Central African Republic Market Entry
It is a small market characterized by very low purchasing power of the population. The exporter should focus on the entire CEMAC area. The customer focuses primarily on the price, the quality of the goods comes second – the ever-increasing imports of cheap Chinese goods represent a significant competitive obstacle.
Market entry: distribution and sales channels, use of local representatives, other factors affecting sales
According to cheeroutdoor.com, the situation in the SAR is very complicated for Czech exporters for many reasons, the current crisis is dominated by security aspects, a legal vacuum and the de facto bankruptcy of the country and great poverty. In addition to other factors operating in all countries of the region (very low purchasing power, geographical distance, laboriousness of the case, distrust in the seriousness of the partner, high corruption…) there are also specific factors such as orientation towards traditional (primarily French, Cameroonian, Chadian) suppliers, consumption restrictions, a large number of refugees, the disintegration of the supply network, orientation towards very cheap Chinese goods and the absence of a contract base.
Establishing a relationship with a local (or Cameroonian, Chadian) reliable partner (importer, distributor, representative) is a basic condition for successful business. Another option is orientation to organizations providing humanitarian aid (EU, FAO, UN).
Goods are imported into the SAR by trucks through the ports of Douala or Point Noire. The transport time can be extended for months. Daily necessities in SAR are mostly sold in small shops and markets, which are abundant or directly on the street. Bigger shops exist only in Bangui. Price is a fundamental prerequisite for sales success.
The best market entry strategy is through a local (possibly Cameroonian or Chadian) agent or distributor familiar with the language and local business practices, working either on an “ad hoc” commission basis or on a long-term contractual basis. The most suitable for the supplier is to find a reputable partner who would work on his own account and pay for the offered goods himself when taking them.
For any major case, it is essential that the local representative has good contacts with the local administration.
Due to the number of frauds, there is always a thorough check of the partner (due diligence). For deliveries of machinery and more complex equipment, the customer usually expects a sufficient supply of spare parts and service. The Czech Republic has no established network of representatives in the SAR who would regularly treat the local market.
Import conditions and documents, customs system, export control, domestic market protection
Being a landlocked country, importing goods into the SAR is a complex and expensive process (the second most complex system in the world). 17 documents are required for the import of goods, SAR customs offices are established in the port of Douala (Cameroon) and Point Noire (Congo).
A local fully registered importer must have a license issued by the Direction du Commerce intérieur of the Ministry of Trade and Industry, as well as invoices (if possible in French or another world language, but with a French translation and a description of the goods attached. All invoices must include the names of the supplier and recipient of the goods, the name of the goods, unit and total price and quantity data.
Unit and total price must be quoted in CIF parity, with specified gross and net weight and terms of sale). Certificate of origin of goods (2 copies) issued by the Chamber of Industry and Commerce in the country of origin, Bill of Lading or Air Waybill, Packing List, permission to cross borders must also be documented (border crossing authorization), cargo release order, collection order, customs receipt, tax payment receipt, health/technical certificate, marine terminal bills, electronic cargo tracking bill, order to transport (carrier), customs import declaration, transit document (S101), insurance certificate and pre-shipment inspection report.
Import duties (official) from countries outside the CEMAC community are derived from ad valorem prices. Transport insurance must be paid by the importer for the section between the home and Cameroon port of Douala and the SAR land border.
- basic products – the rate is 5%
- raw materials and basic equipment – 10% rate
- semi-finished products (especially most imported food products, tools, tires) – the customs rate is 20%
- ordinary consumer goods (canned food, electronics, etc.) – the rate of 30% VAT is 19% (with the exception of some commodities (medicines). The importer also pays the so-called statistical and integration tax of 2%, and IR/IS 5% (advance tax from the profit).Alcoholic beverages, tobacco products, cosmetics and jewelry are subject to a so-called additional tax (droit d’excise) of 25%; soft drinks are also subject to this tax of 10%. Cement and new means of transport have zero duty.
There are no special regulations regarding the labeling of goods (with the exception of sugar, rice and flour, where the name and address of the importer, weight and country of origin must be on the packaging), the instructions must be in French and in the metric system. The same applies to food labeling. Goods should meet European/French standards. The importation of drugs, ivory goods and weapons is prohibited. Imported medicines are registered with the Ministry of Health, veterinary medicines with the Ministry of Animal Production. The import of mobile phones is subject to the permission of the Ministry of Telecommunications.
