VZCZCXYZ0420
RR RUEHWEB

DE RUEHKI #0092/01 0261503
ZNR UUUUU ZZH
R 261503Z JAN 10
FM AMEMBASSY KINSHASA
TO RUCPCIM/CIM NTDB WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/SECSTATE WASHDC 0080
INFO RUEHKI/AMEMBASSY KINSHASA

UNCLAS KINSHASA 000092 
 
SIPDIS 
DEPT FOR EB/IFD/OIA (DAVID AHN AND THOMAS WALSH) 
DEPT FOR AF/C (CHRIS LAMORA) 
DEPT PASS TO DEPT OF COMMERCE WASHINGTON DC (MARIA RIVERO AND KEVIN BOYD) 
 
DEPT PASS TO DEPT OF TREASURY WASHINGTON DC 
DEPT PASS TO CIMS NTDB WASHDC 
DEPT PASS TO USTR 
DEPT PASS TO OPIC 
 
E.O. 12958: N/A 
TAGS: EFIN EINV ELAB ETRD ECON KTDB OPIC USTR CG
SUBJECT: DRC: 2010 INVESTMENT CLIMATE STATEMENT 
 
REF: 09 STATE 124006 
 
¶1. (U) Per reftel, the following is the text of the Investment 
Climate Statement for the DRC for 2010. 
 
 
 
Openness to Foreign Investment 
 
------------------------------ 
 
 
 
¶2.  (U) The DRC's rich endowment of natural resources, large 
population size (approximately 68 million) and generally open 
trading system provide significant potential opportunities for U.S. 
investors.  At the same time, the DRC remains a highly challenging 
environment in which to do business.  The DRC was ranked 182 out of 
183 in the 2010 World Bank's Doing Business report, the second most 
difficult country in the world in which to do business.  The DRC 
had previously been ranked dead last in the 2008 and 2009 Doing 
Business rankings- 181 out of 181 countries.  The DRC was also 
ranked 173 out of 179 countries on the 2009 Heritage Foundation's 
Economic Freedom Index.  Underdeveloped infrastructure, inadequate 
contract enforcement, limited access to credit, continued 
insecurity in the eastern part of the DRC, lack of adequate 
property rights protection, and high levels of both bureaucracy and 
corruption continue to constrain private sector development. 
 
 
 
¶3.  (U) Since the democratic Presidential, Parliamentary and 
provincial elections in 2006, the Democratic Republic of Congo 
(DRC) has continued to make progress, albeit slowly, in addressing 
the country's significant political, economic, and social 
challenges.  The DRC seeks to attract foreign investors in order to 
boost production and increase economic growth.  Congolese 
investment regulations, codified in the Investment Code, do not 
discriminate against foreign investors, except in some specific 
cases dealing with labor and related taxes.  To overcome previous 
hurdles and to simplify and facilitate investment, the GDRC has 
created a one-stop agency called the National Agency for Investment 
Promotion (ANAPI).  This agency is using the provisions of the new 
Investment Code to work to simplify new investments and to make the 
procedures more transparent.  With support from international 
donors, the GDRC is also working to implement a series of reforms 
aimed at improving the business climate.  Specifically, the GDRC 
has launched a steering committee under the Ministry of Plan to 
improve the GDRC's ranking on the World Bank's Doing Business 
report. 
 
 
 
¶4.  (U) Broadly, there are no formal limits or screening mechanisms 
imposed upon foreign ownership of businesses in the DRC.  Small 
businesses, however, are still subject to presidential decrees 
number 79-021 of August 2, 1979 and number 90-046 of August 8, 
1990, which prohibit foreign investors from engaging in retail 
commerce.  The processes of granting permits and licenses in the 
mining and telecommunication sectors often suffer from 
arbitrariness, lack of transparency, and corruption. 
 
 
 
¶5.  (U) All investors in the DRC suffer from multiple audits by 
various government enforcement agencies seeking evidence of 
violations of tax laws or price controls.  Foreigners and Congolese 
alike suffer the consequences of non-functional judicial 
institutions.  The inadequate physical infrastructure - including 
internal transportation, energy, and social infrastructure - is a 
result of years of civil war and literally decades of 
mismanagement, negligence, and a lack of clear public policies in 
the infrastructure sector.  International donors and a recently 
concluded multi-billion dollar Sino-Congolese agreement will 
provide critically needed resources for infrastructure development, 
but constraints will exist in the short-term. 
 
