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. The country abounds in agricultural and mineral resources. 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. In the late 1970s,the DRC sank into an economic and social morass, the effects of which are still being felt today. In 1999, following the signing of the Lusaka Peace accords, a transitional government had been established, pending the holding of presidential elections in 2006, which were held peacefully. New institutions, such as the parliament, the senate and provincial assemblies, are now operational. The second presidential elections, held in November 2011, gave rise to concerns about the credibility and transparency of the electoral process. The level of insecurity that prevailed in Kinshasa during the elections declined as soon as a new government was appointed. However, the resurgence of conflicts in the eastern part of the country is an important challenge.
Yet the DRC is still a fragile post-conflict country with huge reconstruction needs, but very little tax headroom and weak institutions. The country’s infrastructure, already hobbled by a lack of maintenance, has also been left badly damaged by the conflicts.
Despite progress made through political and economic reforms over the past five years, many communities live hand to mouth, with little access to markets to buy or sell goods and little access to public services. 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. Per capita gross national income (US$220 in 2012 according to the Atlas method) and human development indicators (the DRC ranks 186 out of 187 countries on the HDI) remains among the lowest in Africa.
Governance still gives cause for concern in the DRC. Faced with poor governance indicators, the government adopted a governance contract in 2007 that lays out its objectives in four crosscutting areas (decentralization, public finance management, public administration, and transparency) and three sectors (public enterprises, the mining sector, and the security sector, including the demobilization and reintegration of ex-combatants).
The Government also put in place a palette of measures in 2010 to improve governance and transparency in the extractive industries (forestry, mining, and oil sectors) and to 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. As a result, almost all contracts in the oil sector and 134 out of 135 contracts in the mining sector have been issued. However, additional efforts must be made to entrench the principle of competitive awarding of mining, oil, and forestry contracts. In 2013, 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 measured on a bimonthly basis.
The return to peace in most of the country in 2003 facilitated the adoption of political and economic reforms. From 2003 to 2005, the transitional government implemented prudent macroeconomic policies, brought hyperinflation under control, and laid the foundations for strong growth. The slippage of the macroeconomic framework in the pre-electoral period in late 2005, which prevented the sixth and last review of the program supported by the Poverty Reduction and Growth Facility (PRGF), was promptly corrected in 2006 with the help of an IMF staff-monitored program (SMP). The IMF’s Executive Board approved a new three-year program financed by the Extended Credit Facility (ECF) for the Government Economic Program (PEG 2) on December 11, 2009. The first three reviews of the IMF-backed program were satisfactorily completed in March 2010, February 2011, and April 2011, respectively. Following a 2009 slowdown to 2.8% prompted by the global financial crisis, the macroeconomic situation improved considerably starting in 2010. Real GDP growth remained solid above 7% between 2010 and 2012, driven mainly by the extractive industries’ performance boosted by favorable trends in commodity prices and by public investments, despite difficult international conditions. Inflation fell from 53.4% in 2009 to less than 10% in 2010 and was at 2.7% in 2012, and the trend appears to be holding steady for 2013 owing to a restrictive monetary policy in place.
Implementation of prudent fiscal and monetary policies alleviated the pressure on demand for foreign currency and kept the national currency relatively stable. In addition, gross international reserves were maintained at around $1.3 billion at the end of 2010 and 2011 and were about $1.6 billion in late 2012 and early 2013, accounting for approximately nine weeks of import cover, as a result of financial flows and capital inflows, especially those associated with HIPC relief and MDRI relief and with IMF disbursements under the ECF. However, because of the delay in implementing measures relating to governance and transparency in the extractive industries, the last three ECF reviews were not completed in time, so the Facility expired in December 2012.
The DRC’s medium-term economic outlook still seems positive even though its political and security situation remains fragile. In the medium term, the economy is expected to grow steadily at around 7 to 8% in 2012-13, following increased investment and growth in the extractive industries and the contribution of the civil engineering and service sectors; however, the risk of slipping back into debt remains high.
Last updated: September 2013
The Bank re-engaged in the DRC in 2001 after nearly a decade of suspended Bank activities due to widespread corruption and growing insecurity.
The new country assistance strategy for the period 2013-2016 aims to (i) increase the efficiency of the State at the central and decentralized levels and improve good governance; (ii) enhance the competitiveness of the economy by accelerating growth spearheaded by private sector job creation; (iii) upgrade the delivery of social services in order to improve human development indicators (HDI); and (iv) respond to problems of fragility and conflict in the eastern provinces of the DRC. In conjunction with the new operations, the strategy will be primarily based on the existing portfolio and should enhance its impact on development.
In April 2013, the World Bank’s portfolio in the DRC consisted of 17 projects in progress, representing a total commitment of $3.1 billion, including two regional projects for a total of $1.14 billion. The portfolio consists mainly of infrastructure rehabilitation projects (roads, railways, drinking water, electricity); governance in public finance management in four provinces and in the mining sector; reform of public enterprises and improvement of the business climate; rehabilitation of health and education infrastructures and improvement of health, education and social protection services; management of national forests and parks; and agriculture.
The Bank has been working on rallying donors to re-engage in the DRC since it resumed operations in 2001. Since then, foreign economic assistance has been on the rise with annual disbursements of US$800 million on average ($1 billion from 2004 to 2009). However, this aid is fragmented and insufficient to meet the challenges that the DRC must take up (it represents approximately $15 per capita).
The Bank will pursue its strategic partnership with other donors. It has taken the lead in developing joint project implementation mechanisms to reduce the cost of doing business and avoid overburdening already weak government capacities. An illustrative case is the joint implementation unit for energy sector programs funded by the Bank, the AfDB, and the European Investment Bank (EIB).
Last updated: September 2013
World Bank assistance has made a significant contribution to important changes through the following projects:
Health: Vaccination coverage for children under the age of one rose from 54% in 2007 to 83% in 2011 under the Health Sector Rehabilitation Support Project (HSRSP);
Education: Some 918 classrooms were constructed and 14 million textbooks distributed under the Emergency Urban and Social Rehabilitation (PURUS) and the Education Sector Rehabilitation (PARSE) projects. Primary enrolment rates climbed from 64% in 2007 to 93% in 2011, and 43,335 teachers were officially incorporated into the civil service.
Infrastructure: The rehabilitation of basic infrastructure helped revive economic growth by reopening 1,530 kilometers of national roads in Orientale, South Kivu, and Katanga provinces.
Energy:World Bank support helped strengthen the national electricity company [Société nationale d’électricité SNEL] through the establishment of a new executive board, recruitment of technical experts and managers, and the conclusion of a performance contract with the Government. As a result, the company’s revenues have increased 30% per kWh.
Public sector governance and capacity building: the governance matrix adopted in 2010 is the main framework for dialogue with the authorities on the subject of governance. Significant progress has been made in recent months with regard to the issuance of mining and oil contracts. Almost 80% of contracts and 100% of oil contracts are now issued.
Competitiveness and employment: The Competitiveness and Private Sector Development Project helped, among other things, reduce business start-up times by 51%