Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Most products enter through the maritime ports of Matadi and Boma in Kongo Central province, N’djili International Airport in Kinshasa, Kasumbalesa customs post on the Zambian border, or through several entry points on the Rwandan and Ugandan borders.
After customs clearance, importers move the products to their warehouse by truck, although some limited rail service is available from Matadi and in Katanga province. Importers sell their products either directly from the warehouse or move them to wholesale shops.
Wholesalers sell the products to retailers, whose shops may vary from Western-style buildings to open air markets. Major distribution centers include Kinshasa, Lubumbashi, Matadi, Mbuji-Mayi, Mbandaka, Kananga, Kikwit, Kisangani, Goma and Bukavu. The DRC’s distribution system functions on both modern and traditional levels, and the informal sector tends to grow in proportion with economic recessions. Many firms, particularly Congolese, Lebanese, Indian and Pakistani enterprises, conduct at least part of their business through informal channels. Smuggling, under-invoicing, and tax evasion are widespread.
Large trading firms that engage in a variety of commercial activities dominate most sectors. The formal sector caters to the Congolese elite, the expatriate community, and small traders engaged in traditional commercial activities who buy wholesale from larger traders. There are a growing number of small and medium-sized businesses that work with traditional merchants or serve DRC’s middle-and lower classes. Often dynamic, but small and frequently inexperienced, these firms are generally unable to obtain credit, are often ignored by chambers of commerce, and increasingly look to cooperative credit associations for assistance. Commercial activities such as operating small shops continue to flourish as unemployed former wage-earners turn to agriculture, commerce, and artisanal mining to make ends meet.
Most economic activity centers on the DRC’s major cities. In the country’s interior, transportation is difficult, expensive, and nearly impossible in the rainy season. The 2016 economic crisis worsened the situation and the concomitant increase in the price of fuel, combined with the lack of appropriate roads and infrastructure in the country, has made the distribution of products beyond the major cities and ports increasingly difficult.
Using an Agent or Distributor
Using a local agent is the quickest way to deploy a sales force in DRC. Local sales agents bring experience, customer portfolios and knowledge of the local market. The Economic and Commercial Section of the United States Embassy in Kinshasa may provide some assistance identifying and vetting agents.
Establishing an Office
Establishing an office in the DRC is a complex and time-consuming undertaking. Residency permit requirements, domestic labor regulations, and tax regulations change with little advance notice or without official notification or announcement. Hiring an attorney with local and commercial legal experience is critical. Joining a local business or commercial association may ease the burden of remaining in compliance with national and local regulations and provide valuable connections.
The Guichet Unique is a single point (“one-stop shop”) for business creation. The Guichet Unique performs essential formalities for business creation with the aim of approving business applications within three business days from receipt. The National Agency for Investment Promotion (ANAPI) provides assistance to investors who are interested in doing business in the DRC. In order to benefit from incentives under the DRC’s Investment Code (which include customs duty and tax exemptions), investors need to submit a business plan and a $1,000 fee to ANAPI to assess eligibility. Businesses investing less than $200,000 pay a $500 fee for the assessment. According to current regulations ANAPI has 30 days to decide on an investment project.
Corporations pay the Guichet Unique fee of $120 to certify the company’s charter, register at the Trade and Personal Property Credit Register, publish the company’s charter in the Official Journal, and obtain authorization and a business license. Sole proprietorships pay $30 to receive a National Identification Number, business registration, and authorization to open a business. There is no minimum capital requirement for corporations. Limited liability companies must provide capital of at least $20,000.
Businessmen in the DRC are keenly interested in franchising known American brands. There have been limited franchises with South African and other companies, but consumer purchasing power is low and companies worry about timely supply chains and maintaining quality. This opportunity is a possible growth sector.
Marketing is conducted primarily through word-of-mouth, radio, mobile phone ads, printed journals, and outdoor campaigns. The internet, social media, and mobile phones are emerging as important marketing media. Any advertisement in a media is subject to approval by the Higher Council of Audiovisual and Communication. The DRC postal system is insufficiently developed to support large-scale direct marketing.
There are opportunities for foreign businesses to enter joint ventures with foreign and domestic firms operating in the DRC. Congolese private businesses and parastatals seek foreign partners when undertaking resource and innovation intensive undertakings such as infrastructure, IT, power generation, mining, and other extractives projects. While joint ventures present real opportunities for companies seeking to work in the DRC, companies should conduct proper due diligence before entering into agreements with foreign or local partners in the DRC. Licensing is required in some industries such as telecommunications, mining, banking, and insurance.
Société Congolaise des Postes et Télécommunications (SCPT) is the public postal and telecommunications company in the DRC. One of the recent strategic partnerships entered by the SCPT is with Flash, which will make it possible to open postal accounts and access a multitude of services, including international financial messaging with Western Union and MoneyGram, national and cross-border messaging with Flash Cash, mobile money deposits and withdrawals, transfers to all bank accounts, tax and duty payments, top-ups for all telephone operators, as well as the renewal of TV subscriptions and many other payment services. FedEx and DHL, operate in the country through franchisees. International courier services (e.g., DHL, FedEx, UPS) are available in the major cities. To get an online quote for FedEx, DHL, and UPS, visit: https://www.ipsparcel.com/rate.cfm
U.S. companies should “perform appropriate due diligence” on their potential local partners, distributors, or agents prior to any proposed business deals. Potential investors may contact the Commerce Department or the Economics section at the U.S. Embassy in Kinshasa for help.