Cablegate: Drc: 2010 Investment Climate Statement


DE RUEHKI #0092/01 0261503
R 261503Z JAN 10




E.O. 12958: N/A

REF: 09 STATE 124006

1. (U) Per reftel, the following is the text of the Investment
Climate Statement for the DRC for 2010.

Openness to Foreign Investment


2. (U) The DRC's rich endowment of natural resources, large
population size (approximately 68 million) and generally open
trading system provide significant potential opportunities for U.S.
investors. At the same time, the DRC remains a highly challenging
environment in which to do business. The DRC was ranked 182 out of
183 in the 2010 World Bank's Doing Business report, the second most
difficult country in the world in which to do business. The DRC
had previously been ranked dead last in the 2008 and 2009 Doing
Business rankings- 181 out of 181 countries. The DRC was also
ranked 173 out of 179 countries on the 2009 Heritage Foundation's
Economic Freedom Index. Underdeveloped infrastructure, inadequate
contract enforcement, limited access to credit, continued
insecurity in the eastern part of the DRC, lack of adequate
property rights protection, and high levels of both bureaucracy and
corruption continue to constrain private sector development.

3. (U) Since the democratic Presidential, Parliamentary and
provincial elections in 2006, the Democratic Republic of Congo
(DRC) has continued to make progress, albeit slowly, in addressing
the country's significant political, economic, and social
challenges. The DRC seeks to attract foreign investors in order to
boost production and increase economic growth. Congolese
investment regulations, codified in the Investment Code, do not
discriminate against foreign investors, except in some specific
cases dealing with labor and related taxes. To overcome previous
hurdles and to simplify and facilitate investment, the GDRC has
created a one-stop agency called the National Agency for Investment
Promotion (ANAPI). This agency is using the provisions of the new
Investment Code to work to simplify new investments and to make the
procedures more transparent. With support from international
donors, the GDRC is also working to implement a series of reforms
aimed at improving the business climate. Specifically, the GDRC
has launched a steering committee under the Ministry of Plan to
improve the GDRC's ranking on the World Bank's Doing Business

4. (U) Broadly, there are no formal limits or screening mechanisms
imposed upon foreign ownership of businesses in the DRC. Small
businesses, however, are still subject to presidential decrees
number 79-021 of August 2, 1979 and number 90-046 of August 8,
1990, which prohibit foreign investors from engaging in retail
commerce. The processes of granting permits and licenses in the
mining and telecommunication sectors often suffer from
arbitrariness, lack of transparency, and corruption.

5. (U) All investors in the DRC suffer from multiple audits by
various government enforcement agencies seeking evidence of
violations of tax laws or price controls. Foreigners and Congolese
alike suffer the consequences of non-functional judicial
institutions. The inadequate physical infrastructure - including
internal transportation, energy, and social infrastructure - is a
result of years of civil war and literally decades of
mismanagement, negligence, and a lack of clear public policies in
the infrastructure sector. International donors and a recently
concluded multi-billion dollar Sino-Congolese agreement will
provide critically needed resources for infrastructure development,
but constraints will exist in the short-term.

6. (U) Restructuring of approximately 60 Congolese parastatals,

including perennial money losers such as the national electricity
(SNEL), river transportation (ONATRA) and rail (SNCC) companies,
continues, though slowly. The GDRC acknowledges the need for
reform and the Portfolio Ministry continues to work to improve the
situation. The government and state-owned Societe Nationale
d'Electricite (SNEL) have begun to open the energy sector to
private investment.

7. (U) The DRC's economic environment changed dramatically
beginning in late 2008 and throughout 2009 as a result of the
impact of the global financial crisis. GDP growth for 2009 is
projected at only 2.7 percent, a significant reduction from earlier
projections. The once robust mining sector significantly
contracted during late 2008 and early 2009 due to falling
international commodities prices, a tightening of international
credit, and dampened investor confidence in the sector. With the
support of international emergency assistance and improved prices
for key export commodities, the DRC's macroeconomic situation has
stabilized and the economy has begun to recover. GDP growth for
2010 is projected at 5.4%. The IMF's Executive Board approved a
new three-year Poverty Reduction and Growth Facility (PRGF) in
December 2009.

