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 ofa 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.
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 May 2014, the World Bank’s portfolio in the DRC consisted of 25 projects in progress, representing a total commitment of $3.1 billion, including two regional projects for a total of $3.5 billion, including two regional projects representing $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.
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%
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: Jul 08, 2014
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