4.5 AN OVERVIEW OF THE CAR CRISIS
4.5.3 ECONOMIC CRISIS
Economic crisis has hit the Central African Republic severely over the past couple of years.
According to the scholars and researchers who have written about this country they argued that the escalation of violence in the CAR is likely to cause more havoc, provided that it is not properly being contained and/or addressed by the international organizations and regional communities (www.betterworldcampaign.org). They argue that incomplete responses could exact higher costs than full-fledged intervention. Moreover, it is stated that civil wars have a
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tendency to ease the growth of real gross domestic product (GDP) per capita for every year of conflict. The neighboring countries each experience an average reduction in their annual growth rates over a five-year period (www.betterworldcampaign.org). In essence, the argument here is that any economic instability in the CAR has serious repercussions to neighboring countries too.
In the case of the CAR, any economic impacts from prolonged violence could reverberate throughout the region, affecting neighboring countries, which already face political and ethnic violence and economic instability of their own. Beyond the immediate and possible future economic impacts of the situation in the CAR, the daily reports of violence which have come to include incidents of mobbing and mutilation have brutally shown the sheer extent of human suffering caused by the current political crisis and concomitant sectarian tensions (Mwanasali, 1999). The Central Emergency Response Fund (CERF) has been one of the main donors for the response to the CAR crisis and its impact on the region. Lack of funding to-date has severely impeded any meaningful response to humanitarian needs.
Economically, the CAR has been dependent on the international donors for them to survive.
There is high unemployment rate in this country and the region. People rely on agricultural farming and working in small towns that surround Bangui. Such sources of income are evidently insufficient to satisfy the economic needs of the people of the CAR. Steiner (2007) states that there is a high number of people living in the CAR who are suffering from different kinds of diseases, especially malaria and measles. The diamond trade, the main source of income for the state, has been hit by CAR’s suspension from the Kimberley Prowess, a decision which has backfired on the diamond dealers who allegedly financed Seleka to overthrow the Bozize regime (www.chisnell.com). Of course, this remains a debatable issue. However, whatever the truth is, the reality is that “it is certain that alluvial diamond mining has a central place in the Central African political economy, whether for corrupt rulers, cash-strapped rebels or criminalized gangs of unemployed youth, and has the potential to trigger even greater instability in the increasing security and administrative vacuum in the country” (www.chisnell.com).
The CAR’s economy is subjugated by the primary sector which accounted for 52 % of the GDP in 2008. In the primary sector, which is subsistence agriculture, represents 28% of the GDP and livestock accounts for about 13% (www.infrastructureafrica.org). The country’s main sources of
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export revenues are timber, cotton, coffee, and extractive industries. Moreover, the CAR’s extractive industry potential could be expanded to constitute a solid basis for growth and economic diversification only if the political situation could be normal. Dominguez-Torres and Foster (2011:12) espouse the view that “the main potential mining centers gold, diamonds, uranium, iron, and copper are located in the southwest and central parts of the country.” On average, diamonds have accounted for about 40 percent of exports. All in all, as the CAR is facing such challenges it still manages to overcome some of its challenges (Dominguez-Torres and Foster, 2011). The figure below shows the Central African Republic’s agricultural sector.
Figure 4.6: A scale showing the CAR agricultural sector
www.africaneconomicoutlook.org
As indicated above, the CAR is rich in agricultural farming. The Central African Republic has large amounts of natural resources that are in high demand on the international market, but instead of driving growth, the raw material and mineral wealth has fueled conflict and derailed any plans to lift the country to economic prosperity (Dominguez-Torres and Foster, 2011).
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Furthermore, the agricultural sector generates more than half of the GDP as reflected in the pie chart above. This shows/confirms that agriculture is the substance and cash crop as it encompasses 56.6% of the CAR’s economic engine. This is a huge percentage by any standard.
Noticeably, the industry only shows 14.5% and service equals 28.9% (www.canisius.edu). Most of the country’s other exports are made up of gold, diamonds, and timber.
The financial sector in the CAR according to the scholars who research this area is shallow in comparative terms. It comprised of a limited number of institutions and these institutions remain concentrated in Bangui (www.africaneconomicoutlook.org). Banks have suffered substantial material losses. Since the beginning of the crisis the principal establishments have limited their activities across the country. The banking system suffered from the departure of key client’s improved unrecoverable debt and from the accumulating state arrears resulting in a fall in the liquidity of the banking sector (www.africaneconomicoutlook.org). What is clear from this synopsis is that the CAR has the potential to be an economically viable country but that potential is overshadowed by a combination of factors. As such, the country has failed to perform to its full potential in economic terms. As such, not only do the people of the CAR have to endure pain and suffering, neighboring countries too have to content with the repercussions of the CAR’s economic crisis which also leads to the political crisis given the interconnectedness of politics and economy.