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Congo Republic: Country Brief

Country Overview

Since the ceasefire in 2000 and adoption of a new Constitution in 2002, the Republic of Congo has been largely at peace. With full restoration of peace, Congo has the potential for building a strong and robust economy and attaining a high standard of living for its people: it has a relatively small population of 3.6 million, a significant endowment of oil, natural forests, arable land, a biodiversity of global importance, minerals, and a strategic location in Central Africa with a deep-sea port at Pointe-Noire that can serve as a gateway to the sub-region.

The Congolese economy has grown significantly since 2008. Real GDP is estimated to have expanded by 8.8 percent in 2010, compared to 7.5 percent in 2009, based on continued high growth in the oil-sector as well as accelerated growth in the non-oil sector. Economic growth is projected to 5.0 percent in 2011. Despite this strong economic performance, the country continues to face fundamental development challenges. Poverty remains significant, with about half the population living below the poverty line and inequality remains high. Social indicators are still far below those of countries with comparable levels of GNI per capita and meeting the MDGs remain a challenge.

Economic performance

The Republic of Congo’s economy is heavily dominated by the oil sector. Its overbearing dominance in the economy is a major challenge for economic management and diversification. The key policy challenge for Congo is, therefore, to use its oil wealth to build a more diversified and competitive economy and thereby reduce poverty and improve social outcomes. Congo should exploit its comparative advantages related to its natural resource endowment, geographic position and climatic conditions to promote non-oil growth. A priori, sectors with strong growth potential include transport services, telecommunication, agribusiness, forestry and mining.

Congo has made significant progress on macroeconomic stabilization and “first generation” structural reforms since the end of the civil strife. GDP at constant prices grew on average by 5-6 percent between 2008 and 2010, while inflation has remained broadly under control. However, the economic performance has been strongly affected by swings in oil prices and production levels, particularly in past years. Macroeconomic resilience increased despite the global economic downturn. The economic performance remained robust, backed by increasing oil production and sustained growth in non-oil sectors, such as construction, transport and telecommunication, whereas the timber industry was negatively affected by lower demand and prices. After deteriorating in 2009, following the decline in global demand and oil prices, Congo’s external current account position also improved markedly in 2010 and is expected to remain positive in 2011.

The diversification of the economy remains the big challenge.Stimulating growth in the non- oil sectors will require, among other things: tackling impediments to the promotion of Congo’s potential as a transport hub, enhancing its investment and business climate, promoting efficiency in the use of its public resources, improving its human capital, and strengthening its public institutions. The very low rank of Congo in the Doing Business Ratings (177 out of 183 countries), according to the 2011 Doing Business report, underscores Congo’s highly uncompetitive business environment. Experience elsewhere in the region has shown that significant and rapid improvements are possible in these areas.

Fiscal performance has strengthened markedly since 2008, enabling the successful completion of all reviews of the IMF of the ECF so far. On January 28, 2010, the Republic of Congo became the 28th country to reach the completion point under the Enhanced Indebted Poor Countries Initiative (HIPC). The Completion Point marks the end of the HIPC process which started in March 2006 when the Republic of Congo met requirements for reaching the decision Point. The total debt service savings generated include US$1.7 billion from the initiative and US$201.3 million from the Multilateral Debt Relief Initiative (MDRI).

Historical Perspective

In 2001, the Bank reengaged in the country through a Transitional Support Strategy for FY03-FY06 (TSS), which aimed at laying down the foundation for social and economic recovery after a cycle of conflicts, and was reviewed by the Executive Directors in August 2003. This was followed by an Interim Strategy Note FY07-FY09 (ISN) in July 2007 that was designed to serve as a bridge between the transitional strategy and completion of the full Poverty Reduction Strategy Paper (PRSP). The ISN had the objective to scale up the governance focus and create the foundations for equitable growth. 

