As the groundbreaking “DRC Investment Summit” will be taking place from Monday to Wednesday, 27 to 29 June 2022, in Kinshasa, Jambo Africa Online’s SAUL MOLOBI, learns from DRC Invest – the country’s trade and investment promotion agency – why should investors target this Africa’s sleeping giant…
Economic outlook: Views from the African Development Bank and the World Bank
The largest Francophone country in Africa, the Democratic Republic of Congo (DRC), endowed with vast natural resources, has nearly 80 million inhabitants, fewer than 40% of whom live in urban areas. With 80 million hectares of arable land and over 1,100 listed minerals and precious metals, the DRC has the potential to become one of the richest economies on the continent and a driver of African growth, if it can overcome its political instability, improve governance and create an environment conducive for business.
Real GDP growth dropped to 4.3% in 2019 from 5.8% in 2018 due to a slowdown in extractives, the economy’s main driver despite a fall in the price of some raw materials (copper and cobalt). Agriculture has suffered from low productivity while energy shortages have hindered industrialization efforts. Growth has been driven by domestic demand, particularly private investment and public consumption. Thanks to good coordination in monetary and budget policies, the inflation rate, which reached 29.3% in 2018, fell to 4.5% in 2019.
Despite considerable rationalization in public expenditure, the fiscal deficit for 2019 was 0.4% of GDP due to the implementation of the presidential emergency plan (the fiscal surplus was 0.4% in 2018). Fiscal pressure averaged 10.2% from 2016 to 2019 (the continental standard being at least 20%). The current account deficit was 2.6% of GDP, financed primarily by direct foreign investment. Low currency reserves (equivalent to 3.7 weeks of imports in 2019) pose a threat to external stability. The country faces a moderate risk of debt distress. Poverty remains a concern with 77% of the population living on less than $1.90 a day. Other concerns include inequality and underemployment, which affects 86% of workers according to the 1.2.3 Survey in 2012. Young people have limited access to jobs and socio-professional insertion programs.
Furthermore, DRC was ranked 184 of 190 countries in the World Bank’s 2019 Doing Business report. The ongoing Ebola epidemic in the provinces of Ituri, Nord-Kivu, and Sud-Kivu, where insecurity remains a concern, continues to hinder economic development in these areas.
Attracting private sector investment in the DRC
The DRC economy remains dependent on mining products, which makes it vulnerable to global price fluctuations. The dollarization of the economy reduces the efficiency of monetary policy. Structural weaknesses in internal revenue systems make it difficult to fund priority programs. Infrastructure shortages in most sectors continue to dampen economic development significantly. However a medium-term economic and financial program supported by the IMF has paved the way for additional economic stimulus.
Africa’s infrastructure gap is about $68 billion to $108 billion a year. We believe however that the money can be found through private financing. The Democratic Republic of Congo urgently needs to establish infrastructure (power, water, roads, railways, ports, airports and telecoms infrastructure) as an investible asset class.
The Congolese government has launched several sector reforms to boost governance in the management of natural resources and improve the business climate. Virtually all mining, oil, and forestry contracts awarded by the Government are now accessible to the public. The DRC participates in the Extractive Industries Transparency Initiative (EITI) and regularly publishes reports on revenues earned from natural resources. Reforms instituted to improve the business climate include laws on public-private partnerships, the liberalization of the insurance sector, and telecommunications.
The expected adoption of the 2019–23 Strategic Development Plan will give national priorities more visibility, and thanks to the country’s low debt (13.7% of GDP for external debt and 6.5% for domestic debt in 2018), new external concessional loans can be secured. Moreover, normalization of the political situation and a new determination to reform and fight corruption instill a climate of confidence, which promotes new private investment in sectors that drive the economy.
Role of private investors
The primary private investors in the infrastructure sector are pension funds, life insurers, sovereign wealth funds and other funds acting on behalf of these investors.
Private investors typically work with governments by contributing funds to build and manage infrastructure. There are a number of ways in which this can happen. Infrastructure can be built by governments and subsequently privatised, or built from the ground up using private money, or developed through hybrid arrangements such as public-private partnerships and private finance initiatives.
