Overview

Country Overview

The Republic of Congo is rapidly urbanizing and its two largest cities, Brazzaville and Pointe-Noire, are home to more than one half the population. However, the rest of the country is sparsely populated and ranks among the least dense countries in Africa, with a population density of 12.8 per square kilometer. The country is largely covered by tropical forests, but also possesses abundant arable land equivalent to about 31% of its total surface area. Most importantly, it is endowed with significant hydrocarbon reserves with an estimated proven 1.6 billion barrels of oil reserves and 90 billion cubed meters of natural gas reserves. In addition, the country is significantly endowed in mining resources.

While some progress has been made in transforming its natural resources into economic growth, the country has not been able to leverage these natural resources to achieve robust socio-economic outcomes. Overall, the heavy reliance on hydrocarbon resources has crowded out development of other sectors, like agriculture and forestry. With the decline in oil prices and the new institutional context, the Republic of Congo is at a crossroads. The new government is determined to implement key structural reforms that will tackle the obstacles that have reduced incentives for investment, create the necessary conditions for a diversified economy, and move toward sustainable growth.

Political Context

Elected in the first round elections on March 20, 2016, with over 60% of the total votes, President Denis Sassou Nguesso appointed Clement Mouamba as Prime Minister on April 23. The latter formed his government a week later. The objective of this new government, composed of 38 members including, for the first time, eight women, is to (i) promote institutional change; (ii) break with the past; (iii) promote youth and technocrats; and (iv) move towards greater gender equality. The government quickly engaged in the implementation of "The march towards development," the social project of President Denis Sassou Nguesso for 2016 to 2021, and in promoting the "Living together" initiative calling for unity and national cohesion. Gradually, the country has polished its image on the international scene, while the president endeavors to play a mediating role in regional political crises such the one in the Democratic Republic of Congo (DRC).

The Congolese opposition continues to challenge the legitimacy of the president and to request the opening of a true dialogue. Two of the main opposition leaders have been imprisoned and military actions have been reported since September 10, 2016 in the Pool department. According to the authorities, the latter have been conducted to respond to terrorist attacks committed by supporters of Frederick Bintsamou, also known as Pasteur Ntoumi, a religious leader at the head of a rebel group called Ninjas Nsiloulou.

Economic Overview

Over the past five years, the Republic of Congo’s economic performance has fallen short of the growth rate needed to achieve its 2025 development goals. Between 2011 and 2015, the economy grew at a rate of 4%, compared to the projected growth rate of 8.5% set forth in the country’s National Development Plan (NDP). This slower growth is attributed to the poor performance and low prices of the oil sector, where production fell by 5.4% over the same period and prices declined by over 50%. The non-extractive sectors’ good performances depend on mixed effects from activities in the manufacturing, electricity, gas, telecommunication sectors, and public investments in infrastructure (9.7%). In 2016, the economy posted a -0.9% growth rate. Annual inflation is under control and fell sharply between 2012 and July 2016, from 5% to 2.2%.

The government opted to slow the pace of public expenditures in 2015 and 2016 in order to amend its fiscal policy following the decline in oil prices, instead of implementing optimal counter cyclical policy. Between 2011 and 2013, government revenues increased by 13% on average and decreased by 29% over 2014-2016. The decrease in public expenditures helped offset the substantial reduction in oil revenues caused by a slowdown in oil production and prices. In addition, the country’s reserves at the Bank of Central African States (BEAC) declined by 49% in 2015 and 75% in 2016, and can cover up to two months of prospective imports in 2016. Economic growth is expected to recover significantly, with a projected annual average growth rate of 3% over the 2016-2018 period with the entry into production of Moho Nord field.

Last Updated: Dec 20, 2016

The Country Partnership Strategy (CPS) for FY 2013-2016 was endorsed by the World Bank Board of Executive Directors in November 2012. The overall strategy of this CPS was to support the Congolese government to diversify its economy away from oil, focusing on private sector-led growth and employment generation. The strategy also aimed at assisting the country to achieve better outcomes in basic public services, especially in health and education. It is built around three themes: competitiveness and employment, vulnerability and resilience, and strengthening government capacity and governance.

