Democratic Republic of Congo Business Overview

The Democratic Republic of Congo (DRC), the second-largest African country with a third-largest population, holds significant mineral resources. Despite these advantages, challenging social and economic conditions, inadequate transport infrastructure, and escalating conflict in the eastern DRC hinder economic growth.

The DRC’s economy relies heavily on international trade, with exports and imports accounting for 68% and 78% of GDP, respectively. Between 2001 and 2011, exports and imports grew by 8.6% and 12.3% annually. Over 90% of exports are commodities. However, the country’s dependence on external demand and financial flows was exposed in 2009 due to a commodity price crash and escalating conflict.

A campaign to control conflict minerals, similar to the one for blood diamonds, is gaining momentum. Section 1502 of the Dodd–Frank Act requires electronics companies to verify and disclose sources of conflict minerals like tin, tantalum, tungsten, and gold. The US Securities and Exchange Commission (SEC) reinforced this in 2012 by requiring companies to disclose purchases from the DRC. Reducing conflict mineral exports may decrease conflict and benefit the country. The DRC has made efforts to integrate with world trade. After a diagnostic study, it set up a steering group for a one-stop-shop reform. It’s also a member of African trade communities like COMESA, SADC, and ECCAS. Conflict minerals aren’t the only issue. Decades of conflict have underdeveloped the gold industry.

Market Opportunities

The DRC offers diverse opportunities. Its vast mining wealth attracts global companies, especially for hard-rock lithium, crucial to renewable energy batteries. Global lithium demand could quadruple by 2040 due to decarbonization efforts.

Energy potential is huge, including hydropower and solar. The DRC can generate over 100,000 MW of hydropower, more than half of Africa’s potential. East of the country, oil and gas discoveries yield the second-largest crude oil reserves in Central and Southern Africa, mostly in four large lakes bordering Tanzania, Burundi, Rwanda, and Uganda. Proven reserves exceed 180 million barrels, with total estimates exceeding 5 billion. Currently, Congolese oil production is limited to the coastal basin, with offshore exports of 25,000 barrels per day.

Agriculture is the DRC’s strength. With favourable climate and fertile soils, it can feed over 2 billion people with investment. U.S. companies have infrastructure construction opportunities, mostly in public-private partnerships. The growing transportation market demands vehicles, boats, and engines.

Risk to business

The DRC’s political turmoil has hindered economic development. The unstable sociopolitical environment poses a significant risk to businesses, while dysfunctional public administration and selective enforcement of the complex legal code hinder property rights protection and legal compliance. The fragile and underdeveloped local financial sector further exacerbates the challenges.

High taxes, including a 35% corporate income tax rate, discourage investment. The country’s immense natural resources have fuelled conflict rather than development, with human rights abuses and banditry deterring economic activity, primarily in the eastern region near Rwanda and Uganda. Frequent clashes between rebels and government forces, along with sporadic fighting and occasional roadblocks, constrain transportation and cause delays.

The DRC’s large population, estimated at 65.7 million in 2012, with a high growth rate of 2.7%, intensifies social challenges. Approximately 50 million people live below the poverty line of US$1.25 a day. Despite having a labour force of nearly 25 million, most workers are unskilled, with only 23.2% having secondary education. Labour productivity is extremely low, with each employed person contributing only US$691 to national GDP.