The Republic of Congo (RoC) is a country of enormous potential wealth relative to its small population of 4.5 million. However, the RoC’s fiscal and external accounts have deteriorated due to the sustained crash of oil prices, owing to the country’s continued dependence on oil. The IMF estimates weak economic growth of 1.4 percent in 2016 and 5 percent in 2017. Oil remains a big driver of growth, but its contribution to government revenue has declined sharply in the wake of the 2014 global drop in oil prices. The non-oil sector is primarily focused on the logging industry, but growth is also occurring in the telecommunications, banking, construction, and agricultural sectors. The RoC is a country poised for economic diversification, with some of the largest iron ore and potash deposits in the world, a heavily-forested land mass, a deep-water International Ship and Port Facility Security (ISPS) Code-certified port, fertile land, and a small but heavily urbanized population. The RoC has been AGOA eligible since October 2000, providing an additional enticement for export-related investment. The RoC is a member of the Financial Community of Africa (FCA).
With 46 percent of the population living on less than $1.40 per day, poverty prevalence in the RoC is much higher than in peer oil-exporting countries. There is no sizeable middle class with respect to education, skills, and material living standards. The RoC suffers from low education standards and little social mobility. The majority of the population operates in the informal sector of the economy.
In addition to risks stemming from fluctuating oil prices and income inequality, the RoC also faces periodic internal political and security risks. The RoC is a post-conflict society, with the final peace accord of the 1997-1999 civil war signed in 2003. In late 2015 and early 2016, political unrest resulted in over 30 dead, hundreds injured, and thousands of temporarily displaced persons. Such tensions may occur around elections, and potential investors should always check www.travel.state.gov for the latest security information.
The Republic of Congo (RoC) has made significant investments in recent years to develop its weak infrastructure, including the completion of paved roads linking the commercial capital of Pointe-Noire and administrative capital Brazzaville and other departmental capitals. Significant challenges remain, in particular with the RoC’s nascent broadband internet and inconsistent electric and water supply, which present the biggest hurdles for most foreign direct investment. The country’s paved road system remains underdeveloped and its railroad system to connect inland iron ore and timber resources in the north and west of the country with the port of Pointe-Noire is still on the drawing board. However, infrastructure improvement projects are evident in the major cities of the RoC and the government continues to report spending decent amounts of capital on infrastructure improvements, though at a decreasing rate with the drop in oil revenues.
International landlines are non-existent, though mobile phone saturation in the RoC is strong. In 2015 there were 111.66 mobile-cellular telephone subscriptions per 100 inhabitants. However, supporting infrastructure, particularly for data communications, is lagging. Internet penetration is 7.6 percent and connections are extremely expensive, providing significant room for competition and growth in that sector. And, while overall low income keeps people from having their own personal computers and internet services, prevalence of cyber cafes and other Wi-Fi hotspots is increasing, indicating both a desire for internet services as well as a potential market for local internet advertisers. However, the government closely controls internet and telecommunication access. This was demonstrated during the referendum to change the constitution in October 2015 when the government suspended internet and text communication throughout the country for 10 days. In March 2016 during the presidential election, the government suspended internet, text, and voice services for four days.
Investors report that the commercial environment in RoC has not improved substantially in the last few years. Many feel that they have good working relations with government officials, but corruption, especially among “informal” tax collectors, is still widespread. In January 2013 the Congolese government created an Agency for the Promotion of Investments (API) to promote economic diversification through expanding the pool of external investors. Throughout 2013 the government continued to put in place regulatory reforms with the stated goal of improving the business environment. Nevertheless, businesses are not yet noticing positive impacts from the new regulations, and the RoC remains near the bottom (177 out of 190) in the World Bank’s “Ease of Doing Business” rankings, and 159 out of 176 in Transparency International’s “Corruption Perceptions Index 2016”. Established American businesses operating in the RoC – as well as companies interested in establishing a presence – continue to encounter obstacles linked to corruption and lack of transparency. Various companies have raised concerns to the U.S. Embassy related to land titles, tax law misapplication, and general difficulty initiating negotiations with RoC government officials.
The energy and mining sectors will continue to represent the most significant sectors of the economy in the coming years. The RoC government issued a new hydrocarbons law in December 2016 that includes measures to increase taxation, boost local content, and invigorate the gas industry, and plans to conclude an oil block licensing round in mid-2017. Mining is seen as a significant sector for the future, as the country boasts large deposits of phosphate, iron ore, and potash. The government is eager to support mining investment as a means of diversifying its economy. Additionally, agribusiness presents a growth opportunity given that the country cultivates only about 2 percent of its arable land, most agriculture is practiced at the subsistence level, and the country imports more than 80 percent of its food.
|TI Corruption Perceptions Index||2016||159 of 176||http://www.transparency.org/
|World Bank’s Doing Business Report “Ease of Doing Business”||2017||177 of 190||doingbusiness.org/rankings|
|Global Innovation Index||2016||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, stock positions)||2015||-9||http://www.bea.gov/
|World Bank GNI per capita||2015||$2,540 USD||http://data.worldbank.org/