Republic of the Congo Economy

26 January 2010
PDFPrintE-mail
Rep. del Congo Home Page
Economia
Politica
Approfondimenti
Notizie Utili

 

MACROECONOMIC PANEL
In the Republic of the Congo civil war, fought between 1997 and 1999, followed by sporadic fighting, which ended with peace accords in 2003, destroyed a large part of the country and caused a sharp deterioration of its economic potential.

The post-war reconstruction program had the goal of achieving optimal conditions for the restoration of social and economic revitalization of the country through the rehabilitation of all economic sectors.

It funded mainly through the intensive exploitation of the vast wealth of the country's natural resources, especially oil reserves.

In recent years, it was precisely the oil to be the main catalyst for growth, given its overriding importance in the economic structure of the country.

The country's economy and in fact is largely dominated by oil production which accounts for over 50% of GDP, more than 85% of its exports and 70% of budget revenues.

The primary role exercised by the mining sector conceals the relative importance of other activities, especially in terms of employment.

For example, the forestry sector accounts for only 1% of GDP but employs 11% of the workforce.

The contribution of manufacturing to GDP is very low, due to the existence of numerous constraints of supply, especially as the low level of infrastructure, the limited availability of electricity and a system of financial intermediation just articulated.

The services, especially trade and transport, contributes only 30% to the formation of GDP.

One of the main comparative advantages of the country is represented by the port of Pointe-Noire, a port for ocean oil on which the country hopes to point because the transit center merchant at sub-regional level.

In 2008, the increase in oil production has also stimulated the growth of non-oil sector, particularly agriculture, forestry and services, plus increased interest from foreign investors for other natural resources in the country.

Furthermore, the increase in oil revenues has encouraged the sustained growth of the construction sector, while strong domestic demand led to the strong expansion of trade and telecommunications.

The Congolese government's economic policy and 'fundamentally based on the need to expand the country's infrastructure through the use of oil revenues and simultaneously activate the channels for negotiation with the IMF for a new assistance program.



Technical data:
GDP
$ 2.3 billion



GDP per capita :
$ 800



Annual growth :
3.7%



Inflation:
1.8%



THE AGRICULTURAL SECTOR
Agriculture employs nearly half of the working population.

This is largely bare subsistence activities, practice often with archaic techniques, there are also plantations of more recently established and profitable SOEs created with technical assistance from the Chinese model of communities.

There was, however, yet reached the goal of food.

For domestic consumption are grown mainly cassava, maize and other cereals, potatoes and bananas, but much greater economic significance are the products intended for export, which usually comes from large plantations where the use of modern techniques can get an high production.

Of particular note are several oils (palm oil, peanuts, sesame), cane sugar, coffee, cotton, tobacco.

The main asset of the country, however, is represented by forests, which cover more than half of the national area, although it has not properly exploited, even for the inadequacy of the roads.

They are obtained, however, precious wood for export, particularly okoumé, mahogany and ebony.

Very little emphasis has instead livestock (the Congo is forced to import meat and dairy products), even if we tried to introduce, for example, breeds of cattle resistant to trypanosomiasis, also plays a very marginal fishing.


OPPORTUNITIES FOR ITALIAN COMPANIES

Several years Italian companies in the country already  work, especially in the activities' of oil and associated services, particularly in the construction and supply of machinery and plant construction, in forestry and timber processing.

An Italian multinational company has announced investments in the country for 3 billion dollars for the period 2008-2011 by making a series of projects, including the production of superheavy oil from tar sands, biofuels (biodiesel from palm oil) and electricity generation projects in particular the construction of a central gas from 300mW to Pointe Noire, then extensible to 450mW, which would transform the country from a net importer to net exporter of energy.

The perception of Italian products, both for consumer goods, or take investment is very high among consumers and entrepreneurs Congolese and made in Italy and is a guarantee of high quality and reliability.

The main opportunities can be found within the instrumental mechanics, machinery, agricultural chemicals and pharmaceuticals, electro - mechanical and medical, construction and infrastructure, car components, means of transport and telecommunications.

In Pointe Noire currently there are already several Italian companies, given the view to increase significantly the request of the Italian product.

It can be assessed the feasibility of opening the Congolese potential cooperation opportunities in commercial and manufacturing activities of exploration and oil extraction in the field of wood processing and management of forest resources, medical research and pharmacology, but also in of biotechnology and alternative energy sources, also thanks to the rich and diverse natural heritage of the country.




INDUSTRY

The industry participates in more than half the training of national output and is represented mainly by companies operating in the food industry (oil mills, sugar mills, milling complex) and in the wood processing; also include tobacco factory, brewery, cement, cotton mills and an oil refinery.

Foreign trade is conducted mainly with France, which would generate half of the imported goods; more patchy and the range of buyers of goods Congolese. Imports concern mainly machinery, transport equipment, chemicals and textiles, while exports are mainly represented by oil, timber, diamonds and agricultural products (coffee, cocoa, oilseeds).




MINING RESOURCES
Mining activity has made good progress over the last decade, although in 1977 it was closed for Holle potash mine in Saint-Paul, near Pointe-Noire.

Congo, extracts small quantities of copper, zinc, tin, lead, but the main mineral resource consists of several oil and natural gas.

It is also very rich in hydropower resource, although the production of electricity is still rather low.


SECTORS IN EXPANSION
Good opportunities for growth are also provided for non-oil sectors particularly in agriculture, forestry and services.

In agriculture there  is  a pilot project to introduce the cultivation of rice in the Cuvette region in the District of Oyo, to promote new perspectives agribusiness and create an innovative model of land use.

The overall objective is to reduce the deficit in rice production in the country, due to lack of resistant varieties and appropriate technologies for the production must resort to imports to meet the needs of the population.

