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Zaire Foreign Investment
In the early 1970s, direct foreign investment ranged
from US$50
million to US$100 million annually before dropping with
the onset
of Zairianization. To entice foreign investors to return
to Zaire
after the economic decline brought on by nationalization,
in 1981
the government created a free-trade zone in Bas-Zaïre
under the
direct authority of the president. Zaire hoped to attract
powerintensive export-oriented industries with the offer of
relatively
inexpensive power and tax incentives. But although there
had been
many proposals to establish industries in the free-trade
zone, at
the end of the 1980s there had been no firm commitments.
Zaire and the United States signed a bilateral
investment
treaty in 1984. The treaty was, in part, aimed at
supporting
Zaire's economic reform efforts. The treaty proved to be
more
symbolic than practical. Little new United States private
investment ensued, despite promotion by the Overseas
Private
Investment Corporation (OPIC), which led a small
investment mission
to Zaire in 1986. Zaire also had bilateral investment
agreements
with France, Belgium, Switzerland, West Germany, Canada,
Denmark,
and the Netherlands. Most foreign investment, albeit a
significantly smaller share than at independence, was
still
Belgian.
The new investment code promulgated in April 1986 was
an
important step toward restoring investor confidence and
mobilizing
foreign capital. It incorporated various existing tax
benefits and
introduced new ones. Further advantages were offered to
investors
depending on the location of the enterprise, number of
jobs
generated, type of activity, training and promotion of
local staff,
export orientation, and value added to local resources.
Most of the
benefits were available for five years, but some ranged
from one to
ten years and even longer for mining ventures, which were
also
exempted from taxes on reinvested profits. Repatriation of
profits
and earnings was guaranteed for foreign investors. Despite
the
code's enticements, Zaire experienced only a marginal
increase in
foreign direct involvement. Moreover, not all projects
approved
under the investment code were actually started.
Despite increasing incentives, foreign investment was
slow and
fitful. The transportation system was still in a state of
gross
disrepair, although rehabilitation efforts had been under
way for
some time. Communication was also difficult, and the
population's
purchasing power remained low. In addition to the daunting
physical
and logistical difficulties of doing business in Zaire,
new
investors, especially nontraditional ones such as United
States
business interests, were discouraged by Zaire's reputation
for
unbridled corruption. It was thought in many circles that
these
irregularities were among the reasons that the United
States
business community had largely ceded Zaire to Belgium and
other
European countries as their sphere of economic influence.
Data as of December 1993
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