A Performance Learning Review (PLR) has been prepared (Q2- FY16). The strategic focus will continue to be on (1) competitiveness and employment; (2) vulnerability and resilience; and (3) good governance and capacity building as a foundation. The recent plunge in oil revenues underscores the importance to diversify Congo’s economy using public resources more efficiently to achieve better results. Proposed revisions reflect new engagements to align the program more closely with the twin goals through transformational projects on urban infrastructure, skills development in agriculture, delivery of health services (performance-based financing), social safety nets, and quality of education. The World Bank Group will explore alternative funding mechanisms through collaboration with the International Finance Corporation (IFC), and the development of public-private partnerships (PPPs) to fund large infrastructure projects.

A Systematic Country Diagnostic (SCD) is currently under preparation and scheduled to go to the board in FY17

Last Updated: Dec 20, 2016

World Bank Group support focuses on the following themes: (i) economic diversification and growth; (ii) improving the management of oil revenues and public expenditures; (iii) enhancing agricultural production and productivity; (iv) introducing tools to improve forestry management; (v) establishing a strategy for the growth of micro, small, and medium enterprises; (vi) improving services from the infrastructure program; and (vii) identifying the increase in the government’s share of the public transport services market at the sub-regional level.

Agriculture

The Bank has supported the agricultural sector through the Agricultural Development and Rural Roads Rehabilitation Project (PDARP) an International Development Association (IDA) grant of $20 million which became effective on April 3, 2008. Project results include the financing of 814 micro agricultural projects including fish farming and commercial vegetable and livestock projects that benefited 10,247 people, 50% of whom are women. The rehabilitation of a total of 1,251 km of rural roads, serving 221 villages, with a population of approximately 300,000 people, connecting them to markets they previously could not access, coupled with the completion of 36 rural markets, has made a huge difference to beneficiaries who are now seeing their incomes increase.

Forestry

The Republic of Congo has been committed to the Reducing Emissions from Deforestation and Forest Degradation (REDD+) initiative since 2008. The World Bank is supporting the government through an $8.6 million Readiness Grant from the Forest Carbon Partnership Facility. Using this support, the government has been laying the institutional and technical groundwork for REDD+. A particular focus has been on preparing the Sangha/Likouala Emissions Reductions Program, which aims to be one of the first large-scale emissions reductions programs worldwide, covering an area of 12.1 million hectares. In parallel, the $10 million IDA and $22.6 million government funded Forest and Economic Diversification Project is supporting forest administration, local communities, and indigenous peoples to co-manage forests.

Health

The World Bank is implementing a $120 million Health System Strengthening Project II (PDSS-II) of which $100 million is financed from by government funds, $10 million from IDA and $10 million from a multi-donor trust fund for health results innovation. The objective is to increase the utilization and quality of maternal and child health services in targeted areas. A performance-based financing approach is being introduced throughout the entire health system. It is accompanied by some support to strengthen health financing and health policies to improve equity and efficiency in health financing, help pave the way for universal health coverage.

Urban Development

The World Bank is supporting the implementation of the Water, Electricity and Urban Development Project (PEEDU), with $125.5 million in initial financing and $150 million in additional financing. Approved on February 18, 2016, the Urban Development and Poor Neighborhood Upgrading Project, co-financed with the government, is a $120 million project that aims to improve access to infrastructure and basic services for people living in selected unplanned settlements in Brazzaville and Pointe-Noire; and to strengthen government and municipal capacity for urban upgrading.

Water and sanitation

In 2003, the Republic of Congo adopted a new water legislation. This was a major effort to improve the legal and institutional framework of the country’s water sector. Implementation was not completed with several regulations and policies never developed and several institutions not fully operational. In response to the current situation, the World Bank Group provided technical assistance for conducting an institutional audit which identified the key challenges the sector and institutions are facing.  Based on the findings, a National Water and Sanitation Policy (NWSP) was developed which is aligned with the Sustainable Development Goals targets. So far, the NWSP has been approved in a national workshop in July 2016. Approval by the Council of Ministers is foreseen by the end of the year.

Last Updated: Dec 20, 2016

Foreign financial assistance to the Republic of Congo is modest. Apart from the World Bank, major international partners are China, the European Union (EU), the French Development Agency (AFD), and the African Development Bank (AfDB). These partners work together to promote economic diversification and the development of the health and education sectors. The United Nations (UN) and the Central African State Development Bank (BDEAC) are also active in the Republic of Congo. Furthermore, the government recently scaled up its collaboration with Singapore, in particular with respect to the special economic zones.

Last Updated: Dec 20, 2016


LENDING

Republic of the Congo: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments