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«EXECUTIVE SUMMARY The Government of the Democratic Republic of the Congo (GDRC) has repeatedly cited attracting foreign investment as one of its ...»

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The Government of the Democratic Republic of the Congo (GDRC) has repeatedly cited

attracting foreign investment as one of its highest priorities, yet the country remains a very

difficult environment for investors. The GDRC is justifiably proud of achieving

macroeconomic stability in recent years however reforms to improve the business climate

have stalled. The economic outlook for the medium term remains generally positive although

there are concerns the Congolese economy and budget are overly dependent on global commodity prices. The DRC rebounded remarkably well from the global financial crisis thanks to improved fiscal policy, high global commodity prices and the largest debt forgiveness in history. The DRC averaged 6% annual growth over the last decade, including 8.5% GDP growth in 2013. Despite this recent growth the DRC has the world’s lowest gross national income per capita, it also ranks last in the UN Human Development Index, and near the bottom in business climate, hunger and many other indices. Businesses in the DRC face numerous challenges, including little functional infrastructure, endemic corruption at all levels of government, dysfunctional institutions, predatory tax agencies, little access to finance, shortage of skilled labor, unenforceable contracts, a high crime rate, an unpredictable security environment, and ongoing armed conflicts in the eastern part of the country. The Embassy strongly urges all prospective investors to visit www.travel.state.gov to read the latest country-specific information and travel warning before traveling to the DRC.

Despite these difficulties, the DRC’s abundant resources, a decade of positive economic growth and increased investment in infrastructure offer opportunities for American businesses, particularly those with experience in similar business environments. Mining is the Congo’s dominant revenue generator, with the DRC estimated to hold mineral reserves worth over $24 trillion. Sales from the mining sector were estimated at over $8 billion in 2012 and there remains significant room for growth in mining and related products or services, despite a severe electricity shortage and little transport infrastructure. Additional opportunities exist in agricultural, construction and heavy equipment (including used and reconditioned equipment), transportation, energy, engineering, and consumer goods.

The U.S. Financial Reform Act (Dodd-Frank) 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. They must also document their due diligence to ensure that their sourcing arrangements are not benefiting armed groups. The State Department and USAID have worked with the private sector, the GDRC, civil society, and international partners to develop pilot supply chains of artisanal-mined conflict-free minerals out of the eastern Congo. The Congolese Army’s victory against the M 23 rebels and the conclusion of a regional peace agreement in Addis Ababa have focused the GDRC on eliminating other armed groups and encouraging economic development in the eastern DRC.


The GDRC has prioritized attracting foreign investment; however its efforts to improve economic governance and the business climate have stalled. Congolese investment regulations prohibit foreign investors from engaging in small retail commerce and ban foreign majority-ownership of agricultural firms. Visas for foreign workers are limited to three Department of State: 2014 Investment Climate Statement June 2014 months at a time. After the approval of a work permit, they may qualify for an establishment visa, which is more expensive but valid for up to a year. Expatriate salaries are also taxed at a higher rate than those of locals. Foreign investors, like local businesses, face frequent harassment, demands for bribes, and subjective, predatory interpretation of regulatory and taxation policies. Most foreign direct investments are governed by the Investment Code of February 2002. The mining, hydrocarbons, finance and other sectors are governed by sectorspecific investment laws. The DRC will officially join the Organization for the Harmonization of Business Laws in Africa (OHADA) in September 2014.

In 2002, the GDRC created the National Agency for Investment Promotion (ANAPI) to overcome hurdles and to simplify and facilitate investment. ANAPI’s mandate is to simplify the investment process, make procedures more transparent, assist new foreign investors, and improve the image of the DRC as an investment destination.

With support from international donors, the GDRC is also working to implement a series of reforms aimed at improving the business climate. Specifically, in August 2009, the GDRC launched the Steering Committee for the Improvement of Business and Investment Climate (CPCAI) under the Ministry of Plan with the goal of improving the GDRC’s ranking on the World Bank’s Doing Business report. The main objectives of CPCAI are to reduce red tape, decrease delays and the cost of establishing a business, improve transparency of procedures, and strengthen judicial security. CPCAI has achieved the elimination of 46 “zero-revenue” taxes among the 117 that were previously applied in cross-border trade. In April 2013, a onestop window was created to simplify business creation, cut the processing time from five months to three days, reduce the number of formalities, and reduce fees from $3000 to $120 for forming a corporation. The one-stop window has sped-up business creation, but businesses continue to complain of corruption and the need to visit multiple ministries.

The Steering Committee for the Reform of Public Enterprises (COPIREP), funded by the World Bank but falling under the Ministry of Portfolio, seeks foreign investors to enter into public-private partnerships (PPPs) with Congolese state-owned companies. However restructuring approximately 60 Congolese parastatals, none of which were profitable, has stalled. The parastatals not yet restructured include the national power utility (SNEL), port and river authority (SCTP), and rail company (SNCC).

