Policies Towards Foreign Direct Investment

The GOC’s policies towards foreign direct investment (FDI) are generally positive.  There are few formal restrictions on foreign trade and investment. 

Chad’s laws and regulations encourage FDI.  The National Investment Charter of 2008, a set of guidelines promulgated by the National Agency for Investment and Exports (ANIE, Agence Nationale des Investissements et des Exports), an agency of the Ministry of Industrial and Commercial Development & Private Sector Promotion, offers incentives to foreign companies establishing operations in Chad, including up to five years of tax-exempt status.  Under Chadian law, foreign and domestic entities may establish and own business enterprises. The National Investment Charter permits full foreign ownership of companies in Chad. The only limit on foreign control is on ownership of companies deemed related to national security.  The National Investment Charter guarantees both foreign companies and individuals equal standing with Chadian companies and individuals in the privatization process. In principle, tenders for foreign investment in state-owned enterprises (SOEs) and for government contracts are conducted through open international bid procedures.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign ownership or control.  There are no sector-specific restrictions that discriminate against market access for U.S. or other foreign investors, and no de facto anti-foreign discriminatory practices.

Other Investment Policy Reviews

The World Trade Organization (WTO) last published a trade policy review for Chad, Cameroon, Republic of Congo, Gabon, and Central African Republic in July 2013. 

Neither the Organization for Economic Cooperation and Development (OECD) nor the United Nations Committee on Trade and Development (UNCTAD) has published any investment policy reviews (IPR) of Chad.

Business Facilitation

Foreign businesses interested in investing in or establishing an office in Chad should contact ANIE, which offers a one-stop shop for filing the legal forms needed to start a business.  The process officially takes 72 hours and is the only legal requirement for investment. ANIE’s website (www.anie-tchad.com  ) provides additional information.  Online business registration is not yet available via the Global Enterprise Registration web site (www.GER.co  ) or the Business Facilitation Program (www.businessfacilitation.org  ). 

In 2018, the World Bank ranked Chad 180 out of 190 countries for ease of starting a business, which included factors beyond the registration, to include permitting, access to resources like space and energy, and access to capital.

Contracts are tailored to each investment and often include additional incentives and concessions, such as permissions to import labor or agreements to work with specific local suppliers.  Some contracts are confidential. Occasionally, government ministries attempt to change the terms of contracts or apply new laws broadly, even to companies that have pre-existing agreements that exempt them.  Chad’s judicial system is weak, and rulings, including those relating to contract disputes, are susceptible to government interference. There is limited capacity within the judiciary to address commercial issues, including contract disputes.  Parties usually settle disputes directly or through arbitration provided by the Chamber of Commerce, Industry, Agriculture, Mining, and Crafts (CCIAMA) or through an outside entity, such as the International Chamber of Commerce (ICC) in Paris. 

Outward Investment

The GOC does not offer any programs or incentives encouraging outward investment, although there are no restrictions on domestic investors who might have the means and the interest in investing abroad.

The GOC does not restrict domestic investors from investing abroad.

Chad does not have a bilateral investment treaty (BIT) with the United States.  Chad has signed bilateral investment treaties with Benin, Burkina Faso, China, Egypt, Germany, Guinea, Italy, Lebanon, Mali, Mauritius, Morocco, Qatar, and Switzerland.

Chad does not have a Free Trade Agreement (FTA) with the United States but is eligible for tariff exemptions under the African Growth and Opportunity Act (AGOA).  The bulk of Chad’s total exports under AGOA is crude oil. Chad is eligible for the Special Rule for Apparel.

Chad does not have a bilateral taxation treaty with the United States.

Transparency of the Regulatory System

Chad is currently implementing laws to foster competition and establish clear rules based on Uniform Acts produced by the Organization for the Harmonization of Business Law in Africa (OHADA, Organisation pour l’Harmonisation en Afrique du Droit des Affaires, www.ohada.com  ).  However, until full implementation of new laws is complete, certain Chadian and foreign companies may encounter difficulties from well-established companies with a corner on the market that discourages competition. 

Regulations and financial policies generally do not impede competition in the financial sector.  Legal, regulatory, and accounting systems pertaining to banking are transparent and consistent with international norms.  Chad began using OHADA’s accounting system in 2002, bringing its national standards into harmony with accounting systems throughout the region.  Several international accounting firms have offices in Chad. However, while accounting, legal, and regulatory procedures are consistent with international norms, some local firms do not use generally accepted standards and procedures in their business practices.

There are no informal regulatory processes managed by nongovernmental organizations or private sector associations.  The Government has posted its draft Finance Law on the Ministry of Finance and Budget’s website the past two years; other proposed laws and regulations are not published in draft form for public comment. (Note: the Ministry of Finance and Budget’s website was funded by a USG grant in 2014. End Note.)  The GOC occasionally provides opportunities for local associations, such as the National Council of Employers (CNPT, Conseil National du Patronat Tchadien) or the CCIAMA to comment on proposed laws and regulations pertaining to investment.  All contracts and practices are subject to legal review, which can be weak. In 2018, the Ministry of Public Health closed some pharmacies operating without licenses and initiated a law regulating pharmacies.

The GOC publishes all budget information including on its website. The GOC also established an Observatory on Public Finance (OFiP) in 2018 to implement projects and publish information contributing to transparency in the management of public finances. OTFiP is a dedicated online framework for the dissemination of public finance data and the operationalization of the Code of Transparency and Good Governance. This code is an implementation of one of the six CEMAC Directives on the new harmonized framework for public financial management. 

Chad is still not listed on www.businessfacilitation.org  . 

International Regulatory Considerations

Chad has been a member of the WTO since 19 October 1996 and a member of GATT since 12 July 1963. Chad is a member of OHADA, and also a member of the Central African Economic and Monetary Community (CEMAC, Communaute Economique et Financiere de l’Afrique Centrale, www.cemac.int  ) and OHADA.  Since 2017, Chad is gradually implementing business and economic laws and regulations based on CEMAC standards and OHADA Uniform Acts.  Chad’s banking sector is regulated by COBAC (Commission Bancaire de l’Afrique Centrale), a regional agency. 

Legal System and Judicial Independence

Chad’s legal system and commercial law are based on the French Civil Code.  The constitution recognizes customary and traditional law if it does not interfere with public order or constitutional rights.  Chad’s judicial system rules on commercial disputes in a limited technical capacity. The Chadian President appoints judges without National Assembly confirmation, and thus the judiciary may be subject to executive influence.  Courts normally award monetary judgments in local currency, although it may designate awards in foreign currencies based on the circumstances of the disputed transaction. 

Chad’s commercial laws are based on standards promulgated by CEMAC, OHADA, and the Economic Community of Central African States (CEEAC, Communaute Economique des Etats de l’Afrique Centrale, http://www.ceeac-eccas.org  ).  The Government and National Assembly are currently in the process of adopting legislation to comply fully with all these provisions. 

Specialized commercial tribunal courts were authorized in 1998 and became operational in 2004.  These tribunals exist in five major cities but lack adequate technical capacity to perform their duties.  Firms not satisfied with judgments in these tribunals may appeal to OHADA’s regional court in Abidjan, Ivory Coast that ensures uniformity and consistent legal interpretations across its member countries and several Chadian companies have done so.  OHADA also allows foreign companies to utilize tribunals outside of Chad, generally in Paris, France, to adjudicate business disputes. Finally, CEMAC established a regional court in N’Djamena in 2001 to hear business disputes, but this body is not widely used.

Contracts and investment agreements can stipulate arbitration procedures and jurisdictions for settlement of disputes.  If both parties agree and settlements do not violate Chadian law, Chadian courts will respect the decisions of courts in the nations where particular agreements were signed, including the United States.  This principle also applies to disputes between foreign companies and the Chadian Government. Such disputes can be arbitrated by the International Chamber of Commerce (ICC). Foreign companies frequently choose to include clauses in their contract to mandate ICC arbitration. 

Bilateral judicial cooperation is in effect between Chad and certain nations.  Chad signed the Antananarivo Convention in 1970, covering the discharge of judicial decisions and serving of legal documents, with eleven other former French colonies (Benin, Burkina Faso, Cameroon, CAR, Congo-Brazzaville, Gabon, Cote d’Ivoire, Madagascar, Mauritania, Niger, and Senegal).  Chad has similar arrangements in place with France, Nigeria, and Sudan. 

Laws and Regulations on Foreign Direct Investment

The National Investment Charter encourages foreign direct investment.  Chad is a member of the Central African Economic and Monetary Community (CEMAC, Communaute Economique et Financiere de l’Afrique Centrale, www.cemac.int  ) and the Organization for the Harmonization of Business Law in Africa (OHADA, Organisation pour l’Harmonisation en Afrique du Droit des Affaires, www.ohada.com  ). Since 2017, Chad is gradually implementing business and economic laws and regulations based on CEMAC standards and OHADA Uniform Acts. 

Foreign investors using the court system are not generally subject to executive interference.  In addition, the OHADA Treaty allows foreign companies to utilize tribunals outside of Chad, e.g., the ICC in Paris, France, to adjudicate any disputes.  Companies may also access the OHADA’s court located in Abidjan, Côte d’Ivoire.

Foreign businesses interested in investing in or establishing an office in Chad should contact ANIE, which offers a one-stop shop for filing the legal forms needed to start a business.  The process officially takes 72 hours and is the only legal requirement for investment. ANIE’s website (www.anie-tchad.com  ) provides additional information.

Competition and Anti-Trust Laws

Regulation of competition is covered by the OHADA Uniform Acts that form the basis for Chadian business and economic laws and regulations.  The Office of Competition in Chad’s Ministry of Industrial and Commercial Development & Private Sector Promotion reviews transactions for competition-related concerns. 

Expropriation and Compensation

Chadian law protects businesses from nationalization and expropriation, except in cases where expropriation is in the public interest.  There were no government expropriations of foreign-owned property in 2018. There are no indications that the GOC intends to expropriate foreign property in the near future.

Chad’s Fourth Republic Constitution adopted in May 2018 prohibits seizure of private property except in cases of urgent public need, of which there are no known cases.  A 1967 Land Law prohibits deprivation of ownership without due process, stipulating that the state may not take possession of expropriated properties until 15 days after the payment of compensation.  The government continues to work on reform of the 1967 law. A draft law encourages foreign companies to own property instead of leasing.

Dispute Settlement

ICSID Convention and New York Convention

Chad has been a signatory and contracting state of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) since 1966. 

Chad is not a contracting state of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Arbitration Convention”).

