Management of the public finances

320. Accountability for fiscal management is overseen by the internal and external control bodies. In Congo, ex ante internal administrative control is entrusted to the Directorate-General of Budgetary Control (DGCB) and the Directorate-General of Budget (DGB), while ex-post internal control falls to the Inspectorate-General of Finance (IGF). The Office of Audit and Budgetary Discipline and the Economic and Finance Committees of the National Assembly and the Senate oversee internal controls. The Inspectorate-General of Government supervises all controls in the executive branch.

321. Revenue collection is the responsibility of the Directorate-General of the Treasury (DGT). Revenues assessed by the Directorate-General of Taxation and State Property (DGI) and the Directorate-General of Customs and Indirect Duties (DGDDI) are recovered directly by a receiving officer who deposits them on a daily basis in the treasury.

322. The quality of ex ante internal control has long been affected by the lack of representation of the DGCB in the Government Procurement Regulatory Authority and the lack of a computerized link between the file kept by government agents and the file showing the balance. Moreover, ex post internal control is hindered by a shortage of financial resources and the poor quality of human resources assigned to the IGF. The elimination of unannounced controls and inspections has also reduced the effectiveness of ex post internal control.

323. Major reforms have been undertaken to strengthen both internal and external control over fiscal management. In particular, a new budgetary accounting terminology has been adopted, based on the functional classification and consistent with international rules and standards (International Financial Statistics methodology). The objective is to facilitate consistency between budgetary allocations and the government’s strategic priorities.

324. As well, a Government Action Plan for Fiscal Management (PAGGFP) and another concerning improved management of government investments (PAAGIP) have been adopted with a view to reinforcing government transparency, efficiency and performance. The action plan for government investment management calls for improving the preparation process, cost estimation, and the selection of new projects, as well as bringing greater efficiency and transparency to execution of the government’s capital budget. These plans are designed to: (i) reinforce the capacities of the research and planning directorates (DEP) of ministries and institutions; (ii) improve the budget preparation process; (iii) streamline and rationalize the expenditure circuit and unify the payment circuits. These two plans provide a solid foundation for introducing fundamental reforms to the system for managing the public finances.

325. A new government procurement code was promulgated in May 2009. It establishes the regulatory and institutional framework for public procurement in Congo, consistent with best international practices. The code will help to optimize the utilization of resources earmarked for development, by ensuring competition and transparency.

326. At the same time, significant innovations have been introduced in recent years to strengthen fiscal management. These include:

• Introduction of SYSTAF and the Single Identification Number (Numéro d’Identification Unique, NIU). The tax administration can now record all taxpayers and create a single file for them. This reform has served to expand the tax base.

• Introduction of the ASYCUDA software in the customs administration, for better control of the tax base and of customs revenues.

• Improved transparency and governance in the oil sector, via quarterly certification of oil revenues and their transfer to the treasury within 45 days following the lifting of oil shipments. Data on oil production and revenues are regularly published at the Internet site of the Ministry of Finance, Budget and the Public Portfolio.

• Adoption of the master plan for computerizing the Finance Ministry, more specifically the revenue collecting agencies (régies financières). The objective is to exert greater control over the tax base and over government revenues.

327. Nevertheless, judicial and parliamentary supervision over fiscal management still betrays some technical weaknesses. These weaknesses have also been identified in the Directorate-General of Budget and of the Treasury, as well as in the Directorate-General of Public Accounts (DGCP), when it comes to producing administrative and management accounts for preparing the budget review act at the end of the fiscal year.

Public debt management

328. The government has created a National Public Debt Committee (CNDP) in order to monitor the country’s indebtedness more closely and avoid a return to the over-indebtedness of past years. It is widely acknowledged that the weakness of accountability mechanisms with respect to borrowing and public debt management, together with insufficient budgetary discipline, have caused the country’s over-indebtedness and problems with speculators (“vulture funds”). To address this weakness the authorities promulgated a decree (no. 2008-56 of March 31, 2008) instituting a National Public Debt Committee (CNDP) to monitor the debt and report on public debt management.

329. The creation of the CNDP is also consistent with the CEMAC regulation (12/07-UEAC-CM-15) formalizing the benchmark framework for government borrowing policy and public debt management in member states. Among other tasks, the CNDP is to prepare a national public debt strategy consistent with the country’s development objectives and its financial capacity. This strategy is now annexed to the budget law as a way of strengthening parliamentary control over borrowing mechanisms and conditions.

330. Despite these shortcomings, Congo has made significant reforms that have allowed it to reach the completion point and benefit from significant debt relief. Thanks to the solid economic performance of recent years, the debt relief obtained under the HIPC initiative, and the pay-down of domestic debt, Congo has reduced its debt considerably and has improved its sustainability over the medium term. This good performance can be seen in Congo’s debt ratios. Table 2 shows that, over the period 2004-2010, the debt stock has clearly declined as a proportion of GDP from 198.7 percent to 23.8 percent, and debt service has dropped from 16.0 percent to 3.4 percent of exports. The following table presents the country’s situation, compared to other African countries, mainly in the subregion.

Table 2.

Public Debt of Congo and Comparable Countries

Source: IMF Africa Department database (September 16, 2011) and World Economic Outlook (September 16, 2011)

Table 2.

Public Debt of Congo and Comparable Countries

		2004	2005	2006	2007	2008	2009	2010
Petroleum exporting countries		57.1	35.6	17.7	18.0	17.9	21.7	21.6
Excl. Nigeria		64.0	46.3	27.0	25.1	26.1	29.8	27.2
	Angola	55.3	42.5	20.6	20.8	31.5	36.3	35.0
	Cameroon	61.4	51.8	15.7	11.9	9.5	10.6	12.1
	Congo, Rep. of	198.7	108.3	98.8	98.0	68.1	57.2	23.8
	Gabon	65.2	53.8	42.1	43.2	20.9	26.4	25.1
	Equatorial Guinea	6.2	3.0	1.6	1.1	0.7	5.1	7.5
	Nigeria	52.7	28.6	11.8	12.8	11.6	15.2	17.3
	Chad	34.2	33.6	29.6	26.0	23.6	30.5	32.6

Source: IMF Africa Department database (September 16, 2011) and World Economic Outlook (September 16, 2011)

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Table 2.

Public Debt of Congo and Comparable Countries

		2004	2005	2006	2007	2008	2009	2010
Petroleum exporting countries		57.1	35.6	17.7	18.0	17.9	21.7	21.6
Excl. Nigeria		64.0	46.3	27.0	25.1	26.1	29.8	27.2
	Angola	55.3	42.5	20.6	20.8	31.5	36.3	35.0
	Cameroon	61.4	51.8	15.7	11.9	9.5	10.6	12.1
	Congo, Rep. of	198.7	108.3	98.8	98.0	68.1	57.2	23.8
	Gabon	65.2	53.8	42.1	43.2	20.9	26.4	25.1
	Equatorial Guinea	6.2	3.0	1.6	1.1	0.7	5.1	7.5
	Nigeria	52.7	28.6	11.8	12.8	11.6	15.2	17.3
	Chad	34.2	33.6	29.6	26.0	23.6	30.5	32.6

Source: IMF Africa Department database (September 16, 2011) and World Economic Outlook (September 16, 2011)

Government investment

331. The management of government investments remains a major challenge that the government must address to ensure the success of the country’s development strategy. In comparison with other countries, Congo devotes considerable resources to public investment, but the quality and effectiveness of that investment is still well below that of the best performers in the region. Table 4 confirms that Congo’s public investment rate is considerably higher than the average for sub-Saharan African countries. However, effectiveness falls short of the average in those countries. This point is confirmed by other international benchmarks. For example, governance indicators show that, when it comes to government effectiveness, Congo is still at the bottom of the scale in international rankings.

Table 3.

Comparative Macroeconomic Indicators

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Table 3.

Comparative Macroeconomic Indicators

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Table 3.

Comparative Macroeconomic Indicators

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Table 4.

Comparative Agriculture Potential of Congo and Selected Countries

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Table 4.

Comparative Agriculture Potential of Congo and Selected Countries

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Table 4.

Comparative Agriculture Potential of Congo and Selected Countries

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332. The analyses point to a number of causes underlying the investment quality problem, in particular shortcomings in: (i) the project planning process (identification, evaluation, validation); (ii) budgetary choices (aligning resources with development projects); (iii) and, most importantly, investment execution, in both financial and physical terms, and the monitoring of that execution.

