Democratic Republic of Congo’s Credit Rating to Boost Investment

Democratic Republic of Congo’s new credit rating may enable the country to sell debt abroad and set a benchmark for companies seeking to tap international financing, Congo’s banking association chief said.

Moody’s Investors Services on Sept. 6 assigned Congo a B3 ranking, six steps below investment grade, with a stable outlook. The ranking may increase the visibility of the rising economy and boost investment, Michel Losembe, president of the Congolese Banking Association, said in an interview.

“The rating allows Congo to be on the map of the economic decision makers of the world,” Losembe said from the capital, Kinshasa, on Sept. 7. “The perception was not that Congo was unrated, but that it was un-rateable.”

Congo’s $18 billion economy is recovering from decades of dictatorship and a series of wars which ended with a 2003 peace agreement. More than a dozen foreign and Congolese rebel groups remain in the country’s east.

Mining plays a major role driving economic growth, which is expected to reach 8.3 percent this year, according to the International Monetary Fund. Moody’s expects expansion to continue at the same pace “over the next few years.”

Congo was the world’s eighth-largest producer of copper and the biggest producer of cobalt last year, according to the U.S. Geological Survey.

Its credit ranking is two levels below Ghana, Kenya, Senegal, and neighboring Zambia and three steps below oil producers Nigeria and Angola, according to data compiled by Bloomberg.

B ratings are “considered speculative and are subject to high credit risk,” according to Moody’s website.

Positive Development

“It’s a positive thing,” Losembe said. “The private sector will be able to access more funds for projects because you can use the rating in risk models.”

In 2008, China and Congo signed a $9 billion infrastructure-for-minerals deal, which was reduced to $6.2 billion when the IMF said the debt level was unsustainable. Anti-corruption campaigners including London-based Global Witness criticized the agreement for lacking transparency.

“If the government can get its act together, why not raise funds from financial markets rather than wait for donors or make agreements, like the one with the Chinese, that are questioned,” Losembe said.

Congo is seeking to raise $12 billion to construct the 4,800-megawatt Inga III hydroelectricity plant, which will supply South Africa and Congo’s mining industry. About $3.4 billion for the project will come from Congo and the rest from private investors, according to a proposal by the government.

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