Investor-State Dispute Settlement

Chad is signatory to an investment agreement among the member states of CEMAC, CEEAC, and OHADA.  The OHADA Investment Arrangement, with provisions for securities, arbitration, dispute settlement, bankruptcy, recovery, and other aspects of commercial regulation, has defined the commercial rights of several economic stakeholders, e.g., the Chadian Treasury,   and provides for the enforcement of foreign arbitral awards. Chad has no Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with an investment chapter with the United States.

There is no formal record of the government’s handling of investment disputes.  Some U.S. and other foreign investors have been involved in disputes with the GOC, particularly over issues regarding taxes and duties, though there are no official statistics. Investment disputes involving foreign investors are frequently arbitrated by an independent body.

International Commercial Arbitration and Foreign Courts

In addition to independent courts, such as the ICC, Chad’s constitution recognizes customary and traditional law as long as it does not interfere with public order or constitutional rights.  As most businesses operate in the informal sector, customary and traditional law function as alternative dispute resolution (ADR) mechanisms when parties are from the same tribe or clan and express their desire to settle outside of the formal court.

Specialized commercial tribunal courts were authorized in 1998 and became operational in 2004.  These tribunals exist in five major cities, but lack adequate capacity to perform their duties. The N’Djamena Commercial Tribunal  has heard disputes involving foreign companies.

Foreign investors using the court system are not generally subject to executive interference.  In addition, the OHADA Treaty allows foreign companies to utilize tribunals outside of Chad, e.g., the ICC in Paris, France, to adjudicate any disputes.  Companies may also access the OHADA’s court located in Abidjan, Côte d’Ivoire.

Bankruptcy Regulations

Chad’s bankruptcy laws are based on OHADA Uniform Acts.  According to Section 3, Articles 234 – 239 of OHADA’s Uniform Insolvency Act, creditors and equity shareholders may designate trustees to lodge complaints or claims to the commercial court collectively or individually.  These laws criminalize bankruptcy and the OHADA provisions grant Chad the discretion to apply its own sentences.

The World Bank’s 2018 Doing Business Report ranks Chad’s ease of resolving insolvency at 150 of 190.  This is a decrease of four positions from 2017. The report is available at http://www.doingbusiness.org/data/exploreeconomies/chad/#resolving-insolvency  

Investment Incentives

The Chadian tax code (CGI, Code General des Impôts) offers incentives to new business start-ups, new activities, or substantial extensions of existing activities.  Eligible economic activities are limited to the industrial, mining, agricultural, forestry, and real estate sectors, and may not compete with existing enterprises already operating in a satisfactory manner (Articles 16 and 118 of the National Investment Charter). 

Foreign investors may ask the GOC for other incentives through investment-specific negotiations.  Large companies usually sign separate agreements with the government, which contain negotiated incentives and obligations.  The possibility of special tax exemptions exists for some public procurement contracts, and a preferential tax regime applies to contractors and sub-contractors for major oil projects.  The government occasionally offers lower license fees in addition to ad hoc tax exemptions. Incentives tend to increase with the size of a given investment, its potential for job creation, and the location of the investment, with rural development being a GOC priority.  Investors may address inquiries about possible incentives directly to the Ministry of Industrial and Commercial Development & Private Sector Promotion, or the Ministry of Petroleum and Energy.

The GOC does not issue guarantees but jointly finances some foreign direct investments.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are currently no foreign trade zones in Chad.  The Chadian Agency for Investment and Exportation (ANIE) is examining the possibility of creating a duty-free zone.

Performance and Data Localization Requirements

Chad does not follow forced localization, the policy in which foreign investors must use domestic content in goods or technology. 

Foreign companies are legally required to employ Chadian nationals for 98 percent of their staff.  Firms can formally apply for permission from the Labor Promotion Office (ONAPE) to employ more than two percent expatriates if they can demonstrate that skilled local workers are not available.  Most foreign firms operating in Chad have obtained these permissions. Foreign workers require work permits in Chad, renewable annually. Companies must present personnel files of local candidates not hired to the GOC for comparison against the profiles of foreign workers.  Multinational companies and international non-governmental organizations routinely protest these measures. 

There are no requirements for foreign IT providers to turn over source code and/or provide access to surveillance (backdoors into hardware and software or turn over keys for encryption).  There are no rules on maintaining a certain amount of data storage within Chad. The GOC has enacted four laws covering cybersecurity and cyber-criminality.

Real Property

The Chadian Civil Code protects real property rights.  Since 2013, landowners may register land titles with the One-Stop Land Titling Office (Guichet Unique pour les Affaires Foncieres).  However, enforcement of these rights is difficult because a majority of land owners do not have a title or a deed for their property.

The office of Domain and Registration (Direction de Domaine et Enregistrement) in the Ministry of Finance and Budget is responsible for recording property deeds and mortgages.  In practice, this office asserts authority only in urban areas; rural property titles are managed by traditional leaders who apply customary law.  Chadian courts frequently deal with cases of multiple or conflicting titles to the same property. In cases of multiple titles, the earliest title issued usually has precedence.  Fraud is common in property transactions. By law, all land for which no title exists is owned by the government, and can only be given to a separate entity by Presidential decree.  There have been incidents in which the government has reclaimed land for which individuals held titles, which government officials granted to other individuals without the backing of Presidential decrees. 

The GOC does not provide clear definitions and protections of traditional use rights of indigenous peoples, tribes, or farmers.

The World Bank’s 2018 Doing Business Report ranks Chad 159of 190 in ease of registering property.  The report cites the high cost of property valuation plus other associated costs for registering property as the major impediment.  Time required and number of procedures are on par with the rest of Sub-Saharan Africa.

Intellectual Property Rights

Chad is a member of the African Intellectual Property Organization (OAPI) and the World Intellectual Property Organization (WIPO).  Chad ratified the revised Bangui Agreement (1999) in 2000 and the Berne Convention in 1971. The GOC adheres to OAPI rules within the constraints of its administrative capacity.

Within the Ministry responsible for trade, the Department of Industrial Property and Technology addresses intellectual property rights (IPR) issues.  This department is the National Liaison Unit (SNL) within the OAPI, and is the designated point of contact under Article 69 of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). 

Counterfeit pharmaceuticals and artistic works, including music and videos, are common in Chad.  Counterfeit watches, sports clothing, footwear, jeans, cosmetics, perfumes, and other goods are also readily available on the Chadian market.  These products are not produced locally, and are generally imported through informal channels. Despite limited resources, Chadian customs officials make occasional efforts to enforce copyright laws, normally by seizing and burning counterfeit medicines, CDs, and mobile phones.

Chad does not regularly track and report on seizures of counterfeit goods.  Occasionally, Chadian authorities will announce such a seizure in the local press.  Customs officers have the authority to seize and destroy counterfeit goods ex officio.  The Government pays for storage and destruction of such goods.

Chad is not listed on the United States Trade Representative (USTR) Special 301 Report or Notorious Markets List.  For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/  

Capital Markets and Portfolio Investment

Chad’s financial system is underdeveloped.  There are no capital markets or money markets in Chad.  A limited number of financial instruments are available to the private sector, including letters of credit, short- and medium-term loans, foreign exchange services, and long-term savings instruments.

Commercial banks offer credit on market terms, often at rates of 12 to 25 percent for short-term loans.  Medium-term loans are difficult to obtain, as lending criteria are rigid. Most large businesses maintain accounts with foreign banks and borrow money outside of Chad.  There are ATMs in some major hotels, N’Djamena airport, and in some neighborhoods of N’Djamena.

Chad does not have a stock market and has no effective regulatory system to encourage or facilitate portfolio investments.  A small regional stock exchange, known as the Central African Stock Exchange, in Libreville, Gabon, was established by CEMAC countries in 2006.  Cameroon, a CEMAC member, launched its own market in 2005. Both exchanges are poorly capitalized.

The GOC does not restrict payments and transfers for current international transactions. Access to credit is available, but is prohibitively expensive for most Chadians in the private sector.

Money and Banking System

Chad’s banking sector is small and continues to streamline lending practices and reduce the volume of bad debt. The Chadian banking rate is even lower than the average rate in the CEMAC, sub-region estimated at 12%, due to the lack of means to afford a bank account and the lack of culture aimed at popularizing the banking system. Chad’s four largest banks have been privatized. The former Banque Internationale pour l’Afrique au Tchad (BIAT) became a part of Togo-based Ecobank; the former Banque Tchadienne de Credit et de Depôt was re-organized as the Societe Generale Tchad; the former Financial Bank became part of Togo-based Orabank; and the former Banque de Developpement du Tchad (BDT) was reorganized as Commercial Bank Tchad (CBT), in partnership with Cameroon-based Commercial Bank of Cameroon.  There are two Libyan banks in Chad, BCC (formerly Banque Libyenne) and Banque Sahelo-Saharienne pour l’Investissement et le Commerce (BSCIC), along with one Nigerian bank (UBA, United Bank for Africa). In 2018, the GoC funded a new bank Banque de l’Habitat du Tchad (BHT) with the GoC as majority shareholder with 50 percent of the shares and two public companies, the National Social Insurance Fund (CNPS) and the Chadian Petroleum Company (SHT), each holding 25 percent.

 Chad, as a CEMAC member, shares a central bank with Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, and Gabon – the Central African Economic Bank (BEAC, Banque des Etats de l’Afrique Centrale), headquartered in Yaounde, Cameroon.   

Foreigners must establish legal residency in order to establish a bank account.

Foreign Exchange and Remittances

Foreign Exchange

The government does not restrict converting funds associated with an investment (including remittances of investment capital, earnings, loan repayments, lease payments, royalties) into a freely usable currency at legal market-clearing rates.  There are no restrictions on repatriating these funds, although there are some limits associated with transferring funds. Individuals transferring funds exceeding USD 1,000 must document the source and purpose of the transfer with the local sending bank.  Companies and individuals transferring more than USD 800,000 out of Chad need BEAC authorization to do so. Authorization may take up to three working days. To request authorization for a transfer, companies and individuals must submit contact information for the sender and recipient, a delivery timetable, and proof of the sender’s identity.  There were no reports of other capital outflow restrictions in 2017. Businesses can obtain advance approval for regular money transfers.

Chad is a member of the African Financial Community (CFA) and uses the Central African CFA Franc (FCFA) as its currency.  The FCFA is pegged to the Euro at a fixed rate of one Euro to 655.957 FCFA exactly (100 FCFA = 0.152449 Euro). In 2018, the CFA/USD exchange rate fluctuated between 565 and 625 FCFA as a function of the performance of the USD against the Euro.  There are no restrictions on obtaining foreign exchange.

Remittance Policies

There are no recent changes to or plans to change investment remittance policies.  There are no time limitations on remittances, dividends, returns on investment, interest, and principal on private foreign debt, lease payments, royalties, or management fees. 

Chad does not engage in currency manipulation.

