While the Outlook is Neutral, the conflict in the area has eroded its investability. While things are improving, we feel there is significant progress yet to be made before our Rick Premia is reduced.
June 15, 2021
Africa - West
Usually, under the terms of a PSC and to the extent that oil is discovered by a company undertaking exploration and development activities in the DRC, the exploitation is made in the name of the DRC Government. If oil is not discovered, all the costs of exploration are assumed by the company.
The Democratic Republic of the Congo (DRC) is the second largest country in Africa and one of the richest in the world in terms of natural resources. With 80mm hectares (197mm acres) of arable land and 1,100 minerals and precious metals, the DRC has the resources to achieve prosperity for its people. Despite its potential, the DRC often cannot provide adequate security, infrastructure and health care to its estimated 84mm inhabitants, of which 75% live on less than two dollars a day. The accession of Felix Tshisekedi to the presidency in 2019 and his government’s commitment to attracting international and particularly U.S. investment have raised the hopes of the business community for greater openness and transparency. Overall, businesses in the DRC face numerous challenges, including poor infrastructure and a weak and corrupt bureaucracy. Armed groups remain active in the eastern part of the country, making for a fragile security situation that negatively affects the business environment. Reform of a non-transparent and often corrupt legal system is underway. While laws protecting investors are in effect, the court system is often very slow to make decisions or follow the law, allowing numerous investment disputes to last for years.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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