2021 Investment Climate Statements: Democratic Republic of the Congo
The Democratic Republic of the Congo (DRC) is the second largest country in Africa and one of the richest in the world in terms of natural resources. With 80 million hectares (197 million acres) of arable land and 1,100 minerals and precious metals, the DRC has the resources to achieve prosperity for its people. Despite its potential, the DRC often cannot provide adequate food, security, infrastructure, and health care to its estimated 84 million inhabitants, of which 75 percent live on less than two dollars a day.
The ascension of Felix Tshisekedi to the presidency in 2019 and his government’s commitment to attracting international, and particularly U.S. investment, have raised the hopes of the business community for greater openness and transparency. In January 2021 the DRC government became eligible for preferential trade preferences under the Africa Growth and Opportunity Act (AGOA), reflecting progress made on human rights, anti-corruption, and labor. Tshisekedi created a presidential unit to lead business reform and improve DRC’s poor ranking of 183rd out of 190 countries in the World Bank’s Doing Business 2020 report.
The natural resource sector has historically attracted the most foreign investment. The primary minerals sector is the country’s main source of revenue, as exports of copper, cobalt, gold, coltan, diamond, tin, and tungsten provide over 95 percent of the DRC’s export revenue. The highly competitive telecommunications industry has received significant investment. The energy sector has great potential, particularly in renewable sources such as hydroelectricity and solar. Several breweries and bottlers, several large construction firms, and limited textiles production are active. Given the vast needs, there are significant commercial opportunities in aviation, road, rail, water transport, and ports. The agricultural and forestry sectors present opportunities for economic diversification in the DRC.
Overall, businesses in the DRC face numerous challenges, including poor infrastructure, an arbitrary taxation system, and a weak and corrupt bureaucracy. The COVID-19 pandemic sent growth negative and worsened the country’s food security. Armed groups remain active in the eastern part of the country, making for a fragile security situation that negatively affects the business environment. Reform of a non-transparent and often corrupt legal system is underway. While laws protecting investors are in effect, the court system is often very slow to make decisions or follow the law, allowing numerous investment disputes to last for years.
Investors hope a new Prime Minister and cabinet in 2021 will bring a government more responsive to the needs of investors for an improved business climate and a level playing field. The government’s announced priorities include greater efforts against corruption, election reform, primary school education, and improvements to revenue collection. Observers expect the economy to bounce back to positive growth based on renewed demand for its minerals.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The ascension of Felix Tshisekedi to the Presidency in January 2019 and his welcoming attitude toward foreign direct investment (FDI), particularly from the United States, have raised hopes that the DRC government (GDRC) can impose and follow through on favorable FDI policies. Favorable FDI laws exist, but the judicial system is slow to protect investors’ rights and is susceptible to political pressure and corruption. Investors hope Tshisekedi can create a more favorable enabling environment by business climate reform, better rule of law, and tackling corruption. The DRC’s rich endowment of natural resources, large population and generally open trading system provide significant potential opportunities for U.S. investors.
The major regulations governing FDI are found in the Investment Code Act (No. 004/2002 of 21 February 2002). Current regulations reserve the practice of small retail commerce in DRC to nationals and ban foreign majority-ownership of agricultural concerns. The ordinance of August 8, 1990, clearly stipulates that “small business can only be carried out by Congolese.” Foreign investors should limit themselves to import trade as well as wholesale and semi-wholesale trade. Investors have expressed concern that the ban on foreign agricultural ownership will stifle any attempts to kick-start the agrarian sector.
The National Investment Promotion Agency (ANAPI) is the official investment agency, which provides investment facilitation services for initial investments over USD 200,000. It is mandated to promote the positive image of the DRC and specific investment opportunities; advocate for the improvement of the business climate in the country and provide administrative support to new foreign investors who decide to establish or expand their economic activities on the national territory. More information is available at https://www.investindrc.cd/.
