Investment Opportunities In DRC And What Kenyans Stand To Benefit

The Democratic Republic of Congo (DRC), about the size of Western Europe, is the largest country in Sub-Saharan Africa (SSA). DRC is endowed with exceptional natural resources, including minerals such as cobalt and copper, hydropower potential, significant arable land, immense biodiversity, and the world’s second-largest rainforest.

The country is the richest in the world regarding natural resources. It is Africa’s largest copper producer and the world’s largest cobalt producer.

Despite the wealth in the country, most people in DRC have not benefited. A long history of conflict, political upheaval and instability, and authoritarian rule has led to a grave, ongoing humanitarian crisis. In addition, there has been displacement of populations according to the World bank. These have overall ranked DRC among the five poorest nations in the world.

However, even with the political instability, the country still recorded modest GDP growth of 5.2 percent in the past 5 years.

The growth in GDP is attributable to the rising global prices for commodities during the period. Its currency is the Congolese Franc, but the economy is dollarized. Main exports include Diamonds, Gold, Coffee, Copper, Cobalt, Crude Oil, Timber, etc. Major imports include fuel, foodstuffs, consumer goods, mining equipment and machinery, transport vehicle, etc.

Over the years, the DRC has initiated reforms aimed at strengthening governance in the management of natural resources and improving the business climate. Normalization of the political situation in the country and a new determination to reform and fight corruption is instilling a climate of confidence.

Adoption of the 2019–23 Strategic Development Plan has given national priorities more visibility.

The sectors where there are investment opportunities in the DRC include Agriculture, Mining, Energy, Infrastructure, Insurance, Housing and real estate, Forestry, Transport, Tourism, etc.

1. Mining

The mining industry of the Democratic Republic of the Congo plays a significant role in the world’s supply of cobalt, copper, diamond, tantalum, tin, and gold and produces over 70 percent of globally produced cobalt.

It is Africa’s largest copper producer and the world’s largest cobalt producer. The two commodities account for over 80 percent of the country’s exports.

With total mineral wealth estimated in the tens of trillions of dollars, the DRC offers opportunities for firms from around the world with a high tolerance for risk and familiarity with operating in complex or fragile environments.

Despite the ongoing low-intensity conflict, political instability, and unstable commodity prices, mine operators continue to invest in their operations in anticipation of improved market conditions and to maintain operational footholds in this lucrative environment.

Copper and Cobalt production rose by 12 percent and 7.6 percent in 2021.

2. Agriculture

With 80 million hectares of arable land, 4 million hectares of irrigated land, and many rivers with important fishery resources, the DRC has the potential to become a global agricultural power.

Although the agricultural sector employs over 60 percent of Congolese and comprises 19.7 percent of GDP, it fails to ensure food security and generate sufficient revenues and sustainable employment. The main cash crops include coffee, palm oil, rubber, cotton, sugar, tea, and cocoa.

There has been some success in developing cocoa and coffee for export. Food crops also include cassava, plantains, maize, groundnuts, and rice.

Commercial agricultural production remains limited, with most producers engaged in subsistence food agriculture. To cope with the food shortage, the GDRC is supporting the creation of agro-industrial parks in different areas of the DRC.

To develop the agricultural sector, the GDRC launched a program to strengthen its contribution to economic growth, restore the country’s food security, reduce poverty and insecurity in rural areas and increase the production of food and durable goods.

The GDRC intends to build new, and expand existing, agro-industrial projects that will benefit from the participation of foreign agricultural firms with tolerance for risk, experience operating in complex or fragile environments, and access to capital to finance their participation.

3. Energy

The DRC has immense and varied energy potential, consisting of non-renewable resources, including oil, natural gas, and uranium, as well as renewable energy sources, including hydroelectric, biomass, solar, and geothermal power.

Hydroelectric power accounts for 96 percent of domestic power generation, the bulk of which is generated by the Inga I and Inga II dams located in Kongo Central province. Inga I and II have an installed capacity of 1,775 megawatts„ and the government is supporting maintenance to bring Inga back to full capacity.

The Government of the DRC (GDRC) has launched a program to develop the energy sector, to develop the hydroelectric sector, and exploit the power of the numerous rivers in the Congo Basin. The GDRC welcomes developers to supply power, build transmission lines, or sell the necessary equipment. There is also a tremendous need for off-grid electric solutions.

Along with hydroelectric power, the GDRC seeks to build and rehabilitate several geothermal stations across the country. Several solar investors have explored the DRC market and are in the process of signing MOUs with the government. The GDRC seeks firms with financing and experience to partner with local and parastatal firms to build these power-generating facilities.

4. Infrastructure

The need for roads and buildings means numerous contracting opportunities in the DRC.

