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Accra (gtai) – After years of recovery, the economy of the Democratic Republic of Congo is
in crisis. The main reasons for this are high political instability as well as a crisis in its copper
mining industry. Whether things will improve is difficult to say at the beginning of 2017. For
German companies doing business with Congolese customers there are tougher times ahead. In
2016, German exports to the Central African country fell by more than 40%.
ECONOMIC
OVERVIEW
The economy has declined significantly since and donor organisations. The largest investment
2016, and forecasts for coming years are poor. The ever made in the country, the construction of the 12
Economist Intelligence Unit (EIU) predicts GDP billion USD Inga III hydroelectric power plant, is
growth of 3,5% in 2017 and only 3,1% for 2018. In being postponed again and again. If the plans are to
2015, GDP growth had been at least twice as high be carried out, construction is expected to begin as
for several years and gave the country an economic early as the end of 2018. The uncertainty is felt in
boost that nurtured hope of stability. High inflation potential sectors such as food processing or construc-
and political instability, are likely to result in a tion. The political instability also means that donors,
decline in real per capita income. who are heavily involved in the DRC, are reluctant
One of the main reasons is the low price of to release additional funds. Donors’ funds for further
copper. Since 2011, the price per ton has declined infrastructure investments are likely to decline.
from about 10 000 USD to under 5 000 USD. The
economic impact on DR Congo, which derives more CONSUMPTION
than 90% of its foreign exchange revenues from Consumers are also rejecting the poor economic
copper exports, is massive. Since November 2016, situation. Rising food prices mean much of the
the price of copper has risen to about 6 000 USD, population has to cut back on consumption. At
which suggests an upswing. While western investors only 470 USD per capita income, DRC is already
are leaving, Chinese companies continue to invest in one of the poorest countries in the world. To make
copper mines. matters worse, many foodstuffs are imported at
It is unclear what the political situation is. The great expense. If the country was politically stable,
term of office of President Joseph Kabila ended in local production of food and other consumer goods,
December 2016, but he is still in power. He is not such as personal care products, would be a more
allowed to apply for another term, according to the promising business.
Constitution; observers suspect he is deliberately The upper class almost exclusively purchases
delaying the election to buy time. In September imported goods. Consumer centres are
2016, a demonstration by opposition parties killed Kinshasa (about 10 million inhabitants) and the
more than 50 people. Western nations hope that Lubumbashi area (about 5 million inhabitants).
planned economic activities will put pressure on Local supermarkets (including Shoprite and
Kabila. Conditions for companies that seek to trade Psaro) suffered recent losses, partly because
or invest are difficult. expatriates from Western mining companies have
withdrawn from Katanga. The situation is more
INVESTMENTS stable in Kinshasa where the middle class has lost
While mining companies such as Freeport- purchasing power but foreigners, mostly diplomats
McMoRan from the USA, are selling their shares, or employees of other government organisations,
Chinese mining companies are filling the gap. The remain.
Sicomines mine under construction but in the
Katanga region the mood is sour. There are barely FOREIGN TRADE
any investments from service providers because no According to provisional figures of the Federal
one knows what will happen next. Statistical Office, German exports to the DR Congo
Meanwhile, money is still pouring into the con- fell sharply. German companies supplied goods
struction of power plants by some mining companies worth 147,9 million euro in 2015, but this dropped
72 ANNUAL REPORT OF THE SOUTHERN AFRICAN–GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2016–2017
U b a ng
SOUTH SUDAN
Bangui i Juba
National capital
District capital Uele
Major airport K ib
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District boundary ng
o ORIENTALE
Lake
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Main road
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Albert Kyoga
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Railroad Lu
EQUATEUR Kisangani Kampala
CONGO NORD-
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Area 2 344 858 km²
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Lake RWANDA
Kigali Population 79.7 million (2016)
(C o ng o )
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Kivu
Bukavu
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Lac
Mai-Ndombe
KASAI Kindu Population growth 3,18%
Bandundu
L u ke ni e
ORIENTAL Bujumbura
K as SUD-KIVU
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Brazzaville
Kinshasa
Kw
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MANIEMA Official languages French
KASAI
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ku r u
SA
Cabinda BAS-CONGO
K I NS
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Capital Kinshasa
Matadi
L a ke
(ANGOLA) BANDUNDU Kananga ku g a UNIT E D
Mbuji-Mayi Lu
R EPUBLIC GDP growth 7,2%
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TANZANI A President Joseph Kabila
Kw
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Ease of doing
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KATANGA
184/189 (2016)
Lu
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business
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Luanda
L ulu
A N GOL A Lake
Mweru Currency Congolese franc
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MAL AWI
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Lubumbashi
Bangweulu
ANNUAL REPORT OF THE SOUTHERN AFRICAN–GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2016–2017 73
DEMOCRATIC REPUBLIC OF CONGO
SECTOR SURVEY
such as the Bukanga Lonzo, located 200 km from
Kinshasa, have been cultivated since 2014 by the
South African Africom. There are to be cultivated
ENERGY on 80 000 hectares, among other maize and beans
Planned construction of Inga III at a cost of about for the local market. A further expansion of the
8.4 billion USD, by far the largest energy project, surfaces is provided. Pure private investment is
is continually being postponed and experts claim rare because of the high political instability. A lack
construction may only begin at the end of 2018 at of transport and poorly developed retail are further
the earliest. hurdles for farmers to bring their goods to their
Donors and mining companies, on the other customers.