Conversion and Transfer Policies


8. (U) The DRC adopted a freely floating exchange policy in 2001
as part of the implementation of broader economic reforms. The DRC
has also lifted restrictions on business transactions nationwide.
International transfers of funds take place freely when sent
through a local commercial bank. The bank declaration requirement
and payments for international transfers now take less than one
week to complete, on average.

9. (U) The Central Bank is responsible for regulating foreign
exchange and trade. The only currency restriction imposed on
travelers is a USD 10,000 limit on the amount an individual can
carry when entering or leaving the DRC. The GDRC also requires
that the Central Bank license exporters and importers. The DRC's
parallel foreign exchange market is large and tolerated by the
government. The largest banknote in circulation is the 500
Congolese franc note; larger denominations (1,000 Congolese francs
and 5,000 Congolese francs) may be put into circulation sometime in
the future. The DRC's economy remains highly dollarized.

10. (U) Following several years of relative exchange rate
stability as a result of tight monetary policy, the DRC's currency,
the Congolese Franc, depreciated by 35% against the U.S. dollar
between December 2008 and September 2009. The currency has begun
to stabilize as overall macroeconomic conditions began to improve
starting in late 2009. International reserves had hit a
historically low level of $30 million in February 2009, but
significantly increased throughout the remainder of 2009 due to the
disbursement of emergency financial assistance from several
international donors, the arrival of the first tranche of a signing
bonus under the Sino-Congolese minerals-infrastructure agreement,
and the DRC's drawing on the IMF's Special Drawing Rights (SDR)

Expropriation and Compensation


11. (U) The DRC's land law allows for expropriation of property by
the GDRC for the sake of public interest, such as the protection of

community heritage, completing public works (such as infrastructure
projects) and the presence of precious minerals. The illegitimate
acquisition of property is also grounds for expropriation. In any
case of expropriation, the GDRC is required to offer fair
compensation; as with many Congolese laws, these requirements are
not always fully respected.

12. (U) There have been no expropriation actions against U.S.
citizens in the recent past. Post is aware of a number of existing
claims against the GDRC that date from 1991 to 2002, some of which
were taken to arbitration (see Dispute Settlement section below).
Arbitration judgments against the GDRC, however, have not been paid
in a timely manner, if at all. There are no laws forcing local
ownership, although parastatal companies involved in the petroleum
and mining sectors maintain minority shares of most foreign-owned

13. (U) A recent GDRC review of 61 mining contracts between DRC
public enterprises and private companies between 1997-2002 was
plagued by numerous delays and a lack of transparency. The GDRC
officially announced the conclusion of the contract review in
November 2009. However, the largest foreign investor in the mining
sector, a U.S. majority investor, has yet to reach agreement with
the government under its contract review and negotiations continue.
A recent review of concessions in the logging sector aimed at
cleaning-up corruption in the sector resulted in the cancellation
of approximately two-thirds of the over 150 timber logging
contracts. While not without issues, the forestry sector
conversion process has been largely successful in addressing many
concerns for the sector. The GDRC continues to work with civil
society, local communities and logging companies on implementation
of post-conversion requirements.

Dispute Settlement


14. (U) The U.S.-DRC Bilateral Investment Treaty (BIT) provides
for International Center for Settlement of Investment Disputes
(ICSID) reconciliation or binding arbitration in the case of
investment disputes. A number of U.S. firms pursued claims against
the GDRC for damages resulting from civil disturbances by military
mutinies in 1991 and 1993. Two investors have won settlements from
the ICSID. In early 2004, a claimant under the BIT won a
settlement from ICSID but has not yet collected payment from the
GDRC. The other investor, who successfully collected the
compensation awarded by ICSID, received damages in 1999.

15. (U) The DRC is not a Party to the New York Convention of 1958
on the Recognition and Enforcement of Foreign Arbitral Awards. On
paper, the DRC's official policies are satisfactory and even
attractive to business, but in recent years they have often been
inoperative in practice due to problems with the judicial system.
Courts are marked by a high degree of corruption, public
administration is not reliable, and both expatriates and nationals
are subject to selective application of a complex legal code.
Official channels often do not provide direct and transparent
recourse in the event of property seizure, for which legal standing
can rarely be determined. Seizures have been made via the police
and/or military, often supported by questionable decisions from the
courts. Foreign enterprises may have slightly better security of
ownership due to the presence and intervention of their diplomatic
missions. Many Congolese business contracts provide for external
arbitration, but this is an expensive and time-consuming option
with little value for resolving routine, day-to-day business

