of concerns about arms, drugs, and people trafficking. Yet these precautions could not prevent a rebel attack on Sikikede on February 15; the rebels claimed to have killed 18 soldiers.
The authorities did not reopen the border officially until March, despite the impact on imports of fuel and food from Sudan and the export of CAR coffee. Certainly, the rebels control parts of the north. On March 17, they halted the Archbishop of Bangui’s convoy for checks before allowing him to continue a regional tour near Ouadda, a northern mining zone. In an apparent effort to weaken the momentum behind the CPC, Chad has despatched the group’s exiled leader, former head of state François Bozizé, to a more distant place of exile, Guinea-Bissau.
Insecurity is not confined to remote northern regions. On March 19, nine Chinese were executed when armed men attacked a gold mining site at Chingbolo, in the centre-south. The CPC has denied involvement, blaming Wagner. On March 30, Wagner positions at Nième, 70 kilometres from Bouar in the west, came under CPC attack.
Prospects for curbing violent insecurity are undermined by various factors. The restoration of nationwide peace and security is not the only priority for Wagner, whose men are substantially preoccupied with the defence of the company’s mining interests and reinforcement of its influence in the diamond-rich areas around Bria, in the centre-east.
Moreover, the operations of the UN peacekeeping force – the United Nations Multidimensional Integrated Stabilization Mission (MINUSCA) in the Central African Republic – are sporadically hampered by the interference of some elements of Touadéra’s inner circle and by Wagner, which does not want to see its own operations constrained by the UN force’s presence.
The government also relies partly on Rwanda’s military support, which is comfortable working alongside MINUSCA. Hence, in February 2022, the UN appointed Valentine Rugwabiza, from Rwanda, as MINUSCA head, seemingly in the hope she can rebuild a better relationship of trust with CAR’s government.
There is also a risk of confrontation between CAR’s security forces and civilian urban protesters objecting to Touadéra’s efforts to change the constitution so he can seek a third term. When the Constitutional Court sought to block this move, the government forced the ejection of the court’s chief justice. This has shifted protests to the streets. These have been peaceful, but security forces could use excessive force in trying to control demonstrations.
*Note: Protest intensity is calculated based on ACLED. Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of calculations, see the introductory essay.
Terrorism Risk 35 (Medium-Low) TREND ►
While the CAR has escaped terrorist violence so far, the country is subject to various other violence, the impact of which is almost as severe. This includes attacks on the security forces by the CPC rebels and the killing of some army soldiers and some local officials by Wagner mercenaries. The latter are of course supposed to be supporting the government, but their activities are extremely difficult to control.
Exchange Transfer and Trade Sanctions Risk 73 (Medium-High) TREND ►
The CAR belongs to the six-country CEMAC, whose CFA franc currency is pegged to the euro at a rate guaranteed by France. This arrangement closely aligns the monetary policies of the bloc’s common central bank, the BEAC, with the tight monetary stance of the European Central Bank. This helps contain inflation.
However, the arrangement does tend to maintain the value of the CFA at a relatively strong rate, which can inhibit local productive sectors’ competitiveness and ability to compete with imports. Also, many progressive commentators and younger citizens are uncomfortable with the monetary link to France.
The sister CFA bloc in west Africa (the West African Monetary and Economic Union, or UEMOA by its French acronym) has already reformed the rules governing its own monetary link to France, while still keeping the fixed exchange rate guaranteed by Paris. CEMAC countries’ leaders, including the CAR, have now asked their officials to look at reform options. The bloc hasn’t taken any decisions, but it seems likely the bloc will emulate the UEMOA’s reforms.
CEMAC’s economic track record is less disciplined and consistent than the UEMOA and it will therefore face a more severe tests in retaining international confidence. But successfully implemented reform would, over time, enable CEMAC to strengthen its credibility.
Touadéra’s status as a democratically elected head of state has so far shielded the CAR from sanctions, despite its uncertain human rights record and the government’s reliance on Wagner mercenaries. But as he tightens controls over politics, the CAR becomes more exposed to the risk of sanctions targeting regime leaders.
Sovereign Default Risk 83 (H igh) TREND ►
The CAR is in too fragile a condition to undertake loan-financed large infrastructure investment of the kind seen in many sub-Saharan countries and that has left some with heavy debt repayment obligations, particularly to China. Nor does the CAR produce oil that could be used as loan collateral. This means the CAR has escaped the debt repayment trap in which neighbouring Republic of Congo and Chad have been caught.
But while donors are maintaining strong humanitarian support, and some limited development assistance, the confidence of Western partners and international institutions has been eroded and most key budget aid remains suspended.
One dimension of the CAR’s external relationships is financially opaque: defence procurement from Russia and the deployment of Wagner. It is possible through these arrangements the CAR has incurred financial obligations that could pose future problems, particularly if there was a cooling in the CAR-Russia relationship that then left the CAR exposed to Russian pressure.