 
 
¶6.  (U) Restructuring of approximately 60 Congolese parastatals, 
 
including perennial money losers such as the national electricity 
(SNEL), river transportation (ONATRA) and rail (SNCC) companies, 
continues, though slowly.  The GDRC acknowledges the need for 
reform and the Portfolio Ministry continues to work to improve the 
situation.  The government and state-owned Societe Nationale 
d'Electricite (SNEL) have begun to open the energy sector to 
private investment. 
 
 
 
¶7.  (U) The DRC's economic environment changed dramatically 
beginning in late 2008 and throughout 2009 as a result of the 
impact of the global financial crisis.  GDP growth for 2009 is 
projected at only 2.7 percent, a significant reduction from earlier 
projections.  The once robust mining sector significantly 
contracted during late 2008 and early 2009 due to falling 
international commodities prices, a tightening of international 
credit, and dampened investor confidence in the sector.  With the 
support of international emergency assistance and improved prices 
for key export commodities, the DRC's macroeconomic situation has 
stabilized and the economy has begun to recover.  GDP growth for 
2010 is projected at 5.4%.  The IMF's Executive Board approved a 
new three-year Poverty Reduction and Growth Facility (PRGF) in 
December 2009. 
 
 
 
Conversion and Transfer Policies 
 
-------------------------------- 
 
 
 
¶8.  (U) The DRC adopted a freely floating exchange policy in 2001 
as part of the implementation of broader economic reforms.  The DRC 
has also lifted restrictions on business transactions nationwide. 
International transfers of funds take place freely when sent 
through a local commercial bank.  The bank declaration requirement 
and payments for international transfers now take less than one 
week to complete, on average. 
 
 
 
¶9.  (U) The Central Bank is responsible for regulating foreign 
exchange and trade.  The only currency restriction imposed on 
travelers is a USD 10,000 limit on the amount an individual can 
carry when entering or leaving the DRC.  The GDRC also requires 
that the Central Bank license exporters and importers.  The DRC's 
parallel foreign exchange market is large and tolerated by the 
government.  The largest banknote in circulation is the 500 
Congolese franc note; larger denominations (1,000 Congolese francs 
and 5,000 Congolese francs) may be put into circulation sometime in 
the future.  The DRC's economy remains highly dollarized. 
 
 
 
¶10.  (U) Following several years of relative exchange rate 
stability as a result of tight monetary policy, the DRC's currency, 
the Congolese Franc, depreciated by 35% against the U.S. dollar 
between December 2008 and September 2009.  The currency has begun 
to stabilize as overall macroeconomic conditions began to improve 
starting in late 2009.  International reserves had hit a 
historically low level of $30 million in February 2009, but 
significantly increased throughout the remainder of 2009 due to the 
disbursement of emergency financial assistance from several 
international donors, the arrival of the first tranche of a signing 
bonus under the Sino-Congolese minerals-infrastructure agreement, 
and the DRC's drawing on the IMF's Special Drawing Rights (SDR) 
allocation. 
 
 
 
Expropriation and Compensation 
 
------------------------------ 
 
 
 
¶11.  (U) The DRC's land law allows for expropriation of property by 
the GDRC for the sake of public interest, such as the protection of 
 
community heritage, completing public works (such as infrastructure 
projects) and the presence of precious minerals.  The illegitimate 
acquisition of property is also grounds for expropriation.  In any 
case of expropriation, the GDRC is required to offer fair 
compensation; as with many Congolese laws, these requirements are 
not always fully respected. 
 
 
 
¶12.  (U) There have been no expropriation actions against U.S. 
citizens in the recent past.  Post is aware of a number of existing 
claims against the GDRC that date from 1991 to 2002, some of which 
were taken to arbitration (see Dispute Settlement section below). 
Arbitration judgments against the GDRC, however, have not been paid 
in a timely manner, if at all.  There are no laws forcing local 
ownership, although parastatal companies involved in the petroleum 
and mining sectors maintain minority shares of most foreign-owned 
projects. 
 
 
 
¶13.  (U) A recent GDRC review of 61 mining contracts between DRC 
public enterprises and private companies between 1997-2002 was 
plagued by numerous delays and a lack of transparency.  The GDRC 
officially announced the conclusion of the contract review in 
November 2009.  However, the largest foreign investor in the mining 
sector, a U.S. majority investor, has yet to reach  agreement with 
the government under its contract review and negotiations continue. 
A recent review of concessions in the logging sector aimed at 
cleaning-up corruption in the sector resulted in the cancellation 
of approximately two-thirds of the over 150 timber logging 
contracts.  While not without issues, the forestry sector 
conversion process has been largely successful in addressing many 
concerns for the sector.  The GDRC continues to work with civil 
society, local communities and logging companies on implementation 
of post-conversion requirements. 
 