333. The government is aware of these shortcomings and has instituted a program to strengthen the planning and management of government investment. The key actions already taken in this context include:

• Adoption of decree no. 2009-230 of July 30, 2009, clarifying and simplifying the expenditure circuit and the respective roles of the principal players. That decree: (i) delegates to ministries the responsibility for committing and verifying expenditures; (ii) establishes budget control units within ministries to supervise and approve commitments and verifications; (iii) eliminates sign-off by the budget controller after the payment order (ordonnancement) is issued; and (iv) leaves the Directorate-General of Budget with only the task of issuing the payment order.

• Adoption in 2009 of a new system for evaluating and selecting investment projects, designed to ensure that new projects financed from the budget are consistent with the objectives of the PRSP and meet clear criteria of technical and financial feasibility.

334. There have been some difficulties, however, in implementing these reforms, due to capacity problems. While decree no. 2009-230 gives the line ministries responsibility for committing and verifying expenditures, there are a number of gaps in the system that can lead to inefficiency. As well, ministries and institutions have difficulty in conducting project studies and drawing a link between these projects and the PRSP objectives.

335. Lastly, introduction of the Medium Term Expenditure Framework (MTEF), the Priority Action Programs (PAPs) and objective-based program budgets in the ministries must also allow the framework for their implementation to be rationalized. The PAP approach makes it easier to identify and plan for ministries’ human resource needs vis-à-vis priority program requirements. These needs are programmed in the PAPs and reflected in the line ministries’ MTEF. To the extent that these needs form the basis for budgetary allocations under the MTEF, the MTEF process will help align recruitment with sectoral strategy priorities. This will help to rationalize the entire recruitment process in the civil service, in line with national strategic priorities.

Management of government property

336. Congo still has no system of accounting for public assets, but the government has created two ministries in charge of government property (domaine public) and state assets (patrimoine de l’Etat). Those ministries are responsible for inventory, accounting and management of State assets, but they are not yet fully operational in carrying out their missions. The authorities are well aware of this and are working to resolve the problem so that the State will have a sound basis of information on its assets and their status.

Strategic planning

337. Congo has made significant progress with strategic planning in recent years. Key actions include: (i) adoption and execution of the first-generation Poverty Reduction Strategy Paper (PRSP) in March 2008; (ii) implementation of the MTEF in 2009 for better alignment of the budget with the PRSP; (iii) reorganization of the Investment Projects Evaluation Center (CEPI) to strengthen the project planning and evaluation process; (iv) reinforcement of technical capacities for monitoring and evaluating PRSP programs, including physical and financial execution of investments; and (v) introduction of results-based management (RBM).

338. With the first PRSP, the Republic of Congo had for the first time a coherent and credible multisectoral strategy for integrated development. The general objective of the strategy was to improve the macroeconomic framework in a sustainable manner and to strengthen the social sector, so that Congo could move toward achieving the Millennium Development Goals (MDG). The PRSP was a prerequisite for achieving the completion point under the Heavily Indebted Poor Countries (HIPC) Initiative.

339. In this context, the authorities have also made great efforts to reorganize and reinforce the entire process of program execution and monitoring. This initiative is a response to the shortcomings detected in the coordination and monitoring of activities under the strategy.

340. This problem is common to nearly all countries of sub-Saharan Africa. For example, PRSP evaluations have shown that in most cases it is not the quality of the strategy documents or other programs but rather the lack of adequate execution and monitoring capacities that has undermined the effectiveness of national strategies. In this respect, Congo has been no exception. To a large extent, the disappointing performances are due to the problems of resource allocation (budgetary alignment) mentioned above, but also to problems of organizational, execution and monitoring capacity.

341. To address this challenge, the Congolese authorities have made great efforts to strengthen the execution mechanism. The key move in this area was certainly the establishment of the DGGT (General Commission for Large-Scale Projects) to carry out major government projects of national importance. The DGGT has executed nearly 80 percent of all government investment over the period 2008-2010.

342. In the course of its efforts to resolve execution problems through a “concentrated and centralized” approach, the government has become increasingly aware of the merits but also the limitations of this approach. It is important to improve communication between the assistant project manager and the contracting authority (sectoral ministry) in the monitoring and evaluation of the work. Indeed, the ministries (DEP) often highlight information gaps with respect to the progress of their work entrusted to the DGGT.

Moreover, the government has engaged in discussions to reassess the situation and refine the criteria for DGGT intervention in capital project execution

Moreover, the government has engaged in discussions to reassess the situation and refine the criteria for DGGT intervention in capital project execution.

343. At the same, aware of the growing importance of foreign investment for transforming the economy, the government has put in place the National Investment Commission (CNI) to track private investment plans and projects, under the coordination of the Ministry for Economy and Planning. Under this initiative, an inventory of investment intentions will be compiled and the introduction of investors into the Congolese economy will be facilitated. The initiative reflects the importance that the government places on foreign investments as a channel for transmitting new technologies, injecting significant financial resources into the national economy, and opening up international markets for Congolese products. This initiative will also improve the programming of the government’s own actions in support of these investments, so that public investment can be an effective complement to private investment for accelerated the transformation of the Congolese economy.

344. All these developments with respect to strategic planning and building capacities for execution and monitoring of the strategy have contributed to implementation of PRSP 1. They have been used for preparation of the PND and they will be reinforced and put to work for its effective execution.

Macroeconomic policies

345. Beyond administrative management, economic governance is reflected in the quality of macroeconomic management. Here, Congo has made remarkable progress during the last decade. The government has resolutely embraced structural reforms in order to stabilize the country’s macroeconomic situation. It was in this context that it implemented the macroeconomic program supported by the IMF under the Poverty Reduction and Growth Facility (PRGF) in the context of the HIPC initiative. The program brought Congo to the completion point in January 2010. It will continue with the support of a new instrument, the Extended Credit Facility (ECF).

346. Implementation of this aspect, together with other components of the poverty reduction strategy, has allowed Congo to consolidate the macroeconomic framework. As proof, economic growth has been robust in recent years, averaging around 7.0 percent between 2008 and 2010, despite volatility in the oil sector. In particular, the non-oil sector has produced very encouraging results, with average growth of around 5.2 percent over the same period, despite adverse world economic conditions.

347. Similarly, the public finances have been cleaned up. Non-oil revenues have been rising steadily, from 22.7 percent of GDP in 2008 to 25.5 percent in 2010. Despite the launch of the PRSP programs, spending increases have been relatively restrained in GDP terms, thanks to control over operating expenses, and despite the higher capital outlays occasioned by implementation of the PRSP.

348. This pro-growth fiscal policy has been combined with a prudent monetary policy. As a result, inflation has been kept under control (… percent) over this period, despite higher prices for food and oil products.

Key sectors

350. The government has taken a series of steps to reduce transaction costs at Customs. The main actions here included: (i) institution of the “one-stop maritime window” (GUMAR) for integrated handling of commercial operations at the Pointe-Noire customs station, together with measures to streamline and simplify customs clearance procedures; (ii) strict management of electronic manifests and a scanning device for container inspection and risk management.

351. To promote competition and reduce distortions, the government has eliminated exceptional exemptions and has computerized exemption granting and management procedures. It has also reviewed the customs privileges contained in government contracts, conventions and other texts. As well, the government has applied CEMAC Act 298 concerning establishment agreements in the oil industry, including subcontractors.

352. In the mining and oil sector, the government has devoted considerable effort to improving the transparency of natural resource management, especially in the context of its membership in 2004 to the Extractive Industries Transparency Initiative (EITI). This action was followed by the establishment of appropriate national structures, certification of oil revenues, and audits of oil company accounts (oil cost audits).

353. Improved management of the oil sector is now reflected in better performance by the two key national companies in the sector, Société Nationale du Pétrole du Congo (SNPC) and CORAF. In particular, the SNPC reforms have instituted analytical accounting in that company, which has improved its earnings results.

354. The government has adopted an action plan for marketing Congolese oil in line with international standards. A program of reforms and upgrades has been instituted to enhance the capacities and performance of CORAF. The government has also taken steps to clean up the accounts of that enterprise, including application of a transfer price for crude oil that will gradually balance its accounts while keeping the pump price accessible to Congolese consumers. As a result of these reforms, recent years have seen a clear improvement in CORAF’s earnings and in coverage of domestic market needs. These reforms and good performances have also translated into a clear improvement in government mobilization of oil revenues. In fact, the share of oil revenues in total government revenues was consistently above 80 percent between 2008 and 2010.