The export value of goods is determined in FOT parity. The exporter must be licensed by the Direction du Commerce extérieur of the Ministry of Trade and Industry. Exported food must have a phytosanitary/veterinary certificate (Direction générale de la réglementation et du contrôle), exported goods must have a certificate of origin. Hunting trophies may be exported on the basis of a hunting permit. The export of diamonds and wood is subject to special certification.
Export tax is paid on gold 1.75%, diamonds (8%), logs (10.5%), wood (4.5%), cattle and coffee.
Domestic market protection:
Theoretically, there are certain restrictions on the import of sugar, coffee, diamonds (certification), food of plant and animal origin (phytosanitary certificate of the country of origin). There are no special regulations regarding the labeling of goods (with the exception of sugar, rice and flour, where the name and address of the importer, weight and country of origin must be on the packaging), the instructions must be in French and in the metric system. The same applies to food labeling. Goods should meet European/French standards. The importation of drugs, ivory goods and weapons is prohibited. Imported medicines are registered with the Ministry of Health, veterinary medicines with the Ministry of Animal Production. The import of mobile phones is subject to the permission of the Ministry of Telecommunications. Currently, the export of diamonds is prohibited.
For detailed information, see: www.izf.net
Conditions for setting up an office, representative office, joint venture
Note due to the current security, legal and financial crisis, we present it more for information.
On January 1, 1998, an agreement between the 15 African countries of the CFA currency area (and Guinea), called OHADA (Organisation pour l’Harmonisation du Droit des Affaires en Afrique), which promotes the development of the African Economic Community, a common trade policy and guarantees traders and investors legal certainty and compatibility.
The SAR has acceded to the OHADA agreement and the commercial law here should theoretically not differ from the European (French) law. According to the law, both domestic and foreign companies can operate as, among other things, a branch (succursale), Société a Responsabilité Limitée” (SARL – spol. s ro) or “Société Anonyme (as)” – only certain basic different requirements for the amount of minimum capital apply (SARL 1 million FCFA, SA 10 million FCFA). Foreign companies registered in the SAR are considered domestic entities and have the same rights and obligations under the law as local companies. The same regulations and rules also apply to their registration.
The rules for setting up an office are codified in the Commercial Code and implementing regulations (www.droit-afrique.com), the procedure is basically similar to that in the Czech Republic. The company is established at the founding general meeting, where the founding partners or their representatives meet (power of attorney certified by a Czech notary in French or with an official translation, in the case of natural persons a copy of the passport or OP, in the case of legal entities, an extract from the OR with translation). The capital is deposited into a bank account.
The articles of association must contain, among other things, the exact name and seat of the company, legal form, share capital, date of establishment, names of all statutory representatives. Supporting documents must be officially translated into French. Documents are drawn up in SAR in French. The company then contacts Guichet Unique, which handles the registration at the local Chamber of Commerce (Chambre du Commerce), company register, social, employment and tax office. A copy of the partnership agreement certified by a notary, a declaration of integrity, a certified copy of the OP or passport of the partners, as well as a residence permit for foreigners, proof of depositing the basic assets in a bank (account statement), photos of the partners are required. The final step is to obtain a license from the Department of Commerce. The incorporation of the company must be publicly published.
We recommend setting up your company with the help of a local lawyer with knowledge of the language and French commercial law.
Requirements for promotion, marketing, advertising (use of HSP), important fairs and exhibitions in the territory
Due to the limited infrastructure in the country, advertising in one of the local languages through radio is of the greatest importance. TV advertising is only effective in Bangui. Local dailies and weekly newspapers also accept advertising, but due to the low level of education, it has only a limited impact. The local customer also usually requires the foreign partner to supply sufficient promotional materials in French.
Issues of intellectual property protection
Rights must be registered locally and enforced under local laws. SAR has copyright laws (need to apply to Ministry of Culture). The owner of the trademark should register it in the SAR (with the Ministry of Trade and Industry). The SAR has adopted laws promulgated by the African Intellectual Property Office (OAPI, based in Yaoundé), which aims, among other things, to protect patents. As a member of OAPI, SAR has accepted a number of obligations arising from international treaties for the protection of patents, intellectual property, including the Paris and Berne Agreements. As a member of the WTO, the SAR is a signatory to the TRIPS Agreement. SAR is also a member country of WIPO (World Intellectual Property Organization).
Despite participating in these international conventions, very little has been done to stop the sale of pirated music recordings, videotapes, computer software, drugs, clothing, etc. The SAR government is dealing with the basic existential problems of the population, protecting intellectual property is not one of its priorities.
