US embassy cable - 05KINSHASA292

UNCLAS SECTION 01 OF 03 KINSHASA 000292 
 
SIPDIS 
 
DEPT FOR USITC - LSCHLITT 
 
E.O. 12958: N/A 
TAGS: ETRD, OTRA, ASEC, ELAB, CG 
SUBJECT:  USITC STUDY ON EXPORT OPPORTUNITIES AND 
BARRIERS IN AGOA 
 
REF:  STATE 08545 
 
1.  Summary:  This cable responds to reftel request for 
additional information on major economic sectors with 
export potential and major barriers to trade growth in 
AGOA-eligible countries. The DRC has significant 
natural resources and an ample employment base. As the 
DRC continues its transition from war to a peacetime 
society, some reform efforts are being made - with the 
assistance of international financial institutions - to 
increase transparency, reduce corruption build 
dilapidated infrastructure. Nevertheless, the "de 
facto" situation is still defined by opaque regulations 
and unreliable public services and infrastructure. The 
following responses are keyed to reftel.  End summary. 
 
2. A. In the last five years, the DRC has gone from a 
wartime to a (mostly) peacetime economy. Despite strong 
economic growth for the last three years (averaging 6 
percent), the virtually destroyed infrastructure, both 
physical and financial, graphically underscores how 
much remains to be done. The DRC is adhering to an IMF 
regime and is trying to improve its conformance with 
the Kimberley Process. 
 
Together with the World Bank, the GDRC has undertaken a 
number of reforms to improve the investment climate and 
promote exports. The 2002 Investment Code simplifies 
procedures for establishing a business and provides 
investment assistance to foreign investors through the 
National Agency for Investment Promotion (ANAPI). The 
Investment Code attempts to ensure advantageous 
conditions and equal treatment to both foreign and 
local investors. It also offers several "de jure" 
incentives for investment, including customs duties 
exonerations for capital equipment and necessary spare 
parts, exemption from export taxes on manufactured 
products, and a one time exemption from taxes on 
profits, socioeconomic and infrastructure investments, 
real estate and land concessions.  Small and medium 
enterprises can also claim a tax deduction for expenses 
related to employee training programs. The GDRC also 
qualified for a HIPC debt relief program, reaching a 
decision point in 2003 with a target completion point 
in 2006. 
 
Investment Code incentives and guarantees are 
reinforced through industry-specific codes including 
the mining code, the forestry code, the labor code, and 
certain laws that govern telecommunications. The 
International Monetary Fund (IMF) and World Bank 
programs to reform regulatory practices, such as in the 
banking system and tax services, support the investment 
codes.  Although these codes aim to provide some 
incentives to investment, the effect is frequently 
offset by corrupt officials who demand bribes. 
 
B. DRC production base by sector and industry (by 
percent): 
 
Agriculture (Cattle, fish, timber):     42 
 
Industry:                25 
- Mining and Metallurgy       13 
- Construction                       7 
- Manufacture                   4.4 
- Electricity and Water                   0.8 
 
 
Services:                        31 
- Distribution and Retailing               18 
- Hotels and restaurants             6 
- Transportation and Storage                   5 
- Public Services                       2 
- Taxes and Customs                     2 
 
Source:  Congolese Central Bank 
 
C.  The DRC is a member of the Common Market for 
Eastern and Southern Africa (COMESA), the Southern 
African Development Community (SADC), and the Economic 
Community of Central African States--"Communaute 
Economique des Etats de l'Afrique Centrale" (CEEAC). 
Although a member of these organizations, the DRC does 
not fulfill all of the organizations'.  For example, 
the country has never met the free trade zone 
commitment requested for COMESA countries.  COMESA 
called on all member countries to reduce customs duties 
incrementally reaching zero, but the DRC has not begun 
to reduce its customs duties. 
 
The DRC has a program with the IMF, which has a Poverty 
Reduction and Growth Facility to aid the DRC economic 
program. The IMF is working with tax and customs 
agencies to improve their standards, increase income 
and reduce corruption, and it also working with the 
Congolese Central Bank to modernize the banking system. 
The World Bank is working with the GDRC to implement a 
Poverty Reduction Strategy Paper and rebuild 
infrastructure through its Emergency Multisectoral 
Reconstruction and Rehabilitation Program. 
 
D.  The GDRC does not have programs targeting the 
development of specific sectors for export. Business 
incentive programs are ostensibly managed by ANAPI, but 
are very general in nature and apply to all 
investments. 
 
E.  Some Congolese small- and medium-sized enterprises 
are formally part of local chambers of commerce and 
other business organizations to promote Congolese 
exports. These businesses are interested in taking 
advantage AGOA, but in spite of Post's efforts to 
educate both private sector businessmen and GDRC 
officials involved in import-export, knowledge of AGOA 
is still limited.  Small businesses and NGOs export 
handcrafts and artisanally produced items (such as 
toys, works of arts, textiles, shoes, handbags, belts,) 
and food products (such as salted fish, peppers, and 
vegetables) in small quantities and sell them to 
specific targeted groups.  Post has received trade 
inquiries from businesses that would like to export 
decorative wood products and animal skins. Expansion of 
the export of these items and their incorporation into 
formal trade practices provides potential export 
opportunities. 
 