355. In the financial sector, the government has made major reforms to clean up credit institutions and insurance companies. Those reforms have also improved the operating conditions of micro-finance institutions. Liberalization in the banking sector has sparked the entry of new credit institutions and greater diversification of banking activities. Specifically, the government has instituted reforms to eliminate the ceiling on lending rates and to make lending conditions more transparent (in particular through publication of the total cost of loan offers, including fees and commissions). The government has also succeeded in expanding the use of banking services by paying salaries and pensions via direct deposit and eliminating account charges.

356. The government has defined a plan to reform the insurance and reinsurance market. The public operator (Assurances et Réassurances du Congo, ARC) has been restructured in accordance with code of the Inter-African Conference on the Insurance Market (CIMA) and the rules of the Regional Reinsurance Company (Compagnie Commune de Réassurance des Etats membres de la CIMA, CICA-RE). All these actions should help improve government intervention, the quality of economic and social services (transport, water, electricity etc.), and the business climate.

Management of state-owned enterprises

357. Major steps have been taken to reinforce accountability in the management of state-owned enterprises. The government created the National Management Center (CENAGES) by decree no. 49/78 of December 18, 1978 and the National Audit Office (Commissariat National aux Comptes, CNC) by law no. 13/81 of March 14, 1984 creating the Charter of State-Owned Enterprises.

• CENAGES is the government instrument for promoting the development of modern management techniques in state-owned enterprises, semipublic enterprises, and public organizations and establishments.

• The CNC has the task of reviewing and auditing the operations, accounts and training programs of state-owned enterprises in the fields of internal control, accounting control and organization.

However, these two agencies have performed poorly in carrying out their missions and they will have to be thoroughly overhauled, in light of the new free-market context, if they are to make a meaningful contribution.

358. In addition, the “accountability” obligation of private and public enterprises alike demands rehabilitation of a government agency to certify their accounts for various purposes (taxation, banking, legal etc.).

359. On this point, it may be noted that the legislative and regulatory framework for private-sector accounting in Congo is governed by OHADA provisions. The government has reformed the legal and judicial mechanism and has harmonized the commercial code with the OHADA treaty. The powers of the OHADA National Commission have been reinforced as have those of the commercial courts.

360. However, the absence of an officially recognized college of accountants and the ineffective organization of the Association of Professional Accountants (APC) represent obstacles to the preparation of reliable financial statements. Efforts are needed, then, to strengthen the institutional environment for the accounting profession by establishing a College of Accountants, improving initial and ongoing training for accounting professionals, and making private-sector operators aware of the need to prepare accounting and financial statements.

Infrastructure services and private sector support programs

361. Despite the reforms described above, the business climate is still not very conducive, as indicated by Congo’s low rating against international criteria. It is a demonstrated fact that it is not easy to start up and grow a business in Congo, or to invest there, not because of the lack of economic opportunities but because of an environment that is still unattractive and difficult to navigate.

362. Aware of these weaknesses, the government has undertaken major structural reforms as well as investments in essential infrastructure and services for improving the business climate and encouraging investment. These programs are backed by the country’s development partners. Thus, the World Bank is supporting government initiatives under the Economic Diversification Support Project (EDSP), focusing on its component to foster public-private dialogue and reform the investment climate. The African Development Bank is also involved in this effort through the Institutional Support Project for Improvement of the Business Climate and Economic Diversification of Congo (PACADEC). These projects, implemented concurrently and coordinated by the government, are designed to strengthen the institutional framework for supporting business and investment. In 2010 they led to creation of a high-level council for public-private dialogue (HCPP), a forum for coordination between public and private stakeholders. The council meets once a year, and reports to the President of the Republic.

363. In the transport sector in particular, the assistance provided by the third component of the PADE project for reforming the CFCO (the Congo-Ocean Railway) should improve the supply of transport infrastructure services and reduce access costs. Government infrastructure investments, including construction of the Imboulou hydroelectric station, the Pointe-Noire gas fired power station, the Pointe-Noire-Brazzaville highway (of which the Pointe-Noire-Dolisie section is completed), and various other projects are part of this move to improve the business climate.

Combating corruption

364. The government has undertaken targeted efforts against corruption as well as against money laundering and terrorism financing. In this context, it has created the National Commission to Combat Corruption, Fraud and Misappropriation (CNLCCF), the Anticorruption Observatory, and the National Financial Investigation Agency. The Commission has the mandate to formulate, coordinate and implement the national anticorruption strategy, while the Observatory was created to oversee and assess that strategy’s implementation. The Agency is responsible for investigating financial crime. The institutional and regulatory framework for combating corruption, fraud and misappropriation is governed by the anticorruption law adopted in July 2009. An action plan was adopted in August 2009. It provides for a series of measures to curb the risks of corruption in the five most exposed sectors: oil production and marketing, forestry, fiscal management, justice and police, and the social sectors.

Agriculture

379. Congo has some important agricultural assets that are still largely unexploited. The most important of these, of course, is the extent and quality of its cultivable land. The country has more than 10 million hectares of arable land, of which 90 percent remains available. This situation contrasts with the conditions in many sub-Saharan African countries, where land is in short supply as a result of demographic pressure and advanced agricultural development. This is the case, for example, in Kenya, Rwanda and Burundi and to a lesser extent in Ghana, Côte d’Ivoire and Cameroon. As a consequence, Congo still has strong potential for the development of staple food crops as well as cash crops, including the production of biofuels for which there is a booming international market.

380. Moreover, Congo is endowed with an exceptionally favorable geographic location. Straddling the equator, the country has the possibility to produce seasonal crops throughout the year. A situation of this kind, where crops can be alternated during the entire year, is rare in Africa and even worldwide. The country’s orchards have a rich heritage of fruit-bearing tree species (21 kinds of mango, six kinds of mandarin, four kinds of orange). It also has know-how in grafting, which allows production cycles to be shortened, and Congo can now position itself as an exporter of orchard products.

381. Despite these advantages, agriculture has languished over the years because of low investment and productivity. This decline has been evident as much in staple food crops, where output per head dropped from 420 kg to 300 kg from the 1980s to the middle of the last decade, as in cash crops (coffee, cocoa, palm oil, cotton, peanuts, sugar cane). This situation has resulted in a steady shrinkage of agriculture’s share in GDP, from 20 percent in the 1980s to less than 10 percent in the first decade of this century, and it currently stands at only 4 percent of GDP.

382. As a result, Congo is experiencing problems of food security and heavy dependence on imported food products. Trends in the agriculture sector are exacerbating food insecurity and making the country increasingly dependent for its food on the outside world. As agricultural output has stagnated or declined, imports of foodstuffs have risen sharply, to around 130 million CFA francs, or 12 percent of the country’s export proceeds. This is making the country and its people, in particular the poorest, increasingly vulnerable. As an indication, the index of food production per capita at the beginning of this century was barely 60 percent of its level in the 1960s, while in developing countries as a whole that index stood at 170 percent of its 1960 value.

383. This poor performance is in large part due to the competitiveness problems discussed above, aggravated by low factor productivity and small-scale production patterns. The observed weakness of agriculture performance is linked in part to the dominance of a traditional farming system, which is still practiced on 81 percent of cultivated lands and is characterized by low productivity. This system coexists with two smaller-scale but more productive systems, namely “periurban” agriculture and large-scale public or private plantations.

384. Beyond the small size of farming operations (0.5 to 1.5 ha), traditional agriculture produces very low yields. The yield for maize, for example, is only 690 kg/hectare, compared to more than 3 tons per hectare for developing countries as a whole and 1.2 tons for sub-Saharan Africa. Yields are higher for cassava (6.6 tons/hectare) but are still well below the average for developing countries (more than 10 tons/hectare in the past decade). These low yields are due to rudimentary production techniques, in particular the very scarce use of fertilizer.

385. The poor agricultural performance is also the result of inadequate government attention and the inappropriate sector policies that have long prevailed. For more than 30 years (1960-1992), agricultural policy focused on establishing large-scale, government-run farms and ranches. With the withdrawal of government from direct involvement in production activities, agricultural policy during the periods of structural adjustment shifted in favor of private operations. Unfortunately, the reforms in support of private agriculture have not been applied with the diligence required, in light of the weakness of traditional agriculture. To the contrary, the reforms have been scattered and haphazard and as a result they have had a negligible impact on transforming the sector and boosting its productivity. To this must be added the depressing effects of competitiveness problems and, more particularly, the conflicts at the beginning and end of the 1990s. The end result has been a sharp decline in agricultural activity.

386. The lack of sustained attention, in terms of government investment, is still evident in agriculture. Investment spending earmarked for agriculture is still low in comparison to national needs and international standards. Over the years 2008-2010, government investment in the sector represented only 5.5 percent of average annual capital spending. This poor performance leaves Congo well below the international benchmark established at the Maputo Summit in 2003. (The NEPAD recommendations called for allocating at least 10 percent of the budget in order to achieve an agricultural growth rate of 6 percent, or three percentage points in excess of population growth).

