Congo, Republic of the
The Republic of Congo (RoC) is a country of enormous potential wealth relative to its small population of 4.5 million. However, the RoC’s fiscal and external accounts have deteriorated due to the sustained crash of oil prices, owing to the country’s continued dependence on oil. The IMF estimates weak economic growth of 1.4 percent in 2016 and 5 percent in 2017. Oil remains a big driver of growth, 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 growth is also occurring in the 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 Financial Community of Africa (FCA).
With 46 percent of the population living on less than $1.40 per day, poverty prevalence in the RoC is much higher than in peer oil-exporting countries. There is no sizeable middle class with respect to 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.
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 post-conflict society, with the final peace accord of the 1997-1999 civil war signed in 2003. In late 2015 and early 2016, political unrest resulted in over 30 dead, hundreds injured, and thousands of temporarily displaced persons. Such tensions may occur around elections, and potential investors should always check www.travel.state.gov for the latest security information.
The Republic of Congo (RoC) has made significant investments in recent years to develop its weak infrastructure, including the completion of paved roads linking the commercial capital of Pointe-Noire and administrative capital Brazzaville and other departmental capitals. Significant challenges remain, in particular with the RoC’s nascent broadband internet and inconsistent electric and water supply, which present the biggest hurdles for most foreign direct investment. The country’s paved road system remains underdeveloped and its railroad system to connect inland iron ore and timber resources in the north and west of the country with the port of Pointe-Noire is still on the drawing board. However, infrastructure improvement projects are evident in the major cities of the RoC and the government continues to report spending decent amounts of capital on infrastructure improvements, though at a decreasing rate with the drop in oil revenues.
International landlines are non-existent, though mobile phone saturation in the RoC is strong. In 2015 there were 111.66 mobile-cellular telephone subscriptions per 100 inhabitants. However, supporting infrastructure, particularly for data communications, is lagging. Internet penetration is 7.6 percent and connections are extremely expensive, providing significant room for competition and growth in that sector. And, while overall low income keeps people from having their own personal computers and internet services, prevalence of cyber cafes and other Wi-Fi hotspots is increasing, 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. This was demonstrated during the referendum to change the constitution in October 2015 when the government suspended internet and text communication throughout the country for 10 days. In March 2016 during the presidential election, the government suspended internet, text, and voice services for four days.
Investors report that the commercial environment in RoC has not improved substantially in the last few years. Many feel that they have good working relations with government officials, but corruption, especially among “informal” tax collectors, is still widespread. In January 2013 the Congolese government created an Agency for the Promotion of Investments (API) to promote economic diversification through expanding the pool of external investors. Throughout 2013 the government continued to put in place regulatory reforms with the stated goal of improving the business environment. Nevertheless, businesses are not yet noticing positive impacts from the new regulations, and the RoC remains near the bottom (177 out of 190) in the World Bank’s “Ease of Doing Business” rankings, and 159 out of 176 in Transparency International’s “Corruption Perceptions Index 2016”. Established American businesses operating in the RoC – as well as companies interested in establishing a presence – continue to encounter obstacles linked to corruption and lack of transparency. Various companies have raised concerns to the U.S. Embassy related to land titles, tax law misapplication, and general difficulty initiating negotiations with RoC government officials.
The energy and mining sectors will continue to represent the most significant sectors of the economy in the coming years. The RoC government issued a new hydrocarbons law in December 2016 that includes measures to increase taxation, boost local content, and invigorate the gas industry, and plans to conclude an oil block licensing round in mid-2017. Mining is seen as a significant sector for the future, as the country boasts large deposits of phosphate, iron ore, and potash. The government is eager to support mining investment as a means of diversifying its economy. Additionally, agribusiness presents a growth opportunity given that the country cultivates only about 2 percent of its arable land, most agriculture is practiced at the subsistence level, and the country imports more than 80 percent of its food.
|TI Corruption Perceptions Index||2016||159 of 176||http://www.transparency.org/
|World Bank’s Doing Business Report “Ease of Doing Business”||2017||177 of 190||doingbusiness.org/rankings|
|Global Innovation Index||2016||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, stock positions)||2015||-9||http://www.bea.gov/
|World Bank GNI per capita||2015||$2,540 USD||http://data.worldbank.org/
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
FDI in the RoC has increased in recent years, topping $5.5 billion in 2014, making the country the top FDI destination in Central Africa for that year. However, more than 90 percent of FDI inflows are concentrated in the oil sector. Diversifying beyond oil activities 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 in order to become an emerging market economy by 2025. The RoC’s Minister for Planning and Integration reiterated the government’s intent to improve the investment climate through reforms and endorsed World Bank recommendations in January 2016.