The DRC's traditional exports are lumber, diamonds, 
sugar, cement and copper. As the investment climate 
improves and infrastructure repairs are made, the DRC's 
wealth of natural resources will become extremely 
attractive to exporters. The main metal and mineral 
resources are diamonds, copper, cobalt, coltan, gold, 
cassiterite, wolframite, zinc, nickel and germanium. 
 
F.  During the past 5 years, investments in the DRC 
have targeted local market consumption as well as 
export markets, excluding the mining sector: 
 
Company:            Product:            Investment: 
 
Congotex Sprl            Textiles 
$39,829,000 
Sosider Steel Makers          Steel Manufacturing 
$36,321,065 
Socibex                          Forestry 
$7,081,500 
Socope                           Maritime fishery 
$6,497,717 
Fretin Sprl              Syringes 
$5,341,089 
Cinat                    Cement 
$4,391,315 
Dimon Congo              Tobacco agriculture 
$3,918,897 
Mbunzama Agency Service  Forestry 
$3,806,914 
O.K. Plast Sprl                       Reinforced steel 
bars                    $2,796,499 
Sicobois            Foresty 
$2,471,829 
Bakribois Corporation         Forestry 
$1,497,899 
Groupe Agro Alimentaire  Agri-business 
$970,847 
Africa Welfare Sprl      Food processing factory 
$791,754 
Societe Int'l de Distribution Agricultural products 
processing    $375,000 
Ets Savonnerie                   Soaps Manufacturing 
$191,231 
Ets Matchem              Foam rubber mattresses 
$187,459 
 
Source:  Federation des Entreprises du Congo (FEC). 
 
G.  The GDRC does not currently have plans to create 
"export processing zones." 
 
H.  The primary barriers to increased export sales 
include poor infrastructure, corruption, a very small 
formal sector, and a general lack of information and 
transparency. Bad road, rail and river conditions and 
lack of transportation and storage facilities hinder 
the movement of agricultural and forestry products from 
the interior of the DRC to the major ports of 
entry/exit. Water and electricity infrastructure is 
unreliable in major cities and non-existent in the 
interior. Corruption at regulatory and tax agencies - 
including customs - creates delays in obtaining 
documents, licenses and customs clearance. The judicial 
system is neither transparent nor impartial. The large 
informal market and a lack of transparency reduce 
information available to potential investors and 
exporters. There is also a lack of access to capital 
due both to weak respect for property rights, and to 
high interest rates on the domestic capital market. 
 
I.  The following organizations in the public and 
private sectors work to encourage export and 
investment: 
 
Ministry of Industry 
Contact:  Mr. Jean Mbuyu, Minister 
E-mail:  cabminipme@yahoo.fr 
 
Agence Nationale pour la Promotion des Investissements 
(ANAPI) 
Contact:  Mr. Matthias Bwabwa, General Director 
E-mail:  anapirdc@yahoo.fr 
Web site:  www.anapi.org 
 
Federation des Entreprises du Congo (FEC) 
Contact:  Jean Bamanisa, Administrator 
E-mail:  feccongo@hotmail.com 
Web site:  www.fec.cd 
 
Federation des Ong Laiques a vocation Economique du 
Congo (FOLECO) 
Contact:  Andre Tshula, Secretary Executive 
E-mail:  foleco@raga.net 
 
Reseau des Femmes d'Affaires COMESA/SADC 
Contact:  Liliane Okende, Coordinator 
E-mail:  femcomsa@yahoo.fr 
 
Confederation des Petites et Moyennes Entreprises 
Congolaises (COPEMECO) 
Contact:  Georges Bukasa, President 
E-mail:  copemeco@raga.net; copemeco@ic.cd 
 
Chambre de Commerce de Femmes 
Contact:  Marie-Antoinette Mbombo 
E-mail:  Bombez@cs-net.cd 
 
3.  To further assist in research efforts, please 
contact the following persons: 
 
Mr. Sam Amisi 
Commercial Director 
Federation des Entreprises du Congo--FEC 
(Chamber of Commerce) 
Phone:  +243-99-07226 
E-mail:  idiamisi@hotmail.com 
 
Mrs. Angele Mamba 
Division  Chief for regional agreements 
Ministry of External Trade 
Phone:  +243-81-0600-922 
E-mail:  angelemamba@yahoo.fr 
 
Mr. Thierry Mutombo 
Investments Promotion Director 
ANAPI  (National Agency for the Promotion of 
Investments) 
Phone:  +243-81-813-2525 
E-mail:  mutombothierry@yahoo.fr 
E-mail:  anapirdc@yahoo.fr 
 
MEECE