Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
The Democratic Republic of the Congo’s (DRC) rich endowment of natural resources, large population, and strategic location in Central Africa make it a potentially rewarding market for U.S. companies. However, the DRC’s commercial and investment climate remains extremely challenging.
The DRC economy is largely reliant on commodity prices, particularly prices for copper, cobalt, tin, tungsten, and tantalum. Favorable commodity prices facilitated robust economic growth from 2001 to 2014, but the absence of political will, weak institutions, and persistent conflict in the regions continued to undermine resilience. A drop in mineral prices caused an economic downturn in 2016-2017. Growth rebounded to 5.9% in 2018 but fell to 4.5% in 2019 and fell further to -2.2%, as the COVID-19 pandemic caused a worldwide slowdown in demand for Congolese raw materials. In July 2020, the credit rating agency Standard & Poor’s lowered the DRC’s outlook from “positive” to “stable” because of the pandemic’s likely impacts. However, the DRC showed resilience in 2020, as the global downturn did not devastate the commodities-dependent economy as deeply as many economists had predicted. While the World Bank said the pandemic turned forecasted GDP growth of 3.5 percent negative for the first time since 2001, the Central Bank of Congo (BCC) more optimistically estimated that the economy grew 0.8 percent in 2020 because of the “dynamism of extractive activity.” According to the BCC, copper mines exported 1.31 million tons by the end of October 2020 (copper exports for all of 2019 totaled 1.42 million tons). Also, the price of copper has more than doubled from its pandemic low of nearly $4,600 per ton in late March 2020 to nearly $10,500 per ton in May 2021. Both the World Bank and BCC predict the economy will grow in 2021 by 2.1 and 3.2 percent, respectively.
Inflation, which averaged 1.4% from 2012 to 2015, soared to 54.7% in 2016 and fluctuated around 10% before increasing to 15% in 2020 due to COVID-19-induced limitations on imports. The Congolese Franc (CDF) depreciated sharply by 25% in 2020 due to the high price of imports, bringing the exchange rate to 2000 CDF to the US dollar.
A weak manufacturing sector, porous borders, weak links between the capital and the periphery, and between the regions have rendered the DRC an import-based economy. Low-cost consumer goods and foodstuffs smuggled into DRC from Angola and Zambia have undercut local production and resulted in large-scale capital flight.
The accession of Felix Tshisekedi as President in 2019 represented the first peaceful transition of power in the country’s history. In 2021 President Tshisekedi ended his alliance with the party of former President Joseph Kabila and formed a new coalition called the Sacred Union. In April Sama Lukonde became Prime Minister leading a new cabinet.
The DRC is a member of the African Union, Southern African Development Community, Common Market for Eastern and Southern Africa, Economic Community of Central African States, Organization for the Harmonization of African Business Law, and the Economic Community of the Great Lakes Countries. The DRC has applied to join the East African Community. The DRC is in the process of ratifying the African Continental Free Trade Agreement.
- Official Exchange rate (Central Bank of Congo): CDF 1988: USD 1 (from December 2020)
- Income per capita: $557 (2020)
GDP (current US$) (in billions USD):
- China: $5.79B
- Tanzania: $1.67B
- Zambia: $1.24B
- South Africa: $1.09B
- Singapore: $1.02B
Top 5 import markets in 2020
- China: $1.69B
- United States: $1.42B
- South Africa: $611.68M
- Zambia: $326.09M
- India: $315.23M
U.S. Companies find five primary advantages in exporting to the DRC. These include the fact the DRC is the fourth most populous country in Africa with a small but growing middle class. Congolese hold a high opinion of U.S. products and services, particularly in terms of the quality to price ratio. The DRC [is undertaking multimillion dollar programs to rehabilitate various sectors including agriculture, energy, construction, basic infrastructure, and transportation. The DRC’s turn to the United States and away from China has resulted in more international development finance being available and more contracting opportunities. The DRC Government has created a working group to improve the business climate and is actively seeking to increase foreign trade and investment. Exporting to the DRC can offer high profit margins as the market is not yet saturated with competition.
The country has three main economic hubs centered on large population centers with significant commercial or industrial bases. These are:
- Kinshasa and Kongo Central provinces: Kinshasa is the DRC’s most populous city and its political and economic capital. It is a vibrant economic hub; most foreign companies operating in the DRC maintain a presence in Kinshasa, and Congolese businesses tend to have their corporate headquarters in the city. Kinshasa is the third largest city on the African continent, with an estimated population of over 5.5 million inhabitants in the city and 12 million in its urban agglomeration. Kongo Central is the only province in the DRC with direct access to the sea. Matadi, approximately 170 miles (273km) southeast of Kinshasa, is the capital and largest city in the province, and is home to the principal seaport. A meter gauge portage railway and a paved two-lane road connect Kinshasa and Matadi. Though the Congo River flows between Kinshasa and Matadi, the stretch connecting the two is unnavigable.
- Haut-Katanga and Lualaba provinces: These two provinces form the southern economic hub comprising the southern half of the former Katanga province bordering Angola and Zambia. Lubumbashi, the DRC’s second largest city, is located near one of the world’s largest copper deposits. Today, the region is home to numerous domestic and internationally owned mines. Unlike Kinshasa, Lubumbashi, and a number of other key cities in the Lualaba and Haut-Katanga provinces are connected to the southern African rail network.
- North Kivu, South Kivu, Ituri, Bas-Uele, Haut-Uele, and Tshopo provinces: This area of economic activity, from the cities of Bukavu and Goma on the Rwandan border, to the river port city of Kisangani to the west, and the gold mines in Bas-Uele and Ituri, forms the third economic hub of the country. The area faces chronic instability due to the continuing low-intensity conflict between various armed factions fighting the DRC government and each other. Despite difficult conditions, the region is home to a number of industrial and artisanal mines extracting cobalt, gold, and diamonds, as well as a rich agricultural sector with export potential.