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 the Republic of Congo signed an Investment Agreement in 1994.
In January 2013 the Congolese government created an Agency for the Promotion of Investments (API) to promote economic diversification through expanding the pool of external investors. Throughout 2013 the government put in place regulatory reforms with the stated goal of improving the business environment.
The country established a High Committee for Public-Private Dialogue (“Le Haut Comité du Dialogue Public-Privé”) in 2012 which is intended to be a forum for ongoing dialogue between the Congolese government and the private sector. However, the committee has not convened any meetings to look into the business climate.
Limits on Foreign Control and Right to Private Ownership and Establishment
There are no known limits on foreign control for investment overall. This should be reviewed on a case-by-case, and industry-by-industry basis.
Other Investment Policy Reviews
The government has not undergone any third-party investment policy reviews (IPRs) in recent years.
The RoC has no operational business registration website. In order to create a business in the RoC, investors must provide the Business Formalities Center (“Centre de Formalites des Entreprises” or 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, the company-approved financial statements (if available), and ownership documents or lease agreements for the company’s offices in the RoC.
The CFE is designed to provide all services under one roof (the so-called “guichet unique” or one-stop shop) to facilitate the opening and closing of businesses. CFE has offices in Brazzaville, Pointe-Noire, N’kayi, Ouesso, and Dolisie.
The cost of registering a business depends on the type of company one is trying to register. Registration fees range from $244 for a small company with capitalization below $2,000, to $4,500 for a large company with capitalization exceeding $200,000.
A local partner is generally not required to start a business in RoC, but country managers must either be Congolese or foreign nationals who have been resident for two or more years. The entire business registration process should take an average of three weeks according to the CFE, though the World Bank’s Ease of Doing Business Index puts the required time at closer to two months. Depending on the sector or nature of the business, there may be additional government licensing and permit requirements.
Despite the existence of the CFE, a highly centralized decision-making process often hinders FDI. At the same time, some U.S. companies have experienced lengthy delays in their efforts to invest in the RoC due to overlapping authority within the country’s decision-making apparatus.
The Investment Charter, established by Law 6–2003 on January 18, 2003, offers a range of guarantees to foreign investors, including no discrimination or disqualification on all types of investment and equal treatment under Congolese law. In addition, RoC is party to the Organization for the Harmonization of Business Law in Africa (OHADA), a commercial code adopted by 16 African countries that governs investments and business practices.
The RoC government has no specific policy to promote outward investment, and does not restrict domestic investors from investing abroad.
2. Bilateral Investment Agreements and Taxation Treaties
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 other member states of the Central African Economic and Monetary Community (CEMAC) countries. 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.
The RoC does not have any known 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 Tax (VAT) from the RoC government.
3. Legal Regime
Transparency of the Regulatory System
Transparency is an ongoing concern in the government’s economic management system. Lack of transparency arguably presents the greatest hurdle to FDI as investors must navigate an opaque regulatory bureaucracy. Companies that have successfully navigated the bureaucracy, including with Embassy support, have helped new prospective investors overcome this challenge, but RoC government policies and practices have not helped to establish “clear rules of the game.” Instead, personal contacts remain the most important resource for prospective investors.
From 2006 to 2009 the RoC, working with the International Monetary Fund and the World Bank, designed and began implementation of significant changes in public finance and the management of RoC’s natural resources. A forestry code was adopted, a government procurement system was designed and implemented, major changes were made in the management of revenue from oil production, a national anti-corruption commission was established, new debt management procedures were adopted, and a system for monitoring public spending was developed. Continuing into 2013, the RoC government has worked with technical advisors from the European Union to put in place an improved business framework, including an arbitration system. In spite of these efforts, those who do business in the RoC have not yet noticed significant improvements in the business environment, primarily because the rules seem to exist more on paper than in practice.
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 not published or communicated formally.
