Economy of the Democratic Republic of the

Congo
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Economy of Democratic Republic of Congo

Kinshasa, capital and economic center of the Democratic Republic of the Congo

Currency Congolese Franc (CDF)

Fiscal year Calendar year

Trade AU, AfCFTA (signed), AfDB, SADC, COMESA, ECCAS, SADC, W
organisations
TO, Group of 77

Country Least developed[1]

group Low-income economy[2]

Statistics

Population  84,068,091 (2018) [3]

GDP  $48.994 billion (nominal, 2019 est.)[4]

 $83.112 billion (PPP, 2019 est.)[4]

GDP rank 85th (nominal, 2019)

91st (PPP, 2019)

GDP growth 3.7% (2017) 5.8% (2018)

4.3% (2019e) 3.9% (2020f)[5]
GDP per  $501 (nominal, 2019 est.)[4]
capita
 $849 (PPP, 2019 est.)[4]
GDP per 178th (nominal, 2019)
capita rank 183rd (PPP, 2019)
GDP by agriculture: 44.2%
sector
industry: 22.6%

services: 33.1%

(2012 est.)
Inflation (CP 5.0% (2020 est.)[4]
I)
Population 63.9% (2012)[6]
below povert
76.6% on less than $1.90/day (2012)[7]
y line
Gini 42.1 medium (2012)[8]
coefficient
Human  0.459 low (2018)[9] (179th)
Development
0.316 IHDI (2018)[10]
Index
Labour force  29,699,289 (2019)[11]

63.1% employment rate (2012)[12]

Labour force N/A
by occupation

Unemployme N/A

nt
Main mining (copper, cobalt, gold, diamonds, coltan, zinc, tin, tungsten), mi
industries
neral processing, consumer

products (including textiles, plastics, footwear, cigarettes, processed

foods, beverages), metal products, lumber, cement,

commercial ship repair
Ease-of-  183rd (below average, 2020)[13]
doing-
business rank

External

Exports  $8.872 billion (2012 est.)

Export goods gold, diamonds, copper, cobalt, coltan, zinc, tin, tungsten, crude

oil, wood products, coffee
Main export  China 53.4%
partners
 Zambia 24.5%

 Belgium 5.6%

 United Kingdom 4.4%

(2012 est.)[14]

Imports  $8.187 billion (2012 est.)

 Import goods machinery, transportation equipment, fuel, food

Main import  South Africa 21.4%

partners
 China 15.1%

 Belgium 7.9%

 Zambia 7.5%

 Zimbabwe 6.1%

 Kenya 5.1%

 France 4.9%

 Turkey 3.9%

(2012 est.)[15]
Gross externa  $6.089 billion (31 December 2012 est.)
l debt

Public finances

Revenues $4.943 billion (2018 est.)

Expenses $5.198 billion (2018 est.)

Foreign  $1.633 billion (31 December 2012 est.)
reserves
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of the Democratic Republic of the Congo has declined drastically

around the 1980s,[16] despite being home to vast potential in natural resources
and mineral wealth; their gross domestic product is $48.994 billion as of 2019.
At the time of its independence in 1960, the Democratic Republic of the Congo was the
second most industrialized country in Africa after South Africa. It boasted a thriving
mining sector and its agriculture sector was relatively productive. [17] Since then, decades
of corruption, war, and political instability have been a severe detriment to further
growth, today leaving DRC with a GDP per capita and a HDI rating that rank among the
world's lowest and make the DRC one of the most fragile and according to United
Nations, least developed countries in the world.
Despite this the DRC is quickly modernizing; it tied with Malaysia for the largest positive
change in HDI development in 2016. Government projects include strengthening the
health system for maternal and child health, expansion of electricity access, water
supply reconstructions, and urban and social rehabilitation programs.

Contents

 1Economic implications of conflicts

 2Economic history
o 2.1After Leopold
o 2.2Zaire
 o 2.31990s
o 2.42000s
 2.4.1Special economic zones
 3Data
 4Economic implications of instability
 5International relations
o 5.1World Bank
o 5.2International Monetary Fund
 6Sectors
o 6.1Agriculture
o 6.2Fishing
o 6.3Forestry
o 6.4Mining
 7Exploitation of mineral substances by companies
o 7.1Copper and cobalt
o 7.2Informal sector
 8Transport
 9See also
 10References
 11External links

Economic implications of conflicts[edit]

