Democratic Republic of the Congo

Executive Summary

The Democratic Republic of the Congo (DRC) is the second largest country in Africa and one of the richest in the world in terms of natural resources.  With 80 million hectares (197 million acres) of arable land and 1,100 minerals and precious metals, the DRC has the resources to achieve prosperity for its people.  Despite its potential, the DRC often cannot provide adequate security, infrastructure and health care to its estimated 84 million inhabitants, of which 75 percent live on less than two dollars a day.

The accession of Felix Tshisekedi to the presidency in 2019 and his government’s commitment to attracting international and particularly U.S. investment have raised the hopes of the business community for greater openness and transparency.  The DRC government is currently working with USTR to regain preferential trade preferences under the Africa Growth and Opportunity Act (AGOA).  Tshisekedi created a presidential unit to lead business reform and improve DRC’s standing of 183rd out of 190 countries in the World Bank’s Doing Business 2019 report.

The natural resource and telecommunications sectors have attracted the most foreign investment in the past.  The primary minerals sector is the country’s main source of revenue, as exports of copper, cobalt, gold, coltan, diamond, tin and tungsten provide over 95 percent of the DRC’s export revenue.  Several breweries and bottlers, a number of large construction firms, and limited textiles production are active.  The highly competitive telecommunications industry is expanding into electronic banking.  Given the vast needs, there are significant commercial opportunities in aviation, road, rail, water transport, and ports.  The agricultural and forestry sectors present opportunities for economic diversification in the DRC.

In 2019 economic growth remained sluggish, with only the extractives sector exhibiting significant growth.  After reaching 5.8 percent in 2018, economic growth slowed to 4.4 percent in 2019 owing to the drop in commodity prices.  The outbreak of the COVID-19 pandemic sent growth negative as global demand for DRC’s exports dropped.

Overall, businesses in the DRC face numerous challenges, including poor infrastructure and a weak and corrupt bureaucracy.  Armed groups remain active in the eastern part of the country, making for a fragile security situation that negatively affects the business environment.  Reform of a non-transparent and often corrupt legal system is underway.  While laws protecting investors are in effect, the court system is often very slow to make decisions or follow the law, allowing numerous investment disputes to last for years.

Table 1
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 168 of 180 http://www.transparency.org/
research/cpi/overview
World Bank Doing Business Report “Ease of Doing Business” 2019 183 of 190 https://www.doingbusiness.org/
en/data/exploreeconomies/
congo-dem-rep
Global Innovation Index 2019 N/A http://www.globalinnovationindex.org/
content/page/data-analysis
U.S. FDI in partner country ($M USD, stock positions) 2018 $80 https://apps.bea.gov/
international/factsheet/
World Bank GNI per capita 2018 $490 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

The DRC remains a challenging environment in which to conduct business.  The accession of Felix Tshisekdi to the Presidency in January 2019 and his announcement of his interest in attracting more international investment, particularly from the United States, have raised hopes the DRC government (GDRC) can impose and follow through on policies more favorable to foreign direct investment.  To encourage U.S. visitors, in January 2020 the GDRC lowered the price of a single-entry visa to USD 100 and a three month multiple-entry visa to USD 160.  The DRC’s rich endowment of natural resources, large population and generally open trading system provide significant potential opportunities for U.S. investors.

Current investment regulations prohibit foreign investors from engaging in informal small retail commerce and ban foreign majority-ownership of agricultural concerns.  Investors have expressed concern that the ban on foreign agricultural ownership will stifle any attempts to kick-start the agrarian sector.

The official investment agency, the National Agency for Investment Promotion (ANAPI), provides investment facilitation services for initial investments over USD 200,000, and is mandated to simplify the investment process, make procedures more transparent, assist new foreign investors, and improve the image of the DRC as an investment destination.

There are several public and private sector forums which speak to the government on the investment climate in specific sectors.  In December 2019 President Tshisekedi created the business climate cell (CCA) to listen and develop ways to improve the business climate.  The CCA in June 2020 presented a roadmap for reform.  The public-private Financial and Technical Partners (PTF) mining group represents the different countries with significant mining investments in the DRC.  The Federation of Congolese Enterprises (FEC) has a dialogue on business interests with the government.

Limits on Foreign Control and Right to Private Ownership and Establishment

In general, there are no limits on foreigners owning a business or engaging in all forms of remunerative activity, with the exceptions of small commerce and owning more than 49 percent of an agribusiness.  Many investors note that in practice the GDRC requires foreign investors to hire local agents and participate in a joint venture with the government or local partners.

In response to private sector complaints, in June 2020 the GDRC repealed a law on subcontracting in the private sector that restricted using foreign entities.

The government promulgated a new mining code in 2018 which increased royalty rates from two to ten percent, raised tax rates on “strategic” metals, and imposed a surcharge on “super profits” of mining companies.  The government unilaterally removed a stability clause contained in the previous mining code protecting investors from any new fees or taxes for ten years.  Removal of the stability clause may deter future investment in the mining sector.  The Tshisekedi government has indicated that it is willing to reopen discussions on the new mining code.

The government does not maintain an organization to screen inbound investment.  The Presidency and the ministries serve this purpose de facto.

Other Investment Policy Reviews

The DRC has not undergone a World Trade Organization (WTO), Organization for Economic Cooperation and Development (OECD), or a United Nations Conference on Trade and Development (UNCTAD) Investment Policy Review in the last three years.  Cities with high custom clearance traffic use Sydonia, which is an advanced software system for custom administrations in compliance with ASYCUDA.  (ASYCUDA is a large technical assistance software program recommended by UNCTAD for custom clearance management.)

Business Facilitation

Since 2013, the GDRC has operated a “one-stop shop” (https://www.guichetunique.cd/ ) that brings together all the government entities involved in the registration of a company in the DRC.  The registration process now officially takes three days, but in practice it can take much longer.  Some businesses have reported that the Guichet Unique has considerably shortened and simplified the overall process of business registration.

Outward Investment

The GDRC does not prohibit outward investment, nor does it particularly promote it.  There are no current government restrictions preventing domestic investors from investing abroad, and there are no current blacklisted countries with which domestic investors are precluded from doing business.

2. Bilateral Investment Agreements and Taxation Treaties

The U.S.-DRC Bilateral Investment Treaty (BIT) was signed in 1984 and entered into force in 1989.  The BIT guarantees reciprocal rights and privileges to each country’s investors and provides that, should a claim arise under the treaty, it can be submitted to a dispute resolution mechanism through international arbitration.  U.S. companies have at times reported difficulties with the tax authorities from arbitrary enforcement of the taxation code.

Germany, France, Belgium, Italy, South Korea, and China have also signed bilateral investment treaties with the DRC, while South Africa and Kenya are currently negotiating BITs.  Lebanon, Côte d’Ivoire, and Burkina Faso have negotiated, but not signed, BITs with the DRC.  In October 2016, the DRC and Rwanda signed an agreement on a simplified trade regime covering only small-scale commerce between the countries.

There is no bilateral taxation treaty between the United States and the DRC.  In August 2015, Zambia and the DRC signed a bilateral taxation treaty that abolished customs taxes across their common border.

