WASHINGTON, October 7, 2022—The 7th edition of the Economic Update for the Democratic Republic of Congo (DRC) highlights the country’s economic resilience amidst adverse shocks induced by the COVID-19 pandemic and the most recent headwinds from the war in Ukraine. After a COVID-induced slowdown in growth to 1.7% in 2020, economic activity rebounded strongly in 2021. Growth was initially estimated at 5.7% then revised upward to 6.2%, mainly driven by the mining sector but also supported by growth in non-mining sectors (with the easing of COVID restrictions). Overall, while the pandemic exacerbated DRC’s existing economic vulnerability, it also boosted the use of digital technology. Thus, the DRC economy demonstrated more resilience than other SSA countries owing to its robust mining and telecommunications sectors.
The report highlights the mixed economic and social consequences of the war in Ukraine, with muted effects on the balance of payments but potentially more pronounced effects on inflation and households’ well-being. While inflation remains moderate and despite robust economic growth, poverty reduction has been elusive and the benefits from growth are yet to be more widely shared.
According to the DRC Economic Update: Digital Inclusion for Equitable Growth, digital development is critical in bringing about poverty reduction and inclusive growth. While the pandemic boosted digital transformation, it also exposed the country’s stark digital divide. Key indicators of the digital economy in the DRC are among the lowest when compared to its peers, and the country faces substantial geographic and socio-economic disparities in mobile phone and internet access. Strengthening digital connectivity in DRC would significantly boost GDP growth and job creation: a 10% higher broadband penetration rate could lead to an additional growth of about 2.5% of GDP and generate close to 700,000 jobs.
“Expanding and using digitalization as a tool, both in urban and rural areas, whether for targeted cash transfers or to fight marginalization, will ensure no one is left behind,” said Albert Zeufack, Country Director for the Democratic Republic of the Congo, Angola, Sao Tome and Burundi.
The report acknowledges the progress achieved by the government to liberalize the telecommunications sector with the publication of the new Telecommunications Law which provides a modern regulatory environment and emphasizes universal access as one of its key objectives. This signals how strongly the government is invested in reforming the sector and serves as a catalyst to attract investors into the sector. The study salutes the potential of this new telecom law to improve connectivity and affordability, while also exposing the remaining challenges.
While the report examines several possible pathways to develop the digital economy in the DRC and lists specific actions needed to promote digital connectivity, the top three priority recommendations for the government are to: (1) implement the secondary legislation that is necessary to operationalize the new law; (2) develop the national fiber optic backbone by leveraging private sector investment; (3) encourage private sector participation through public-private partnerships (PPPs) and fiscal and parafiscal reforms to simplify taxation throughout the economy.
