The Republic of the Congo, often called Congo-Brazzaville, is a country located in Central Africa that straddles the Equator line and covers a surface of 342,000 km2 with a population of approximately four (4) million. The country is bordered by Central African Republic and the Republic of Cameroon to the north, the Democratic Republic of the Congo to the south and east, the Republic of Angola (Cabinda) in the south and the Republic of Gabon to the west. The Republic of the Congo has a sea coastline of 170 km along the Atlantic Ocean.
The Republic of the Congo has a huge agricultural potential. Agriculture GDP share is 6 % and represents 1 to 2 % only of the country’s exports, despite good rainfall levels of about 1,200 mm/a and a vast hydrographical network structured around the two main basins: the Congo Basin consisting of the Congo River and its tributaries and the Kouilou-Niari Basin, consisting of the Kouilou-Niari river and its tributaries.
The country has about 10 million hectares of arable land of which only 2% is exploited. Consumption food production, which uses the largest share of arable land, is inferior to domestic demand. This gap constrains the state to import food up to 30% of the total annual imports for an average annual cost of FCFA 100 billion.
Boosting the agricultural sector will help the country meet the population’s food needs, reduce reliance on imports and put in place a new income-generating source.
I. Legal framework
The agricultural sector in the Republic of the Congo is governed by several laws and regulations in the absence of an agricultural or rural code1. Article 1 of the Law No 6-2003 of 18 January 2003 establishing the Investment Chart stipulates: “Any physical person or legal entity, irrespective of nationality, is free to undertake, on the territory of the Republic of the Congo, an agricultural activity…, in compliance with the laws and regulations of the Republic”.
The agricultural sector is mainly governed by Law No 10-2004 of March 26, 2004 setting the general principles applicable to land and State domain; Law No 25-2008 of September 22, 2008 on the agricultural and land regime; Law No 22-2005 of December 28, 2005 creating a State public administrative service known as the Agriculture Support Fund, as amended by Law No 30-2012 of October 11, 2012; and Decree No 2012-1156 of November 9, 2012 setting the powers of the Minister of Agriculture and Livestock. The Agriculture Support Fund is, amongst other things, tasked with funding agricultural production, commercialization activities and conservation activities while ensuring the proper implementation of these activities.
Furthermore, seeing that the land is an asset for agricultural production, understanding Congo-Brazzaville agricultural sector requires knowledge of other legal instruments pertaining to the land domain and other related domains. These instruments comprise in particular the following: Law No 9-2004 of March 26, 2004 on the State domain Code; Law No 16-2000 of November 20, 2000 on the forest Code; Law No 17-2000 of December 30, 2000 on the forest property regime; Decree No 2011-548 of August 17, 2011 on forest management modalities; Decree No 2006-257 of June 18, 2008 on the precarious forest titles conversion into permanent titles; Decree No 2005-515 of October 26, 2005 on public domain occupancy modalities; Decree No 2005-552 of November 7, 2005 on the private State domain immovable assets attribution; and Decree No 2002-437 of December 31, 2002 setting the forests management and use conditions.
II. Land used for agricultural purpose
Congo-Brazzaville legislation defines the agricultural land regime and sets forth the principle of security guarantee of land users’ tenures and rights. The necessity to such pieces of land has led to the establishment of rules of recognition, holding, use and exploitation of land held by individuals and private/ public entities. The agricultural and land Law has categorized land spaces that might be used for agricultural exploitation.
- Lands pertaining to the rural area
Land located outside the urban perimeter is rightfully rural. The state or local communities may hand over these rural lands to private users.
Rural land development consists of farming (plantations, cultivations, animal husbandry, and fishery) characterized by a permanent and effective encroachment on the soil. The agricultural and land Law classifies rural lands under three categories.
The first category encompasses lands that must be developed as a matter of priority. They are the lands used for residential purposes, subsistence farming, fallow lands, pasture lands, lands for pathways and afforestation for villagers.