International Regulatory Considerations
The RoC is part of the Central African Economic and Monetary Community (CEMAC), which is a regional economic block of six countries (Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, Gabon, and Chad) that use a common currency, the Central African CFA Franc (XAF). Much of the national regulatory system is inspired or controlled by regional regulatory bodies, in particular for economic, financial, and monetary regulations, which are controlled by the Central Bank of the Central African States (Banque des Etats de l’Afrique Centrale, BEAC).
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.
Legal System and Judicial Independence
The Congolese legal system is largely inspired by the French Common Law legal system. OHADA, the French Commercial Law common to all francophone African countries, serves as the basis for country commercial law, and is also subject to specific provisions unique to RoC. There is a Commercial Court in RoC, but it is rarely convened. The last time the Commercial Court convened was more than three years ago.
The judicial system is independent in theory; 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 outright deny the judgment, it may propose meetings or solutions that prolong the matter without resolution. There is one known case of a foreign-owned company that won a judgment on money owed by the RoC government for past work done that has not been paid for over 25 years. Despite judgments by U.S. and French courts to the contrary, the RoC government claims that the company has been insolvent in the RoC and has not fulfilled its tax obligations.
Laws and Regulations on Foreign Direct Investment
No major laws, regulations, or judicial decisions related to foreign investment have come out in the past year. Additionally, no primary or “one-stop-shop” website for investment exists to provide relevant laws, rules, procedures, and reporting requirements for investors.
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. The government erected 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 and its handling of the process lacked transparency.
There is no evidence that foreign investors are discriminated against or have been subject to expropriation of assets, which would violate the constitution. Foreign and national firms established in the RoC operate on an equal legal basis.
ICSID Convention and New York Convention
The RoC is party to the International Centre for Settlement of Investment Disputes (ICSID) Convention. The RoC government has not ratified the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Investor-State Dispute Settlement
The Republic of the Congo is a party to the OHADA treaty for harmonization of commercial law throughout francophone Africa. OHADA has an arbitration process for its member countries.
The RoC has a Bilateral Investment Treaty (BIT) with the United States. There were no recent claims by U.S. investors under the agreement.
About 10 years ago, a Vulture fund bought a Congolese default commercial bond, and they forced the Congolese authority to negotiate after they sued Congo in a U.S. court. The Congolese accepted arbitration and paid an agreed amount to settle the claim. Currently, COMMISSIMPEX has won a case in a U.S. court against the Congolese government. However, the Congolese judiciary also ruled against COMMISIMPEX in 2013, in which it was found insolvent and owing back taxes to the RoC government. The 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.
The RoC does not have a specific law that governs bankruptcy.
4. Industrial Policies
The RoC’s Ministry of Economy, Industrial Development, and Promotion of the Private Sector is in charge of industrial promotion, but does not have a specific strategy to address industrial 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 Ministry of Finance and includes the participation of the Minister of Economy and Industrial Development as well as the Ministry 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:
- Incentives to export;
- Incentives to reinvest the company’s profit in the RoC;
- Incentives for businesses in remote areas or areas which are difficult to access; and
- Incentives for social and cultural investment.
Some incentives have included diminishing and exempted taxes (company tax is currently 30 percent) and customs duties over a 5-10 year span, reduction by 50 percent of registration fees, and accelerated depreciation under the general tax structures. For companies owned at least 25 percent by resident companies, 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 are to be located in the main port and oil 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, minimal to zero tax and duty, 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, and the government has specifically encouraged U.S. investment in these SEZs.
No timeline has been issued for when the SEZs will be completed. There is some progress in Brazzaville with a plastics and building material company that has started pilot operations. There is also progress being made in Pointe-Noire where a large portion of the Loango bay has been set aside to serve as the Pointe-Noire SEZ.
Performance and Data Localization Requirements
The RoC government encourages, but does not maintain, local-purchasing or production requirements. However, there is currently one draft law under review that may introduce 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.
In the oil and forestry sectors, companies are required to respect the environment, particularly regarding water pollution safeguards and forest regeneration. All forestry companies, both foreign- and locally-owned, are required by law to process 85 percent of their timber in the country and to sell it abroad as furniture or otherwise transformed wood, and may 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 Chinese-owned timber companies in the RoC’s west and south still operate without certification. Only one of the northern timber companies, Singapore’s Olam, which now operates the largest concessions formerly run by the state-owned CIB, is FSC-certified. 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.
