Politics, Economy and Startups in the Republic of Congo (Brazzaville).
Lake Tele in the north-eastern part of the country (Epena District) is an habitat for the legendary creature named ‘one who stops the river’ or mokele-mbembe. According to non-confirmed accounts of many aborigines as well as of some western travelers it may well be a sauropod dinosaur which miraculously survived the global extinction event which had happened 65 million years ago.
Although we may question the existence of this folklore monster, it would be much harder for us to doubt survivalist capacities of another Congolese beast — its democratic one-party, one-president political system. Believe it, or not but Denis Sassou Nguesso and his ruling Parti Congolais du Travail have already stayed in power for more than 20 years.
It would be, however, hard to not recognize that this archaic political set-up, mostly inherited from the Marxist-Leninist triassic period of the Congolese history, has, nevertheless, served its purpose. As did the mbembe legend, which had attracted many wealthy European and American tourists into wet jungles of the Congo river basin, political and social stability imposed by the non-challenged Nguesso rule has created an economic climate suitable for channeling large scale investments into the oil industry of the Republic.
The price to pay for influx of tourists into pristine forests is that those forests soon became much less pristine. The wide spread corruption, red tapes for businesses, human rights violations, absence of media freedom and drastic inequality — what Congolese society is paying for its current economic progress.
Republic of the Congo economy traditionally relies on oil and forestry. Almost 50% of this country’s GDP is the oil export and state-owned enterprises dominate almost in all sectors. Not surprisingly, supporting the hi-tech economy (as well as SME in general) isn’t a glaring necessity for the government and launching a startup in the Republic isn’t a walk in the park for local entrepreneurs at all.
Due to the over-powered, mismanaged government’s bureaucracy as well as to country’s outdated tax and commercial laws this Republic isn’t particularly popular among international investors (including VC funds). Consequently, for a startup to attract a seed capital there is extremely difficult. What, then, alternatives left for local founders consist mostly of self-funding and bootstrapping. On more positive note, the low level of competition may, for a certain degree, alleviate some of major deficiencies of the local startups scene.
In a country with overwhelmingly poor population and skyrocketing unemployment, several hundred-thousands of middle-class urban dwellers of largest cities (Brazzaville and Pointe-Noire) are the main potential source of revenues in consumer sector for high-tech entrepreneurs. E-commerce and on-line advertisements usually present the most popular profit opportunities on such types of sluggish hi-tech markets.
Business Notes for Startups Founders:
- political climate: not friendly;
- economic climate: not friendly;
- regions to focus: locally;
- industries to focus: e-commerce, advertisement, fintech, mobile apps;
- major limitations: small population (4.5 million), very slow economic growth (GDP growth rate is around 1%), extremely high unemployment rate (27%), negative investment climate, high administrative barriers, high costs of running SME, very high personal income tax rate (40%);
- opportunities: low competition.