The two recent conflicts (the First and Second Congo Wars), which began in 1996, have
dramatically reduced national output and government revenue, [16] have increased
external debt,[16] and have resulted in deaths of more than five million people from war,
and associated famine and disease.[18] Malnutrition affects approximately two-thirds of
the country's population.[19]
Agriculture is the mainstay of the economy, accounting for 57.9% of GDP in 1997.[20] In
1996, agriculture employed 66% of the work force. [20]
Rich in minerals, the Democratic Republic of the Congo 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.[21]
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.[22] President Joseph Kabila established the Commission of
Repression of Economic Crimes upon his ascension to power in 2001. [23]
The conflicts in the Democratic Republic of Congo were over water, minerals, and other
resources. Political agendas have worsened the economy, as in times of crisis, the elite
benefit while the general populace suffers. This is worsened as a result of corrupt
national and international corporations. The corporations instigate and allow the fighting
for resources because they benefit from it. A large proportion of fatalities in the country
are attributed to a lack of basic services[citation needed]. The influx of refugees since the war in
1998 only serves to worsen the issue of poverty. Money of the taxpayers in the DRC is
often misappropriated by the corrupt leaders of the country, who use the money to
benefit themselves instead of the citizens of the DRC. The DRC is consistently rated the
lowest on the UN Human Development Index.[24]

Economic history[edit]

Change in per capita GDP of Congo, 1950–2018. Figures are inflation-adjusted to 2011 International dollars.

Evolution of the DRC's GDP.

Main article: Economic history of the Democratic Republic of the Congo

After Leopold[edit]
Forced labor was important for the rural sector. The corporations that dominated the
economy were mostly owned by Belgium, but British capital also played an important
role. The 1950s were a period of rising income and expectations. Congo was said to
have the best public health system in Africa, but there was also a huge wealth disparity.
Belgian companies favored workers in certain areas more and exported them to work in
different areas, restricting opportunities for others. Favored groups also received better
education and were able to secure jobs for people in the same ethnic group which
increased tensions. In 1960 there were only 16 university graduates out of a population
of 20 million. Belgium still had economic power and independence gave little opportunity
for improvement. Common refrains included "no elite, no trouble" and "before
independence = after independence". When the Belgians left, most of the government
officials and educated residents left with them. Before independence, there were just 3
out of 5000 government jobs held by Congolese people. [25] The resulting loss of
institutional knowledge and human capital crippled the government.

Congolese exports in 2006.

Zaire[edit]
After the Congo crisis, Mobutu arose as the country's sole ruler and stabilized the
country politically. Economically, however, the situation continued to decline, and by
1979, the purchasing power was only 4% of that from 1960. [26] Starting in 1976
the IMF provided stabilizing loans to the dictatorship. Much of the money was
embezzled by Mobutu and his circle.[26] This was not a secret as the 1982 report by
IMF's envoy Erwin Blumenthal documented. He stated, it is "alarmingly clear that the
corruptive system in Zaire with all its wicked and ugly manifestations, its
mismanagement and fraud will destroy all endeavors of international institutions, of
friendly governments, and of the commercial banks towards recovery and rehabilitation
of Zaire’s economy".[27] Blumenthal indicated that there was "no chance" that creditors
would ever recover their loans. Yet the IMF and the World Bank continued to lend
money that was either embezzled, stolen, or "wasted on elephant projects". [28] "Structural
adjustment programmes" implemented as a condition of IMF loans cut support for
health care, education, and infrastructure.[26]
1990s[edit]
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.[16] 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.[16]
Faced with continued currency depreciation, the government resorted to more drastic
measures and in January 1999 banned the widespread use of American dollars for all
domestic commercial transactions, a position it later adjusted. [20] The government has
been unable to provide foreign exchange for economic transactions, while it has
resorted to printing money to finance its expenditure. [20] 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. Although depreciated, congolese francs
have been stable for few years (Ndonda, 2014)
2000s[edit]
Conditions improved in late 2002 with the withdrawal of a large portion of the invading
foreign troops.[citation needed] A number of IMF and World Bank missions have met with the
government to help it develop a coherent economic plan, [16] and President Kabila has
begun implementing reforms.[citation needed]
DRC's economic growth decelerated from its pre-COVID level of 4.4% in 2019, to an
estimated 0.8% in 2020. Growth was driven by the extractives sector which, helped by
robust demand from China, expanded by 6.9% in 2020 (compared to 1% in 2019).
Meanwhile, non-mining sectors contracted by 1.6% (vs. growth of 5.7% in 2019) due to
pandemic-related mobility restrictions, weaker trading activities and constrained
government spending. Private consumption and government investment fell in 2020 by
an estimated 1.0 and 10.2%, respectively.[29]
Special economic zones[edit]
The DRC is embarking on the establishment of special economic zones (SEZ) to
encourage the revival of its industry. The first SEZ was planned to come into being in
2012 in N'Sele, a commune of Kinshasa, and will focus on agro-industries. The
Congolese authorities also planned to open another zone dedicated to mining (Katanga)
and a third dedicated to cement (in the Bas-Congo). [30] There are three phases to the
program that each have their own objectives. Phase I was the precursor to the actual
investment in the Special Economic Zone where policymakers agreed to the framework,
the framework was studied for its establishment, and to predict the potential market
demand for the land. Stage one of Phase II involved submitting laws for the Special
Economic Zone, finding good sites for businesses, and currently there is an effort to
help the government attract foreign investment. Stage two of Phase II hasn't been
started yet and it involves assisting the government in creating framework for the
country, creating an overall plan for the site, figuring out what the environmental impact
of the project will be, and guessing how much it will cost and what the return can be
made on the investment. Phase III involves the World Bank creating a transaction
phase that will keep everything competitive. The program is looking for options to hand
over the program to the World Bank which could be very beneficial for the western part
of the country.

