SA has favoured-nation status for $3,9bn in aid money

28th May 2004 By: Steven Chiaberta

The expansion of the donor-funded programme to rehabilitate the Democratic Republic of Congo’s (DRC’s) war-torn and badly-neglected infrastructure has created increased investment opportunities for international contractors, with South African companies, in particular, set to benefit.

South Africa, which was prominent in brokering a peace deal between President Joseph Kabila’s government and rebel groups, backed by Rwanda and Uganda, has been designated a favoured nation in the awarding of contracts in the DRC’s $3,9-billion emergency multisectoral programme for rehabilitation and reconstruction (known by its French acronym, PMURR).

PMURR, which is set to run over the next three years, now includes the former rebel-controlled eastern and northern parts of the central African country. DRC officials secured the funding at a meeting with Paris Club donors last December.

Seventy per cent of the capital will go towards the rehabilitation of infrastructure such as roads, ports, airports, and electricity and water schemes, while the remainder has been set aside for health, educational and agricultural initiatives.

“The money is there, and you must bring us your proposals for projects,” said Planning Minister Alexis Thambwe Mwamba at a recent investment conference in Johannesburg.

Mwamba said that infrastructure projects to be undertaken in the eastern DRC included the refurbishment of 4 000 km of roads and the building of new ones linking the region to the more-developed western part of the country.

However, a closer look at investment opportunities within the DRC in general reveals extensive opportunities for South African companies in a host of industries.

To begin with, the former Belgian colony boasts a wide range of mineral deposits, including copper and cobalt, diamonds, gold, iron-ore, manganese, silver, tin, uranium, cadmium, germ-anium and oil.

Hence, the country’s mining sector alone contains ample opportunities for investment in prospecting, geological and mining research, mining operations, and materials processing.

With the sector currently under- going restructuring, a new liberal mining code, that mirrors successful codes found in Tanzania and in the mining countries of South America, was introduced in July last year.

“For four decades, mining was largely undertaken by State-owned enterprises, but the government now wants the private sector to play a dominant role in mining,” says economic and commercial adviser at the DRC embassy’s trade and investment section, Serge Basaula.

The DRC’s forestry sector also offers a number of prospects.

Boasting more than 45% of Africa’s tropical forests and 700 different tree species, a production potential of over 10-million cubic metres a year of wood exists.

A new forestry code has opened up opportunities in lumber production and transportation, timber sawing, cutting and processing, and in industrial timber processing, while more prospects exist in agroforestry, the production of paper, and the production and selling of wooden poles for power lines.

Another potentially lucrative sector for South African companies is the DRC’s hydrocarbons and energy industry.

As regards the former, there are opportunities for prospecting in the Congo central basin, for geological research on the Atlantic coast, for methane gas production in Lake Kivu, and for the production of asphalt for roads in the Lower Congo province.

Moreover, while the DRC boasts an electrical hydropower potential of some 100 000 MW, there remains an urgent need for rural electrification in the country, and for the rehabilitation and expansion of the DRC’s Inga facilities.

The Inga hydropower scheme represents the main potential project for South African firms in the electricity sector.

While South African power utility Eskom has been working with its counterpart in the DRC on phases I and II of the project, phase III is expected to present yet more opportunities for South African companies.

It is envisaged that the Grand Inga dam project, which is still in the prefeasibility stage, will allow the DRC to export electricity to the rest of Africa and to eastern and western Europe.

In addition, construction of Inga– South Africa, Inga–Nigeria and Inga–Egypt power transmission lines is required, as is construction for general power transmission and distribution within the DRC.

Meanwhile, the DRC’s water sector seeks investment for the upgrading and expansion of production plants and distribution systems, for the completion of the Lukaya plant, and for the procurement of water-treatment pro-ducts, while opportunities for water exporting also exist.

Agriculture, livestock and fisheries are all areas that have long been neglected in the DRC.

However, with an annual rainfall of more than 1 400 mm falling on a million km2 of fertile land – only 15% to 20% of which is currently cultivated – agricultural investment opportunities abound in cash-crop production and the rehabilitation of coffee and tea plantations in the north of the country.

“There are many opportunities to grow export-oriented crops such as cotton, coffee, cocoa, tea and palm oil,” Basaula says, adding that incentives in the new agricultural code include exemption from export duties and taxes, and permission to repatriate dividends.

Also noteworthy to potential investors in the DRC is the livestock potential of 40-million cattle and fishing potential of over 700 000 t/y.

Forming part of the PMURR programme, the DRC’s harbours and transportation infrastructure require substantial investment.

The establishment of transportation companies is a necessity, while the rehabilitation, upgrading and modernisation of existing harbours in the country is equally important.

Plans to construct a deepwater harbour at Banana will require foreign expertise, as will the construction of a railway between Matadi and Banana.

Further, the rehabilitation, construction and modernisation of DRC’s airports is crucial to the country’s development.

Moving on, buildings, public works and housing in the DRC require renovation, reconstruction and furnishing of the basic infrastructure, while South African experience in the construction of low-cost housing may greatly assist the government’s efforts in this regard.

Significant expansion of industry in the DRC also requires foreign investment, and the DRC has identified a need for more factories, particularly fish-tinning factories and cement factories, as well as a necessity for the production of various commodities, including fruit juices, mineral water, food products for animals, chalk, and clay bricks. There is also a growing need for processing of food products, coffee and cocoa, as well as fish drying and salting. Finally, several opportunities exist in the DRC’s banking and insurance industries, while the country has plans to boost its tourism industry significantly.

The latter involves the rehabilitation and construction of hotels and other tourism infrastructure, management of tourism sites, development of new sites, and the modernisation of national reserves.

In order to take advantage of the many and varied investment prospects that currently exist in the DRC, Basaula stresses that the DRC embassy in Pretoria is a reliable and credible contact point.

“South African companies can approach the embassy with the aim of identifying private and public opportunities. We are also organising conferen-ces and other networking opportunities to promote investment in the DRC,” he explains.