SUMMARY REPORT MARKET RESEARCH AND FEASIBILITY STUDY IN THE DEMOCRATIC REPUBLIC OF CONGO

Transcription

1 SUMMARY REPORT ON MARKET RESEARCH AND FEASIBILITY STUDY IN THE DEMOCRATIC REPUBLIC OF CONGO PREPARED BY: Global Center for Business Development Center for research, Consultancy & Business Development September 21, 2012

2 Introduction The Export Promotion Council, in its quest for export consolidation and diversification undertook a market research and feasibility effort with a broad econo-socio-political focus. Conducted by Global Center for Business Development, a corporate with focus on business research, consultancy and development, carried out the task with focus on The Democratic Republic of Congo (DRC). This research was conducted between April and July, Notably, bilateral trade relations between Kenya and the DRC had gradually risen from KSh billion (2001) to KSh billion (2011) translating to over 300% increase, and making the DRC Kenya s tenth largest global export market in The market research and feasibility study s broad objectives included: To identify business opportunities for expanding Kenya s export of goods and services To undertake an in-depth research and analysis of the market conditions and viability in the DRC To give an expose of the market regulations To identify the competition levels, pricing strategies, and other aspects supporting the purpose of this market survey. Procedure Through designated triangulation processes, the research project integrated various methodological components and tools to achieve stated objectives. This research project s methodology therefore involved various data sources ranging from primary and secondary data; qualitative and quantitative data; to historical research, reports and surveys. The major tools used to harness information were SWOT Analysis (Strengths-Weaknesses-Opportunities-Threats); PESTEL Analysis (Political-Economic-Sociocultural-Technological-Ecological-Legal factors); the 7Ps of Marketing (Product-Promotion-People-Physical Evidence-Pricing-Place-Process) and the Michael Porter Forces (Supplier Power; Threat of New Entry; Threat of Substitution; Buyer Power and Competitive Rivalry) among others. These tools and methodologies were used to probe the DRC market, to meterits business operations; to evaluate the DRC s distribution chain; to survey the country s institutional functionalities; to explore its infrastructure; to track case studies and to generate general other inquiries deemed relevant herein. Findings The DRC is a vast market which deals in quite a variety of goods and services, qualifying as a viable import-export market solution for the region. This market research and feasibility studybore several broad findings multi-faceted and appended on background and introduction into the DRC market; business relations; infrastructural survey and the value chain analysis of the DR Congo. The country s political environment can be described as stable, informed both by public polls in 2006 and 2011; and international relations opinion. There is resource-centred dissidence to the East of the state, notably though an issue towards which resolute effort is being engaged.

3 Econo-socio-politically stated; the DRC arguably suffers poor infrastructure; inexact legal frames; opaque government policy; and financial hiccups on growth and investment. Nevertheless, the DRC economy has rejuvenated in the last decade, growing at an average of 70% since 2000 (one of the fastest in Africa). DRC is also currently going aboard special economic zones to revive its industries. Bilateral trade between Kenya and the DRC has remarkably risen since 1994; further marking positive-aggressive expectation through avenues such as the COMESA front. The major imports between the two countries include: petroleum materials, plastic, footwear, tobacco, soaps and detergents, vegetable lipids, textiles, mattresses etc. The list of products that can be exported to DRC include: Manufacturing and Manufactured Products, Edible Oils, Beauty care products- Lotions, creams and Cosmetics, Household and industrial chemicals, Packaging Products, Engineering and automotive accessory, Electrical equipment and appliances, Agricultural supplies, seeds and inputs-seedlings, fertilizers, Dairy Products- Milk and milk, Textile and Leather products, Fish and Livestock, Construction materials- Iron, cement and related construction products, Fast Moving Consumer goods, Horticulture- Flowers, Fruits, Edible Nuts and vegetables, Fresh produce- Fruits and vegetables. The services that Kenya can export to DRC include: Capacity for exports of services in general and professional services in particular, Electrical services, Education services, Consulting services, Business outsourcing services, Medical and healthcare, Financial services like Insurance and Banking. The documentation requirements for business relations in the DRC are generally established to be within normalcy, at least from the Kenyan eye-view. Taxation patterns are fairly elaborate with special emphasis on property, income, operational revenues and expatriate earnings - with tariff barriers (or lack of them) accordingly applying across the imports divide. Moreover, the importexport trade follows the Exporter-Importer/wholesaler/Distributor-Retailer-consumer general distribution chain. The DRC environment is well endowed with both foreign and local business entities in this chain of distribution and beyond. The export requirements include the following documents Residence Permit/ Work Permit Bill of Lading/Air Waybill original Cargo tracking note for all sea shipments from office of Freight Maritime Management of DRC Comprehensive Valued Invoice in French, dated & signed by exporter/seller Packing list Power of Attorney giving authority for Destination Agent to arrange customs clearance Pre-shipment report from Bureau VERITAS (Bivac) The following are factors one should look into when setting up business in DRC:- Situation in the ground in terms of security Competition in the Congo market. Product Quality and Packaging Pricing- In FC and USD Knowledge on competitive edge

4 Respect to contracts and commitments in trade, security stability, Business requirements by administration, credit infrastructure, consumer needs and tax payments. Recommendations Robust recommendations point towards Kenya (through the Export Promotion Council) designing for viability strategy of establishing a distribution infrastructure by the end of the financial year with a consistency tapered towards inter alia,related costs, local authority statutes, culture, infrastructure, population etc. Firstly, it was therefore recommended that the Kenya government should enhance its effort to: create enabling linkages for the SMEs thrive in relation to import-export trade put in place a system of financial incentives to fast track the establishment of the distribution/commercial house and a policy framework focused on the SME growth. incorporate Kenya National Trading Corporation in its potential DRC ventures liaise with the private sector to facilitate the center s functions conduct an in-depth analysis of the legal-regulatory structure extend grants/loans at lower interest rates for export promotion activities increase funding to EPC aimed at assisting SMEs participation in import-export ventures steer an exhibition to sensitize the DRC community on Kenya on an import-export plane. source avenues to bridge bilateral trade barriers through language learning; cultural orientation; exchange programs, diplomatic relations etc.

5 Secondly, it was recommended that the Kenyan government to hold government to government talks with the DRC government with a view of the DRC to: reduce bureaucracy levels which may attract corruption liaise with the Kenyan Ministry of Trade (through EPC)in an effort to boost export quality enhance market information gathering and presentation facilitate confidence building for DRC import-export market/business regulators fully heed to COMESA trade regimes It was finally recommended that Kenyan exporters work towards: adopting high standards of branding and product packaging to suit regional standards negotiating for affordable storage and warehouses expenses in the DRC publicizing and advertising their goods and services safeguarding their patency as there are weak patent protection rights in the DRC seeking joint ventures to ease the DRC market penetration and survival Conclusion In conclusion, this market research and feasibility study established that the Democratic Republic of Congo offers a viable market for Kenyan finished goods and services. These products and services include processed food; hoteling; mining; insurance; financial business; agricultural products; and, information and communication. The established viability is informed by an array of factors among which are distribution channels, adaptable historical and cultural background, political stability; established positive international relations; open-market policy potential etc. Further, potential trade is encouraged through the DRC s numerous commercial destinations e.g. Kinshasa; Kisangani; Lubumbashi; Goma; Boma, Matadi, Bukavu among others.