3. Legal Regime

The DRC does not have a legal system to address the issue of competition.  By joining the regional legal body OHADA and the regional Central and Southern African trade group COMESA, the DRC plans to implement the standards and regulations of these structures in order to create a more transparent and effective policy to promote competition.

There are no informal regulations run by private or nongovernmental organizations that discriminate against foreign investors.  However, some investors perceive the regulations in the mining code as discriminatory against foreign investment.

The GDRC authority on business standards, the Congolese Office of Control (OCC), oversees foreign businesses engaged in the DRC.

There are no formal or informal provisions systematically employed by the GDRC to impede foreign investment.  Companies most often complain of facing administrative hurdles as laws and regulations are often poorly or unevenly applied.

Proposed laws and regulations are rarely published in draft format for public discussion and comment;  discussion is typically limited to the governmental entity that proposes the draft law and Parliament prior to enactment.  Sometimes the government will hold a public hearing after public appeals.

By implementing the OHADA system, the GDRC strengthened its legal framework in the areas of contract, company, and bankruptcy law and set up an accounting system better aligned to international standards.  For this purpose, a Coordination Committee was established internally in the GDRC to monitor OHADA implementation.

The government announced the creation of a business unit (CCA) in December 2019 to enact needed regulatory reforms.

The DRC is a member of the Extractive Industries Transparency Initiative (EITI), a multi-stakeholder initiative to increase transparency in transactions between governments and companies in the extractive industries.  The DRC’s validation process for compliance with the EITI Standard commenced in November 2018, with an assessment due in 2020.  The initial report published by the International EITI Secretariat in April 2019 stated that the DRC EITI failed to adequately address 13 of the  requirements of the EITI Standard, with two of these assessed as unmet with inadequate progress.  The report also stressed the need to clarify the financial flows of state-owned enterprises (SOEs) in the DRC’s extractive sector.

In 2019 the DRC failed to meet the minimum requirements of fiscal transparency according to the State Department’s Fiscal Transparency report.  While the DRC publishes budgets that are publicly available and timely, the published budgets were not reliable indicators of actual government spending.

International Regulatory Considerations

The DRC is a member of several regional economic blocs, including the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), the Economic Community of Central African States (ECCAS), and the Economic Community of the Great Lakes Countries (ECGLC).

According to the Congolese National Standardization Committee, the DRC has adopted 470 harmonized COMESA standards.

The DRC is a member of the World Trade Organization (WTO) and seeks to comply with Trade Related Investment Measures (TRIM) requirements, including notifying regulations to the WTO Committee on Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

The DRC is a civil law country, and the main provisions of its private law can be traced to the Napoleonic Civil Code.  The general characteristics of the Congolese legal system are similar to those of the Belgian system.  Various local customary laws regulate both personal status laws and property rights, especially the inheritance and land tenure systems in traditional communities throughout the country.  The Congolese legal system is divided into three branches: public law, private law and economic law.  Public law regulates legal relationships involving the state or state authority; private law regulates relationships between private persons; and economic law regulates interactions in areas such as labor, trade, mining and investment.

In 2018 the DRC established thirteen commercial courts located in DRC’s main business cities, including Kinshasa, Lubumbashi, Matadi, Boma, Kisangani, and Mbuji-Mayi.  These courts are designed to be led by professional judges specializing in commercial matters and exist in parallel to an otherwise inadequate judicial system.  A lack of qualified personnel and a reluctance by some DRC jurisdictions to fully recognize OHADA law and institutions have hindered the development of commercial courts.

The current judicial process is not procedurally reliable and its rulings are not always respected.  The current executive branch has generally not interfered with the proceedings.  The national court system provides an appeals mechanism under the OHADA framework.  Legal documents in the DRC can be found at: http://www.leganet.cd/index.htm .

Laws and Regulations on Foreign Direct Investment

The 2002 Investment Code governs most foreign direct investment (FDI), providing for the protection of investments.  In practice, an inadequate legal system has insufficiently protected foreign investors in the event of a dispute.  Mining, hydrocarbons, finance, and other sectors have sector-specific investment laws.

ANAPI is the DRC agency with the mandate to simplify the investment process, make procedures more transparent, assist new foreign investors, and improve the image of the country as an investment destination (www.investindrc.cd).

The GDRC has a “Guichet Unique,” which is a one-stop shop to simplify business creation, cutting processing time from five months to three days, and reducing incorporation fees from USD 3,000 to USD 120. (www.guichetunique.cd ). A “one-stop-shop” also exists for import-export business, covering aspects such as the collection of taxes and transshipment operations. (https://segucerdc.cd/ ).

Competition and Anti-Trust Laws

There is no national agency that reviews transactions for competition or antitrust-related concerns.  As a member of COMESA the DRC follows the COMESA Competition Regulations and rules, and the COMESA competition body regulates competition.

Expropriation and Compensation

The GDRC may proceed with an expropriation when it benefits the public interest, and the person or entity subject to an expropriation should receive fair compensation.  The U.S. Embassy is unaware of any new expropriation activities by the GDRC against U.S. citizens in the past three years, but there are a number of existing and long-standing claims made against the GDRC.  Some claims have been taken to arbitration, though many arbitral judgments against the GDRC are not paid in a timely manner, if at all.

Dispute Settlement

ICSID Convention and New York Convention

The DRC is a member of the International Center for Settlement of Investment Disputes (ICSID) Convention and a Contracting State to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).  It is important to note that the New York Convention does not apply toward disputes relating to immovable property, which includes mining rights.

Investor-State Dispute Settlement

The DRC is subject to international arbitration.  A U.S. mining company  sued under the BIT to recover losses suffered when FARDC troops sacked its mine in Kasai Central Province in 1995. The arbitration courts ruled the GDRC liable for damages totaling USD 13 million, and the GDRC started paying back the awarded amount plus interest to the U.S. company.

International Commercial Arbitration and Foreign Courts

The DRC adopted the OHADA Uniform Act on Arbitration (the UAA).  The UAA sets out the basic rules applicable to any arbitration where the seat of arbitration is located in an OHADA member state.  The requirements set out under Article 5 of the New York Convention for the recognition and enforcement of foreign awards applies where the seat of any arbitration is outside an OHADA member state, or where the parties choose arbitration rules outside the UAA.

OHADA‘s UAA offers an alternative dispute resolution mechanism for settling disputes between two parties where the place of arbitration is situated in a Member State.  Disputes must be submitted to the Common Court of Justice and Arbitration (CCJA) in Abidjan in accordance with the provisions of the OHADA Treaty and the OHADA Arbitration Rules.

The UAA, while not directly based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law, is similar in that it provides for the recognition and enforcement of arbitration agreements and arbitral awards and supersedes the national laws on arbitration to the extent that any conflict arises.  Arbitral awards with a connection to an OHADA member state are given final and binding status in all OHADA member states, on par with a national court judgment.  Support is provided by the CCJA which can rule on the application and interpretation of the UAA.

Arbitral awards rendered in any OHADA Member State are enforceable in any other OHADA member state, subject to obtaining an exequatur (a legal document issued by a sovereign authority allowing a right to be enforced in the authority’s domain of competence) of the competent court of the State in which the award is to be made.  Exequaturs are granted unless the award clearly affects public order in that State.  Decisions granting or refusing to grant an exequatur may be appealed to the CCJA.