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.
There are no legally onerous residence or work permit requirements, but there are multiple steps involved in the process and low-level corruption exists in the immigration and customs sectors. Visitors require a letter of invitation approved by immigration prior to applying for a visa, which must be obtained before arrival.
Tariffs and import price controls are applied to a number of staple food goods with the goal of augmenting local purchasing, but often with the result of forcing imported goods into the more expensive local black market.
5. Protection of Property Rights
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.
Intellectual Property Rights
As a member of the Central African Economic and Monetary Community (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, and there is no formal system for the RoC to track and report on seizures of counterfeit goods.
The Republic of the Congo is not listed in the United States Trade Representative’s (USTR’s) Special 301 Report on Protection of American Intellectual Property Rights Across the World, or in USTR’s Notorious Market Report.
6. Financial Sector
Capital Markets and Portfolio Investment
The Congolese government’s general attitude toward foreign portfolio investment is neutral given the fact the 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) or 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 the use of complex products is not a widely known practice.
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 get credit on the local market. The private sector may access several credit instruments; however, the RoC is not a mature financial market and thus offers a limited range of credit instruments.
Money and Banking System
The banking sector in the RoC 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). International reports contend that banking penetration remains in the five-to-seven percent range, but allegedly a 2015 survey found 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 excess 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 2014 global drop in oil prices and the ROC’s deteriorating balance sheet have a negative impact on the banking sector. Non-performing loans have recently increased to about 15% in 2016 from 2.5% in 2015. It is difficult to accurately determine total assets in the RoC’s largest bank, BGFI Congo. However, it is rumored that its assets have decreased about 12% in the past year.
The Republic of the Congo 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).
Most banking operations in the Republic of the Congo are foreign banks or branches of foreign banks. 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.
Foreign Exchange and Remittances
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 $10,000. Additionally, financial institutions must maintain records of large transactions for a minimum of five years. The RoC authority for exchange control is the General Director of Monies and Credit (DGMC). Investors are authorized to remit on a legal parallel market with approval from the DGMC. The Central Bank (BEAC) has recently started to closely monitor and control any fund transfer larger than $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 U.S. are possible.
The common currency used in the RoC and other CEMAC member states is the Central African CFA Franc (FCFA). 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.
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 legal restrictions on converting or transferring funds associated with an investment, including remittances, but CEMAC regulations require banks to record and report the identity of customers engaging in transactions over $10,000. Additionally, financial institutions must maintain records of large transactions for a minimum of five years. The RoC authority for exchange control is the General Director of Monies and Credit (DGMC). The Central Bank (BEAC) has recently started to closely monitor and control any fund transfer larger than $100,000.
Sovereign Wealth Funds
There is no Sovereign Wealth Fund (SWF) currently in the RoC, although there is talk of setting up one in the near to mid-term. A law enabling the creation of such a SWF has been adopted by the Parliament. It is envisaged that the SWF will be established at the BEAC and will acquire mostly risk-free foreign assets. However, the IMF and BEAC have confirmed the existence of non-public “rainy day funds,” a sort of 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 Enterprises
During the 1970s and 1980s the Congolese economy was dominated by state-owned companies. However, the promulgation of Law 24/94 on August 10, 1994, which introduced a framework for privatization, and its addendum, Law 10/95 introduced on April 17, 1995, which identified specific sectors to be privatized, ushered in a new economic era that is receptive to national, private and foreign investments. In the wake of privatization, the remaining number of State-Owned Enterprises (SOE) is quite small. The primary actors are in the energy & utility sector; these include the National Oil Company (SNPC), the Electric Company (SNE), and the Water Supply Company (SNDE).
There is no official published list of SOEs. Existing SOEs report to their respective line ministries, though the extent is dependent on the relative influence of the SOEs’ leadership. Corporate governance regulation of SOEs requires non-state corporate directorship. In practice this requirement is not met, most notably by 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. SNPC, though, has not been well-monitored and continues to present transparency challenges. SOEs are required to publish annual reports, which must be audited by state auditors. SOEs are, in theory, subject to the same domestic accounting rules as non-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.
