Economy of the Democratic Republic of the Congo

Economy of Democratic Republic of Congo
Kinshasa, capital and economic center of the DRC
Currency	Congolese Franc (CDF)
Fiscal year	Calendar year
Trade organisations	AU, WTO, SADC
Statistics
GDP	$15.64 billion (2011 est.)
GDP growth	3% (2009 est.)
GDP per capita	$300 (2009 est.)
GDP by sector	agriculture (55%), industry (11%), services (34%) (2000)
Inflation (CPI)	16.7% (2007 est.)
Population below poverty line	N/A
Labour force	23.53 million (2007 est.)
Labour force by occupation	N/A
Unemployment	N/A (2003)
Main industries	mining (diamonds, gold, copper, cobalt, coltan, zinc), mineral processing, consumer products (including textiles, footwear, cigarettes, processed foods and beverages), cement, commercial ship repair
Ease of Doing Business Rank	181th
External
Exports	$6.1 billion (2007)
Export goods	diamonds, gold, copper, cobalt, wood products, crude oil, coffee
Main export partners	China 47.3%, Belgium 15.4%, Finland 9.6%, United States 8.1%, Zambia 4.4% (2008)
Imports	$5.2 billion (2007)
Import goods	foodstuffs, mining and other machinery, transport equipment, fuels
Main import partners	South Africa 28.4%, Belgium 9.9%, Zambia 7.1%, Zimbabwe 6%, China 5.9%, Kenya 5%, France 4.6% (2008)
Gross external debt	$10 billion (2007 est.)
Public finances
Public debt	N/A
Revenues	$700 million (2006 est.)
Expenses	$2 billion (2006 est.)
Economic aid	$195.3 million (recipient) (1995)
Foreign reserves	$890 million (September 2009)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars

Sparsely populated in relation to its area, the Democratic Republic of the Congo (DRC) is home to a vast potential of natural resources and mineral wealth, its untapped deposits of raw minerals are estimated to be worth in excess of US$ 24 trillion, yet the economy of the DRC has declined drastically since the mid-1980s. At the time of its independence in 1960, DRC was the second most industrialized country in Africa after South Africa; it boasted a thriving mining sector and its agriculture sector was relatively productive.

Economic Implications of Conflicts

The two recent conflicts (the First and Second Congo Wars), which began in 1996, have dramatically reduced national output and government revenue, have increased external debt, and have resulted in deaths of more than five million people from war, and associated famine and disease. Malnutrition affects approximately two thirds of the country's population.

Agriculture is the mainstay of the economy, accounting for 57.9% of GDP in 1997. In 1996, agriculture employed 66% of the work force.

Rich in minerals, the DRC has a difficult history of predatory mineral extraction, which has been at the heart of many struggles within the country for many decades, but particularly in the 1990s. The economy of the second largest country in Africa relies heavily on mining. However, much economic activity occurs in the informal sector and is not reflected in GDP data.

In 2006 Transparency International ranked the Democratic Republic of the Congo 156 out of 163 countries in the Corruption Perception Index, tying Bangladesh, Chad, and Sudan with a 2.0 rating. President Joseph Kabila established the Commission of Repression of Economic Crimes upon his ascension to power in 2001.

History

Evolution of GDP

Congolese exports in 2006

1990s

International Bank for Reconstruction and Development (IBRD) Trust Fund for the Congo. Poor infrastructure, an uncertain legal framework, corruption, and lack of openness in government economic policy and financial operations remain a brake on investment and growth. A number of International Monetary Fund (IMF) and World Bank missions have met with the new government to help it develop a coherent economic plan but associated reforms are on hold. Faced with continued currency depreciation, the government resorted to more drastic measures and in January 1999 banned the widespread use of U.S. dollars for all domestic commercial transactions, a position it later adjusted. The government has been unable to provide foreign exchange for economic transactions, while it has resorted to printing money to finance its expenditure. Growth was negative in 2000 because of the difficulty of meeting the conditions of international donors, continued low prices of key exports, and post-coup instability.