The second category comprises lands that are subject to optional or not so urgent development. These are lands are destined to intensive food crop or agricultural or animal husbandry cooperatives, lands for commercial or industrial use and lands for perennial crops. Lands falling under the third category are those earmarked for specific activities in mining or forestry.
Therefore, rural lands falling under the second category may be used for massive agricultural investments to develop intensive crop food. They may be used for commercial or industrial purposes or for perennial crops. It is worth mentioning that perennial crops (rubber trees, palm oil trees, cocoa trees…) are the most targeted by land transactions in Central Africa.
- Lands in suburban or peri-urban areas
Suburban areas are those located beyond urban boundaries while being immediately adjacent to urban zones. They are used for various crops, including vegetables. As part of agricultural and livestock development of lands located in the peri-urban zones, the agricultural and land Law defines peri-urban zones suitable for agriculture as priority actions areas and peri-urban zones for agro-pastoralist actions2.
- Lands under customary tenure
As is the case for other Central African countries, the Congolese land system is characterized by a duality between the state land rights and customary land rights inherited from pre-colonial era. As a result, in the absence of land titles, indigenous populations maintain their pre-existing customary land rights.
Nevertheless, the agricultural and land Law provides that lands under customary ownerships, after settlement of customary fees, may be allocated to farmers under the form of provisional concession. Beneficiaries of such concessions are therefore required to develop those lands within five years.
Any project aimed at exploitation of natural resources in occupied lands or lands under customary use by indigenous populations should first be subjected to a socio-economic and environmental impact assessment. These populations can only be relocated from the lands they own or are using under customary use for public utility purpose.
- Lands located in forest zones
Private farming may take place on lands occupied by forests. Agricultural activities in forest areas require deforestation of these lands, which can happen only for non-classified or decommissioned forests. To that effect, companies which are granted lands occupied by forests must file an application for deforestation permits from the Ministry of forest economics. A deforestation tax shall be levied if the surface they occupy is more than one hectare.
III. Granting lands for agricultural activities
The granting of lands for agricultural purposes may take various legal forms. In several African countries, it is done through a lease agreement, investment agreement, settlement agreement, concession agreement, contractual agriculture agreement, or exclusive agreement.
In the Republic of the Congo, there are also various legal forms at hand, including the following main ones: provisional occupancy authorization, express occupancy authorization, ordinary leasing and long-term leasing. Moreover, private agricultural users may benefit from the alienation of lands from state private domain that are unused or removed from use, either through sale, assignment or exchange.
- Provisional occupancy authorization
The provisional occupancy authorization may be defined as a right granting temporary enjoyment of a piece of land belonging to the state and its use by a person for their own needs. This is therefore an administrative authorization whereby the state may avail lands to a private company so that they can be used for agricultural purposes. Depending on the case, the provisional occupancy authorization granted to a private company for agricultural purposes may be converted into a leasing or long-term leasing or land title subsequent to proper development of the land.
- Express occupancy authorization
The express occupancy authorization is defined as an act whereby the state or a decentralized community grants land enjoyment to a natural person or a private legal entity a portion of its public domain. Commercial companies wishing to occupy a portion of land of the public domain must file an application with the mayor or the prefect, depending on the location of lands concerned. The authorization is issued by a decree taken in the Council of ministers. Its validity period cannot exceed 20 years, except under exceptional circumstances. As such, the Congolese Ministry of Agriculture has established a standard concession contract which is applicable for agricultural matters.
- Ordinary lease
The ordinary lease is granted under the following conditions: obligation to develop the land and prohibition to assign the leasing right or consent to sublet it without prior authorization. The beneficiary is granted the right of enjoyment for a duration which cannot exceed 18 years. In order to benefit from any lease on lands that a company wishes to exploit, any company wishing to carry out agricultural activities must file an application with the Ministry of Finance. The lease is granted through a decree by the Ministry of Finances.