16. (U) In 2008, the DRC established commercial courts in Kinshasa

and Lubumbashi for the first time, with additional commercial
courts scheduled to be established shortly in the remaining DRC
provinces. These courts are slated to be led by professional
judges with expertise in commercial matters and may assist
investors to address commercial claims within an otherwise
inadequate judicial system. The DRC is poised to join OHADA
(Organization for the Harmonization of Business Laws); the DRC
Parliament passed the required legislation for OHADA accession in
December 2009. OHADA members agree to adopt a common set of
commercial laws - including contract, company and bankruptcy laws -
and to submit interpretation of those laws to the final
jurisdiction of the OHADA court, which sits in Abidjan in the Ivory

Performance Requirements and Incentives


17. (U) The DRC does not have any barriers specifically targeting
or restricting U.S. trade or investment. The DRC has not
maintained any measures that are inconsistent or violate the WTO's
TRIMs requirements. The DRC 2002 Investment Code is a simplified
and improved version of its predecessor. Although there are no
specific performance requirements for foreign investors, there are
investment conditions that must be agreed upon with the GDRC.
These conditions are discussed and agreed upon with the DRC
investment agency, ANAPI, which assures equitable treatment and
procedures for all qualified foreign investments. The DRC has
shortened this agreement procedure to approximately 30 days, and
has created a number of incentives to attract foreign investment to
the country. Pro-business incentives range from tax breaks to duty
exemptions granted for three to five years, and are dependent upon
the location and type of enterprise, the number of jobs created,
the extent of training and promotion of local staff, and the
export-producing potential of the operation. Investors who wish to
take advantage of customs and tax incentives of the new 2002
Investment Code must apply to ANAPI, who will in turn submit their
applications to the Ministries of Finance and Plan for approval.
The Ministry of Labor controls expatriate residence and work
permits. For U.S. companies, the BIT assures the right to hire
staff of their choice to fill some management positions, but the
companies agree to pay a special tax on expatriate salaries. There
is no requirement that investors purchase from local sources or
export a certain percentage of output.

18. (U) Performance requirements agreed upon initially with ANAPI
include a timeframe for the investment, the use of Congolese
accounting procedures and periodic authorized GDRC audits, the
protection of the environment, periodic progress reports to ANAPI,
and the maintenance of international and local norms for the
provision of goods and services. The investor must also agree that
all imported equipment and capital will remain in place for at
least five years. There is no discriminatory or excessively
onerous visa, residence or work permit requirement designed to
prevent or discourage foreigners from investing in the DRC, though
corruption and bureaucracy can create delays in obtaining necessary
permits. In 2008, the GDRC passed a resolution to abolish four
burdensome requirements for establishing a company in the DRC,
including the civil servant attestation, resident's certification,
a document with the company seal on it, and a police background
check certification. ANAPI and the Congolese Chamber of Commerce
(FEC) play a vital role in addressing business issues in the DRC.

19. (U) According to the terms of the Investment Code, the GDRC
may require compliance with an investment agreement within 30 days
of notification. Continued violations of an agreement may result
in sanctions, including repayment of benefits received (such as tax
exemptions) and eventual nullification of the agreement.

20. (U) In the case of a dispute between a U.S. investor and a

GDRC agency, the investor is subject to the Congolese civil code
and legal system. If the parties cannot reach agreement, under the
terms of the U.S.-DRC BIT the dispute is taken to the ICSID or to
the Paris-based International Chamber of Commerce (ICC).

21. (U) GDRC public administration reforms implemented since 2002
have allowed foreign investors to bid on government contracts just
as domestic investors, with no discriminatory terms. Foreign firms
may even be favored in the bidding process because they can more
easily access and present international insurance funding
guarantees. There is no discrimination against U.S. or foreign
firms in participating in government- sponsored or subsidized
research and development programs, since participation is done on a
national treatment basis. With the sponsorship and technical
assistance of the World Bank, a tender board now works under the
supervision of the Ministry of Budget. Normally, however, public
companies and/or parastatals do not participate in the bidding
process, due to the financing guarantees required beforehand. In
addition, contracts are often negotiated directly with the GDRC,
not through an international tender process, thus reducing
transparency. A new procurement law has been submitted to
Parliament, but has yet to be passed.

