Central African Republic risk report
Corruption is a very high risk for companies operating in the Central African Republic (CAR). After a government coup in 2013, political instability and widespread violence significantly undermined the rule of law. Pre-coup corruption was already a problem, but the ongoing insecurity has further exacerbated corruption, which in turn perpetuates the fragility of the state. Investors should be aware that bribery and extortion are pervasive throughout the country, and impunity is a severe problem. CAR has ratified the United Nations Convention Against Corruption, but efforts to curtail corruption are minimal.
Judicial system Very high risk
There is a very high risk of corruption in the judicial system. The institution lacks resources, functions inefficiently, and has poorly trained staff (BTI 2016). Before the coup, corruption and political influence were pervasive in the judiciary (FitW 2015). Today, the institution continues to suffer from executive influence, as high-ranking officials disrespect court orders (FitW 2015). Furthermore, the chiefs that make up the rebel group Séléka sentence individuals in regions under their control without the legal mandate to do so (HRR 2015). Impunity is a problem in the conflict-torn country, undermining attempts to curb corruption (HRW 2016).
Enforcing a contract takes businesses on average 660 days, and the cost in court and attorney fees amount to around 82 percent of the claim (DB 2016).
Police Very high risk
Corruption in the police force is a high risk for businesses operating in the Central African Republic. The widespread conflict within the country and the succession of several rebel movements has meant that the state does not have a monopoly on the use of force, and local security forces. The police do not have authority over all parts of the country (BTI 2016). During the 2013 crisis, private companies suffered from insecurity and fell victim to looting, kidnapping, and damages to installations and offices (Crisis Group, Jun. 2014). Despite support from the local police and from various international bodies, companies should note that law enforcement is weak (Amnesty International, Feb. 2016). Additionally, reports of abuse of function by peacekeepers are widespread, and often involve extortion in exchange for food or basic services (Washington Post, Feb 2016).
Public services Very low risk
Corruption when acquiring public services is a comparatively low risk, as the state fails to deliver basic public services. For civilians, this is filled by humanitarian aid agencies, or not at all (BTI 2016). With the lack of official service administration, the illegal economy prospers, and smuggling is widespread (Crisis Group, Jun. 2014). Unofficial traders and armed groups are key actors, and they try to control the most profitable networks (Crisis Group, Jun. 2014). Businesses face high fees when acquiring public services or licenses (DB 2016).
Land administration Very high risk
Corruption is a high risk for land administration, and negatively affects the private sector (BTI 2016). The weak rule of law limits the protection of private property (BTI 2016). Registering property takes investors on average 75 days (DB 2016). The ongoing conflict exacerbates the situation and has around 435,000 people displaced throughout the country (ICRC, Feb. 2016). Private businesses and civilians' homes are regularly plundered and destroyed by militants on both sides of the conflict. With livestock and land destroyed, the agricultural economy, and the livelihood of 75 percent of the population has come to a halt (FitW 2015).
There is no data available on corruption in the tax administration; however, in light of the conflict, the tax administration is often unable to fulfill its function, and armed groups frequently tax traders in an arbitrary manner (BTI 2016).
Customs administration Very high risk
There is a high risk of corruption in the customs administration. Trade in and out of the CAR is restricted by limited infrastructure, and the landlocked position of the country (BTI 2016). The country gets 80 percent of its imports via a corridor linking the Cameroonian port, Douala to the capital, Bangui (Bloomberg, Feb. 2016). The key transit route has been rehabilitated in 2014, and several border checks have been put in place during 2015 (DB 2016). Cameroonian truck drivers report regularly to being asked for bribes at the border, and on the route (Bloomberg, Feb 2016). Reportedly, Séléka groups set up informal roadblocks between the Cameroonian border and Bangui, extorting CFA 20,000 (EUR 30) from bypassing trucks (Global Witness, Jul. 2015). At the same time, logging companies report to pay as much as CFA 150,000 to 200,000 from the forested area of CAR to Douala, Cameroon (Global Witness, Jul. 2015).
Smuggling is very common, especially between Cameroon and Sudan (Crisis Group, Jun. 2014). In 2013, Chinese citizens were arrested at the airport with gold and false documents issued by the mines ministry (Crisis Group, Jun. 2014). Another private operator reportedly had arrangements with customs officers to allow the transportation of diamonds (Crisis Group, Jun. 2014). Finally, those who are caught for attempted smuggling are rarely get prosecuted (Crisis Group, Jun. 2014).
The time for obtaining, preparing, and submitting documents during port or border handling, plus customs clearance and inspection procedures averages 161 hours when exporting, and 74 when importing (DB 2016).