Chad is a member state of the Action Group against Money Laundering in Central Africa (GABAC), which is in the process of becoming a Financial Action Task Force (FATF)-style regional body.  On the national level, the National Financial Investigation Agency (ANIF) has implemented GABAC recommendations to prevent money laundering and terrorist financing.

Sovereign Wealth Funds

The GOC does not currently maintain a Sovereign Wealth Fund. 

All Chadian SOEs operate under the umbrella of government ministries.  SOE senior management reports to the minister responsible for the relevant sector, as well as a board of directors and an executive board.  The President of the Republic appoints SOE boards of directors, executive boards, and CEOs. The boards of directors give general directives over the year, while the executive boards manage general guidelines set by the boards of directors.  Some executive directors consult with their respective ministries before making business decisions.

The GOC operates SOEs in a number of sectors, including Energy and Mining; Agriculture, Construction, Building and Heavy Equipment, Information and Communication, in water supply and cement production.  The percentage SOEs allocate to research and development (R&D) is unknown.

There were no reports of discriminatory action taken by SOEs against the interests of foreign investors in 2018, and some foreign companies operated in direct competition with SOEs.  Chad’s Public Tender Code (PTC) provides preferential treatment for domestic competitors, including SOEs. 

SOEs are not subject to the same tax burden and tax rebate policies as their private sector competitors, and are often afforded material advantages such as preferential access to land and raw materials.  SOEs receive government subsidies under the national budget; however, in practice they do not respect the budget. State and company funds are often commingled. 

Chad is not a party to the Agreement on Government Procurement within the framework of the WTO.  Chadian practices are not consistent with the OECD Guidelines on Corporate Governance for SOEs. 

The GOC privatized two SOEs  in 2018, but wishes to remain a major player in extractive industries.

Privatization Program

Foreign investors are permitted and encouraged to participate in the privatization process.  There is a public, non-discriminatory bidding process. Having a local contact in Chad to assist with the bidding process is important.  To combat corruption, the GOC has recently hired private international companies to oversee the bidding process for government tenders. Despite the GOC’s willingness to privatize loss-making SOEs, there remain several obstacles to privatization. 

 The Chamber of Commerce submitted a ‘white paper’ (livre blanc) in fall 2018 with recommendations for the Government to facilitate and simplify private sector operations, including establishing a Business Observatory and a Presidential Council, which would implement the over 70 recommendations to improve the investment climate in Chad.

In April 2018, the GoC sold 60% of its stake in the cotton producer CotonTchad Societe Nouvelle (CotonTchad SN) to the Singaporean Olam International.

In October 2018 the GoC launched a new airline, Tchadia airlines, a joint venture owned 51 percent by the GoC and 49 percent by Ethiopian Airlines.

Chad is considering privatization in the following sectors:

• Information & Communication (SOTEL Tchad)
• Food Processing & Packaging (juice, meat processing)

The GOC has not published a timeline for these privatizations.

There is a general awareness of Responsible Business Conduct (RBC) among firms in Chad.  Most Western firms operating in Chad engage in RBC, particularly those in the petroleum and telecommunications sectors.  For example, Esso Exploration and Production Chad, Inc. (EEPCI), the main oil producer, has implemented Environmental Management Plans (EMP), a rigorous program that espouses, inter alia, prioritizing hiring local residents and local purchase of goods and services, establishing international safety standards, and protecting biodiversity.  A critical part of EMP has been the Land Use Management Action Plan (LUMAP) that compensates individuals and communities for land used by the project. To date, LUMAP has distributed approximately $1.7 million in cash, in-kind goods, and training. EMP’s efforts are complemented by the ExxonMobil Foundation, which supports projects to improve girls’ education and fight malaria.

Many foreign firms commit to extensive local staff training efforts, purchase local goods, and donate excess equipment to charities or local governments. Internet companies Airtel and Tigo, as well as some banks, continue to engage in RBC focused on public awareness campaigns countering violent extremism and promoting social cohesion.

While work safety and environmental protection regulations exist, the government does not always enforce them and companies do not always adhere to them.  There are a number of local NGOs, particularly in the southern oil-producing regions, which monitor safety and environmental protection in the oil sector, and which have held government and private companies publically accountable. EEPCI adheres to U.S. Occupational Safety and Health Administration (OSHA) guidelines for recording accidents and injuries, and implements a rigorous program of safety procedures and protocols.

Foreign investors should also be aware that corruption remains common in Chad.  Corruption in Chad remains a significant deterrent to U.S. investment. Corruption is most pervasive in government procurement, award of licenses or concessions, dispute settlement, regulation enforcement, customs, and taxation.

Chad is not a signatory country of the UN Convention Against Corruption (UNCAC).  Chad is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“the OECD Anti-Bribery Convention”).

There is an independent Court of Auditors (Cour des Comptes), equivalent to a supreme audit institution (SAI), to enhance independent oversight of government decisions, although its members are nominated by Presidential decree.  Concurrently, the GOC created a General Inspectorate for State Control within the Presidency to oversee government accountability. No reports have been published, however.    In addition to these bodies, the National Assembly’s Finance Committee carries out verifications of the GOC’s annual financial statement. No audits have been made publicly available during the reporting period.

A February 2000 anti-corruption law stipulates penalties for corrupt practices. The law does not single out family members and political parties.  As in other developing countries, low salaries for most civil servants, judicial employees and law enforcement officials, coupled with a weak state system and a culture of rent seeking, have contributed to corruption. 

The Ministry of Finance and Budget set up a toll-free number (700) to fight corruption and embezzlement. According to the Minister of Finance and Budget the toll-free number 700 allows each economic operator or any other individual to alert the Inspectorate General of Finance to denounce any unscrupulous agent who seeks to be corrupted in the context of the issue of administrative paper or the payment of a tax. There are no specific laws to counter conflict of interest. The GOC does not require private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials.

A prominent local NGO, the Center for Studies and Research on Governance, Extractive Industries and Sustainable Development (CERGIED), formerly GRAMP-TC (Groupe Alternatif de Recherche et de Monitoring de Petrole – Tchad), tracks government expenditures of oil revenue.  There are no indications that anti-corruption laws are enforced differently on foreign investors than on Chadian citizens. There is no specific protection for NGOs involved in investigating corruption.

Corruption is an obstacle to FDI.  It is most pervasive in government procurement, award of licenses or concessions, transfers, performance requirements, dispute settlement, regulatory system and customs or taxation.

Resources to Report Corruption

Government agency contact responsible for combating corruption:

Inspection Generale d’Etat
Ministry of Finance and Budget toll free number 700 (inside Chad)
Presidence de la Republique
Ndjamena, Chad
+235 22 51 51 39 / 22 51 44 37

Contact at watchdog organizations:

Gilbert Maoundonodji
Coordinator
CERGIED (formerly GRAMP –TC)
BP 4021, N’Djamena, Chad
+235 6058 2016 / 9317 7678
infos@cergied.org / secretariat@cergied.org / https://cergied.org/  

Chad has enjoyed political stability since 2008. There have been no reported incidents in recent years involving politically-motivated damage to projects and/or installations.  The latest Presidential election was held in April 2016 and parliamentary elections are planned for late 2019. In May 2018, President Deby promulgated a new constitution establishing a Fourth Republic that consolidates power in the Presidency. Socio-economic conditions occasionally spark demonstrations and protests against the Government.  In most cases, the government either denied permits for demonstrations, or suppressed them using tear gas, arresting participants and organizers.

Regional violent extremist organizations continue to threaten Chadian and Western interests. Boko Haram’s violence has choked off vital trade routes with Nigeria and the road between N’Djamena and Douala, Cameroon, the principal port serving Chad.  This has increased costs for imports and decreased exports due to border closures.

For up-to-date information on political and security conditions in Chad, please refer to the Consular Affairs Bureau’s Travel Warning and Country Specific Information at http://www.travel.state.gov.  The Embassy encourages all U.S. Citizens visiting Chad to register with the Embassy upon arrival or online via the STEP program.

U.S. businesses and organizations in Chad are welcome to inquire at the Embassy about joining the Overseas Security Advisory Committee (OSAC).

Chad has a shortage of skilled labor in most sectors.  Although there is an increasing pool of university graduates able to fill entry-level management and administrative positions, skilled workers still represent a very small percentage of the total labor pool.  Eighty percent of the Chadian labor force is estimated to be engaged in subsistence activities including farming, herding and fishing. Unskilled and day laborers are readily available. Few Chadians speak English.  Acceptable translators and interpreters are available. Some government ministries and SOEs provide job-related training to their employees.

Chad has ratified all eight Fundamental Conventions of the International Labor Organization.  International labor rights such as freedom of association, the elimination of forced labor, child labor, employment discrimination, minimum wage, occupational safety and health, and weekly work hours are recognized within the labor code.  However, gaps remain in law and practice. Chadian labor law derives from French law and tends to provide strong protection for Chadian workers; priority is given to Chadian nationals. Labor unions operate independently from the government and, in fact, often challenge the government.  The two main labor federations, the Confederation Libre des Travailleurs du Tchad (CLTT) and the Union des Syndicats Tchadiens (UST), to which most individual unions belong, are the most influential, and have been instrumental in persuading the GOC to engage in social dialogue regarding the government’s 2016 to 2017 austerity measures.  A deal reached in October 2018, implemented in January 2019, ended strikes as salaries were partially restored after major cuts.

The labor court is the labor dispute mechanism in Chad.  In case of a dispute, the aggrieved party contacts a labor inspector directly or through the labor union to settle the dispute or lodge a complaint with the labor court.

Labor unions practice collective bargaining, and the labor code monitors labor abuses, health, and safety standards in low-wage assembly operations.  The enforcement of the code is not effectively conducted; most disputes are based on contract termination. Child labor remains a problem. Approximately 53 percent of children in Chad are engaged in child labor, particularly in domestic service, cattle herding, and agriculture.  Chadian cattle are included on the U.S. Government’s List of Goods Produced by Child Labor or Forced Labor.

The GOC may provide incentives for foreign businesses, but does not waive laws to attract or retain investment, as the Chadian labor law strongly supports workers.

Chad is a member of the Multilateral Investment Guarantee Agency (MIGA).  The U.S. Overseas Private Investment Corporation (OPIC) has provided political risk investment insurance to U.S. companies in Chad.  The French investment guarantee agency Compagnie Française d’Assurance pour le Commerce Exterieur (COFACE) has also guaranteed a number of investments in Chad.

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.