Right to Private Ownership and Establishment


22. (U) The DRC's Constitution (chapter 2, articles 34-40)
protects private ownership without discrimination between foreign
and domestic investors. It also protects investments against
takeover, unless the investment conflicts with some overriding
public interest. In this case, there are legal provisions for
equitable and appropriate compensation for the parties involved.

23. (U) Foreign investors can operate in the DRC either through
establishing a branch or local subsidiary. The individual business
may either be designated a(##)Commodite Simple" (SNC),
Responsability Limit(SPRL), a
The most common adopted forms of establishment are the SPRL and
SARL, which are both limited liability companies. While in an SPRL
shares are not freely negotiable, incorporation of an SARL requires
a minimum of seven shareholders. Furthermore, incorporation of an
SARL requires both authorization of the Head of State and the
government must receive 6 percent of share capital.

24. (U) The GDRC has restricted one category of small businesses
to Congolese nationals. This covers artisanal production sector
activities, small public transport firms, small restaurants, and
hotels with fewer than ten beds. Despite GDRC restrictions, some
foreign-owned small retailers, particularly Chinese-owned stores,
have recently appeared on the market.

Protection of Property Rights


25. (U) Despite the new DRC Constitution and attempts to enforce
existing legal provisions, protection of property rights remains
weak and dependent upon a currently dysfunctional public
administration and judicial system. Some senior-level officials
are making efforts to restore and improve the legal and
administrative frameworks, but the challenge remains to implement

these changes at a practical level.

26. (U) Ownership interest in movable properties (e.g. equipment,
vehicles, etc.) is secured and registered through the Ministry of
the Interior's Office of the Notary. Real estate property (e.g.
buildings and land) is secured and registered at the Ministry of
Land's Office of the Mortgage Registrar.

27. (U) The GDRC continues to undertake efforts to improve
IPR-related legislation and build capacity to improve
implementation and enforcement. In principle, intellectual
property rights are legally protected in the DRC, but enforcement
of IPR regulations is virtually non-existent. The DRC's legal
system and public administration do not have the capacity to
enforce intellectual property regulations. The country is a
signatory to a number of international agreements with
organizations such as the World Intellectual Property Organization
(WIPO), and the Paris Convention for the Protection of Intellectual
Properties, which protects trademarks and patents. The DRC is also
a member of the Berne Convention that protects copyrights, artistic
works, and literary rights. The maximum protection that these
conventions provide is 20 years for patents and 20 years,
renewable, for trademarks, beginning from the date of registration.
If it is not used within three years, a trademark can be cancelled.
The DRC has not yet signed the WIPO Internet Treaties. The
Minister of Justice has presented a law to the government that
seeks to rectify the flaws of the existing 1986 IPR law. The law
is still pending Parliamentary approval.

Transparency of the Regulatory System


28. (U) Implementing a transparent regulatory system is still a
challenge in the DRC. The GDRC is making some effort to improve
the situation, including through appropriate legislation enacted by
the parliament. Implementation and compliance, however, are still
far from securing a complete legal and regulatory framework for the
orderly conduct of business and the protection of investment. The
GDRC authority on business standards, the Congolese Office of
Control (OCC), oversees participation by foreign businesses.

29. (U) There are no formal or informal provisions by any private
or public structure, in any business-related environment, used to
impede foreign investment. Problems encountered within the GDRC
tend to be administrative and/or bureaucratic in nature since
reforms and improved laws and regulations are often poorly or
unevenly applied. Proposed laws and regulations are not published
in draft format for public discussion and comments. Normally the
only discussion occurs within the governmental or administrative
entity that drafts them and at the parliament prior to a vote. The
Congolese public, as well as foreign and domestic investors, do not
receive an adequate opportunity to discuss or comment on these

30. (U) The IMF and the World Bank are working with the GDRC to
bring the country into compliance with international business norms
for accounting, legal, and regulatory systems. The World Bank's
International Finance Corporation (IFC) has launched a program to
establish "Special Economic Zones" to help jumpstart investments.
The GDRC has made progress towards joining the Organization for the
Harmonization of Business Law in Africa (OHADA) to help the DRC to
modernize its legal standards.

