Overview

Country Overview

The Republic of Congo is endowed with a wealth of assets that can be used to build a robust economy, improve the living standards of its population, and drive the economic growth of the sub-region.

The country has substantial oil reserves, vast natural forests (close to 22 million hectares), and extensive arable land (10,000,000 hectares). It also has a highly developed hydrographic network, a climate conducive to agriculture, a world renowned biodiversity that helps regulate greenhouse gases, and mineral resources. It is also strategically positioned in Central Africa, possessing a 170-kilometer long coastal front on the Atlantic Ocean and a deep-water port in Pointe-Noire that could benefit the entire sub-region.

While the country has made some progress in transforming its natural resources into economic growth, its social indicators remain low compared to countries in similar contexts. Given its important resource base and a population of only 4.1 million, located primarily in the three largest urban centers, the Republic of Congo could be an emerging economy over the next 15 to 20 years if the right polices and action are taken by the policy makers.

However, the Republic of Congo’s economic performance over the last three years has been far behind the growth rate needed to achieve its development goals by 2025. In the past decade, the average annual economic growth rate of Congo was lower than that of lower middle income countries (LMICs). The Republic of Congo remains fragile; the high poverty rate, unemployment, inequalities, and low access to efficient public services are significant challenges to the country.

Political Context

In July 2015, President Denis Sassou-Nguesso held national consultations to end the debate surrounding a change or revision of the constitution to give the current president the legitimacy to run for a third term in the upcoming presidential elections. The consultations concluded in the adoption of a new constitution that includes the following changes: (i) removal of the age restriction and two-term limit, replacing it with a three term limit moving forward; (ii) the creation of a Prime Minister’s position; and (iii) decentralization as a method of political and economic governance in key sectors like agriculture and education. The new text was put to a referendum in October 2015 and the revisions were approved with 92% of the votes in favor of the change; however the local opposition held an alternative consultation and concluded that they were against the change of the constitution.

On March 20, 2016, presidential elections were held and featured nine candidates, including incumbent President Denis Sassou-Nguesso who won with 60% of the vote. The results are highly contested by the opposition.

Economic Situation

Over the past five years, Congo’s economic performance has fallen short of the target growth rate needed to achieve the 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 growth is attributed to the poor performance of the oil sector, where production fell by 5.4% over the same period. The non-extractive sectors’ good performances depend on mixed effects from activities in the manufacturing, electricity, gas, and telecommunication sectors, and public investments in infrastructure (9.7%). In 2015, the economy posted a 3% increase in growth. Annual inflation is under control and fell sharply between 2012 and 2015, from 5% to 0.9%. It is now holding below the 3% ceiling set by the Economic Community of Central African States (CEMAC).

The government opted to slow the pace of public expenditures in 2015 in order to amend its fiscal policy following the decline in oil prices. Between 2011 and 2013, government revenues increased by 13% on average and decreased by 26% over 2014-2015. The decrease in public expenditures helped offset the substantial reduction in oil revenues caused by a slowdown in oil production and prices. In addition, Congo’s reserves at the Bank of Central African States (BEAC) declined by 19% in 2015, and can cover up to six months of imports in 2016.

Economic growth is expected to remain moderate, with a projected annual average growth rate of 3% over the 2016-2018 period. This growth is expected to be driven by the extractive sectors, as a strong increase in oil production is expected. While government consumption will be contained, the government will post a substantial fiscal deficit of about 10.5% of GDP as revenues will be reduced. This deficit is expected to be financed by the issuance of new debt, by drawing on government deposits or by borrowing from the regional central bank. Given the projected decline of the nominal GDP in 2016, the resulting debt-to-GDP ratio would exceed 50% in 2016. Overall, the current account deficit is projected to stand at 17% in 2016. The economy remains vulnerable to exogenous shocks such as the volatility of oil prices, and mining production delays. Internal risks also remain, but have been taken into consideration in the government’s economic strategy.

Last Updated: Apr 13, 2016

World Bank Group Engagement in the Republic of Congo

The aim of the Country Partnership Strategy for 2013-2016 is to help the government diversify its economy by reducing its dependence on oil, promoting private sector-led growth, creating jobs, and boosting the performance of basic public services (health and education).

This strategy is in line with the government’s Poverty Reduction Strategy Paper (PRSP) and is built around three themes: competitiveness and employment; vulnerabilities and adaptability; and good governance and capacity building.

As of February 2016, the World Bank’s portfolio in the Republic of Congo is composed of 11 projects totaling $695.8 million (including a regional Central African Backbone (CAB) project and a Reducing Emissions from Deforestation and Forest Degradation (REDD+) project). The sectorial composition of the WBG portfolio is as follows: infrastructure accounts for 65% of the portfolio, followed by human development (14%), governance and private sector development (13%), and agriculture (8%).

In addition to these operations, the World Bank conducts analytical studies in several areas to help the authorities define appropriate public policies and implement priority reforms.

Last Updated: Apr 13, 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.

Urban Planning and Social Protection

Approved on February 18, 2016, the Urban Development and Poor Neighborhood Upgrading Project, co-financed with Congo’s 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 strengthen government and municipal capacity for urban upgrading.

The Lisungi Project (lisungi means help in Lingala) is establishing the key building blocks of a national safety net program and is piloting a cash transfer program to improve access to health and education services for the poorest households in participating areas. It is valued at $17 million and primarily financed by the Congo and the World Bank. The Lisungi Project will grant allowances to 5,000 poor households with children aged 0 to 14 years, and in 1,000 aged 60 years or more, at a rate of 10,000 CFA francs per household, 5,000 CFA francs per child, and 10,000 CFA francs per senior per month.

The cash transfer pilot has so far benefitted 254 households in Pointe Noire and 623 households in the department of La Cuvette. The first cash transfers in Brazzaville started in December 2015. In total 1,720 targeted households in four of the nine districts of the capital will benefit from these cash transfers.

Trade and Competitiveness

The World Bank funded Support to Economic Diversification Project (SEDP) in the Republic of Congo, is actively supporting the Republic of Congo’s pressing economic diversification agenda.  The $20 million project, which aims to promote private investment in select non-oil value chains and to support small and medium enterprises’ (SME) competitiveness, has overachieved by all measures including helping to realize an aggregate non-oil investment of $70 million or 140% of the target result. It also supported the competitiveness of over 400 SMEs exceeding by 30% the original overall result target of the project.

Agriculture

The Agricultural Development and Rural Road Rehabilitation Project, equally financed by the government and the World Bank ($20 million each), aims to strengthen the ability of rural communities to increase their incomes through the use of more modern agricultural technologies and increased access to market infrastructure. This project also seeks to contribute to improved planning and implementation of the pro-poor agricultural policies and expenditure programs. Under this project, 1,251 km of rural roads have been rehabilitated, 36 rural market infrastructure facilities have been constructed, and 855 income-generating micro projects have been financed. The sum of $10.5 million in additional financing from IDA and other donors, with support from the Ministry of Agriculture, was provided on August 18, 2014. Foreign direct investment has begun to flow into the country. A South African company is planning to develop large-scale farms and Singaporean enterprises have expressed an interest in investing in palm oil production.

Last Updated: Apr 13, 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 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: Apr 13, 2016


LENDING

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

*Amounts include IBRD and IDA commitments