The crisis and conflicts which took place (seleka insurrection) resulted in a collapse of the CAR’s economy, which had experienced a low yet stable economic growth between 2004 and 2012, as a result of steady macroeconomic management and structural reforms. The country reached the Heavily Indebted Poor Countries (HIPC) Initiative completion point for debt relief in 2009, and the stock of debt fell from 80 to 35% of gross domestic product (GDP) between 2008 and 2012. These achievements were reversed as a result of the crisis, as GDP contracted by 37 percent in 2013 alone. In 2014, the gross national income (GNI) per capita of $600 (purchasing power parity—PPP) was the lowest in the world, returning to dismal 1990 levels. The country’s public finances underwent an acute crisis: domestic revenues dropped to 6 percent of GDP on average during the transition, down from 11.5 percent of GDP in 2012; and the debt stock increased to just over 50 percent of GDP in 2014, as a result of the rapid expansion in domestic arrears, from approximately $40 million in 2013 to $290 million in 2014.19 This in turn further reduced the state’s capacity to provide basic services. The payment of civil service wages and pensions was suspended for the better part of 2013 [1].
Little is known about sustainable finance in Central African Republic. However. the CAR has adopted the 2030 Agenda for Sustainable Development. The country has aligned its socioeconomic development framework to the SDGS, formulated its SDGs priorities and ensured that the priorities are aligned with national and provincial policy and planning frameworks.
Financial instability has been exacerbated by ongoing concerns in CAR such as social vulnerability, political instability and conflicts, food security, and high poverty rates.
Key policies and governance approach
The Ministry of Environment, Ecology and Sustainable Development is responsible for guiding the country’s environment sustainability plans and climate change policies.
Development and sustainable finance activities in the CAR are based on the National Peace Building and Consolidation Plan (RCPCA) for 2017-2021. The plan wants to, among other priorities, ensure food security and resilience through micro-finance initiatives which will be strengthened and consolidated [1]. Moreover, another important pillar of the Plan is to “Strengthen macroeconomic stability and good governance, including public financial management and controls, revenue generation, and anti-corruption measures” [1].
Successes and remaining challenges
With the support of technical assistance from several partners, the CAR has marginally improved macroeconomic stability and the management of its public finances. The total debt stock was reduced slightly in 2015, to 48.5% of GDP. Domestic primary deficit (excluding grants) narrowed to 3% of GDP as a result of the boost in domestic revenues and tight control of primary spending. The government has strengthened excise and customs controls and the value-added tax (VAT) on oil products, and has closely monitored tax exemptions [1]. The major barrier for sustainable finance in CAR is the limited domestic finance towards key economic activities. At the same time green interventions are needed to implement development plans and sustainable adaptation solutions for the long term in the country.
Initiatives and Development Plans
Development and sustainable finance activities in the CAR are based on the National Peace Building and Consolidation Plan (RCPCA) for 2017-2021. The plan aims to boost economic development through promising sectors such as agriculture, mining, and timber by providing them with a better business environment and appropriate infrastructure services.
According to the RCPCA, CAR wants to adopt a program of reforms that has been agreed upon with the International Monetary Fund (IMF) and will need to be implemented in the coming years to build momentum around public financial management to create the virtuous circle needed to finance this stimulus: good management of public finances would allow, on the one hand, reconstruction of a tax base and revenues for the state; and, on the other hand, investment in priority productive sectors where the economic impact will be the highest. Such momentum would also help secure the necessary financial support from technical and financial partners to revive economic growth and consolidate state revenues. Reform will help ensure that budget programming will be used as a peacebuilding tool, ensuring that spending is aligned with priority needs for the RCPCA [1].
Moreover, new national microfinance strategy will be implemented, focusing on professionalizing microfinance institutions, extending their product offerings and geographical outreach outside Bangui, and improving the understanding of clients and humanitarian actors intervening in the subsector [1].
Goals and Ambitions
According to the RCPCA, the country is committed to boost economic development through promising sectors such as agriculture, mining, and timber by providing them with a better business environment and appropriate infrastructure services, as well as adopting a new national microfinance strategy [1].
Sustainable finance offers opportunities for a cleaner environment, new and greener jobs, and business opportunities in the environment and natural resources sectors. In order to achieve this, it is vital for CAR to [1]:
- the country is committed to boost economic development through promising sectors such as agriculture, mining, and timber by providing them with a better business environment and appropriate infrastructure services,
- adopting a new national microfinance strategy