Data[edit]
The following table shows the main economic indicators in 1980–2017. [31]

19 19 19 199 200 20 20 20 20 20 20 20 20 20 20 20 20 20
Year
80 85 90 5 0 05 06 07 08 09 10 11 12 13 14 15 16 17

GDP 19. 27. 31. 24. 20. 27. 29. 32. 35. 36. 39. 43. 47 52 58 62 65. 68.
in $ 62 16 58 37 34 55 90 61 33 62 70 30 .2 .0 .0 .7 02 45
 2 5 1 0
(PPP) bn. bn. bn. bn. bn. bn. bn. bn. bn. bn. bn. bn. bn bn bn bn bn. bn.
. . . .

GDP
per 68 80 79 45 47 50 53 53 56 59 63 67 73 76 77 79
capita 522 388
3 4 5 3 8 6 2 5 3 7 2 6 2 8 3 0
in $
(PPP)

GDP 7. 8. 9. 6.
growt 2.4 0.5 −6. 2.8 −8. 6.1 5.3 6.3 6.2 2.9 7.1 6.9 2.4 3.4
1 5 5 9
h % % 6% % 1% % % % % % % % % %
% % % %
(real)

Inflati
on 0. 0. 1. 1.
40. 23. 81. 541 550 21. 12. 16. 18. 46. 23. 15. 18. 41.
(in 9 9 2 0
0% 5% 3% .8% .0% 5% 8% 7% 0% 1% 5% 0% 2% 5%
Percent % % % %
)

Gover
nment
debt 135 10 10 87 74 85 31 25 23 20 18 16 17 16
... ... ... ...
(in % % 1% 4% % % % % % % % % % % %
of
GDP)

Economic implications of instability[edit]

Ongoing conflicts dramatically reduced government revenue and increased external
debt.[16] 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." Ethnic rivalries were made worse because of
economic interests and looting and coltan smuggling took place.
Illegal monopolies formed in the country where they used forced labor for children to
mine or work as soldiers. National parks were overrun with people looking to exploit
minerals and resources. Increased poverty and hunger from the war and that increased
the hunting of rare wildlife. Education was denied when the country was under foreign
control and very few people make money off the minerals in the country. The national
resources are not the root cause for the continued fighting in the region, however, the
competition has become an incentive to keep fighting.[1] The DRC's level of economic
freedom is one of the lowest in the world, putting it in the repressed category. The
armed militias fight with the government in the eastern section of the country over the
mining sector or the corruption of the government, and weak policies lead to the
instability of the economy. Human rights abuses also ruin economic activity; the DRC
has a 7% unemployment rate, but still has one of the lowest GDP's per capita in the
world. A major problem for people trying to start their own companies is that the
minimum amount of capital needed to launch the company is five times the average
annual income, and prices are regulated by the government, which almost forces
people to have to work for the larger, more corrupt businesses; otherwise, they won't
have work. It is hard for the DRC to encourage foreign trade because of the regulatory
barriers.[32]

