The commentary in this issue of our newsletter was provided by our member, Declan Galvin, Managing Director of a Nairobi-based consultancy, Exigent Risk Advisory. Exigent Risk Advisory supports investors navigate risk across African markets through geopolitical risk management, intelligence reporting, due diligence, and commercial investigations.  He can be reached on info@exigent-risk.com.  The Association is grateful for his contribution. This is a commentary and comments are welcome by email to: info@eaa.co.ke .  The views expressed here are not necessarily those of the Association.

RISKS AND OPPORTUNITIES IN THE DRC

Risks and Opportunities for Investors in Eastern Democratic Republic of the Congo (DRC)

A common jest about the Democratic Republic of the Congo (DRC) goes something like “if you understand Congolese politics, it just means it was incorrectly explained to you”.

Naturally that joke is an exaggeration but it also underscores the paradoxical, complex, and dynamic nature of politics in one of Africa’s most significant countries.  Common perceptions about the DRC suggest that investors only enter the market because they need to, such as the mining or logistics industries, or when their risk appetite makes the market worth the many tests it certainly presents for companies.

However, as geopolitical dynamics shift and the world becomes increasingly inter-reliant, there may be opportunity windows for investors in the Eastern region of DRC which would have been considered far too challenging ten years ago.  Despite the ongoing armed hostilities in the Lake Kivu region of Eastern DRC, the intensifying attention from Washington DC and the Trump Administration will possibly reduce medium-term security risks, localise governance, and create an integrated economic framework allowing for greater predictability for investment.

Geography of Eastern DRC and proximity to EAC Markets

DRC is the second largest country in Africa in terms of landmass and one of Africa’s richest in terms of natural resource deposits.  DRC also shares a border with more countries than any other in Africa.

In terms of human and economic diversity, DRC could be three separate countries with significant differences between the Capital Kinshasa which is the seat of Government to the extreme west of the country, the mining centre in the city of Lubumbashi to the extreme south, and the country’s trading hub in Goma to the extreme east.  The linguistic, cultural, and ethnic dimensions of these regions are more reflective of West, Southern, and Eastern Africa than they are of each other which adds to the difficulty of governing this enormous territory.

However, economic diversity is most robust in Goma, the largest city in Eastern DRC, owing to its position as a regional trading hub and proximity to markets in Rwanda and Uganda.  In particular, the Lake Kivu area and wider Eastern DRC region is strategically connected to the following:

• Critical mineral and metal supply chains needed for developed economies, emerging technologies, electric mobility, and weaponry;
• Essential overland supply routes connecting Uganda, Rwanda, Burundi, and Tanzania to DRC;
• Regional air connectivity to Capital Cities across the broader African region including passenger and cargo flights;
• Financial services that include main Commercial Banks from EAC markets to facilitate payment transfers, deposits, and commercial operations.

Political and security risk in Eastern DRC

Eastern DRC has a decades-long history of ethnic violence, insurgency, Gender-Based Violence, and resource competition that has made the region one of the world’s most protracted humanitarian crises.  However, despite the protracted nature of the security climate in Eastern DRC, low-intensity violence has mostly waxed and waned with periods of tepid peace often shattered more because of meddling by DRC’s neighbours than spawned from internal actors.

In January 2025, an allegedly Rwandan-backed rebel group M23 of mostly Congolese nationals launched an invasion that led to the retreat of the Congolese military and M23 forces holding the key administrative, logistics, and security installations across North and South Kivu Provinces in Eastern DRC.  Despite international condemnation, including being directed toward Rwandan President Paul Kagame, M23’s control of the region persists and has triggered ongoing negotiations between the DRC and Rwandan Governments brokered by the US and talks between the DRC Government and M23 in Doha, Qatar.

The negotiations between the conflicting parties have waxed and waned for several months but progress toward a comprehensive peace deal is remarkable given the entrenched social, economic, and political issues in the Great Lakes Region.  In particular, attention from the Trump Administration is a key force behind the progress of the negotiations and driven by the US Government’s priority to secure critical resource supply chains away from China.

Sector-based opportunities in Eastern DRC

As mentioned previously, the political and economic context in DRC differs across its diverse regions.  Eastern DRC, which has a more robust history of trade and commerce, presents investment opportunities distinct from Southern and Western DRC.  Moreover, the commercial dynamics in Eastern DRC –especially Goma and Bukavu cities – are highly integrated with other East African markets.

Industries and investment in Eastern DRC are, as expected, quite nascent and carry operational risks of varied concern depending on the economic sector.  Nevertheless, consumer behaviour, regional economic trends, and global demand for critical resources are potentially driving increased returns for investors expanding in the region.

In particular, business operators, investors, and local authorities have identified the following sectors as compelling for foreign investment:

Risk Forecast

There is no question that DRC, including Eastern DRC, remains a frontier market with a number of risks that undermine investor confidence.  However, there are economic pull factors which may entice investors from certain industries, and with a higher degree of comfort in ambiguous operational environments, to consider expanding into Eastern DRC especially for companies looking to leverage opportunities in neighbouring EAC markets.

