Investment in the Congo, a real opportunity? – Trends-Trends on PC

Since the election of President Tshisekedi, the climate in the Democratic Republic of the Congo seems to be more favorable for business. And even if the war in Ukraine could eventually put pressure on the economy, growth forecasts there remain good.

“Belgium and the Congo are a family story. Sometimes things don’t go so well, sometimes things get better. But no matter what happens, we remain a family. This mission is an opportunity to revive the fraternal relations that unite us.” Last March, Rudy Vervoort, minister-president of the Brussels-Capital Region, began a five-day stay in Kinshasa, accompanied by representatives of about a hundred Belgian companies. Long awaited because it was postponed several times, this economic mission was all the more important because it was the first since the election of President Felix Tshisekedi. A tri-regional economic mission organized jointly with Awex, Flanders Investment & Trade, hub.brussels, with the aim of familiarizing and even deepening the Congolese market.

“Belgium and the Congo are a family story. Sometimes things don’t go so well, sometimes things get better. But no matter what happens, we remain a family. This mission is an opportunity to revive the fraternal relations that unite us.” Last March, Rudy Vervoort, minister-president of the Brussels-Capital Region, began a five-day stay in Kinshasa, accompanied by representatives of about a hundred Belgian companies. Long awaited because it was postponed several times, this economic mission was all the more important because it was the first since the election of President Felix Tshisekedi. A tri-regional economic mission organized jointly with Awex, Flanders Investment & Trade, hub.brussels, with the aim of familiarizing and even deepening the Congolese market. Brussels companies were the most numerous: about sixty. Because if the region represents a modest 13% of Belgian exports in the country, compared to 83% for Flanders and only 4% for Wallonia, the DRC is its first African buyer. Our country remains its leading European supplier, far behind China, the leading trading partner with 17% of total imports and 1.122 billion euros. The Asian giant is also the first recipient of exports from the DRC (51%) due to its omnipresence in the mining industry. Overall, in 2020, Belgian exports to the Congo were still around €291.01 million. As we can see, things in Belgium are not so bad. But given her knowledge of the field, the network she has, and strong connections, even if they weaken over time, one could say: “Could have done better.” Moreover, our country enjoys tax and legal benefits, which can especially contribute to the development of trade between the two states. Let us quote the Convention for the Prevention of Double Taxation, which, as its name implies, aims to avoid the accumulation of taxes. As well as the Convention for the Promotion and Reciprocal Protection of Investments, whose executive decrees were finally ratified at the end of 2021. Now the delicate issue of the “business climate” remains. It seems that the efforts of the government appointed by Felix Tshisekedi, which has made good governance the centerpiece of its program, have been commended. A special “business climate” cell was also created, attached directly to the president shortly after he came to power. Recall that in the World Bank’s Doing Business 2020 ranking, the DRC was among the worst students (183rd out of 190), where, for example, at the same time, neighboring Rwanda was proud of the 38th place. However, an encouraging sign is that in July 2021, a three-year program was struck – the first in 10 years – with the International Monetary Fund, which provided the DRC with a $1.5 billion package. An agreement that aims to help the country recover from the Covid-19 pandemic, maintain macroeconomic stability and resume the pace of reforms to boost growth. Although the war in Ukraine may eventually affect the Congolese economy, growth forecasts remain quite good. The IMF forecasts have even been revised upwards, with growth of 6.2% for 2022 instead of the originally announced 5.6%. But what kind of investments should be made in the DRC? As the Minister of Industry of the Congo, Julien Paluku, bluntly pointed out during the Belgian economic mission, there were over 10,000 industrial companies in the Congo at the time of independence. There are only 500 of them today. A desertification of the landscape that forces the country to import everything it can nevertheless produce itself, be it the agri-food, pharmaceutical, textile or mechanical sectors. Not to mention raw materials, which are little or not yet exploited and with which the country is full. Let’s quote oil: today 8 million barrels per year, with a potential of 20 billion, and for which, in addition, competition has just been announced for 16 out of 32 oil blocks (13 onshore, 3 offshore). Or, less well known, the nickel and chromium available in the Kasai Province are used very little. And not only does the DRC have one of the world’s largest reserves of components needed for electric batteries and smartphones – 70% of the world’s mined cobalt and 40% of coltan – but its competitiveness seems real in terms of processing these minerals. According to a Bloomberg study, the construction of wastewater treatment plants in the DRC would cost just $39 million compared to $117 million if they were built in the US, $112 million in China or even $65 million in Poland. The opportunity, which in addition will require the construction of infrastructure to serve the area, is an investment estimated at $58 billion under a government-initiated industrialization master plan. Thus, the capacity and funding of which may be depleted by PPPs (public-private partnerships), which the current Congolese Minister of Industry proposes to consider as “calls for bids” for foreign companies. Among the best-known PPPs is the Inga II Dam Rehabilitation Project, which accounts for about 60% of the country’s electricity generation. Also underutilized: agricultural potential. Of the 75 million hectares that can be used in the country, only 10 million are actually used today. At full capacity, the earth will be able to feed more than 2 billion people, far exceeding the needs of the continent. During her Belgian economic mission, Kimona Bonongue, President of the Federation of Congolese Companies, recalled readily that the Congo was once one of the world’s largest exporters of coffee, cocoa, rubber and palm oil. “We are only talking about our mines, but the real wealth of the country is agriculture,” said Modest Bati, Senate President. He is also working on legislation to make the sector more attractive. Exports that will be facilitated in the future as construction of the country’s first deep water port at Banana finally began in January after many ups and downs. Ultimately, the project, won by DP World of the United Arab Emirates, promises an annual capacity of 300,000 containers, or a turnover of more than 1.3 million tons of goods. “Don’t wait for the Congo to become Switzerland to invest in it,” insisted Nicolas Casady, the finance minister, who proudly announced a bill to facilitate lending and finance banking, during the same visit. One of Congo’s main problems remains its inability to provide long-term financing due to a bank rate of around 10%. Today in Kinshasa, many of those who insist on a transition under way are also aware that there is still work to be done. Rome was not built in a day, others recall, elaborating that investing in the Congo “remains an adventure” where, unsurprisingly, the rewards equal the risks, exponential even for those who “adventure.” Admittedly, its real impact is not yet known, but the day after the economic mission in March, Brussels Minister President Rudy Vervoort was already delighted with its success, citing in turn several agreements in the fields of telemedicine, textiles, construction and the environment. Wednesday. It is expected that there will be more such initiatives in the future. Because, as Isabelle Grippa, CEO of hub.brussels, said well: “International trade is a long love story.”

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