The RoC does not currently have a specific program for privatization.
8. Responsible Business Conduct
Corporate social responsibility (CSR) is a well-known concept in the RoC and is viewed favorably by local communities. The oil companies have been the primary CSR actors, however telecommunication and transport 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, schools, feeding programs, and road construction.
The government has promoted Responsible Business Contact by encouraging companies’ Corporate Social Responsibility programs and by publicly endorsing some initiatives undertaken by various companies. The government has not established a national contact point or ombudsman, or a National Action Plan for Responsible Business Contact (RBC). Nothing indicates that the government factors RBC policies into its procurement decisions.
There are no known high-profile, controversial instances of private sector entities negatively impacting human rights; however, 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, and no independent NGOs, investment funds, worker organizations/unions, or business associations are known to promote or monitor responsible business conduct.
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.
Corruption is rampant and widely practiced in the RoC, although government officials do not acknowledge it. Companies operating in the oil sector have constantly complained about ingrained corruption practices.
The Republic of the Congo 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 effective in fighting corruption. The RoC ranks 177 out of 190 countries in the World Bank’s “Ease of Doing Business” rankings, and 159 out of 176 countries in Transparency International’s “Corruption Perceptions Index 2016”.
The corruption law does not extend to family members of officials, or to political parties. It targets individuals and elected or appointed officials in particular. Additionally, 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; however, the government does not provide protection to non-governmental organizations (NGOs) in general, let alone to NGOs involved in investigating corruption.
Resources to Report Corruption
Contact at government agency or agencies are responsible for combating corruption:
Emmanuel Ollita Ondongo
Centre Ville, Brazzaville
06 944 6165, 05 551 2229
Contact at “watchdog” organization:
Rencontre pour la Paix et les Droits de l’Homme (attempt to become the local representative of Transparency International).
10. Political and Security Environment
Multi-party democracy, established during the National Conference in 1991, went through a period of intense instability in the early 1990s that eventually led to the civil war that severely damaged Brazzaville and other Congolese cities from 1997-1999. The final peace accord was signed in 2003, and stability has generally returned. There have not been any significant incidents of politically-motivated damage to projects or installations since post-war reconciliation.
Opposition rallies turned violent in October 2015 against a referendum on a new constitution that would permit 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. Election day itself was peaceful.
For several months there has been a strong security presence in southern areas of Brazzaville and the city of Pointe-Noire. An opposition call for a one-day “stay at home” strike to protest the conduct of the elections was relatively successful, especially in Pointe Noire. Many Congolese have been concerned for their personal security, with some leaving cities for their villages. The government cut off internet and SMS communications for ten days in October during the referendum period and cut off all communications for four days during the presidential election period, which contributed to a greater air of uncertainty. The southern Brazzaville neighborhoods experienced violence just before the announcement of the results by the Constitutional Court. On April 4, 2016 there were clashes between assailants and security forces, with sounds of heavy gunfire in the early morning hours, reportedly resulting in 17 deaths. Tens of thousands of people temporarily fled their homes heading to safety in the northern suburbs. Subsequent security operations in the Pool region surrounding Brazzaville also caused people to flee their homes. The security operations in the Pool are still ongoing and are a cause of great concern.
11. Labor Policies and Practices
The state civil service bureaucracy is the country’s largest employer. The World Bank and other international lending institutions have pressed for reform in public sector hiring practices. Prior to 1991, college graduates of the state’s Marien Ngouabi University were guaranteed civil service positions. Though this practice was abolished, the expectation of guaranteed employment appears to remain (with long waiting periods) in certain fields of study, such as education, administration, technical vocations, and medicine. The potential educated work force is largely trained in skills unrelated to the country’s current needs. This problem is slowly improving with the help of the private sector, which has focused hiring on engineering, management, and technical skills.
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.
12. OPIC and Other Investment Insurance Programs
The Overseas Private Investment Corporation (OPIC) is active in the RoC with a political risk insurance program covering MINOCO (Minoterie du Congo SA), a flour mill owned and operated by the Seaboard Corporation. The RoC is also a member of the Multilateral Investment Guarantee Agency (MIGA).
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
Embassy of the United States of America
Boulevard Denis Sassou-N’Guesso, Brazzaville, Republic of Congo
+242 612 2020