387. The government is determined to revive the agriculture sector and make it one of the drivers of economic transformation to achieve greater and better-distributed growth. However, there are a number of severe constraints that must be addressed in order to take advantage of Congo’s agricultural assets and reinforce their contribution to the country’s development.

388. The issue of “small-scale” production and factor productivity. As noted above, the very first constraint concerns the “small-scale” and rudimentary production technologies typical of “peasant agriculture” that account for 80 percent of farm output. As a result, productivity and competitiveness are weak and remain a drag on the expansion of Congolese agriculture. To this must be added a series of factors, in particular: (i) human capital shortcomings; (ii) absence of effective mechanisms (farm banks, microfinance) for financing agricultural investment and activity; and as a corollary, (iii) the weakness of farming technology and production methods.

389. The land question. Promoting investment and modernizing agriculture will also require addressing another essential constraint on production factors – land. Traditional farming is based on communal ownership of the land, organized according to cultural traditions in the country’s various départements. To institute modern and larger scale agriculture, the land regime will have to be adapted to the market economy. In this regard, the current regime has great weaknesses, in particular the difficulties in asserting and securing land title and developing a real land market accessible both to citizens and to foreign investors and farmers. Foreign involvement can not only contribute know-how, raise needed financial resources and inject innovations, but can also open export markets for Congolese products.

390. Market size. On the demand side, the growth of Congolese agriculture may also have been held back by the small size of the country’s population and hence of its domestic market. Experience in Congo and in other countries with narrow domestic markets (Benin, Togo, Gambia, Zimbabwe etc.), however, shows that this constraint has been greatly overestimated. As evidence, staple food crop production has not kept pace with population growth and, as noted earlier, this has left Congo increasingly dependent on food imports. Moreover, this constraint does not seem to affect cash crop production, which in all countries of the region is essentially for export. More significantly, with globalization, the domestic market size constraint is becoming less important, at least on the demand side.

391. The quality of trade policies. The weaknesses in production capacities and trade policies and the lack of competitiveness in agriculture are much more important for the sector’s growth than is the size of the domestic market. Prospects for exports to the subregion, particularly to the DRC, but also to the rest of the world, are highly favorable. To take advantage of them will require a sound combination of domestic, regional and global trade policies and targeted measures to organize domestic producers, in order to preserve the resources for balanced and sustainable development purposes. Strategies in the agriculture sector are described in chapter 8 of this document.

Livestock

392. As in the case of crop agriculture, Congo has significant natural advantages in livestock, in particular its vast expanses of pasture land, in their natural state or capable of conversion, most of which is suitable for sheep and goat raising, even if the nutritional quality is limited. Heavy-livestock raising was in fact introduced into Congo in the colonial era. Over the intervening decades, a number of experiments have been attempted, including the successful introduction of new cattle breeds (primarily Lagune and Ndama). On the other hand, small-scale, traditional cattle herding has been virtually snuffed out by the emergence of government-owned ranches that have taken over the best pasture lands and that compete with the output of traditional farmers. With the failure of state-owned ranches and farms, there is now a possibility to revive private cattle raising.

393. Congo also has great potential for the raising of small livestock and poultry, as a family farming pursuit. However, in contrast to countries of the Sahel (e.g. Chad, Cameroon), and other countries that have significant pastoralist populations (such as the Masai in Kenya and Tanzania), Congo has little in the way of an agro-pastoral tradition. Consequently, the development of small-livestock raising will require still greater efforts to arouse the interest of farmers and herders in this subsector and, for small-scale traditional farmers, to modernize their operations and boost their productivity.

394. Congo also has important native fauna reserves that should encourage family-based livestock raising. These include certain poultry species such as quails and guinea fowl, as well as ruminants and rodents such as antelope, aulacodes (cane rats) and hedgehogs, for which the lifecycle and production cycle are now well in hand, thanks to innovations.

395. Compared to these potentials, the livestock sector is still in its infancy in Congo and, like agriculture, its development has been handicapped by capacity and competitiveness problems. In recent years, livestock raising has grown at an average annual rate of 2.8 percent, well below the rate for agricultural output and for the overall non-oil economy. Its contribution to non-oil GDP has consequently been declining steadily, and is well below the sector’s potential.

396. There has however been a sharp increase in domestic demand for livestock products, as indicated by the strong growth in imports per capita. As well, regional demand is booming, especially in the DRC. Congo can benefit, then, from these natural assets to expand domestic production in response to this demand.

397. To this end, the government will have to strengthen the capacity of the working population of the sub-sector and remove the main obstacles concerning the small number of agro-pastoralists. To these factors of production must be added the problem of competitiveness of the economy as a whole which constitutes a cross-cutting prerequisite that must be met if Congolese products are to be made more attractive in comparison to imports.

Fishing

398. In this area, Congo again has some undeniable but under-exploited assets: it has a coastline of 170 km and a dense continental hydrographic network with two main river basins: the Congo and its tributaries (Oubangui, Sangha, Likouala-Mossaka, Alima, etc) and the Kouilou-Niari and its tributaries (Loutété, Bouenza, Loudima, Louvissi kibaka). These two watersheds are rich in fishery resources. As an indication, the potential annual catch is estimated at 100,000 tons of freshwater fish and 80,000 tons of marine fish. However, the marine fishery has shrunk significantly, while the freshwater fishery is still marking time, with output of barely 15,000 tons a year.

399. Despite these assets, fishing is still underexploited in Congo and its contribution to national wealth falls far short of its potential. As an indication, the sector’s average annual contribution to growth has been barely 1 percent, even during the period 2000-2010. By comparison with other coastal countries, the Congolese fishery contributes little either to GDP or to exports. This week contribution can be explained by:

• Insufficient understanding of the available fishery resources and lack of control over their exploitation, especially in inland waters.

• Lack of support facilities for fish harvesters, in terms of training in enhanced fishing techniques and methods (processing and conservation techniques are often outdated).

• Inadequate facilities for conservation and processing of fishery products.

• Obsolete equipment, processing plants and boats.

• Inadequate fish landing and transport facilities.

Apart from these major difficulties, fishing zones have receded because of oil operations in maritime waters, the invasion of vegetation in water bodies, the silting of the Congo River and its tributaries, and the presence of floating logs that make it impossible for small vessels to navigate in forested areas.

Aquaculture and fish farming

400. When it comes to aquaculture and fish farming, the basins of the Congo and Kouilou-Niari rivers represent a major strength for the development of aquaculture and pisciculture activities. Indeed, the Congo has some rare and valuable natural species that could be raised for export. These include species such as missala (crustacean), malangwa, djombo, and ngolo (clarias, catfish), tilapia (nilotica), the Ngoki (crocodile) the skin of which is used in the leather and footwear industry. Market prospects are enticing given the sustained gowth of the domestic and regional markets, as indicated by the growth in the consumption and imports of fishing products.

401. Aquaculture is still confined to family-operated and traditional pond-based fish farming, and is limited by the lack of appropriate inputs (fry of good stock, proper feed, fertility agents etc.). This situation explains in part the poor yields obtained from fish farming. To this may be added the almost complete lack of extension agents as well as of means for the local delivery of technical support.

402. Significant measures are planned to boost capacities. These include the establishment of support infrastructure in the Lower Alima basin, for the development of aquaculture and fish farming. In terms of human resources, some départements (Pool, Lékoumou, Niari, the Plateaux, Cuvette and Kouilou) have know-how available for fish farming in ponds and in still river waters (“oxbows”).

403. From this viewpoint, boosting the sector will require coordinated action programs in two areas: (i) building the capacity of operators and strengthening key factors, in particular infrastructure and human resources, and (ii) improving the overall competitiveness of the economy, without which Congolese products will not be able to compete with imports.

Agro-industry

404. The low level of development of farming, livestock and fishing activities has also left the food and agri-food industry in the doldrums. The agri-food industry amounts at present to a single cane sugar production facility, one wheat flour mill, and some beverage producers (mineral water, beer and soft drinks). Even in these cases, the industries have had little in the way of spillover effects upstream, and many inputs are imported (e.g. wheat for flour milling, maize, malt and hops).

405. There is much room for growth in this sector, then, provided it is accompanied by an adequate supply of key inputs. As well, export prospects are attractive, particularly for vegetable oils (palm oil, peanut oil clock), soap making and newly developed lines to satisfy the growing international market for beauty products and bioenergy.

