The Democratic Republic of the Congo (DRC), located in central Africa, has long been an area of conflict, particularly in the eastern part of the country. Emerging coups and unstable governments have been a source of invasive wars and high taxes. The DRC is still ranked only 176th out of 188 countries for human development as listed by the U.N., but this is still an improvement, having moved up 11 places between 2013 and 2014. The Congolese people are making an effort to turn their country around by becoming more autonomous and growing businesses in the Congo to provide themselves with a living wage. This change is also turning foreign investors’ heads as they look abroad for growing economies.
The wars and conflict can generally be traced to political contentions which have then impacted education and business. Many have disagreed on the best path for the country to take, which combined with greed for power has created corrupt governments in the past. While there is still a ways to go before the country will be able to host fair elections, steps have been made to ensure they happen. In December 2016, an agreement was signed stating that President Kabila would not run for a third term (he has been president since 2001) and that time would be allotted for elections to be set up. Originally the new election was supposed to be held in late 2017, but voting was pushed back to December 2018. Although there is fear and frustration related to the delays, the fact that conversation is occurring rather than war is a positive step in the right direction and has in itself created more stability for the country.
Growth in the political sector has equaled, if not been exceeded by growth in the business sector as well. In the past, much of the difficulty of growing businesses in the Congo has been related to unreliable taxes. Jason Stearns, the author of Dancing in the Glory of Monsters, writes in his book, “If you paid all your taxes in the Congo…you would be dishing out 230 percent of your profits.” In other words, the only way to operate a business is to not pay all your taxes. Unfortunately, according to Stearns, the taxes were created by an unhealthy state who used taxes as a means of bribery. Even with government reforms, these taxes are often forgotten about until someone decides to use them take money from a business.
Even with the risk of unknown taxes. there are still growing businesses in the Congo, particularly in the micro-business realm, which does not necessarily require a brick and mortar shop. Now, if someone wants to start a business, they might just need a pan, oil, flour and a box to cook hotcakes and make a living wage as a street vendor. This flexibility helps keep these entrepreneurs from being charged excess taxes and is the cornerstone for turning these micro-businesses into larger businesses in the future.
Investing foreigners might be at higher risk because they will be perceived as having money to spend on taxes. However, foreign investors bring jobs and oftentimes roads to the country, which in the past may have slowed down investors before, but now increasing knowledge of and access to the DRC’s rich mining resources are creating businesses in the Congo, which has brought many Congolese around to accepting involvement in mining.
Changing and simplifying tax laws is a long-term goal that will be one of the keys to creating a stable and growing economy for the DRC. This will reduce the risk of being charged an unforeseen tax or fee and will continue to create growing businesses in the Congo.
– Natasha Komen