Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
The DRC’s economy is largely dependent on commodity prices, particularly the prices of copper, cobalt, tin, tungsten, and tantalum. Most raw mineral deposits remain untapped and have an estimated value of $24 trillion. The DRC is Africa’s largest producer of copper and the world’s largest producer of cobalt, a strategic metal used in battery manufacture. Prices for both metals have risen sharply in the past year. Despite its vaunted wealth, the country remains one of the poorest and least developed in the world, mired in armed conflict in the eastern part of the country for a quarter century.
After a year of moderate growth, 1.7 percent in 2020, the economy expanded by 5.7 percent in 2021, driven by increased mining production and high world prices for exports such as copper and cobalt. Growth in the non-extractive sectors has shifted from a contraction of 1.3 percent in 2020 to growth of 3.3 percent in 2021, driven by telecommunications, energy, and non-business services. The country’s growth is driven by strong commodity exports (11.5 percent) and private investment (9.8 percent). Despite the high level of current expenditures (wage expenditures exceeding their budget by 10.9 percent), a 39.3 percent increase in tax revenues, thanks to tax controls and penalties, has lowered the budget deficit from 2.1 percent to 1.6 percent of GDP between 2020 and 2021. Public debt, however, remains moderate at 22.8 percent of GDP. Inflation has been better controlled, resulting in a decline from 11.4 percent in 2020 to 9.3 percent in 2021, with a target of 7 percent for 2022, which has allowed the Central Bank to lower its prime rate from 18.5 percent to 8.5 percent in 2021. The ratio of bad loans to total gross loans decreased from 9.2 percent to 8.8 percent between 2020 and August 2021. Foreign exchange reserves increased from $709 million in 2020 to $3.344 billion in 2021, in part due to the receipt of 50 percent of the IMF Special Drawing Rights (SDR) allocation of $1.52 billion, with the remainder allocated to priority investments. With the increase in mining exports, the current account deficit is reduced from 2.2 percent of GDP in 2020 to 1.0 percent in 2021. Unemployment, as defined by the ILO, fell from 4.7 percent in 2012 to 3.0 percent in 2020.
The medium-term outlook for the DRC is favorable, with growth estimated at 6.4 percent in 2023. The mining industry is expected to grow further in 2022 and even more by 2024, as the Kamoa-Kakula copper mine enters its second phase of production in late 2022. However, the country’s economy remains exposed to fluctuations in commodity prices and the growth levels of its major trading partners, which could be disrupted by geopolitical conflicts and a resurgence of the pandemic.
The economic consequences of the Russian invasion of Ukraine have already aggravated inflation in sub-Saharan Africa and reduced household consumption, due to higher world food and oil prices. The budget deficit could widen by 2022, as the government is likely to use subsidies to cushion rising oil and food prices. The immediate challenge for the DRC is therefore to maintain political and macroeconomic stability while intensifying ongoing reforms to ensure sustainable and inclusive growth.
The DRC shipped US$16.1 billion worth of exported goods to the world in 2021. This dollar amount reflects a 30.8 percent increase from $12.3 billion in 2017. Year-over-year, the value of Congolese exports increased by 13.9 percent from $14.1 billion during 2020.
The DRC’s top five exports are refined copper and unwrought alloys, cobalt, unrefined copper, copper ores or concentrates, and crude oil. Together, this quintet of major exports represents 92.2 percent of the country’s total exports by value. The latest available data by country show that 97 percent of DRC’s exports were purchased by importers in the following countries: Mainland China (41 percent of the world total), Tanzania (11.8 percent), Zambia (8.8 percent), South Africa (7.7 percent), Singapore (7.2 percent), United Arab Emirates (6 percent), Switzerland (5.7 percent), Mozambique (4.8 percent), Vietnam (1.6 percent), Hong Kong (1 percent), Belgium (0.6 percent) and Malaysia (0.6 percent).
In 2020, United States exported $1.37 billion in goods to DRC. The main products that the United States exported to Democratic Republic of the Congo are Documents of Title (bonds etc.) and unused stamps ($1.16 billion), poultry meat ($26 million), and magnesium carbonate ($25.3 million). During the last 25 years exports from the United States to the Democratic Republic of the Congo have increased at an annualized rate of 12.4%, from $74.1 million in 1995 to $1.37 billion in 2020.
U.S. companies find five main advantages to exporting to the DRC. These include the fact that the DRC is the fourth most populous country in Africa with a small but growing middle class. The Congolese have a high opinion of U.S. products and services, especially in terms of value for money. The DRC is undertaking multi-million-dollar programs to rehabilitate various sectors, including agriculture, energy, construction, basic infrastructure, and transportation. The DRC’s shift toward the United States and away from China has led to an increase in international development funding and contracting opportunities. The Government of DRC (GDRC) has created a task force to improve the business climate and is actively seeking to increase trade and foreign investment. Exporting to the DRC can offer high profit margins because 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. With an estimated population of 17 million in its metropolitan area in 2021, Kinshasa is the third largest metropolitan area in Africa after Cairo and Lagos. It is the largest French-speaking metropolitan area in the world and one of the most populous in the world. 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 several 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 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.