- Long-term lease
A Long-term lease grants the beneficiary a real immovable right that can be mortgaged making the beneficiary virtually an owner of leased lands. The beneficiary may undertake all kinds of works on the land and may be authorized to assign his leasing right. The lease is entered into for a period ranging from 18 to 99 years under the resolutive conditions to develop it. The beneficiary is prohibited from reducing the value of the land and investments made by the beneficiary will remain as-is at the end of the lease without any compensation.
IV. Some benefits likely to be granted to investors
- Assignment, for free, of a land reserve and, if need be, of the entire agro-industrial heritage to the private investor;
- Free setting, by the investor, of prices for the sale of any production from the agro-industrial complexes;
- Fixed annual minimal fees per assigned hectare, subject to the review of such fees over subsequent years through a negotiated amendment, taking into account the last inflation rate known ;
- Fiscal and customs benefits under the Investment Charter, through the signing of a settlement agreement with the State;
- Benefit of the implementation by the state, upon request, of the expropriation procedure for acquiring public or private properties not located in the conceded domain, subject to compliance with the law (payment of a fair and prior compensation to expropriated persons…);
- Guaranteed benefits linked to the economic and financial stability of the contract, namely the negotiation of the clauses of the contract in the event of the adoption of new legislative and regulatory provisions upsetting this balanced structure or should major technical constraints arise;
- Settlement of disputes amicably or, failing that, through international arbitration;
- Granting the investor a compensation corresponding to the residual value i.e. as assessed by an expert, of the facilities built under the contract, in the event of forfeiture caused by the investor’s liquidation or a non-approved change of the investor’s control by the state ;
- Setting of the contract duration over more than a decade, with the possibility of an extension, after assessment.
V. Dues and Taxes
Any occupancy of the state private or public domain leads to the collection of rental payments and fees whose rates per square meter are set by the Law on public finances. Companies benefiting from land transactions are, actually, liable for a flat annual fee.
In the model contract of lands allotment written by the Ministry of Agriculture, the amount of this flat fees is set at 2,500 FCFA (about 5 US$) per allotted hectare. However, this mode contract specifies that in the perimeter conceded to private land users, unused areas should not be subject to the payment of fees.
With regard specifically to holders of long-term leases, failure to pay this annual fee for a year entitles the state to refer the matter to court for settlement after an unheeded warning through a registered letter or through any other means.
Furthermore, companies benefiting from land transactions must pay the compulsory fees for the entry of the long-term lease in the land registers. These registration fees, calculated as in the case of any registration, are set at the rate of 2% for immovable assets located in the urban zone and in the rural zone, as per the General Tax Code.
With regard more specifically to express authorizations to occupy the public domain, it is worth stressing that these authorizations may, exceptionally and for public purposes, be granted freely to private legal entities that apply for them.
On the other hand, companies benefiting from land transactions are liable for payment of land contributions and related taxes. Regarding land maters, the Congo-Brazzaville Tax Code provides for a property tax related to land revenue, property tax for built land, and property tax for land not built.
The reduced tax rate on agricultural companies or agro-pastoral companies is 25% of the taxable income. Other fiscal and customs benefits, provided for by the Investment Charter, may also be granted to companies wishing to carry out agricultural activities in the country.
Finally, agricultural activities on lands occupied by forests and having a surface larger than one hectare are subject to a deforestation tax in the amount of 5,000 FCFA per hectare for traditional agricultural activities, and to 10,000 FCFA per hectare for modern agricultural activities.
VI. Exchange rate regime
Foreign companies are subject to exchange rate regulations and benefit from the free convertibility between the local currency and foreign currencies. Congo is a member of the Economic and Monetary Community of Central African States (CEMAC). Within the CEMAC, foreign exchange regulation states that the purchase and selling rates of currencies other than the euro should be set based on the fixed exchange rate of the Franc CFA against the euro. The rates of these currencies against the euro are based on foreign exchange markets.