Foreign direct investment (FDI) in Congo

FDI in Figures

FDI flows to the Republic of Congo have been increasing regularly in recent years. Like many countries in the region, the Congo is rich in oil and other raw materials, and is largely affected by the fluctuations in natural resources global prices. According to the UNCTAD World Investment Report 2022, FDI inflows to Congo fell by 8% to USD 3.7 billion in 2021, but two international project finance deals were announced in the country. The largest involves the construction of an oil facility for USD 166 million. In 2021, the stock of FDI was estimated at USD 36.6 billion. According to UNCTAD’s Investment Trends Monitor, global FDI momentum weakened in 2022 in the context of the war in Ukraine, rising food and energy prices, financial turmoil and debt pressures.

The country's natural resources constitute its main asset, in particular oil and timber. Recently, the emphasis has been on the mining sector, which attracts a growing number of investors. In a few years, the country is expected to play an important role in the core of the Central African region due to the modernisation of its transport passageway between Brazzaville and Pointe Noire. France, China, the Netherlands, Mauritius and Italy are the main investors in the country (IMF). Lately, China has been playing an increasingly important role in the reconstruction of the country's port, road, rail and electricity infrastructure.
Although some reforms have been adopted, such as reducing property transfer fees or establishing rules to settle conflicts arising from contract execution, and enacting a new investment law, the economy is still not much favourable to foreign investments. The country is rich in natural resources, strategically positioned in Central Africa, with a 170-kilometer long coastal front, but its political instability, inadequate infrastructure, high cost of labour and raw materials, as well as low productivity are factors that discourage foreign investors.

What to consider if you invest in Congo

Strong Points

Among the factors that make the Republic of the Congo an attractive destination for FDIs, there are:

• abundant natural resources (oil, iron ore, potassium, phosphates, wood)
• great agricultural potential (out of the ten million hectares of fertile land, only two million are currently cultivated)
• member of the Central African Economic and Monetary Community (CEMAC), the Economic Community of Central African States (CEEAC), and the World Trade Organization (WTO)
• a small but heavily urbanized population
• the fact that the government is trying to diversify the economy (with the goal of becoming an emerging market economy by 2025) and developing the country’s infrastructure
• four foreign trade zones (the so-called “special economic zones – SEZs”), are expected to become operative shortly
• no legal restrictions or limitations on converting, transferring or repatriating funds associated with an investment.

Weak Points

The Republic of the Congo is not yet an attractive FDIs destination due to several reasons:

• periodic internal political and security risks, coupled with poor economic governance and lack of economic diversification (highly dependent on oil exports)
• almost half of the population lives under the poverty line and a high level of unemployment (10.27% in 2020 according to the World Bank)
• inconsistent electricity and water supply and weak IT infrastructure
• an overall poor business environment: the ROC was ranked 180 out of 190 countries in the World Bank’s 2020 Ease of Doing Business rankings (losing four positions compared to the previous year) and 165th out of 180 countries in Transparency International’s Corruption Perceptions Index 2020
• various ministries have regulatory authority over the individual industries in their area of responsibility, and local authorities may impose additional regulations or requirements which are hard to predict
• high risks of corruption and lack of transparency.

Government Measures to Motivate or Restrict FDI

The government of the Republic of the Congo is trying to attract foreign investments through various initiatives, including the creation of special economic zones, the establishment of the Agency for the Promotion of Investments (API) and the signing of several bilateral investment agreements (for instance with the U.S., France, China, Germany, Italy, Republic of Korea, Switzerland and the U.K.).
Furthermore, if a potential investment is estimated to be able to create jobs in the country, preferential tax and customs treatment may be granted (by submitting a request to the Ministry of Finance’s National Committee on Investments, which meets annually). Incentives may include a 50% reduction in business registration fees; and accelerated depreciation under the general tax structures. If at least 25% of a company’s shares are owned by domestic entities, further incentives may apply (such as a reduced dividend tax at 10%, capital gains tax reductions, deductions for business expenditures, reduced rents, etc.).
The Congolese labour code requires that the top manager of all companies be a Congolese national, however, this requirement has frequently been waived for multinational companies.