According to African Development Bank the economy slowed in 2015, falling to 7.7% from 9.2% in 2014, a trend set to continue in 2016 (7%), with a recovery expected to start in 2017 (8%). DRC therefore posted an annual average economic growth rate of 7.7% during the 2010-2015 period which were well above the average in Sub-Saharan Africa. The economic performance was due to the growth in extractive industries and public investments. Inflation that was 53% in 2009 remained around 1% over the period 2013-2015, down from 2.8% in 2012 and 9.8% in 2010. Maintaining a restrictive monetary policy and fiscal discipline is critical to containing inflation below the 5% goal.
Why invest in DRC?
The investor in DRC benefits from the following;
- Untapped minerals
- Fisheries along River Congo
- Fertile land
The presidential and parliamentary elections planned for November 27, 2016 have been delayed due to an outdated electoral register. According to the National Independent Electoral Commission (CENI), the revision of the electoral register may take between 13 and 16 months. On September 1, 2016, the African Union facilitator, Edem Kodjo, launched the national political dialogue to discuss the electoral process and pave the way for peaceful and transparent elections although the opposition parties have refused to participate. There is already pressure for President Joseph Kabila to step down.
According to World Bank the population of DRC was 77.3 million in 2015 with population growth rate of around 2.6%. About 42% of the population was aged of 14 years and below. About 63.3% of the population was aged 24 years and below. The projected population at the growth rate of 2.6% will be 81.4 million people in 2017.
According to the latest NSI (National Statistics Institute) estimates about 42% of the population of DRC live in urban areas.
Doing business in Democratic Republic of Congo (DRC)
The highlights of World Bank score of doing business in DRC is summarised as follows;
|Topic||World Bank 2017 rank||World Bank 2016 rank||Change|
|Starting a business||96||85||-11|
|Dealing with Construction Permits||114||129||15|
|Protecting Minority Investors||162||162||-3|
|Trading across the boarders||188||188||-1|
Doing business in the DRC is extremely difficult, with the country often considered to be one of the most challenging business environments in the world.
Moody’s affirms the Democratic Republic of the Congo’s sovereign issuer rating at B3 and maintained a stable outlook.
In 2001 DRC adopted a free-floating exchange rate policy and lifted various restrictions on business transactions, including those in the mining sector. International transfers of funds take place freely when sent through local commercial banks. On average, bank declaration requirements and payments for international transfers take less than one week to complete. The only currency restriction imposed on travellers is a $10,000 limit on the amount an individual can carry when entering or leaving the DRC. The DRC’s informal foreign exchange market is large and unregulated and has tended to offer exchange rates not widely dissimilar from the official rate. In practice, the DRC’s economy remains highly dollarized. In September 2013, the government embarked on a process of “de-dollarizing” the economy by requiring that tax records be kept in CDF and tax payments from mining companies be paid in CDF.
There is no legal restriction on converting or transferring funds related to investment, however, new exchange regulations will increase the time for in-country foreigners to repatriate export and re-export income from 30 to 60 days. Foreign investors may remit through parallel markets when they are legally established and recognized by the BCC.
The Democratic Republic of Congo (the DRC) has signed the New York Convention. The convention facilitates the enforcement of international arbitral awards in the DRC. Disputes relating to immovable property situated in the DRC or relating to rights in connection with that immovable property do not fall under the New York Convention. As a result, foreign arbitral awards which fall under the scope of the New York Convention cannot be enforced in the DRC on the DRC’s property or any property belonging to state-owned entities, unless these entities have expressly waived their immunity of execution.
- Poor road and rail infrastructure
- The country has over 200 ethnic and tribal groups living together and over 700 different languages and dialects are spoken in DR Congo.
- Despite the abundant natural and human resources at least 50% of its population living below the poverty line.
- DR Congo is battling with killer diseases including malaria, sleeping sickness, typhoid fever, cholera and HIV’AIDS
- Excessive poaching, deforestation, lack of environmental protection laws and law enforcement.
- There are still pockets of insecurity.
DRC was ranked 156 out of 175 countries in the annual Corruption ranking published by the global anti-corruption body, Transparency International (TI). The country obtained a corruption index score of 21%.
DRC is generally peaceful despite a few locations where militias are still very active. The government is however determined overcome militias in eastern part of the country that are mainly focused on extracting minerals illegally.
Unemployment and skilled labour
The labour market is not growing fast enough to take up the new entrants in the market. Hardly 5% of the job seekers find employment corresponding to their abilities and skills. Among those that cannot find suitable jobs include the young people educated in business centres.
Attitude to foreign investment
The government prioritizes attracting foreign investment into the country. The government has however to improve economic governance and the business climate before it can attract investments. Most foreign direct investments are governed by the 2002 Investment Code. The mining, hydrocarbons, finance, and other sectors are governed by sector-specific investment laws. The National Agency for Investment Promotion (ANAPI) is responsible for facilitating investment. DRC has created a one-stop window bureau in Kinshasa to simplify business creation, cutting processing time from five months to three days; reducing the number of incorporation formalities and fees from USD 3,000 to USD 120.
Restriction on investment
No limits on foreign control for investment in DRC. However, some sectorial laws impose limits on a case-by-case basis. For example, the current agriculture law does not allow foreigners to be majority holders in agricultural businesses. This law is under review because it has stalled foreign investment in the agricultural sector.
Intellectual property rights
In principle, intellectual property rights (IPR) are legally protected in the DRC, but enforcement of IPR regulations is virtually non-existent. DRC is a member of the World Intellectual Property Organization (WIPO) and party to the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works, giving Congolese and foreign patent-holders the same legal protection. Patents are valid for 20 years from the date of application, and registrations of foreign patents can also have up to 20-year duration. Trademark registrations are valid for 20 years from the date of filing and are renewable, but they are subject to cancellation if not used within three years of the application. The Ministry of Industry oversees real property issues. Losses due to piracy and locally produced counterfeit goods remain relatively small due to the DRC’s weak economy and nominal industrial base, though the government is unable to prevent most pirated goods from being imported or distributed domestically.
DRC has abundant natural resources including gold, petroleum, diamond, coal, timber, tin, manganese, uranium, copper, cobalt, tantalum, zinc, silver, and hydro-power. Other resources include a natural forest and River Congo that has the potential for fisheries.
Investment Climate in DR. Congo has been summarized to include the following
For more reading