The Democratic Republic of the Congo (DRC) has an estimated $24 trillion worth of natural resources, yet 70 percent of its population lives on less than one dollar a day. With 80 million hectares (197 million acres) of arable land and over 1,100 minerals and precious metals identified, the DRC has the potential to become one of the richest countries on the African continent and a catalyst for African growth. Though the DRC’s political and security situation remains fragile, the economy is expected to grow at a rate of roughly 5 percent in 2016, largely driven by the extractive sector with contributions from the public and tertiary sectors. Since 2010, the Government of the DRC (GDRC) has demonstrated a growing commitment to foster sound economic governance and attract foreign direct investment (FDI). The DRC’s overall economic forecast for the medium term remains largely positive despite the impact of low global commodity prices and continuing political uncertainty.
After an economic slump during the global financial crisis that lowered gross domestic product (GDP) growth to 2.8 percent in 2009, the DRC posted an annual average economic growth of 7.7 percent between 2010 and 2014, and 8.8 percent in 2015, well above the average in sub-Saharan Africa. This performance was driven by robust growth in the extractive sector and favorable trends in commodity prices. Lower commodities prices more recently have lowered growth projections for 2016 to around 5 percent. Inflation, which reached a staggering 53 percent in 2009, was an estimated 1 percent in 2015 largely owing to more conservative fiscal and monetary policies. The government’s Competitiveness and Private Sector Development Project reduced business start-up time by half and reduced the number of taxes from 118 to 30.
Though rehabilitation of basic infrastructure also contributed to economic recovery, the GDRC continues to struggle to improve the quality of transportation networks. As an example, of 1,530 km (950 miles) of road in the east, only a third is in good condition. The Congo River system, the world’s second largest river by flow after the Amazon River, has great potential for hydroelectric power generation. The country’s two largest dams, Inga I and II, built in 1972 and 1982 respectively, have a combined generating capacity of close to 2,000 megawatts, yet actually generate only half of their total capacity due to poor upkeep. The Congo River has the potential to generate up to 100,000 megawatts of electricity, though today less than ten percent of Congolese have access to electricity. The GDRC seeks foreign investment partnerships on several hydropower projects, including an expansion of Inga, as well as construction of new transmission lines and geothermal power stations in the east.
Implementation of macroeconomic and fiscal reforms have led to growth in the banking sector and increased microfinance projects. Though a recovery in the banking sector has encouraged commercial and private borrowing, the Central Bank of Congo (BCC) has recently tightened borrowing requirements and access to credit in an effort to maintain stable exchange and inflation rates. The GDRC is also taking steps toward mitigating the impact of low commodity prices on the broader economy through a push for diversification, targeting key sectors including agriculture, telecommunication and energy. Through diversification and reform, the DRC hopes to improve its business climate and attract more investment. Toward this end, the GDRC has created the legal framework for Special Economic Zones (SEZs), including industrial agribusiness parks, and is looking to partner with American businesses. The first SEZ has been established in Maluku in Kinshasa province, although operations had not started as at June 2016.
In 2014, the DRC joined the Organization for the Harmonization of Business Laws in Africa (OHADA) to protect investors by modernizing the business code and settling disputes through supranational arbitration. OHADA provides multiple incentives for foreign investment by standardizing and streamlining enterprise creation and contract enforcement as well as providing investor protection and harmonization of accounting principles. Moreover, GDRC investment reforms and investor protections make Public-Private Partnerships (PPPs) more secure and attractive for outside investors. In its third year of existence, the DRC American Chamber of Commerce continues to be a forum and network for American business interests in DRC.
The U.S. Financial Reform Act (Dodd-Frank Act) requires companies whose products contain tin, tantalum, tungsten or gold to disclose to U.S. regulators whether they are sourcing these materials from the DRC or its neighbors. Companies must also document their due diligence to ensure their sourcing arrangements are not benefiting armed groups. The State Department and USAID work with the private sector, government, civil society, and international partners to develop pilot supply chains of artisanally-mined conflict-free minerals out of the eastern Congo. The Congolese Army’s 2013 victory against rebel M23 combatants and the conclusion of a regional peace agreement in Addis Ababa the same year have helped focus the GDRC on eliminating other armed groups and encouraging economic development and restoration of state authority in the eastern DRC, though security issues remain a concern in many parts of the east.
Overall, businesses in the DRC faces numerous challenges, including fragility of functional infrastructure, endemic corruption at virtually all levels of government, predatory tax agencies, limited access to capital, shortage of skilled labor, difficulty enforcing contracts, political uncertainty, weak judicial system, and ongoing armed conflict in eastern DRC. The Embassy strongly urges all prospective investors to visit www.travel.state.gov to read the latest country-specific information and travel warnings before traveling to the DRC.