Congo, Republic of the

Bureau of Economic and Business Affairs
Report
July 19, 2018

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Executive SummaryShare    

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.

Table 1

Measure

Year

Index/Rank

Website Address

TI Corruption Perceptions Index

2017

161 of 180

http://www.transparency.org/
research/cpi/overview

World Bank’s Doing Business Report “Ease of Doing Business”

2018

179 of 190

www.doingbusiness.org/rankings

Global Innovation Index

2017

N/A

https://www.globalinnovation
index.org/analysis-indicator

U.S. FDI in partner country (USD M USD, stock positions)

2016

USD 202

http://www.bea.gov/
international/factsheet/

World Bank GNI per capita

2016

USD 1,710

http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Policies Toward Foreign Direct Investment

Diversifying beyond the petroleum sector, which account for over 90 percent of FDI inflows, is a key government priority to stimulate growth and development. The country has pledged to undertake a variety of legislative, regulatory and institutional reforms to improve the investment climate with the goal of becoming an emerging market economy by 2025. ROC President Denis Sassou N’Guesso reiterated the government’s intent to diversify the economy and improve the investment climate in his December 2017 state of the nation address. Several government ministries began working to implement World Bank Doing Business recommendations in January 2018 under the leadership of the Ministry of Economy.

There are no known laws or common practices that discriminate against foreign investors, including U.S. investors, by prohibiting, limiting or conditioning foreign investment in a sector of the economy. The U.S. and ROC signed an Investment Agreement in 1994.

ROC’s Agency for the Promotion of Investments (API), established in 2013, is charged with promoting economic diversification through expanding the pool of external investors. However, the services it provides are limited. The Ministry of Economy has the lead on coordinating government-wide economic diversification efforts.

The government has not made significant efforts to retain foreign investments. The High Committee for Public-Private Dialogue (“Le Haut Comité du Dialogue Public-Privé”), established in 2012, and has not convened since 2014.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity.

There are no known general limits on foreign ownership or control.

Foreign business entities investing in the petroleum sector are required to pursue a joint venture with the Congolese National Petroleum Company (SNPC). There are no other known sector-specific restrictions, limitations, or requirements applied to foreign ownership and control.

The host country does not have an investment screening mechanism for inbound foreign investment.

U.S. investors are not especially disadvantaged or singled out by any of the ownership or control mechanisms.

Other Investment Policy Reviews

The government has not undergone any third-party investment policy reviews (IPRs) in recent years.

Business Facilitation

The ROC government has a “one-stop shop” for establishing a business called the Centre de Formalité des Entreprises (CFE). CFE has offices in Brazzaville, Pointe-Noire, N’kayi, Ouesso, and Dolisie. In order to establish a business in the ROC, investors must provide CFE with two copies of the company by-laws, two copies of capitalization documents (e.g. a bank letter or an affidavit), a copy of the company’s investment strategy, company-approved financial statements (if available), and ownership documents or lease agreements for the company’s offices in the ROC.

The ROC has no operational business registration website.

ROC’s business facilitation mechanism does not employ measures to ensure equitable treatment of women and underrepresented minorities in the economy. Women and underrepresented minorities routinely face discrimination and other burdens in registering businesses.

Outward Investment

The ROC government does not promote or incentivize outward investment.

The ROC government does not restrict domestic investors from investing abroad.

2. Bilateral Investment Agreements and Taxation TreatiesShare    

On February 12, 1990, the ROC signed a Bilateral Investment Treaty (BIT) with the United States. The treaty entered into force on August 13, 1994. There are BITs in force with France, China, Germany, Italy, Republic of Korea, Mauritius, Switzerland, and the United Kingdom.

The ROC has fiscal agreements with the other member states of the Central African Economic and Monetary Community (CEMAC). Commercial and bilateral agreements to safeguard investments have been signed with several African nations, including South Africa in 2005 and Namibia in 2007. Because the ROC is considered a lower middle income country, it is not eligible to join a number of trade agreements open to the Least Developed Countries.