Economic and Commercial Officer
U.S. Embassy N’Djamena,
Rond Point Chagoua BP 413
N’Djamena  Chad
+235 2251-5017 Ext 24408
NDjamena-Commercial@state.gov

Policies Toward Foreign Direct Investment

The DRC remains a challenging environment in which to conduct business.  At the same time, the GDRC sporadically takes steps to improve economic governance and its business climate, while the DRC’s rich endowment of natural resources, large population and generally open trading system provide significant potential opportunities for U.S. investors.  The GDRC’s 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.  Current investment regulations prohibit foreign investors from engaging in informal small retail commerce, referred to locally as petit commerce, and ban foreign majority-ownership of agricultural concerns. Visas for foreign workers are limited to six consecutive months and cost between USD 300 (single entry) and USD 400 (multiple-entry).

Following approval of an initial “temporary” work visa, which, normally, is not difficult to procure, a foreign worker may qualify for a more expensive “establishment visa” with at least a one year validity.  Salaries paid to expatriates are taxed at a higher rate than those of locals to encourage local employment.

Limits on Foreign Control and Right to Private Ownership and Establishment

The DRC Constitution stipulates entitlement to own and establish a business enterprise, and to engage in all forms of remunerative activity, noting minimal restrictions related to small commerce and a prohibition of foreign shareholder ownership of more than 49 percent of an agribusiness.  The government has drafted foreign ownership legislation, but parliamentary debate is still pending. Although it may not be based in law, many investors note that in practice the GDRC requires foreign investors to both hire local agents and participate in a joint venture with the government or local partners.

A new law on subcontracting in the private sector, which was enacted in January 2017, restricts foreign investors’ participation in subcontracting in almost all sectors and is considered discriminatory to the interests of some U.S. companies operating in DRC.  The law restricts subcontracting activity to majority Congolese-owned and capitalized-companies whose head offices are located in the national territory.  The only exception is in the case of unavailability of expertise in a specific subcontracting area. In that case, proof of lack of expertise must be provided to the competent authority to enable a non-Congolese company to be used as a subcontractor, but the activity may not exceed six months.

The law also forbids the subcontracting of more than 40 percent of the overall value of a contract; voids clauses, stipulations and contractual arrangements that violate the provisions of this law; and carries penalties of up to USD 150,000 and the risk of closure of operations for six months if certain provisions are violated.  As of April 2017, the Federations of Enterprises of the Congo (FEC), the American Chamber of Commerce DRC, and other business organizations were lobbying to review and revise the law.  Foreign businesses had a 12-month grace period, which ended in January 2018, to comply with the new law, but as noted below, the law is not yet being enforced.

On April 16^th, 2018, the Congolese government adopted the draft decree on the “creation, organization and functioning of the Authority to Regulate Subcontracting in the Private Sector” (ARSP).  On December 27th, 2018 former President Kabila and Prime Minister Tshibala signed an order to appoint the Authority’s general management and the board of directors, which would implement the law.  The Director General of the ARSP announced in May 2019 that the Authority would begin operations shortly.

On March 9, 2018, the government promulgated a new mining code which increased royalty rates by two to ten percent, raised tax rates on “strategic” metals, and imposed a surcharge on “super profits” of mining companies.  Of particular concern to mining companies, the government unilaterally removed a stability clause contained in the mining code of 2002.  The stability clause protects investors from any new fees or taxes for ten years.  With no coherent and transparent legal and fiscal framework to alleviate investors’ concerns, the stability clause offered a significant inducement to major mining companies.  Removal of the stability clause may deter future investment in the mining sector.  Since August 27^th, 2018, the day of the last meeting between the government and investors, the situation has not progressed.  Also in August, the DRC’s major industrial mining companies, responsible for 80 percent of copper and cobalt production and 90 percent of gold production, formed a new industry body, the Initiative for the Promotion of the Mining Industry (IPM), to engage the GDRC more effectively on the new mining code.  IPM is awaiting appointment of the new government to resume discussions.  The Tshisekedi government has indicated that it is willing to reopen discussions on the new mining code, but given its minority status in the National Assembly, it may not be able to implement changes that require legislative approval.

Other Investment Policy Reviews

The DRC has not undergone an Organization for Economic Cooperation and Development (OECD) or United Nations Conference on Trade and Development (UNCTAD) Investment Policy Review in the last 10 years, but the GDRC has made significant progress to improve its customs clearance procedures. 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.  Yet, 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.

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.

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 with the DRC.  Lebanon, Cote d’Ivoire, and Burkina Faso have negotiated, but not signed, bilateral investment treaties 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.

Transparency of the Regulatory System

The DRC still does not have a legal system to address the issue of competition.  By joining OHADA and 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 on a non-discriminatory basis.

There are no informal regulations that would discriminate against foreign or American investors in particular.  Nevertheless, the new regulations in the mining code and the law on subcontracting are perceived as discriminatory and punitive by foreign investors.

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, but neither are there provisions that are universally employed to attract such investment.  Problems encountered within the GDRC tend largely to be administrative and/or bureaucratic in nature, as reforms and improved laws and regulations are often poorly or unevenly applied.

Proposed laws and regulations are rarely published in draft format for public discussion and comments; discussion is typically limited to the governmental entity that proposes the draft law and Parliament prior to enactment.

By implementing the OHADA, 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 Extractive Industries Transparency Initiative (EITI), a multi-stakeholder initiative to increase transparency in transactions between governments and companies in the extractive industries, declared in 2014 that DRC’s payment and receipt procedures conform to EITI requirements.  In 2016, EITI awarded the DRC the first Initiative Award for Transparency in Extractive Industries for a pilot study DRC EITI conducted on establishing beneficial ownership, i.e. identifying the persons who actually control or benefit from a company.

The DRC adopted a Beneficial Ownership Roadmap in December 2016 outlining the steps to be taken to ensure the country complies with the more rigorous EITI Standard of 2016.  The roadmap sought to achieve stakeholder consensus on a definition of beneficial ownership in the DRC context, and to draft legislation requiring certain categories of businesses to disclose their beneficial owners.  No progress was made on the issue during 2016 however.  As a result, stakeholders amended the roadmap and a revised version was published in December 2017.

The DRC’s validation process for compliance with the 2016 EITI Standard commenced in November 2018, with assessment due in 2020.  The initial report published by the International EITI Secretariat in April 2019 stated that 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.

International Regulatory Considerations

The DRC is a member of several regional economic blocks, 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, almost achieving the objective set by the country in 2008.

In order to formalize the DRC’s integration into the COMESA Free Trade Area and to comply with its commitments, in December 2015, the DRC President promulgated, after its adoption by both chambers of Parliament, an act establishing a new scale of import duties and taxes pursuant.  The act establishes a zero rate for goods originating in COMESA member countries following a three-year graduated scale of 40 percent, 30 percent and 30 percent reductions respectively.  Still, the DRC is not on track to meet this goal, and significant tariff reductions have yet to take place.  The DRC has signed several customs agreements in the region and sub-region to reduce import tariffs, but it has not yet implemented these agreements.

The DRC is a World Trade Organization (WTO) member and, as such, seeks to comply with Trade Related Investment Measures (TRIM) requirements.  In October 2016, the WTO noted that there had been positive developments on various fronts in the DRC, including streamlining of the country’s tax system, introduction of a value added tax (VAT), and enactment of a new customs act, a new excise act, and a new procurement code.  The WTO also noted that the business environment has improved as a result of the progressive establishment of single sites for conducting international trade (https://segucerdc.cd/ ) and setting up enterprises (www.guichetunique.cd ).  The WTO further commended the adoption of new sectoral policies that have opened several economic sectors, including insurance services and hydrocarbon trade, to competition.  The GRDC has proposed a new Strategic National Development Plan which sets the goal of modernizing and industrializing the country by 2035.

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.  As a result of colonialism, the general characteristics of the Congolese legal system are similar to those of the Belgian legal system.  Customary or tribal law is another aspect of the legal 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.

As of early 2018, the DRC had established thirteen commercial courts located in DRC’s main business cities, including Kinshasa, Lubumbashi, Matadi, Boma, Kisangani, and Mbuji-Mayi, though only the Kikwit and Boma courts appear to be functioning reasonably well.  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 commercial courts.  In 2013, the European Union began funding the construction or rehabilitation of commercial courts in Boma, Butembo, Kolwezi and Kananga, and the World Bank later supported the rehabilitation of the courts in Kinshasa, Kisangani, and Mbuji-Mayi.  Infrastructure, quality issues, and delays in execution have hampered these projects.

The current judicial process is not procedurally reliable, as its rulings are not always respected.  The national court system provides an appeals mechanism, and the OHADA provides regulations and a legal framework to appeal verdicts.  Legal documents in the DRC can be found at: http://www.leganet.cd/index.htm .

Laws and Regulations on Foreign Direct Investment

Most Foreign Direct Investment (FDI) is governed by the 2002 Investment Code.  Mining, hydrocarbons, finance, and other sectors are also governed by sector-specific investment laws.  The GDRC deregulated the electricity and insurance sectors in 2015, and in 2016 Parliament passed a bill to reform the hydrocarbons sector and revised the labor law.  Lawmakers have also authored legislation to address consumer protection, e-commerce, liberalization of prices, competition regulation, account auditing, agriculture regulation, entrepreneurship, and free trade areas.  With the exception of the bill on e-commerce, all of these bills were adopted and promulgated in 2018.

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 (investindrc.cd). There is also a Steering Committee for the Improvement of the Business and Investment Climate (CPCAI), which has the overall goal of improving the DRC’s ranking in the World Bank’s “Doing Business” indicators by reducing administrative delays, red tape, and the overall cost of establishing a business.  Since its inception, CPCAI has eliminated 46 of 117 taxes applied to cross-border trade.  The GDRC also instituted a “Guichet Unique,” in 2013, 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, among other things, the collection of taxes and transshipment operations. (https://segucerdc.cd/ ).

Competition and Anti-Trust Laws

There is no existing national agency that reviews transactions for competition or antitrust-related concerns, however, as a member of COMESA, the DRC falls under the organization’s competition regime, which is made up of the COMESA Competition Regulations and rules. Under the COMESA Treaty, the regulations are binding on all member states.  Since the DRC does not have a dedicated domestic competition law regime, the regional competition law regime is effectively the only competition law available.

Expropriation and Compensation

Technically, the GDRC may only 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 2017 and 2018, but there are a number of existing and some 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.  The U.S. – DRC BIT also contains provisions on expropriation.

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 has been a Contracting State to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) since February 2015.  Although the DRC has not made any notifications or reservations in accordance with the New York Convention, the internal legislation facilitating the DRC’s accession to the New York Convention contains reservations regarding reciprocity (the DRC will only enforce awards made in the territory of other Contracting States); commerciality (only awards on matters which are considered commercial under DRC law will be recognized and enforced under the New York Convention); non-retroactivity (the New York Convention will only apply to awards made after February 3, 2015); and finally, that the New York Convention will not apply to disputes related to immovable property (i.e. real estate, industrial plants, etc.) or to rights related to immovable property.