 
 
Dispute Settlement 
 
------------------ 
 
 
 
¶14.  (U) The U.S.-DRC Bilateral Investment Treaty (BIT) provides 
for International Center for Settlement of Investment Disputes 
(ICSID) reconciliation or binding arbitration in the case of 
investment disputes.  A number of U.S. firms pursued claims against 
the GDRC for damages resulting from civil disturbances by military 
mutinies in 1991 and 1993.  Two investors have won settlements from 
the ICSID.  In early 2004, a claimant under the BIT won a 
settlement from ICSID but has not yet collected payment from the 
GDRC.  The other investor, who successfully collected the 
compensation awarded by ICSID, received damages in 1999. 
 
 
 
¶15.  (U) The DRC is not a Party to the New York Convention of 1958 
on the Recognition and Enforcement of Foreign Arbitral Awards.  On 
paper, the DRC's official policies are satisfactory and even 
attractive to business, but in recent years they have often been 
inoperative in practice due to problems with the judicial system. 
Courts are marked by a high degree of corruption, public 
administration is not reliable, and both expatriates and nationals 
are subject to selective application of a complex legal code. 
Official channels often do not provide direct and transparent 
recourse in the event of property seizure, for which legal standing 
can rarely be determined.  Seizures have been made via the police 
and/or military, often supported by questionable decisions from the 
courts.  Foreign enterprises may have slightly better security of 
ownership due to the presence and intervention of their diplomatic 
missions.  Many Congolese business contracts provide for external 
arbitration, but this is an expensive and time-consuming option 
with little value for resolving routine, day-to-day business 
problems. 
 
 
 
¶16.  (U) In 2008, the DRC established commercial courts in Kinshasa 
 
 
and Lubumbashi for the first time, with additional commercial 
courts scheduled to be established shortly in the remaining DRC 
provinces.  These courts are slated to be led by professional 
judges with expertise in commercial matters and may assist 
investors to address commercial claims within an otherwise 
inadequate judicial system.  The DRC is poised to join OHADA 
(Organization for the Harmonization of Business Laws); the DRC 
Parliament passed the required legislation for OHADA accession in 
December 2009.  OHADA members agree to adopt a common set of 
commercial laws - including contract, company and bankruptcy laws - 
and to submit interpretation of those laws to the final 
jurisdiction of the OHADA court, which sits in Abidjan in the Ivory 
Coast. 
 
 
 
Performance Requirements and Incentives 
 
--------------------------------------- 
 
 
 
¶17.  (U) The DRC does not have any barriers specifically targeting 
or restricting U.S. trade or investment.  The DRC has not 
maintained any measures that are inconsistent or violate the WTO's 
TRIMs requirements.  The DRC 2002 Investment Code is a simplified 
and improved version of its predecessor.  Although there are no 
specific performance requirements for foreign investors, there are 
investment conditions that must be agreed upon with the GDRC. 
These conditions are discussed and agreed upon with the DRC 
investment agency, ANAPI, which assures equitable treatment and 
procedures for all qualified foreign investments.  The DRC has 
shortened this agreement procedure to approximately 30 days, and 
has created a number of incentives to attract foreign investment to 
the country.  Pro-business incentives range from tax breaks to duty 
exemptions granted for three to five years, and are dependent upon 
the location and type of enterprise, the number of jobs created, 
the extent of training and promotion of local staff, and the 
export-producing potential of the operation.  Investors who wish to 
take advantage of customs and tax incentives of the new 2002 
Investment Code must apply to ANAPI, who will in turn submit their 
applications to the Ministries of Finance and Plan for approval. 
The Ministry of Labor controls expatriate residence and work 
permits.  For U.S. companies, the BIT assures the right to hire 
staff of their choice to fill some management positions, but the 
companies agree to pay a special tax on expatriate salaries.  There 
is no requirement that investors purchase from local sources or 
export a certain percentage of output. 
 