hand, are investing in smaller power plants to begin
meeting the electricity demand to some extent. FOOD
Despite the great potential of hydropower, experts Like other industries, the food industry has always
hold that an energy mix may be the most sensible suffered becaue of a poor national power supply.
solution in the Congo. The construction of hydroe- The political uncertainty that has now been added
lectric power plants takes a comparatively long time is making sure that investments are not forthcom-
and is expensive – the country urgently needs power ing. The potential in individual areas is large. The
now! Therefore, gas and coal act as an additional Congo also has to introduce expensive staple foods.
source of energy. There are also opportunities for The production of poultry and dairy products,
renewable energies aside from hydropower. beverages, confectionery, tomato paste or pastries,
for example, would be met with high demand. In
particular, companies in Kinshasa have settled
in some of these sectors. The supply of food and
packaging machines is particularly interesting for
German companies. This is also likely to have little
effect on the modestly declining machinery imports
from Germany in 2016.
In light of the scarcely developed agriculture
and food processing, almost all foodstuffs have
to be imported. Given the declining purchasing
power of more parts of the population, the business
environment for food suppliers is likely to deteriorate
74 ANNUAL REPORT OF THE SOUTHERN AFRICAN–GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2016–2017
I switched to
airplane mode.
at least in the short term. The sales market is roughly AUTOMOTIVE INDUSTRY
divided into two segments. The majority of the The demand for new cars is declining due to the
approximately 70 million inhabitants buy their food difficult economic situation. Asian manufactur-
in more informally organised markets. There the ers dominate the small market for new cars in
price is the measure of all things. Manufacturers of Kinshasa and Lubumbashi. German sedans and
cheap mass products have good chances there, for SUVs, distributed by CFAO and Tractafric, are
example in meat. In the supermarkets and the expats evident in the luxury segment. Robust, off-road
aimed supermarkets in the big cities Kinshasa and vehicles are needed. In the Katanga mining region,
Lubumbashi, however, luxury items are also found. a large number of commercial vehicles are also
needed during good economic conditions. Here too,
ENVIRONMENT demand declined sharply.
By 2020, some 300 million USD will be available
for new water projects. The expansion of the MINING
water supply is also one of the key areas for As a result of the recent collapse in copper and
German development cooperation. The largest gold prices, the mining sector is struggling. In 2015,
development project in the water sector is the Projet Glencore closed its Kamoto mine and Freeport-
d’Alimentation en Eau potable en Milieu Urbain McMoRan sold its shares in the Tenke-Fukurume
(PEMU), which is financed by the World Bank. copper mine.
PEMU focuses on modernisation and expansion The large Sicomines copper mine under construc-
of networks in the major cities of Kinshasa, tion at Kolwezi in Lualaba Province demonstrates
Lubumbashi and Matadi; Kisangani should that Chinese companies are investing, thanks to a
eventually also be added. Although wastewater good capital base. German companies are mainly
and waste projects have not been a priority for active as suppliers of mining technology. The sale
donors environmental problems are increasing, of conveyor technology or construction machinery
particularly in Kinshasa and Lubumbashi. could decline in terms of Chinese investment, since
Chinese miners tend to buy Chinese equipment. ■
ANNUAL REPORT OF THE SOUTHERN AFRICAN–GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2016–2017 75