His Excellency François Balumuene Nkuna,
Ambassador of the Democratic Republic of the Congo to the United States
Address to the Corporate Council on Africa
November 9, 2015
Members of the Corporate Council on Africa and distinguished guests, good afternoon,
I would like first of all to thank the Members of the Congo Working Group of the Corporate Council on Africa for giving me the opportunity to speak before this August assembly.
Thank you all very much for agreeing to come listen to me and talk with me about the economic situation of the DRC, and especially about the investment opportunities in this moment in my country.
For those who are already engaged with the DRC, I welcome your availability and intent to strengthen or diversify your investments. And for those who are not yet engaged, I welcome your interest in seizing opportunities that exist within the general framework of the country.
I am convinced that you already know the fundamentals of the Congolese economy based mainly on mining, agriculture, hydrocarbons, forests and natural resources. For example, you may be familiar with the abundance of fresh water contained in the Congo Basin, which stores the potential for nearly 100,000 megawatts of hydropower, of which 44,000 megawatts come from one site called Grand Inga, which is capable of providing electrical power to the entire African continent.
Endowed with considerable natural wealth and a population of approximately 80 million people, the DRC presents outstanding development potential. This huge country, covering an area half the size of the entire European Union, is located in the center of Africa, giving it a prime strategic geographic and commercial position.
The DRC’s growth rate, at 8.4% in 2015 and projected at 9.2% in 2016, is higher than the African average and can be attributed to the extensive national reconstruction program, to which the government has been committed since 2001. Accompanied by deep structural reforms across all sectors, the aim is to diversify the economy and set the country on course to become an emerging market by 2030.
That is why I want to frame my remarks today around seven major reasons to invest in the DRC.
- The DRC is a Pivotal Point for African Trade
Surrounded by nine countries, the DRC boasts a fortunate geographic location between Central, East and Southern Africa. The DRC is part of a Free-Trade zone that falls under the three most important African regional economic organizations, namely the East African Community (EAC), the Common market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC).
- Our Business-Friendly Reforms
Simplifying customs procedures, lowering taxes, introducing VAT, and putting in place a Single Window for setting up a company in three days are some of the numerous fiscal, legal and institutional reforms underway to foster a better business climate.
Tax revenues increased as result of anti-fraud and anti-corruption actions, the modernization of financial authorities, which will soon be interconnected, and the introduction of new customs, and duties instruments, including Value-Added Tax (VAT) in 2012. The General Tax Directorate created a division dedicated to large companies and Single Windows have been established at major border crossings. However, tax revenues were down slightly in 2013 and the tax burden remains low (11% of GDP, against 22% on average in Africa). Moreover, customs revenues provide about one-third of revenues while income tax represents only 25% and Corporate Income Tax (CIT, known as IBP in DRC) does not exceed 8%. New measures will focus on increasing tax revenues, including CIT.
The DRC is firmly committed to developing public-private partnerships in the most strategic and profitable sectors, such as agriculture, transport and energy.
- Growth Strategy
In support of its industrial development, the DRC is applying a growth strategy based on diversifying the economy and promoting the private sector. The priorities are strengthening infrastructure, in particular transport, boosting electricity production, local processing of resources and setting up successful, high-performance business groups.
- Opportunities for Investing in Three Specific Sectors:
- Agriculture and Forestry
With over 80 million hectares of arable land, the DRC could easily produce enough to feed three billion people. However, agriculture and livestock farming are very much based on small, traditional farms. Government authorities have developed an agricultural policy that focuses on modernizing agriculture to increase yields and production in order to meet domestic and foreign demand. Plans are moving ahead for the creation of Agro-Industrial parks built on tens of thousands of hectares across the country, to stimulate agricultural production, develop commercial farming and create jobs. There are numerous opportunities in the timber industry and industrial plantations (palm oil, rubber, coffee, and cotton, etc.) as well as in the huge fisheries.
- Industry &Infrastructure
The DRC’s agribusiness sector, currently largely underdeveloped, offers enormous potential, with guaranteed domestic, African and international markets. The entire agro-industrial sector needs to be diversified, and will benefit from infrastructure projects underway in energy, construction and public works.
The DRC’s remarkable size means there is considerable development potential for transport, be it air, road, rail, river or maritime. The service sector accounts for barely one-third of GDP despite the country’s rapidly growing middle class. ICT, financial services, retailing and business tourism are growing quickly, offering extensive prospects for modernization and growth.
- New Economic Partnerships
The DRC’s international relations also come into play in support of its economic and social policy. The country is forging links with a growing number of increasingly diversified partners, chosen for the skills and know-how that their companies can bring to the country’s reconstruction and development. While maintaining its traditional multilateral partnerships (International Monetary Fund, World Bank, African Development Bank and European Union), the DRC is seeking to consolidate its traditional bilateral cooperation (Belgium, France, USA, Germany, Canada, etc.) and broaden new ties (China, India and South Korea). Its policy of diversification extends to trade partners, confirmed by the increase in trade with emerging countries (Turkey, China, India, South Korea, Russia, Brazil and South Africa).
- Strengthening Regional Integration
Another component of economic diplomacy focuses on expanding the DRC’s membership of African institutions such as the Organization for the Harmonization of African Business Law (OHADA), and the regional economic communities, such as the Economic Community of Central African States (ECCAS), the Economic Community of the Great Lakes Countries (ECGLC), and the SADC-EAC-COMESA Tripartite Free Trade Area. All of these organizations, and more, will enable the DRC to benefit from the strengthening of intra-African trade and regional integration, as well as attract new investors and access new sources of funding.
- Strong Economic Growth
After the disastrous period of the 1990s, during which inflation reached an astronomical more than 9,000% in 1994, the DRC’s economy has been growing steadily. Over the 2002-2008 period, our gross domestic product growth stood at 5.8% on average. Driven by the primary and tertiary sectors, it is estimated at 8.4% in 2015 and expected to rise above 9.2% in 2016. With the implementation of tight monetary and fiscal policies, inflation is fully under control and low (1% in 2014) and the Congolese franc remains stable compared to foreign currencies.
Thanks to our dynamic economy and the reforms we have implemented in recent years, the DRC continues to be ripe for foreign investment.
The DRC is opening up competition in a number of private sector markets that up until now have been reserved for the public sector. New laws have been adopted, and others are under consideration, that will benefit the liberalization of the electricity and insurance sectors, promote ‘public-private’ partnerships in agriculture and infrastructure, and attract and retain both domestic and international investors.
All of these factors contribute to an economy that is growing faster than ever. In fact, the World Bank recently said “the DRC has the potential to be one of the richest countries on the African continent and a driver of African growth.” Not to be outdone, an International Monetary Fund report recently stated, “Despite a challenging external and domestic environment, the DRC’s economy continues to show resilience.”
For all of these reasons, the DRC is open and waiting for your engagement.