AFRICAN RENAISSANCE
DEmoCRAtIC REpublIC oF CoNgo: opportunities Expand as Reforms take Shape
Paul Trustfull, Forbes African Renaissance, recently met with Democratic Republic of Congo President Felix Tshisekedi and Minister of Finance Sele Yalaghuli to discuss new developments and reforms in the country.
As the largest, and perhaps most exciting country to follow in Africa, the Democratic Republic of Congo (DRC) offers significant opportunity for investors. The DRC’s story starts with mineral wealth, yet there are some surprising new chapters being written under President Tshisekedi’s leadership.
The central African nation is endowed with over $24 trillion worth of mineral riches, including copper, diamonds and coltan. Its natural resources supply the consumer electronics market, and fuel the proliferation of renewable energy and many technology innovations.
The DRC shows remarkable resilience in the face of global economic uncertainty.
The nation of approximately 80 million is now on the cusp of economic prosperity. The DRC holds tremendous potential in the context of untapped mineral deposits, human capital, manufacturing capabilities and agriculture. Today, it stands as a beacon of persevering success—one that serves as a model for other central African nations.
Fresh Leadership Accelerates Growth
President Felix Tshisekedi and Minister of Finance Sele Yalaghuli are leading efforts to continue growing and diversifying the economy. At the same time, they are working to further strengthen multinational relationships and introduce capital investment opportunities. Over the past several months, Tshisekedi’s leadership team has successfully started developing innovative mechanisms to propel the country towards accelerated growth.
Within the bustling capital city of Kinshasa, evidence of this growth is widely apparent. From the improved road infrastructure to the influx of construction cranes crowding the nation’s skyline, the stage is being set for a new wave of economic expansion.
Despite global uncertainty, the country’s vibrant economy has shown signs of structural integrity that are a testament to its leadership and values. While GDP
growth slightly declined to 4.4% in 2019 compared to 5.8% in 2018, year-on-year inflation decreased to 4.6% in 2019 from 7.1% in 2018. While global commodity and macroeconomic shocks affected the country’s substantial extractives sector, economic stability has prevailed and opportunities for growth are abundant.
Since October 2019, Tshisekedi and his administration have established more than 80 reforms to attract foreign capital to the DRC. Improving the business climate and its ability to attract investors is among his administration’s most important objectives.
“My government and I are resolutely committed to mobilizing all necessary efforts to further clean up the business climate and provide a framework for private investment,” says Tshisekedi.
Reforms Designed to Attract and Streamline Investment
Investment opportunities have grown exponentially as recent government reforms have helped global institutions see significant growth potential in the DRC. Today, investors can take advantage of the nation’s mineral wealth, agricultural opportunities and a growing middle class, in addition to a decrease in bureaucracy and reforms in government regulation.
Since taking office in January 2019 after being elected in the country’s first-ever peaceful transfer of power, Tshisekedi’s actions and commitments illustrate the desire of his new government to make the DRC an attractive destination for foreign capital. His active pursuit of change in the fundamental foundations of the country is immense and his work to date has shown his ability to take action.
“The country is firmly committed to a series of reforms to improve the business climate,” says Tshisekedi. “Improving the business climate and the economic attractiveness of the DRC are among the most important objectives of my administration.” Tshisekedi has addressed inherited issues of corruption and property rights head-on. He acknowledges that the DRC can only be more attractive to foreign capital if it can drastically reform these problems. By reducing corruption and strengthening property rights, he is creating a system that will be able to generate the right incentives to attract and retain investors.
Beyond developing internal controls to better empower the private sector, President Tshisekedi is reviewing the country’s tax and customs policies. Ultimately, reforms aim toward a more favorable tax system for the private sector. In addition to the bolstering the national Investment Code, which offers substantial tax benefits, the DRC is actively looking into establishing Special Economic Zones that offer even greater benefits.
