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- GDP (PPP):
- $27.6 billion
- 7.1% growth
- 6.0% 5-year compound annual growth
- $369 per capita
- Inflation (CPI):
- FDI Inflow:
The Democratic Republic of Congo (DRC) has an economic freedom score of 40.6, making it the 172nd freest economy in the 2014 Index. Its overall score is 1 point better than last year, with improved scores for government spending, monetary freedom, and labor freedom partially offset by a decline in business freedom. The DRC is ranked 44th out of 46 countries in the Sub-Saharan Africa region, and its score is far below the regional average.
Over the 20-year history of the Index, the DRC’s economic freedom score has declined by 0.8 point. Significant declines have occurred in five of the 10 economic freedoms, notably property rights and business freedom, the scores for which have deteriorated by 25 points or more. Bright spots include a significant improvement in monetary stability and a modest increase in trade freedom. Grading of the country was temporarily suspended from 2001 to 2008 due to internal conflicts.
Political risk continues to be high, severely undermining prospects for diversified growth and trapping a majority of the population in poverty. The slow pace of reform, coupled with ongoing political instability, has left the capacity of public institutions inadequate to support private-sector development and long-term economic expansion.
In 2006, Joseph Kabila won the first multi-party election in 40 years. He was re-elected in December 2011 in a flawed and violent election. Rebel groups that include the Lord’s Resistance Army, M23, and the Democratic Forces for the Liberation of Rwanda remain active in the northeastern region. In February 2013, 11 neighboring countries signed a U.N.-backed accord aimed at stabilizing the country. The DRC’s immense natural resources, including copper, cobalt, and diamonds, have fueled conflict, forcing foreign businesses to limit their operations. Corruption and costly policy errors discourage participation in the formal sector. The DRC has had positive economic expansion for 10 straight years, but an uncertain legal framework, corruption, and a lack of policy transparency remain serious problems.
Instability caused by the ongoing fight for control of eastern Congo’s rich mineral deposits, continuing entrenched corruption, and general mismanagement of government pose severe obstacles to the rule of law. Protection of property rights remains weak and dependent on a currently dysfunctional public administration and judicial system. Human rights abuses and banditry deter economic activity.
The top individual income tax rate is 30 percent, and the top corporate tax rate is 40 percent. Other taxes include a rental tax and a tax on vehicles. Overall tax revenue amounts to 23.6 percent of GDP. Total government expenditures equal 29 percent of gross domestic output. Debt levels remain relatively low at below 40 percent of GDP.
Despite progress in simplifying the business start-up process, private enterprises still face costly regulatory hurdles. Launching a company costs more than twice the level of average annual income, and the cost of completing licensing requirements is over 10 times that level. The formal labor market is not fully developed. Prices are controlled and regulated by the government, which also subsidizes electricity.
The Democratic Republic of Congo’s average tariff rate is 11 percent. It can take several weeks to import goods. The legal and regulatory systems can be difficult for foreign investors to navigate. The financial sector remains limited in scope and depth, with only 2 percent of the population using banks and companies having very limited access to financial services. The majority of bank loans are for short terms only.