2000s

Conditions improved in late 2002 with the withdrawal of a large portion of the invading foreign troops. A number of IMF and World Bank missions have met with the government to help it develop a coherent economic plan, and President Kabila has begun implementing reforms.

2010s

Special Economic Zone

The DRC is embarking on the establishment of special economic zones to encourage the revival of its industry. The first SEZ should come into being in 2012 in N'Sele, a commune of Kinshasa, and will focus on agro-industries. The Congolese authorities are already planning to open another dedicated to mining (Katanga) and a third dedicated to the cement (in the Bas-Congo).

Implications of Instability on Economy

Ongoing conflicts dramatically reduced government revenue increased external debt. As Reyntjens wrote, “Entrepreneurs of insecurity are engaged in extractive activities that would be impossible in a stable state environment. The criminalization context in which these activities occur offers avenues for considerable factional and personal enrichment through the trafficking of arms, illegal drugs, toxic products, mineral resources and dirty money.”16

International Relations

International Bank for Reconstruction and Development (IBRD) Trust Fund for the Congo. Poor infrastructure, an uncertain legal framework, corruption, and lack of openness in government economic policy and financial operations remain a brake on investment and growth. A number of International Monetary Fund (IMF) and World Bank missions have met with the new government to help it develop a coherent economic plan but associated reforms are on hold. Faced with continued currency depreciation, the government resorted to more drastic measures and in January 1999 banned the widespread use of U.S. dollars for all domestic commercial transactions, a position it later adjusted. The government has been unable to provide foreign exchange for economic transactions, while it has resorted to printing money to finance its expenditure. Growth was negative in 2000 because of the difficulty of meeting the conditions of international donors, continued low prices of key exports, and post-coup instability.

World Bank

Ease of Doing Business Rank (EDBR)

The Democratic Republic of Congo ranks 181 on the low end of the ease of doing business scale as ranked by the World Bank. This measures the difficulties of starting a business, enforcing contracts, paying taxes, resolving insolvency, protecting investors, trading across borders, getting credit, getting electricity, registering property, dealing with construction permits and registering property (World Bank 2013:8).

Sectors

Agriculture

Main article: Agriculture in the Democratic Republic of the Congo

Agriculture is the mainstay of the economy, accounting for 57.9% of the GDP in 1997. Main cash crops include coffee, palm oil, rubber, cotton, sugar, tea, and cocoa. Food crops include cassava, plantains, maize, groundnuts, and rice. In 1996, agriculture employed 66% of the work force.

Fishing

The Democratic Republic of Congo also possesses 50 percent of Africa’s forests and a river system that could provide hydro-electric power to the entire continent, according to a United Nations report on the country’s strategic significance and its potential role as an economic power in central Africa. Fish are the single most important source of animal protein in the DRC. Total production of marine, river, and lake fisheries in 2003 was estimated at 222,965 tons, all but 5,000 tons from inland waters. PEMARZA, a state agency, carries on marine fishing.

Forestry

Forests cover 60 percent of the total land area. There are vast timber resources, and commercial development of the country’s 61 million hectares (150 million acres) of exploitable wooded area is only beginning. The Mayumbe area of Lower Zaire was once the major center of timber exploitation, but forests in this area were nearly depleted. The more extensive forest regions of the central cuvette and of the Ubangi River valley have increasingly been tapped. Roundwood removals were estimated at 72,170,000 m³ in 2003, about 95 percent for fuel. Some 14 species are presently being harvested. Exports of forest products in 2003 totalled $25.7 million. Foreign capital is necessary in order for forestry to expand, and the government recognizes that changes in tax structure and export procedures will be needed to facilitate economic growth.

Mining

Main article: Mining industry of the Democratic Republic of the Congo

See also: Canadian mining in the Democratic Republic of the Congo

Graphical depiction of DRCongo's product exports in 28 color-coded categories.