Public procurement market
In the current situation, it does not exist. According to the law, public contracts should be subject to competition. The public procurement system has always been heavily criticized – many international donors have tried to make it more transparent. Public contracts were often “tailored” to the presumed winner, decided by a narrow group of people connected to the ruling power. In SAR, you cannot get a contract without contacts and knowledge of the conditions.
Ways of resolving commercial disputes, risks of the local market and investing in the territory, usual payment terms, payment ethics
The SAR is a member of the International Center for the Settlement of Investment Disputes (ICSID) and the New York Convention of 1958. It is a member of the WTO and has also signed the convention prepared by OHADA (Organisation pour l’Harmonisation des Droits des Affaires en Afrique) which harmonizes legal norms fifteen member countries in the area of resolving commercial and investment disputes and bankruptcies. SAR is also a member of MIGA (Multilateral Investment Guarantee Agency). It should therefore recognize the decisions of foreign courts.
A well-drafted business contract (preferably by a local lawyer) is essential for preventing and resolving business disputes. We always need to thoroughly check with whom we conclude the contract (due diligence). The place of dispute resolution (preferably abroad) must always be specified in the commercial contract. Court resolution of disputes is usually associated with high costs, and the enforceability of law in SAR is very difficult and lengthy even under normal circumstances, and today it is practically zero. A foreigner will always be at a disadvantage against a local entity. It is therefore fundamentally recommended to resolve the dispute by agreement and out-of-court settlement.
In relation to Czech companies, we have not yet recorded a case of a commercial dispute that would have to be resolved by a third party (court). In any case, we recommend incorporating into the contract a provision on the basis of which any arbitration proceedings would take place outside the SAR.
Local customs important for business contacts, official and spoken language(s), public holidays, working and sales hours
We recommend conducting business negotiations abroad. When planning it, tardiness must be taken into account – as a rule, it is necessary to plan a reserve. Negotiations are often postponed and business partners very often do not show up for meetings at all. The language of business negotiations is French. Clothing is either traditional or European (a suit with a tie is always desirable for meetings). The importance of acquaintances and personal contacts is essential in closing deals.
Authorities are functional only to a limited extent, decision-making processes are very lengthy and are often stimulated by the interests of influential groups.
The currency used is the Central African franc, the so-called CFA-franc (“Cooperation Financiere en Afrique Centrale francs”; issued by the Central Bank of the Central African States, united in the so-called CEMAC – “Union économique et monetaire de l’Afrique centrale”). The Central African franc is further divided into 100 centimes.
International designation XAF. Average exchange rate 2016: 1 USD = 612.03 XAF (FCFA), fixed at Euro 1 Euro = 655.96 XAF. In foreign trade, the most frequently used currencies are EUR and USD.
Public holidays, usual working and sales hours:
- January 1 – New Year
- Easter Monday
- 29/3 (Boganda Day)
- May 1 – Labor Day
- May – Ascension (l’Ascencion)
- Whit Monday
- June 30 – day of prayers
- August 13 – Independence Day (Indépendence)
- August 15 – Assumption of Mary (l’Assomption)
- November 1 – All Saints Day (la Toussaint)
- December 1 (proclamation of the Republic)
- December 25 – Christmas
Usual office hours: Monday – Friday 7:30 a.m. – 3:30 p.m
6.9. Visas, fees, specific conditions for traveling to the territory (areas with increased risk for foreigners)
The SAR has been going through a deep crisis since December 2012, which culminated in March 2013 with the capture of the capital by rebels from the Séléka movement and the overthrow of the regime of President Bozizé. Members of the Sélék, mostly Muslims with a number of mercenaries from Chad and Sudan, began to rob, loot, and kill the local population. Christian residents formed militia groups called anti-Balaka, which both defended themselves against Séléka attacks and took revenge on the defenseless Muslim population. More than 1,000 people were killed in Bangui alone, many observers using the word genocide to describe the situation. To prevent further escalation of violence, France sent 1,600 troops to the SAR on 12/5/2013 as part of Operation Sangaris. On December 5, 2013, the UN Security Council also approved the deployment of the 6,000-strong African MISCA mission. In July 2014, Seleka and anti-Balaka reached a ceasefire agreement, The Seleka retreated from the capital to the central and northeastern parts of the country. After that, the security situation in the capital stabilized, and there was also a decrease in crime. In the west of the country, the security situation has also improved somewhat. Nevertheless, a violent crisis breaks out from time to time (e.g. in October 2014 in Bangui, November in Ngaragba, December in Mbrés, in February 2015 in Bria, etc. But a new element of criminal activity has spread – the kidnapping of foreigners (Catholic missionaries, UN workers), kidnapped he was also the Minister of Youth and Sports. Currently, the situation remains more uncomplicated in the center and east of the country (around Kaga Bandoro, Bambari, Bria), where there are diamond deposits. LRA rebels operate in the east. Violence, including kidnappings, murders, is regularly recorded and looting.All over the country, there are armed groups that prey on locals and foreigners alike. There are often fake checkpoints on the roads. In January 2015, several abductions of NGO and UN workers were recorded, the Minister of Youth and Sports was kidnapped.
