A. Brief summary of major developments in the Congolese economy from 1960 to 2019

• The major developments in the Congolese economy can be broadly circumscribed into four periods, namely:
• 1959 to 1973: Growth and moderate inflation;
• 1974-1988: Slower growth and open inflation;
• 1989-May 1997: Decline in growth, destruction of wealth and hyperinflation;
• After May 1997-2001: Deflation and hyperinflation
• 2002-2019: Recovery of growth and inflation under control.

1. Growth and moderate inflation

The economic recovery efforts undertaken between the end of 1967 and the end of 1973 led to higher economic growth. They coincided with a favorable international environment driven by the rise in copper prices. These two elements determined the positive results recorded during this period characterized by real GDP growth of 2.7% and a rise in the general price level of 27% on annual average.

2. Slower growth and open inflation

This period, marked by growth of 0.03% and inflation of 57.6% on annual average, comprises two phases:

The period from 1974 to 1982 was characterized by poor economic policy choices that led to the country’s over-indebtedness in the financing of major works (INGA I and II, CCIZ, MALUKU Steelworks, etc.) under the seal of corruption and retro-commissions.

In an international context characterized by two oil shocks (a fivefold and fourfold increase in the price per barrel in 1973 and 1976 respectively) and the fall in the price of Copper in 1975 (after the failure of the strategy implemented by CIPEC, the Intergovernmental Council of Copper Producing and Exporting Countries), the failed measures of Zairianization or nationalization, The unorthodox management of public finances, the accommodative nature of monetary policy and the costs associated with the late adjustment of exchange rate policy (the delayed transition from a fixed to a floating exchange rate regime) resulted in a halt in the process of domestic wealth creation.

The period from 1983 to 1989 was one of efforts to adjust the economy through fiscal policy consolidation and reforms in monetary policy (liberalization of interest rates) and exchange rate policy (adoption of a flexible exchange rate regime and relaxation of exchange rate regulations). However, these demand management policies have not been backed up by structural policies and development initiatives.

3. Decline in growth, destruction of wealth, hyperinflation and widespread impoverishment of the population

The period from 1989 to 2001 is that of the decline of the Congolese economy and society. The long political transition marks not only the culmination of institutional instability (more than 12 governments in the space of 10 years), but above all of social unrest (the events of LUBUMBASHI in 1990, inter-ethnic conflicts in 1991 and 1992, strikes, popular protests, dead cities, etc.) and economic unrest (hyperinflation, looting of the production and marketing tools of companies in 1991 and 1993, breakdown of bilateral and multilateral cooperation, etc.).

The disorder of public finances is evidenced by unsustainable treasury deficits financed almost exclusively by direct advances from the Central Bank, resulting in the rapid depreciation of the exchange rate and the dizzying rise in domestic prices, 98% and 9800% respectively in 1994. The armed conflicts after the failure of the National Conference had a serious impact on both the social and economic situation. During this period, real GDP fell by an average of 4.5%. The rise in the general price level was almost 2,000% on average. The incidence of poverty averaged 80% and the unemployment rate 84%.

4. Deflation and hyperinflation

In May 1997, the Alliance of Democratic Liberation Forces, led by President Laurent Désiré Kabila, took power and ousted Marshal Mobutu’s regime. The new regime began a program of national reconstruction and tried to improve the economic and financial situation of the country, while the country owed the Paris Club 7 billion euros. The government that was put in place began by carrying out certain economic and financial reforms, in particular the monetary reform that instituted the Congolese franc. The economy was characterized by deflation during this period.

In August 1998, the Congolese economy experienced a further drastic decline characterized by hyperinflation, which continued until the mid-2000s, following the outbreak of war imposed on the DRC by its neighbors. The Government repeatedly made advances from the central bank to finance the war, a practice that had considerably reduced the value of the national currency against the US dollar. In the foreign exchange market, the Government applied the fixed exchange rate and in the parallel market it was the floating exchange rate.

Throughout this period, the problem of consolidating public finances was characterized by failure, and the relationship with traditional partners, including the World Bank and the International Monetary Fund, was conflictual.

5. Growth recovery and inflation under control (2002 to 2019)

This period was characterized by the resumption of multilateral and bilateral cooperation, the application of restrictive economic policies and first-generation structural reforms (partnership in the mining sector, Single Window at the Port of Matadi, establishment of the expenditure chain, etc.).

