Congo, Democratic Republic of the
The Democratic Republic of the Congo (DRC) is the second largest country in Africa and potentially one of the richest in the world in terms of natural resources. With 80 million hectares (197 million acres) of arable land and 1,100 minerals and precious metals, the DRC has the resources to achieve prosperity for its people. Despite its potential, the DRC often cannot provide adequate security, infrastructure and health care to its estimated 81 million inhabitants, of which 75 percent live on less than two dollars a day.
The country possesses untapped resources that attract investors and could make it a giant in the African and global economies, but it occupies the 184th place (of 190) in the World Bank’s Doing Business 2019 report.
Overall, businesses in the DRC face numerous challenges, including fragility of functional infrastructure and alleged corruption at all levels of government. Though, the election of President Felix Tshilombo Tshisekedi has raised the hopes of the business community in the DRC, and there is optimism that this change in leadership heralds the beginning of a new era of transparency in the country.
Armed groups remain active in the eastern part of the country making for a fragile security situation that negatively affects the business environment. A long cycle of delayed elections finally ended in December 2018, with the arrival in power of the new President Felix Tshilombo Tshisekedi, reducing long-standing political tensions.
Poor governance, corruption and a deficit of transport, energy, and telecommunications infrastructure continue to make the business climate difficult. The infrastructure deficit is the main challenge as it hinders intra- and international trade. The poor quality of DRC’s infrastructure leads to import and export costs that are reported to be among the highest in Africa.
Despite some reforms implemented by the government, investors continue to complain about corruption and the lack of reform in the mining and subcontracting sectors.
ANAPI (Agence de promotion des investissements au Congo) strives to coordinate the actions of the Government of the Democratic Republic of the Congo (GDRC) in an attempt to simplify administrative formalities and procedures, but its influence in the administrative sphere is still limited. In 2018 business remained sluggish, with only the extractives sector exhibiting significant growth.
GDP growth in 2018 was 4.1 percent (compared to 3.7 percent in 2017), while the average rate of inflation was 27 percent (compared to 54 percent in 2017). Despite this, the year-on-year increase in consumer prices dipped to approximately 7 percent by the 4th quarter of 2018. The CDF stabilized against the USD, losing only 2.7 percent of its value in 2018 (compared to a depreciation rate of 23 percent in 2017). In 2018, the financing of the elections was supported by USD 500 million in public funds, roughly 9 percent of the 2018 state budget.
According to the Governor of the Central Bank, the main challenge remains the insufficient mobilization of public revenues, which is estimated by various sources to be between 7 and 10 % of GDP, as compared to an average of 20% in sub-Saharan Africa.
The primary minerals sector is the country’s main source of revenue. Copper, cobalt, gold, coltan, diamond, tin and tungsten, along with oil from offshore fields, provide over 95 percent of the DRC’s export revenue.
The agricultural sector and the forestry sector present opportunities for economic diversification in the DRC. Agriculture is the mainstay of the economy, as it employs approximately 60% of Congolese. The National Strategic Development Plan (NSDP), currently being finalized, plans to use agricultural transformation to advance the DRC into a middle-income country by 2022, including through the establishment of agro-industrial parks in the country’s various regions, which will take into account the interests of small producers. The industrialization of the forest-based sector would strengthen diversification efforts.
According to foreign investors, inadequate infrastructure and allegedly predatory taxation have greatly diminished the secondary sector. Several breweries and bottlers, a number of large construction firms, and limited textiles production are still active.
The tertiary sector includes retail and wholesale sales, banking, transport and communication components. Micro commerce dominates the retail sector; the banking sector is small in terms of capitalization, but diverse in terms of ownership; the highly competitive telecommunications industry is expanding into electronic banking.
The banking sector configuration in 2018 remains unchanged from the previous year. There are currently 17 operational banks in the Congolese banking industry. This includes BIAC, which is in serious difficulty and will likely be dissolved and another, Byblos Bank RDC, which became Solidaire Banque following the withdrawal of its majority shareholder and has remained practically inactive. The bank penetration rate is well below the sub-Saharan African average of 25%. The nation’s economy is highly dollarized, which weakens monetary policy execution, financial development and systemic stability.
The DRC is finally opening up its insurance sector after years of hesitancy and delay. The new regulator ARCA (Autorité de Régulation et de Contrôle des Assurances), approved four new insurance companies and two insurance brokers on March 28th, 2019. The insurance sector will hopefully stimulate the economy, by mitigating risk and financing economic development projects.
Reform of a non-transparent and often corrupt legal system is also a prerequisite for investors to benefit more fully from the DRC’s membership in the Organization for the Harmonization of Business Laws in Africa (OHADA).
The Embassy invites all prospective investors to visit www.travel.state.gov to read the latest country-specific information and travel warnings before traveling to the DRC.
|TI Corruption Perceptions Index||2018||161 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank Doing Business Report “Ease of Doing Business”||2019||184 of 190||http://www.doingbusiness.org/rankings|
|Global Innovation Index||2017||N/A of 126||http://www.globalinnovationindex.org/content/page/data-analysis|
|U.S. FDI in partner country ($M USD, stock positions)||2017||$76||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2017||$460||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD
1. Openness To, and Restrictions Upon, Foreign Investment
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 16th, 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 27th, 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.)
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.
The GDRC does not prohibit outward investment, nor does it particularly promote it. There are no current government restrictions preventing domestic investors from investing abroad, and there are no current blacklisted countries with which domestic investors are precluded from doing business.
2. Bilateral Investment Agreements and Taxation Treaties
The U.S.-DRC Bilateral Investment Treaty (BIT) was signed in 1984 and entered into force in 1989. The BIT guarantees reciprocal rights and privileges to each country’s investors and provides that, should a claim arise under the treaty, it can be submitted to a dispute resolution mechanism through international arbitration.
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.
3. Legal Regime
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 ( ) and setting up enterprises ( ). 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: .
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. ( ). A “one-stop-shop” also exists for import-export business, covering, among other things, the collection of taxes and transshipment operations. ( ).
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.
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.
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.
4. Industrial Policies
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.
5. Protection of Property Rights
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.
6. Financial Sector
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
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.
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.
7. State-Owned Enterprises
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: .
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.
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.
8. Responsible Business Conduct
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
Palais de Justice, Place de l’Indépendance
Special Advisor for Good Governance
Position is vacant
10. Political and Security Environment
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, . Kivu Security Tracker ( ) 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
11. Labor Policies and Practices
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.
12. OPIC and Other Investment Insurance Programs
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.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
Points of contact for inquiries from the public:
Econ Section’s email address: KinshasaEcon@State.gov