Forestry and the wood industry

406. Congo abounds in forestry resources. Exploitation began long ago in the southwestern part of the country (Kouilou) and expanded into the Niair forest and thence into the Chaillu Mountains before reaching into the northern part of the country. Congo has some 22.5 million hectares of forest and a commercially exploitable wood potential of 340 million m³. Forest production thus became the country’s main economic activity, geared essentially to export, and the one with the highest rate of growth. From 1946 to 1959, exports of raw logs rose from 5,660 tons to 197,000 tons, including 140,000 tons of limba (shinglewood), and lumber exports increased from 5,570 tons to 12,720 tons, to which may be added 3,740 tons of veneer. Public investments have included prospecting work as well as activities to enrich the natural forest and create artificial stands: for example, 5,500 ha of limba in Mayombe, 400 ha of eucalyptus near Pointe-Noire.

407. Given the proven potential, the level of output could reach 2 million m³ without harming the ecological balance. Despite uncertain economic conditions, Congolese production has been growing steadily, particularly for raw logs. The same is true for wood processing. However, the country is still far from achieving its ambitions, in terms of exploitation and in terms of the provision in the forestry code that calls for processing 85 percent of wood production locally.

408. Despite the disruptions mentioned above, the forestry industry remains one of the biggest employers in the economy. Having been displaced by oil since 1974, wood is still the country’s second largest export resource. The industry has grown steadily in 2009-2010 after considerable contraction in 2008 due to the global economic crisis and the collapse of wood prices.

409. As in Cameroon and Gabon, the “wood industry” can contribute substantially to economic growth, to job creation as well as to government revenues. The government has already launched a program to increase domestic wood processing in order to derive greater value added. Targeted actions are already under way to build capacities in the sector and to encourage investors in this sector.

Market services

410. Congo has great potential to develop a transit economy because of its geographic position in the heart of central Africa. Congo has a proven track record in providing services to neighboring countries both for imports and for export of their products. Despite the slowdown caused by structural problems and the crises described earlier, Congo remains a country of transit and it has the principal “economic entry and exit gateway” in central Africa, namely the Port Autonome de Pointe-Noire (PAPN).

411. Transport. Congo has a natural transport corridor to the countries of central Africa. This corridor consists of the Port of Pointe-Noire, the railway, the Port of Brazzaville and the secondary ports. However, problems with the Congo-Ocean Railway (CFCO) and navigation constraints on the Congo River during certain periods of the year (low water levels) have frustrated development of Congo’s capacities to provide transit services to countries of the region.

412. Significant efforts have been made in recent years, or are now underway, to address this situation. These include rehabilitation of the railway (under way), construction of the Pointe-Noire-Brazzaville Highway (under way), expansion and modernization of the Pointe-Noire port (under way), in particular its container terminal, planned rehabilitation of the Port of Brazzaville and the secondary ports, as well as completion of the “bridge-road-rail” project between Brazzaville and Kinshasa.

413. Completion of these major projects is bound to allow Congo to take full advantage of its potential as a “corridor country”, thereby improving interconnection of the economies of the subregion to the rest of the world.

414. Tourism. Congo has great potential for ecological tourism, but that potential has been underexploited. Congo is in fact a vast and relatively virgin natural garden situated in the heart of the Congo basin, commonly known as the “African Amazon” because of the wealth of its biodiversity. Its physical relief and its climate offer different ecological zones, the flora and fauna of which constitute an exceptional tourism resource. Its variety of watercourses, consisting of rivers, streams, lakes and lagoons, is one of its most attractive tourist assets. In particular, the equator-straddling city of Makoua symbolizes Congo’s location in both the northern and southern hemispheres.

415. A number of natural sites have the potential to attract tourists. The principal ones are: (i) the Loufoulakari, Minguele and Moukoukoulou waterfalls and the cataracts of the Congo; (ii) the Diosso gorges, the Nkila-Ntari caves, the Inoni cliffs and the “holy hand” of Sembé; (iii) the mangroves of Conkouati, Lake Nanga and the “Blue Lake” of Louvakou; (iv) the biosphere of Dimoneka; and (v) the Léfini and Nouabalé Ndoki reserves and the Odzala National Park.

416. Congo has a great diversity of peoples and of cultural, linguistic and artistic riches, on which the country could build a “high-end” tourism business that would enhance the sector’s contribution to national income, to foreign currency generation, and to job creation.

417. The tourism sector’s contribution to growth is still very low in comparison to its potential. This poor performance reflects the shortage of capacities, and in particular the lack of development of tourist sites and circuits and the shortage of hospitality facilities, especially hotels. Here again, competitiveness is a problem, for transportation costs on the Congo River are still very high for a country that aspires to become a tourist destination. The government is well aware of the problem and intends to correct it in the context of this plan.

418. Financial services. Congo is currently experiencing a growth spurt in its banking sector. After the crisis of the 1990s, the Congolese banking sector underwent a cleanup, and several international banks moved in. However, the level of use of banking services in financing the economy, remains poor. Although credit institutions are awash in liquidity, they extend little credit to the private sector. The deepening and diversification of banking structures and products is one of main conditions for the sustainable funding of the development and modernization strategy of society.

419. The microfinance industry has been performing well, and savings and loan activities are growing strongly. This is very encouraging from the viewpoint of poverty reduction, for such services are used for the most part by poor people. At the same time, the insurance industry is undergoing a profound restructuring with the reorganization of the public operator – Assurances et Réassurances du Congo (ARC) – and stepped-up oversight of the industry.

420. Yet development of the financial market is still awaiting the effective start-up of the Central Africa Stock Exchange (BVMAC). That exchange is to serve the six countries of CEMAC and is intended to facilitate investment financing for private operators. Its failure to commence trading is holding back the efforts of the country and of the financial system to achieve the diversification of long-term financing instruments for private investment.

The Government’s Economic Program

421. The macroeconomic performance of recent years has been particularly encouraging, since introduction of the Government’s economic program supported by the IMF (December 2004) and the Poverty Reduction Strategy (PRS, 2008-2010). Implementation of the PRS made Congo eligible for cancellation of nearly US$3.5 billion in debts, representing 67.4 percent of the country’s total debt stock and 32.4 percent of its GDP.

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Congo In International Comparison: Macroeconomic Policy

Citation: IMF Staff Country Reports 2012, 242; 10.5089/9781475505986.002.A001

Source: ST/DSCERTP and INT/DEC, World Bank Data, World Development Indicators <http://darabank.worldbank.org/>

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Growth and competitiveness

422. The oil sector remains the driver of economic growth in the Congo. Its positive performance during recent years is due to the favorable trend in global crude oil prices, the increase in exploitation at the M’boundi, Nkossa Sud, Kombi, Likalala, Loango and Zatchi fields and the operationalization of the Moho Bilondo field. During the period 2008-2011, the Congo experienced annual average growth close on 7,0% drawn from both the oil sector (9,6%) and the non-oil sector, whose contribution is on the rise (4,0% in 2009, 6,4% in 2010 and 8,0% in 2011) and this, despite the global economic crisis which shook the wood industry (2008-2009).

The oil sector’s performance is due to rising oil output, which has been driven by the favorable trend in prices and good success in exploiting the fields (M’boundi, Nkossa Sud, Kombi, Likalala, Loango and Zatchi). With the coming on stream off the Moho Bilondo field, oil output rose from 15.3 million tons in 2007 to 15.7 million tons in 2011, for an average annual growth rate of 2.6 percent.

Table 5.

GDP Performance, 2008-2011

Source: CPCMB

Table 5.

GDP Performance, 2008-2011

Year		2008	2009	2010	2011	Average 2008-2011
	(Annual change, in percentages)
Primary sector		6.8	10.6	11.8	2.6	8.0
Agriculture		6.2	6.8	6.4	7.9	6.8
Sylviculture and forestry		2.0	-42.5	5.0	4.1	-7.8
	Extracted industries	7.4	16.1	13.7	1.1	9.6
Secondary sector		6.6	5.3	6.3	8.7	6.7
	Manufacturing	7.0	5.5	5.9	8.6	6.7
	Electricity, gas and water	3.6	1.3	5.5	7.4	4.5
	Construction and public Works	7.6	8.7	8.8	10.5	8.9
Tertiary sector		5.0	5.4	5.7	7.2	5.8
Transport and telecommunications		6.7	6.1	6.9	9.2	7.2
	Commerce, restaurants and hotels	6.0	7.5	7.4	9.2	7.5
Government, all levels		3.0	2.9	3.2	3.2	3.1
Other services		4.1	4.8	4.9	6.7	5.1
GDP at factor cost		6.0	7.6	8.5	5.3	6.8
	Import duties and taxes	4.2	4.5	16.0	6.6	7.8
GDP at market prices		5.9	7.5	8.7	5.4	6.9
	Non-oil GDP	5.3	3.9	6.4	7.5	5.8

Source: CPCMB

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Table 5.

