External Economic Impact on Business in Congo
Congo has recorded impressive growth in the GDP over the last few years. The actual GDP grew at 8.8% in 2010, 5.3% in 2011, 5.7% in 2012, and was projected to grow at 4.7% in 2013. However, one of the key challenges to business in Congo is the economy’s overdependence on oil exports, which makes the country very susceptible to the economic and financial crises from outside the country or continent. The country exports oil and imports products such as foods, medicines and motor vehicles among others. Any fluctuations that occur in these trading countries will certainly affect trade in Congo. The high dependency on oil exports may also be a contributing factor to the high unemployment rates in the country. While there has been significant growth in the past, there has not been a corresponding structural change in the economy with the oil industry still making up 89% of the country’s total export. Job creation will be enhanced through diversification and investment in infrastructure.
Business in Congo is also influenced by regional trade policies. The country is among the member states of the Central African Economic and Monetary Community (CEMAC), a regional trade community in central Africa. Business in the country follows the community’s custom rules, as well as the country’s general preferential tariffs. The CEMAC rules that apply in Congo are quite limiting compared to the other regional integration communities such as the East African Customs Union, the Southern African Customs Union and the West African Economic and Monetary Union. The limiting CEMAC rules and the characteristic high tariffs in Congo become significant barriers to trade in the country. Therefore, the country merely struggles to be integrated into the multilateral trading system.
On the other hand, the debts a country registers from the development and trade partners may negatively affect its economic growth and environment for business. Fortunately, the country has had significant relief in debt following the 2010 achievement of the goals and targets established in Heavily Indebted Poor Countries (HIPC) initiative. With a reduced debt, the government can now invest more on serious infrastructural development to create a better environment for business. There will be more job opportunities that can help reduce the problem of unemployment and high poverty levels. This will in turn create a good environment for the establishment of businesses across different industries.