Democratic Republic of the Congo
3. Legal Regime
The DRC does not have a legal system to address the issue of competition. By joining the regional legal body OHADA and the regional Central and Southern African trade group COMESA, the DRC plans to implement the standards and regulations of these structures in order to create a more transparent and effective policy to promote competition.
There are no informal regulations run by private or nongovernmental organizations that discriminate against foreign investors. However, some investors perceive the regulations in the mining code as discriminatory against foreign investment.
The GDRC authority on business standards, the Congolese Office of Control (OCC), oversees foreign businesses engaged in the DRC.
There are no formal or informal provisions systematically employed by the GDRC to impede foreign investment. Companies most often complain of facing administrative hurdles as laws and regulations are often poorly or unevenly applied.
Proposed laws and regulations are rarely published in draft format for public discussion and comment; discussion is typically limited to the governmental entity that proposes the draft law and Parliament prior to enactment. Sometimes the government will hold a public hearing after public appeals.
By implementing the OHADA system, the GDRC strengthened its legal framework in the areas of contract, company, and bankruptcy law and set up an accounting system better aligned to international standards. For this purpose, a Coordination Committee was established internally in the GDRC to monitor OHADA implementation.
The government announced the creation of a business unit (CCA) in December 2019 to enact needed regulatory reforms.
The DRC is a member of the Extractive Industries Transparency Initiative (EITI), a multi-stakeholder initiative to increase transparency in transactions between governments and companies in the extractive industries. The DRC’s validation process for compliance with the EITI Standard commenced in November 2018, with an assessment due in 2020. The initial report published by the International EITI Secretariat in April 2019 stated that the DRC EITI failed to adequately address 13 of the requirements of the EITI Standard, with two of these assessed as unmet with inadequate progress. The report also stressed the need to clarify the financial flows of state-owned enterprises (SOEs) in the DRC’s extractive sector.
In 2019 the DRC failed to meet the minimum requirements of fiscal transparency according to the State Department’s Fiscal Transparency report. While the DRC publishes budgets that are publicly available and timely, the published budgets were not reliable indicators of actual government spending.
International Regulatory Considerations
The DRC is a member of several regional economic blocs, including the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), the Economic Community of Central African States (ECCAS), and the Economic Community of the Great Lakes Countries (ECGLC).
According to the Congolese National Standardization Committee, the DRC has adopted 470 harmonized COMESA standards.
The DRC is a member of the World Trade Organization (WTO) and seeks to comply with Trade Related Investment Measures (TRIM) requirements, including notifying regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Legal System and Judicial Independence
The DRC is a civil law country, and the main provisions of its private law can be traced to the Napoleonic Civil Code. The general characteristics of the Congolese legal system are similar to those of the Belgian system. Various local customary laws regulate both personal status laws and property rights, especially the inheritance and land tenure systems in traditional communities throughout the country. The Congolese legal system is divided into three branches: public law, private law and economic law. Public law regulates legal relationships involving the state or state authority; private law regulates relationships between private persons; and economic law regulates interactions in areas such as labor, trade, mining and investment.
In 2018 the DRC established thirteen commercial courts located in DRC’s main business cities, including Kinshasa, Lubumbashi, Matadi, Boma, Kisangani, and Mbuji-Mayi. These courts are designed to be led by professional judges specializing in commercial matters and exist in parallel to an otherwise inadequate judicial system. A lack of qualified personnel and a reluctance by some DRC jurisdictions to fully recognize OHADA law and institutions have hindered the development of commercial courts.
The current judicial process is not procedurally reliable and its rulings are not always respected. The current executive branch has generally not interfered with the proceedings. The national court system provides an appeals mechanism under the OHADA framework. Legal documents in the DRC can be found at: .
Laws and Regulations on Foreign Direct Investment
The 2002 Investment Code governs most foreign direct investment (FDI), providing for the protection of investments. In practice, an inadequate legal system has insufficiently protected foreign investors in the event of a dispute. Mining, hydrocarbons, finance, and other sectors have sector-specific investment laws.
ANAPI is the DRC agency with the mandate to simplify the investment process, make procedures more transparent, assist new foreign investors, and improve the image of the country as an investment destination (www.investindrc.cd).
The GDRC has a “Guichet Unique,” which is a one-stop shop to simplify business creation, cutting processing time from five months to three days, and reducing incorporation fees from USD 3,000 to USD 120. ( ). A “one-stop-shop” also exists for import-export business, covering aspects such as the collection of taxes and transshipment operations. ( ).
Competition and Anti-Trust Laws
There is no national agency that reviews transactions for competition or antitrust-related concerns. As a member of COMESA the DRC follows the COMESA Competition Regulations and rules, and the COMESA competition body regulates competition.
Expropriation and Compensation
The GDRC may proceed with an expropriation when it benefits the public interest, and the person or entity subject to an expropriation should receive fair compensation. The U.S. Embassy is unaware of any new expropriation activities by the GDRC against U.S. citizens in the past three years, but there are a number of existing and long-standing claims made against the GDRC. Some claims have been taken to arbitration, though many arbitral judgments against the GDRC are not paid in a timely manner, if at all.
ICSID Convention and New York Convention
The DRC is a member of the International Center for Settlement of Investment Disputes (ICSID) Convention and a Contracting State to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). It is important to note that the New York Convention does not apply toward disputes relating to immovable property, which includes mining rights.
Investor-State Dispute Settlement
The DRC is subject to international arbitration. A U.S. mining company sued under the BIT to recover losses suffered when FARDC troops sacked its mine in Kasai Central Province in 1995. The arbitration courts ruled the GDRC liable for damages totaling USD 13 million, and the GDRC started paying back the awarded amount plus interest to the U.S. company.
International Commercial Arbitration and Foreign Courts
The DRC adopted the OHADA Uniform Act on Arbitration (the UAA). The UAA sets out the basic rules applicable to any arbitration where the seat of arbitration is located in an OHADA member state. The requirements set out under Article 5 of the New York Convention for the recognition and enforcement of foreign awards applies where the seat of any arbitration is outside an OHADA member state, or where the parties choose arbitration rules outside the UAA.
OHADA‘s UAA offers an alternative dispute resolution mechanism for settling disputes between two parties where the place of arbitration is situated in a Member State. Disputes must be submitted to the Common Court of Justice and Arbitration (CCJA) in Abidjan in accordance with the provisions of the OHADA Treaty and the OHADA Arbitration Rules.
The UAA, while not directly based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law, is similar in that it provides for the recognition and enforcement of arbitration agreements and arbitral awards and supersedes the national laws on arbitration to the extent that any conflict arises. Arbitral awards with a connection to an OHADA member state are given final and binding status in all OHADA member states, on par with a national court judgment. Support is provided by the CCJA which can rule on the application and interpretation of the UAA.
Arbitral awards rendered in any OHADA Member State are enforceable in any other OHADA member state, subject to obtaining an exequatur (a legal document issued by a sovereign authority allowing a right to be enforced in the authority’s domain of competence) of the competent court of the State in which the award is to be made. Exequaturs are granted unless the award clearly affects public order in that State. Decisions granting or refusing to grant an exequatur may be appealed to the CCJA.
The OHADA Uniform Act on Insolvency Proceedings provides a comprehensive framework not only for companies encountering financial difficulties and seeking relief from the pressing demands of creditors, but also for creditors to file their claims. The GDRC judiciary system has agreed to enforce the OHADA Insolvency Act. Bankruptcy is not criminalized.
According to the World Bank’s Doing Business Report, there were no foreclosure, liquidation or reorganization proceedings filed in the country in 2019, making it impossible to assess the time, cost or outcome for an insolvency proceeding.
4. Industrial Policies
Investment incentives can range from tax breaks to duty exemptions, and are dependent upon the location and type of enterprise, the number of jobs created, the degree of training and promotion of local staff, and the export-producing potential of the operation. Investors who wish to take advantage of customs and tax incentives in the 2002 Investment Code must apply to the National Agency for Investment Promotion (ANAPI), which submits applications to the Ministries of Finance and Planning for final approval. The government does not have a history of providing guarantees or jointly financing FDI projects.
Foreign Trade Zones/Free Ports/Trade Facilitation
The DRC does not have any designated free trade areas or free port zones. President Tshisekedi has signaled that he will revive stalled efforts to join the East African Community (EAC). In November 2019, the Presidency submitted a law authorizing the ratification of the agreement of the African continental free-zone (ZLEC). The law is still pending approval by the Parliament.
Performance and Data Localization Requirements
Foreign investors must negotiate many of the conditions of their investments with ANAPI. Performance requirements agreed upon with ANAPI typically include a timeframe for the investment, use of OHADA accounting procedures and periodic authorized GDRC audits, protection of the environment, periodic progress reports to ANAPI, and the maintenance of international and local norms for the provision of goods and services. The investor must also agree that all imported equipment and capital will remain in-country for at least five years.