Bilateral Taxation Treaties

The ROC does not have stand-alone Bilateral Taxation Treaties with any country. Some of ROC’s Bilateral Investment Agreements, such as with the United States and France, do include taxation provisions to avoid double taxation, but these provisions are generally not enforced by tax authorities. Some companies have reported issues recovering back Value Added Taxes (VAT) from the ROC government.

3. Legal RegimeShare    

Transparency of the Regulatory System

Lack of transparency one of the greatest hurdles to FDI as investors must navigate an opaque regulatory bureaucracy. Companies that have successfully navigated the bureaucracy, including with Embassy support, are often an important source of advice for prospective investors on how to overcome this challenge, since ROC government policies and practices have not helped to establish clear “rules of the game.” Instead, personal contacts are often the most important resource for prospective investors.

Proposed laws and regulations are not published in draft form for public comment. Non-governmental organizations and intra-governmental task forces have sought to improve government transparency with little success to date. Ministries or regulatory agencies are supposed to give notice of proposed regulations to the general public, but these drafts are often not published or communicated formally.

Formal Regulatory Authority and Processes

Various ministries have regulatory authority over the individual industries in their area of responsibility, with overall authority coordinated by the Ministry of Economy. New regulations are developed internally, occasionally with input requested from industry representatives. There is usually not a formal public comment period. Departmental and local authorities may impose additional regulations or requirements on a case by case basis. Regulations are usually not reviewed on the basis of scientific or data-driven assessments.

Informal Regulatory Processes

There are no known informal regulatory processes managed by nongovernmental organizations or private sector associations.

Accounting, Legal, and Regulatory Procedures

The ROC uses francophone Africa’s OHADA system of accounting, legal and regulatory procedures.

Draft Legislation

Draft bills or regulations are not generally made available for public comment.

Online Regulatory Disclosure

New laws and regulations are regularly published in ROC’s Official Journal. This document is sometimes available for download at the website of the Secretary General of the Government (www.sgg.cg). However, this website is not regularly updated.

Transparency Enforcement Mechanisms

No known Transparency Enforcement Mechanisms for the ROC.

International Regulatory Considerations

The ROC is a member of the Economic Community of Central African States (CEEAC), an economic community of the African Union for the promotion of regional economic cooperation, as well as the Economic and Monetary Community of Central Africa (CEMAC), a monetary union of six Central African states that share a common currency. Much of the national regulatory system is inspired, legislated or controlled by these regional economic organizations.

Francophone African regulatory norms, such as those promulgated by OHADA, are frequently incorporated into the ROC’s regulatory system for business disputes and regulations governing company registration structure and incorporation.

The ROC is a member of the World Trade Organization (WTO), though it is unclear if the government notifies the WTO Committee of all draft regulations relating to Technical Barriers to Trade. ROC is a signatory to the WTO Trade Facilitation Agreement, but has not begun implementing the agreement.

Legal System and Judicial Independence

The Congolese legal system is largely inspired by the French Common Law legal system.

OHADA, the common commercial law among francophone African countries, serves as the basis for ROC’s national commercial law, which also incorporates provisions unique to ROC. There is a Commercial Court in ROC, but it has not convened in over three years.

The judicial system is in principle independent, however, in practice the executive branch regularly intervenes in the judicial system. Judges face high pressure to rule in favor of the executive branch and the ruling party’s interests.

Enforcement actions may be appealed to an appellate court. Public Law 6-2003, which established the country’s Investment Charter, states that investment disputes are subject to settlement under Congolese law. However, independent settlement or conciliation procedures can be enacted by either party. These procedures are governed by:

  • The convention regulating the Community Justice Court;
  • The treaty of October 17, 1993, implementing the Organization for the Harmonization of Business Law in Africa (OHADA); and
  • The International Center for the Settlement of Investment Disputes (ICSID).

In practice, judgments of foreign courts are difficult to enforce in the ROC. Though the government does not usually deny those judgments outright, it may propose obstacles, processes or procedures that prolong the matter indefinitely without resolution.

