The main role of DFIs has always been to play a counter-cyclical role where economic markets of countries are experiencing a critical downturn and private sector investors evade the risks of investing in those markets. With the downturn in commodity prices impacting the foundation of African growth in sub-Saharan Africa, especially in the oil industry, the DBSA took a major calculated risk in investing in the Republic of Congo, where the oil sector is the driving force of the country’s economy. This was the DBSA’s first exposure in the Republic of Congo (RoC).
The DBSA invested debt of R1.5 billion into the oil and gas sector of the RoC.
The RoC economy is resource-based with the oil and gas sectors accounting for more than 80% (2007-2009) of total revenues for the country. Given the extensive upstream and downstream activities within the oil market value chain – through its subsidiaries – Société Nationale des Pétroles du Congo (SNPC) plays a significant development role in the RoC economy. Therefore corporate finance for SNPC constitutes much more than just financing of the oil trade, but rather it is more about financing of an oil-dominated group whose commercial activities are inextricably linked to the development of the rest of the economy.