The Democratic Republic of the Congo: Investment Risk
By Stephen Krebs
Macroeconomic Environment
The Macroeconomic Environment
Current Economic Trends
- Recent recession
- Trade balance (+) Current Account (-)
- Lack of other important data
Current Economic Trends
Exchange Rate Dynamics
- "Other Managed Arrangement"
- Crawling peg
- Recent recession
Exchange Rate Dynamics
Balance of Payments
- Diversified imports
- Concentrated exports
- Mining-based economy (risky)
Balance of Payments
Institutions and Political Risk
“If you want to steal, steal a little in a nice way. But if you steal too much to become rich
overnight, you'll be caught.”
~ Mobutu Sese Seko
Historic Information
- Congo Civil Wars
- Ineffective government policy
- Caa1 credit rating (Moody's)
- Downgrade and negative outlook
Historic Information
Congo Civil Wars
- Mobutu's takeover of foreign firms and 1989 Belgian loan default (sovereign debt)
- Rwandan genocide
- 1993-1994: worst economic years
- Ethnic conflict, warring militias, proxy wars
Congo Civil Wars
Monetary and Fiscal Policy
- Ineffective monetary policy
- FX rate arrangement
- Dollarization
- Ineffective fiscal policy
- Stabilizing FX rate
- Increased mining taxes
Monetary and Fiscal Policy
Quality of Institutions
Quality of Institutions
Doing Business Survey
Doing Business Ranking
Worldwide Governance Indicators
Governance
Contemporary Affairs
- Northeast Congo
- Ebola
- Militia violence
- Hydroelectric dam project
- Congo river: second in flow to Amazon
- Regime change: Félix Tshisekedi
Contemporary Affairs
Overall Assessment : Do Not Invest
- Positives
- Hydroelectric dam
- New president
- Natural resources
- Negatives
- Concentrated economy
- Weak institutions
- Violence and Ebola
Overall Assessment