Laws and Regulations on Foreign Direct Investment

ROC’s Hydrocarbons Law and Mining Code contain industry-specific regulations for foreign investments. There is no other known code of laws or regulations that applies specifically to foreign investment, aside from the provisions contained in bilateral investment treaties. All legal disputes involving foreign investors are heard by the Commercial Court.

No major laws, regulations, or judicial decisions related to foreign investment have come out in the past year.

Competition and Anti-Trust Laws

No agencies review transactions for competition-related concerns, whether domestic or international in nature. Economic ministries monitor individual industries and review industry-related transactions.

Expropriation and Compensation

The ROC government may legally expropriate if there is a public need for a given public facility or infrastructure (e.g. roads, hospitals, etc.).

There is no recent history of expropriation regarding private companies; however, the ROC government has expropriated private property from Congolese citizens to build roads and stadiums. The claimants are entitled to fair market value compensation, but payment is generally not made.

Beginning in 2012, the ROC government expropriated the land of Congolese owners of private property in the Kintele neighborhood of Brazzaville, which was used to build a state-of-the-art sports complex for the 2015 African Games. Property owners subsequently complained that they had no way to sue the government or follow up on their expropriation claims. The government has not offered any explanation or compensation and its handling of the process lacked transparency.

Dispute Settlement

ICSID Convention and New York Convention

The ROC is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID). The ROC government has not ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

There is no specific domestic legislation providing for enforcement of awards under the ICSID Convention.

Investor-State Dispute Settlement

The ROC is a member of the Organization for the Harmonization of Business Law in Africa (OHADA), which includes binding international arbitration of investment disputes.

The ROC has a Bilateral Investment Treaty (BIT) with the United States that includes an investment chapter. There were no recent claims by U.S. investors under the agreement.

There have been two investment disputes involving U.S. entities in the past ten years. In one, an American vulture fund bought a Congolese default commercial bond and successfully negotiated a settlement with the Congolese authority after suing ROC in a U.S. court. In the second, a joint British-American construction company successfully sued ROC in U.S. and French courts over unpaid construction contracts dating back to the 1980s; however, the ROC government have to date not recognized these judgements, and Congolese courts have instead issued their own judgements in favor of the ROC government. The case is pending indefinitely as the ROC government no longer engages on the issue.

Local courts have rarely recognized and enforced foreign arbitral awards issued against the government.

There is no known history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

The ROC abides by international arbitration for any treaty, international convention, or organization of which it is a member. In practice, arbitral judgments may be difficult to enforce.

There is no domestic arbitration body within the country.

Local courts do not recognize and enforce foreign arbitral awards. In theory, judgments of foreign courts may be recognized when the relevant laws are sufficiently similar to Congolese law; however, in practice Congolese courts have not accepted any foreign arbitral awards in recent years.

Post is not aware of any investment disputes involving SOEs in recent years. However, given the evidence that the executive routinely exercises significant influence on the judicial system, it is likely that this could also occur in investment disputes involving SOEs.

Bankruptcy Regulations

The ROC does not have a specific law that governs bankruptcy. However, as a member of OHADA, ROC applies OHADA bankruptcy law provisions in the event of company insolvency.

The ROC does not have a credit bureau or other credit monitoring authority serving the country’s market.

4. Industrial PoliciesShare    

Investment Incentives

The ROC’s Ministry of Economy, Industrial Development, and Promotion of the Private Sector has overall responsibility for investment promotion. When a potential investor believes its investment will bring substantial investment and job creation to the Congolese economy, it may apply for preferential tax and custom treatment. This is done by introducing a case to the Ministry of Finance’s National Committee on Investments. This committee is chaired by the Minister of Finance and includes the participation of the Minister of Economy and Industrial Development as well as the Minister of Budget Planning. The committee meets once annually to review various applications.

