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The Democratic Republic of Congo: Top-5 Investment Opportunities in 2019

17.02.2019
Article from AFRIC Editorial
The Democratic Republic of Congo has been struggling through political, social, and economical crisis for quite some time. The recent peaceful presidential power transition develops the trend for a political stability at least for the next 4-5 years. DRC’s potential to become the most economically successful country in Africa is undoubtful.

Investment Climate / Political Background

  • 80 million hectares of arable land
  • 1,100+ minerals and precious metals
  • 81+ million amazing people

The economic forecast has been optimistic with the World Bank Group predicting the GDP growth trend, driven by a boost in commodity prices and mining production. The growth is being also fuelled by investments in infrastructure and government attempts to improve the business climate. As of 2017 the Democratic Republic of the Congo had a positive trade balance of $2.59B in net exports.

Foreign Direct Investment Inflows, $US millions, UN Conference on Trade and Development (UNCTAD), UNCTADstat

Currently the mining industry, oil production and overseas financial aid are the main sources of the DRC income. DRC’s manufacturing sector has been chronically stagnant with a lack of investment. Foreign direct investment, net inflows, as reported by World Bank Group and UN, has dropped 2 times since 2010 but still it’s high, amounting USD 1,054 million, and if we consider it in % of GDP, it’s on the same level with Brazil and higher than in Cameroon.

Investment / Business Risk Factors

  • civil war and local in-security
  • high level of corruption
  • lack of skilled and highly educated personnel, employee theft
  • absence of state regulatory bodies in many industries
  • basically no electricity in rural areas
  • high import taxes
  • relatively high inflation rate
  • low consumer spending
  • unfriendly and aggressive outside disturbance from few G20 members and neighbouring countries
  • overseas financial aid

Irregardless of all business risks and concerns, commodities trading groups enjoy sales market with a zero-to-none competitors. Most of them are owned and run by Lebanese and Indians, they introduce international and smaller brands and set up distribution in their own retail chains. Most of the commodities are produced by the international brands at their production facilities in South Africa, thus the largest imports share (based on the country of origin) is taken by the RSA.

The Observatory of Economic Complexity, 2018

Largest Commodities Importers

Below we have listed few promising investment opportunities in the DRC (though with lower margins than mining, oil production, telecom and serving the numerous international missions).

POWER GENERATION FACILITIES

Based on USAid stats, the DRC has one of the lowest rates of electrification in the world 9%, with 1% in rural areas and 19% in urban areas. The DRC has a potential to install up to 100,000 MW of hydropower capacity. There’s also a good opportunity in construction of power transmission and distribution facilities. But copper cable theft might be the same issue as in the RSA.

Opportunities In Power Generation

  • Construction and operation of power generation facilities (including hydro and solar)
  • Construction and operation of transmission and distribution facilities
  • Production of basic equipment and accessories (cables, junction boxes, switches, etc).  

Power Africa Datasheet, USAid

AGRICULTURE
The livestock and fishery sectors are reported to have the highest potential. The cost of chicken, eggs, milk and cheese in Kinshasa is almost twice the price you would pay in neighboring countries. Lower retail prices will always meet the greater consumption considering the number of population.

Opportunities In Agriculture Sector

  • Poultry, meat, and fish production (farming)
  • Packaging facilities
  • Food processing
  • Irrigation
  • Cooling storages and warehouses
  • Logistic centers and delivery

INFRASTRUCTURE AND TRANSPORTATION

Construction business in the DRC is already monopolized by Lebanese companies but still there’s a huge room in infrastructure and transportation as both are vastly underdeveloped. We would assume this market is an attractive piece of pie for chinese companies.  

Opportunities In Transportation And Infrastructure

  • Water treatment and supply
  • Garbage collection and processing, recycling
  • Sewerage facilities
  • Roads construction

It’s important to note that there is a high demand for cement accompanied by heavy prices (USD 300-400t) and providing a good opportunity to set up cement production facilities. Unavailability of cheap cement causes one of the barriers for infrastructure development. The largest local cement producers:

ENTERTAINMENT AND TOURISM

The cost of eating and drinking anything out in Kinshasa is high, almost same cost as in Paris or Milan. There are only few places for sports and exploration activities. No activities for families with kids and teenagers unless you go for a barbecue. Nightlife is rather throbbing, offering a range of good bars and nightclubs. High prices, absence of activities, and local in-security affect tourism greatly but still provide amazing opportunities for development and good tourist inflow.

Opportunities In Entertainment And Tourism

  • Bed-and-breakfast economy class hotels with an organized tours service
  • Regular organized tours
  • Co-working spaces (shared offices with the good Internet connection). This type of space could be particularly popular with Congolese entrepreneurs, often looking for real estate solutions to develop their business.
  • Wedding\Family and Business Events\Funeral agency for middle class Congolese and expats
  • Playground facilities for families with small kids
  • Sports facilities, any type

EDUCATION AND CHILDREN ACTIVITIES

The DRC population is about 81 million with the most awful primary school conditions (no electricity, no hygienic and safety provisions, and no educational materials). The Ministry of Education is one of the most reform-focused ministries in the DRC, its cooperating with many foreign donors such as USaid and United Kingdom Department for International Development (DfID) . In spite of all reported efforts, the situation is not improving and there is a big room for private educational facilities both for kids and grownups.

Opportunities In Education And Children Activities

  • Languages studying centers
  • Management training centers
  • IT training centers
  • Nursing training centers
  • Affordable educational courses for children

If you look deeper into the DRC services, healthcare, and manufacturing market, it’s still in its infancy. There are billions of investment opportunities, you just have to learn local specifics how to operate any business there safely for your capital.

Article from AFRIC Editorial

 

 

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