In the case of an investment dispute, the U.S.-DRC BIT provides for reconciliation of national or international arbitration.  In the case of a dispute between a U.S. investor and the GDRC, the U.S. investor is subject to the Congolese civil code and legal system.  If the parties cannot reach agreement under the terms of the U.S.-DRC BIT the dispute is taken to ICSID or the Paris-based International Chamber of Commerce (ICC).  Commercial parties may also seek redress under the Organization for the Harmonization of African Business Law (OHADA).

The DRC’s accession to the New York Convention is important to international investors seeking to develop activities in the DRC because it facilitates the enforcement of international arbitral awards.  Nevertheless, the reservation related to immovable property effectively excludes disputes relating to mining rights, which, under Congolese law, are considered immovable property.

Although there are instances of ongoing corruption at every level of the DRC judicial system, several disputes between foreign investors and State Owned Enterprises (SOE) have been resolved in favor of the foreign investor.

International Commercial Arbitration and Foreign Courts

As a signatory to the OHADA, the DRC also 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.  Because DRC is a member of the New York Convention, the requirements set out under Article 5 of the New York Convention for the recognition and enforcement of foreign awards will apply where the seat of any arbitration is outside an OHADA member state, or where the parties chose arbitral rules outside the UAA.

OHADA‘s UAA offers an alternative dispute resolution mechanism for settling disputes between two parties.  The two main consequences of the DRC’s September 2012 accession to OHADA with respect to dispute resolution are:

• The mandatory application of the UAA, which sets out arbitration procedures applicable to any arbitration arising in a Member State of OHADA where the place of arbitration is situated in a Member State.
• Disputes must be submitted to the Common Court of the Justice and Arbitration (CCJA) (based in Abidjan, Cote d’Ivoire) 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 a par with a judgment of a national court.  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 shall, in principle, be granted unless the award clearly affects public order in that State.  Decisions granting or refusing the granting of 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.

Investment Incentives

Investment incentives for companies entering the DRC are generally negotiated during a streamlined period of approximately 30 days.  Negotiated 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 extant 2002 Investment Code must apply to the National Agency for Investment Promotion (ANAPI), which, in turn, submits applications to the Ministries of Finance and Planning for final approval.

Foreign Trade Zones/Free Ports/Trade Facilitation

The DRC does not have designated free trade areas or free port zones; however legislation is pending to create such zones.  DRC is still progressively implementing legislation to integrate into the COMESA and SADC Free Trade Areas.  In 2015, the GDRC confirmed its commitment to work to enter the tripartite COMESA-SADC-EAC (Eastern African Community) Free Trade Area and the Continental Free Trade Area.  The implementation process has been on hold since that time, however, newly elected President Tshisekedi has signaled that he will revive stalled efforts to join the EAC.  Notwithstanding, the GDRC signed the agreement for the Continental Free Trade Area (Zone de libre-échange continentale or ZLEC) on March 21, 2018 in Kigali, under the aegis of the African Union.  The GDRC has yet to take any steps to implement the agreement.

Performance and Data Localization Requirements

Although there are no specific performance requirements for foreign investors, they invariably 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, though corruption and bureaucratic hurdles can create serious delays in obtaining the necessary permits and visas.

The GDRC enacted a new law on subcontracting in January 2017, which requires foreign companies to use local subcontractors for subsidiary services.  The DRC does not have specific legislation on data storage, however, it recognizes the need for appropriate regulation.  As there is no obligatory legislation, in practice, few companies report having issues regarding data storage.

Real Property

The DRC’s Constitution (Chapter 2, Articles 34-40) protects private property ownership without discriminating between foreign and domestic investors.  Despite this provision, the GDRC has acknowledged the lack of enforcement in the protection of property rights.  Relevant draft bills have been pending before Parliament since 2015. Congolese law related to real property rights enumerates provisions for mortgages and liens, and real property (buildings and land) is protected and registered through the Ministry of Land’s Office of the Mortgage Registrar.  Nevertheless, land registration may not fully protect property owners, as records can be incomplete and legal disputes over land deals are common.  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

In principle, intellectual property rights (IPR) are legally protected in the DRC, but enforcement of IPR regulations is limited.  Prior to independence in 1960, IPR was regulated by multiple Belgian instruments.  In 1963, the DRC became a party to the Berne Convention of 1886 for the Protection of Literary and Artistic Works, and in 1975 it joined the 1883 Paris Convention for the Protection of Industrial Property.  The DRC introduced Law No. 82-001 on Industrial Property in 1982, and Law No. 86-022 on the Protection of Copyright and Neighboring Rights in 1986.  Both instruments remain in force, but legislative action in the area of IPR and enforcement of the existing laws has been virtually non-existent since their passage.

The country is also 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 thus ostensibly subject to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), an international legal agreement between all the member nations of the WTO which sets down minimum standards for the regulation by national governments of many forms of IPR.  Specifically, TRIPS requires WTO members to provide copyright rights covering content producers, including performers; producers of sound recordings and broadcasting organizations; geographical indications, including appellations of origin; industrial designs; integrated circuit layout-designs; patents; new plant varieties; trademarks; trade dress; and undisclosed or confidential information.  TRIPS also specifies enforcement procedures, remedies, and dispute resolution procedures.  As a least-developed country member, DRC was given a longer transition period, through 2006, to comply with TRIPS, but it continues to be out of compliance with its international IPR obligations.

The pertinent conventions provide maximum protection of 20 years for patents, and 20 years, renewable, for trademarks, starting from the date of registration.  If not used within three years, a trademark can be cancelled. By contrast, the current Congolese laws provide only 15 years of protection on a number of patents, and do not include all the means mentioned in TRIPS for enforcement of IPR rights.  In July 2011, the Ministry of Culture and Art established the Société des Droits d’Auteur et des Droits Voisins (SOCODA) to address IPR issues faced by authors, and presented a bill to the government that seeks to rectify shortcomings of the existing 1982 IPR law.  Still, the reform bill is pending Parliamentary approval and it is unclear when that will be forthcoming.

Capital Market and Portfolio Investment

The Congolese financial system continues to improve with new regulations and guidelines seeking to maintain stability and consolidate the system.  Although reforms have been initiated, the Congolese financial system remains small, heavily dollarized, characterized by fragile balance sheets, and cumbersome to use.  The GDRC backed away from its short-lived (2013-2016) de-dollarization program, and further reforms are needed to strengthen the financial system, support the expansion of the financial sector, and spur economic growth.  Shock resilience is undermined by inadequate risk-based controls, weak enforcement of regulations, low profitability, and excessive reliance on demand deposits.  The system is also characterized by a significant concentration of credit and exposure to systemic failure in the event of the insolvency of a large borrower.

Financial inclusion is increasing, but substantial progress is needed to develop payment systems, facilitate the use of financial services, and strengthen regulation of the non-banking sector. Consolidation and strengthening of microfinance along with reform of the pension sub-sector and continued privatization of the insurance sector could facilitate the expansion of financial services and attract long-term investors.

The DRC’s capital market remains underdeveloped and consists mainly of the issuance of treasury bonds.  There are no stock exchanges operating in the country, although 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.  The Central Bank of Congo (BCC), developed a market for short-term bonds, but most of these bonds are bought and held by local Congolese banks.  In the absence of private debt securities, the fixed-rate market is limited to government-issued treasury bonds with maturities of up to 28 days traded through commercial banks.

Access to the primary market is limited to commercial banks holding securities accounts at the BCC, and all investors, including institutional and individual investors, must submit bids through banks.  Commercial banks, which dominate the investor base, may trade in treasury bills in the secondary market, but in order to do so, bids and prices for which they agree to trade must be transparent and publicized.  There is no market for derivatives in the country.

The DRC suffers from a weak and fragile financial infrastructure.  National payment systems are not governed by central legislation, although the DRC’s National Payments and Settlement Committee is in the process of proposing legal reform through a draft bill that was proposed in 2016, has been adopted by the DRC Senate, and, as of the date of this report, is before the National Assembly for a second reading.

The Central Bank worked for a decade to implement reform on the national payment system via a gradual and interactive approach that identified and corrected deficiencies at each stage. This culminated with the Central Bank inaugurating in September 2017 an automated system that supports customer transfers, regulation of monetary policy operations, and the processing of transactions for the regional payment system-REPSS, set up by COMESA member countries. The system also includes an interbank automated clearing module for check payments, collections, and bills of exchange.

Borrowing options for small and medium enterprises (SME) are limited.  Maturities for loans are usually limited to 3-6 months, and interest rates typically hover around 16-21 percent.  Several companies complain that 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).  The Central Bank sets minimum capital requirements for local banks in CDF or its equivalent in USD.  Prior to 2016, the average was roughly USD 12 million per bank, but the economic downturn prompted the Central Bank to mandate an increase to USD 30 million by January 2019.  Foreign currency deposits account for almost 90 percent of bank holdings.

As for the insurance sector, the DRC Insurance Authority, ARCA, began implementing privatization of the sector in 2018, granting licenses to four private insurance companies.  These approvals came four years after passage of the 2015 Insurance Reform Law, and three years after the decree establishing ARCA as the regulator of the insurance sector.  Once the state owned insurance company SONAS is fully privatized, the DRC insurance sector should operate under competitive market conditions.  While analysts estimate that the DRC insurance market could be worth roughly USD 5 billion in ten years’ time, the current Congolese insurance market comprises roughly USD 80 million worth of insurance premiums for a penetration rate of only 0.5 percent.

Portfolio investment is absent in the DRC.  Cross-shareholding and stable shareholding arrangements are also not common.  There are occasional complaints about unfair privileges extended to certain investors in profitable sectors such as mining and telecommunications.

Money and Banking system

The Congolese financial system is growing but it remains fragile and operates primarily through the Central Bank.  The financial sector is comprised of 17 licensed banks, a national insurance company (SONAS), the National Social Security Institute (INSS), one development bank, SOFIDE (Société Financière de Development), a savings fund (CADECO), 102 microfinance institutions and cooperatives, 95 money transfer institutions which are concentrated in Kinshasa, Kongo Central, North and South Kivu and the former Katanga provinces, three electronic money institutions, and 23 foreign exchange offices. There is no secondary equity or debt market.

The Congolese Central Bank developed a charter of compliance with international financial rules that has been accepted by virtually all banks operating in DRC.  The stricter regulatory regime put in place after the global financial crisis increased bank compliance costs, however, and the resultant “de-risking” saw the bank lose two of its three remaining correspondent banks.  It currently works with one correspondent bank, Citigroup. All foreign banks accredited by the Congolese Central Bank are considered Congolese banks with foreign capital and fall under provisions and regulations covering the credit institutions’ activities in the DRC.

