The prices of necessities sold in the Democratic Republic of Congo (DRC) will be reduced on December 10, 2024. The importers of the Fédération des Entreprises du Congo (the employers' association) disclosed the measure on December 5, just after meeting with the Minister of National Economy, Daniel Mukoko.
This price reduction follows numerous discussions with the government and is backed by a decree signed by Prime Minister Judith Suminwa on September 19. The decree suspends VAT collection on essential items such as meat, poultry, fish, milk powder, rice, corn, and sugar. It also abolishes customs duties and other administrative levies on maize and maize flour while reducing these levies for other products from 25% to 50%. This scheme will remain in effect until the end of 2025. Minister Mukoko Samba assured that "the reforms undertaken will continue and some will be perpetuated."
As part of the current reform efforts, the government plans to identify and list existing stocks of goods and calculate outstanding VAT and other taxes already paid to convert them into tax credits for future imports. The government has also pledged to assist importers in identifying opportunities to reduce costs. "The battle for purchasing power is not won in a single day; it is won over time," said Mukoko.
Regarding their stocks, importers have assured that they have sufficient stocks to avoid any supply disruptions, with at least three months' worth stored in warehouses across Kinshasa, Lubumbashi, Goma, Mbuji-Mayi, and Kananga, as explained by John Mwenda, Managing Director of Cowbell.
Favorable International Climate
It is worth noting that the Congolese government has been striving to lower the rising cost of living in the country. Other efforts include ensuring a continuous and reliable food supply while boosting local production. The government’s efforts may be fostered by a favorable global environment next year.
Indeed, global prices for several products are expected to decline in 2025. This does not include corn, which is projected to cost slightly more. Freight costs, by sea, are also anticipated to decrease by up to 70%, aided by lower global fuel prices and potentially reduced demand due to ongoing trade tensions between Europe, China, and the United States.
The dollar could also weaken due to declining global demand and shifting economic relations among BRICS countries (Brazil, Russia, India, China, South Africa), which are gradually moving away from US influence.
Still, DR Congo has many issues that contribute to the high cost of living problem. These include an infrastructure network that requires improvement, unpredictable trade facilitation costs (such as transport and control barriers), and a complex parafiscal levy system that accounts for nearly 25% of the price of goods arriving at warehouses.
In addition, the government has decided to exclude foreigners from small-scale distribution in favor of local players. While this measure may strengthen local businesses in the long term, it could also increase operating costs and influence prices in a context where regulatory controls may become more challenging.
Overall, as Tradex prepares for its entry into the DRC market amidst these developments, it faces both opportunities and significant logistical challenges that will require careful navigation to ensure successful operations in this complex environment.
This article was initially published in French by Georges Auréole Bamba.
Edited by: Ola Schad Akinocho