GDP Performance, 2008-2011

Year		2008	2009	2010	2011	Average 2008-2011
	(Annual change, in percentages)
Primary sector		6.8	10.6	11.8	2.6	8.0
Agriculture		6.2	6.8	6.4	7.9	6.8
Sylviculture and forestry		2.0	-42.5	5.0	4.1	-7.8
	Extracted industries	7.4	16.1	13.7	1.1	9.6
Secondary sector		6.6	5.3	6.3	8.7	6.7
	Manufacturing	7.0	5.5	5.9	8.6	6.7
	Electricity, gas and water	3.6	1.3	5.5	7.4	4.5
	Construction and public Works	7.6	8.7	8.8	10.5	8.9
Tertiary sector		5.0	5.4	5.7	7.2	5.8
Transport and telecommunications		6.7	6.1	6.9	9.2	7.2
	Commerce, restaurants and hotels	6.0	7.5	7.4	9.2	7.5
Government, all levels		3.0	2.9	3.2	3.2	3.1
Other services		4.1	4.8	4.9	6.7	5.1
GDP at factor cost		6.0	7.6	8.5	5.3	6.8
	Import duties and taxes	4.2	4.5	16.0	6.6	7.8
GDP at market prices		5.9	7.5	8.7	5.4	6.9
	Non-oil GDP	5.3	3.9	6.4	7.5	5.8

Source: CPCMB

423. The performance of the non-oil sector has been particularly encouraging with respect to prospects for diversification. In fact, after a downturn in 2009 in the wake of the global crisis, which affected forestry output in particular (-42 percent), the non-oil sector saw growth accelerate to 4 percent in 2009, and to nearly 8 percent in 2011, according to recent estimates. Besides commerce and services, we note a sustained buoyancy in tradable goods, notably agriculture (7, percent), manufacturing (7.0 percent) and transport and commerce (6.0 percent).

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Change In GDP (Percentages)

Citation: IMF Staff Country Reports 2012, 242; 10.5089/9781475505986.002.A001

Source: CPCMB

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424. Exports. The behavior of exports and the structure of Congo’s international trade follow production trends and seemed to confirm the gains in productivity. While oil remains the dominant sector, other tradable goods sectors have seen still sharper growth in exports as a share of growth in output, signaling an enhanced propensity in favor of export. This is particularly evident in wood products. Consequently, the share of non-oil exports has been progressing favorably, even if their weight remains low in the total of exports, given the dominance of oil.

Table 6.

Goods Exports 1987-2009

Table 6.

Goods Exports 1987-2009

Products		1987-1993	1994-2000	2001-2006	2007-2009
1.	Crude oil	83%	92%	92%	93%
2.	Oil products	2%	1%	1%	1,53%
3.	Tropical wood	12%	5%	6%	3,50%
4.	Eucalyptus logs	2%	2%	0%	0,10%
5.	Sugar	1%	1%	1%	0,34%

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Table 6.

Goods Exports 1987-2009

Products		1987-1993	1994-2000	2001-2006	2007-2009
1.	Crude oil	83%	92%	92%	93%
2.	Oil products	2%	1%	1%	1,53%
3.	Tropical wood	12%	5%	6%	3,50%
4.	Eucalyptus logs	2%	2%	0%	0,10%
5.	Sugar	1%	1%	1%	0,34%

425. Investment. There was a favorable progression of non-oil investment over the period, consistent with the growth in non-oil output. The non-oil investment rate in Congo rose steadily over the period (10.8 percent in 2008 and 14.8 percent in 2011). The intersection of this curve with that of non-oil GDP growth indicates a recovery of investment productivity in the non-oil sector.

426. More interestingly, foreign investment in the non-oil sector has risen considerably over the period. An analysis of the balance of payments confirms that foreign investment in the non-oil sector rose sharply in recent years (by an annual average of 35 percent between 2008 and 2011). This finding corroborates the modest improvement in the business climate, reflecting the courageous initiatives taken by the government. These positive developments have encouraged the government to persevere on this path and to redouble its efforts to strengthen the business environment, in order to stimulate investment for transforming the Congolese economy.

Inflation

427. The inflationary pressures recorded at the beginning of 2009, after the 2008 explosion in food and oil prices, slowed considerably in 2010. This favorable trend can be seen in the deceleration of the consumer price index (CPI), which rose at an annual average of 3 percent between 2008 and 2010.

428. The decline in world food prices contributed to this slowing of inflation. Also observable are the competitiveness effects resulting from structural reforms and the reinforcement of infrastructure services. The downward trend in inflation can in fact be correlated with the substantial reduction in business and transaction costs resulting from improvements in the supply routes for food products in urban centers, and the progress made in the delivery of electricity. With intensification of these reforms and improvement in the quality of infrastructure services (transport and energy), thanks in particular to rehabilitation of the power distribution networks and transport infrastructure, the downward trend in inflation should continue.

429. The fiscal and monetary prudence exhibited by the government in the context of its economic program should help contain inflation at around 3 percent, consistent with the CEMAC zone convergence criteria. On the fiscal and monetary side, the government continues to pay close attention to the rate of growth of spending and credit. This prudence is essential to avoid inflationary tensions that could result from sharp growth in domestic demand, given production and import capacities.

430. This policy, which is at once prudent but also accommodating of growth, is evident in the monetary situation. The money supply has grown at a rate proportional to GDP (the ratio remained stable at around 64 percent over the period), while the favorable trend in the government’s debt position has served to free up credit for the private sector. As an indication, credit to the private sector rose at an average pace of 38.8 percent, in correlation with the progress of investment and private-sector activity, although the level still remains low. All told, the government’s pro-growth but prudent fiscal and monetary policies have made it possible to sustain activity and maintain macroeconomic stability.

The public finances

431. Fiscal policy has been geared to restoring balance in the public finances, by stressing improvement in the collection of non-oil revenues and a reduction in the pace of growth of current expenditures. This judicious policy has allowed the government to boost investment spending while continuing to save a portion of oil revenues. The strategic objective is to constitute reserves both for “financial stabilization” needs and for the needs of future generations, recognizing that oil revenues will inevitably decline over the long term.

432. Revenues. Thanks to stepped-up collection efforts and the sound performance of the non-oil sector, government revenues rose strongly at an average annual pace of 25.8 percent over the period 2008-2011. This remarkable performance is due in particular to the solid record with non-oil revenues, which rose by 19.5 percent over the period, increasing their share of GDP from 7.6 percent in 2008 to 10 percent in 2011, and raising their contribution to government revenues from 14.3 percent to 20.4 percent.

Table 7.

Government Revenues 2008-2011

(as percentage of GDP)

Source: CPCMB

Table 7.

Government Revenues 2008-2011

(as percentage of GDP)

Year				2008	2009	2010	2011	Average
								2008-2011
Revenues and grants				53.3	34.6	41.7	45.2	43.7
	Own revenues			53.3	34.2	41.7	45.2	43.6
		Oil revenues		45.6	24.1	32.9	36.0	34.7
		Non-oil revenues		7.6	10.1	8.8	9.2	8.9
			Tax revenues	6.9	9.2	8.3	8.7	8.3
			Non-tax revenues	0.7	0.8	0.4	0.5	0.6
	Grants			0.0	0.4	0.0	0.0	0.1

Source: CPCMB

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Table 7.

Government Revenues 2008-2011

(as percentage of GDP)

Year				2008	2009	2010	2011	Average
								2008-2011
Revenues and grants				53.3	34.6	41.7	45.2	43.7
	Own revenues			53.3	34.2	41.7	45.2	43.6
		Oil revenues		45.6	24.1	32.9	36.0	34.7
		Non-oil revenues		7.6	10.1	8.8	9.2	8.9
			Tax revenues	6.9	9.2	8.3	8.7	8.3
			Non-tax revenues	0.7	0.8	0.4	0.5	0.6
	Grants			0.0	0.4	0.0	0.0	0.1

Source: CPCMB

433. Expenditures. The government has clearly reoriented its fiscal policy so as to reinforce infrastructure, boost competitiveness, and accelerate the transformation of the economy and of growth. To this end, and despite administrative and social pressures, the government has succeeded in containing the rise in current expenditures, while steering them towards growth sectors and social development (health and education). This has freed up fiscal room in favor of capital spending. As table 9 indicates (Public Spending 2008-2011, as percentages of GDP), while these two aggregates have behaved favorably, the share of current spending declined from 17 percent of GDP in 2008 to 10 percent in 2011, while capital expenditure rose from 10 percent to 16 percent over the same period.