Bankruptcy Regulations

The OHADA Uniform Act on Insolvency Proceedings provides a comprehensive framework not only for companies encountering financial difficulties and seeking relief from the pressing demands of creditors, but also for creditors to file their claims.  The GDRC judiciary system has agreed to enforce the OHADA Insolvency Act.  Bankruptcy is not criminalized.

According to the World Bank’s Doing Business Report, there were no foreclosure, liquidation or reorganization proceedings filed in the country in 2019, making it impossible to assess the time, cost or outcome for an insolvency proceeding.

4. Industrial Policies

Investment Incentives

Investment incentives can range from tax breaks to duty exemptions, and are dependent upon the location and type of enterprise, the number of jobs created, the degree of training and promotion of local staff, and the export-producing potential of the operation.  Investors who wish to take advantage of customs and tax incentives in the 2002 Investment Code must apply to the National Agency for Investment Promotion (ANAPI), which submits applications to the Ministries of Finance and Planning for final approval.  The government does not have a history of providing guarantees or jointly financing FDI projects.

Foreign Trade Zones/Free Ports/Trade Facilitation

The DRC does not have any designated free trade areas or free port zones.  President Tshisekedi has signaled that he will revive stalled efforts to join the East African Community (EAC).  In November 2019, the Presidency submitted a law authorizing the ratification of the agreement of the African continental free-zone (ZLEC).  The law is still pending approval by the Parliament.

Performance and Data Localization Requirements

Foreign investors must negotiate many of the conditions of their investments with ANAPI.  Performance requirements agreed upon with ANAPI typically include a timeframe for the investment, use of OHADA accounting procedures and periodic authorized GDRC audits, protection of the environment, periodic progress reports to ANAPI, and the maintenance of international and local norms for the provision of goods and services.  The investor must also agree that all imported equipment and capital will remain in-country for at least five years.

The Ministry of Labor controls expatriate residence and work permits.  For U.S. companies, the BIT assures the right to hire staff of their choice to fill some management positions, but companies agree to pay a special tax on expatriate salaries.  Visa, residence or work permit requirements are not discriminatory or excessively onerous, and are not designed to prevent or discourage foreigners from investing in the DRC.

The DRC does not have specific legislation on data storage or limits on the transmission of data.

5. Protection of Property Rights

Real Property

The DRC’s Constitution protects private property ownership without discriminating between foreign and domestic investors.  Despite this provision, the GDRC has acknowledged the absence of enforcement protecting property rights.  Congolese law related to real property rights enumerates provisions for mortgages and liens. Real property (buildings and land) is protected and registered through the Ministry of Land’s Office of the Mortgage Registrar.  Land registration may not fully protect property owners, as records can be incomplete and legal disputes over land deals are common.  Many owners lack a clear registered title to the land.  In addition, there is no specific regulation of real property lease or acquisition.

Ownership interest in personal property (e.g. equipment, vehicles, etc.) is protected and registered through the Ministry of the Interior’s Office of the Notary.

Intellectual Property Rights

Intellectual property rights (IPR) are legally protected in the DRC, but enforcement of IPR regulations is limited.  The DRC’s intellectual property laws date from the 1980s and remain in force. However,  enforcement is weak, and IPR theft is common.  The country is a signatory to a number of relevant agreements with international organizations such as the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO) and is subject to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).   The government does not keep a record of IPR violations.

The DRC is not included in the U.S. Trade Representative (USTR) Special 301 Report or Notorious Markets List.

For additional information about national laws and points of contact at local IPR offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

6. Financial Sector

Capital Market and Portfolio Investment

Portfolio investment is nonexistent in the DRC and there is no domestic stock market.  A small number of private equity firms are actively investing in the mining industry.  The institutional investor base is not well developed, with only an insurance company and a state pension fund as participants.  There is no market for derivatives in the country.  Cross-shareholding and stable shareholding arrangements are also not common.  Credit is allocated on market terms, but there are occasional complaints about unfair privileges extended to certain investors in profitable sectors such as mining and telecommunications.

Although reforms have been initiated, the Congolese financial system remains small, heavily dollarized, characterized by fragile balance sheets, and cumbersome to use.  Further reforms are needed to strengthen the financial system, support its expansion, and spur economic growth.  Inadequate risk-based controls, weak enforcement of regulations, low profitability, and excessive reliance on demand deposit undermine the shock resilience of the financial system.

The Central Bank of Congo (BCC)  refrains from payments and transfers on current international transactions.  The DRC’s capital market remains underdeveloped and consists mainly of the issuance of treasury bonds.  In 2019, the BCC issued its first domestic bond in 24 years, which was oversubscribed.  Most of the buyers were local Congolese banks.

It is possible for foreign firms to borrow from local banks, but their options are limited.  Maturities for loans are usually limited to 3-6 months, and interest rates are typically around 16-21 percent.  The inconsistency of the legal system, the often-cumbersome business climate, and the difficulty in obtaining inter-bank financing discourages banks from providing long-term loans.  There are limited possibilities to finance major projects in the domestic currency, the Congolese franc (CDF).

Money and Banking system

The Congolese financial system is improving but it remains fragile.  The BCC controls monetary policy and regulates the banking system.  Banks are concentrated primarily in Kinshasa, Kongo Central, North and South Kivu, and Haut Katanga provinces.  Banking rate penetration is roughly 7 percent or about 4.1 million accounts, which places the country among the most under-banked nations in the world.  Mobile banking has the potential to greatly increase banking customers as an estimated 35 million Congolese use mobile phones.

There is no debt market.  The financial health of DRC banks is fragile, reflecting high operating costs and exchange rates.  The situation improved in 2019 as deposits have increased.  Fees charged by banks are a major source of revenue.

The financial system is mostly banking-based with aggregate asset holdings estimated at USD 5.1 billion.  Among  the five largest banks, four are local and one is controlled by foreign holdings.  The five largest banks hold almost 65 percent of bank deposits and more than 60 percent of total banks assets, about USD 3.1 billion.  There are no statistics on non-performing loans, as many banks only record the balance due instead of the total amount of their non-performing loans.

There is one correspondent bank, Citigroup.  All foreign banks accredited by the BCC are considered Congolese banks with foreign capital and fall under the provisions and regulations covering the credit institutions’ activities in the DRC  There are no restrictions on foreigners establishing an account in a DRC bank.

Foreign Exchange and Remittance

Foreign Exchange

The international transfer of funds is permitted when channeled through local commercial banks.  On average, bank declaration requirements and payments for international transfers take less than one week to complete.  The Central Bank 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 requires the BCC to license exporters and importers.  The DRC’s informal foreign exchange market is large and unregulated and offers exchange rates slightly more favorable than the official rate.  BCC regulations set the Congolese franc (CDF) as the main currency in all transactions within the DRC, required for the payment of fees in education, medical care, water and electricity consumption, residential rents, and national taxes.  Exceptions to this rule occur where both parties involved and the appropriate monetary officials agree to use another currency.