31. (U) In 2008, the DRC became a candidate country for the
Extractive Industries Transparency Initiative (EITI), a

multi-stakeholder effort to increase transparency in transactions
between governments and companies in the extractive industries.
The GDRC has taken some positive steps under EITI, including
establishment of a National EITI Committee, publication of the
first report on EITI in the DRC, and the hiring of an independent
auditor to carry out the validation of the EITI process. However,
the DRC still has to organize a workshop to present the report at
the provincial and national levels and have the EITI process
validated before being declared an "EITI-complaint" country by the
March 10, 2010 deadline set by the International EITI Secretariat.

Efficient Capital Markets and Portfolio Investment

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32. (U) Economic growth in the DRC since 2002 has increased the
flow of money in the finished goods and raw materials market.
Credit markets are also becoming more active, mainly in the
commercial project and medium-term project sectors. All economic
operators, foreign and domestic, have access to credit markets in
the DRC without discrimination, as long as they can provide
credible guarantees. Foreign investors, though, are more likely to
benefit from this type of credit, since they are able to provide
guarantees and collateral secured by foreign banks.

33. (U) The commercial banking system has undergone a full
reorganization and continues to expand. However, the commercial
banking sector remains small. During 2009, six new commercial
banks opened in the DRC, as well as 62 new branches. Strengthened
supervision of the commercial banking sector, including improving
the regulatory framework for the financial sector, is a component
of DRC's formal IMF program. There are currently 18 commercial
banks, two specialized financial institutions, one savings bank,
eighty-two co-operative banks, and fourteen micro-finance
institutions, with a total of 200,000 accounts. The volume of
savings increased from USD 97.2 million in 2001 to USD 934 million
at the end of June 2008, a growth of 861 percent. Credits grew
from USD 48 million to USD 576 million during the same period, an
increase of over 1,000 percent.

34. (U) Portfolio investment is not yet developed in the DRC.
Business practices in the DRC are still at a fairly rudimentary
level. Cross-shareholding and stable shareholding arrangements are
not common in the DRC. There are occasional complaints about
unfair competition between investors in profitable sectors such as
mining and telecommunications.

Competition from State-Owned Enterprises (SOEs)

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35. (U) The GDRC, with support from international donors,
continues to work to reform state-owned enterprises (SOEs). To
boost the efficiency of SOEs, many of which have been plagued by
years of mismanagement, Prime Minister Adolph Muzito signed five
ministerial decrees in April 2009. The decrees focused on
transforming these SOEs into profitable commercial companies,
public establishments (which would be autonomous from any ministry)
and public services (which are directly tied to a particular
ministry). Some SOEs would be dissolved. SOEs that have been
targeted for reform include those operating in the mining, energy,
industry, transport, telecommunications and finance sectors. The
government and state-owned Societie Nationale d'Electricite
have begun to open the energy sector to private investment.

Corporate Social Responsibility (CSR)


36. (U) Awareness about Corporate Social Responsibility (CSR) is
growing, and many of the large, multinational investors in the DRC
have formal CSR programs. Under the Mining Code of 2002, mining
companies are required to submit an environmental impact statement.
Mining companies are also required to support infrastructure
projects, such as roads, schools and hospitals. Corporate Social
Responsibility provisions are also included in the 2002 Forestry
Code, which requires forestry concessionaires to support social and
physical infrastructure projects in the communities in which they
operate. CSR is also reflected in the sustainable use of forestry
resources. In November 2009, the Ministry of Environment,
Conservation and Tourism held a workshop to analyze and propose
procedures for local communities to share benefits from logging
concessions. Participants at the workshop agreed on key principles
that may guide the implementation of corporate social
responsibility within the DRC forestry sector, including a social
agreement that engages reciprocally both sides (the timber
concession companies and the local communities) and payment by
timber concession companies that would be done at two levels
(construction of socioeconomic infrastructure on a per cubic meter
of harvested timber basis and in-kind payment for actions of common
interest). The local community would collaborate with
concessionaires to fight against illegal logging and wildlife
poaching and also participate in the sustainable management of
forest resources.

Political Violence


37. (U) The DRC has suffered bouts of civil unrest and conflict
for many years. Large-scale military looting in 1991 and 1993, for
example, resulted in significant loss of economic productive
capacity. In addition, widespread looting and destruction
associated with wars in the DRC from 1996-1997 and from 1998-2003
further damaged Congolese economic activity.

