Highlights:

THE CENTRAL AFRICAN REPUBLIC FACES SEVERE DEVELOPMENT CHALLENGES

• Low growth and political turbulence have left CAR with amongst the lowest levels of GDP per capita in the world.

• At least eight structural features of the Central African economy constrain the inclusive growth needed for poverty reduction:

  • CAR’s geography may curtail growth: it is landlocked, making trade more difficult, and it is sparsely populated;

  • Conflict — fueled partly by competition over natural resources — persists;

  • Conflict begets displacement: currently there are around 700,000 refugees from CAR in other countries and around 500,000 people are displaced internally within CAR itself;

  • CAR is endowed with extensive natural resources, but their mismanagement can fuel conflict and many are exported before value can be added;

  • The economy is highly dependent on agriculture both in terms of GDP and livelihoods, but agricultural productivity is weak;

  • CAR is fiscally constraine;

  • The institutional and regulatory framework hinders competition and in turn the private investment needed for growth, job creation, and poverty reduction;

  • Investment in two fundamental engines of inclusive growth and poverty reduction — human capital and infrastructure — is low.

• CAR is also confronting climate change, the effects of COVID‑19, and price shocks.

POVERTY IN THE CENTRAL AFRICAN REPUBLIC IS WIDE AND DEEP

• Poverty is widespread and deep in CAR, leaving more than half of the population without enough food. In 2021, some 68.8 percent of the population — 4.2 million people out of a population of 6.1 million — were living below the overall national poverty line (Figure 1). About 54.9 percent of the population (3.3 million people) were living below the food poverty line, meaning they could not feed themselves adequately, even if they devoted their entire household budget to food. Food poverty is a particularly severe form of deprivation, which may be associated with limited agricultural productivity and low-quality infrastructure preventing food from reaching the right places.

• CAR has one of the highest poverty rates in the world.

• There are large spatial differences in poverty; Bangui is better off than the rest of the country.

• Displacement is associated with poverty.

• Central Africans are more likely to be poor if they live in larger households whose heads are less educated and primarily engaged in agriculture.

ALMOST ALL CENTRAL AFRICANS ARE JUST ONE SHOCK AWAY FROM POVERTY.

• Without social safety nets, Central Africans respond to shocks with negative coping strategies that could hurt their long‑term welfare.

MONETARY AND NON-MONETARY POVERTY OVERLAP, DEEPENING DEPRIVATION.

AGRICULTURE IS CENTRAL TO LIVELIHOODS, BUT IT IS NOT LIFTING PEOPLE OUT OF POVERTY.

• Agriculture is by far the most common activity, but non‑agricultural activities are more likely to lift Central Africans out of poverty.

• Constraints on agricultural productivity — including lack of access to key inputs and markets — are holding back Central Africans’ livelihoods. Rainfed agriculture is prevalent throughout CAR, with cassava, maize, rice, sorghum, and millet comprising the main staple crops — these activities are potentially vulnerable to climate-related shocks. Agriculture’s total factor productivity (TFP) appears to be limited by low use of fertilizers, irrigation, and tools, although land itself does not appear to be a binding constraint. Many farms employ labor from outside the household, demonstrating how the benefits of boosting agricultural productivity could spill over to other workers. Most farmers also sell at least some of what they produce, but they report that roads and access to markets hold them back. This emphasizes the importance of investing in infrastructure to improve farmers’ access to markets for enhancing agricultural productivity and bolstering livelihoods.

ACCESS TO SERVICES AND INFRASTRUCTURE MUST BE IMPROVED TO PROVIDE THE BEDROCK FOR POVERTY REDUCTION

• Many Central Africans live prohibitively far away from schools, especially in remote and rural areas and especially at the secondary level; this is associated with lower enrolment and higher poverty.

• The supply of electricity and the quality of roads represent severe deficiencies in CAR’s infrastructure.

POLICIES TO ENERGIZE POVERTY REDUCTION

• A broad mix of policies is urgently required for poverty reduction. First, promoting peace, security, and good governance remains critical for creating the enabling environment for pro-poor policies. Second, since CAR cannot afford poverty-reducing policies without more growth and fiscal space, reforms to encourage private investment, bolster trade, and improve natural resource management are essential. Third, CAR will need to invest in three engines that simultaneously drive both inclusive growth and poverty reduction: human capital, agricultural productivity, and infrastructure. Yet the 3.3 million Central Africans who are food poor cannot wait for these policies, whose full effects may take many years, to work. Therefore, fourth, social safety nets should be expanded, directed to the most deprived, and “bundled up” with programs to support human capital and livelihoods to maximize impact whilst remaining budgetarily feasible.

• Boosting agricultural productivity offers the most direct way to enhance livelihood opportunities. Since so many Central Africans work in agriculture and structural transformation is likely to take years or decades, boosting agricultural productivity is a critical priority. Agriculture could even help reduce conflict by absorbing demobilized combatants. In part, boosting agricultural productivity hinges on ensuring farms have access to the inputs — including seeds, tools, and fertilizers — that they need, particularly for improving resilience to climate-related shocks. Expanding access to microfinance or other forms of credit could help farmers buy the inputs they need while facilitating trade would ensure such inputs can enter CAR in the first place. Farmers also need better market access for what they produce, which will rest on upgrading infrastructure and on macroeconomic policies that support trade of agricultural goods. Raising agricultural productivity could also release people to work in services and industry, spurring structural transformation, and the inclusive growth required to sustain poverty reduction.