The financial system is mostly banking-based with aggregate holdings estimated at USD 5.1 billion, about 95 percent of the overall holdings of the financial system. Bank deposits account for about 90 percent of total deposits, with the balance held by microfinance institutions.  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 bank assets.

Bank financing is dominated by the collection of deposits, nearly 90 percent of which are denominated in U.S. dollars and held in demand accounts.  Bank operations are highly dollarized and financed largely by demand deposits.  Nearly 95 percent of loans are in dollars, and clients are mainly companies seeking working capital primarily for daily operations and import/export activities.  National and local government entities have significant balances in some banks (deposits in dollars used for investments) and also borrow funds from a few banks to finance administrative expenses.  Statistics on non-performing loans do not seem reliable.  According to the Central Bank’s regulatory framework, many banks only record the balance due rather than the total amount of the non-performing loan.

Transactions involving correspondence with associated foreign banks represent a significant part of the activities of DRC banks.  Correspondent accounts represent more than 30 percent of bank assets and more than 95 percent of interbank market activity.  They allow banks to settle transactions denominated in dollars, reflecting efforts to limit risks.  The profitability of the banks is fragile and has deteriorated over the last year, reflecting high operating costs and exchange rates.  Fees charged by banks are a major source of their revenues.

The banking system faces challenges in terms of net income and profitability.  In 2018, the banking system recorded a steady increase in net banking income and confirmed a strengthening and enrichment of banks.  Yet, the banking sector struggled to offset the increase in its cost/income ratio and the deterioration in the quality of its loan portfolio.

The DRC has roughly USD 4.6 billion of deposits in the banking system, up from USD 3.7 billion in 2017.  The 2018 Mining Code increased the percentage of export revenue that mining companies are required to repatriate from 40 percent to 60 percent.  This likely accounts for a good proportion of the increase in deposits, and will contribute to a further increase in 2019.  An estimated USD 10 billion of savings exist outside of banks informally.  Most deposits in the formal system are U.S. dollar-denominated.  A slight increase in bank penetration occurred after 2011 as the GDRC switched public employee payments from cash to bank transfers.

Bank penetration is roughly 6 percent or about 3.9 million accounts, which places the country among the most under-banked nations in the world.  Based on its strategic plan, the Central Bank seeks to increase the number of bank accounts to more than 20 million by 2030.  Banks are increasingly offering savings accounts that pay approximately 3 percent interest, but few Congolese hold savings in banks.

The overall balance sheet of the banks amounted to roughly USD 6.9 billion in 2018.  Credit volume is estimated at roughly USD 2.8 billion in comparison to USD 1.9 billion in 2017.  Credit remains scarce, short-term, and highly concentrated.  Domestic credit granted by banks increased from USD 1.9 billion in 2017 to USD 2.8 billion in 2018.  In 2018, the largest depositors in the banking system are private enterprises and households with 48 and 40 percent of deposits, respectively.  Public enterprises and central administration deposits comprise six percent and four percent, respectively.

Foreign Exchange and Remittance

Foreign Exchange

As part of broad economic reforms begun in 2001, the DRC adopted a free-floating exchange rate policy and lifted various restrictions on business transactions, including in the mining sector.  The international transfer of funds takes place freely 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 that the Central Bank license exporters and importers.  The DRC’s informal foreign exchange market is large and unregulated and has tended to offer exchange rates not widely dissimilar from the official rate.  In practice, the nation’s economy remains highly dollarized.

On September 25, 2014, the Central Bank put into place new foreign exchange regulations. These regulations declared the Congolese franc (CDF) as the main currency in all transactions within the DRC.  Payment of fees related to education, medical care, water and electricity consumption, residential rents, and national taxes were mandated to be paid in CDF.  In the last several years, this requirement has been relaxed and where the parties involved and the appropriate monetary officials agree, exceptions may, and routinely are, made.

Any payments exceeding USD 10,000 must be executed within the banking system, unless there is no presence of banking entities.  The largest, albeit rarely used, banknote in circulation is the CDF 20,000 note (approximately USD 12.36).  Far more common are the CDF 500 and CDF 1,000 notes worth approximately USD 0.30 and USD 0.61 respectively.  U.S. banknotes printed after 2008 are readily accepted in virtually all transactions, with the exception of one-dollar bills.  Banks provide accounts denominated in either currency.  In September 2013, the GDRC embarked on a process of “de-dollarizing” the economy by requiring that tax records be kept in CDF and tax payments from mining companies be paid in CDF.  In March 2016, however, as a result of a dollar shortage, the GDRC began requiring mining and oil companies to pay their customs fees and taxes in U.S. dollars.

The economic forecast calls for continuing inflation and currency depreciation over the long term, but the currency has remained stable since August 2017.  The annualized inflation rate, which was stable at an average 1.4 percent from 2013 through 2015, increased to 54 percent in 2017 and decreased to 7.2 percent in 2018.  As of April 2018, foreign exchange reserves totaled USD 1 billion or 4.2 weeks of import cover in comparison to the 2017 level of USD 859 million 2.9 weeks of cover.  If government revenues from the extractive sectors continue to increase, the Central Bank will again have the option to support the CDF and maintain currency stability.

Remittance Policies

Although there is no legal restriction on converting or transferring funds related to investment, new exchange regulations will increase the time for in-country foreigners to repatriate export and re-export income from 30 to 60 days.  Foreign investors may remit through parallel markets when they are legally established and recognized by the Central Bank.

Sovereign Wealth Funds

The DRC has no reported Sovereign Wealth Funds, though the 2018 Mining Code discusses a Future Fund that is to be capitalized by a percentage of mining revenues.

Some report the DRC state-owned enterprises (SOEs) can generally act as a burden on the nation’s economy. Investors have noted that SOEs stifle competition and are unable to provide reliable electricity, transportation, and other important services over which they have monopolies.  Some SOEs and other Congolese parastatal organizations are in a poor financial and operational state due primarily to indebtedness, mismanagement of resources and employees, and poor service delivery.

Reporting on the assets of SOEs and other parastatal enterprises is limited, making valuation difficult.  According to State law N° 08/007 of July 7, 2008 (related to business transformation), any firm of which the state owns 50 percent plus one share is considered to be an SOE.  DRC law does not grant SOEs advantage over private companies in bidding for government contracts, however, in practice, SOEs are accused of being favored over private companies, sometimes using questionable practices and arguably unsupportable legal actions.  The list of SOEs can be found at: http://www.leganet.cd/Legislation/Droit percent20Public/EPub/d.09.12.24.04.09.htm .

SOE accounts are not audited.  While the Supreme Audit Institution (Cour des Comptes) is authorized to audit SOEs and to publish findings, a lack of resources devoted to the organization has resulted in no or partial SOE audits.  In addition, the Conseil Superieur du Portefeuille – an oversight body under the Ministry of Portfolio – is mandated with assessing SOE financial performance in terms of growth, profitability, and solvency.  Their reports are for internal use and are not publicly available.

There is no official provision requiring preferential access to land and raw materials for SOEs; in a situation where both an SOE and private enterprise show interest in the same land or material, preferential access shall be granted to the first applicant.

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.

According to some, in addition to being inadequately managed, some SOEs also serve as conduits for the illicit diversion of funds. U.S. NGO the Carter Center issued the November 2017 study, “A State Affair:  Privatizing Congo’s Copper Sector,” stating that roughly USD 750 million earned by the DRC’s state-owned mining company Gecamines between 2011 and 2014 cannot be reliably accounted for.  More recently, Gecamines has aggressively audited some of its joint venture partners, threatening to dissolve partnerships, and ultimately expropriate private mine holdings, unless partners transferred more revenue to GDRC and Gecamines accounts.

Privatization Program

The DRC has no official privatization program, though, with support of the World Bank, the GDRC established a Steering Committee in 2010 for the Reform of Public Enterprises (COPIREP), which attempts to address the performance of SOEs.  To date, only a handful of SOEs have undergone reform, with mixed results.

In the past, the GDRC has taken actions of limited impact to support responsible business conduct (RBC) by encouraging the development and adherence to a code of ethics, and respect for the environment in which companies in the DRC operate.  Specific steps taken to encourage RBC include a 2012 roundtable between the GDRC, economic operators and the Fond Social de la République Democratique du Congo (FSRDC) in order to evaluate the implementation of socially responsible and environmentally sustainable investments in the DRC.

The DRC Labor Code includes provisions intended to protect employees, and there are legal provisions that require businesses to protect the environment or face prosecution.  Yet, these are spottily enforced and not effectively communicated to the private sector.  The DRC does not possess a legal framework to protect the rights of consumers and there are no existing domestic laws intended to protect individuals from adverse business impacts in general.  Most legal issues of this nature are resolved, if at all, on a case-by-case basis.

In September 2017, the United Nations Global Compact, with the support of the Embassy of the Netherlands in the DRC, officially launched the Global Compact Network DRC in Kinshasa.  The DRC Network consists of some 40 local firms, subsidiaries of multinational corporations, and international and national NGOs that seeks to encourage locally operating businesses to adopt sustainable and socially responsible policies.  The DRC Network is developing a partnership project to raise their visibility and highlight the Global Compact’s goals.

In 2016, the GDRC, in conjunction with the Federations of Enterprises of the Congo (FEC), and civil society organizations interested in the mining sector, launched the Guide on Corporate Social Responsibility (CSR Guide) for the mining sector in Katanga.  The project was financed by GIZ, the German development agency, and offers directives and guidance that propose a voluntary approach to achieve two objectives: (i) better enforcement of mining sector laws, and; (ii) identification of international standard practices for companies operating in DRC.

Although it is not a member of the Organization for Economic Cooperation and Development, 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.  In addition, the DRC authorities renewed the mandate of the UN Group of Experts on transparency in the mining industry in June 2016.

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 and/or incomplete.  Systematizing the procedures necessary for a competitive process in awarding contracts and concessions in mining, oil, and forestry requires additional effort.

There are also existing internal measures in place in the DRC requiring supply chain due diligence for companies that source minerals in DRC.  Both the 2002 and 2018 mining codes provide domestic transparency measures requiring the disclosure of payments made to government entities, though they appear to have been infrequently enforced.  In addition, Promines, a technical parastatal body financed by the GDRC and the World Bank, works to improve the transparency of the artisanal mining sector.  Amnesty International, Pact Inc., Global Witness and the Carter Center have also published reports related to a responsible business climate 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 so as to avoid possible reputational damage.

The GDRC’s constitution includes laws intended to fight corruption and bribery by all citizens, including public officials.  Notwithstanding, the application of the laws are inconsistent and according to some sources they are sometimes politically motivated.  Historically, private firms have been more likely to develop and implement anti-corruption controls than their SOE and parastatal counterparts.