Exigent’s risk forecast for Eastern DRC is overall progressively positive with many of the key issues – including militancy, foreign intervention, financial, and operational risks – likely to ameliorate in the near-to-medium term.  Our five primary forecasts on Eastern DRC are:

US-brokered peace deal between Rwanda and DRC: A peace deal involving Rwandan and DRC Heads of State will very likely occur in the near-term and marked by a major ceremony in Washington, DC.  While the ceremony is not without significance, the signing of Accords following the peace deal is almost certainly the most critical element in sustaining peace, deterring further hostilities, and creating a more predictable environment for economic activity.

Economically-Oriented Accords: Many of the subsequent Accords, either connected to the Washington, DC ceremony or immediately following, are likely to focus on creating an economic climate that is conducive for certain types of investment – primarily in the critical resources and mineral processing industries. The signing and implementation of these economically-focused Accords is the most significant medium-term risk indicator to monitor with regard to the sustainability of environmental conditions that can promote large investment projects.

Special Economic or Processing Zones: Designating certain areas in Eastern DRC as Special Economic Zones or Export Processing Zones will almost certainly be part of the post-peace deal Accords.  The establishment of these specially designated areas will likely offer enormous benefits for economic operators who can take direct advantage of the preferential terms of these zones or induced benefits through economic stimulation and market predictability in close proximity to them.

Reduced Operational Risk: While operational risks will likely remain one of the most consistent challenges to investors in eastern DRC over the medium-term the most disruptive of these risks are expected to ameliorate in the near-term and following a peace deal in Washington, DC.  In particular, financial service providers and aviation companies will almost certainly resume operations in Eastern DRC as soon as permitted given the consumer demand and predictable security environment. This change in circumstances will ease business operations in terms of payments, procurement, and the movement of goods and people.

M23’s Future Role in Eastern DRC: The M23 rebel movement, or an iteration of it, will almost certainly remain part of the local governance system in Eastern DRC for the medium-to-long term.  However, the anticipated peace agreement and subsequent Accords will very likely clarify their remit and potentially constrain their authority to certain functions or areas.  M23 leaders will likely take prominent roles in politics, Government administration, and security functions in eastern DRC making them significant interlocutors for business operators.

Managing Risks with Opportunities

While the operational and perceived risks may be too great for many investors or companies considering expanding into Eastern DRC, businesses which have been successful in East Africa are uniquely positioned to navigate this complexity.

In particular, successful Kenyan-based businesses looking for entry-points into the large consumer market of DRC or access to other parts of EAC markets and who have a history of managing political, forex, operational, and non-financial risks may find eastern DRC a lucrative and strategic investment location.

The near-term investment climate in Eastern DRC remains volatile, however, risks are expected to decrease if the US-led peace deal promotes sustainability in governance, legitimate control over the use of force, and more predictable control over economic conditions.  Based on this, potential investors should consider the following actions:

1. Consider visiting Eastern DRC

The security situation in Goma and Bukavu, the Capital Cities of North and South Kivu provinces, is safer than many expect.  There are business-oriented hotels and essential services and supply chains to make a trip possible and relatively comfortable.  Seeing firsthand the volume of trade, the safety situation, and the stability of supply chains will focus the opportunities and risks for potential business expansion.

2. Conduct market assessments

Each sector and enterprise is different and Eastern DRC may not be the right commercial environment yet.  However, the growing demand and connectivity between the region and other EAC countries, which can augment investment returns, based on unique commercial strategies.  Market assessments should consider competitive advantage weighed against environmental, social, and governance risks.

3. Conduct due diligence on partners and suppliers

Even well-established businesses will skip due diligence despite this being a critical step in market entry – especially in a country like DRC.  But, counterparty risk awareness and mitigation are essential given the ambiguity of the market and potential for political exposure.  Similarly, supply chain reliability is crucial for certain sectors and an audit on supplier capability and performance will be needed to gauge operational risks.

4. Apply know-how already in use

There is no need to ignore the strategies and methods which made your business successful.  Especially for businesses with a sustained track record of operating in Kenya, their understanding of the market is a unique selling point.  Many Kenya-based companies have navigated numerous operational and strategic risks ranging from: political interference, unreliability of supply chains, cash-related risk, internal fraud, skills deficits, consumer sensitivity, etc.  Operating in Eastern DRC will present the same or adjacent challenges as in other EAC markets.

5. Potential structuring opportunities through SEZ

The possibility of robust economic and export zones, intended to stimulate commercial activity through predictability and preferential treatment, offers potential investors structuring opportunities to both remain compliant and manage regulatory burdens often cited as an issue in DRC.  Moreover, the trend in developing SEZs in Africa means that there are now a range of tax, legal, and management professionals ready to support investors.

6. Limited partnership opportunity

Global demand for growth in emerging markets, combined with perceived commercial opportunities in Eastern DRC, may create a situation where investors enter Eastern DRC as limited financial partners through a regionally-based company with experience managing business operations in EAC markets.  This opportunity may allow EU, North American, or Asian businesses to benefit from emerging market growth by investing in local companies in need of affordable access to capital.

While there is presently, and over the long-term, significant operational risks for investors expanding into Eastern DRC it is crucial to recognise the evolving strategic, security, and commercial environments in East Africa. Given the fast-moving developments in Eastern DRC, which may yield positive economic outcomes, regional and foreign investors should consider whether this region fits within their broader growth strategy.

This is a commentary and comments are welcome by email to: info@eaa.co.ke .  The views expressed here are not necessarily those of the Association.