The Ministry of Labor controls expatriate residence and work permits. For U.S. companies, the BIT assures the right to hire staff of their choice to fill some management positions, but companies agree to pay a special tax on expatriate salaries. Visa, residence or work permit requirements are not discriminatory or excessively onerous, and are not designed to prevent or discourage foreigners from investing in the DRC.
The DRC does not have specific legislation on data storage or limits on the transmission of data.
7. State-Owned Enterprises
There are 20 DRC state-owned enterprises (SOEs) operating in the mining, transportation, energy, telecommunications, finance, and hospitality sectors. In the past, Congolese SOEs have stifled competition and have been unable to provide reliable electricity, transportation, and other important services over which they have monopolies. Some SOEs and other Congolese parastatal organizations are in poor financial and operational state due to indebtedness and the mismanagement of resources and employees. The list of SOEs can be found at: .
There is limited reporting on the assets of SOEs and other parastatal enterprises, making valuation difficult. DRC law does not grant SOEs an advantage over private companies in bidding for government contracts or obtaining preferential access to land and raw materials. The government is often accused of favoring SOEs over private companies in contracting and bidding.
The DRC is not a party to the WTO’s procurement agreement (GPA), but nominally adheres to the OECD guidelines on Corporate Governance for SOEs. The DRC is a Participating Country in the Southern Africa SOE network, with the Ministry of Portfolio and the Steering Committee for SOE reforms designated as Regularly Participating Institutions.
The DRC has no official privatization program.
8. Responsible Business Conduct
The GDRC has taken actions of limited impact to support responsible business conduct (RBC), by encouraging companies to develop and adhere to a code of ethics and respect for the environment. The DRC Labor Code includes provisions to protect employees, and there are legal provisions that require businesses to protect the environment. However, the DRC does not possess a legal framework to protect the rights of consumers, and there are no existing domestic laws to protect individuals from adverse business impact.
The Global Compact Network DRC, a public-private consortium affiliated with the United Nations, encourages locally operating businesses to adopt sustainable and socially responsible policies. In 2016, the DRC issued the Guide on Corporate Social Responsibility (CSR Guide) for the mining sector in Haut Katanga.
The DRC has adopted the OECD due diligence guidelines on responsible mineral supply chains as defined by the United Nations Group of Experts, as well as various resolutions of the UN Security Council related to business and human rights in the Congolese mining sector. The DRC participates in the Extractive Industries Transparency Initiative (EITI) and publishes reports on its revenue from natural resources, although in recent years the reports have been late or incomplete.
The 2018 Mining Code provides domestic transparency measures requiring the disclosure of payments made to government entities. Promines, a technical parastatal body financed by the GDRC and the World Bank, works to improve transparency in the artisanal mining sector. Amnesty International, Pact Inc., Global Witness, and the Carter Center have published reports on RBC in the DRC mining sector. The Dodd-Frank Act mandated companies publicly listed in the United States to declare their supply chains for DRC-sourced “3Ts” (tin, tungsten, and tantalum) and gold. Although the Securities and Exchange Commission is no longer actively enforcing the act, many U.S. multinationals appear to be complying voluntarily to avoid possible reputational damage.
The Tshisekedi government has used public prosecutions of high-level officials and the creation of an anti-corruption unit to improve the DRC’s reputation on corruption. DRC’s 2018 Corruption Perception Index score—161 out of 180—underlines the endemic and deep roots of corruption in the country. The DRC constitution includes laws intended to fight corruption and bribery by all citizens, including public officials. Anti-corruption laws extend to family members and political parties. Private companies have applied their own controls to limit corruption, and have in the past been more effective at controlling it.
In March 2020, President Tshisekedi created the National Agency to Fight Corruption. In June 2020, the National Assembly began discussing the law on the creation, organization, and function of the Agency. The National Assembly forwarded the proposal to the Political, Administrative, and Judiciary Commission for analysis prior to a vote. Currently corruption investigations are ongoing for three Managing Directors of SOEs. In June, the court convicted Tshisekedi’s former Chief of Staff of embezzlement and public corruption, and sentenced him to 20 years in prison.
The DRC is a signatory to the UN Anticorruption Convention, but not to the OECD Convention on Combating Bribery. The DRC ratified a protocol agreement with the Southern African Development Community (SADC) on Fighting Corruption. NGOs such as the group “The Congo is Not for Sale,” have an important role in revealing corrupt practices, and the law protects NGOs in a whistleblower role.
U.S. firms see corruption as one of the main hurdles to investment in the DRC, particularly in the awarding of concessions, government procurement, and taxation treatment.