The GDRC maintains an ongoing dialogue with investors to hear their concerns. There are several public and private sector forums which speak to the government on the investment climate in specific sectors. In 2019 President Tshisekedi created the business climate cell (CCA) to monitor the improvement of the economic environment and the business climate in the DRC, and to interface with the business community. The CCA in June 2020 presented a roadmap for reform. The public-private Financial and Technical Partners (PTF) mining group represents countries with significant mining investments in the DRC. The Federation of Congolese Enterprises (FEC), which is a privileged partner of the government and the workers’ unions, has a dialogue on business interests with the government. The FEC has relayed information to the government about the effects of the COVID-19 pandemic on the private sector. The FEC is also tracking post-Covid-19 investment sectors.
Limits on Foreign Control and Right to Private Ownership and Establishment
The GDRC provides the right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity.
The DRC law reserves small commerce exclusively for Congolese nationals and does not allow foreign investors to own more than 49 percent of an agribusiness. Many investors note that in practice the GDRC requires foreign investors to hire local agents and participate in a joint venture with the government or local partners.
The GDRC promulgated a mining code in 2018 which increased royalty rates from two to ten percent, raised tax rates on “strategic” metals, and imposed a surcharge on “super profits” of mining companies. The government unilaterally removed a stability clause contained in the previous mining code protecting investors from any new fees or taxes for ten years. Removal of the stability clause may deter future investment in the mining sector. The Tshisekedi government has indicated that it is willing to reopen discussions on the new mining code.
The GDRC does not maintain an organization to screen inbound investment. The Presidency and the ministries serve this purpose de facto.
Other Investment Policy Reviews
The DRC has not undergone a World Trade Organization (WTO), Organization for Economic Cooperation and Development (OECD), or a United Nations Conference on Trade and Development (UNCTAD) Investment Policy Review in the last three years. Cities with high custom clearance traffic use Sydonia https://asycuda.org/wp-content/uploads/Etude-de-Cas-SYDONIA-Contr%C3%B4le-de-la-Valeur-RDC.pdf, which is an advanced software system for custom administrations in compliance with ASYCUDA WORLD. (ASYCUDA is a large technical assistance software program recommended by UNCTAD for custom clearance management.)
The GDRC operates a “one-stop-shop” for Business Creation (GUCE) that brings together all the government entities involved in the registration of a company in the DRC. The goal is to permit the quick and simple registration of companies through one office in one location. In October 2020, President Tshisekedi instructed the government to restructure GUCE in order to ease its work with the various state organizations involved in its operation. More information is available at https://guichetunique.cd/.
At the one-stop-shop, companies fill in a “formulaire unique” in order to register with the: Commercial Registry (GUCE); tax administration (Direction Générale des Impots); Ministry of Labor; and National Institute for Social Security (Institut National de Sécurité Sociale (“INSS”)). The Labor Inspection Department and the National Office of Employment (l’Office National de l’Emploi (“ONEM”)) are also to be notified of the establishment of the company. Companies may also need to obtain an operating permit, as required from some municipal councils. The registration process now officially takes three days, but in practice it can take much longer. Some businesses have reported that the GUCE has considerably shortened and simplified the overall process of business registration.
The GDRC does not prohibit outward investment, nor does it particularly promote or incentivize it.
There are no current government restrictions preventing domestic investors from investing abroad, and there are no currently blacklisted countries with which domestic investors are precluded from doing business.
2. Bilateral Investment Agreements and Taxation Treaties
The U.S. DRC Bilateral Investment Treaty (BIT) was signed in 1984 and entered into force in 1989. The BIT guarantees reciprocal rights and privileges to each country’s investors and provides that, should a claim arise under the treaty, it can be submitted to a dispute resolution mechanism through international arbitration. U.S. companies have at times reported difficulties with the tax authorities from arbitrary enforcement of the taxation code.
The DRC has bilateral investment treaties in force with France, Germany, Switzerland, and the United States. Treaties have been signed with Belgium-Luxembourg Economic Union, China, Egypt, Greece, India, Italy, Jordan, Portugal, Republic of Korea, South Africa, and Ukraine but these have not yet entered into force. Kenya is currently negotiating a BIT. Lebanon, Côte d’Ivoire, and Burkina Faso have negotiated, but not signed, BITs with the DRC. In October 2016, the DRC and Rwanda signed an agreement on a simplified trade regime covering only small-scale commerce between the countries.