For security reasons, the Ministry of Foreign Affairs of the Czech Republic strongly recommends avoiding trips to the Central African Republic completely. In the event of a necessary trip, we recommend maintaining the highest degree of caution and registering on the website of the Ministry of Foreign Affairs before the trip.
Before traveling to the sub-Saharan African countries of the region, every traveler should visit a specialist doctor – specialist in tropical diseases, where all recommended vaccinations can be completed. It is recommended to have antibodies against TB and polio checked before the trip and, if necessary, supplement these vaccinations as well. There is no vaccination against a very serious mosquito-borne tropical disease – malaria. For short-term stays, preliminary antimalarial prophylaxis is recommended, while individual derivatives develop resistance in the territory over time. Therefore, the type of antimalarial used must be consulted with a specialist in tropical diseases before departure. Among the common antimalarials Flansidar, Coartem and Artesum. At the appearance of the slightest symptoms of any disease (flu, angina, headaches, feelings of fatigue) it is necessary to visit the nearest hospital and have a malaria test done. This is very simple (taking a blood sample from the pad of the finger on the hand) and fast – it takes about 15 minutes, including blood analysis. Medicines for already ongoing malaria are available over the counter and are effective – the disease subsides within two to three days. It is essential not to let the disease develop (the incubation period of malaria is about a week) – then it can have fatal consequences. It can also be recommended that the traveler buys one pack of local antimalarial drugs in the destination country and takes it back to the Czech Republic with him. Due to the incubation period, malaria can manifest itself only after returning to the homeland, and its occurrence and thus its treatment could cause problems in the Czech Republic.
A valid passport, visa and international vaccination card are required to enter the country. It is recommended to keep the original documents and prove them with copies. Visas are issued by the SAR Embassy in France:
Ambassade de la République centroafricaine, Rue de Perchamps 30, Paris, phone 0033/142244256, website: www.amb-rcaparis.org
Taking photographs in Bangui and other cities requires special caution, as it can be a source of harassment and extortion of bribes. It is forbidden to take photos of the presidential palace and other government offices and objects that are considered to be of strategic importance by local authorities. Off-road vehicles must be used outside the capital and its immediate surroundings. It is not recommended to travel after dark and go out in Bangui after 22.00. In the event of a car accident, it is advisable not to stop, but to report the accident to the nearest police station.
The Czech Republic has no representation in the Central African Republic, and the possibilities of eventual assistance to Czech citizens in need are very limited. The Embassy of the Czech Republic in the Federal Republic of Nigeria has diplomatic and consular jurisdiction for SAR. A citizen in need can contact the French Embassy in Bangui and ask for consular assistance.
Conditions for employment of citizens from the Czech Republic
See the warning in chapter 6.9.
The employer must obtain a work permit from the Ministry of Labor (DG travail) for the prospective employee. An employment contract must be submitted for this. Based on the work permit, the employee can apply for a work visa. In reality, this is a very complex and long-term process.
Conditions for the use of local health care by Czech and EU citizens
Medical care is very limited and paid for. There are three hospitals and several private clinics in Bangui, however, their equipment is very outdated and treatment is recommended only in cases of extreme necessity. It is also possible to try to contact the doctor at ZÚ France +236 70 90 16 53.
Quality travel insurance with the possibility of quick repatriation to Europe for health reasons is recommended. Vaccination against yellow fever is required as mandatory, the international vaccination card is checked upon arrival in the country. Vaccination against typhoid, hepatitis A+B, meningitis, cholera and tetanus is strongly recommended. Malaria is present throughout the territory. Approximately 20% of the population is infected with the HIV virus, of which 40% are young women. In the southern part of the country, overgrown with rainforest, Ebola can occur, tuberculosis is a problem.
Current information on the health situation and mandatory and recommended vaccinations will be provided by the Center for Travel Medicine, Havelská 14, Prague 1 and the Vinohradská Hospital, the Center for Geographical Medicine and each hygiene station. Examinations for malaria and other diseases are carried out directly at SAR Institut Pasteur Bangui, phone +236 618996.