In 2015, former President Kabila authorized the creation of an anti-corruption office to fight corruption in the management of public affairs and appointed a “corruption czar” to decrease governmental malfeasance.  The office is reportedly under-financed and, although it has allegedly prepared reports on several politicians who have been accused of corruption and embezzlement of public funds, the reports have not been publicized, leading many to believe that the office is highly politicized.  The DRC’s 2018 Corruption Perception Index score—161 out of 180— highlights the lack of progress in fighting corruption, and underlines the endemic and deep roots of corruption in the DRC government.

While several NGOs contribute to the fight against corruption, the government can be prone to ignore their reports, particularly when government officials are implicated.  American firms see corruption as one of the main hurdles to investment in the DRC.

The DRC is a signatory to the UN Anticorruption Convention, but not to the OECD Convention on Combating Bribery.  In September 2007, the DRC ratified a protocol agreement with SADC on Fighting Corruption.  In 2015, the government drafted a bill to fight corruption that was scheduled to be discussed in Parliament in 2016, however that did not happen and it is not mentioned in the 2018 parliamentary agenda.

In December 2018, newly elected President Tshisekedi promised to combat corruption within the administration and establish a charter of good conduct.  The charter will be implemented in the administration and by SOEs in order to promote good governance, integrity and to encourage responsible business conduct within the communities in which they operate.  Since his arrival in power, President Tshisekedi has suspended two SOE administrators accused of embezzlement and mismanagement and has disciplined several other civil servants for specific acts of corruption.

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

Cellule Technique de Lutte contre l’Impunité
Falanga Mawete Coordinateur
Tel: 00243815189341
Email: nmbayo2002@yahoo.fr

Palais de Justice, Place de l’Indépendance
Kinshasa/Gombe, DRC
Special Advisor for Good Governance
Position is vacant
Email: jedenonce2015@gmail.com

After decades of political instability and conflict, in December 2018 President Felix Tshisekedi was elected in DRC’s first peaceful transition of power.  The successful 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.”  Nevertheless, large parliamentary majorities held by former President Kabila’s coalition have prevented the quick creation of a government, though a Prime Minister was named in May 2019.

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 (the Kasai provinces) DRC.  Nevertheless, 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 Allied Democratic Forces (ADF) rebel group in eastern DRC is one of the country’s most notorious and intractable armed groups, and its members do not appear to have demobilized to any significant degree.  Unlike his predecessor, President Tshisekedi appears cognizant of the important role security plays in attracting foreign investment, and is ready 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/search.html?search_input=travel+advisory+drc&data-sia=true&data-con=true&starton=0

The DRC is a difficult labor market, with chronically high unemployment, particularly among youth, as well as a lack of marketable skills in the labor force.  Expatriates frequently fill jobs requiring technical or vocational training.

There is no official or formal policy to mandate the make-up of senior management or boards of directors. Nonetheless, the labor law stipulates that for businesses with over 100 employees, 10 percent of all employees should be local.  Further, if the managing director is a foreigner, his deputy or secretary general is generally expected to be a Congolese citizen.  These provisions can be waived depending on the sector of activity and available expertise.  There are no onerous conditionality, visa, residence or work permit requirements inhibiting mobility of foreign investors and their employees, although visa fees are substantial.

While the agricultural sector is expanding, it continues to face challenges related to poor infrastructure; its contribution to employment though large, is primarily informal.

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 preferential policy, giving Congolese preference in hiring over expatriates.  Laws prevent firms from firing workers under most conditions without compensation.  These restrictions, however, have deterred hiring and encouraged the use of temporary contracts in lieu of permanent hiring.  In 2016, a new labor law was enacted that authorizes foreigners, under certain conditions, to be appointed to the management of a trade union, and allows women to work the night shift.  Despite these changes, the DRC labor code still requires substantial revision, including facilitating foreign employment and providing more protection for employees, foreign and domestic.

Congolese law imposes certain restrictions on the practice of free and voluntary collective bargaining in the public sector.  The 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 undermine this right, including requiring unions to obtain permission and adhere to lengthy compulsory arbitration and appeal procedures prior to initiating a strike.

Despite GDRC ratification of the International Labor Organization’s (ILO) eight core conventions, some Congolese laws continue to be inconsistent with the ILO Convention on Forced Labor.  There are significant gaps both in law and practice regarding compliance with ILO conventions.

The 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 employment of career public service members.  According to some businesses, the government does not always effectively enforce relevant employment laws.

As of January 1, 2018, the DRC labor code increased the minimum wage (SMIG) from USD 1.04 to USD 5 per day for public and private enterprises.  The change did not affect civil servants’ salaries.

Although the new SMIG was supposed to take effect January 1, 2018, implementation has lagged.  Labor law defines different standard workweeks, ranging from 45 to 72 hours, for various jobs and prescribes rest periods and premium pay for overtime.  The law establishes no monitoring or enforcement mechanism, and 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.  The Ministry of Labor employs 200 labor inspectors, which is not sufficient to enforce consistent compliance with labor regulations.  The government does not effectively enforce such standards in the informal sector, and enforcement is uneven to non-existent in the formal sector.

The DRC Penal Code does not establish appropriate criminal penalties regarding the imposition of forced labor.  In practice, forced labor persists and remains a serious concern.  According to a 2015 UNICEF study, nearly a third of Congolese employed in the informal mining sector, or 40,000 individuals, were children.  According to the DRC’s Ministry of Labor, children continue to be engaged in the mining of gold, cassiterite (tin ore), and wolframite (tungsten ore).  The presence of children working in eastern DRC’s mines, especially in cobalt mines, was subject to growing international press coverage in 2017 and 2018.  In May 2018 the U.S. Department of Labor announced a USD 2.5 million, three-year project to combat child labor in the DRC’s cobalt mines.

Penalties for violations for the worst forms of child labor, which are one to three years of imprisonment and fines as high as 200,000 Congolese francs (USD 170), have proven to be insufficient to deter violations.  While DRC’s criminal courts could in principle adjudicate cases of child labor, neither the courts, nor other government agencies, effectively enforce these laws.

Reportedly, political parties also increasingly recruit children for violent election campaign activities targeting political opponents.  In order to combat this and other child labor issues, President Kabila signed and promulgated a law on July 15, 2016 fixing the legal working age at 18.

According to a report of the US Department of Labor, in 2017, the DRC made minimal advancement in efforts to eliminate the worst forms of child labor.  The GDRC adopted a revised Mining Code in 2018 which includes penalties for selling ore mined with child labor.  Children in the DRC continue to engage in the worst forms of child labor, including in the forced mining of gold, tin ore (cassiterite), tantalum ore (coltan), and tungsten ore (wolframite), and are used in armed conflict, sometimes because of forcible recruitment or abduction by non-state armed groups.

Other gaps remain in efforts to limit the worst forms of child labor, including a lack of trained enforcement personnel, a lack of financial resources for enforcement, and poor coordination of government efforts to combat child labor.

The U.S. Overseas Private Investment Corporation (OPIC), which provides political risk insurance and project financing to U.S. investors and non-governmental organizations, has granted political risk insurance for projects in the DRC in the past and is open to working on future projects in the DRC.  President Trump signed the Better Utilization of Investments Leading to Development (BUILD) Act on 5 October 2018, which established the Development Finance Corporation to succeed OPIC.

Table 2: Key Macroeconomic Data

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

Table 4: Sources of Portfolio Investment
Data not available.

Points of contact for inquiries from the public:

Jigar Bhatt
Economic Officer
BhattJ@state.gov

Elisée Kaozi
Commercial Assistant
KaoziEN@state.gov

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

Policies towards Foreign Direct Investment

The government sees investment beyond the petroleum sector, which accounts for over 90 percent of FDI inflows, as key to stimulating growth and development.  The country has pledged to undertake a variety of legislative, regulatory and institutional reforms to improve the investment climate and attract more FDI with the goal of becoming an emerging market economy by 2025. 

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. The U.S. and ROC signed an investment agreement in 1994.

ROC’s Agency for the Promotion of Investments (API), established in 2013, promotes economic diversification by seeking to expand the pool of external investors. It provides limited services, however.  The Ministry of Economy leads government-wide economic diversification efforts.

The government has made no significant efforts to retain foreign investments.  The High Committee for Public-Private Dialogue (“Le Haut Comité du Dialogue Public-Privé”), established in 2012, has not convened since 2014, despite significant lobbying efforts in 2018-19 from ROC’s union of private enterprises to restart a serious public-private dialogue.

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 general 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).  Informally, ROC enforces a policy that foreign companies must employ a significant number of Congolese workers, including managers, with a focus on employing an increased number of Congolese workers and managers in subsequent years.  There are no other known sector-specific restrictions, limitations, or requirements applied to foreign ownership and control.

ROC does not have an investment screening mechanism for inbound foreign investment.

Other Investment Policy Reviews

The government undergone no third-party investment policy reviews (IPRs) in recent years.

Business Facilitation

The ROC government has a “one-stop shop” for establishing a business called “Agence Congolaise Pour la Création des Entreprises” (ACPCE).  ACPCE has offices in Brazzaville, Pointe-Noire, N’kayi, Ouesso, and Dolisie. In order to establish a business in the 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 the ROC.

The ACPCE has a website: http://www.acpce.cg/  . However, this website serves as an information only website; business registration cannot be undertaken 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.

On February 12, 1990, ROC signed a Bilateral Investment Treaty (BIT) with the United States.  The treaty entered into force on August 13, 1994. ROC maintains BITs in force with France, China, Germany, Italy, Republic of Korea, Mauritius, Switzerland, and the United Kingdom.  The ROC has fiscal agreements with the other member states of the Central African Economic and Monetary Community (CEMAC). Several African nations have signed commercial and bilateral agreements with ROC to safeguard investments, including South Africa in 2005 and Namibia in 2007. As a lower middle-income country, ROC may not join a number of trade agreements open to the Least Developed Countries.

ROC does not have stand-alone bilateral taxation treaties with any country. Some of ROC’s bilateral investment agreements, such as with the United States and France, do include taxation provisions to avoid double taxation, but tax authorities generally do not enforced these provisions. Some companies have reported issues recovering value added taxes (VAT) from the ROC government.

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 that have successfully navigated the environment, including with Embassy support, serve as important sources of advice for prospective investors on how to adapt to ROC’s unclear “rules of the game.”  The government does not publish proposed laws and regulations in draft form for public comment. Although Congolese law requires ministries and regulatory agencies to give notice of proposed regulations to the general public, these drafts in fact do not appear publically. Nongovernmental organizations and intra-governmental task forces have sought to improve government transparency with little success. 

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

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 develops new regulations internally and rarely requests input from industry representatives. The government does not usually offer a formal, public comment period.  Departmental (regional) and local authorities may impose additional regulations on a case-by-case basis. Scientific or data-driven assessments do not typically drive the development or review of regulations

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 Office of the President publishes new laws, regulations, and their summaries in ROC’s Official Journal. The Office of the President no longer publishes the Official Journal online.  

