En­cour­ag­ing signs for the Repub­lic of Congo’s econ­omy

Africa Renewal - - Africa Watch - By Pavithra Rao

De­spite a re­cent of his­tory of eth­nic and po­lit­i­cal ten­sions, in­clud­ing a civil war over its highly-prized nat­u­ral re­sources, the Repub­lic of Congo’s econ­omy is set for im­pres­sive growth, ac­cord­ing to econ­o­mists. An eco­nomic fore­cast of 7.6% growth over the next three years will be pro­pelled by abun­dant nat­u­ral re­sources, in­clud­ing oil, nat­u­ral gas and di­a­monds. Congo’s growth is ex­pected to help dent poverty in the coun­try, which the World Bank says is about 70%.

The Repub­lic of Congo is one of sub-Sa­ha­ran Africa’s top five ma­jor oil pro­duc­ers, ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund. Oil is the coun­try’s dom­i­nant in­come-gen­er­at­ing source. In fact, in 2011, oil ac­counted for nearly 80% of the coun­try’s to­tal rev­enue. It cur­rently pro­duces around 250,000 bar­rels of crude per day, which is shipped to China, the Euro­pean Union and the United States, ac­cord­ing to the Global Trade At­las, an on­line or­ga­ni­za­tion that pro­vides in­for­ma­tion on trade statis­tics.

Over-re­liance on a sin­gle com­mod­ity has its draw­backs, econ­o­mists warn. Al­ready, there is a de­cline in Congo’s ma­tur­ing oil fields, which will lead to a de­crease in pro­duc­tion for the short term. How­ever, the gov­ern­ment is mov­ing fast to sup­ple­ment this de­crease by is­su­ing new on­shore and off­shore ex­ploita­tion li­cences. The U.S. En­ergy In­for­ma­tion Ad­min­is­tra­tion states that 10 on­shore and off­shore oil blocks are be­ing awarded this year. The re­cent drop in the in­ter­na­tional price of oil to be­low $80 per bar­rel by last Novem­ber is ex­pected to im­pact neg­a­tively on Congo’s oil.

In ad­di­tion to the vo­latil­ity in the oil in­dus­try, the World Bank says ob­sta­cles to Congo’s growth in­clude un­even dis­tri­bu­tion of re­sources be­tween in­fra­struc­ture and the so­cial sec­tors, poor ab­sorp­tive ca­pac­ity in in­vest­ment spend­ing and a weak ex­pen­di­ture chain. Congo has also been crit­i­cised for ear­mark­ing $60 mil­lion for the 2015 All Africa Games in Braz­zav­ille, its cap­i­tal city, de­spite its high poverty. The coun­try must ad­dress th­ese prob­lems, first and fore­most, be­fore it can be­gin to reach its po­ten­tial, states the World Bank.

Even as it ex­plores new oil sources, the World Bank also ad­vises the Con­golese gov­ern­ment to invest heav­ily in in­fra­struc­ture in or­der to boost the growth of non-ex­trac­tive sec­tors. Over­all, the bank be­lieves the coun­try could wit­ness im­pres­sive eco­nomic growth in the years to come.

Alamy/MJ Pho­tog­ra­phy

A gas sta­tion in Braz­zav­ille, Repub­lic of Congo.

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