38. (U) National and provincial governments were elected at the
end of 2006 in the country's first democratic national elections in
more than 40 years. Despite technical and logistical difficulties,
coupled with isolated incidents of violence and intimidation, the
elections were held in a largely calm and orderly fashion.
Post-election disturbances occurred in March 2007 in Kinshasa,
resulting in the deaths of civilians and military personnel.

39. (U) The United Nations has its largest peacekeeping operation
in the world in the DRC. Known by its French acronym of MONUC, it
has nearly 20,000 peacekeepers deployed in the country - primarily
in the east. Violence nevertheless persists in the eastern DRC due
to the presence of several militias and foreign armed groups, with
sporadic outbreaks occurring in North Kivu, South Kivu, and
northern Katanga provinces, as well as the Ituri and Haut-Uele
Districts of Orientale province, and sporadically in Bas-Congo and
Equateur provinces.

40. (U) The political-military landscape in the eastern DRC
changed dramatically in 2009, offering the best prospects for
lasting peace in the region in many years. In early 2009, the DRC
and Rwanda formally re-established full diplomatic relations and
separate peace agreements were signed between the Government of the
DRC and various armed groups. Many of the rebel groups agreed to
transform their movements from military to political in nature,
while the government promised to work toward integrating rebel
soldiers and officials into the Congolese military (FARDC),

national police, and national and local political and
administrative units. Integration, however, has been piecemeal,
and several important rebel formations remain outside the process.

41. (U) In addition to continuing instability in the eastern DRC,
strikes by civil servants and teachers over salary and benefit
issues have occurred and continue to pose a potential source of
social upheaval. Military and police personnel remain poorly paid
and trained.



42. (U) U.S. businesses often complain about corruption in the
DRC, citing it as a principal constraint to doing business in the
country. The Mobutu regime created a culture of corruption in the
DRC during more than 30 years of rule. This ingrained culture
permeated the private, public, administrative, and business
environments and has been difficult to root out. The DRC was rated
as the tenth most corrupt country out of 180 nations on
Transparency International's 2008 Corruption Perception Index. The
DRC was rated as 162 out of 180 nations on Transparency
International's 2009 Corruption Perception Index.

43. (U) In principle, there are legal provisions to fight and
sanction corruption. The DRC is a member of the UN Anti-Corruption
Convention and passed its own anti-corruption law in 2004.
Additional legislation includes the 2004 Money Laundering Act,
under which the DRC cooperates with African and European
crime-fighting organizations. Despite these reform efforts,
however, bribery is still routine in public and private business
transactions, especially in the areas of government procurement,
dispute settlement, and taxation. The DRC is not a signatory of
the OECD Convention on Combating Bribery. In September 2007, DRC
ratified the protocol agreement with SADC (Southern African
Development Community) on Fighting Corruption. The GDRC is also
preparing to ratify the African Union Convention on the Prevention
and Fighting of Corruption.

44. (U) The law calls for imprisonment and fines for both parties
to the bribery no matter the circumstances. However, law
enforcement remains a challenge in this area.

45. (U) In order to enforce anti-corruption laws among civil
servants and members of the government, in September 2009,
President Kabila launched a "zero-tolerance" campaign. Within this
framework, he established the DRC Financial Intelligence Unit to
combat money laundering and misappropriation of public funds.

Bilateral Investment Treaties


46. (U) The United States and the DRC (then-Zaire) signed a
Bilateral Investment Treaty (BIT) in 1984 that entered into force
in 1989. This treaty guarantees reciprocal rights and privileges
to each country's investors. The BIT provides for binding
third-party arbitration in the event of an investment expropriation

47. (U) Germany, France, Belgium, Italy, South Korea, South
Africa, and China (PRC) have signed bilateral investment agreements
with the DRC. Lebanon, Ivory Coast, and Burkina Faso have
negotiated, but not yet signed, bilateral investment treaties with
the DRC.

OPIC and Other Investment Insurance Programs


48. (U) The U.S. Overseas Private Investment Corporation (OPIC),
which provides political risk insurance and project financing to
U.S. investors and non-governmental organizations, ceased
operations in the DRC for a time following the events of 1991.
Since the establishment of the transitional government in June
2003, OPIC has granted three political risk insurance contracts in
2004, another in 2005, and is currently reviewing additional
applications by American-owned companies. In March 2006, the DRC
signed an accord with OPIC that will expedite the process of
obtaining political risk insurance and financing.

