The Central African Republic’s Forestry and Mining Revenue Potential

This paper examines the untapped fiscal potential of natural resources in the Central African Republic, focusing on the forestry and mining sectors. The paper analyzes current production levels, tax systems, and revenue generation in both sectors, and identifies significant opportunities for increased domestic resource mobilization, currently estimated to be between CFAF 150 billion and CFAF 180 billion. The forestry sector, contributing 2.6 percent of gross domestic product and 47.4 percent of exports, generated CFAF 3.7 billion in annual revenues from the main forestry taxes over 2020–21. However, it operates well below capacity, with industrial logging concentrated on just four species, representing 70-75 percent of production. Through modeling three scenarios of improved resource utilization and processing, the study demonstrates potential forestry revenue increases of 75.7 to 145.9 percent, reaching CFAF 6.5 billion to CFAF 9.1 billion, not accounting for potential second round impacts on general taxation. The mining sector, primarily artisanal gold and diamond extraction, contributes 0.6 percent of gross domestic product and 46.5 percent of exports, generating CFAF 2.0 billion in revenues (in 2022). The analysis of the 2024 mining code reforms suggests that revenues could potentially reach CFAF 6.4 billion, primarily through new production-sharing requirements. The paper proposes targeted policy recommendations, including strengthened monitoring and law enforcement, increased investment, simplified taxation for forestry, and improved control mechanisms for mining operations, while noting that the current mining tax system's regressive nature may discourage formalization and investment over the long term.