Public procurement Very high risk
There is no data available on corruption in CAR's public procurement; however, companies should note that pre-coup corruption was widespread, and the conflict is likely to have exacerbated the situation (ICS 2012).
In 2014, transitional leader Samba-Panza was implicated in a corruption scandal involving the embezzlement of more than CFA one billion (USD 2 million) of the funds provided by Angola for the transitional government, but the audit commission looking into the issue was abandoned (HRR 2014). Companies are strongly recommended to use a specialized due diligence tool on public procurement in order to mitigate corruption risks associated with public procurement in the Central African Republic.
Natural resources Very high risk
Corruption in the natural resource sector is a very high risk for companies operating in the CAR. Clientelism, racketeering, and bribery have especially high risks for companies operating in the logging sector (Global Witness, Jul. 2015). Logging companies commonly provide gifts to new political leaders when government changes occur, reportedly these include freezers or envelopes with cash of CFA five to 10 million (Global Witness, Jul. 2015). In return, the officials protect or defend companies at ministerial meetings (Global Witness, Jul. 2015). Companies routinely receive officials on weekends and give them drinks and bribes of around CFA 100,000 to 130,00 (EUR 150-200), in order to ensure relevant documents are signed, and official papers are up-to-date (Global Witness, Jul. 2015). Logging permits are often obtained per collusion with officials.
In the absence of government control, public funds are frequently misappropriated; the special forest tax fund CAS-DF is known to be used by ministers to cover their travels abroad (Global Witness, Jul. 2015). Logging goes largely unchecked, and inspections are often paid for by the logging companies themselves (Global Witness, Jul. 2015). On occasion, companies have gone into business with those in power. SEFCA was in business with Ange-Félix Patassé, president between 1993 and 2003, by managing a concession of 652,000 hectares held by his logging company, La Colombe Forêt SN (Global Witness, Jul. 2015). Today, SEFCA employs as its legal representative, Nicolas Tiangaye, Prime Minister under Séléka President Michel Djotodia, and also a potential candidate in the next presidential elections (Global Witness, Jul. 2015).
The government has no control over territory in the South West of the country, and armed groups engage in illegal logging activities (Global Witness, Jul. 2015). Apart from logging, poaching is a high risk in the CAR (The New Yorker, May 2015). Especially during the civil war, wild animals were poached, sometimes in collusion with state officials (BTI 2016). Diamonds make up around 50 percent of the country’s export earnings, but largely circumvents official channels (FitW 2015).
The legal framework regarding anti-corruption is inadequate and not enforced. The CAR Penal Code (in French) criminalizes passive and active bribery, undue benefits, embezzlement, abuse of office, favoritism and the offer, promise, or solicitation of gifts. Embezzlement or misappropriation of public funds carries a sentence of hard labor if the embezzled funds exceed CFA 100.000. If the amount is inferior to CFA 100.000, punishment ranges from two to ten years' imprisonment. Bribery by local companies of foreign officials and bribery by foreigners of local officials are rarely punished (ICS 2012). In 2010, the National Committee to Fight Corruption provided a strategic document concerning the fight against corruption, but active efforts have been extremely limited (HRR 2014).
Under the Bozizé government (2003-2013), civil society was excluded from most political, societal, and economic processes. The ongoing insecurity hinders freedom of assembly and significantly impairs nongovernmental organizations or unions from operating effectively (FitW 2015). With the transitional government, the situation for media improved significantly, but outlets and journalists still find themselves caught between warring parties, and resort to self-censorship to avoid retaliation (FoP 2015).
- Bertelsmann Foundation: Transformation Index - Central African Republic 2016.
- The World Bank: Doing Business 2016.
- Human Rights Watch: World Report 2016.
- Amnesty International: Mandated to Protect, Equipped to Succeed? Strengthening Peacekeeping in Central African Republic, 7 February 2016.
- International Committee of the Red Cross: "Displaced in the Central African Republic: Between a rock and a hard place", 29 February 2016.
- Washington Post: "Members of a U.N. peacekeeping force in the Central African Republic allegedly turned to sexual predation, betraying their duty to protect", 27 February 2016.
- Bloomberg: "Cameroon Truckers Plying Corridors to Chad, Bangui Plan Strike", 11 February 2016.
- US Department of State: Country Report on Human Rights Practices for 2015.
- Freedom House: Freedom of the Press 2015.
- Freedom House: Freedom in the World 2015.
- Global Witness: Blood Timber: How Europe played a significant role in funding war in the Central African Republic, 15 July 2015.
- The New Yorker: "Elephant Watch", 11 May 2015.
- US Department of State: Country Report on Human Rights Practices for 2014.
- Crisis Group: The Central African Crisis: From Predation to Stabilization, 17 June 2014.
- US Department of State: Investment Climate Statement for 2012.