Structural Changes Address Education, Healthcare and Poverty
As one of central Africa’s anchors of commerce and development, the DRC has been often mischaracterized as a nation
Investors in the DRC can take advantage of the nation’s mineral wealth, agricultural opportunities and a growing middle class, in addition to a decrease in bureaucracy and reforms in government regulation.
struggling to overcome its perpetual conflicts as it attempts to reach its potential. The Tshisekedi administration recognizes the historical challenges it must address. Among these are weaker and non-inclusive growth, advanced dilapidated infrastructure and weak governance. The nation’s new leader s hip team has already shown a great willingness to introduce structural reforms to create a more stable economic environment. “The main lever to combat poverty is to sustainably and substantially increase national wealth while ensuring its best redistribution ,” Tshisekedi notes.
His administration has taken action by prioritizing education and healthcare for its inhabitants. First steps include making basic education free throughout the country, and rehabilitating a number of healthcare centers. These initiatives are focused on reducing the financial burden on the poorest Congolese and thus allowing an opportunity to enhance social equity.
Diversifying Economic Opportunities
With an eye on expanding the nation’s economy beyond its natural resources, Tshisekedi is looking to em power entrepreneurs and small business owners. With diversification into sectors in which smaller businesses can thrive, the nation can boost its economic performance and decrease dependence on commoditized goods.
The president also plans to achieve economic diversification through agricultural development and industrialization. Tshisekedi and his team are implementing several coordinated initiatives to strengthen incentives for investors in areas other than the extractive sector.
Developing core infrastructure throughout the country is also a top priority. Tshisekedi is strongly committed to rapidly reducing the significant gap in basic infrastructure in the transport and energy sec tor. To ameliorate some of the near-term concerns, his administration has started a program to rehabilitate urban roads in order to ease transport and decrease congestion. While transport infrastructure remains a challenge, perhaps the biggest challenge throughout the country and region remains power generation and distribution. Tshisekedi is determined to revamp the DRC’s energy sector by taking advantage of the nation’ s immense hydropower capabilities.
The development of the Inga Dam Project, one of the largest infrastructure projects ever undertaken, remains a key priority of the president’ s administration. He sees the Grand Inga Dam, the centerpiece of the Inga Dams, as potentially the world’s largest hydropower project and an instrumental part of Africa’s future energy strategy. The dam has the potential to generate 38,000 MW of energy and will help power South Africa, Botswana and Angola.
For longerterm electric infrastructure need s, disc u ssions with private sec tor participants are underway to develop smaller micro-dams that can supply power in several different parts of the country.
Equipped with Financial Expertise
The DRC’s Minister of Finance Se le Ya laghul ii st asked with a tremendously difficult challenge: growing and maintaining the economy of an immense and diverse country. In a world of collapsing commodity prices, uncertain demand and general malaise within the global banking sector, this task may seem daunting at times. Hailing from Gamena, a town in northern DRC, Minister Yalaghuli is no stranger to these types of challenges. Commodity price fluctuations and economic ramifications are not new to the country,
and over time, it has developed the capability to shield itself to some degree. As the former director general of the General Directorate of Taxes, Yalaghuli is experienced at improving the mobilizaton of revenues and contributing to the restoraton of the balance of public finances. President Tshisekedi and Minister Yalaghuli work in partnership to implement prudent fiscal and monetary policies and develop frameworks for the nation’s future. In 2019, further advances to the nation’s stability were made as the DRC agreed to a Reference Program with the Internatonal Monetary Fund. The three-year program demonstrates the leadership’s willingness to implement courageous reforms necessary to improve the country’s macroeconomic environment. Through the program, the IMF loaned $370 million to the DRC government to help restore macroeconomic and financial stability, and improve governance and transparency. Minister Yalaghuli’s prior experience working with international agencies has proved invaluable in the current setting. He was instrumental in negotatng cooperaton agreements with major international institutions including the International Monetary Fund, the World Bank Group and the African Development Bank.
A Country of Opportunities and Immense Potential
Through development of infrastructure and the improvement of its overall business climate, the leadership of the Democratic Republic of Congo has proven its ability to accomplish goals necessary to bring progress and contnued economic growth. “I remain convinced that the transformaton of our natural potental into effectve wealth for the benefit of our people requires a strong and innovatve private sector,” says Tshisekedi. As the Democratic Republic of Congo contnues to develop and create a wealth of opportunity for internatonal investors and its citzens, the development of a businessfriendly environment is vital for the country to become a superpower within the African contnent.