The AfCFTA is a continent-wide free-trade agreement brokered by the African Union (AU) that began on 1 January 2021, but hard work lies ahead. The DRC signed the African Continental Free Trade Agreement (AfCFTA) in March 2018 and ratified it in April 2021. The Presidency will enact the law in 2021. The agreement aims to facilitate imports and exports among member countries – with lower or no tariffs, free access to the market and market information, and the elimination of trade barriers – and offer numerous benefits to SMEs.
On January 1, 2021, the DRC again became eligible for benefits under the African Growth and Opportunity Act (AGOA), after a 10-year exclusion due to concerns over human rights violations. AGOA provides African countries with duty-free access to the U.S. market for over 1,800 products for 20 years. Congo’s main exports of copper, and cobalt were tariff-free under the United States’ Generalized System of Preferences trade program.
There is no bilateral taxation treaty between the United States and the DRC. In 2015, Zambia and the DRC signed a bilateral taxation treaty that abolished customs taxes across their common border.
3. Legal Regime
Transparency of the Regulatory System
Passed in 2019, the Law on Pricing, Freedom and Competition (the “Competition Act”) created a new Competition Commission charged with limiting control by one party over a market. DRC law mandates review if the turnover achieved is equal to or exceeds the amount determined by Decree of the Prime Minister upon proposal of the Minister of the Economy; if the parties hold a combined market share of 25% or more; or if the contemplated transaction creates / reinforces an already dominant position. DRC law requires notification prior to a corporate merger. It is unclear what penalties apply if there is no pre-notification.
The DRC is a member of the regional competition bodies, COMESA and OHADA. OHADA does not have an operational merger control regime in place, while COMESA does have merger control. Merger activities in the DRC should be conducted with COMESA in mind.
There are no informal regulations run by private or nongovernmental organizations that discriminate against foreign investors. However, some U.S. investors perceive the regulations in the mining code on local content as discriminatory against foreign investment.
The GDRC authority on business standards, the Congolese Office of Control (OCC), oversees and develops regulations relevant to 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.
The Official Gazette of the DRC is a specialized service of the Presidency of the Republic, which publishes and disseminates legislative and regulatory texts, judicial decisions, acts of companies, associations and political parties, designs, industrial models, trademarks as well as any other act referred to in the law. More information is available at http://www.leganet.cd/.
There are no formal or informal provisions systematically employed by the GDRC to impede foreign investment. Companies often complain of facing administrative hurdles as laws and regulations are often poorly or unevenly applied.
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.
Tshisekedi created the Business Climate Unit (CCA) by a presidential order issued in February 2020. The mission of the CCA is to monitor the national business climate and enact regulatory reforms. The CCA announced a roadmap for reform in June 2020, but has yet to implement the recommended reforms.
In November 2020, the GDRC launched the construction of the first Special Economic Zone, with the aim of attracting foreign investment and stimulating the creation of local businesses. This free zone offers tax and regulatory advantages for investors and entrepreneurs including a 5-to-10-year tax exemption. More information is available at https://www.azes-rdc.com/.
The roadmap details priority and urgent reforms and awaits action by the Prime Minister and the new cabinet. In the long term, the first Special Economic Zone will promote exports and create 3,500 direct jobs.
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. 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 2020, 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 Organization for the Harmonization of Business Law in Africa (“OHADA”), 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, which are based on the European system.
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.
The DRC has written commercial and contractual law. 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 the judicial system. A lack of qualified personnel and reluctance by some DRC jurisdictions to fully recognize OHADA law and institutions have hindered the development of commercial courts. Legal documents in the DRC can be found at: http://www.leganet.cd/index.htm.
The current executive branch has generally not interfered with judicial proceedings. The current judicial process is not procedurally reliable and its rulings are not always respected.
The national court system provides an appeals mechanism under the OHADA framework.
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 $3,000 to $120. (www.guichetunique.cd ). A “one-stop-shop” also exists for import-export business, covering aspects such as the collection of taxes and transshipment operations. (https://segucerdc.cd/ ).
Competition and Antitrust 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. In May 2020, Tshisekedi instructed the cabinet to better defend the GDRC’s interests in outstanding investor disputes, including if necessary, by agreeing to a settlement. This decision followed the announcement of two international court decisions unfavorable to the GDRC, which put the government liable for hundreds of millions of dollars.
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.
Companies report that the GDRC levies heavy fines in a form of financial expropriation. A government agency imposes fines due to a company’s failure to pay a tax, though often the tax regime is unclear and multiple government bodies impose different taxes. Companies that appeal these fines through the courts often encounter a long wait. There has not been an expropriation of property 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).
There is no specific domestic legislation providing for the enforcement of awards under the 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 $13 million, and the GDRC started paying back the awarded amount plus interest to the U.S. Company.
There have been charges of extrajudicial action against foreign investors, including levying fines and imprisonment. In one case an investor left the country after being jailed on charges of corruption.
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 in the domestic courts of 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.
In general, companies which fail to find a favorable judgment in domestic courts go to international courts for relief. This often drags the judicial process on for years. For domestic cases involving SOEs the courts often rule in favor of the SOEs. One attorney estimated that about five percent of cases have any transparency.
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 2020, making it impossible to assess the time, cost or outcome for an insolvency proceeding. According to the World Bank, the DRC ranked 168th out of 190 countries on ease of resolving insolvency.
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 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 March 2021, the DRC Parliament ratified the African Continental Free Trade Area (AfCFTA). The Treaty awaits enactment by the executive branch.
On November 4, 2020, The GDRC launched the construction of the first Special Economic Zone, with the aim of attracting foreign investment and stimulating the creation of local businesses. This free zone offers tax and regulatory advantages for investors and entrepreneurs including a 5-to-10-year tax exemption. More information is available at https://www.azes-rdc.com/.
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.
In response to private sector complaints, in June 2020 the GDRC repealed a law on subcontracting in the private sector that mandated the use of local companies and restricted using foreign entities.
The DRC does not have specific legislation on data storage or limits on the transmission of data. The GDRC does not force IT companies to hand over encryption data.
5. Protection of Property Rights
The DRC’s Constitution protects private property ownership without discriminating between foreign and domestic investors. Despite this provision, the GDRC has acknowledged the absence of enforcement protecting property rights. Congolese law related to real property rights enumerates provisions for mortgages and liens. Real property (buildings and land) is protected and registered through the Ministry of Land’s Office of the Mortgage Registrar. Land registration may not fully protect property owners, as records are often incomplete and legal disputes over land deals are common. Many owners lack a clear registered title to the land. In addition, there is no specific regulation of real property lease or acquisition.
Less than 10 percent of land have a clear property title, but the GDRC is in the process of promoting and encouraging people to regularize property titles by buying a final title called a “Record Certificate” (Certificat d’Enregistrement). Ownership interest in personal property (e.g., equipment, vehicles, etc.) is protected and registered through the Ministry of the Interior’s Office of the Notary.
Intellectual Property Rights
Intellectual property rights (IPR) are legally protected in the DRC, but enforcement of IPR regulations is limited. The DRC’s intellectual property laws date from the 1980s and remain in force. However, enforcement is weak, and IPR theft is common. The country is a signatory to a number of relevant agreements with international organizations such as the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO) and is subject to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Despite being officialy party to several international agreements that set minimum standards for IP, enforcement is lax due to low capacity, and a lack of awareness among consumers and businesses. The government does not keep a record of IPR violations.
The DRC is not included in the U.S. Trade Representative (USTR) Special 301 Report or Notorious Markets List.