Rich in minerals, the DRC has a difficult history of predatory mineral extraction, which has been at the heart of many struggles within the country for many decades, but particularly in the 1990s. Although the economy of the Democratic Republic of the Congo, the second largest country in Africa has historically relied heavily on mining, this is no longer reflected in the GDP data as the mining industry has suffered from long-term "uncertain legal framework, corruption, and a lack of transparency in government policy." The informal sector .

In her book entitled The Real Economy of Zaire, MacGaffey described a second, often illegal economy, "system D," which is outside the official economy (MacGaffey 1991:27). and therefore is not reflected in the GDP.

exploitation of mineral substances as MIBA EMAXON and De Beers The economy of the second largest country in Africa relies heavily on mining. The Congo is the world's largest producer of cobalt ore, and a major producer of copper and industrial diamonds. The Congo has 70% of the world’s coltan, and more than 30% of the world’s diamond reserves., mostly in the form of small, industrial diamonds. The coltan is a major source of tantalum, which is used in the fabrication of electronic components in computers and mobile phones. In 2002, tin was discovered in the east of the country, but, to date, mining has been on a small scale.

Smuggling of the conflict minerals, coltan and cassiterite (ores of tantalum and tin, respectively), has helped fuel the war in the Eastern Congo.

Copper and Cobalt

Katanga Mining Limited, a London-based company, owns the Luilu Metallurgical Plant, which has a capacity of 175,000 tonnes of copper and 8,000 tonnes of cobalt per year, making it the largest cobalt refinery in the world. After a major rehabilitation program, the company restarted copper production in December 2007 and cobalt production in May 2008.

Informal sector

Much economic activity occurs in the informal sector and is not reflected in GDP data.

Transport

Train from Lubumbashi arriving in Kindu on newly refurbished line

Main article: Transport in the Democratic Republic of the Congo

Ground transport in the Democratic Republic of Congo has always been difficult. The terrain and climate of the Congo Basin present serious barriers to road and rail construction, and the distances are enormous across this vast country. Furthermore, chronic economic mismanagement and internal conflict has led to serious under-investment over many years.

On the other hand, the Democratic Republic of Congo has thousands of kilometres of navigable waterways, and traditionally water transport has been the dominant means of moving around approximately two-thirds of the country.

See also

• Democratic Republic of the Congo
• Mining industry of the Democratic Republic of the Congo

References

•  This article incorporates public domain material from websites or documents of the CIA World Factbook.

External links

• Janet MacGaffey (1991). The Real Economy of Zaire: The Contribution of Smuggling and Other Unofficial Activities to National Wealth. London: James Currey. p. 175. 
• Seema Shekhawat (January 2009) (PDF). Governance Crisis and Conflict in the Democratic Republic of Congo (Report). Working Paper No. 6. Mumbai: Centre for African Studies, University of Mumbai. http://www.mu.ac.in/arts/social_science/african_studies/seemawp6.pdf. Retrieved 23 March 2013.
• Economy of the Democratic Republic of the Congo at the Open Directory Project
• Democratic Republic of the Congo latest trade data on ITC Trade Map
• First Blood Diamonds, Now Blood Computers? by Elizabeth Dias, Time Magazine, 24 July 2009
• Oasis Kodila Tedika et Francklin Kyayima Muteba, The sources of growth in DRC before independence. A cointegration analysis, CRE Working paper, n°02/10, juin 2010
• Exenberger, Andreas/Hartmann, Simon (2007): The Dark Side of Globalization. The Vicious Cycle of Exploitation from World Market Integration: Lesson from the Congo, Working Papers in Economics and Statistics 31-2007 7yjmyry
• Doing Business in Congo, Dem. Rep. 2013 (Report). World Bank. http://www.doingbusiness.org/data/exploreeconomies/congo,-dem~-rep~/. Retrieved 2013-03-25.
• Polgreen, Lydia (16 November 2008). "Congo's Riches, Looted by Renegade Troops". The New York Times. Retrieved 27 March 2010.