The Republic of the Congo will undertake substantial reforms to its investment policy framework in order to attract and benefit more from foreign direct investment (FDI), and promote agricultural development, according to conclusions from the inter-governmental discussion of UNCTAD's Investment Policy Review (IPR) of the country.
Foreign investment in the Republic of the Congo has boomed in recent years, topping $3.5 billion in 2013, making the country the top FDI destination in Central Africa. However, more than 90 per cent of FDI inflows are concentrated in the oil sector and diversifying beyond oil activities is a key priority to stimulate growth and development.
"The analysis of the IPR needs to drive our efforts to undertake the necessary legislative, regulatory and institutional reforms to improve the investment climate and to contribute towards our ambition to become an emerging market economy by 2025," the Republic of the Congo's Minister for Planning and Integration Léon Raphaël Mokoko said in endorsing the recommendations of the report at a presentation of the IPR in Geneva on 21 April 2015.
According to the IPR, market-led growth in the Republic of the Congo will crucially hinge on significant improvements in the regulatory and institutional framework for investment. In particular, specific regulations on FDI entry and protection, establishing companies and their operations, land tenure, taxation, human resources and infrastructure remain priority areas for policy action.
Overall, government initiatives are on the right track, but a significant gap in their implementation hampers the effectiveness of the reforms. In view of this, capping the proliferation of government agencies and organizations could free up resources to move forward with policy priorities.
The IPR also offers strategic advice on agricultural policy and FDI, which can be crucial in the fight against food insecurity and poverty by encouraging investment in subsistence-related crops.
In particular, the review stresses that inclusive development models of agriculture are likely to result in more sustainable impacts to help protect local farmers, while amplifying employment, technology transfer and crop diversification. They also involve fewer risks linked to the displacement of people, land grabbing for trading purposes and environmental degradation.
However, UNCTAD emphasized that inclusive agricultural development, in order to succeed, requires transparency in investor relations, clarity of legal texts, regular impact assessment and professional investor targeting.
"The recommendations of this IPR have the potential to support sustainable development in the Congo," UNCTAD's Director of Investment and Enterprise James Zhan said.
Investment authorities have an important role to play in the promotion of linkages to maximize the impact on sustainable development projects. Regular monitoring and rigorous evaluation of projects, based on reliable indicators, are one of the best ways to ensure good results. At the same time it is important to consider initiatives will be realized over the long term and that policy adjustments might be necessary.
The IPR presentation prompted lively discussion among delegates attending the session, with many representatives congratulating the Republic of the Congo for opening its regulatory regime to the policy assessment and praising the efficacy of UNCTAD's IPR programme.
UNCTAD IPRs are delivered at the request of receiving countries and provide concrete and action-driven recommendations aimed at attracting higher levels of FDI to foster economic and social development in recipient countries. The programme spans several phases, commencing with the preparation of the report, followed by the implementation of the recommendations contained therein through technical assistance and follow up, and ultimately the conduct of an implementation review. A draft version of the IPR was discussed during a national workshop in Brazzaville attended by public officials and private-sector representatives in November 2014.