The Central African Republic (CAR) has been marred by political instability for a long time, the most recent being in 2013. Twenty-five percent of the country’s 4.9 million people was displaced; however, the intervention of the international community and the democratic legislative elections have led to stability in the past three years. According to the World Bank, the GDP of the state expected a slower growth than expected due to insecurity that led to the displacement of labor and disruption of economic activities. Domestic consumption contributes significantly to the GDP in an economy where capital formation is hampered by limited public investment and unfavorable investment climate. The state’s official currency is the Central African CFA franc.
The Central African CFA Franc
The CFA Franc is the official currency use in the Central African states including CAR. It is pegged to the Euro at a standard rate of 1 Euro = CFA 655.957. The CFA franc is issued by the Bank of the Central African States that is located in Yaoundé, Cameroon. The franc has an equal value to the West African Franc but cannot be used in West Africa. The CFA Franc was introduced in 1945 by the French to its colonies in Equatorial Africa to replace the French Equatorial African franc. After Independence, the colonies continued the use of the franc. In 1984, Equatorial Guinea replaced its currency the Equatorial Guinean ekwele when it adopted the CFA franc despite being a Spanish colony. The franc is offered in both notes and coins and is divided into centimes.
CFA Franc Coins
CFA coins were introduced to all the French colonies in 1948 except Cameroon. The first coins were issued in denominations of 1 and 2 francs, but the production of the 2 CFA coin was stopped. The 5,10 and 25 franc coins were issued in 1958 to all the colonies including Cameroon. In 1961 and 1966 the 50 and franc coins were introduced respectively. In 1971, each state introduced the 100-franc coins within their borders; the 500-franc coins were later introduced in 1976. The coins were also introduced to Equatorial Guinea after it adopted the currency. 1n 1996, the production of 100-franc coin was centralized, and in 1998 the Bank of Central African States authorized the production of the 500-franc coin. In 2006, the 2 CFA franc coin was introduced.
When the French introduced the franc, it circulated in the denominations of 5, 10, 20, 100 and 1000 CFA franc. In 1947, a different series of notes that did not bear the name of the colonies was introduced. The 5, 10, 20, 50, 100 and 1000 francs’ notes were the first to circulate before the 500, and 5000 notes were introduced in 1949 and 1952 respectively. In 1968 the 10,000-franc note was introduced, in 1971 the 100-franc note was withdrawn from circulation and replaced by the 100-franc coin. In 1975, each state began producing their own 500, 1000, 5000 and 10,000-franc notes. However, the independent production ceased in 1993 and the state names replaced by a single letter to distinguish the state where the currency was issued. In 1993, the 2000-franc note was introduced.