Table 8.

Government Expenditure 2001-2011 (Percentages Of Gdp)

Table 8.

Government Expenditure 2001-2011 (Percentages Of Gdp)

			2008	2009	2010	2011
Net spending and loans			27,2%	28,8%	23,0%	23,3%
	Current spending.		17,2%	16.2%	12,7%	9,0%
		Compensation and salaries.	3,6%	4,5%	3,4%	3,0%
		Goods and services.	4,8%	4,5%	4,3%	2,8%
		Transfers.	5,0%	4,3%	3,2%	2,6%
		Local governments.	0,5%	0,6%	0,8%	0,5%
		Interest on the public debt.	3,3%	1,9%	1,1%	0,0%
	Capital spending.		10,0%	12,5%	10,2%	14,3%
		Internally financed.	8,6%	12,1%	9,6%	11,3%
		Externally financed.]	1,4%	0,4%	0,6%	3,1%

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Table 8.

Government Expenditure 2001-2011 (Percentages Of Gdp)

			2008	2009	2010	2011
Net spending and loans			27,2%	28,8%	23,0%	23,3%
	Current spending.		17,2%	16.2%	12,7%	9,0%
		Compensation and salaries.	3,6%	4,5%	3,4%	3,0%
		Goods and services.	4,8%	4,5%	4,3%	2,8%
		Transfers.	5,0%	4,3%	3,2%	2,6%
		Local governments.	0,5%	0,6%	0,8%	0,5%
		Interest on the public debt.	3,3%	1,9%	1,1%	0,0%
	Capital spending.		10,0%	12,5%	10,2%	14,3%
		Internally financed.	8,6%	12,1%	9,6%	11,3%
		Externally financed.]	1,4%	0,4%	0,6%	3,1%

434. On the strength of the policies described above, the government has been able to persevere along the path toward cleaning up the public finances. As an indication, the budgetary balance on a cash basis improved considerably over the period 2008-2011, moving from a deficit of 4.1 percent of GDP in 2008 to a surplus of 15.9 percent in 2010. This surplus should stabilize in 2011 at around 14.3 percent. However, the picture is not the same once oil revenues are isolated. In fact, over the period, the primary balance excluding oil revenues remained structurally in deficit to the tune of around 14 percent of GDP. This poses a challenge to the authorities in terms of the risks to fiscal sustainability and macroeconomic stability over the medium term. These risks could be accentuated with the increase in spending for implementation of the development program. The government is well aware of this challenge and is determined to show the greatest prudence and frugality in its budgetary policy, while ensuring that it remains – in terms of intensity and quality – compatible with Congo’s ambitions as an emerging economy.

Recent trends

438. The results of the ECOM (2011) confirm those of the survey of urban employment and the informal sector (EESIC, 2009), showing a clear decrease in unemployment across the country, and most notably in Brazzaville and Pointe-Noire. Over the decade 2000-2009, employment in the modern sector rose steadily overall, from 105,827 jobs to 131,455, for an average annual increase of 2.4 percent, compared to an average annual rate of GDP growth of 4.6 percent. In the non-oil sector, employment rose by 4.1 percent and GDP by 7.0 percent. These trends are encouraging in several respects. They show that output growth has translated into job creation. Just as importantly, the intersection of the two trends reveals that the Congolese economy has seen sharp gains in labor productivity over the period, especially in the non-oil sector. Yet the data do not make it possible to assess the performance of wages and incomes, which is needed to obtain an overview of the scope and quality of the jobs created.

Employment by sector

439. The greatest number of Congolese workers earn their livelihood in agriculture (35.6 percent) or in commerce (20.7 percent), while the proportion of persons working in manufacturing is relatively low (16.3 percent). The ECOM2 indicates that more than two thirds of the workforce (35.6 percent) is engaged in agriculture. Construction, commerce and other services each account for around 20 percent of the working population.

440. In terms of occupational category, persons working for their own account remain the largest group, accounting for 70.1 percent of labor market participants. The proportion of poor workers in this group is also the highest, at 75.2 percent. The prevalence of poverty in this group is correlated to the informal nature of activities.

441. Overall, a large portion of the workforce is engaged in the informal sector, and only 15 percent have formal jobs. This indicates that, despite the encouraging performance of recent years, job insecurity still prevails for a large portion of the population. That finding confirms the need for greater transformation of the economy (supply-side) but also of human resources (demand-side), and for greater attention to the functioning of the labor market.

Education

481. Since the early years of this century, the government has taken steps to revive the education system and to guarantee primary education for all, in accordance with the MDG. Achievements in this area include:

• Effectively free access to primary education.

• Free schoolbooks.

• The recruitment of more than 6,000 primary school teachers between 2002 and 2008.

• The revival of adult literacy and informal basic education activities nationwide.

To ensure the effective presence of teachers in the classroom, a census was conducted. The education system can be analyzed by subsector, as described below:

Preschool education. The coverage rate for preschool education is still low (12.3 percent in 2009), despite the rising numbers of preschool pupils, from 5,600 in 1995 to 39,652 and 2009, for an increase of 33.6 percent per year. Preschool education is essentially limited to urban areas and to a certain socioeconomic class. This situation is detrimental to those children who move directly into primary education without preschool experience. Preschool education faces the following problems:

• The coverage rate of daycare centers and preschool education facilities across the country is low.

• The model currently used in preschool education centers is inappropriate to the local setting.

• Coverage is unequal between rural and urban areas.

• Special early childhood education is only a marginal feature of the education system.

• Insufficient financial and material resources are devoted to preschool education, a which is not included in free schooling.

• Teaching equipment and supports are inadequate in nearly all preschool education centers.

• The objectives, contents and methods of education are not adapted to children’s emotional, psychomotor and intellectual needs or to the socio-cultural environment.

• The training of private school teachers is inadequate and there is no continuous training for publicly-employed teachers, with the consequent repercussions on learning.

• No attention is paid to holistic development integrating health, nutrition and education aspects.

• There is a lack of synergy in the interventions of the ministries involved in early childhood questions.

• Personnel in charge of early childhood programs have inadequate qualifications.

Primary education

482. The results in primary school have improved in recent years. With the support of technical and financial partners, the government has taken steps to improve access, quality and productivity in the education system. These actions include: (i) free tuition in the public primary and secondary systems; (ii) free schoolbooks; (iii) the recruitment of a significant number of new teachers; (iv) strengthened service capacity through school rehabilitation and construction. The ECOM2 results indicate improved access to education services and better outcomes in terms of enrollment rates and family satisfaction with education services. Between 2005 and 2011, the rate of access to primary school improved perceptibly from 86.6 percent to 91.5 percent. This was accompanied by an almost equivalent increase in the net primary school enrollment rate (from 86.8 percent to 89.3 percent) and in the primary school satisfaction rate (from 27.3 percent to 30.8 percent).

483. However, there are still major shortcomings in the internal efficiency of the Congolese education system. The primary school completion rate is still low (83 percent in 2011), with a dropout rate of 5.7 percent. As well, gender gaps have narrowed: the girls-boys parity index improved from 92.8 percent in 2005 to 97.1 percent in 2011. This shows that, in the education field, gender parity is indeed a reality. Yet regional disparities persist. In 2011 the access rate was considerably lower in rural areas (42.5 percent) than in the cities (84.7 percent), despite lower population numbers and density in the countryside. This combination of a low enrollment rate and a relatively small population points to the need for specific policies for rural areas.

484. Primary education has seen significant qualitative improvement in recent years. The number of schools rose from 1,542 in 2003 to 3,008 in 2007. This trend reflects the emergence of private institutions, of which there were 1,154, including 63 that were conventionné (officially recognized) in 2007, versus 601 in 2003. Enrollment numbers in public education have increased more slowly than in the private sector, although there was a jump in 2009, two years after free tuition was introduced. However, primary education still faces a number of problems:

• High repeater rates.

• Excessive reliance on support personnel (i.e. non-teachers) in the classroom because of the recurrent shortage of teachers.

• High pupil-teacher ratios in large cities.

• Difficulties in financing education projects.

• Difficulties of access (supply/demand) in remote areas and among vulnerable population groups.

• The scarcity of alternative education solutions.

Table 10.

Key Education Indicators

Source: ECOM 1 and 2, GTDR Education Report

^*Gross enrollment rate for girls relative to that for boys.

Table 10.