Remittance Policies

There are no legal restrictions on converting or transferring funds.  Exchange regulations require a 60 day waiting period for in-country foreigners to remit income.  Foreign investors may remit through parallel markets when they are legally established and recognized by the Central Bank.

Sovereign Wealth Funds

The DRC does not have any reported Sovereign Wealth Funds, though the 2018 Mining Code discusses a Future Fund that is to be capitalized by a percentage of mining revenues.

7. State-Owned Enterprises

There are 20 DRC state-owned enterprises (SOEs) operating in the mining, transportation, energy, telecommunications, finance, and hospitality sectors.  In the past, Congolese SOEs have stifled competition and have been unable to provide reliable electricity, transportation, and other important services over which they have monopolies.  Some SOEs and other Congolese parastatal organizations are in poor financial and operational state due to indebtedness and the mismanagement of resources and employees.  The list of SOEs can be found at: http://www.leganet.cd/Legislation/Droit percent20Public/EPub/d.09.12.24.04.09.htm .

There is limited reporting on the assets of SOEs and other parastatal enterprises, making valuation difficult.  DRC law does not grant SOEs an advantage over private companies in bidding for government contracts or obtaining preferential access to land and raw materials.  The government is often accused of favoring SOEs over private companies in contracting and bidding.

The DRC is not a party to the WTO’s procurement agreement (GPA), but nominally adheres to the OECD guidelines on Corporate Governance for SOEs.  The DRC is a Participating Country in the Southern Africa SOE network, with the Ministry of Portfolio and the Steering Committee for SOE reforms designated as Regularly Participating Institutions.

Privatization Program

The DRC has no official privatization program.

8. Responsible Business Conduct

The GDRC has taken actions of limited impact to support responsible business conduct (RBC), by encouraging companies to develop and adhere to a code of ethics and respect for the environment.  The DRC Labor Code includes provisions to protect employees, and there are legal provisions that require businesses to protect the environment.  However, the DRC does not possess a legal framework to protect the rights of consumers, and there are no existing domestic laws to protect individuals from adverse business impact.

The Global Compact Network DRC, a public-private consortium affiliated with the United Nations, encourages locally operating businesses to adopt sustainable and socially responsible policies.  In 2016, the DRC issued the Guide on Corporate Social Responsibility (CSR Guide) for the mining sector in Haut Katanga.

The DRC has adopted the OECD due diligence guidelines on responsible mineral supply chains as defined by the United Nations Group of Experts, as well as various resolutions of the UN Security Council related to business and human rights in the Congolese mining sector.  The DRC participates in the Extractive Industries Transparency Initiative (EITI) and publishes reports on its revenue from natural resources, although in recent years the reports have been late or incomplete.

The 2018 Mining Code provides domestic transparency measures requiring the disclosure of payments made to government entities.  Promines, a technical parastatal body financed by the GDRC and the World Bank, works to improve transparency in the artisanal mining sector.  Amnesty International, Pact Inc., Global Witness, and the Carter Center have published reports on RBC in the DRC mining sector.  The Dodd-Frank Act mandated companies publicly listed in the United States to declare their supply chains for DRC-sourced “3Ts” (tin, tungsten, and tantalum) and gold.  Although the Securities and Exchange Commission is no longer actively enforcing the act, many U.S. multinationals appear to be complying voluntarily to avoid possible reputational damage.

9. Corruption

The Tshisekedi government has used public prosecutions of high-level officials and the creation of an anti-corruption unit to improve the DRC’s reputation on corruption.  DRC’s 2018 Corruption Perception Index score—161 out of 180—underlines the endemic and deep roots of corruption in the country.  The DRC constitution includes laws intended to fight corruption and bribery by all citizens, including public officials.  Anti-corruption laws extend to family members and political parties.  Private companies have applied their own controls to limit corruption, and have in the past been more effective at controlling it.

In March 2020, President Tshisekedi created the National Agency to Fight Corruption.  In June 2020, the National Assembly began discussing the law on the creation, organization, and  function of the Agency.  The National Assembly forwarded the proposal to the Political, Administrative, and Judiciary Commission for analysis prior to a vote.  Currently corruption investigations are ongoing for three Managing Directors of SOEs.  In June, the court convicted Tshisekedi’s former Chief of Staff of embezzlement and public corruption, and sentenced him to 20 years in prison.

The DRC is a signatory to the UN Anticorruption Convention, but not to the OECD Convention on Combating Bribery.  The DRC ratified a protocol agreement with the Southern African Development Community (SADC) on Fighting Corruption.  NGOs such as the group “The Congo is Not for Sale,” have an important role in revealing corrupt practices, and the law protects NGOs in a whistleblower role.

U.S. firms see corruption as one of the main hurdles to investment in the DRC, particularly in the awarding of concessions, government procurement, and taxation treatment.

The Agency in charge of fighting corruption in the DRC is:

Agence de Prévention et de Lutte contre la Corruption (APLC)
Ghislain Kikangala, Coordinator
Tel: +243 893 302 819

10. Political and Security Environment

In January 2019, Felix Tshisekedi became President in the DRC’s first peaceful transition of power, ushering a period of relative political stability.  The December 2018 elections were the result of international, including U.S pressure, as well as a long period of mediation involving the Catholic Church, the government, and the opposition.  Maintaining public support for the Tshisekedi government will ultimately require the administration to deliver on the campaign slogan of “the people first.”

The security situation continues to be a concern.  Thousands of members of armed groups have been disarming and turning themselves in to the United Nations’ DRC peacekeeping operation (MONUSCO) and the GDRC since President Tshisekedi’s election, according to international observers.  Most of the defections have taken place in eastern and central DRC.  International statistics indicate that over 140 armed groups continue to operate in 17 of the DRC’s 26 provinces, primarily in the east of the country.  The ISIS-affiliated Allied Democratic Forces (ADF) rebel group in eastern DRC is one of the country’s most notorious and intractable armed groups, and its members have shown no interest in demobilizing.  Armed groups previously interfered with the effort to eradicate the Ebola outbreak in eastern DRC, but interference decreased and the eastern outbreak was declared over on June 25.  President Tshisekedi appears cognizant of the important role security plays in attracting foreign investment, and has encouraged the Congolese army to work with MONUSCO to eliminate armed groups.

US citizens and interests are not being specifically targeted by armed groups, but can easily fall victim to violence or kidnapping by being in the wrong place at the wrong time.  The Armed Conflict Location and Event Dataset tracks political violence in developing countries, including the DRC, http://www.acleddata.com/.  Kivu Security Tracker (www.kivusecurity.org) is another database for information on attacks in eastern DRC.   In addition, the Department of State continues to advise travelers to review the Embassy’s travel advisory: https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/DemocraticRepublicoftheCongoDRC.html

11. Labor Policies and Practices

The DRC labor market has a large and low-skilled labor force with high youth unemployment.  Expatriates frequently fill jobs requiring technical training in the key mining sector.  About 85 percent of the non-agricultural workforce is in the informal sector.

DRC labor law stipulates that for businesses with over 100 employees, 10 percent of all employees should be local.  If the managing director is a foreigner, his or her deputy or secretary general is expected to be a Congolese citizen.  The government can waive these provisions depending on the sector of activity and expertise available.  There are no onerous conditionality, visa, residence, or work permit requirements inhibiting the mobility of foreign investors and their employees.