Bank partnership is now governed by the Country Partnership Strategy (CPS), based on the full PRSP approved by the Government in April 2008. Since its reengagement, the Bank has financed about 20 development projects and programs worth approximately XDR 330 million, in all sectors of the economy. Bank’s annual lending to the Republic of Congo averages US$20 million. Credits are supporting governance, capacity building, agriculture, health and HIV/AIDS, education, infrastructure and private sector.


The World Bank partnership with the Republic of Congo is governed by the Country Partnership strategy for the period FY10-FY12.  The main objective of this results-based CPS is to make a critical contribution to promoting broad-based economic growth and improving social outcomes. The current CPS is fully in line with PRSP priorities. The CPS was prepared in close collaboration with IFC, although a joint strategy was not possible as IFC is only now beginning to reengage in the country. Areas of potential synergy include: Small and Medium Enterprise Development, and Agribusiness Development.  The Bank’s support to the Government’s efforts is organized around two main pillars. These are: (i) support to diversification and growth and (ii) poverty reduction through improved basic service delivery. To ensure effective implementation in both priority areas, the CPS will also support governance and institutional capacity building as a cross-cutting theme.

The underlying approach of the strategy is to provide critical support to Congo for getting the highest possible benefit from its current efforts to improve the reach and quality of its infrastructure and basic services. Given IDA’s limited funding envelope (US$20 million per year) in comparison to the relatively large Government’s resources, the CPS focuses on helping the Government improve prioritization and effective implementation, as well as subsequent management, of its ambitious infrastructure investment program, and supports its efforts to enhance basic service delivery.

Besides playing this strategic role, the Bank seeks to leverage its small envelope in each new project with significant amounts from the Government in order to obtain the desired critical mass. This is consistent with the Bank’s evolving role, from that of “financier”, to that of “catalyst” for change.  The CPS program has been designed to helping mitigate the effects of the global financial crisis on the Congolese economy as it supports the Government in effectively managing its own resources by strengthening fiscal management as well as increasing spending efficiency.

The IDA portfolio consists of seven country-level operations and one regional project with a total commitment of US$176 million (excluding the regional project), with a disbursed balance of US$81.2 million (46 percent) and with US$94.2 million undisbursed (54 percent). Improving the portfolio performance has been the focus of high level dialogue of both the Country Director and the Country Manager (both based in the field).

Examples of Bank Group’s Assistance to the Republic of Congo

  • Diversifying the economy to spur broad-based growth. The World Bank will support the country’s reform efforts in three key areas: (i) more effectively managing oil revenues in the face of high price volatility and possible decline of reserves in the long-term, and using these resources to promote the diversification agenda and improve the services provided by key infrastructure; (ii)adopting and initiating implementation of a strategy for developing growth corridors that would improve exploitation of natural resources, linking production with markets, and regional integration - including restoring Congo’s traditional transit services industry; (iii)developing, and implementing a strategy for removing key obstacles to private sector development, and for promoting small and medium-term enterprises (including agro-business), and (iv) improving its human capital, and (v) strengthening its public institutions.
    The Economic Diversification Project (SEDP) in the Republic of Congo is effective on September 13.
  • Improving public service delivery for the people of Congo, particularly the most vulnerable groups. World Bank’s support entails improving basic services, especially health and education, through well focused programs and their efficient implementation.
  • Support in these two areas will be complemented by continued focus on improving governance and strengthening institutional capacity. This will not be treated in isolation, but rather, it will be mainstreamed into sectoral interventions. Support to different aspects of ongoing reforms on strengthening transparency, accountability and institutional capacity in the management of public resources remains a major priority for the Bank. The Bank will play a critical role in facilitating the implementation of recently adopted new legislation and action plans to address weaknesses in the governance system, including on oil marketing, governance and anti-corruption, public investment management and procurement. In dealing with these issues, the Bank will continue to support both the supply side and the demand side of governance. 