Portfolio investment is nonexistent in the DRC and there is no domestic stock market. A small number of private equity firms are actively investing in the mining industry. The institutional investor base is not well developed, with only an insurance company and a state pension fund as participants. There is no market for derivatives in the country. Cross-shareholding and stable shareholding arrangements are also not common. Credit is allocated on market terms, but there are occasional complaints about unfair privileges extended to certain investors in profitable sectors such as mining and telecommunications.
Although reforms have been initiated, the Congolese financial system remains small, heavily dollarized, characterized by fragile balance sheets, and cumbersome to use. Further reforms are needed to strengthen the financial system, support its expansion, and spur economic growth. Inadequate risk-based controls, weak enforcement of regulations, low profitability, and excessive reliance on demand deposit undermine the shock resilience of the financial system.
The Central Bank of Congo (BCC) refrains from payments and transfers on current international transactions. The DRC’s capital market remains underdeveloped and consists mainly of the issuance of treasury bonds. In 2019, the BCC issued its first domestic bond in 24 years, which was oversubscribed. Most of the buyers were local Congolese banks.
It is possible for foreign firms to borrow from local banks, but their options are limited. Maturities for loans are usually limited to 3-6 months, and interest rates are typically around 16-21 percent. The inconsistency of the legal system, the often-cumbersome business climate, and the difficulty in obtaining inter-bank financing discourages banks from providing long-term loans. There are limited possibilities to finance major projects in the domestic currency, the Congolese franc (CDF).
Money and Banking System
The Congolese financial system is improving but remains fragile. The BCC controls monetary policy and regulates the banking system. Banks are concentrated primarily in Kinshasa, Kongo Central, North and South Kivu, and Haut Katanga provinces. Banking rate penetration is roughly 7 percent or about 4.1 million accounts, which places the country among the most under-banked nations in the world. Mobile banking has the potential to greatly increase banking customers as an estimated 35 million Congolese use mobile phones.
There is no debt market. The financial health of DRC banks is fragile, reflecting high operating costs and exchange rates. The situation improved in a weak economic environment in 2019 as deposits have increased, which could point to a better year in 2020 considering the asset quality measures taken by the BCC, allowing banks to absorb the economic impact of the covid-19 pandemic. Fees charged by banks are a major source of revenue.
The financial system is mostly banking-based with aggregate asset holdings estimated at USD 5.1 billion. Among the five largest banks, four are local and one is controlled by foreign holdings. The five largest banks hold almost 65 percent of bank deposits and more than 60 percent of total banks assets, about $3.1 billion. There are no statistics on non-performing loans, as many banks only record the balance due instead of the total amount of their non-performing loans.
Citigroup is the only correspondent bank. All foreign banks accredited by the BCC are considered Congolese banks with foreign capital and fall under the provisions and regulations covering the credit institutions’ activities in the DRC. There are no restrictions on foreigners establishing an account in a DRC bank.
Foreign Exchange and Remittances
The international transfer of funds is permitted when channeled through local commercial banks. On average, bank declaration requirements and payments for international transfers take less than one week to complete. The Central Bank is responsible for regulating foreign exchange and trade. The only currency restriction imposed on travelers is a $10,000 limit on the amount an individual can carry when entering or leaving the DRC.
The GDRC requires the BCC to license exporters and importers. The DRC’s informal foreign exchange market is large and unregulated and offers exchange rates slightly more favorable than the official rate. BCC regulations set the Congolese franc (CDF) as the main currency in all transactions within the DRC, required for the payment of fees in education, medical care, water and electricity consumption, residential rents, and national taxes. Exceptions to this rule occur where both parties involved, and the appropriate monetary officials, agree to use another currency. The CDF exchange rate floats freely, but the BCC carefully monitors the rate and intervenes to shore up the exchange rate.
There are no legal restrictions on converting or transferring funds. Exchange regulations require a 60-day waiting period for in-country foreigners to remit income. Foreign investors may remit through parallel markets when they are legally established and recognized by the Central Bank.
Sovereign Wealth Funds
The DRC does not have any reported Sovereign Wealth Funds, though the 2018 Mining Code discusses a Future Fund to be capitalized by a percentage of mining revenues.
