Executive Summary
The Democratic Republic of the Congo (DRC) is the second largest country in Africa and potentially one of the richest in the world in terms of natural resources. With 80 million hectares (197 million acres) of arable land and 1,100 minerals and precious metals, the DRC has the resources to achieve prosperity for its people. Despite its potential, the DRC often cannot provide adequate security, infrastructure and health care to its estimated 81 million inhabitants, of which 75 percent live on less than two dollars a day.
The country possesses untapped resources that attract investors and could make it a giant in the African and global economies, but it occupies the 184th place (of 190) in the World Bank’s Doing Business 2019 report.
Overall, businesses in the DRC face numerous challenges, including fragility of functional infrastructure and alleged corruption at all levels of government. Though, the election of President Felix Tshilombo Tshisekedi has raised the hopes of the business community in the DRC, and there is optimism that this change in leadership heralds the beginning of a new era of transparency in the country.
Armed groups remain active in the eastern part of the country making for a fragile security situation that negatively affects the business environment. A long cycle of delayed elections finally ended in December 2018, with the arrival in power of the new President Felix Tshilombo Tshisekedi, reducing long-standing political tensions.
Poor governance, corruption and a deficit of transport, energy, and telecommunications infrastructure continue to make the business climate difficult. The infrastructure deficit is the main challenge as it hinders intra- and international trade. The poor quality of DRC’s infrastructure leads to import and export costs that are reported to be among the highest in Africa.
Despite some reforms implemented by the government, investors continue to complain about corruption and the lack of reform in the mining and subcontracting sectors.
ANAPI (Agence de promotion des investissements au Congo) strives to coordinate the actions of the Government of the Democratic Republic of the Congo (GDRC) in an attempt to simplify administrative formalities and procedures, but its influence in the administrative sphere is still limited. In 2018 business remained sluggish, with only the extractives sector exhibiting significant growth.
GDP growth in 2018 was 4.1 percent (compared to 3.7 percent in 2017), while the average rate of inflation was 27 percent (compared to 54 percent in 2017). Despite this, the year-on-year increase in consumer prices dipped to approximately 7 percent by the 4th quarter of 2018. The CDF stabilized against the USD, losing only 2.7 percent of its value in 2018 (compared to a depreciation rate of 23 percent in 2017). In 2018, the financing of the elections was supported by USD 500 million in public funds, roughly 9 percent of the 2018 state budget.
According to the Governor of the Central Bank, the main challenge remains the insufficient mobilization of public revenues, which is estimated by various sources to be between 7 and 10 % of GDP, as compared to an average of 20% in sub-Saharan Africa.
The primary minerals sector is the country’s main source of revenue. Copper, cobalt, gold, coltan, diamond, tin and tungsten, along with oil from offshore fields, provide over 95 percent of the DRC’s export revenue.
The agricultural sector and the forestry sector present opportunities for economic diversification in the DRC. Agriculture is the mainstay of the economy, as it employs approximately 60% of Congolese. The National Strategic Development Plan (NSDP), currently being finalized, plans to use agricultural transformation to advance the DRC into a middle-income country by 2022, including through the establishment of agro-industrial parks in the country’s various regions, which will take into account the interests of small producers. The industrialization of the forest-based sector would strengthen diversification efforts.
According to foreign investors, inadequate infrastructure and allegedly predatory taxation have greatly diminished the secondary sector. Several breweries and bottlers, a number of large construction firms, and limited textiles production are still active.
The tertiary sector includes retail and wholesale sales, banking, transport and communication components. Micro commerce dominates the retail sector; the banking sector is small in terms of capitalization, but diverse in terms of ownership; the highly competitive telecommunications industry is expanding into electronic banking.
The banking sector configuration in 2018 remains unchanged from the previous year. There are currently 17 operational banks in the Congolese banking industry. This includes BIAC, which is in serious difficulty and will likely be dissolved and another, Byblos Bank RDC, which became Solidaire Banque following the withdrawal of its majority shareholder and has remained practically inactive. The bank penetration rate is well below the sub-Saharan African average of 25%. The nation’s economy is highly dollarized, which weakens monetary policy execution, financial development and systemic stability.
The DRC is finally opening up its insurance sector after years of hesitancy and delay. The new regulator ARCA (Autorité de Régulation et de Contrôle des Assurances), approved four new insurance companies and two insurance brokers on March 28th, 2019. The insurance sector will hopefully stimulate the economy, by mitigating risk and financing economic development projects.
Reform of a non-transparent and often corrupt legal system is also a prerequisite for investors to benefit more fully from the DRC’s membership in the Organization for the Harmonization of Business Laws in Africa (OHADA).
The Embassy invites all prospective investors to visit www.travel.state.gov to read the latest country-specific information and travel warnings before traveling to the DRC.
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