49. (U) The DRC is a member of the World Bank's Multilateral
Investment Guarantee Agency (MIGA), which offers insurance on new
foreign investments to protect against foreign exchange losses,
expropriation, and civil unrest. The GDRC is negotiating now for
complete resumption of the MIGA program, which would allow for
investment insurance in other sectors of the economy. The DRC is
also a member of the African Trade Insurance Agency, which also
provides political risk insurance.



50. (U) The DRC's large urban population provides a ready pool of
available labor, including a significant number of high school and
university graduates, a few of whom have studied at American
universities. Employers cannot, however, take diplomas at face
value. Skilled industrial labor is in short supply and must often
be trained by individual companies.

51. (U) The GDRC sets regional minimum wages for all workers in
private enterprise, with the highest pay scales applied in the
cities of Kinshasa and Lubumbashi. Wages have not kept pace with
the DRC's rate of inflation. While most foreign employers pay
higher wages than the official minimum wage, the average Congolese
worker has had to cope with falling real wages for over a decade.

52. (U) The country's labor legislation was modified by the
October 2002 Labor Code, which is in compliance with the
conventions and recommendations of the International Labor
Organization. The code provides for tight control of labor
practices and regulates recruitment, contracts, the employment of
women and children, and general working conditions. Strict labor
laws can make termination of employees difficult. The code also
provides for equal pay for equal work without regard to origin,
sex, or age. The new code formally permits a woman to gain
employment outside of her home without her husband's permission.

53. (U) Employers must cover medical and accident expenses.
Larger firms are required to have medical staff and facilities on
site, with the obligations increasing with the number of employees.
Mandated medical benefits are a major cost for most firms.
Employers must provide family allowances based on the number of

children, and paid holidays and annual vacations, based on the
years of service. Employers must also provide daily transportation
for their workers or pay an allowance in areas served by public
transportation. Outside the major cities, large companies often
assist by providing infrastructure, such as roads, schools and
hospitals. Many labor regulations have been only sporadically
enforced in recent years. The Ministry of Labor must grant
permission for staff reductions. Generous pensions and severance
packages are required by the labor code.

54. (U) Every foreign employee must apply for a work permit from
the National Committee of Employment of Foreigners within the
Ministry of Labor. The right to strike is recognized and the law
provides for reconciliation procedures in cases where the
government is not involved.

Foreign Trade Zones/Free Ports


55. (U) The DRC does not have any areas designated as free trade
zones or have any free ports. The DRC is a member of the Southern
African Development Community (SADC) and the Common Market of
Eastern and Southern Africa (COMESA), but has not yet joined either
the COMESA or SADC free trade areas (FTAs).

Foreign Direct Investment Statistics


56. (U) Obtaining reliable statistical data on foreign direct
investment (FDI) in the DRC remains a challenge. There are two
sources: the Central Bank (BCC) and the National Agency for
Investment Promotion (ANAPI).

57. (U) BCC statistics are based on funds reported to the bank
from actual investment projects underway, and are more accurate
than those of ANAPI. These figures, however, may not capture all
FDI flowing in the DRC; therefore, the quality of the BCC data is
undetermined. Actual FDI amounts are probably higher than the BCC
figures shown here. For the last three years, BCC has published
the following totals:

FDI (in USD million)

2006 2007 2008 2009

Total 304 720 1,672.8 1,604.8 (estimates at the
end of November 2009)

ANAPI-registered data are obtained from proposals by potential
foreign investors. They summarize approved projects in services,
the manufacturing sector, the food sector, pharmaceuticals,
forestry and agriculture, and infrastructure, The bulk of
investments are oriented towards services (telecommunications,
health, and housing), representing almost 60 percent of investments
reported by ANAPI.

FDI (in USD million)

2006 2007 2008

Services 1,246 812.46 192.78

Infrastructure 35 67.15

Food 10 34.78

Pharmaceuticals 4 0.00

Beverages/Brewery 0 0 0.00

Agriculture/Forestry 29 141.69

Manufacturing 131 54.20 123.29

------------- ----- ------- --------

Total 1,455 866.66 559.69


Services 1,495.95

Infrastructure 209.96

Food 50.75

Pharmaceuticals 3.00

Beverages/Brewery 0.00

Agriculture/Forestry 33.36

Manufacturing 87.13


Total 1,880.15


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