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: http://www.leganet.cd/Legislation/Droit%20Public/EPub/d.09.12.24.04.09.htm
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 DRC has not defined responsible business conduct (RBC) for most industries, but the Labor Code includes provisions to protect employees, and there are legal provisions that require businesses to protect the environment. 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 GDRC has taken actions of limited impact to support RBC by encouraging companies to develop and adhere to a code of ethics and respect for labor rights and 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 impacts.
Reports of children working in the DRC’s artisanal mines has led to international pressure to find ways to ensure the DRC’s minerals supply chain is free of child labor. Development pressures have resulted in reports of threats against environmental activists. The DRC has adopted 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. Many U.S. multinationals appear to be complying voluntarily to avoid possible reputational damage.
The DRC has a private security industry but does not support the Montreux Document on Private Military and Security Companies. It does not support the International Code of Conduct or Private Security Service Providers, nor does it participate in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).
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 2020 Corruption Perception Index score—170th out of 180—underlines the 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 for the Prevention and Fight Against Corruption. Currently corruption investigations are ongoing for three Managing Directors of SOEs. In June 2020, the court convicted Tshisekedi’s former Chief of Staff Vital Kamerhe of embezzlement and public corruption and sentenced him to 20 years in prison. Accused of having embezzled funds allocated to Primary, Secondary and Technical Education (EPST), the General Inspector of EPST and General Director of the Service for Control and Payment of Teachers (SECOPE) were sentenced in March 2021 to 20 years of hard labor by the Court of Appeal of Kinshasa/Gombe.
The DRC is a signatory to both the UN Anticorruption Convention and the African Union Convention on Preventing and Combating Corruption but has not fully ratified the latter. The DRC is not a signatory 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 consortium “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 and harassment by local security forces as one of the main hurdles to investment in the DRC, particularly in the awarding of concessions, government procurement, and taxation treatment.
Resources to Report Corruption
Official government agency:
Agence de Prévention et de Lutte contre la Corruption (APLC)
Tel: +243 893 302 819
Ligue Congolaise de Lutte contre la Corruption (LICOCO)
Avenue Luango No14, Quartier 1, N’djili
+243 81 60 49 837
10. Political and Security Environment
In January 2019, Felix Tshisekedi became President in the DRC’s first peaceful transition of power. Following President Felix Tshisekedi’s establishment of a new political alliance known as the “Sacred Union”, the former Prime Minister stepped down in February 2021. On February 15, a week after he was sworn in as Head of the African Union, President Tshisekedi appointed Jean-Michel Lukonde as Prime Minister. 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 and the U.S. Embassy through its travel advisory (https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/DemocraticRepublicoftheCongoDRC.html) keeps a list of areas where it does not recommend travel by U.S. citizens. 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, with inconsistent demobilization processes and high recidivism rates. International statistics indicate that over 140 small and medium sized armed groups and organized criminal groups continue to operate in 17 of the DRC’s 26 provinces, primarily in the east of the country. The foreign terrorist organization-designated ISIS-DRC (a.k.a the 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. ISIS-DRC has been spreading violence throughout the eastern part of DRC fat an increasing pace since 2014 and killed at least 840 people in 2020 President Tshisekedi is 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. The Department of State continues to advise U.S. citizen travelers to review the Embassy’s Travel Advisory and country information page (https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/DemocraticRepublicoftheCongoDRC.html) for the latest security information.
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. About 60 percent of the total workforce is in agriculture.
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 is no onerous conditionality, visa, residence, or work permit requirements inhibiting the mobility of foreign investors and their employees.
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 146 labor inspectors, but the Labor Inspector General reports that funding is not enough to facilitate the conduct of efficient labor inspections.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance and Development Finance Programs
There is an active U.S.-DRC Investment Incentive Agreement in force. The U.S. International Development Finance Corporation (DFC) provides political risk insurance and project financing to U.S. investors and non-governmental organizations. Though there are currently no DFC projects in the DRC, though DFC is open to working on future projects.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source*
USG or international statistical source
USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Host Country Gross Domestic Product (GDP) ($B USD)