- Thursday, June 23, 2016

The vast natural resources, considerable arable land and energy potential of the Democratic Republic of the Congo have been attracting investors to the region since the colonial period, and continue to bring billions of investment dollars into the country every year.

In addition, a population of about 85 million people and the DRC’s location in the center of Africa, sharing borders with nine other African countries, together create a regional market hungry for goods and services.

The European Union, China, the United States and countries from all over the world have companies operating in the DRC, especially in the extraction industries, including mining, timber and the recently discovered new oil deposits.

According to data from the United Nations Conference on Trade and Development, the DRC received more than $12 billion in foreign direct investment (FDI) between 2010 and 2014. This was one of the strongest showings in Africa for this time period, despite limited infrastructure and sometimes difficult business environment.

This success is not accidental.

The government of the DRC has been making important strides in improving the business climate. The World Bank’s Doing Business 2016 report on the DRC shows that the ease of starting a business in the country improved by 83 places compared with the 2015 report, climbing from 172 to 89 and placing the country in the center of the global pack. The Doing Business reports measure the ease/difficulty of starting and operating a small-to-medium-sized business in 189 countries around the world.

Although the DRC continues to be a challenging environment for private investment, and its national rank for other indicators of the Doing Business report are not as good, the government has implemented a series of reforms to make it easier to do business.

According to the DRC Ministry of Planning, reforms include creation of the National Agency for Investment Promotion and a steering committee for the improvement of the business climate. It has also ratified the OHADA treaty (Organization for the Harmonization of Business Law in Africa), which improves the efficiency of trade disputes and other judicial processes, and currently includes 17 African countries.

Additional reforms outlined by the ministry include establishment of a one-stop-shop for business creation, elimination of a minimum capital requirement for some types of companies and changing the sales tax to an added-value tax, as well as a series of changes to simplify the corporate tax code and cross-border trade rules.

A broader series of changes to improve the business climate and promote inbound investment cover rules on the transfer of property, obtaining licenses, execution of contracts, the protection of investors and liberalizing the code for the insurance markets, ministry documents show.

The DR Congo Investment Promotion Agency (ANAPI) has outlined target areas for FDI including: infrastructure, agriculture, mines, hydrocarbons, industry, transportation, energy, tourism, housing, telecommunications and forestry.

In 2013, the government adopted a National Agricultural Investment Plan which created an investment framework for 2013-2020. The goal of the plan is to grow the agricultural sector by more than 6 percent to ensure food security and create jobs, according to ANAPI.

The key component of the plan is the development of 20 agro-industrial parks spread throughout the country. The first park, Bukanga Lonzo, was inaugurated in Bandundu Province in July 2014, and is managed by SOPAGRI, a public-private partnership.

In the tourism sector, the government revised its 15-year master plan with the objective of achieving 1,150,000 international tourist arrivals, according to ANAPI. Possible areas for investment include development of recreation areas and amusement parks; tourist transportation options for “air, road, river and lake”; new hotels; and travel agencies.

Another sector ripe for additional investment is telephony and internet. Data from ANAPI shows that although mobile phone penetration is more than 45 percent, the national coverage is only 20 percent, and internet and data penetration is only 2.6 percent. In this sector, the agency claims that there are no barriers to entry for new investors.

To encourage investment, the government of the DRC has done preliminary work in identifying suitable projects.

The Ministry of Planning released a 56-page document, “Major Projects Awaiting Funding,” in December 2015. The document provides details on specific projects in the agriculture, infrastructure, tourism, energy and telecommunications/ITC sectors. Pre-feasibility or feasibility studies, including estimated costs, have already been prepared for most projects. The document can be found at investindrc.cd.

In addition, investors who apply by providing their business plans to ANAPI can benefit from a variety of incentives, including exemption from duties on imports of equipment and materials and tax exemption on profits and property. The length of these incentives varies from three to five years, based on the location of the investment.

To be eligible for these incentives, the new business must meet certain requirements, including proper registration as a Congolese business, a minimum investment of $200,000 for a large company or $10,000 for Small and Medium-Sized Enterprises (SMEs), and compliance with environmental and labor laws, among others.

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