FRAMEWORK FOR AGOA NATIONAL STRATEGY DEVELOPMENT
Introduction
During the mission to Congo Brazzaville it was apparent the
impact of civil war on the economies of DRC and RC was devastating,
paralyzing commercial activity in major sectors with the notable
exception of petroleum. After peace accords were signed last
year concerted efforts have been made by the international
development community and stakeholders to rebuild socio-economic
stability in both countries. Once confidence in the peace
process is restored it is expected badly needed foreign aid
and investment flows will increase.
The purpose of this report is to focus on National AGOA Strategy
development for Brazzaville. Yet, it will be interesting to
note how potential increases in trade ties between the two
countries will impact business expansion within the sub-region.
Very recently, an MOU of "Friendship" was signed
between DRC and the RC. During my visit to Pointe Noire -
the commercial center of RC - I was taken on a tour of the
famous "Cataracte" (confluence of River Congo where
RC and DRC nearly meet but rough rapids make it impossible
to cross). The Ministry informed me that former plans to construct
a bridge across this river have finally been reinstated. This
is good news.
Recent Political Events and Economic Transformation
In this section of the report a brief synopsis of recent
events is provided in order to place export strategy planning
in perspective. This information is based on various reports
and numerous interviews conducted during the field mission.
Shortly after Denis Sassou-Nguesso assumed power in October
1997 resumption of armed conflict halted all progress toward
judicial and economic reform.
In March 2002, Sassou-Nguesso was elected to a seven-year
term as president of the Republic of Congo. At that time he
reaffirmed his commitment to economic liberalization, regulatory
reform, good governance, and renewed cooperation with international
financial institutions.
In the two rounds of elections held in May and June 2002,
the parties that supported President Sassou-Nguesso, the Parti
Congolais du Travail (PCT) and the Forces Démocratiques
Unies (FDU) won 83 of the 153 seats in the National Assembly.
In July 2002, PCT and its allies had won 56 of the 72 seats
in the Senate; and in April 2003 over 2,000 rebel Ninja soldiers
had surrendered their weapons in Congo's Pool region.
A peace agreement was reached in March 2003 between the government
and Ninja leader, Rev. Frederic Bitsangou (Pastor Ntoumi).
The disarmed Ninjas, guaranteed amnesty by the government,
are being integrated into the military and/or returning to
civilian life. An additional 600 Ninja rebels were reported
to have surrendered in May 2003 but since then sporadic skirmishes
in Pool continue to be reported.
Congo's business and physical infrastructure was badly damaged
during the civil wars. However, oil production was not harmed
by fighting.
The CFCO (Chemin de fer Congo-Ocean) railway linking Pointe
Noire to Brazzaville suffered rebel attacks causing extensive
material damage in Pool. Passenger and cargo trains were suspended
and according to official figures, the CFCO incurred losses
between 70-80 million CFA per day.
Economic activity was further hampered by the fact that over
800,000 Congolese, nearly 30% of the population, fled their
homes during the conflicts.
In 2003 and 2004 economic stabilization and rehabilitation
of infrastructure were deemed top government priorities; and
action plans are set in place to achieve specific targets.
Pointe-Noire
Pointe Noire is the largest deep sea port in the Gulf de
Guinea and constitutes a pivotal trade link for transporting
goods within the sub-region and abroad. The port town celebrated
its 44th anniversary in August 2004. During festivities government
authorities announced plans to rehabilitate transport and
communications infrastructure to support increased volumes
of international trade.
Funds have been committed to refurbish port, road, rail and
airport facilities. Port freight capacity and storage handling
will be enhanced; and containerization facilities will be
expanded. The airport will be remodeled and rehabilitation
of CFCO will be transferred to a private concession to restore
vital rail links between Pointe-Noire and Brazzaville.
Pointe Noire is an ideal venue for expansion of economic
activity, including tourism promotion. Traders can tap into
maritime trade opportunities through exploiting abundant fisheries
resources (including sardines, sole, line fish and numerous
species). Two new laboratories will be constructed in order
to control the quality of shellfish production, notably shrimp
exports to the European Union.
In August 2004, a Canadian company, Magnesium Alloy Corporation
signed an agreement with the government to process magnesium
in Makola, (4 miles from Pointe Noire). The project will be
based in the former potassium production factory owned by
the French during the 1970s. The Minister of Mines, Energy
and Hydrology estimates approximately 1,500 new jobs will
be generated; as magnesium production will be an important
revenue source for Congo.
Current Economic Outlook
The current economic outlook is favorable. Growth rates increased
from 3.8% in 2001 to 4.6% in 2002; and inflation remains stable
at 2.6%, indicating a healthy rebound for a country moving
in the right direction. The path toward economic stabilization
will be easier for Congo to follow after Paris Club creditors
made a landmark decision to cancel a large portion of external
debt in September 2004.
Congo's economy consists mainly of village agriculture (small-scale
fish processing, vegetable/fruit crop cultivation, coffee/cocoa
farming) and handicraft production.
In urban areas there is a large informal sector, including
street vendors and traders.
The industrial sector is dominated by oil and oil-related
services with few linkages to the rest of the economy. Since
the 1980s, the oil industry has provided the major share of
government revenues and exports, surpassing timber and wood
products as principle growth sectors.
Key Sector Performance
Oil and natural gas exploration are mentioned in this report
given their important contribution to economic growth. Moreover,
exploitation of these resources can build support for economic
diversification through backward linkages and sub-regional
integration.