While the agricultural sector is expanding, it continues to face poor infrastructure and a lack of access to technology.  About 60 percent of the workforce is in agriculture.

The DRC faces a deficit in skilled labor across all sectors.  There are few formal vocational training programs, though Article 8 of the labor law stipulates that all employers should provide training to their employees.  To address the high unemployment rate, the GDRC enacted a policy giving Congolese a preference in hiring over expatriates.  Laws prevent firms from firing workers under most conditions without compensation.  These restrictions have deterred hiring and encouraged the use of temporary contracts in lieu of permanent hiring.  There is no government safety net to compensate laid off workers.

Congolese law bans collective bargaining in certain sectors, including by civil servants and public employees, and the law does not provide adequate protection against anti-union discrimination.  While the right to strike is recognized, there are provisions which require unions to obtain permission and adhere to lengthy compulsory arbitration and appeal procedures before starting a strike.  Unions often strike for higher wages or the payment of back wages.

The DRC government ratified the International Labor Organization’s (ILO) eight core conventions, but some Congolese laws continue to be inconsistent with the ILO Convention on Forced Labor.

DRC law prohibits discrimination in employment and occupation based on race, gender, language, or social status.  The law does not specifically protect against discrimination based on religion, age, political opinion, national origin, disability, pregnancy, sexual orientation, gender identity, or HIV-positive status.  Additionally, no law specifically prohibits discrimination in the employment of career public service members.  According to some businesses, the government does not effectively enforce relevant employment laws.

Labor law defines different standard workweeks, ranging from 45 to 72 hours, for various jobs, and prescribes rest periods and premium pay for overtime.  Employers in both the formal and informal sectors often do not respect these provisions.  The law does not prohibit compulsory overtime.

The labor code specifies health and safety standards, but the government does not effectively enforce labor standards in the informal sector, and enforcement is uneven to non-existent in the formal sector.  The Ministry of Labor employs 200 labor inspectors but has not provided funds to conduct labor inspections.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

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) ($B USD) N/A N/A 2018 $47 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2018 $80 BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Total inbound stock of FDI as % of host GDP 2018 51.3% 2019 51.4% UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 
 
Table 3: Sources and Destination of FDI
No detailed information is available on the IMF’s Coordinated Portfolio Investment Survey (CPIS) website and no information is available on outward direct investment from Democratic Republic of Congo.
Table 4: Sources of Portfolio Investment
No detailed information is available on the IMF’s Coordinated Portfolio Investment Survey (CPIS) website and no information is available on outward direct investment from Democratic Republic of Congo.

14. Contact for More Information

Points of contact for inquiries from the public:

Jeremy Chen
Deputy Economic Chief
ChenJH2@state.gov

Nkandamana Kabangu
Commercial Specialist
KabanguNX@state.gov

Econ Section’s email address:  KinshasaEcon@State.gov

Republic of the Congo

Executive Summary

The outbreak of the novel coronavirus will negatively impact the Republic of Congo’s (ROC) economy and investment climate for the rest of 2020. The International Monetary Fund (IMF), the Bank of Central African States (BEAC), and the ROC government project between negative 2.3 and negative nine percent gross domestic product (GDP) growth in 2020. The predictions for 2020 follow an IMF downward revision of Congo’s 2019 GDP growth from 3.7 percent to negative 0.3 percent.

Even before the outbreak of COVID-19, the country had not fully recovered from a sustained economic crisis caused by the 2014 drop in oil prices. Poor governance and a lack of economic diversification pushed the ROC government to near insolvency, reduced its creditworthiness, and forced the central bank to expend significant foreign currency reserves.

Oil represents the largest sector of the economy and contributes upwards of 60 percent of the government’s annual declared revenue. The non-oil sector consists primarily of the logging industry, but significant economic activity also occurs in the telecommunications, banking, construction, and agricultural sectors. ROC is poised for economic diversification, with vast swaths of arable land, some of the largest iron ore and potash deposits in the world, a heavily forested land mass, and a deep-water International Ship and Port Facility Security Code-certified port. ROC has been eligible for U.S. African Growth and Opportunity Act trade preferences since October 2000, providing incentive for export-related investment. ROC participates in the Central African Economic and Monetary Community (CEMAC).

ROC has made significant investments in recent years to develop its infrastructure, including the completion of paved roads linking Brazzaville to the commercial capital of Pointe-Noire and other departments (regions). Significant challenges remain, in particular ROC’s nascent internet and inconsistent supplies of electricity and water, which present both hurdles to and opportunities for foreign direct investment. Significant sections of the country’s road system remain in need of maintenance or paving. The limited railroad network competes with truck and bus traffic for commercial cargo. However, major infrastructure projects still reach major cities, and the government reports spending significant amounts on infrastructure improvements.

Investors report that the commercial environment in ROC has not improved substantially in recent years. The World Bank’s 2020 Ease of Doing Business report ranked ROC at 180 out of 190 countries, and ROC ranked 165 out of 180 countries in Transparency International’s Corruption Perceptions Index 2019. American businesses operating in ROC and those considering establishing a presence regularly report obstacles linked to corruption, lack of transparency, and host government inefficiency in matters such as registering businesses, obtaining land titles, paying taxes, and negotiating natural resource contracts.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 165 of 183 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2020 180 of 190 http://www.doingbusiness.org/
en/rankings
Global Innovation Index 2019 N/A https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 N/A https://apps.bea.gov/international/
factsheet/
World Bank GNI per capita 2018 USD 1,640 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The ROC government welcomes FDI in most sectors and particularly in the oil sector, which accounts for 90 percent of FDI inflows. The government has stated an urgent need to attract investment outside of the petroleum sector. In conjunction with an International Monetary Fund extended credit facility awarded in July 2019, ROC pledged to undertake legislative, regulatory, and institutional reforms to improve the investment climate.

The United States and ROC signed an investment agreement in 1994. No known laws or practices discriminate against foreign investors, including U.S. investors, by prohibiting, limiting or conditioning foreign investment in a sector of the economy.

ROC’s Agency for the Promotion of Investments (API), established in 2013, promotes economic diversification by seeking to expand the pool of external investors. API provides French-language advisory services to potential investors and maintains a database of government projects seeking private investor partners.

The government has made no significant efforts to retain foreign investments or to maintain dialogue with investors. The High Committee for Public-Private Dialogue, Le Haut Comité du Dialogue Public-Privé, established in 2012, convened two meetings in 2019.

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.

ROC has no known limits on foreign ownership or control.

Foreign business entities investing in the petroleum sector must pursue a joint venture with the Congolese National Petroleum Company (SNPC). An ROC executive order of November 15, 2019 requires foreign companies in the hydrocarbons sector to employ Congolese in 80 percent of management positions and 90 percent of all employee positions. There are no other known sector-specific restrictions, limitations, or requirements applied to foreign ownership and control.

ROC has no investment screening mechanism for inbound foreign investment.

Other Investment Policy Reviews

The government has not undertaken any third-party investment policy reviews in recent years.