Presidential decree No. 2004-30 of February 18, 2004, defines the requirements for foreign and national companies to benefit from incentives offered by the Congolese Investment Charter. Four types of incentives are considered:

(a) Incentives to export;
(b) Incentives to reinvest the company’s profit in the ROC;
(c) Incentives for businesses in remote areas or areas that are difficult to access; and
(d) Incentives for social and cultural investment.

Examples of incentives include diminishing or exempted taxes (below the corporate tax rate of 30 percent) and reduced customs duties over a period of five to 10 years; a 50 percent reductions in business registration fees; and accelerated depreciation under the general tax structures. For companies owned at least 25 percent by domestic entities, other incentives include minimized exposure to dividend taxes (10 percent), capital gains tax reductions, deductions for business expenditures, reduced rents, and deductible remunerations. Other incentives are available by negotiation during the incorporation process.

Foreign Trade Zones/Free Ports/Trade Facilitation

Four foreign trade zones, also known as special economic zones (SEZs), are in the planning process. They will be located in the main economic hub of Pointe-Noire, the capital Brazzaville, and the cities of Ouesso and Oyo in the remote north. Memoranda of Understanding were signed with the Governments of Mauritius, Singapore, and China to solicit technical expertise on developing these special economic zones. In 2009, the Ministry to the Presidency in Charge of SEZs, the first of its kind in Africa, was created to administer the nascent trade zones. The Ministry has hired a number of international consultants to assist in the creation of these SEZs, which are envisioned as offering a competitive quality of life, single-window export-import assistance, reduced taxes and customs, and a number of other incentives. Only a few companies have signed onto the SEZs at this point, so the area is still ripe for investment. The government has expressed a desire to attract U.S. investment to these SEZs. The government has taken initial steps toward establishing the SEZs in Pointe Noire and Brazzaville, however there is no reliable timeline for when the SEZs will be operational.

Performance and Data Localization Requirements

Employment and Investor Requirements

ROC’s labor code requires that the top manager of all companies be a Congolese national. However, this requirement has frequently been waived for multinational companies. Residence or work permit requirements are not legally onerous, however, there are multiple steps involved in the process and low-level corruption is common in the immigration and customs sectors. Visitors require a letter of invitation approved by the immigration authority prior to applying for a visa. A visa must be obtained before travelling.

Goods, Technology, and Data Treatment

The ROC government encourages local purchasing and production, but in most cases does not impose requirements. One draft law under review proposes introducing local content requirements. The new Hydrocarbons Law includes some local content requirements.

The Ministry of Commerce operates price controls on roughly four dozen staple products, including food and fuel. The Ministry of Commerce also subsidizes certain products to make the domestic market more profitable for some companies, notably the sugar company SARIS, which might otherwise seek to export additional supply.

ROC imposes water pollution safeguards and forest regeneration requirements in the oil and forestry sectors. All forestry companies, both foreign- and locally-owned, are required by law to process 85 percent of their timber domestically and export it as furniture or otherwise transformed wood, and allows timber companies to export up to 15 percent of their wood product as natural timber. In practice, however, most timber is exported as natural timber.

The timber industry in the ROC increasingly requires international certification, most often Forest Stewardship Council (FSC) certification. However, a number of foreign-owned timber companies in the ROC’s west and south still operate without certification. FSC-certified companies may benefit from promised government incentives in the future as the ROC continues to participate in a Voluntary Partnership Agreement (VPA) with the European Union’s Forest Law Enforcement and Governance Transparency (FLEGT) program, and with the United Nations’ Reducing Emissions from Degradation and Deforestation (UN REDD) program.

The ROC government applies tariffs and import price controls to a number of staple food goods with the goal of augmenting local purchasing. However, in practice these controls often forces imported goods into the more expensive local black market.

Investment Performance Requirements

There are no known performance enforcement procedures for foreign companies. There are no known restrictions on U.S. or other foreign firms' participation in ROC government-financed or subsidized Research and Development programs.

5. Protection of Property RightsShare    

Real Property

There is a codified process for the acquisition and retention of real property, though the process is not always followed. There are widespread complaints against the government’s administration of real property transactions. The recording system is somewhat reliable.