Oil
Congo is sub-Saharan Africa's fourth largest oil producer
(after Nigeria, Angola and Gabon), with estimated reserves
of 1.5 billion barrels. The majority of Congo's crude production
is located offshore, heavily reliant on foreign personnel
and technology. The crude oil types are medium and sweet varieties,
and the main crude export blend is Djeno, (27.6°API gravity
and 0.23% sulfur content).
Oil accounts for over 50% of real gross domestic product
(GDP), 60%-80% of the government budget and about 95% of Congo's
export earnings. Oil exports grew sharply, from approximately
$820 million in 1994 to around $2.3 billion in 2002.
Congo and Angola agreed to finance a joint project ending
a border dispute blocking deepwater oil exploration in March
2003. An agreement creating the ZIC (Zone d'Interet Commun)
will concentrate on development of fields within Angola's
Block 14 and Congo's Haute Mer areas.
Haute Mer partners are Total, EA, and ChevronTexaco. Block
14 partners are ChevronTexaco, Agip, Total, and Petrogal.
ChevronTexaco will operate the acreage in the joint zone,
and companies active on both concessions will be entitled
to equity.
Natural Gas
Congo contains an estimated 3.2 trillion cubic feet of natural
gas reserves, the third largest base in sub-Saharan Africa,
following Nigeria and Cameroon.
These natural gas reserves are mainly associated with oil
deposits although major non-associated fields exist offshore,
namely Banga Marine and Litchendjili. Most natural gas output
is currently vented or flared due to lack of infrastructure,
but the government plans to mobilize natural gas reserves
for electric power production over the next several years.
In December 2002, Agip and ChevronTexaco built a natural
gas-fired power plant in Djeno near Pointe Noire. The plant,
with a capacity of 25 megawatts was completed in 13 months
at a cost of $32 million. The power plant is fired from associated
gas derived from Kitina, Djambala and Foukanda offshore fields.
It is then separated onshore at the Djeno oil terminal and
piped into the nearby power plant. This is an important step
towards cooperation in the field of power generation as the
economy expands.
Multilateral Institutional Support Mechanisms
In November 2000, the IMF approved a loan of $14 million
for emergency post-conflict assistance to Congo for reconstruction
and economic recovery. Congo later signed an agreement with
the IMF on a "staff-monitored program" (SMP) as
part of post-conflict recovery plans. The SMP lead to a formal
"poverty reduction and growth facility" (PRGF);
and now Congo is working on a Poverty Reduction Strategy Program.
Implementation of PRGF permits Congo to benefit from relief
on its external debt under the Initiative for Highly Indebted
Poor Countries (HIPC). In exchange for debt relief recently
granted during Paris Club negotiations, Congo is expected
to increase its transparency, improve fiscal management, maintain
good governance, and reduce fraud including cost over-runs
for civil service salaries.
From 2001-2003 World Bank and the development community focused
on humanitarian assistance and rehabilitation. In July 2002
a $40 million Emergency Reconstruction, Rehabilitation, and
Living Conditions Improvement Project earmarked funds for:
construction of roads, bridges and schools; rehabilitation
of the railway and maintaining the fight against HIV/AIDS.
From 2004-2005 World Bank programs will broaden its focus
on a wide range of development projects
- Rural road construction,
- Training and educational development,
- Governance,
- Agricultural production,
- Judicial reform,
- Privatization of public enterprises,
- Continuation of the demobilization program.
UNDP is planning to expand its program from one that is focused
on humanitarian aid, governance and social sector development
to private sector capacity building, SME training and export
promotion.
UNDP expressed keen interest in working with US Embassy,
USAID, and our team on export promotion and technical assistance
for private sector capacity-building.
Congolese Institutions Promoting Exports and Trade
Capacity Building
The Ministry of Planning plays a key role in territorial
resource management and donor collaboration on five year investment
plans. The latest five year plan is currently being aligned
with the Poverty Reduction Strategy Program.
The Ministry of Trade has a broad mandate to promote exports,
negotiate bilateral/multilateral trade agreements, monitor
domestic trade issues, and ensure commercial interests are
well represented abroad.
The Congolese Center for External Trade, housed within the
Ministry, handles all aspects of export promotion. There is
no separate Board of Trade nor is there a separate office
dealing with investment promotion. Therefore, export promotion
activities are closely coordinated among Chambers of Commerce
and the Ministry for Industry Development, SMEs and Artisans.
In response to increased demand for accurate, timely market
information, Chamber officials in Pointe Noire announced plans
to create trade data reference centers for members of the
business community, NGOs, stakeholders and agricultural producers.
Chamber delegations visited Ghana to learn how these centers
can be successfully designed and managed.
In September the Chamber also presided over a protocol agreement
signed between l'Association Pointe Noire Industrielle (APNI)
and l'Association Professionelle des Etablissements de Micro-Finance
(APEMF). This partnership will expand business management
training for Association members while SMEs, including APNI
members will have greater access to micro-finance institutions.
Agricongo is a pioneering economic development institute
working throughout the country on agricultural research and
grassroots skills training. These programs help small-scale
farmers and youth groups participate in technical training
courses pertaining to agriculture production.
Created in 1986 this quasi-public NGO founded 7 regional
professional resource centers in 6 out of 11 departmental
zones. Donor funding and private resources help finance projects
ranging from vegetable/citrus production, chicken farming
to youth mobilization in disadvantaged areas. .
In Pointe Noire Agricongo with assistance from EU and other
donors has been quite successful. Young adults who would otherwise
be unemployed cultivate land to grow fruits, process vegetables
and raise poultry in order to supply local market demand.
In turn these trainees learn how to apply agricultural production
techniques including crop rotation and irrigation systems
management.
The Ministry of Trade intends to work closely with Agricongo
to expand agricultural production potential in Congo, including
transformation of agricultural goods destined to export markets.
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