No known oversight or enforcement mechanisms exist for the ROC.

The Office of the President publishes new laws, regulations, and their summaries in ROC’s Official Journal. The Office of the President no longer publishes the Official Journal online.  

The government announced no new regulatory systems or enforcement reforms during the reporting period.

The executive branch, or government, generally proposes laws, which the two houses of the Congolese parliament, the National Assembly and the Senate, must pass. A parliamentarian or a group of parliamentarians in either of the two chambers may propose a law, though this rarely occurs in practice.  A law passed by both houses of the parliament enters into effect from the date the president signs it into law.

No known regulatory enforcement mechanisms exist.

The government does not create or review most regulations based on scientific or data-driven assessments.  No known instances exist where the government made public scientific studies or quantitative analyses on the impact of regulations.

The government does not make transparent its public finances and debt obligations, including explicit and contingent liabilities.  As of the date of this report, the International Monetary Fund (IMF) continues to evaluate ROC’s eligibility for an IMF program. The IMF has cited ROC’s lack of transparency in many of the 17 IMF conditions that ROC must meet before receiving approval for an IMF program.

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 inspire, legislate, or control much of the national regulatory system.

ROC’s regulatory system for business disputes and regulations governing company registration structure and incorporation frequently incorporate Francophone African regulatory norms, such as those 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 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 has signed on to the WTO Trade Facilitation Agreement but has not begun implementing the agreement.

Legal System and Judicial Independence

The French common law legal system inspires the Congolese legal system.

OHADA – the organization for business and customs harmonization, or “Organisation pour l’harmonisation en Afrique du droit des affaires,” serves as 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 regularly intervenes in the judicial system.  Judges face high pressure to rule in favor of the interests of the executive branch and the ruling party.

Appellate courts exist and receive appeals of enforcement actions.  Public Law 6-2003, which established ROC’s Investment Charter, states that Congolese law will resolve investment disputes. Either party, however, may enact independent settlement or conciliation procedures. These procedures govern appeals:

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

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

Laws and Regulations on Foreign Direct Investment

ROC’s Hydrocarbons Law and Mining Code of 2016 contains industry-specific regulations for foreign investments.  No other known laws or regulations apply specifically to foreign investment, aside from the provisions of bilateral investment treaties.  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.

The government has published no major laws, regulations, or judicial decisions related to foreign investment in the past year.

The Congolese “one-stop-shop” – the Congolese Agency for Business Creation, or“Agence Congolaise Pour la Création des Entreprises” (ACPCE) – has an active website: www.acpce.cg  . The website provides information only and does not offer online registration.

Competition and Anti-Trust Laws

No agencies review transactions for competition-related concerns, either domestic or international in nature.  Economic ministries 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, which the government makes 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

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

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

Investor-State Dispute Settlement

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

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

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

In one, 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 unpaid revenue, however, the ROC government refused to recognize the judgements. Moreover, Congolese courts issued their own judgements in favor of the ROC government. The ROC government no longer engages on the issue.

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

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

International Commercial Arbitration and Foreign Courts

The ROC 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.

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. In practice, Congolese courts have not accepted any foreign arbitral awards in recent years.

The U.S. Embassy is not aware of any investment disputes involving SOEs in recent years.  Given reports that the government routinely exercises significant influence on the judicial system, however, such interference could foreseeably occur in disputes involving SOEs.

Bankruptcy Regulations

The ROC has no specific law that governs bankruptcy.  As a member of OHADA, ROC applies OHADA bankruptcy provisions in the event of corporate or individual insolvency. No laws criminalize bankruptcy. The ROC does not have a credit bureau or other credit monitoring authority serving the country’s market.

Investment Incentives

The ROC’s Ministry of Economy, Industrial Development, and Promotion of the Private Sector has overall responsibility for investment promotion. When a potential investor believes its investment will bring substantial investment and job creation to the Congolese economy, it may apply for preferential tax and 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 once 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 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 China to advise on the development of the SEZs and has also expressed a desire to attract U.S. investment.  Little to no activity occurs in the SEZs, however, 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 typically riddled with low-level requests for bribes in the immigration and customs sectors.  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 new 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 imposes water pollution safeguards and forest regeneration requirements in the oil and forestry sectors.  All forestry companies, both foreign- and locally-owned, are required by law to process 85 percent of their timber domestically and export it as furniture or otherwise transformed wood, and allows timber companies to export up to 15 percent of their wood product as natural timber. In practice, the economy exports much timber as natural timber.

The timber industry in ROC increasingly requires international certification, most often Forest Stewardship Council (FSC) certification. A number of foreign-owned timber companies in the ROC’s west and south, however, still operate without certification.  FSC-certified companies may benefit from future government incentives as the 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.

ROC applies tariffs and import price controls to a number of staple food goods to encourage local purchasing.

The government does not force local hiring, but has in recent years informally encouraged companies, particularly those in the oil sector, to hire more Congolese and “Congolize” their operations.

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.

Real Property

A process exists for the acquisition and retention of real property. The government enforces property rights, though companies and individuals cite inconsistent enforcement. Mortgages and liens exist. A generally reliable system of property exists.

No known regulations exist to 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 used 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 legislation conforms to WTO intellectual property norms and standards.  The Ministry of Commerce leads 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; however, overall infringement of intellectual property rights (IPR) remains uncommon.

The government has enacted no new IP-related laws or regulations in the past year.

ROC maintains no formal system of tracking and reporting seizures of counterfeit goods.

The ROC is not listed in the United States Trade Representative (USTR) Special 301 Report.

The ROC is not included in USTR’s Notorious Markets List.

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

Capital Markets and Portfolio Investment

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

ROC does not have a stock exchange. ROC-based companies may seek regional listing on the Douala Stock Exchange (DAC), which merged with the CEMAC Zone Stock Exchange (BVMAC). The regional central bank, 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 and do not impose restrictions on international payments and transfers.

The central bank (BEAC) monitors credits and market terms. Foreign investors can easily obtain credit on the local market.  As an immature financial market, the ROC offers a limited range of credit instruments.

Money and Banking System

ROC’s banking sector lags behind regional peers. The regulatory body of the Central Bank of Central African States (BEAC), the Banking Commission of Central Africa (COBAC), supervises the Congolese banking sector.  Banking penetration likely remains in the five-to-seven 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.  The 13 banks that operate in ROC suffer from strained liquidity and generally have deposits that outpace credit. Microfinance banks and electronic 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.

Non-performing loans remained steady at approximately five percent in 2018.

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.

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 three years.

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

Foreign Exchange and Remittances

Foreign Exchange

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

Foreign investors may hold local bank accounts and report no difficulty obtaining foreign assets (currencies) from any of the major commercial banks, which include French, Chinese, Moroccan, or African 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 EUR 1: CFA 655.957. 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 according to the exchange rate between the Euro and the U.S. dollar.

Remittance Policies

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

No known time limitations on remittances exist.

Sovereign Wealth Funds

ROC maintains no formal Sovereign Wealth Fund (SWF), although the Parliament adopted a law enabling the creation of a SWF. The law envisages establishment of the SWF at the BEAC and acquiring mostly risk-free foreign assets.

No official sovereign wealth fund exists.

As a former people’s republic, state-owned enterprises (SOEs) dominated the Congolese economy of the 1970s and 1980s. The remaining number of SOEs remains comparatively small following a wave of privatization in the 1990s. The national oil company (SNPC), electricity company (SNE), and water supply company (SNDE) constitute the largest remaining SOEs. The government reorganized the country’s electricity and water companies in October 2018 to increase efficiency and place a greater emphasis on public-private partnership.

SOEs report to their respective ministries.  SOE corporate governance regulations require non-state corporate directorship. SOEs do not meet this requirement in practice, most notably by the SNPC.

Private companies may compete with public companies and, in some cases, have won contracts sought by SOEs.

Government budget constraints limit SOEs’ operations. 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.

No known SOEs in receive non-market based advantages from the government.  SOEs do not directly compete with U.S. or other private companies.

Privatization Program

The ROC has no known program for privatization.

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

The government has not established a national contact point or ombudsman for responsible business conduct (RBC), nor has it established a national action plan to define and drive its approach to RBC.  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, 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 2016. No domestic transparency measures require the disclosure of payments made to the government and/or of RBC policies or practices.

ROC has a law against corruption by public officials. The government inconsistently enforces the law.  ROC ranks 165 out of 180 countries in Transparency International’s 2018 Corruption Perceptions Index.

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.

Corruption remains rampant in ROC. U.S. companies have cited corruption as an impediment to investment, particularly in the petroleum sector, where corruption practices remain prolific.

Resources to Report Corruption

Contact at government agency or agencies responsible for combating corruption:

Emmanuel Ollita Ondongo
President
Observatoire Anti-Corruption
Centre Ville, Brazzaville
06 944 6165, 05 551 2229
emmallita2007@yahoo.fr

Contact at “watchdog” organization:

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

U.S.-Republic of the Congo relations are positive and cooperative. The two countries work together on issues of common interest such as strengthening regional security, improving living standards of Congolese citizens, and safeguarding the environment. The United States has encouraged Congolese efforts to diversify the economy and improve the business environment. The United States collaborates with the next generation of Congolese leaders to improve access to knowledge and skills to build a more stable, secure, democratic, and prosperous Congo.

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

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

Unemployment in the 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. The actual rate is most likely closer to the numbers reported by Trading Economics and African Economic Outlook, which report 46.1 percent unemployment. A large pool of applicants exists for potential employers.

Except for members of the police, gendarmerie, and armed forces, ROC’s 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. Public and private institutions usually resolve occasional strikes over non-payment of salaries quickly and without incident.

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

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. However, the Government continues to pursue a local content law that may mandate increased 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 illegal behavior 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 remains uncommon.

No known labor dispute resolution mechanisms exist. Courts mediate and arbitrate labor disputes.

A number of strikes occurred in 2018, primarily by public sector university students and professors, health sector workers, and public transportation workers. A notable strike in the oil sector–where employees represent 60 percent of ROC’s total production volume–ceased production for one week. In this case, government security services intervened and oversaw negotiations to end the strike.

No known compliance gaps exist between ROC law and international labor standards that pose reputational risks to investors.

The government enacted no new labor laws or regulations during the last year.

The Overseas Private Investment Corporation (OPIC) has exposure in ROC.  One U.S. company has a political risk insurance program with OPIC. ROC participates in the Multilateral Investment Guarantee Agency (MIGA).

OPIC maintains an agreement with ROC; please refer to https://www.opic.gov/blog/impact-investing/a-world-of-opportunity-opics-interactive-map-feature  .

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.

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