Broadly, there are no formal limits or screening mechanisms imposed upon foreign ownership of most businesses in the DRC. However, the processes of granting permits and licenses in the mining and telecommunication sectors often suffer from arbitrariness, lack of transparency, and corruption. Investment projects which benefit from Investment Code incentives must have an assessment completed by ANAPI agents every six months. All investors in the DRC face multiple audits by various government enforcement agencies seeking evidence of violations of tax laws or price controls. Foreigners and Congolese alike suffer the consequences of non-functional judicial institutions. Inadequate physical infrastructure – including internal land, river, and air transport, energy and social services – presents a serious challenge and additional cost for nearly all commercial operators in the DRC. International donors and a 2009 multi-billion dollar Sino-Congolese agreement have begun to provide critically needed resources for infrastructure development, but significant constraints remain.

One trend of note in recent years is the propagation of so-called “vulture fund” legal actions against the DRC government for recuperation of decades-old unpaid private debts owed by Department of State: 2014 Investment Climate Statement June 2014 DRC parastatal companies. These legal actions have sought to sequester and redirect profits and other payments owed by private multinational companies to DRC public enterprises through joint venture projects, including mining joint ventures. These “vulture fund” legal actions add uncertainty to the investment climate, especially for private multinational companies which are in joint ventures with DRC public enterprises.

The Democratic Republic of Congo (DRC) remains a highly challenging environment in which to conduct business. The DRC’s rich endowment of natural resources, large population and generally open trading system provide potential opportunities for U.S. investors.

The Millennium Challenge Corporation, a U.S. Government entity charged with delivering development grants to countries that have demonstrated a commitment to reform, produced scorecards for countries with a 2012 per capita gross national income (GNI)of $4,085 or less.

A list of countries/economies with MCC scorecards and links to those scorecards is available here: http://www.mcc.gov/pages/selection/scorecards. Details on each of the MCC’s

indicators and a guide to reading the scorecards are available here:


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Heritage Foundation’s Economic 2013 172 of 177 http://www.heritage.org/index/ranking Freedom index World Bank’s Doing Business 2014 183 of 189 http//doingbusiness.org/rankings Report “Ease of Doing Business”

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The DRC adopted a free-floating exchange rate policy in 2001 as part of broader economic reforms. The DRC has also lifted restrictions on business transactions nationwide.

International transfers of funds take place freely when sent through local commercial banks.

The bank declaration requirement and payments for international transfers now take less than one week to complete, on average.

The Congolese Central Bank (BCC) is responsible for regulating foreign exchange and trade.

The only currency restriction imposed on travelers is a USD 10,000 limit on the amount an individual can carry when entering or leaving the DRC. The GDRC also requires that the Central Bank license exporters and importers. The DRC’s informal foreign exchange market is large and unregulated and offers exchange rates similar to the official rate. The DRC’s economy remains highly dollarized. The largest banknote in circulation is the 20,000 Congolese franc (CDF) note (worth approximately USD 22), though it is very rare. Far more common are the 500 and 1000 franc notes worth approximately 54¢ and $1.08, respectively.

U.S. banknotes are readily accepted in all major transactions. Banks provide accounts denominated in either currency. The GDRC has begun the process of de-dollarizing the economy by requiring tax records be kept in CDF and tax payments from mining companies must be in CDF.

The Congolese franc depreciated by 35% against the U.S. dollar between December 2008 and September 2009, but the GDRC has since maintained a stable exchange rate. Inflation in 2012 (2.7%) and 2013 (1.07%) remained under the BCC’s target of 4%. Although GDRC fiscal policy may loosen in the run-up to elections in 2015 and 2016, it is expected to continue prioritizing a stable exchange rate and low inflation. As of May 2014, the exchange rate was 925 CDF per dollar at the BCC, and 938 CDF per USD in the parallel market. The DRC finished 2013 with international reserves of USD 1,766,450,000, corresponding to 9.4 weeks of import cover.

The BCC is drafting a new strategic plan for 2014-2017, which will focus on four major axes:

sustaining monetary stability, promoting financial system stability, developing the financial system, and financing the real economy.


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The DRC’s land law allows for expropriation of property by the government for the sake of public interest, such as the protection of community heritage, completing public works (such as infrastructure projects) and the presence of precious minerals. The illegitimate acquisition of property is also grounds for expropriation. In any case of expropriation, the GDRC is required to offer fair compensation; as with many Congolese laws, these requirements are not always fully respected. Activities that have an impact on the environment, such as mining, energy and forestry are at greater risk for expropriation.

There have been no expropriation actions against U.S. citizens in the past year. Post is aware of a number of existing claims against the GDRC, some of which were taken to arbitration (see Dispute Settlement section below). Arbitration judgments against the GDRC, however, have not been paid in a timely manner, if at all.


On paper, the DRC’s official policies are satisfactory and even attractive to business, but in recent years they have often been inoperative in practice due to problems with the judicial system. Courts are marked by a high degree of corruption, public administration is not reliable, and both expatriates and nationals are subject to selective application of a complex legal code. Official channels often do not provide direct and transparent recourse in the event of property seizure, for which legal standing can rarely be determined. Seizures have been made via the police and/or military, often supported by questionable decisions from the courts. Foreign enterprises may have slightly better security of ownership due to the presence and intervention of their diplomatic missions. Many Congolese business contracts provide for external arbitration, but this is an expensive and time-consuming option with little value for resolving routine, day-to-day business problems.

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