Country report Congo

Economic overview

A state among the richest in natural resources in Africa, the DRC has long been at the center of the interests of many great powers. Tons of cobalt are extracted here and transported to Chinese refineries. The smuggling of gold supports that of arms, opposing the international community’s attempts at pacification. The country derives very little benefit from the international trade in commodities. For this reason, in 2018, the government of Kabila proposed a revision of the code for the regulation of the exploitation of mineral resources and therefore of transnational agreements. Proposal that was approved and that brought Congo in line with the world average for the sector

The situation in the DRC is followed with attention and concern by the European External Action Service, which coordinates the cooperation programs of the EU member states and monitors the situation in the country. In this context, Italy actively exercises its action, trying to encourage political mediation, in order to find shared solutions

The mission of the United Nations MONUSCO has managed to prevent an escalation in the various internal crises, but not to eradicate the presence of the numerous armed groups and to solve social and institutional problems. The UN project, in its methods and objectives, does not, in fact, follow the wishes of Congolese governance and the excessive neutrality is perceived negatively by local politicians.

The importance of the country from every point of view – natural resources, demographics, strategic location – thus requires a renewed interest from the great powers that overcomes the often predatory approach that has characterized the last few years and organizes a more solid multilateral commitment, in the interest above all of a population exhausted by decades of internal wars.

Main sectors of industry

The country is mainly dependent on imports, as the commitment for the development of agricultural production is not relevant at the moment.

The Congo economy is in fact largely dominated by oil production.

Oil accounts for 90% of exports, 2/3 of GDP and ¾ of budget revenues.

Congo, being a predominantly oil-dependent country, has been heavily impacted by falling crude oil prices, which has provided a decrease in GDP growth and a major accumulation of back payments.

Agriculture and forests. A large part of the active population is employed in agriculture, which however has rather small areas, about 3.4% of the territorial surface; there is a serious shortage of food. For their part, the Belgians almost completely neglected subsistence production and expropriated the best land to introduce commercial agriculture. In addition, the government’s economic policy choices aimed at privileging mining alone and at creating gigantic public works, which are very expensive but in reality not very useful for the country. Tubers such as cassava and yam are particularly suited to the tropical environment; among cereals, only corn and rice have a certain diffusion, while among fruit and vegetable crops, tomatoes, citrus fruits, pineapples and bananas prevail.

Breeding and fishing. Breeding is scarcely practiced, also due to unfavorable environmental conditions; in particular, cattle are severely hampered by the presence, throughout the Congolese area, of the tsè-tsè fly: the best areas are the highlands of Ituri, Kivu, Shaba and Kasai. Goats, sheep, pigs and poultry are also bred.

Mineral Resources. The great wealth of the Democratic Republic of the Congo is constituted by mineral resources, which contribute largely to the country’s exports and are particularly conspicuous as regards diamonds, cobalt and copper.

Industry. The traditional productive sectors mainly concern the transformation of local raw materials; agricultural and zootechnical processes are generally carried out by small and medium-sized companies, managed by Congolese, while in the large extractive and manufacturing industries the foreign direction prevails. Furthermore, the location of the plants has a double geographical concentration: in the Shaba, especially around Lubumbashi, where the industries related to the extraction and refining of minerals are grouped, and in Kinshasa, where the manufacturing industries that work for the market prevail. 

Communications. Also as regards the ways of communication, the Democratic Republic of the Congo immediately reveals the heavy colonial past. In fact, the Belgians created pure and simple arteries of penetration from the coast to the mining areas and areas occupied by plantations, generally following the natural passages already marked by the extraordinary Congolese hydrography, thanks to which rivers have always represented easy communication routes, indeed often the only ones, within the vast depression: 16,400 km are navigable.

Business. Exports mainly concern copper, cobalt, oil, coffee and above all diamonds, while imports are represented by fuels, machinery and equipment, semi-finished products and consumer goods, including, to a considerable extent, foodstuffs.

Taxation for businesses in Congo

The Republic of Congo inherited its tax system from the French one. It is a declarative type of taxation that draws its resources mainly from three taxes: the personal income tax, the corporation tax and the value added tax which represent about 80% of tax revenues.

Taxation of individuals

Without prejudice to the provisions contained in the international conventions against double taxation, all persons resident or fiscally domiciled in Congo are subject to personal income tax (IRPP) or, regardless of residence, those who receive taxable income in Congo by virtue of an international convention against double taxation.

Taxation of companies

Capital companies and similar companies (whatever the corporate purpose), legal persons domiciled abroad that receive real estate income in Congo or realize capital gains from the sale of securities or rights are subject to corporation tax (IS) companies held in companies governed by Congolese law, public bodies, state or local authorities that have financial autonomy and carry out an industrial or commercial activity or carry out operations for profit.

On the other hand, partnerships and similar companies, economic interest groups (G.I.E.) and limited liability companies (S.A.R.L.) whose sole shareholder is a natural person can opt for taxation to the IS. Newly established companies (for the first two years of their activity), certain non-profit entities such as cooperative companies for the production, processing and conservation of agricultural products, agricultural unions and agricultural credit banks are exempt from payment of the SI. all companies with net taxable income of less than 1,000 CFCA. Companies in the agricultural, fishing and livestock sectors are exempt from IS.

Taxation of companies

Capital companies and similar companies (whatever the corporate purpose), legal persons domiciled abroad that receive real estate income in Congo or realize capital gains from the sale of securities or rights are subject to corporation tax (IS) companies held in companies governed by Congolese law, public bodies, state or local authorities that have financial autonomy and carry out an industrial or commercial activity or carry out operations for profit.

On the other hand, partnerships and similar companies, economic interest groups (G.I.E.) and limited liability companies (S.A.R.L.) whose sole shareholder is a natural person can opt for taxation to the IS. Newly established companies (for the first two years of their activity), certain non-profit entities such as cooperative companies for the production, processing and conservation of agricultural products, agricultural unions and agricultural credit banks are exempt from payment of the SI. all companies with net taxable income of less than 1,000 CFCA. Companies in the agricultural sector, fishing and taxable base and rates are exempt from IS.

The CGI distinguishes non-oil companies from oil companies for which particular rules apply both for determining the tax base and for taxation.

For non-oil companies, the tax base is determined using the analytical method (difference between costs and revenues). of the breeding.

The rate of the IS is established at 33% and applies to incomes above 1,000 F CFA. The rate is increased to 35% for non-resident companies without a permanent establishment and reduced to 25% in favor of companies operating in the microcredit sector or carrying out private teaching or an agricultural or pastoral activity.

Investing in Congo

Foodstuffs

In the country the food products are all imported (mainly from Belgium, South Africa, Lebanon and India) and their cost is high. Among the main difficulties in importing food products are the difficulties of customs clearance procedures and logistics. In fact, there are few viable roads in the country.

Textile products

In the textile sector, good quality fabrics for use in local textile companies are all imported from countries such as China and Turkey.

Products of agriculture, fisheries and forestry

The Democratic Republic of Congo thanks to its very fertile land and tropical climate, lends itself to the development of the agricultural sector having the possibility of becoming the granary of all Africa. It should be noted that a grouping of Italian companies at the end of 2018 was awarded a World Bank Project for the creation of an agri-food processing pole in the territory of Lukula, in the Bas Fleuve District, in the Central Congo Province of the Democratic Republic of Congo.

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