REPUBLIC OF CONGO

The Republic of Congo (Brazzaville) ranks among the top 10 of Africa’s oil producers and is endowed with (mostly untapped) substantial mineral resources. The country’s economy is highly dependent on natural resources (mainly oil production), while agricultural and non-oil service actives still have to be developed. Since the oil-price slump in 2015, the country has been caught in a low-growth and mounting-debt loop. Moreover, the Covid-19 pandemic put a break on the ambitious reform agenda of the government to diversify the economy away from oil. Therefore, oil production is set to drive the economic recovery in the medium term. The recent discovery of an onshore oil field in the Delta de la Cuvette deposit and Chinese investment to build a new crude oil refinery by 2023 –with a capacity of 2.5 million tons per year –  have strong potential to boost oil production.

The Congolese economy has been hit hard by the Covid-19 crisis. Economic activity contracted by -8.5% in 2020 as a result of sanitary restrictions to curb the pandemic as well as lower oil prices and production. We forecast economic growth to pick up to +2.2% in 2021, with the normalization of global demand for oil. Nevertheless, the macroeconomic environment over the medium term is likely to be impaired by high debt levels and domestic arrears, low potential growth and limited business confidence.  

The Republic of Congo is ranked 180th out of 190th countries in the World Bank’s Doing Business index 2020 and may struggle even harder to attract private investors in the post-Covid environment. Thus, there is a strong need to improve the business environment by making it easier to pay taxes, trade across borders, start a business, get electricity and register property.  

President Denis Sassou Nguesso, who has been in power since 1997, was reelected for an additional term in March 2021 with more than 88% of the votes. The Republic of Congo is poorly ranked  in the Human Development Index (149th) and the Corruption Perception Index (165th). Although opposition is historically weak, the Covid-19 sanitary and economic crisis accentuated general discontent among the population regarding the economic and political situation.  

Within the framework of the agreement with the IMF, the government plans to implement some structural reforms to tackle long-lasting issues such as weak institutional capacity and poor governance. For instance, in 2021, the authorities will submit amendments to the anti-corruption law to parliament and finalize the audit of domestic arrears.

Poverty in Congo is striking and widespread, mostly caused by civil wars, poor infrastructure development and weak access to clean water sources or sanitation. Almost 1.5 million people live in unplanned settlements, creating a difficult atmosphere to combat respiratory and parasitic diseases. Although the proportion of the population living below the poverty line decreased between 2005 and 2011( from 51% to 41%), the World Bank finds that the extreme poverty rate has increased from 2016, especially in rural areas, as a result of the decline in oil prices. Enhancing education is also a key challenge for the country to tackle rampant youth unemployment (23%). - April 2021.