 
 
¶18.  (U) Performance requirements agreed upon initially with ANAPI 
include a timeframe for the investment, the use of Congolese 
accounting procedures and periodic authorized GDRC audits, the 
protection of the environment, periodic progress reports to ANAPI, 
and the maintenance of international and local norms for the 
provision of goods and services.  The investor must also agree that 
all imported equipment and capital will remain in place for at 
least five years.  There is no discriminatory or excessively 
onerous visa, residence or work permit requirement designed to 
prevent or discourage foreigners from investing in the DRC, though 
corruption and bureaucracy can create delays in obtaining necessary 
permits.  In 2008, the GDRC passed a resolution to abolish four 
burdensome requirements for establishing a company in the DRC, 
including the civil servant attestation, resident's certification, 
a document with the company seal on it, and a police background 
check certification.  ANAPI and the Congolese Chamber of Commerce 
(FEC) play a vital role in addressing business issues in the DRC. 
 
 
 
¶19.  (U) According to the terms of the Investment Code, the GDRC 
may require compliance with an investment agreement within 30 days 
of notification.  Continued violations of an agreement may result 
in sanctions, including repayment of benefits received (such as tax 
exemptions) and eventual nullification of the agreement. 
 
 
 
¶20.  (U) In the case of a dispute between a U.S. investor and a 
 
GDRC agency, the investor is subject to the Congolese civil code 
and legal system.  If the parties cannot reach agreement, under the 
terms of the U.S.-DRC BIT the dispute is taken to the ICSID or to 
the Paris-based International Chamber of Commerce (ICC). 
 
 
 
¶21.  (U) GDRC public administration reforms implemented since 2002 
have allowed foreign investors to bid on government contracts just 
as domestic investors, with no discriminatory terms.  Foreign firms 
may even be favored in the bidding process because they can more 
easily access and present international insurance funding 
guarantees.  There is no discrimination against U.S. or foreign 
firms in participating in government- sponsored or subsidized 
research and development programs, since participation is done on a 
national treatment basis.  With the sponsorship and technical 
assistance of the World Bank, a tender board now works under the 
supervision of the Ministry of Budget.  Normally, however, public 
companies and/or parastatals do not participate in the bidding 
process, due to the financing guarantees required beforehand.  In 
addition, contracts are often negotiated directly with the GDRC, 
not through an international tender process, thus reducing 
transparency.  A new procurement law has been submitted to 
Parliament, but has yet to be passed. 
 
 
 
Right to Private Ownership and Establishment 
 
-------------------------------------------- 
 
 
 
¶22.  (U) The DRC's Constitution (chapter 2, articles 34-40) 
protects private ownership without discrimination between foreign 
and domestic investors.  It also protects investments against 
takeover, unless the investment conflicts with some overriding 
public interest.  In this case, there are legal provisions for 
equitable and appropriate compensation for the parties involved. 
 
 
 
¶23.  (U) Foreign investors can operate in the DRC either through 
establishing a branch or local subsidiary.  The individual business 
may either be designated a(##)Commodite Simple" (SNC), 
Responsability Limit(SPRL), a 
(##) 
Cooperative." 
The most common adopted forms of establishment are the SPRL and 
SARL, which are both limited liability companies.  While in an SPRL 
shares are not freely negotiable, incorporation of an SARL requires 
a minimum of seven shareholders.  Furthermore, incorporation of an 
SARL requires both authorization of the Head of State and the 
government must receive 6 percent of share capital. 
 
 
 
¶24.  (U) The GDRC has restricted one category of small businesses 
to Congolese nationals.  This covers artisanal production sector 
activities, small public transport firms, small restaurants, and 
hotels with fewer than ten beds.  Despite GDRC restrictions, some 
foreign-owned small retailers, particularly Chinese-owned stores, 
have recently appeared on the market. 
 
 
 
Protection of Property Rights 
 
----------------------------- 
 
 
 
¶25.  (U) Despite the new DRC Constitution and attempts to enforce 
existing legal provisions, protection of property rights remains 
weak and dependent upon a currently dysfunctional public 
administration and judicial system.  Some senior-level officials 
are making efforts to restore and improve the legal and 
administrative frameworks, but the challenge remains to implement 
 
these changes at a practical level. 
 
 
 
¶26.  (U) Ownership interest in movable properties (e.g. equipment, 
vehicles, etc.) is secured and registered through the Ministry of 
the Interior's Office of the Notary.  Real estate property (e.g. 
buildings and land) is secured and registered at the Ministry of 
Land's Office of the Mortgage Registrar. 
 