There are no specific regulations regarding land lease or acquisition by foreign and/or non-resident investors.

There is no specific documentation on the proportion of land that does not have clear title.

Property legally purchased is always the under the ownership of the legal owners and cannot revert to any other owners (such as squatters) according to the Congolese Real Property Law.

There are no financial mechanisms available for securing properties for lending purposes, unless several properties are grouped together in property Trust clearly identified as such and registered in a Congolese court.

Intellectual Property Rights

As a member of the Economic and Monetary Community of Central Africa (CEMAC), the ROC is automatically a member of the African Intellectual Property Organization (AIPO). AIPO is charged with issuing a single copyright system that is enforceable in all member states. Additionally, as a member of the World Trade Organization (WTO), the ROC must ensure that its legislation conforms to trade-related aspects governing intellectual property. The Ministry of Commerce and other interested ministries work together to address issues related to counterfeit products and other items entering the country illegally. Local authorities have seized and destroyed containers of contraband items, such as medical supplies and food products. There have been complaints of ROC government computers using unlicensed software.

No new IP related laws or regulations have been enacted in the past year.

There is no formal system for the ROC to track and report on seizures of counterfeit goods.

The ROC is not listed in USTR’s Special 301 report.

The ROC is not listed in the notorious market report.

6. Financial SectorShare    

Capital Markets and Portfolio Investment

The Congolese government’s general attitude toward foreign portfolio investment is neutral. Foreign portfolio investment is not widely practiced in the country.

The ROC does not have a stock exchange. ROC-based companies may be listed on the Douala Stock Exchange (DAC) that was recently merged with the CEMAC Zone Stock Exchange (BVMAC). Monetary and credit policies are determined by the regional central bank, BEAC, within the CEMAC framework. The main objective is to ensure the stability of the common regional currency.

Existing policies facilitate the free flow of financial resources, though complex products are not widely used.

The government and central bank respect IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.

Most credits are allocated on market terms and are closely monitored by the National Office of the Central Bank (BEAC). Foreign investors that establish solid business partnerships can easily obtain credit on the local market. The private sector may access several types of credit instruments; however, the ROC is not a mature financial market and thus offers a limited range of credit instruments.

Money and Banking System

ROC’s banking sector is highly concentrated and lags behind regional peers. The Congolese banking sector is supervised by the Banking Commission of Central Africa (COBAC), the regulatory body of the Central Bank of Central African States (BEAC). Most international reports contend that banking penetration remains in the five-to-seven percent range, but a government survey conducted in 2015 estimates a rate of 25-30 percent. High intermediation costs and high collateral requirements limit the pool of customers. Banks themselves, of which there are approximately 10 commercial entities, suffer from strained liquidity and have deposits outpacing credit. Growth and innovation within the sector appear most salient in microfinance and electronic banking.

The banking sector is somewhat healthy, however the current economic crisis and the government’s deteriorating balance sheet have put additional strain on the banking sector in the past three to five years.

Non-performing loans remained steady at about 15 percent in 2017.

It is difficult to accurately estimate the total assets controlled by the ROC’s largest banks. However, it is likely that the assets of the largest banks have decreased significantly in recent years as a result of the economic crisis.

The ROC is part of the Central African Economic and Monetary Community (CEMAC) zone and as such is also part of the Central Bank of the Central African States system (BEAC).

Foreign banks are allowed to establish operations in ROC, and indeed, the majority of banking operations are foreign banks or branches of foreign banks. Foreign and domestic banks are subject to the same set of banking regulations promulgated by BEAC. The country has not lost any correspondent banking relationship in the past three years and no correspondent banking relationship is known to be in jeopardy.

There are no known restrictions on a foreigner’s ability to establish a bank account.

The country has not explored or announced its intent to implement or allow the implementation of blockchain technologies in its banking transactions.

Microfinance institutions provide alternative financial services in the country and primarily cater to the needs of small-scale and informal operators who lack sufficient means to access traditional banking services.