The infrastructure sector is attractive to investors who are looking for long-term investments with a reliable return profile. It can provide a steady income stream lasting years into the future, perhaps through track access charges, rail fares or through utility bills.
In addition to funding, private investors can bring development experience and management expertise to help improve the performance of their asset and the benefit it brings to users and society.
Investment in infrastructure
It keeps our cities running smoothly, our communities connected, our homes warm and our taps running. It provides the ingredients for a healthy and growing economy enabling us to get to and from our jobs, for commerce to flow and businesses to grow. As well as being crucial to eliminating poverty in emerging markets, efficient infrastructure is vital in keeping countries internationally competitive.
The OECD estimates that more than US$50 trillion is needed by 2030 to upgrade existing and build the required new infrastructure worldwide. But governments are more challenged than ever in raising their own capital, and many countries have not created the right environment to access the private investment funds that are readily available.
(Source: GIIA)
The scale of investment needed
Worldwide investment in infrastructure needs to average $3.3 trillion a year to support global economic growth aspirations and provide citizens with essential services. In terms of sec- tor areas going forward, $5.1 trillion will need to be invested in rail, $7.5 trillion in wa- ter and $11.4 trillion in roads between 2016-2030 in order to keep pace with projected growth.
However, if the current trajectory of underinvestment continues the world will fall short by 11% or $350 billion a year and infrastructure investment has actually declined as a share of GDP in 11 of the G20 countries since the global market crisis.
(Source: Mckinsey Global Institute –’Bridging Global Infrastructure Gaps’)
Benefits of private investment
Private-sector specialists bring skills and experience at running infrastructure which often delivers more efficient performance, ultimately benefiting the users and the public.
The involvement of private financing also averts excessive pressure on government balance sheets, allowing more infrastructure to be built and modernised without overstretching public finances.
Infrastructure investment leads to the development, maintenance and provision of essential services. It plays a key role in generating economic growth and building prosperous societies, helping governments support the needs of a rapidly changing world.
It creates jobs and develops skills across all levels of the workforce and it can catalyse economic growth through supply chains.
About DRC Invest
DRC Invest is an umbrella initiative created to attract and facilitate private and public sector investment in infrastructure development in the Democratic Republic of Congo (DRC).
Interventions to increase the available pool of funds in infrastructure development projects in the DRC have been limited – Our work consists of increasing the number of viable, bankable private and PPP projects and increasing the available pool of funds in the infrastructure space by altering the risk–return characteristics of investments.
Through our innovative approach and bold actions, we lobby on behalf of the private sector to improve the business and investment climate, and work with our network of investors to unlock a new wave of financing and partnership to support the momentous growth that the country needs to be able to drive millions of people out of poverty.
Our network represent
Infrastructure development is a long term process that requires a clear strategic focus, favourable policies and plenty of capital. DRC Invest works closely with high level executives
and senior officials to drive infrastructure development financing in the Democratic Republic of Congo. Our partners are diverse and include government departments, international financial institutions, investors, developers and key solution providers.
- Asset managers
- Development Finance Institutions
- Commercial lenders or banks
- Multinational corporations
- Insurance
- Debt funders
- Institutional investors such as Pension schemes; Insurers; Sovereign wealth and pension funds; and, Endowments and family offices
Legal
- Impact investors Developers
- Technology accelerators Advisory firms
- Governments
- Foreign representatives Development agencies.
Our work
The Democratic Republic of Congo urgently needs to establish infrastructure (power, water, roads, railways, ports, airports, digital and telecommunication infrastructure) as an investible asset class.
Interventions to increase the available pool of funds in the infrastructure space in the DRC have been limited – There are important opportunities to increase the available pool of funds (liquidity) in the infrastructure space by altering the risk–return characteristics of investments, increasing the number of viable, bankable private and PPP projects and working closely with the local government – the state can’t afford to cover the full bill themselves however with innovative approach and bold action our team lobbies to unlock a new wave of financing and partnership from private investors and developers.
Agrifood reform and investment
The development of food and agriculture is a long term process that requires a clear strategic focus; agriculture is a business that requires an entrepreneurial approach, plenty of risk capital and favorable policies.
DRC Invest, African Agri Council (AAC) and their partners will work with the Congolese agriculture industry for the advancement of this important agenda.