 
 
¶27.  (U) The GDRC continues to undertake efforts to improve 
IPR-related legislation and build capacity to improve 
implementation and enforcement.  In principle, intellectual 
property rights are legally protected in the DRC, but enforcement 
of IPR regulations is virtually non-existent.  The DRC's legal 
system and public administration do not have the capacity to 
enforce intellectual property regulations.  The country is a 
signatory to a number of international agreements with 
organizations such as the World Intellectual Property Organization 
(WIPO), and the Paris Convention for the Protection of Intellectual 
Properties, which protects trademarks and patents.  The DRC is also 
a member of the Berne Convention that protects copyrights, artistic 
works, and literary rights.  The maximum protection that these 
conventions provide is 20 years for patents and 20 years, 
renewable, for trademarks, beginning from the date of registration. 
If it is not used within three years, a trademark can be cancelled. 
The DRC has not yet signed the WIPO Internet Treaties.  The 
Minister of Justice has presented a law to the government that 
seeks to rectify the flaws of the existing 1986 IPR law.  The law 
is still pending Parliamentary approval. 
 
 
 
Transparency of the Regulatory System 
 
------------------------------------- 
 
 
 
¶28.  (U) Implementing a transparent regulatory system is still a 
challenge in the DRC.  The GDRC is making some effort to improve 
the situation, including through appropriate legislation enacted by 
the parliament.  Implementation and compliance, however, are still 
far from securing a complete legal and regulatory framework for the 
orderly conduct of business and the protection of investment.  The 
GDRC authority on business standards, the Congolese Office of 
Control (OCC), oversees participation by foreign businesses. 
 
 
 
¶29.  (U) There are no formal or informal provisions by any private 
or public structure, in any business-related environment, used to 
impede foreign investment.  Problems encountered within the GDRC 
tend to be administrative and/or bureaucratic in nature since 
reforms and improved laws and regulations are often poorly or 
unevenly applied.  Proposed laws and regulations are not published 
in draft format for public discussion and comments.  Normally the 
only discussion occurs within the governmental or administrative 
entity that drafts them and at the parliament prior to a vote.  The 
Congolese public, as well as foreign and domestic investors, do not 
receive an adequate opportunity to discuss or comment on these 
proposals. 
 
 
 
¶30.  (U) The IMF and the World Bank are working with the GDRC to 
bring the country into compliance with international business norms 
for accounting, legal, and regulatory systems.  The World Bank's 
International Finance Corporation (IFC) has launched a program to 
establish "Special Economic Zones" to help jumpstart investments. 
The GDRC has made progress towards joining the Organization for the 
Harmonization of Business Law in Africa (OHADA) to help the DRC to 
modernize its legal standards. 
 
 
 
¶31.  (U) In 2008, the DRC became a candidate country for the 
Extractive Industries Transparency Initiative (EITI), a 
 
multi-stakeholder effort to increase transparency in transactions 
between governments and companies in the extractive industries. 
The GDRC has taken some positive steps under EITI, including 
establishment of a National EITI Committee, publication of the 
first report on EITI in the DRC, and the hiring of an independent 
auditor to carry out the validation of the EITI process.  However, 
the DRC still has to organize a workshop to present the report at 
the provincial and national levels and have the EITI process 
validated before being declared an "EITI-complaint" country by the 
March 10, 2010 deadline set by the International EITI Secretariat. 
 
 
 
Efficient Capital Markets and Portfolio Investment 
 
--------------------------------------------- ----- 
 
 
 
¶32.  (U) Economic growth in the DRC since 2002 has increased the 
flow of money in the finished goods and raw materials market. 
Credit markets are also becoming more active, mainly in the 
commercial project and medium-term project sectors.  All economic 
operators, foreign and domestic, have access to credit markets in 
the DRC without discrimination, as long as they can provide 
credible guarantees.  Foreign investors, though, are more likely to 
benefit from this type of credit, since they are able to provide 
guarantees and collateral secured by foreign banks. 
 
 
 
¶33.  (U) The commercial banking system has undergone a full 
reorganization and continues to expand.  However, the commercial 
banking sector remains small.  During 2009, six new commercial 
banks opened in the DRC, as well as 62 new branches.  Strengthened 
supervision of the commercial banking sector, including improving 
the regulatory framework for the financial sector, is a component 
of DRC's formal IMF program.  There are currently 18 commercial 
banks, two specialized financial institutions, one savings bank, 
eighty-two co-operative banks, and fourteen micro-finance 
institutions, with a total of 200,000 accounts.  The volume of 
savings increased from USD 97.2 million in 2001 to USD 934 million 
at the end of June 2008, a growth of 861 percent.  Credits grew 
from USD 48 million to USD 576 million during the same period, an 
increase of over 1,000 percent. 
 