Foreign Exchange and Remittances

Foreign Exchange Policies

There are no legal restrictions or limitations on converting, transferring or repatriating funds associated with an investment, including remittances, though CEMAC regulations require banks to record and report the identity of customers engaging in transactions valued at over USD 10,000. Additionally, financial institutions must maintain records of large transactions for a minimum of five years. The General Director of Monies and Credit (DGMC) within the Ministry of Finance has responsibility for exchange control. Investors are authorized to remit on a legal parallel market with approval from the DGMC. The Central Bank (BEAC) recently began monitoring and controlling fund transfers larger than USD 100,000.

Foreign investors may hold local bank accounts. There is no difficulty obtaining foreign assets (currencies) from any of the major commercial banks, which are subsidiaries of French, Moroccan, or African banks. There are no U.S.-based banks, but transfers directly to and from the United States are possible.

The common currency used in the ROC and other CEMAC member states is the Central African CFA Franc (FCFA, sometimes abbreviated XAF). The CFA is pegged to the Euro and is treated as an intervention monetary unit at a fixed exchange rate of 1 Euro: 655.957 CFA Franc. This agreement guarantees the availability of foreign exchange and the unlimited convertibility of the CFA Franc. It also provides considerable monetary stability to the ROC and other CEMAC countries. The exchange rate between the CFA Franc and the U.S. dollar fluctuates in line with exchange rate fluctuations between the Euro and the U.S. Dollar.

Remittance Policies

There are no recent changes or plans to change investment remittance policies that either tighten or relax access to foreign exchange for investment remittances.

There are no known time limitations on remittances.

Sovereign Wealth Funds

There is currently no formal Sovereign Wealth Fund (SWF), although a law enabling the creation of such a SWF has been adopted by the Parliament. The law envisages establishing the SWF at the BEAC and acquiring mostly risk-free foreign assets. Separately, the IMF and BEAC have confirmed the existence of non-public “rainy day funds,” a sort of off-the-books sovereign wealth fund created by the government in 2007 to deposit budget surpluses from oil revenue. These funds are not disclosed publicly.

7. State-Owned EnterprisesShare    

During the 1970s and 1980s the Congolese economy was dominated by state-owned enterprises (SOEs). Following a wave of privatization in the 1990s, however, the remaining number of SOEs is comparatively small. The primary actors are in the energy and utility sector and include the National Oil Company (SNPC), the Electricity Company (SNE), and the Water Supply Company (SNDE). In February 2018, the government announced that the existing electricity and water companies would be reorganized to increase efficiency and place a greater emphasis on public-private partnership.

Existing SOEs report to their respective line ministries. SOE corporate governance regulations require non-state corporate directorship. This requirement is not met in practice, most notably by the SNPC.

Private companies may compete with public companies under the same terms and conditions, and in some cases have successfully won contracts sought by SOEs. SOEs are subject to budget restraints under the law. For SOEs operating in the non-oil sector, these restraints seem to be sufficiently monitored, and SOEs are subject to civil society and media scrutiny. However, SNPC has not been well-monitored and continues to present transparency concerns.
SOEs are required to publish annual reports, which must be audited by state auditors. In theory SOEs are subject to the same domestic accounting rules as non-SOEs, but may not strictly adhere to these requirements in practice.

There is no official published list of SOEs.

Post is not aware of SOEs in the domestic market receiving non-market based advantages from the host government, or of how might this could potentially affect U.S. investors in the market. Generally speaking, SOEs do not compete directly with U.S. or other private companies, and there is a lack of transparency with regard to government intervention in the private sector.

Privatization Program

The ROC does not currently have a specific program for privatization.

8. Responsible Business ConductShare    

Corporate social responsibility (CSR) is a well-known concept in the ROC and is viewed favorably by local communities. Foreign-owned oil companies have been the primary CSR actors, however telecommunications and transportation companies, as well as banks, have increasingly been visible CSR actors with resulting positive public perception. All CSR actors appear to follow accepted CSR principles. The ROC government has promoted CSR, which has helped finance hospitals, education, nutrition programs, and road construction.