Key Education Indicators

INDICATORS	2005	2008	2011	PRSP I target
Gross enrollment rate in primary	128.3	111.	117.7	N/a
Gross enrollment rate of girls in primary	123.5	84	115.9	N/a
Girls/boys parity index (% *)	92.8	89	97.1	N/a
Gross primary school admission rate	113	95	113	N/a
Gross primary school completion rate		77	83	N/a
Pupil/teacher ratio	52	75.7	50

Source: ECOM 1 and 2, GTDR Education Report

^*Gross enrollment rate for girls relative to that for boys.

View Table

Table 10.

Key Education Indicators

INDICATORS	2005	2008	2011	PRSP I target
Gross enrollment rate in primary	128.3	111.	117.7	N/a
Gross enrollment rate of girls in primary	123.5	84	115.9	N/a
Girls/boys parity index (% *)	92.8	89	97.1	N/a
Gross primary school admission rate	113	95	113	N/a
Gross primary school completion rate		77	83	N/a
Pupil/teacher ratio	52	75.7	50

Source: ECOM 1 and 2, GTDR Education Report

^*Gross enrollment rate for girls relative to that for boys.

Secondary education

485. The ECOM results confirm strong growth in the secondary enrollment rate. The gross enrollment rate rose from 65.3 percent in 2008 to 84.5 percent in 2011, for a substantial gain of 19.2 percentage points in five years. This gain may in fact be due to the government’s introduction of free tuition in 2007. The rate of access to secondary school increased from 58.5 percent in 2005 to 72.6 percent in 2011.

486. Despite the good performance of recent years, many children are still missing out. Congo compares poorly in this regard with the average for sub-Saharan Africa and for emerging countries: 4.9 percent of school-age children 12 to 18 years were effectively “left behind” in 2011, a considerable number given the small size of the country’s population. The satisfaction rate with secondary education improved from 28.3 percent in 2005 to 33.4 percent in 2011.

487. The total number of students enrolled in the first cycle of secondary school showed a sharp increase between 2005 and 2010. The student body increased by some 8 percent, from around 191,000 to 206,000. Despite this progress, the coverage rate is far from 100 percent. At the lycée level, the student body also grew, but the coverage rate remains low, and there are regional disparities between rural and urban areas (32.8 percent versus 69.7 percent).

488. Compared to other countries, the secondary school enrollment rate is still low, and the government is concerned at the system’s inefficiency: a relatively low rate means a shortage of human capital equipped to absorb new technologies, to boost productivity, and to contribute to modernization of the economy. Given the small size of the country’s population, the government will therefore need to set a target of 100 percent enrollment in primary and secondary school, in order to assure the human capital needed for modernizing society and industrializing the economy, as envisioned in the “Future Path” [“Chemin d’Avenir”]. The government is determined to redouble its efforts to address this challenge over the next five years. The specific objectives, strategies and programs in this field are described in chapter 11 of this paper.

At the present time, secondary education (first and second cycles) faces the following problems:

• Institutions are run down and obsolete.

• There is a shortage of classroom space, especially in urban areas.

• Laboratories are nonexistent or poorly equipped in nearly all institutions, meaning that science instruction is strictly theoretical.

• There is a shortage of teachers, especially in the sciences.

• Teachers have inadequate qualifications.

• There is excessive resort to substitute personnel (supply teachers, volunteers) in the classroom.

Moreover, the Congolese education system must address several other factors that are holding back its development:

• Under-representation of girls.

• Unequal distribution of enrollment (which is heavily concentrated in the large cities).

• A high rate of monetary poverty among households.

• Shortage of assistance and support services (remedial courses, school transport, etc.).

Literacy

489. The literacy issue concerns the population 15 years and older. The results of the ECOM surveys show that the literacy rate has increased, rising from 80.4 percent in 2005 to 83 percent in 2011. However, these rates conceal sharp disparities between urban (91.5 percent) and rural areas (63.2 percent). The gender analysis also reveals a disparity in favor of males. The analysis by socioeconomic group finds that public sector employees have higher literacy rates in comparison, for example, to independent agricultural workers and other employees.

Technical education and vocational training

490. As with basic secondary education, technical instruction and vocational training are essential for reinforcing human capital. They supplement basic education, serve the needs of the economy, and prepare students to enter the labor market.

491. In practice, the authorities recognize that efforts to date have been insufficient and the results well below expectations. This sector still suffers from weaknesses in terms of its functioning and its outcomes. The Technical and Vocational Education (TVE) sector has only 74 institutions, more than 60 percent of which are concentrated in Brazzaville and Pointe-Noire, and 2,344 government-employed teachers. TVE accounts for 10 percent and 37 percent, respectively, of the student body at the collège (junior secondary) and lycée (senior secondary) levels. Because of the system’s limited capacity, TVE is not yet in a position to meet the growing needs of the Congolese economy for skilled workers and qualified technicians.

492. Different kinds of training have been organized to boost the operational capacities of the TVE sector, which is now hiring new teachers and so improving the student/instructor ratio. This subsector betrays a number of shortcomings that are accentuating the difficulties and weaknesses of the system. The most pressing issues are: (i) the insufficient and uneven distribution of facilities; (ii) the uneven distribution of personnel across the country; (iii) the lack of infrastructure and equipment; (iv) an aging teaching body with inadequate refresher training; (v) the weakness of the linkages with the workplace and with related sectors and institutions in other countries; (vi) training that is inappropriate to real needs; (vii) programs that are poorly designed and often incomplete; (viii) a limited range of training fields and difficulties for graduates in accessing higher education; (ix) certain streams provide training that leads nowhere; and (x) lack of awareness raising about HIV/AIDS and preventive measures.

493. These shortcomings were highlighted in the review of sector strategies and programs in the PRSP 1 completion report. The authorities have taken due note of them and intend to redouble their efforts to strengthen the vocational education system, its intake capacities and its outcomes. This is regarded as an imperative, for the country requires stronger human capital to pursue its objectives of economic modernization and industrialization as called for in the Chemin d’Avenir.

Higher education

494. The government has taken steps to expand the capacity to offer higher education and to improve its quality and performance. To overcome the capacity limitations of the Marien Ngouabi University, the higher education sector has been opened to private interests: as a result, several institutions have been created, and some have been officially recognized. Recent developments include the following: (i) application of programs under the LMD (licence-master-doctorat) system; (ii) supervision and inspection of officially recognized private higher education institutions; (iii) redefinition of the missions of the Marien Ngouabi University as part of the decree reorganizing it; (iv) construction of a new library within the framework of Sino-Congolese cooperation.

495. However, the subsector betrays some shortcomings, notably these: (i) until 2010, private higher education institutions were not officially recognized; (ii) taxes and fees (license fees, flat tax on salaries) for institutions performing a public service are hard to justify; (iii) imports of technical and teaching materials are not exempt from customs duties; (iv) there is no partnership with local businesses to promote on-the-job training; (v) the banking sector is reluctant to finance graduates’ projects.

Scientific research

504. Scientific research is conducted at Université Marien Ngouabi as well as in research and development agencies. The various activities conducted in this connection have produced satisfactory results in the following areas:

• Forestry: development of subculturing for eucalyptus and afara; creation of high-productivity industrial varieties of high-productivity eucalyptus; creation of clonal plantations;

• Agriculture: layering and grafting of fruit trees; micropropagation of food and fruit crops; in-vitro preservation of germplasm for food crops; creation of varieties of cassava resistant to bacterial wither;

• Intellectual property: during the period 2003-2007, 111 applications for protection were submitted to the African Intellectual Property Organisation (OAPI).

Further, studies conducted on flora and vegetation have made it possible to: (i) establish a catalog of vascular plants assessing flora of Congo at 4,397 species among 198 families and 1,338 genuses; and (ii) create a national herbarium in Brazzaville accommodating nearly 4,500 species.

However, some research on fish in the Congolese continental waters, snakes and amphibians, and mammals is still fragmentary.

505. Congo now has a National Plan for Scientific and Technological Development (PNDST) for 2009-2013, for which the implementation is covered by two coordination and cooperation agencies: a higher council for science and technology and an inter-ministerial council for science and technology.

However, the success of scientific research and higher education in Congo is subject to ongoing constraints, as a result of internal (resources, management, efficiency, etc.), external (sociopolitical problems, support from development partners for which the sector is not a priority), and cross-cutting issues (population explosion, expansion in HIV/AIDS, gender disparities, cultural and socioeconomic constraints, etc.).

506. Where scientific cooperation is concerned, Congo has also benefited from a number of agreements and conventions to stimulate research activities in certain areas and on certain scientific topics.