International relations[edit]
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.[16] 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.[16]
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. [20] The government has
been unable to provide foreign exchange for economic transactions, while it has
resorted to printing money to finance its expenditure. [20] 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. 125 companies in 2003 contributed to
the conflict in DRC showing the corruption.
World Bank[edit]
With the help of the International Development Association the DRC has worked toward
the reestablishment of social services. This is done by giving 15 million people access
to basic health services and giving bed nets to prevent malaria from spreading to
people. With the Emergency Demobilization and Reintegration Program more than
107,000 adults and 34,000 child soldiers stood down their militarized posture. The travel
time from Lubumbashi to Kasomeno in Katanga went down from seven days to two
hours because of the improved roads which led to the decrease of prices of main goods
by 60%. With the help of the IFC, KfW, and the EU the DRC improved its businesses by
reducing the time it took to create a business by 51%, reducing the time it took to get
construction permits by 54%, and reducing the number of taxes from 118 to 30.
Improvements in health have been noticeable specifically that deliveries attended by
trained staff jumped from 47 to 80%. In education 14 million textbooks were provided to
children, completion rates of school have increased, and higher education was made
available to students that chose to pursue it.[33]
International Monetary Fund[edit]
The IMF plans on giving the DRC a $1 billion loan after its two-year suspension after it
failed to give details about a mining deal from one of its state owned mines and an
Israeli billionaire, Dan Gertler. The loan may be necessary for the country because
there will be elections in December 2016 for the next president and the cost of funding
this would range around $1.1 billion. The biggest problem with the vote is getting a
country of 68 million people the size of Western Europe to polling stations with less than
1,860 miles of paved roads.[34]

Sectors[edit]
Agriculture[edit]
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.
[20]
 Main cash crops include coffee, palm oil, rubber, cotton, sugar, tea, and cocoa.
[20]
 Food crops include cassava, plantains, maize, groundnuts, and rice.[20] In 1996,
agriculture employed 66% of the work force. [20]
The Democratic Republic of Congo produced, in 2018:

 29.9 million tons of cassava (3rd largest producer in the world, second only to
Nigeria and Thailand);
 4.7 million tons of plantain (largest producer in the world);
 2 million tons of maize;
 1.1 million tons of palm oil;
 990 thousand tons of rice;
 384 thousand tons of sweet potato;
 309 thousand tons of banana;
 307 thousand tons of peanut;
 213 thousand tons of mango (including mangosteen and guava);
 213 thousand tons of papaya;
 205 thousand tons of beans;
 186 thousand tons of pineapple;
 168 thousand tons of orange;
 101 thousand tons of potato;
In addition to smaller productions of other agricultural products, such as coffee (29
thousand tons), cocoa (3.6 thousand tons), natural rubber (14 thousand tons)
and tea (3.6 thousand tons).[35]
Fishing[edit]
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.[36] 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[edit]
See also: Deforestation in the Democratic Republic of the Congo
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 Bas-Congo 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 m 2 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[edit]
Main article: Mining industry of 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 who has historically relied heavily on
mining, 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 .[21]
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).[37] and therefore is not reflected in the GDP.
Exploitation of mineral substances by companies[edit]
The economy of the second largest country in Africa relies heavily on mining. The
Congo is the world's largest producer of cobalt ore,[38] 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., [39] 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 done on a small scale. Manono in
Central DRC has a significant deposit of lithium and tin with tantalum and niobium and
is being developed by an Australian company. Production is expected in 2023.
Smuggling of the conflict minerals, coltan and cassiterite (ores of tantalum and tin,
respectively), has helped fuel the war in the Eastern Congo. [40]
Today's larger mining companies are making changes and adhering to global demand
for ESG ( Environmental, Social and Governance) and IRMA (Initiative for Responsible
Mining Assurance). One such globally recognised certification is the 3T iTSCi, the only
widely implemented and accepted mineral traceability and due diligence system in the
region for the 3T minerals – Tin, Tantalum and Tungsten, an internationally recognised
certification for responsible mining and traceability under the 2010 Dodd-Frank Act.
Today four central African countries including the Democratic Republic of Congo (DRC)
provides legitimate and ethical 3T minerals. ITSCI is the only industry initiative with
standards 100% aligned with the OECD Guidance. Much has been done in the last 15
years, providing artisanal and small-scale miners a support network through iTSCi, to
build the foundations and regulate the industry. At the end of 2019 ITSCI has seen to
2000 mines, employment of around 80,000 miners, and the supply of over 2000 tonnes
of tin, tantalum and tungsten minerals per month; the initiative has come a long way in
the last decade. A report had been done by Pact in 2015, detailing iTSCi's progress
over the previous five years, it discusses the successes, the challenges ahead and the
work yet to be done. Entitled Unconflicted: Making Conflict-Free Mining a Reality in the
DRC, Rwanda and Burundi.
Copper and cobalt[edit]
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.[41]
Informal sector[edit]
Much economic activity occurs in the informal sector and is not reflected in GDP data. [21]

Transport[edit]
 All aboard - a train from Lubumbashi arriving in Kindu on a 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[edit]

 Democratic Republic of the Congo portal

 Economy portal

 Democratic Republic of the Congo

 List of companies based in the Democratic Republic of the Congo
 Mining industry of the Democratic Republic of the Congo
 United Nations Economic Commission for Africa