Encouraging signs for the Republic of Congo’s economy
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.
A gas station in Brazzaville, Republic of Congo.