Investment Law
Foreign companies based in the Republic of Congo have the same benefits and privileges of the Congolese companies, according to the current commercial legislation.

However, Article 11 of Law No.19-2005 of 24 November 2005 prohibits foreign ownership of assets in retail, bakers and in urban transport and extra-urban, limited only to citizens, even if the law is' hitherto unapplied.

The Investment Code (She reads No. 6 of 2003) offers a wide range of advantages for foreign investors, such as freedom to pursue business, non-discrimination on the basis of the type of investment and equal treatment before the justice.

The law considers the possibility of four types of grant incentives to investors:
a) export incentives;
b) incentives for reinvestment of profits in the country;
c) incentives for locating in depressed areas of the country;
d) incentives for social and cultural investments.


THE TAX SYSTEM  OF CONGO
For companies  it is applied a progressive income tax ranging from 1 to 50%. This rate varies depending on marital status of an individual and the number of employees. Who must pay an employee a tax on Social Security and income tax regions.

From 1 January 1995 the corporate tax rate was 49%, with a reduction in state enterprises for special, non-profit institutions, and farms. Today was reduced to 38%. There is also a tax on turnover tax, excise and property taxes.



Specifically:

The income of the companies

The income subject to tax is determined on the basis of profits made or transactions effected in the Congo. Apèplicata The tax is 38%.
If a company resident in Congo holds at least 25% of the shares in the affiliate program, only 10% of the dividend is subject to tax.

Capital Gains
Capital gains are treated as ordinary business income and are taxed at standard income tax rate to 38%.

However, a gain realized on the sale of a fixed asset is excluded from tax for a period of three years if the taxpayer reinvests the gain in new assets to the business.
The capital gain arising from a free allocation of shares, debentures or merging limited liability company, is excluded from the imposition on the condition that the resulting company has its headquarters in the Congo.

On the assignment and / or transfer of a company within five years after its creation or acquisition, net unrealized gains will be considered only for half of their value.


Deductions
Deductions are allowed for reasonable expenses incurred in conducting activities that produce income.

The costs are considered excessive or unnecessary for the operation may be rejected and subject to tax at a rate of 50% or even to pay a penalty at the discretion of the examiner's practice.


Rentals
Payments of real estate rents are deductible in full, provided they are reasonable.

However, any rent paid to a member of a company that owns at least 10% of the shares in the same society and  is deductible.

Remunerations
Wages, salaries and benefits in kind are tax deductible in full, provided they are reasonable and related to real jobs.


TRADE AGREEMENTS
The Republic of Congo is member of the Central African Monetary Union (together aCamerun, Central African Republic, Chad, Gabon and Equatorial Guinea), which provides uniformity of the conduct of monetary and currency policies by member countries, which are under the management Bank of Central African States (BEAC).

The Congo is member of the community since 1994 of Economic and Monetary Union of Central Africa, with Gabon, Cameroon, Equatorial Guinea, Central African Republic and Chad.

It is also member of WTO since 1995.


CUSTOMS DUTIES
Customs fees include a common external tariff, TEC (from 5% to 30%) and a common rate of integration, ICT (1%) that is applied to imports from third countries not members of CEMAC, the payment of Rusida (Fees paid for the use of the computer system of Customs), calculated on the basis of the time taken for customs operations.

This tax, which is obligatory, can vary by a rate of 2% to 80% or more of the declared customs value, making it impossible to calculate in advance the amount to be paid to customs.

There are also excise duty (from 5% to 32%) on the luxury consumer products (wines and spirits, cigarettes, cosmetics). This rate of manufacturing to be applied also for the local production (mineral water, beer and cigarettes).

The Value Added Tax of 18% (TVA)

For some locally produced products (cement, mineral water, sugar, frozen poultry) the rate of VAT is reduced to 10%. Dairy products, butter and margarine, cereals, medicines and medical equipment, fertilizers and seeds are exempt from paying VAT.

Customs import franchises or concessions are granted under special agreements (government contracts) or for particular sectors (es.petroleum, mining, tourism).

Trade policy actually applied by the country appears more complex than the official one, and is accompanied by a serious of charges not covered under the commitments made in the context of WTO and regional agreements.

PROPERTY   
According to government decrees all free land is the property of the state (private property of the State) and about the same concessions are granted for their use or exploitation of individuals or companies' foreign capital.

Private property, including industrial property rights, is fully protected legally.

Property rights on buildings and furniture are recognized and protected.

AngolaBeninBurundiCameroonGabonKenyaMalawimonzambicoNamibiaCentral-African-RepublicCongo-BrazzavillecongoRwandaSao-Tome-&-PrincipeSudanTanzaniaUgandaZambiaZimbabwe

Registrazione

Il successo del nostro portale ha reso necessaria la creazione di uno spazio risevato ai nostri utenti. Da oggi registrandosi riceverete gratuitamente:

Log in e Password per accedere all'area riservata in piena sicurezza;
News Letter, per ricevere nella casella di posta le notizie più importanti, gli appuntamenti con ItalAfrica, gli Eventi che caratterizzano la nostra attività;
Magazine, per scaricare il periodico di Italafrica;
Faq per domande per chiarimenti generali;
Info e Supporto, per parlare con gli operatori di ItalAfrica centrale.

Registrazione gratuita      e mail2 

Area Utente

Iscriviti alla NewsLetter

Iscriviti alla NewsLetter per rimanere sempre aggiornato sulle ultime notizie dall'Africa
Inserisci la mail di iscrizione per cancellarti dalla Newsletter

We use cookies to improve our website and your experience when using it. Cookies used for the essential operation of the site have already been set. To find out more about the cookies we use and how to delete them, see our privacy policy.

I accept cookies from this site.

EU Cookie Directive Module Information