 
 
¶34.  (U) Portfolio investment is not yet developed in the DRC. 
Business practices in the DRC are still at a fairly rudimentary 
level.  Cross-shareholding and stable shareholding arrangements are 
not common in the DRC.  There are occasional complaints about 
unfair competition between investors in profitable sectors such as 
mining and telecommunications. 
 
 
 
Competition from State-Owned Enterprises (SOEs) 
 
--------------------------------------------- -- 
 
 
 
¶35.  (U) The GDRC, with support from international donors, 
continues to work to reform state-owned enterprises (SOEs).  To 
boost the efficiency of SOEs, many of which have been plagued by 
years of mismanagement, Prime Minister Adolph Muzito signed five 
ministerial decrees in April 2009.  The decrees focused on 
transforming these SOEs into profitable commercial companies, 
public establishments (which would be autonomous from any ministry) 
and public services (which are directly tied to a particular 
ministry).  Some SOEs would be dissolved.  SOEs that have been 
targeted for reform include those operating in the mining, energy, 
industry, transport, telecommunications and finance sectors.  The 
government and state-owned Societie Nationale d'Electricite 
(SNEL) 
have begun to open the energy sector to private investment. 
 
Corporate Social Responsibility (CSR) 
 
------------------------------------- 
 
 
 
¶36.  (U) Awareness about Corporate Social Responsibility (CSR) is 
growing, and many of the large, multinational investors in the DRC 
have formal CSR programs.  Under the Mining Code of 2002, mining 
companies are required to submit an environmental impact statement. 
Mining companies are also required to support infrastructure 
projects, such as roads, schools and hospitals.  Corporate Social 
Responsibility provisions are also included in the 2002 Forestry 
Code, which requires forestry concessionaires to support social and 
physical infrastructure projects in the communities in which they 
operate.  CSR is also reflected in the sustainable use of forestry 
resources.  In November 2009, the Ministry of Environment, 
Conservation and Tourism held a workshop to analyze and propose 
procedures for local communities to share benefits from logging 
concessions. Participants at the workshop agreed on key principles 
that may guide the implementation of corporate social 
responsibility within the DRC forestry sector, including a social 
agreement that engages reciprocally both sides (the timber 
concession companies and the local communities) and payment by 
timber concession companies that would be done at two levels 
(construction of socioeconomic infrastructure on a per cubic meter 
of harvested timber basis and in-kind payment for actions of common 
interest).  The local community would collaborate with 
concessionaires to fight against illegal logging and wildlife 
poaching and also participate in the sustainable management of 
forest resources. 
 
 
 
Political Violence 
 
------------------ 
 
 
 
¶37.  (U) The DRC has suffered bouts of civil unrest and conflict 
for many years.  Large-scale military looting in 1991 and 1993, for 
example, resulted in significant loss of economic productive 
capacity.  In addition, widespread looting and destruction 
associated with wars in the DRC from 1996-1997 and from 1998-2003 
further damaged Congolese economic activity. 
 
 
 
¶38.  (U) National and provincial governments were elected at the 
end of 2006 in the country's first democratic national elections in 
more than 40 years.  Despite technical and logistical difficulties, 
coupled with isolated incidents of violence and intimidation, the 
elections were held in a largely calm and orderly fashion. 
Post-election disturbances occurred in March 2007 in Kinshasa, 
resulting in the deaths of civilians and military personnel. 
 
 
 
¶39.  (U) The United Nations has its largest peacekeeping operation 
in the world in the DRC.  Known by its French acronym of MONUC, it 
has nearly 20,000 peacekeepers deployed in the country - primarily 
in the east.  Violence nevertheless persists in the eastern DRC due 
to the presence of several militias and foreign armed groups, with 
sporadic outbreaks occurring in North Kivu, South Kivu, and 
northern Katanga provinces, as well as the Ituri and Haut-Uele 
Districts of Orientale province, and sporadically in Bas-Congo and 
Equateur provinces. 
 
 
 
¶40.  (U) The political-military landscape in the eastern DRC 
changed dramatically in 2009, offering the best prospects for 
lasting peace in the region in many years.  In early 2009, the DRC 
and Rwanda formally re-established full diplomatic relations and 
separate peace agreements were signed between the Government of the 
DRC and various armed groups.  Many of the rebel groups agreed to 
transform their movements from military to political in nature, 
while the government promised to work toward integrating rebel 
soldiers and officials into the Congolese military (FARDC), 
 
national police, and national and local political and 
administrative units.  Integration, however, has been piecemeal, 
and several important rebel formations remain outside the process. 
 
