With growth predicted at 8.7 % in 2014, the DRC has confirmed its lift-off and proven that its economic potential is one of the strongest in Africa. It’s all there in the numbers!
The DRC’s economic results are trending upwards and the main economic indicators are now rated green. Start with the growth rate. A yearly average GDP growth of 5.4 % between 2002 and 2009 and 7.4% between 2010 and 2013. And growth in 2014 is predicted at 8.7 %. This growth is driven by activity in the mining sector, telecoms, wholesale and agriculture as well as by public consumption and investment. It’s a sign of the government’s efforts towards socio-economic development.
These performances are the result of fiscal and monetary policy. So at the end of 2013, inflation was at a historic level of 1%, against less than 3%.
The exchange rate has remained stable on all markets since February 2010. The government also undertook specific reforms to develop the financial markets and improve the management of public finances.
One of the flagship measures was to use banking services to pay the salaries for state officers and civil servants, rolled out across the entire country. Similarly, in terms of governance and transparency in natural resource management, the Extractive Industries Transparency Initiative (EITI) labelled the DRC as a “compliant country”, while the respective ratings from Moody’s and Standard & Poor’s further validated the progress the DRC has made towards good economic governance.
“We intend to capitalise on our achievements, consolidating macroeconomic stability and accelerating the structural reforms we need to promote sustainable and inclusive growth” the DRC’s Prime Minister, Matata Ponyo Mapon, said during his stay in Amsterdam.
An improving business climate
Business reforms have improved the business climate; they already yield considerable progress. To create a company in the DRC, you had to pay over $3,500, it would take at least 155 days and there were 13 formalities to go through between the various ministries and public administrations.
Since the implementation of a one-stop shop in April 2013, the timeframe has been cut to three days and costs cut to $120 for companies or $40 for individual establishments.
In addition, to fight against legal and judicial insecurity, and strengthen investment protection, the DRC joined the Organisation for the Harmonisation of Business Law in Africa (OHADA). To bolster these provisions, commercial courts are being set up gradually right across the country, and they are currently present in all the country’s major cities.
Likewise, the Law on Ratification of the 1958 New York Convention on Arbitral Awards was passed on 26 June 2013. Finally, serious changes have been made to facilitate cross-border trade: implementing Sydonia Word software has made it possible to streamline customs procedures and reduce them to 13 days for exports and 25 days for imports.
And to improve even further in this field, the government signed a contract with a private operator to put in place a complete one-stop shop for foreign trade. It will be up and running soon.
The tax burden was made lighter in January 2012 with the imposition of a VAT set at 16%. Tax deadlines have been synchronised and a single tax statement is almost ready. Corporation tax has been reduced from 40% to 35%. These efforts did not do unnoticed in the Word Bank’s latest Doing Business report: it ranked the DRC among the 10 economies in the world to have enacted the most reforms to facilitate entrepreneurial undertakings.
The DRC, one of the “giants” of Africa, is again attracting businesses and investors. With a surface area of 2,345,000 km²; an underground rich in various minerals including copper, cobalt, silver, uranium, lead, zinc, cadmium, diamond, gold, tin tungsten, magnesium and even coltan, the DRC has plentiful natural resources.
Having resolutely decided to accelerate the diversification of its economy, the government is committed to promoting the country’s other driving sector starting with agri-business.
The agricultural potential could reach nearly 80 million hectares of arable land and 4 million hectares of irrigable land; 125 million hectares of tropical forest and the capacity to produce 700,000 tonnes of fish.
Liberalisation of the energy sector
The liberalisation of the energy sector, through the Law of 17 June 2014, should encourage private investment in the fields of production, distribution and
transportation of electricity. The aim is to close the DRC’s energy deficit. The government has launched various major projects including the construction of the Inga III power plant, which has a predicted capacity of 4,500 MW at a cost of $2 billion; the construction of Grand Inga, with a capacity of 39,000 MW at a cost of $60 billion; the reconstruction of hydropower plants and the construction of electrical transmission lines at a cost of $6.4 billion; and the construction of other plants with a capacity of 1,960 MW to serve as a supply source for local industries.
Improving basic infrastructure
Refurbishing and modernising the country’s basic infrastructure is one of the priority pillars of the government’s action programme, in the field of transport and agriculture in particular.
These infrastructures should accommodate demographic as well as technological changes. The state is calling on private investors, under the framework of public-private partnerships, and plans to lay the groundwork for modern agriculture, through agri-industrial parks, refurbishing transport infrastructure (roads and rails), and the air industry (runways, control towers, technical blocks and terminals, air navigation equipment), creating an airline (Congo Airways), acquiring lighting equipment and dredging the river etc.
There are many projects. All that’s left is the investment!