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Quick Facts
- Population:
- GDP (PPP):
- $65.0 billion
- 7.7% growth
- 6.9% 5-year compound annual growth
- $773 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
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The Democratic Republic of Congo’s economic freedom score is 52.1, making its economy the 147th freest in the 2018 Index. Its overall score has decreased by 4.3 points, reflecting steep declines in scores for judicial effectiveness, monetary freedom, and property rights. The Democratic Republic of Congo is ranked 30th among 47 countries in the Sub-Saharan Africa region, and its overall score is well below the regional and world averages.
The economic development of the DRC has been severely undermined by decades of instability and violence. Poor economic management aggravated by repeated political crises has constrained economic freedom and trapped much of the population in persistent poverty. Arbitrary taxation, poor infrastructure, marginal enforcement of property rights, and the weak rule of law have driven many people and enterprises into the informal sector, which accounts for more than 80 percent of economic activity.
Background
Joseph Kabila won the DRC’s first multiparty election in 40 years in 2006 and was reelected to the presidency in 2011 in a process rife with violence. His schemes to secure a constitutionally prohibited third term delayed 2016 national elections and sparked major protests that were often brutally suppressed by the state security services. Militia groups are active throughout the country. As Western countries pressure Kabila to step down, the DRC seeks closer ties with Russia. Its immense natural resource wealth includes large deposits of rare earth minerals used in many high-technology products. The DRC is Africa’s largest copper producer, but its political instability and high inflation discourage international investors. The country remains among the world’s least developed.
Individuals have the right to own property and establish private businesses, but protection of property rights is weak. The president appoints members of the judiciary, which is dysfunctional and subject to political manipulation. Banditry throughout the country and massive corruption in the government, security forces, and mineral extraction industries continue to paralyze the functioning of the state and deplete its revenues.
The top personal income tax rate is 30 percent, and the top corporate tax rate is 40 percent. Other taxes include rental and vehicle taxes. The overall tax burden equals 13.6 percent of total domestic income. Over the past three years, government spending has amounted to 13.2 percent of total output (GDP), and budget surpluses have averaged 1.4 percent of GDP. Public debt is equivalent to 21.5 percent of GDP.
An uncertain legal framework and an outmoded and arbitrary regulatory environment are significant obstacles for business owners. The informal sector accounts for a large share of employment. The government heavily subsidizes electricity (for the 9 percent of the population that has access to it) and controls prices, in part because of higher food prices caused by armed militia activities.
Trade is significant for the Democratic Republic of Congo’s economy; the combined value of exports and imports equals 55 percent of GDP. The average applied tariff rate is 10.2 percent. The prevalence of state-owned enterprises limits foreign investment. Less than 3 percent of the population uses banks, and companies have very limited access to financial services. The majority of bank loans are only for short terms.