Africa > Central Africa > Congo Kinshasa > Congo Kinshasa Economy Profile

Congo Kinshasa: Congo Kinshasa Economy Profile

2016/05/30

Economic Overview

Annual GDP increase has been high for several years and the outlook is for further rapid expansion

Following an Article IV consultation in May-June 2015, the IMF issued an assessment that indicates that the DRC continues to enjoy one of the highest GDP increase rates in the world, driven by mining output, notably copper and gold, and an expanding services sector. The country’s natural resource base is substantial, with 80 mn hectares of arable land, over 1,100 minerals and precious metals, large copper reserves and DRC is the world’s leading producer of cobalt. The IMF indicates that these high increase rates are likely to continue, although the Fund acknowledges that the country faces substantial economic challenges.


Over a ten-year period to end-2014, annual average GDP increase was +5.7%, with +8.5% registered in 2013. EH expects GDP increase will be +6% in both 2015 and 2016, although there are significant upside (the IMF projects higher increase in the region of +9% and +8%) and downside risks (particularly involving uncertain political and social developments).


External accounts depend largely on the strength of exports from the mining sector and therefore on commodity prices


Export receipts derive principally from base metals (inclunding copper and cobalt), metal ores, diamonds and crude oil (11%). China is the major export market (50% of revenues) and South Africa is the major source of imported goods (20% of the total import bill). The diamond sector has been subject to considerable corruption and its management represents a key challenge to any government, which will rely on gem exports being channelled through official sources as a means of generating FX. Given its development needs, large annual trade and current account deficits will continue to be registered, requiring external financing.

This aid dependence may encourage political sensibility, but this cannot be guaranteed.
Hydrocarbons and mining codes are subject to revision. The government seeks to increase local content requirements, royalty fees and taxation and there is associated uncertainty in relation to investment terms and conditions. As a result, doing business with (or in) the country remains challenging. This uncertainty is compounded by currently weak internationally-determined commodity prices.

Country Rating d4

Strengths

Extensive natural resource base, inclunding copper, cobalt, gold, diamonds, oil, forestry products and hydroelectric power potential (the Inga III dam project, with support from the World Bank, could boost power supply in the longer term).
Attempts to maintain domestic and regional stability are assisted by the presence of a large UN mission force.
Strong GDP increase in recent years.


Weaknesses

The government in Kinshasa in the west has limited control over other parts of the country, particularly in the east where there is armed conflict involving local rebel forces and militias from neighbouring nations.
Difficult relations with neighbours, particularly Rwanda.
The key mining sector is subject to contractual uncertainty and national intervention and output is vulnerable to security risks.
Fiscal and current account deficits.
Infrastructure in Africa’s second major country is weak, increasing supply chain costs.
Very weak structural business environment.