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The Republic of Congo’s government has announced that the economy will grow by 0.5% in 2021 after a contraction of 8.6% in 2020.
The positive economic outlook is driven by renewed optimism for oil futures, as revenues are projected to rise 21% to 1,846.1 billion CFA francs ($3.32 billion), up from 1,525.3 billion CFA francs ($2.74 billion) in 2020.
A record fall in global crude prices caused huge economic suffering in the Republic of Congo, as the government struggled to fix budget deficits. Increased government expenditure to manage the coronavirus pandemic has also induced further strain.
The Central African country’s economic woes started earlier in 2014 following a drop in crude prices, and debt levels subsequently quadrupled to 129% of Gross Domestic Product in 2018.
The Republic of Congo is Africa’s seventh largest oil exporter, and the commodity contributes about 45% of its total GDP. Much of the oil is mined by foreign companies like Total, Chevron and Exxon Mobile, and their revenues are vital in powering Brazzaville.
In a cabinet document, the Ministry of Finance explains what drove the economic contraction in 2020. “The recession can be explained by the under-performance of all business sectors including in the oil, logging, transport and communication sectors.
“The prospects for a recovery in oil prices are very uncertain. Based on oil futures, a slow and partial recovery is expected, with a slight recovery by the end of 2020.”