The country is one of the most infrastructurally challenged in the world. Ground transportation has always been difficult and the country’s vast geography, low population density, extensive forests, and crisscrossing rivers further complicate the development of infrastructure networks.

On a positive note, the country has thousands of kilometers of navigable waterways and water transport has traditionally been the dominant means of moving around approximately two-thirds of the country.

But in the last few years, there have been promising signs. Since 2006, there has been a large upswing in external financing commitments from OECD and non-OECD partners. For example, a major new financing agreement signed with China promises US$3 billion, primarily for road and urban infrastructure projects.

5. Telecommunication

The DRC’s communications network epitomizes the country’s unpredictable blend of 21^st-century technology and glaring insufficiencies. Advanced telecommunications and modern courier services are often available, but landline telephone systems and state postal services are unreliable or non-existent.

The DRC also has several cellular phone providers and numerous private radiotelephone networks. However, the cellular networks are not fully linked and suffer from overload and occasional service interruption. Many people subscribe to at least two or more different service providers; satellite phones are popular for remote areas in the interior of the country.

The DRC presents opportunities for ICT firms to develop and market applications for mobile telephone users, partner with local telecommunications ventures to expand their networks, and offer cybersecurity services to businesses operating in the DRC. Due to poor institutional knowledge, the GDRC has relied heavily on international ICT firms to implement records digitalization and management projects.

6. Transport

The transport market in Congo, DRC is highly fragmented with many small operators and only a few larger ones that offer reliable transport services

The need for transport creates an enormous market for vehicles, boats, and engines. Opportunities to invest are evidenced by countless transportation in the country and different networks are immense.

Since the end of the national conflict in 2003, rehabilitating the road network has been a priority. The country has secured major development funding as well as an infrastructure-for-minerals deal with China. Private enterprise is also playing a role, with mining companies also investing in roads.

The DRC has two main rail systems of strategic importance to the country. However, the networks are inefficient, and tariffs are high. Both have fallen into disuse for the most

The Democratic Republic of the Congo now stands as one of the countries providing some of the best investment opportunities for potential firms and companies across the continent.

With the most abundant natural resources on the planet, a strong economy, rich farmland, and bountiful mineral wealth, the DRC is progressively building towards a brighter future.

 Impacts Of Covid 19 On Businesses in the DRC

Covid-19 has had economic impacts across the DRC. Restrictions on business operations, disruption at international borders and lower demand for key exports in the first half of 2020 have all negatively affected growth, employment, and debt levels. Today, about 2 years since the start of the Covid-19 crisis, the situation is still evolving

Since the onset of the pandemic, the local banking, and financial institutions could not back the private sector. Without a clear state policy to inject funds into businesses and keep the economy afloat, many hard-hit private enterprises have gone bankrupt, a development that has devastated the economy.

 Equity Banks Intervention

Equity has established operations in the DRC through acquisitions and sees the country as strategically important for the future growth of its subsidiary business.

The launch of the Eastern and Central Africa Recovery and Resilience Plan by Equity Group could not have come at a better time. This is a private sector-focused stimulus package to accelerate economic recovery and resilience in the Eastern and Central Africa region as it recovers from the devastating health, social, humanitarian, and economic impacts of the COVID-19 pandemic.

The Eastern and Central Africa Recovery and Resilience Plan is envisaged to provide financing of up to 2 percent of the combined GDP of the six economies, in which the Group operates, to the private sector in the form of blended financing of short-term overdrafts, medium-term loans, and credit facilities which require long-term project and development financing.

A total of 678 billion shillings will be available to 5 million MSMEs and 25 million individual borrowers for the next 5 years.

The 5 million businesses are expected to create 50 million jobs; 25 million jobs directly and an equal number of jobs indirectly as the ecosystems of business become more cohesive. The recovery plan will have a special focus on youth and women, supporting them to be the primary drivers of creating and expanding opportunities in the real economy.

The plan aims to build capacity in young people through financial literacy, entrepreneurship training, and digital literacy, to make them the key drivers of creating and expanding opportunities in the real economy.

The mineral-rich country already has established trade ties with most of the EAC member states through bilateral deals and at the multilateral level through the Southern African Development Community (SADC).

Besides SADC, DRC is also a member of the Common Market for Eastern and Southern Africa (COMESA), Economic Community of Central African States (Ecowas), Organization for the Harmonization of African Business Law, and the Economic Community of the Great Lakes Countries.

By being a member state of these trade blocs, DRC adheres to the existing trade guidelines, regulations, and agreements. As such, partner states are bound to enjoy the incentives provided within each trading bloc.

DRC offers a huge untapped opportunity for access to one of the world’s last economic frontier markets.

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