The Democratic Republic of the Congo (DRC) is a country with vast resources. Its surface area (2.3 million km2) spans the equivalent of two-thirds of the European Union. Just under 40% of the nearly 70 million inhabitants live in urban areas, according to the latest NSI (National Statistics Institute) estimates. With 80 million hectares of arable land and over 1,100 minerals and precious metals, the DRC has the potential to be one of the richest countries on the African continent and a driver for African growth.
Since 2001, the country has been recovering from a series of conflicts that broke out in the 1990s and the effects of a protracted economic and social slump. In 1999 after the Lusaka Peace accords were signed, a transitional government was established, pending the presidential elections in 2006 that were held peacefully. New institutions, such as Parliament, the Senate, and provincial assemblies, are now operational. While presidential and legislative elections held in November 2011 were won by Joseph Kabila and his party, these victories raised concerns about the transparency of the electoral process. The next presidential elections are slated for 2016.
Yet the DRC is still a fragile country with tremendous needs in terms of reconstruction and economic growth, and weak institutions. The security situation remains tense, particularly in the eastern provinces. Peacebuilding and economic recovery efforts are being carried out in a challenging social context. The country’s infrastructure, already hobbled by a lack of maintenance, has also been badly damaged by the conflicts.
Despite an impressive economic growth rate, the DRC’s poverty rate remains high, even though it fell from 71% in 2005 to 63% in 2012. The DRC ranks second to last on the Human Development Index (186 out of 187 countries), and its per capita income, which stood at US$220 in 2012, is among the lowest in the world. The United Nations estimates that there are some 2.3 million displaced persons and refugees in the country and 323,000 DRC nationals living in refugee camps outside the country. A humanitarian emergency persists in the more unstable parts of the DRC and sexual violence rates are high.
Following a slowdown in 2009 to 2.8% triggered by the global financial crisis, the DRC registered a growth rate of 8.5% in 2013, which was driven by the robust extractive industries and favorable trends in commodity prices. Public investments have also helped spur growth. Inflation, which stood at a staggering 53% in 2009, fell to 1% in 2013 as a result of the implementation of prudent fiscal and monetary policies.
The DRC’s medium-term economic outlook still seems positive even though its political and security situation remains fragile. The economy is expected to grow steadily in the medium term at around 7 to 8%, following increased investment and growth in the extractive industries and owing to the contribution of the civil engineering and service sectors.
Maintaining a restrictive monetary policy and fiscal discipline is critical to containing inflation below the 5% target. World Bank estimates confirm that the authorities’ support strategy for investments in large-scale infrastructure could significantly support growth if priority is accorded to high-return projects (transport, electricity).
In 2010, the Government undertook a systematic process to improve economic governance in close collaboration with the World Bank. A governance matrix is now in place and progress is routinely measured on a bimonthly basis. This exercise aims to strengthen governance and transparency in the extractive industries (forestry, mining, and oil sectors) and improve the business climate. These measures are designed to consolidate the reforms launched under the HIPC Initiative, and restore confidence among private investors and development partners.
Over the past two years, significant progress in the implementation of these measures has been observed. Almost all the contracts signed by the Government in the oil, mining, and forestry sectors were disclosed to the public. The DRC met the transparency requirements by publishing the reports under the Extractive Industries Transparency Initiative (EITI). However, additional efforts must be made to entrench the principle of competitive awarding of mining, oil, and forestry contracts.
Last Updated: Oct 15, 2014