The government has not established a national contact point or ombudsman for responsible business conduct (RBC), nor has it established a national action plan to define and drive its approach to RBC. Broadly speaking, the government has encouraged RBC by partnering with or endorsing individual CSR initiatives undertaken by various companies. There is no indication that RBC policies factor significantly into the government’s procurement decisions.

There are no known high-profile, controversial instances of private sector entities negatively impacting human rights.

The ROC government has historically been unwilling to effectively and fairly enforce domestic laws related to human rights, labor law, and commercial law.

There are no known corporate governance, accounting, or executive compensation standards to protect shareholders.

No independent NGOs, investment funds, worker organizations/unions, or business associations are promoting or monitoring RBC practices broadly. Civil society groups have promoted individual causes of interest on a case-by-case basis.

The ROC government does not encourage adherence to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas. There are no domestic measures requiring supply chain due diligence for companies that source minerals that may originate from conflict-affected areas.

The ROC government has participated in the Extractive Industries Transparency Initiative (EITI) since 2012, but only published reports in 2012 and 2013. There are no domestic transparency measures requiring the disclosure of payments made to governments and/or of RBC policies or practices.

9. CorruptionShare    

The ROC has a specific law to combat corruption by public officials, called the Law Against Corruption, Bribery, and Fraud (“Loi contre la Corruption, la Concussion et la Fraude”). However, in practice the law is not enforced and thus not effective in fighting corruption. The ROC ranks 161 out of 176 countries in Transparency International’s Corruption Perceptions Index 2017.

The corruption law applies to individual elected or appointed officials. It does not extend to family members of officials, or to political parties.

There are no specific laws or regulations that counter conflict-of-interest in awarding contracts or government procurement.

The ROC government is not known to encourage or require private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials.

Some private companies, in particular subsidiaries of western international groups, use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials.

The ROC is a state party to the UN Anticorruption Convention.

The ROC does not provide protection to non-governmental organizations (NGOs) in general, let alone to NGOs involved in investigating corruption.

Corruption is rampant and widely practiced in the ROC, although government officials do not acknowledge it. Many U.S. companies have cited corruption as a key impediment to investment, particularly in the petroleum sector, where corruption practices re deeply ingrained.

There are no known local industry or non-profit groups that offer services for vetting potential local investment partners.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:
Emmanuel Ollita Ondongo
President
Observatoire Anti-Corruption
Centre Ville, Brazzaville
06 944 6165, 05 551 2229
emmallita2007@yahoo.fr

Contact at "watchdog" organization:

Christian Mounzeo
President
Rencontre pour la Paix et les Droits de l’Homme (RPDH)
B.P. 939 Pointe-Noire, République du Congo
+242 05 595 52 46
contact@rpdh-cg.org
www.rpdh-cg.org

10. Political and Security EnvironmentShare    

ROC has a history of politically motivated violence and civil disturbance. The 1997-99 civil war severely damaged infrastructure in Brazzaville and other Congolese cities. The final peace accord was signed in 2003.

Opposition rallies turned violent in October 2015 against a referendum on a new constitution that permitted President Sassou to run for a third term as president. There were large-scale clashes and widespread civil unrest in Brazzaville, Pointe-Noire, and several other cities throughout the southern part of the country, with reports of over a dozen deaths and significant damage to politicians’ properties. After the referendum passed there were arrests of opposition supporters around the March 20, 2016 presidential elections. The day of the election itself was peaceful.

These periods of tension were accompanied by a strong security presence in Brazzaville and Pointe-Noire, as well as periodic internet and mobile communications blackouts.

Beginning in April 2016, clashes between rebel groups and military forces in the southern Pool region surrounding Brazzaville resulted in several hundred deaths and displaced as many as 160,000 residents from towns and villages in the region. A peace accord was signed in December 2017, and displaced persons have reportedly begun returning to their homes.

