Iguacu Blog

CAR: Why is a Rich Country So Poor?

Nov 30, 2015
CAR: Why is a Rich Country So Poor?

How can one of the richest countries in the world also be one of the poorest? The resource curse, a sad reality in many parts of the world, is a paradox of economic and political development. In some cases, the countries that are the richest in natural resources are the poorest and most conflict ridden.

The resource curse is usually understood as a political phenomenon. The discovery or existence of natural resources can, in many cases, fuel or exacerbate political tensions and competition for resources and power. Of course, this isn’t always the case: Botswana has managed its diamond reserves well resulting in relative prosperity. But in many developing countries, natural resources are more of a curse than a blessing.

The Central African Republic, or CAR, is a prime example of a country that is cursed by its resources. One of the richest countries in the world in terms of natural resources — laden with gold, timber, uranium, diamonds and even some oil — CAR has been scarred by years of conflict and corruption. Today, CAR lies at the bottom of nearly every measure of development from GDP per capita to rates of literacy.

The resource curse affects CAR in two ways. First competition over resources, like diamonds, has been a cause of conflict. Second, funds from these resources have been used to sustain rebel groups who continue to destabilize the situation. This ongoing violence has been a major block to economic and social development and has kept CAR poor.

Without peace and some minimum semblance of stability, a functioning economy is almost impossible and consequently poverty rates remain among the highest in the world. CAR was recently ranked the least prosperous country in the world by the Legatum Prosperity Index 2015.

CAUSES OF CONFLICT

Competition over CAR’s vast natural resources has long been a characteristic of politics in CAR. Different groups have vied for control of areas rich in minerals and timber. In the outbreak of violence in 2013, this competition has again played a major role. In 2013, when Séléka rebel alliance emerged from the northeast and marched on the capital of Bangui, the group cited illegal government seizures of gold and diamonds as among their motivations for overthrowing the Bozizé regime. Once in power, Séléka too abused CAR’s resources, seizing what they could before they were forced to cede control in 2014. These abuses, in turn, created tensions and set off a cycle of retaliatory violence that continues today.

Photo Credit: Pierre Holtz/UNICEF


FUNDING FOR CONTINUED CONFLICT

A report released this fall by Amnesty International detailed the ongoing illegal diamond trade and its role in the continuation of conflict in CAR. Since 2013, CAR’s diamonds have been barred from international trade by the Kimberly Process, an international initiative aimed at banning diamonds that fuel conflict. However, both Amnesty international as well as a panel of experts authorized by the United Nations Security Council, found that diamonds were continuing to fuel the conflict. The Process, and its impact on CAR, were reviewed recently at the annual Kimberly Process meeting in Angola.

Though the Kimberly Process banned international trade of diamonds originating in CAR, it did not prohibit internal national trading. Accordingly, diamonds are often sold within national borders from small miners to large buying houses in Bangui who stockpile the diamonds, ready for the day when trade bans will be lifted. Amnesty International found that the two biggest buying houses, Sodiam and Badica, are both very likely buying diamonds from conflict affected areas, diamonds that will be theoretically illegal to trade on the international market once bans are lifted. But both Sodiam and Badica deny these allegations. Reliable in-depth investigations will be needed to verify these diamonds once bans are lifted.

In the meantime, the main rebel groups, the ex-Séléka and the anti-balaka, have been heavily involved in the diamond trade: extracting taxes or protection fees in the areas they control and, in some cases, directly controlling mines. These diamonds provide sources of funding for the groups allowing them to continue their activities and their destabilization of the country.

CAR has the potential to thrive economically if its resources were managed effectively. With effective institutions and a stable economy, CAR could seize its full potential. Sadly, until that time, the bountiful natural resources of CAR remain a curse.

Written by Zoe Hamilton 


Subscribe to this blog

Data submitted on this site is encrypted and secure

Share "CAR: Why is a Rich Country So Poor?"