Why Central African Republic Must Boost Domestic Revenue to Secure Long-Term Economic Growth

The World Bank finds that the Central African Republic can reduce its dependence on foreign aid by strengthening domestic revenue collection, improving public financial management, and spending more efficiently on priority sectors such as education, healthcare, and infrastructure. The report urges policymakers, development partners, and private investors to work together on governance reforms, digital tax systems, and better resource management to build fiscal resilience, attract investment, and support sustainable long-term growth.

The Central African Republic (CAR) has a narrow opportunity to reshape its economic future, but doing so will require far more than increased international aid. A new World Bank Public Finance Review argues that stronger domestic revenue collection, better public spending, and improved financial governance are essential if the country is to escape decades of fragility and dependence on external assistance. While recent improvements in security following the 2020–21 elections have opened the door for reforms, the report warns that weak fiscal management continues to constrain development, investment, and poverty reduction.

CAR remains one of the world's poorest countries despite its abundant natural resources, including timber, gold, diamonds, fertile agricultural land, and livestock. Nearly two-thirds of its 5.9 million people live below the international poverty line, while the country ranks 191st out of 193 on global human development indicators. The report estimates that achieving the Sustainable Development Goals would require additional public investment equal to about 47% of projected GDP, highlighting the scale of the country's financing challenge.

Domestic Revenue Holds the Key to Fiscal Stability

The World Bank identifies domestic revenue mobilisation as CAR's biggest economic priority. Government revenues remain below 10% of GDP, while financing basic government operations, including salaries, healthcare, education, and public administration, requires at least 12% of GDP. This persistent gap forces the government to depend heavily on concessional borrowing and international donor support simply to maintain essential public services.

The report recommends raising domestic revenue to 12% of GDP in the medium term and eventually 15% of GDP, which is considered the minimum level needed to support sustainable development. Rather than increasing tax rates broadly, the review advocates expanding the tax base by modernising tax administration, strengthening customs enforcement, reducing tax leakages, reforming fuel pricing, improving excise taxation, and increasing revenue from forestry, mining, telecommunications, and eventually property taxation.

Digitalisation could become a major driver of reform. Modern electronic tax and customs systems could increase government revenue by around 2 percentage points of GDP, while improving transparency and reducing opportunities for tax evasion.

Natural Resources Offer Growth Potential, but Governance Must Improve

Although forestry and mining account for more than three-quarters of CAR's formal exports, they generate only a fraction of their potential public revenue. Forestry taxes currently raise approximately CFAF 3.7 billion annually, but reforms could increase collections to between CFAF 6.5 billion and CFAF 9.1 billion. Likewise, effective implementation of the 2024 Mining Code could increase mining revenues to around CFAF 6.4 billion, creating valuable fiscal space without placing additional pressure on households or small businesses.

For private-sector stakeholders, these reforms present significant long-term opportunities. Improved governance, more transparent licensing systems, stronger regulatory oversight, and predictable fiscal policies could encourage greater domestic and foreign investment in natural resources, agriculture, logistics, telecommunications, and infrastructure. However, investors will continue to face risks from security concerns, limited infrastructure, and institutional weaknesses until broader governance reforms are implemented.

Public Spending Must Deliver Better Development Outcomes

The report argues that CAR's challenge is not only limited resources but also inefficient spending. Government wages now consume approximately 72–73% of domestic revenues, leaving little room for infrastructure, education, healthcare, or economic development. Public employment expanded by about 43% between 2016 and 2022, largely driven by recruitment in the security sector.

Education and healthcare spending also remain well below international benchmarks. Domestic education expenditure stands at just 2.1% of GDP, while health spending is only 1.3% of GDP. Nearly 37% of education spending is directed toward higher education instead of primary schooling, despite severe shortages of teachers and classrooms. Student-teacher ratios have reached 91:1, increasing to 271:1 when only government-paid teachers are considered.

Healthcare faces similar inefficiencies, with funding concentrated in Bangui while rural districts continue to lack facilities, trained personnel, and essential services. The report suggests that better allocation of existing resources, stronger monitoring systems, and performance-based management could significantly improve service delivery even before government spending increases.

Development Partners Need a New Approach to Support Reform

International development partners remain indispensable to CAR's recovery. Between 2016 and 2024, donor assistance financed around 43.5% of government revenues and approximately 84% of capital investment. Annual Official Development Assistance has remained between US$640 million and US$682 million, supporting humanitarian relief, infrastructure, healthcare, education, and institutional reforms.

However, the World Bank argues that aid effectiveness can be significantly improved. Fragmented donor programmes, parallel implementation mechanisms, and weak coordination often reduce long-term institutional development. The report recommends aligning development assistance more closely with national priorities, providing more predictable multi-year financing, strengthening government institutions, and improving coordination among international partners.

For policymakers, the review provides a practical roadmap built around strengthening revenue mobilisation, improving cash and debt management, expanding digital public financial systems, increasing budget transparency, and reforming public administration before pursuing more advanced governance reforms. For development partners, it highlights the importance of supporting institutional capacity rather than simply financing projects. For private investors, it signals that meaningful governance reforms could gradually transform one of Africa's most resource-rich but underdeveloped economies into a more stable investment destination.

CAR's long-term recovery will depend not only on continued international support but also on its ability to build stronger public institutions capable of generating domestic resources, managing public finances transparently, and investing efficiently in the country's people and productive sectors. If implemented successfully, these reforms could reduce aid dependence, strengthen fiscal resilience, and lay the foundation for sustainable and inclusive economic growth.