 
 
 
¶41.  (U) In addition to continuing instability in the eastern DRC, 
strikes by civil servants and teachers over salary and benefit 
issues have occurred and continue to pose a potential source of 
social upheaval.  Military and police personnel remain poorly paid 
and trained. 
 
 
 
Corruption 
 
---------- 
 
 
 
¶42.  (U) U.S. businesses often complain about corruption in the 
DRC, citing it as a principal constraint to doing business in the 
country.  The Mobutu regime created a culture of corruption in the 
DRC during more than 30 years of rule.  This ingrained culture 
permeated the private, public, administrative, and business 
environments and has been difficult to root out.  The DRC was rated 
as the tenth most corrupt country out of 180 nations on 
Transparency International's 2008 Corruption Perception Index.  The 
DRC was rated as 162 out of 180 nations on Transparency 
International's 2009 Corruption Perception Index. 
 
 
 
¶43.  (U) In principle, there are legal provisions to fight and 
sanction corruption.  The DRC is a member of the UN Anti-Corruption 
Convention and passed its own anti-corruption law in 2004. 
Additional legislation includes the 2004 Money Laundering Act, 
under which the DRC cooperates with African and European 
crime-fighting organizations.  Despite these reform efforts, 
however, bribery is still routine in public and private business 
transactions, especially in the areas of government procurement, 
dispute settlement, and taxation.  The DRC is not a signatory of 
the OECD Convention on Combating Bribery.  In September 2007, DRC 
ratified the protocol agreement with SADC (Southern African 
Development Community) on Fighting Corruption.  The GDRC is also 
preparing to ratify the African Union Convention on the Prevention 
and Fighting of Corruption. 
 
 
 
¶44. (U) The law calls for imprisonment and fines for both parties 
to the bribery no matter the circumstances.  However, law 
enforcement remains a challenge in this area. 
 
 
 
¶45.  (U) In order to enforce anti-corruption laws among civil 
servants and members of the government, in September 2009, 
President Kabila launched a "zero-tolerance" campaign.  Within this 
framework, he established the DRC Financial Intelligence Unit to 
combat money laundering and misappropriation of public funds. 
 
 
 
Bilateral Investment Treaties 
 
----------------------------- 
 
 
 
¶46.  (U) The United States and the DRC (then-Zaire) signed a 
Bilateral Investment Treaty (BIT) in 1984 that entered into force 
in 1989.  This treaty guarantees reciprocal rights and privileges 
to each country's investors.  The BIT provides for binding 
third-party arbitration in the event of an investment expropriation 
dispute. 
 
¶47.  (U) Germany, France, Belgium, Italy, South Korea, South 
Africa, and China (PRC) have signed bilateral investment agreements 
with the DRC.  Lebanon, Ivory Coast, and Burkina Faso have 
negotiated, but not yet signed, bilateral investment treaties with 
the DRC. 
 
 
 
OPIC and Other Investment Insurance Programs 
 
-------------------------------------------- 
 
 
 
¶48.  (U) The U.S. Overseas Private Investment Corporation (OPIC), 
which provides political risk insurance and project financing to 
U.S. investors and non-governmental organizations, ceased 
operations in the DRC for a time following the events of 1991. 
Since the establishment of the transitional government in June 
2003, OPIC has granted three political risk insurance contracts in 
2004, another in 2005, and is currently reviewing additional 
applications by American-owned companies.  In March 2006, the DRC 
signed an accord with OPIC that will expedite the process of 
obtaining political risk insurance and financing. 
 
 
 
¶49.  (U) The DRC is a member of the World Bank's Multilateral 
Investment Guarantee Agency (MIGA), which offers insurance on new 
foreign investments to protect against foreign exchange losses, 
expropriation, and civil unrest.  The GDRC is negotiating now for 
complete resumption of the MIGA program, which would allow for 
investment insurance in other sectors of the economy.  The DRC is 
also a member of the African Trade Insurance Agency, which also 
provides political risk insurance. 
 
 
 
Labor 
 
----- 
 
 
 
¶50.  (U) The DRC's large urban population provides a ready pool of 
available labor, including a significant number of high school and 
university graduates, a few of whom have studied at American 
universities.  Employers cannot, however, take diplomas at face 
value.  Skilled industrial labor is in short supply and must often 
be trained by individual companies. 
 
