The Republic of Congo (ROC) is a country of enormous potential wealth relative to its small population of 4.5 million (est.). However, the ROC’s fiscal and external accounts have deteriorated in recent years due to a sustained economic crisis, poor economic governance, and lack of economic diversification. The IMF estimates negative economic growth of 4.6 percent in 2017 and projects growth of just 0.7 percent in 2018. Oil represents the largest sector of the economy, but its contribution to government revenue has declined sharply in the wake of the 2014 global drop in oil prices. The non-oil sector is primarily focused on the logging industry, but significant economic activity is also occurring in the mining, telecommunications, banking, construction, and agricultural sectors. The ROC is a country poised for economic diversification, with some of the largest iron ore and potash deposits in the world, a heavily-forested land mass, a deep-water International Ship and Port Facility Security (ISPS) Code-certified port, fertile land, and a small but heavily urbanized population. The ROC has been AGOA eligible since October 2000, providing an additional enticement for export-related investment. The ROC is a member of the Central African Economic and Monetary Community (CEMAC).
With 46 percent of the population living under the poverty line, poverty rates in the ROC are much higher than in peer oil-exporting countries. There is no sizeable middle class with robust education, skills, and material living standards. The ROC suffers from low education standards and little social mobility. The majority of the population operates in the informal sector of the economy. Women’s participation in both the formal and informal economies is limited, and women entrepreneurs face additional structural challenges establishing and operating a business and accessing credit.
In addition to risks stemming from fluctuating oil prices and income inequality, the ROC also faces periodic internal political and security risks. The ROC is a low intensity conflict society, with a peace accord of the 1997-1999 civil war signed in 2003. A controversial constitutional referendum and presidential election in late 2015 and early 2016 resulted in renewed political unrest that saw a resurgence of armed rebellion in the Pool surrounding Brazzaville, Armed clashes between the military and rebel forces displaced as many as 160,000 persons before a peace accord was signed in December 2017. . Potential investors should always check www.travel.state.gov for the latest safety and security information before traveling.
The ROC has made significant investments in recent years to develop its infrastructure, including the completion of paved roads linking the commercial capital of Pointe-Noire, the administrative capital of Brazzaville, and other departments. Significant challenges remain, in particular with the ROC’s nascent broadband internet and inconsistent electricity and water supply, which present the biggest hurdles for most foreign direct investment. The country’s paved road system is underdeveloped and its railroad system is non-functional at present. However, infrastructure improvement projects are evident in major cities and the government reports spending significant amounts of capital on infrastructure improvements.
The petroleum, timber, and mining sectors will remain the most significant sectors of the economy in the coming years. Additionally, agribusiness presents a growth opportunity given that the country cultivates less than five percent of its arable land, most agriculture is practiced at the subsistence level, and the country imports more than 80 percent of its food.
The telecommunications sector is also poised for growth. Mobile phone saturation in ROC is strong, though supporting infrastructure for telecommunications is lacking. Internet penetration is estimated at less than 10 percent and connections are extremely expensive, providing significant room for competition and growth in that sector. And, while low per capita income prevents most people from having their own personal computers and internet services, prevalence of cyber cafes and other Wi-Fi hotspots is rising, indicating both a desire for internet services as well as a potential market for local internet advertisers. However, the government closely controls internet and telecommunication access, as it demonstrated during the 2015 constitutional referendum by suspending internet and text communication services throughout the country for 10 days; and again during the 2016 presidential election by suspending internet, text, and voice services for four days.
Investors report that the commercial environment in ROC has not improved substantially in recent years. ROC is ranked 179 out of 190 countries in the World Bank’s 2018 Ease of Doing Business rankings, and ROC ranks 161 out of 180 countries in Transparency International’s Corruption Perceptions Index 2017. American businesses operating in the ROC and those considering establishing a presence regularly report encountering obstacles linked to corruption, lack of transparency, unpredictability, and host government inefficiency in matters such as registering businesses, obtaining land titles, paying taxes, and negotiating natural resource contracts with ROC government officials.