There are no know examples of damage to projects and/or installations. Occasionally, civil disturbances have resulted in damage to high-profile public targets such as police stations.

Since the end of the 2015-16 election season, the political environment has become noticeably calmer.

11. Labor Policies and PracticesShare    

Unemployment in the ROC is high, with youth and women disproportionately affected. Reliable unemployment figures are difficult to obtain; the International Labor Organization (ILO) of the United Nations reports an overall rate of 18 percent, with 15-24 age group at 12.1 percent. The actual rate is most likely closer to the numbers reported by Trading Economics and African Economic Outlook, which report 46.1 percent unemployment. Regardless of which figures are accepted, all demonstrate that a strong numerical pool of applicants exists for potential employers.

Except for members of the police, gendarmerie and armed forces, the ROC constitution provides workers with the right to form unions and to strike, subject to conditions established by law. The Labor Code allows for collective bargaining; however, collective bargaining is not widespread due to the social and economic disruption and extreme hardship that occurred during much of the 1990s. There are occasional work strikes over non-payment of salaries by both public and private institutions, but these are typically resolved quickly and without incident.

The Labor Code establishes a standard work period of seven hours per day and 35 hours per week.

There are shortages of qualified skilled labor in a number of technical areas, such as medicine, engineering, math, science, and banking. However, the government does not have specific training programs to address these shortages.

There is no government policy that requires the hiring of Congolese nationals.

There are strict guidelines for employers adjusting employment to respond to fluctuating market conditions, including requirement with respect to severance. A given employer needs to demonstrate that market conditions have changed and must obtain government approval before adjusting employment. Congolese labor laws differentiate between layoffs and firing with regard to severance. Usually, a company must be able to document illegal behavior in order to terminate an employee for cause.

Some labor laws may be waived to attract or retain investment on a case by case basis. For example, the ROC has waived the requirement to hire a Congolese general manager in order to attract foreign companies to invest. There is no particular labor law provision in Special Economic Zones.

Collective bargaining is not a common practice.

There are no specific labor dispute resolution mechanisms in place. Usually, labor disputes are handled in the courts.

There have been a number of strikes in recent months, primarily in the public sector including university students and professors, health sector workers, and public transportation workers. There was also a notable strike in the oil sector, where employees of the major oil companies representing 60 percent of ROC’s total production volume stopped production altogether for one week. In response, the government sent security services to intervene and oversee negotiations to end the strike.

The Embassy is not aware of any gaps in compliance in law or practice with international labor standards that may pose a reputational risk to investors.

No new labor laws or regulations were enacted during the last year.

The U.S. and ROC signed an Investment Agreement in 1994, but it does not include specific labor standards.

12. OPIC and Other Investment Insurance ProgramsShare    

The Overseas Private Investment Corporation (OPIC) is active in the ROC. One U.S. company has a political risk insurance program with OPIC. The ROC is also a member of the Multilateral Investment Guarantee Agency (MIGA).

There is an OPIC agreement in place between the ROC and the United States.
Please refer to https://www.opic.gov/blog/impact-investing/a-world-of-opportunity-opics-interactive-map-feature for the specific agreement.

13. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical Source

USG or International Statistical Source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) (M USD)

2016

USD 8,200

2016

USD 7,834

www.worldbank.org/en/country

Foreign Direct Investment

Host Country Statistical Source

USG or International Statistical Source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country (M USD, stock positions)

2016

N/A

2016

USD 202

BEA data available at
http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Host country’s FDI in the United States (M USD, stock positions)

2016

N/A

2016

N/A

BEA data available at
http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2016

N/A

2016

N/A

N/A


Table 3: Sources and Destination of FDI

Data not available.


Table 4: Sources of Portfolio Investment

Data not available.

14. Contact for More InformationShare    

Economic Officer
Embassy of the United States of America, Boulevard Denis Sassou Nguesso, Brazzaville, Republic of Congo.
+ 242 06 612 2000
brazzavillepolecon@state.gov