The Agency in charge of fighting corruption in the DRC is:
Agence de Prévention et de Lutte contre la Corruption (APLC)
Ghislain Kikangala, Coordinator
Tel: +243 893 302 819
10. Political and Security Environment
In January 2019, Felix Tshisekedi became President in the DRC’s first peaceful transition of power, ushering a period of relative political stability. The December 2018 elections were the result of international, including U.S pressure, as well as a long period of mediation involving the Catholic Church, the government, and the opposition. Maintaining public support for the Tshisekedi government will ultimately require the administration to deliver on the campaign slogan of “the people first.”
The security situation continues to be a concern. Thousands of members of armed groups have been disarming and turning themselves in to the United Nations’ DRC peacekeeping operation (MONUSCO) and the GDRC since President Tshisekedi’s election, according to international observers. Most of the defections have taken place in eastern and central DRC. International statistics indicate that over 140 armed groups continue to operate in 17 of the DRC’s 26 provinces, primarily in the east of the country. The ISIS-affiliated Allied Democratic Forces (ADF) rebel group in eastern DRC is one of the country’s most notorious and intractable armed groups, and its members have shown no interest in demobilizing. Armed groups previously interfered with the effort to eradicate the Ebola outbreak in eastern DRC, but interference decreased and the eastern outbreak was declared over on June 25. President Tshisekedi appears cognizant of the important role security plays in attracting foreign investment, and has encouraged the Congolese army to work with MONUSCO to eliminate armed groups.
US citizens and interests are not being specifically targeted by armed groups, but can easily fall victim to violence or kidnapping by being in the wrong place at the wrong time. The Armed Conflict Location and Event Dataset tracks political violence in developing countries, including the DRC, http://www.acleddata.com/. Kivu Security Tracker (www.kivusecurity.org) is another database for information on attacks in eastern DRC. In addition, the Department of State continues to advise travelers to review the Embassy’s travel advisory: https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/DemocraticRepublicoftheCongoDRC.html
11. Labor Policies and Practices
The DRC labor market has a large and low-skilled labor force with high youth unemployment. Expatriates frequently fill jobs requiring technical training in the key mining sector. About 85 percent of the non-agricultural workforce is in the informal sector.
DRC labor law stipulates that for businesses with over 100 employees, 10 percent of all employees should be local. If the managing director is a foreigner, his or her deputy or secretary general is expected to be a Congolese citizen. The government can waive these provisions depending on the sector of activity and expertise available. There are no onerous conditionality, visa, residence, or work permit requirements inhibiting the mobility of foreign investors and their employees.
While the agricultural sector is expanding, it continues to face poor infrastructure and a lack of access to technology. About 60 percent of the workforce is in agriculture.
The DRC faces a deficit in skilled labor across all sectors. There are few formal vocational training programs, though Article 8 of the labor law stipulates that all employers should provide training to their employees. To address the high unemployment rate, the GDRC enacted a policy giving Congolese a preference in hiring over expatriates. Laws prevent firms from firing workers under most conditions without compensation. These restrictions have deterred hiring and encouraged the use of temporary contracts in lieu of permanent hiring. There is no government safety net to compensate laid off workers.
Congolese law bans collective bargaining in certain sectors, including by civil servants and public employees, and the law does not provide adequate protection against anti-union discrimination. While the right to strike is recognized, there are provisions which require unions to obtain permission and adhere to lengthy compulsory arbitration and appeal procedures before starting a strike. Unions often strike for higher wages or the payment of back wages.
The DRC government ratified the International Labor Organization’s (ILO) eight core conventions, but some Congolese laws continue to be inconsistent with the ILO Convention on Forced Labor.
DRC law prohibits discrimination in employment and occupation based on race, gender, language, or social status. The law does not specifically protect against discrimination based on religion, age, political opinion, national origin, disability, pregnancy, sexual orientation, gender identity, or HIV-positive status. Additionally, no law specifically prohibits discrimination in the employment of career public service members. According to some businesses, the government does not effectively enforce relevant employment laws.
Labor law defines different standard workweeks, ranging from 45 to 72 hours, for various jobs, and prescribes rest periods and premium pay for overtime. Employers in both the formal and informal sectors often do not respect these provisions. The law does not prohibit compulsory overtime.
The labor code specifies health and safety standards, but the government does not effectively enforce labor standards in the informal sector, and enforcement is uneven to non-existent in the formal sector. The Ministry of Labor employs 200 labor inspectors but has not provided funds to conduct labor inspections.