- Since President Félix Tshisekedi took power in January 2019, DRC has been pitching and welcoming international and regional investors in Kinshasa.
- President Tshisekedi has struck mining and agriculture investment agreements with Chinese companies.
- In July, UAE signed a $1.9 billion deal with a state mining firm in the DRC to develop four mines in eastern Congo. South Africa struck electric batteries deal with DRC in July, too.
Across the Democratic Republic of Congo—the second largest country in Africa—the weather is friendly, and the policymakers in Kinshasa have been steadily turning the tide, making DRC a hub for investments.
A stroll down the streets of Kinshasa, a city of over 13 million bustling with activity, heavy clouds are keeping the glare of the tropical sun at bay. The capital’s streets are busy and crowded. The traffic is congested and millions rub shoulders on the sidewalks. To my utter shock, in Kinshasa, you even pay for your taxi ride using the king dollar! This is a true metropolitan city.
It is economic and policy engines running in cities like Kinshasa and the commercial centre Lubumbashi that are driving DRC’s profile of investments into fresh heights globally.
Congo turning into a hub of investments
Tipped by the International Monetary Fund to grow at 8.6 per cent, DRC is boasting one of the world’s highest economic growth rates. And this is no mean feat for a country of over 100 million people.
Which begs the question, what is turning the DRC into a hub of investments in Africa? A visionary President Félix Tshisekedi, bespoke investment hubs in the provinces, and a menu of favorable economic policies are placing mineral-DRC at a vantage position.
The World Bank is projecting that DRC, a country that neighbours nine others, will post 7.5 per cent economic growth by 2025.
Should the DRC achieve these high projections by the World Bank, then it will probably outperform the African Development Bank Group (AfDB) estimates of 4 per cent.
According to its Africa’s Macroeconomic Performance and Outlook report, the AfDB shows that DRC is not alone in its impressive economic growth estimates but so is most of the rest of the continent.
“Africa is set to outperform the rest of the world in economic growth over the next two years, with real GDP averaging around 4 per cent in 2023 and 2024,” reads the report in part.
Notably, these figures are considerably higher than the projected global averages of 2.7 per cent and 3.2 per cent, the AfDB said.
However, despite such promising economic performance, the DRC is one of the world’s five poorest nations. According to the World Bank, in 2022, the same year that the country had its highest economic growth, nearly 62 per cent of its people or 60 million plus people, were living on less than $2.15 a day.
As a matter of fact, “…about one out of six people living in extreme poverty in SSA lives in DRC.”
Drivers of DRC’s economy
DRC’s economic growth and its global fame are primarily pivoted by its vast opportunities in the extractives sector. The DRC is rich in high-demand industrial minerals such as nickel, cobalt, copper, uranium, lead, and zinc, among others.
The DRC is also rich in precious stones and metals ranging from gold to diamond, tin, and tungsten.
Through the National Agency for the Promotion of Investments (ANAPI), DRC is aggressively wooing investors into mining as well as into harnessing the country’s vast arable lands, roughly 80 million hectares across the provinces, for agricultural investments.
Under Managing Director Anthony Kamole, ANAPI is working for the improvement of the business environment through advocacy and advice to President Tshisekedi’s government.
The agency provides various services to investors enabling their establishment in the country and positioning to guarantee competitiveness. What’s more, ANAPI grants customs and tax incentives to investors whose projects are eligible for such benefits under the Investment Code.
The DRC has the world’s largest known deposits of rare earths cobalt and lithium. Both of these minerals are used in the manufacture of batteries to power electric vehicles, computers, and cell phones.
According to the report, “The Cost of Producing Battery Precursors in the DRC,” the market opportunity for electric vehicles is $7 trillion between now and 2030. Estimates show that it will bit $46 trillion between now and 2050.
According to the United Nations Economic Commission of Africa, DRC is producing 70 per cent of the world’s cobalt needs. With such huge potential and deposits, it is no wonder that the extractive industry accounts for 46 percent of DRC’s revenues. Overall, minerals make up a jaw-dropping 99.3 percent of DRC exports.
Growing DRC relations with investors
In his efforts to rebuild international relations and woo investors, President Tshisekedi visited China in May, meeting his counterpart Xi Jinping. The Heads of State announced a bilateral relationship for win-win cooperation through a strategic cooperative partnership. Notably, China is DRC’s largest trading partner and its largest source of foreign investment.
At the meeting, China reaffirmed its readiness to work with the DRC to “synergize their development strategies.” President Xi Jinping said the DRC-China relationship will promote development and open up a broader market for Kinshasa.
Currently, China is one of the major investors in DRC, with big miners such as Sicomines. In an effort to raise the country’s revenues from mining firms, Teshekedi has been leading DRC to renegotiate mining contracts with mining companies, including Sicomines.
Through Parliament, Kinshasa says that the earlier agreements with miners were favouring China more than the country.
The two presidents agreed on prioritizing DRC’s industrialization strategy by supporting growth in energy, minerals, agriculture, infrastructure and manufacturing.
China also announced plans to send agricultural technology experts to the DRC to provide policy support. “Under the current international circumstances, China and Africa should strengthen solidarity and cooperation more than ever,” President Xi Jinping noted.
In July, the United Arab Emirates (UAE) signed a $1.9 billion agreement with a state mining company in the DRC to develop at least four mines in the east, a dispatch from Tshisekedi’s office says.
Additionally, in July, Presidents Tshisekedi and Cyril Rhamaphosa of South Africa undertook to ensure the implementation of various agreements concluded during the 12th session of the Joint Grand Committee. One of the deals will see South Africa explore the opportunity of manufacturing electric batteries in DRC.
DRC’s Mining Code
The mining sector in the DRC is governed by the 2002 Mining Code, a law that was amended in 2018. To back the Mining Code, other legal provisions such as the Tax Code or the Customs Code work in tandem.
DRC’s Ministry of Mines is charged with implementing the country’s mining policy as set out by the law on hydrocarbons. Mining rights are granted by the Mining Cadastre (CAMI) through either a tender or by a request for rights.
According to the Mining Code (Article 242), shares of mining royalties are paid directly by mining companies and the lion’s share goes to the central government.
DRC mining royalties division (Source EITI)
- 50 per cent ~ central government
- 25 per cent ~ provincial authorities
- 15 per cent ~ the decentralized territorial entity which hosts the extractive project
- 10 per cent ~ the Mining Fund for future generations
DRC’s 2023 General Election
The world over and Africa in particular, elections carry a huge weight when investors are considering a case for investments. This year, the DRC will hold its General Election in December. And all projections show that the process will be peaceful.
President Tshisekedi is expected to run for another term and will likely face Martin Fayulu and Moise Katumbe as key challengers.
Tshisekedi will, however, be riding on an overhaul of the DRC foreign and economic policy, a course that he has been charting since 2019 to a new term.
The policy shift has allowed the DRC to shake off the diplomatic isolation that the country was suffering for decades. The President has successfully reset cooperation with key partners both domestic and international.
It is through Tshisekedi’s efforts that DRC is fast evolving into a hub of investments for international organizations and regional firms on an expansion drive.
Tshisekedi is also increasingly placing emphasis on increased transparency and public sector reforms. Most importantly, he has managed to ash out the flames of a conflict that burnt the country’s reputation in the past.
Granted there are still pockets of conflict, particularly in the eastern region. However, it is under Tshisekedi that the DRC has enjoyed growing peace.
To end the conflict in the troubled North Kivu and Ituri provinces, Amnesty International advises the President to investigate allegations of human rights violations by security forces.