Endorsed by the African Agri Council (AAC) and its partners.
Our work
Bureau for Economic Research (BER)
The Bureau for Economic Research (BER) works with stakeholders representing the private sector and policy makers to provide recommendations that accelerate policy reforms and improve the business and investment climate in the Democratic Republic of Congo (DRC).
Infrastructure Investment Committee (IIC) and Agrifood Investment Committee
Our committees are set up to address
the lack of bankable projects – DFIs, institutional investors, asset managers and commercial lenders are all fighting for limited investment opportunities therefore our work with the Congolese government, local and international developers, foreign investors and development institutions contributes to building pipelines of investment ready deals in DRC.
- Create an environment that makes it easy for businesses to comply with the rules
- Increase availability of funds (liquidity) from both domestic and international providers of capital
- Increase the scale of investment by bundling together individual projects and providing a portfolio of products in which such providers of capital can invest.
Public Private Partnerdhip Leadership Group
The Public Private Partnership Leadership Group (PPPLG) works to address the governance and capability gaps that often hinder private-sector investment through the establishment of public and private partnerships.
Our committees’ focus
Our services include deal pipeline development, market insights, risk mitigation and bespoke services. We work closely with:
- Local companies: preparation of market studies and global trends, business plans, financing applications and sourcing local and international partners
- Foreign investors: local market assessment, investment conditions, search for sites and sourcing local partners and support
- Development institutions: technical assistance support – sector analysis, identification and preparation of rural development projects and sourcing local partners and support.
The DRC Investment Summit: 27-29 June 2022
The DRC Investment Summit is a global meeting place for investment in the Democratic Republic of Congo (DRC). The Summit brings together global investors, businesses, developers, and policy makers to attract and retain investment as well as discuss trends that influence economic growth in the DRC.
The Summit, taking place in June in Kinshasa, will present the country as an investment destination, highlighting its commitment to a market economy, where obstacles to private investment are removed.
The DRC Investment Summit will bring over 1250 high level participants targeting over US$10 Billion worth of investment. The Summit will feature private and PPP infrastructure development projects in the Investor Exchange Sessions – DRC is open for business and it is moving towards business friendly policies and engagement.
To download the DRC Invest prospectus which gives in-depth detail about the projects and the link to the DRC Investment Summit giving more information about the summit, please click here.
Matchmaking Services at the DRC Investment Summit (DIS22): 27-29 June 2022
Please click here for the current programme as well as the attendee list for the DRC Investment Summit (DIS22). Both lists will be updated and shared everyday until the event takes place.
“We are offering a matchmaking service whereby we try to pre-arrange one-on-one meetings (20 minutes each) for each of our registered delegates with other attendees of their choice,” comments Ben Leyka, tge DRC Invest’s CEO and Summit Convenor.
Should you wish to take advantage of this service, please provide them with up to 10 attendees names who you wish to meet at the DRC Investment Summit, as well as some times that will be convenient for you. It would also be helpful if you offered a short explanation or purpose for your meeting, so we can inform the attendee you would like to meet, of the nature of your discussion.
We look forward to you joining us at the Summit from 27 – 29 June 2022.
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Ben Leyka: On the driving seat of the DRC Invest
Ben Leyka is the Acting Chief Executive Officer of the DRC Invest. He also serves as the Chief Executive Officer of the African Agri Council NPC (AAC). The African Agri Council is a Pan-African organization that promotes the development of African agriculture by facilitating investment into bankable projects across the value chain.
Over the years, Ben has worked with global stakeholders within the public and private sector across different industries. Working for the Pan African Parliament, African Leadership Academy and now the African Agri Council, combined with his experience working in the private sector for Capital Surge Inc, AFTI and Equitics Holding have allowed him to add his voice to the development of the African continent. His love, passion and commitment towards the development of Africa are the drivers behind his work on the continent.
Ben sits on various Board Committees and he is also involved with the Africa 1st Initiative and DRC Invest – all focusing on the creation and development of entrepreneurs and conducive business environments in Africa.
For further information, contact the DRC on:
Johannesburg: +27 11 803 0373
Cape Town: +27 21 700 4300
Email: info@drcinvest.com
Website: www.drcinvest.com