 
 
¶51.  (U) The GDRC sets regional minimum wages for all workers in 
private enterprise, with the highest pay scales applied in the 
cities of Kinshasa and Lubumbashi.  Wages have not kept pace with 
the DRC's rate of inflation.  While most foreign employers pay 
higher wages than the official minimum wage, the average Congolese 
worker has had to cope with falling real wages for over a decade. 
 
 
 
¶52.  (U) The country's labor legislation was modified by the 
October 2002 Labor Code, which is in compliance with the 
conventions and recommendations of the International Labor 
Organization.  The code provides for tight control of labor 
practices and regulates recruitment, contracts, the employment of 
women and children, and general working conditions.  Strict labor 
laws can make termination of employees difficult.  The code also 
provides for equal pay for equal work without regard to origin, 
sex, or age.  The new code formally permits a woman to gain 
employment outside of her home without her husband's permission. 
 
 
 
¶53.  (U) Employers must cover medical and accident expenses. 
Larger firms are required to have medical staff and facilities on 
site, with the obligations increasing with the number of employees. 
Mandated medical benefits are a major cost for most firms. 
Employers must provide family allowances based on the number of 
 
children, and paid holidays and annual vacations, based on the 
years of service.  Employers must also provide daily transportation 
for their workers or pay an allowance in areas served by public 
transportation.  Outside the major cities, large companies often 
assist by providing infrastructure, such as roads, schools and 
hospitals.  Many labor regulations have been only sporadically 
enforced in recent years.  The Ministry of Labor must grant 
permission for staff reductions.  Generous pensions and severance 
packages are required by the labor code. 
 
 
 
¶54.  (U) Every foreign employee must apply for a work permit from 
the National Committee of Employment of Foreigners within the 
Ministry of Labor.  The right to strike is recognized and the law 
provides for reconciliation procedures in cases where the 
government is not involved. 
 
 
 
Foreign Trade Zones/Free Ports 
 
------------------------------ 
 
 
 
¶55.  (U) The DRC does not have any areas designated as free trade 
zones or have any free ports.  The DRC is a member of the Southern 
African Development Community (SADC) and the Common Market of 
Eastern and Southern Africa (COMESA), but has not yet joined either 
the COMESA or SADC free trade areas (FTAs). 
 
 
 
Foreign Direct Investment Statistics 
 
------------------------------------ 
 
 
 
¶56.  (U) Obtaining reliable statistical data on foreign direct 
investment (FDI) in the DRC remains a challenge.  There are two 
sources:  the Central Bank (BCC) and the National Agency for 
Investment Promotion (ANAPI). 
 
 
 
¶57.  (U) BCC statistics are based on funds reported to the bank 
from actual investment projects underway, and are more accurate 
than those of ANAPI.  These figures, however, may not capture all 
FDI flowing in the DRC; therefore, the quality of the BCC data is 
undetermined.  Actual FDI amounts are probably higher than the BCC 
figures shown here.  For the last three years, BCC has published 
the following totals: 
 
 
 
FDI (in USD million) 
 
 
 
          2006     2007     2008          2009 
 
 
 
Total     304      720      1,672.8    1,604.8 (estimates at the 
end of November 2009) 
 
 
 
ANAPI-registered data are obtained from proposals by potential 
foreign investors.  They summarize approved projects in services, 
the manufacturing sector, the food sector, pharmaceuticals, 
forestry and agriculture, and infrastructure,  The bulk of 
investments are oriented towards services (telecommunications, 
health, and housing), representing almost 60 percent of investments 
reported by ANAPI. 
 
FDI (in USD million) 
 
 
 
                      2006        2007          2008 
 
 
 
Services              1,246      812.46       192.78 
 
Infrastructure           35                    67.15 
 
Food                     10                    34.78 
 
Pharmaceuticals           4                     0.00 
 
Beverages/Brewery         0           0         0.00 
 
Agriculture/Forestry     29                   141.69 
 
Manufacturing           131       54.20       123.29 
 
-------------         -----     -------     -------- 
 
Total                 1,455      866.66       559.69 
 
 
 
 
 
 
 
                    2009 
 
 
 
Services            1,495.95 
 
Infrastructure        209.96 
 
Food                   50.75 
 
Pharmaceuticals         3.00 
 
Beverages/Brewery       0.00 
 
Agriculture/Forestry   33.36 
 
Manufacturing          87.13 
 
------------- 
 
Total               1,880.15 
 
 
 
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