 

Rendering the management of oil revenue and public expenditure more effective. World Bank support is being provided through several channels, including the Public Expenditure Review, the Transparency and Governance Capacity Building Project (PRCTG), as well as analytical and advisory work on the oil sector and public finance management. Positive developments include a shift to the medium-term budget planning by using the MTEF to prepare the 2012 budget; the adoption of a new Public Investment Management Action Plan in 2010, which is currently being implemented, the ongoing rationalization of the public expenditure management system, and a significant decline in the incidence of ex-post regularizations of payments, apart from exceptions as defined by the budget law. A new procurement code and its regulatory framework were adopted, and new institutions for implementing the code have been put in place and are operational. Information on the new systems has been disseminated, and most ministries are now aware of the new procurement code and of their own ministerial level institutions, as does the civil society.  Most procurement tenders are published on the “Congo DG Market” website as well as on the Procurement Regulatory Authority’s own website.  Overall, prudent fiscal policy has led to fiscal consolidation, evidenced by the decline in the non-oil primary deficit as share of non-oil GDP.

Rehabilitation of key infrastructures. Through the Agriculture Development and Rural Infrastructure Rehabilitation project (jointly financed by the Bank and the Congolese Government), 264 kilometers of rural roads have been rehabilitated and 462 micro projects partially funded. On the energy sector, the Bank facilitated a South-South exchange with Ivory Coast to learn about their experience in Public-Private partnerships in the sector. Regarding the water sector, the Bank, through the Water, Electricity and Urban Development Project (PEEDU), has provided support to the Government to set up and implement an Action Plan for the reform of the Société Nationale de Distribution d’Eau (SNDE), the national water utility. The Action Plan consists of carrying out an investment program, strengthening the commercial and financial performance of the SNDE and completing the urban water sector reform.

Improving access to social services. Regarding HIV/AIDS and health, some of the positive developments include an increase of 55 percent in the number of patients treated with Anti-Viral Drugs during 2008 to 2010, a 20 percent increase in voluntary screening centers, among other things.  However, more generalized improvement in health service delivery continues to be beset by weak capacity and institutional inertia.  Thus, the outcomes of the health care system remain disproportionately inferior to the country’s resources and face several challenges, such as the high maternal mortality ratio estimated at 580 maternal deaths per 100,000 live births in 2008; infant mortality increased from 67 deaths per 1,000 live births in 1990 to 81 in 2009; under five mortality increased from 103 to 128 per 1,000 live births in 2009.Support to the health sector is provided through the Bank’s HIV/AIDS and Health IDA-funded operations.

Regarding education, some 2,000 teachers have been trained, over 1 million school books distributed, and some 400 classrooms rehabilitated.  However, more efforts are needed in ensuring high retention rates and levels of learning; ensuring a deeper sense of ownership by all stakeholders of the education strategy; and a better match between skills training programs and market needs. The Bank also contributed to the Medium-Term Expenditure Framework for the education sector including the three areas (Higher education, Professional & vocational education and Primary education), prepared in the context of 2010 budget. Support is currently provided through a Basic Education Support Project, although, moving forward, a separate operation more tailored to vocational training is considered.


Congo does not have many external partners. The most active partners are the French Agency for Development, the European Union, African Development Bank (AfDB), and, most recently, the Chinese Government who, in 2006, entered into a framework agreement with the Government that is worth up to US$1 billion.  The Bank’s strategy for collaboration with the other partners is based on the principal of synergy and comparative advantage. For instance, the European Union is taking the lead on the Justice sector. This sector is critical for, among other things, improving the business climate (and, therefore, the promotion of MSMEs), especially with regard to the proper functioning of commercial courts. The Bank closely coordinates with the EU in this regard, but is not involved in this sector directly. Instead, the Bank focuses on the other aspects of improving the business climate in which other partners are not very present. Similarly, there is a massive infrastructure program that is ongoing, with financing from the Government as well as other partners such as China. The Bank’s limited resources focus on maximizing benefits from, and ensuring the sustainability of, these investments, especially with respect to improving their management. This approach is true for all the other sectors as well.  Looking ahead, some partners expressed interest in moving towards a joint country assistance strategy. AFD, AfDB and the EU all approved their country assistance strategies in 2008. The end of the Bank CPS period (June 2012) coincides, more or less, with the end dates of these strategies.

Last updated September 2011




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