The World Bank Report Urges Congo to Diversify Economic Growth Beyond Oil Dependency

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The World Bank stated in its report, Congo’s Path to Prosperity: Creating Foundations for Economic Diversification, that Congo (Brazzaville) should reduce its excessive reliance on oil for economic growth.

Congo is the 36th most oil-rich nation in the world, with an estimated 1.6 billion barrels of reserves, according to statistics currently available.

The country’s economy has thus been centered on oil exports, but throughout the years, low worldwide prices have stifled economic progress.

“During the past ten years, the consequence of our over reliance on oil has become painfully clear. The conclusion of the previous oil boom cycle precipitated a seven-year recession, which has drastically reduced income per capita, reduced the size of the economy, and diminished long-term growth prospects “In its most recent country economic memoranda report on Congo, the World Bank stated.

The World Bank’s advise comes as oil prices have begun to rise, but in order to avoid a setback and pave the road for an economic recovery, past mistakes shouldn’t be repeated.

The World Bank said, “Although oil prices have lately soared, bringing Congo’s economy back to growth in 2022, the existing development model is unlikely to generate sustainable economic growth and productive jobs going forward.

According to World Bank data, the economy of the Democratic Republic of the Congo shrank by 2.2% in 2021, increasing the population’s prevalence of extreme poverty from 50.2% in 2020 to 52% in 2021.

The country was also plagued by climate change-related floods in 2020, according to the African Development Bank (AFDB), and it was clear that higher output and oil prices were unable to mitigate the effects despite the Covid-19 losses that added to the five-year slump.

A new, people-centered paradigm, according to Korotoumou Ouattara, the World Bank’s resident representative for Congo, may be the solution.

“The oil-based growth strategy in Congo has reached its limits. It is critical for Congo to increase policy ambition and speed up efforts to transition to a people-centered, diversified economy in order to realize its aim for a more diverse and inclusive model “She spoke.

Some of the suggestions made by the World Bank were:

  • Removal of barriers to competition by curbing state-owned enterprises’ market dominance, encouraging private sector participation in the electricity and telecommunications sectors, and modernising competition law and enforcement capacity.
  • Acceleration of digital transformation by enabling private sector participation, developing regulatory and legal support for digital financial services and facilitating digital technology adoption, and building digital skills.
  • Improving the supply of reliable electricity by restoring profitability, invigorating regulation, and investing in transmission and distribution.
  • Enhancing trade competitiveness and diversification by cutting tariffs, reviewing non-tariff measures, concluding regional trade negotiations, and strengthening local markets.
  • Improved logistics efficiency by scrutinising public-private partnership contracts and adopting unified information technology for maritime trade.
  • The Support of ecotourism development by improving regulation and allocating funding to protect natural assets, strengthening regulatory and enforcement agencies, and expanding transport infrastructure and marketing.
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