Sunday, 6 September 2015

Is it profitable for businesses to avoid DRC bureaucracy?

Politics in the DRC are challenging at the moment, as the current president may be moving to a controversial bid for a third term in office (with similar situations in Burundi and Rwanda too).  Businesses would be prudent to avoid strong alignment with either side in the debate.  But is it a good idea for businesses to avoid DRC bureaucracy as much as possible?


Here's a table showing the engagement of the best performing companies (growth champions, with annual growth above 20 percent in 2012-2013), compared with the engagement of other companies.  The first row shows the average number of tax inspections or meetings in the previous year. Growth champions had slightly fewer than other companies.  The second row shows the percentage of companies who applied for government contracts over the same period.  Growth champions applied less often, but again there's not a big gap.  The third row shows the percentage of annual sales paid in informal payments, which can been seen as a means of getting bureaucracy out of the way.  Growth champions pay a bit more.

Overall, growth champions seem to be a bit less engaged with DRC bureaucracy, but the differences are small.

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