A Diamond In The Rough
The Democratic Republic of Congo (DRC) is set to emerge as the fastest growing economy in Africa, clocking growth rates of 8.7% and 8.5% in 2014 and 2015, respectively.
Globally, only Turkmenistan has higher global rates, according to The International Monetary Fund latest World Economic Outlook.
The IMF expects growth to accelerate in the DRC as massive investments in infrastructure and mining gets under way. The country saw foreign direct investment worth USD 3.3 billion flow into the country in 2012 - fourth in the Sub-Saharan Africa region, after Nigeria, South Africa and Mozambique.
DRC has been the second fastest-growing market in terms of new project investments, rising 47.6% annually between 2007 and 2011, second only to Ghana's 50.8% growth.
The robust growth rates come after a period when the economy contracted by 4.5% annually from 1991-2002. The country of 75 million people has been ravaged by civil wars, political and social instability.
After insurgencies and counter-insurgencies that lasted more than a decade, a U.N.-backed accord to stabilise the DRC was signed in February2013 by 11 African countries -- Angola, Burundi, Central African Republic, Congo, the Republic of Congo, Rwanda, South Africa, South Sudan, Uganda and Tanzania.
The accord has allowed President Joseph Kabila to pursue some economic reforms and start the slow process of building the economy.
"With the support of international emergency assistance and improved prices for key export commodities, the DRC's macroeconomic situation has stabilised and the economy has recovered significantly," the IMF noted.
The country - the largest in Sub-Saharan Africa in terms of area -- is rich in mineral and natural resources. Apart from its unique biodiversity thanks to 11,000 plant species and more than a 1,000 varieties of mammals and birds, the country also has abundant reserves of oil and numerous minerals.
More than 25 international mining companies operate in the country, drawn by its mineral and metal riches. By some estimates the total value of the DRC's mineral reserves could equate to USD 24 trillion.
While data is hard to come by for the DRC, the U.S. Geological Survey notes that by 2011 DRC's share of the world's cobalt production was 53%; industrial diamond 34%; tantalum 13%; gem-quality diamond 7%; copper 3%; and tin 2%.
"There are vast gold deposits - said to be the richest undeveloped gold deposits in Africa -in the Kilomoto concessions of Orientale province and around Twangiza in South Kivu," ," KPMG said.
The government is pushing major mining companies such as Glencore Xtrata Plc., AngloGold and Randgold to increase royalties. Companies are resisting the move, especially as the country suffers from electricity shortages which often hurt the sector's productivity.
DRC has a long way to go before its fragile recovery can take hold and investors - beyond the extractive industry - start to pay attention.
The country is like a blank canvas - fully of uncharted opportunities, but also daunting due to lack of infrastructure. Only 2% of the national network is paved and only 11% of the country's rural road network is in an acceptable condition.
The rail network, once extensive, is barely operational, and only 10% of the population has access to electricity.
Overall, the institutional framework to attract investors is also lacking. The DRC is ranked 183rd in World Bank's 2014 Doing Business Survey of 189 countries. The country fell 34 places from its 2013 ranking and performed poorly in virtually every aspect of business process, according to the World Bank data.
Absence of a conducive environment for private initiatives, legal insecurity and relative quality of labor, the infrastructure gap (transport and energy) and inefficiency of logistic services result in major economic costs; and the weakness of public governance have all contributed to the malaise, the World Bank said.
"The main development challenge is to continue to lay the foundations for sustainable and inclusive growth, in partnership with the private sector," the AfDB said.
Trends over the past decade have revealed DRC's ability to achieve satisfactory results under adverse conditions.