Business Facilitation

The ROC Agency for Business Creation, or Agence Congolaise Pour la Création des Entreprises (ACPCE), serves as a “one-stop shop” for establishing a business. ACPCE has offices in Brazzaville, Pointe-Noire, N’kayi, Ouesso, and Dolisie. To establish a business in ROC, investors must provide ACPCE 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 ROC.

The ACPCE has a website: http://www.acpce.cg/ which serves as an information-only website. Business registration cannot be completed through the website.

Outward Investment

The ROC government does not promote or incentivize outward investment. The ROC government does not restrict domestic investors from investing abroad.

3. Legal Regime

Transparency of the Regulatory System

Lack of transparency poses one of the greatest hurdles to FDI, as investors must navigate an opaque regulatory bureaucracy. Companies routinely find themselves embroiled in tax, customs, and labor disputes arbitrated by court officials who make decisions that do not conform with Congolese law and ROC Ministry of Justice regulations.

ROC has no known informal regulatory processes managed by nongovernmental organizations or private sector associations.

The government develops new regulations internally and rarely requests input from industry representatives. Various ministries have regulatory authority over the individual industries in their area of responsibility, with overall authority coordinated by the Ministry of Economy. The government does not usually offer a formal, public comment period.

The accounting, legal, and regulatory procedures are transparent. ROC uses Francophone Africa’s OHADA – the Organization for Business and Customs Harmonization, or Organisation pour l’Harmonisation en Afrique du Droit des Affaires – system of accounting, legal, and regulatory procedures.

The government does not normally make draft bills or regulations available for public comment.

The government publishes new laws and regulations in ROC’s Official Journal. The Official Journal is available for download at the website of the Secretary General of the Government maintains the Official Journal online at http://www.sgg.cg.

Each government ministry has an inspector general that conducts oversight to ensure that government agencies follow administrative processes. The office of the president additionally has an inspector general who supervises the entire government.

The government announced no new regulatory system, including enforcement reforms, during the reporting period.

The inspector general process is not legally reviewable and not accountable to the public.

No known instances exist where the government made public scientific studies or quantitative analyses on the impact of regulations.

The government makes transparent some public finances and debt obligations, including explicit and contingent liabilities. The Ministry of Finance publishes the arrangements on its website, https://www.finances.gouv.cg/.

International Regulatory Considerations

ROC participates as a member in the Economic Community of Central African States (CEEAC), a regional economic cooperation community, and in the Economic and Monetary Community of Central Africa (CEMAC), a monetary union of six Central African states. These regional economic organizations control much of the national regulatory system.

ROC’s regulatory system for business disputes and regulations governing company registration structure and incorporation incorporate Francophone African regulatory norms promulgated by OHADA – the Organization for Business and Customs Harmonization, or Organisation pour l’harmonisation en Afrique du droit des affaires.

ROC participates as a member country of the World Trade Organization (WTO). The government does not provide information as to whether or not it notifies the WTO Committee of all draft regulations relating to Technical Barriers to Trade. ROC signed the WTO Trade Facilitation Agreement but has not begun implementing the agreement.

Legal System and Judicial Independence

The French civil law legal system serves as the basis of the Congolese legal system.

OHADA, the Organization for Business and Customs Harmonization, or Organisation pour l’harmonisation en Afrique du droit des affaires, provides the basis for ROC’s national commercial law, which also incorporates provisions unique to ROC. A commercial court exists in ROC but has not convened since 2016.

The judicial system remains independent in principle, however, in practice the executive branch has intervened in the judicial system.

Appellate courts exist and receive appeals of enforcement actions. Public Law 6-2003, which established the country’s Investment Charter, states that Congolese law will resolve investment disputes. Judgments of foreign courts are difficult to enforce in ROC. Though the government does not usually deny those judgments outright, it may propose process or procedural delays that prolong the matter indefinitely without resolution.

Laws and Regulations on Foreign Direct Investment

ROC’s Commercial Court has authority over any legal disputes involving foreign investors. Investors may also file legal complaints in the OHADA court – based in Abidjan, Cote d’Ivoire – which has jurisdiction throughout Francophone Africa. ROC’s Hydrocarbons Law and Mining Code of 2016 contain industry-specific regulations for foreign investments.

The ROC Agency for Business Creation, or Agence Congolaise Pour la Création des Entreprises (ACPCE), serves as a “one-stop shop” for establishing a business. Its website has limited information about laws, rules, and reporting requirements: http://www.acpce.cg/.

Competition and Anti-Trust Laws

No agencies review transactions for competition-related concerns, either domestic or international in nature. Ministries in general monitor individual industries and review industry-related transactions.

Expropriation and Compensation

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

No recent history of expropriation regarding private companies exists. Historically, however, the ROC government has expropriated private property from Congolese citizens to build roads and stadiums. Law entitles the claimants to fair market value compensation, but the government made such compensation inconsistently.

Beginning in 2012, the ROC government expropriated the land of Congolese private property owners in the Kintele suburb of Brazzaville to build a state-of-the-art sports complex for the 2015 African Games. The government offered no compensation, and property owners complained of a lack of legal recourse against the government.

Dispute Settlement

ICSID Convention and New York Convention

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

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

ROC has a Bilateral Investment Treaty (BIT) with the United States. U.S. investors have made no recent claims under the agreement.

There have been two investment disputes involving U.S. entities in the past ten years.

In one, a company successfully negotiated a settlement with ROC authorities after filing suit in a New York district court. In the second, a company successfully sued ROC in U.S. and French courts over non-payment for goods and services, however, the ROC government refused to recognize the judgements. Congolese courts subsequently issued their own judgements in favor of the ROC government. The ROC government no longer responds to attempts by the company or intermediaries to engage on this dispute.

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

There is no known alternative dispute resolution (ADR) mechanisms available in ROC. ROC inconsistently abides by international arbitration for any treaty, international convention, or organization of which it is a member. In practice, arbitral judgments are difficult to enforce.

Commercial courts constitute the domestic arbitration bodies within the country. The commercial court legislation and structure follows French commercial legislation and structure.

Local courts inconsistently recognize and enforce foreign arbitral awards. ROC law allows for the recognitions of foreign judgments when the relevant laws appear sufficiently similar to Congolese law. Congolese courts have not accepted any foreign arbitral awards in recent years.

Post is not aware of any investment disputes involving state owned enterprises in recent years.

Bankruptcy Regulations

ROC has no specific law that governs bankruptcy. As a member of OHADA, the Organization for Business and Customs Harmonization or Organisation pour l’harmonisation en Afrique du droit des affaires, ROC applies OHADA bankruptcy provisions in the event of corporate or individual insolvency. No laws criminalize bankruptcy. ROC does not have a credit bureau or other credit monitoring authority serving the country’s market.

4. Industrial Policies

Investment Incentives

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 customs treatment by applying to the Ministry of Finance’s National Committee on Investments. The Minister of Finance chairs this committee, which includes the Minister of Economy and Industrial Development as well as the Minister of Budget Planning. The committee reviews applications annually.

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. The decree promulgates four types of incentives:

(a)Incentives to export;
(b)Incentives to reinvest the company’s profit in 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: reduced or exempted taxes below the corporate tax rate of 30 percent; reduced customs duties over a period of five to 10 years; a 50 percent reduction in business registration fees; and an accelerated depreciation mechanism. For companies owned at least 25 percent by domestic entities, other incentives include a reduced dividend tax rate of 10 percent, capital gains tax reductions, deductions for business expenditures, reduced rents, and deductible remunerations. Businesses may negotiate other incentives during the incorporation process.

Foreign Trade Zones/Free Ports/Trade Facilitation

The ROC government has named four special economic zones (SEZs): in the main economic hub of Pointe-Noire, the capital Brazzaville, and the cities of Ouesso and Oyo. ROC signed memoranda of understanding with the Governments of Mauritius, Singapore, and the People’s Republic of China to advise on the development of the SEZs. The government has also expressed a desire to attract U.S. investment. Little to no activity occurs in the SEZs, and no known timeline exists to render the SEZs operational.

Performance and Data Localization Requirements

Foreign companies must offer local employment to receive tax and investment benefits through the National Committee on Investment. Major foreign direct investment must demonstrate a significant economic windfall for the local community, including increased local employment, to receive an investment agreement from the National Committee on Investment.

ROC’s labor code requires the top manager of all companies to be a Congolese national. The government frequently waives this requirement for multinational companies.

Applications for residence or work permits involve multiple, paperwork-intensive steps. Business have reported that immigration and customs officials solicited bribes during the application process. Visitors require a letter of invitation, approved by the immigration authority, prior to applying for any type of visa. A visitor or an investor must obtain a visa before travel. Authorities do not provide visas on arrival.

The ROC government encourages local purchasing and production but in most cases does not impose requirements. The 2016 Hydrocarbons Law includes local content requirements for companies operating in the energy sector.

The Ministry of Commerce applies price controls on roughly four dozen staple products, including food and fuel. The Ministry of Commerce also subsidizes certain products – such as sugar, for example – to make the domestic market more profitable for companies that might otherwise seek to export additional supply.

ROC enforces 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, the economy exports much timber as natural timber.The timber industry in ROC increasingly requires international certification, most often Forest Stewardship Council (FSC) certification. 28 of 32 timber companies in ROC operate without FSC certification. FSC-certified companies may benefit from future government incentives as ROC continues to participate in a Voluntary Partnership Agreement with the European Union’s Forest Law Enforcement and Governance Transparency program and with the United Nations’ Reducing Emissions from Degradation and Deforestation program.

The 2016 Hydrocarbons Law includes local content requirements for companies operating in the energy sector.

No known performance requirements exist for foreign or local companies. No known restrictions apply to U.S. or other foreign firms’ participation in ROC government-financed or subsidized research and development programs.

No known procedures for performance requirements exist in the Republic of the Congo.

No requirements for foreign information technology providers exist to provide source code and/or access to encryption.

No requirements prevent companies from transmitting customer or other business data outside the country.

No known requirements enforce local data storage.

5. Protection of Property Rights

Real Property

The government enforces property rights, though companies and individuals cite inconsistent enforcement. Mortgages and liens exist. A generally reliable recording system exists.

No known regulations prohibit land lease or acquisition by foreign investors.

The government has no definitive registry of untitled land.

Property ownership can transfer to other owners if the property remains unoccupied for 10 consecutive years while having been simultaneously occupied by another user (squatter).

Intellectual Property Rights

As a member of the Economic and Monetary Community of Central Africa (CEMAC), ROC participates in the African Intellectual Property Organization (AIPO). AIPO manages a single copyright system for all member states. Additionally, as a member of the World Trade Organization (WTO), ROC must ensure that intellectual property legislation conforms to WTO norms and standards. The Ministry of Commerce leads on issues related to counterfeit products. Local authorities have historically seized and destroyed contraband items, such as medical supplies and food products. The ROC government reportedly uses unlicensed software on its computers. Intellectual property rights (IPR) infringement remains uncommon overall.

The government has not enacted any new IPR-related laws or regulations in the past year. ROC maintains no formal system of tracking and reporting seizures of counterfeit goods.

ROC is not included in the United States Trade Representative (USTR)Special 301 Report or the Notorious Markets List.

ROC is a member of the World Intellectual Property Organization (WIPO). For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en.

6. Financial Sector

Capital Markets and Portfolio Investment

The ROC government maintains a neutral attitude toward foreign portfolio investment and does not widely practice foreign portfolio investment.

ROC does not have a national stock exchange. ROC-based companies may seek regional listing on the Douala Stock Exchange, which merged with the Economic and Monetary Community of Central Africa (CEMAC) Zone Stock Exchange. The Bank of Central African States, BEAC, determines monetary and credit policies within the CEMAC framework 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 in principle, however, within the last year the Bank of Central African States imposed restrictions on international payments and transfers. Mining and oil companies especially expressed concerns about the new restrictions.

In June 2019, the Bank of Central African States issued a number of directives to implement currency exchange controls previously approved by CEMAC on December 21, 2018. The CEMAC regulation provides the framework, terms, and conditions for the regulation of foreign exchange transactions in the CEMAC member States – Cameroon, Central African Republic, Chad, Equatorial Guinea, Gabon, and the Republic of the Congo. The new regulation increases the BEAC’s role in declaring and authorizing international transactions, the control of the compliance with the foreign exchange regulations and the interpretation of the CEMAC Regulation. The regulation entered into force on March 1, 2019.

The Bank of Central African States (BEAC) monitors credits and market terms. Foreign investors can obtain credit on the local market as long as they have a locally registered company. ROC, however, offers only a limited range of credit instruments.

Money and Banking System

Banking penetration likely remains in the 10- to 12-percent range, although a government survey conducted in 2015 estimated a rate of 25-30 percent. High intermediation costs and high collateral requirements limit the pool of customers. Microfinance banks and mobile banking remain the fastest growth areas in the banking sector.

The current economic crisis and the government’s consecutive years of fiscal deficits have additionally strained the banking sector over the past five years. Overall loan default has increased and has reached about 30 percent in the reporting period due to strained economic conditions.

Non-performing loans increased to approximately 30 percent in 2019.

Fiscal transparency issues limit any estimate of the total assets controlled by ROC’s largest banks. The assets of the largest banks have likely decreased significantly in recent years as a result of the economic crisis.

ROC participates in the Central African Economic and Monetary Community (CEMAC) zone and the Central Bank of the Central African States (BEAC) system. BEAC’s regulatory body, the Banking Commission of Central Africa (COBAC), supervises the Congolese banking sector.

Foreign banks and branches may operate in ROC and constitute the majority of banking operations in ROC. BEAC banking regulations govern foreign and domestic banks in ROC. No banks have left ROC in the past ten years.

No known restrictions exist on a foreigner’s ability to establish a bank account.

Foreign Exchange and Remittances

Foreign Exchange

In 2019, the Bank of the Central African States (BEAC) imposed new restrictions on international payments and transfers that have negatively affected foreign exchange. CEMAC regulations require banks to record and report the identity of customers engaging in transactions valued at over USD 10,000. The BEAC recently began monitoring closely fund transfers larger than USD 100,000.

New BEAC restrictions have created difficulties obtaining foreign currencies from commercial banks. No U.S.-based banks operate in ROC but transfers directly to and from the United States are possible.

ROC and other CEMAC member states use the Central African CFA Franc (FCFA, sometimes abbreviated XAF) as a common currency. The CFA is pegged to the Euro as an intervention monetary unit at a fixed exchange rate of 1 Euro: 655.957 CFA Franc.

Remittance Policies

In 2019, the Bank of the Central African States (BEAC) imposed new restrictions on international payments and transfers that have negatively affected remittances.

In June 2019, the Central Bank of Central African States issued a number of standard operating procedures to implement currency exchange controls. Since the implementation of these regulations, the average waiting period for any fund transfer is 20 days.

Sovereign Wealth Funds

ROC maintains no formal Sovereign Wealth Fund (SWF). An ROC law envisages the establishment of an SWF at the BEAC and acquiring mostly risk-free foreign assets. The sovereign wealth fund is not operational.

7. State-Owned Enterprises

As a former people’s republic, state-owned enterprises (SOEs) dominated the Congolese economy of the 1970s and 1980s. The number of SOEs remains comparatively small following a wave of privatization in the 1990s. The national oil company (SNPC), electricity company (E2C), and water supply company (LCDE) constitute the largest remaining SOEs. SOEs report to their respective ministries.

Constraints on SOEs operating in the non-oil sector appear sufficiently monitored and subject to civil society and media scrutiny. The operations of SNPC, however, continue to present transparency concerns. SOEs must publish annual reports subject to examination by the government’s supreme audit institution. In practice, these examinations do not always occur.

The government publishes no official list of SOEs.

Private companies may compete with public companies and have in some cases won contracts sought by SOEs. Government budget constraints limit SOEs’ operations.

Privatization Program

ROC has no known program for privatization.

8. Responsible Business Conduct

Corporate Social Responsibility (CSR) remains a well-known concept in ROC that local communities view favorably. Foreign oil companies constitute the primary CSR actors. Telecommunications and transportation companies and banks have increasingly supported CSR initiatives and improved their public images. The government promotes CSR to finance hospitals, education, nutrition programs, and road construction.

The government has not taken any specific measures to encourage responsible business conduct (RBC). The government has not established a national contact point or ombudsman for RBC, nor has it established a national action plan to define and drive its approach to RBC. The government encourages RBC by partnering with or endorsing companies’ CSR initiatives. RBC policies do not factor significantly into government procurement decisions.

No known high-profile, controversial instances exist of private sector entities negatively impacting human rights.

ROC inconsistently enforces laws related to human rights, labor rights, consumer protection, environmental protections and commerce.

No known corporate governance, accounting, or executive compensation standards exist to protect shareholders.

No independent NGOs, investment funds, worker organizations/unions, or business associations promote or monitor RBC practices. Civil society groups promote individual matters of interest on a case-by-case basis.

ROC does not adhere to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas. No domestic measures require supply chain due diligence for companies that source minerals that may originate from conflict-affected areas.

ROC has participated in the Extractive Industries Transparency Initiative (EITI) since 2012 and published reports up to 2017. No domestic transparency measures require the disclosure of payments made to the government and/or of RBC policies or practices.

9. Corruption

ROC adopted a law against corruption by public officials, “Code de Transparence dans les Finances Publiques,” on March 9, 2017. The ROC government inconsistently enforces the law.

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

No specific laws or regulations address conflict-of-interest in awarding contracts or government procurement.

ROC does not encourage or require private companies to establish internal codes of conduct that prohibit bribery of public officials.

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

ROC serves as a party to the UN Anticorruption Convention.

ROC does not provide protection to non-governmental organizations (NGOs), to include NGOs investigating corruption.

U.S. companies routinely cite corruption as an impediment to investment, particularly in the petroleum sector, where corruption practices remain prolific.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Emmanuel Ollita Ondongo
Président
Observatoire Anti-Corruption
Centre Ville, Brazzaville, République du Congo
+242 06 944 6165 or +242 05 551 2229
emmallita2007@yahoo.fr

Contact at a “watchdog” organization:

Christian Mounzeo
President
Rencontre pour la Paix et les Droits de l’Homme (RPDH, the local chapter of “Publish What You Pay” – Publiez Ce Que Vous Payez)
B.P. 939 Pointe-Noire, République du Congo
+242 05 595 52 46
http://www.rpdh-cg.org/

10. Political and Security Environment

Congo has experienced several periods of politically-motivated violence and civil disturbance since its independence in 1960. The most recent period ended in December 2017, when anti-government forces in the Pool region – which surrounds the capital of Brazzaville – signed a ceasefire agreement with the government that has held since that signing.

There are no known examples of damage to commercial projects and/or installations in the past ten years. Civil disturbances have occasionally resulted in damage to high-profile, public places such as police stations.

The political environment is noticeably calmer since the end of the 2017 legislative elections.

11. Labor Policies and Practices

Unemployment in ROC remains high, with youth and women disproportionately affected. Reliable unemployment figures do not exist. The International Labor Organization ILO of the United Nations reports an overall unemployment rate of 18 percent, with unemployment among the 15-24 age group at 12.1 percent.

Skilled labor shortages exist in a number of technical areas, including medicine, engineering, math, science, and banking. The government has no specific training programs to address these shortages.

Excepting in the hydrocarbons sector, no government policy requires the hiring of Congolese nationals.

Government regulations govern employment adjustments attempting to respond to changing market conditions, including a severance requirement. Employers must demonstrate that market conditions have changed and obtain government approval before adjusting employment. Congolese severance laws differentiate between layoffs and firing. An employer must generally document malfeasance in order to terminate an employee for cause.

The government may waive some labor laws to attract or retain investment on a case-by-case basis. ROC has, for example, waived the requirement for certain multinationals to hire a Congolese general manager. No known labor law exceptions exist for Special Economic Zones.

Collective bargaining is widely used in this economy, more than half of companies used it in various industries.

Courts mediate and arbitrate labor disputes.

No major strikes that posed an investment risk occurred during the reporting period.

No serious questions of compliance in law or practice with international labor standards that may pose a reputational risk to investors exist. The International Labor Organization has not identified any potential gaps in law or practice with international labor standards.

The government did not enact any new labor laws or regulations during the last year.

12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs

One U.S. company in Congo has a political risk insurance program with DFC. ROC participates in the Multilateral Investment Guarantee Agency (MIGA).

DFC maintains an agreement with ROC that existed between ROC and the Overseas Private Investment Corporation’s (OPIC).

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

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) 2018 $10,800 2018 $11,264 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2018 N/A BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2018 $(-4) BEA data available at
https://www.bea.gov/international/
direct-investment-and-multinational-
enterprises-comprehensive-data
 
Total inbound stock of FDI as % host GDP N/A N/A 2018 228.5% UNCTAD data available at
https://unctad.org/en/Pages/DIAE/
World%20Investment%20Report/
Country-Fact-Sheets.aspx
 

* Source for Host Country Data: National Institute of Statistics

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

14. Contact for More Information

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

Investment Climate Statements
Edit Your Custom Report

01 / Select a Year

02 / Select Sections

03 / Select Countries You can add more than one country or area.

U.S. Department of State

The Lessons of 1989: Freedom and Our Future