The Republic of Congo (ROC) possesses enormous potential wealth relative to its population of five million. The IMF projects GDP growth of 3.7 percent in 2019. A sustained economic crisis since a 2014 drop in oil prices, poor governance, and a lack of economic diversification, however, have pushed the government of ROC to near insolvency, reduced its creditworthiness, and caused the central bank to use enormous amounts of its foreign currency reserves.
Oil represents the largest sector of the economy and contributes upwards of 60 percent of the government’s annual declared revenue. The non-oil sector consists primarily of the logging industry, but significant economic activity also occurs in the telecommunications, banking, construction, and agricultural sectors. ROC seems poised for economic diversification, with a territory of 30 percent arable land, some of the largest iron ore and potash deposits in the world, a heavily forested land mass, and a deep-water International Ship and Port Facility Security (ISPS) Code-certified port. ROC has been AGOA eligible since October 2000, providing an additional enticement for export-related investment. ROC participates in the Central African Economic and Monetary Community (CEMAC).
Poverty rates in ROC remain much higher than in other oil-exporting countries, with 46 percent of the population living under the poverty line. A sizeable middle class with robust education, skills, and material living standards does not exist on a large scale. ROC suffers from poor access to education, low educational standards, and little social mobility. The majority of the population operates in the informal sector of the economy and does not declare revenues and profits, pay taxes, or pay employee benefits to the state. Women do not participate proportionally, in the formal or informal economies, and women entrepreneurs face additional structural challenges establishing and operating a business and accessing credit.
In addition to economic risks, ROC also faces periodic internal political and security risks Potential investors should always check www.travel.state.gov for the latest safety and security information before traveling to ROC.
ROC has made significant investments in recent years to develop its infrastructure, including the completion of paved roads linking Brazzaville to the commercial capital of Pointe-Noire and other departments (regions). Significant challenges remain, in particular ROC’s nascent internet and inconsistent supplies of electricity and water, which present both hurdles to and opportunities for foreign direct investment. Significant sections of the country’s road system remains in need of maintenance or paving. The limited railroad network competes with truck and bus traffic for commercial cargo. However, major infrastructure projects still reach major cities, and the government reports spending significant amounts on infrastructure improvements.
The petroleum, timber, and mining sectors remain the most significant sectors of the economy in the near term. Agro business presents a growth opportunity given that the country cultivates less than ten percent of its arable land. Most agriculture remains at the subsistence level, and the country imports more than 80 percent of its food. The government has also voiced great interest in developing the country’s nascent tourism sector, a sector with potential for investment thanks to ROC’s pristine rainforest reserves. Limited transportation infrastructure will challenge potential expansions of this sector, however.
The telecommunications and mobile banking sectors stand poised for growth as well. Mobile phones saturate ROC’s market, though the country lacks supporting infrastructure for telecommunications. Internet penetration remains at less than 10 percent and connections are extremely expensive, providing significant room for competition and growth in the sector. While low per capita income prevents most people from owning personal computers and accessing the internet, cyber cafes and satellite broadband projects continue to grow in prevalence, indicating both a desire for internet services as well as a potential market for investors. The government closely regulates internet and telecommunication networks and reliability of service remains limited.
Investors report that the commercial environment in ROC has not improved substantially in recent years. The World Bank’s 2019 Ease of Doing Business report ranked ROC at 180 out of 190 countries, and ROC ranked 165 out of 180 countries in Transparency International’s Corruption Perceptions Index 2018. American businesses operating in ROC and those considering establishing a presence regularly report obstacles linked to corruption, lack of transparency, and host government inefficiency in matters such as registering businesses, obtaining land titles, paying taxes, and negotiating natural resource contracts.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||165 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||180 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2017||$230||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita||2017||$1,430||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|