As a result: the control of hyperinflation (increase in the general level of prices by 17% on average per year), the revival of economic growth, the reduction of unemployment (from 84% to 40% on average) and poverty from 80% to 63%.

At the beginning of the period from 2002 to the end of December 2019, and all other things being equal, the economic situation of the DRC was characterized by the orthodoxy of the economic policy and the performances attributable to the effects of the reforms undertaken, which have allowed important investments in the mining and other sectors that bring growth. This period constitutes a decisive turning point for the Congolese economy, with improved economic growth rates, reaching a peak of 9.5% in 2014, combined with a significant drop in domestic price volatility and a relative improvement in the business environment. The said growth slowed to nearly 2.5% of GDP in 2016, following the significant drop in raw material prices, thus reducing the revenues of mining companies. Between 2017 and 2019, this growth rate increased to 3.7%, 5.8% and 4.6% respectively, due to the increase in the international market prices of certain materials, including cobalt.

During the same period, inflation was maintained as a result of an orthodox monetary and even budgetary policy. Indeed, in the absence of major external shocks, the macroeconomic framework remained stable. The evolution of the inflation rate is as follows: 15.8%; 4.4% 21.3%; 18.2%; 27.6%; 53.4%; 9.8%; 2.7%; 1.1%; 0.5%; 0.8%; 26%; 53%; 7.2% and 4.4%.

The foreign exchange market was also characterized by structural stability.

It should be emphasized that following the advent of the global health crisis caused by the Covid-19 pandemic, the Congolese economy has been affected like other countries in the world, and short-term measures are gradually being taken to curb the damage caused by the crisis and enable businesses to survive. 

B. A few illustrations of the Congolese economy through graphs and tables

1. Real sector

Graph n°1: Evolution of the GDP growth rate from 2009 - 2018

Source :ANAPI based on data from the Central Bank of Congo.

Graph n°2: Projected GDP Growth Rate (2019 - 2024)

Source: drawn up on the basis of data from the Directorate of Macroeconomic Studies/Ministry of Planning.

Graph n°3: Evolution of the inflation rate from 2002 to 2019

Source : Central Bank of Congo

Graph n°4: Projected evolution of the inflation rate (2019-2024)

Source: drawn up on the basis of data from the Directorate of Macroeconomic Studies/Ministry of Planning.

Graph n°5: Evolution of the inflation rate from 2002 to 2019

Source: Central Bank of Congo

Credit to the economy has been on an upward trend from 2010 to 2019, following the good performance observed in the Congolese money market. The evolution of this credit is as follows:

Graph n°6: Development of credit to the economy

Source: BCC

Graph n°7: Development of interest rate on accounts receivable

Source: BCC

• High lending rates in both domestic and foreign currencies;
• However, there is a downward trend in interest rates in all currencies;
• Relatively high cost of lending in domestic currency compared to foreign currency.

Graph n°8: Evolution of credit to the economy by maturity

Source: BCC

• Credits quasi-structurally dominated by short-term credits;
• Sharply increasing trend in medium and long-term credit;
• At the end of 2019, credits to M&LT exceed short-term credits.

C. Structure of the economy

Regarding the goods and services market, the revival of economic activity during the decade 2000 is observed, which remained mainly marked by the performances recorded in the primary sector (mainly mining and oil extraction). Indeed, between 2010 and 2014, the average contribution of this sector to growth was 67.9%, significantly higher than its average contribution before 2009, which stood at about 17.6% between 2006 and 2008. The secondary sector (manufacturing, buildings, food industry) also proved resilient with an average contribution of 11.7% after 2009 against 2.6% between 2006 and 2008.

The structure of the country’s economy has been strongly concentrated on the following 5 activity branches: (i) mining, (ii) agriculture, forestry, livestock, hunting and fishing, (iii) manufacturing, (iv) trade and (v) transport and communication.

Table 1. Contribution (value added in billions of CDF from 2005): 2011 - 2017

Source: BCC

In order to reverse the current trend in the structure of Congolese economy, which is dominated by the primary sector, the Government of the Republic, through the implementation of the National Strategic Development Plan, intends to implement a strategy to diversify its economy by relying on the development of the following sectors and sub-sectors: (i) agriculture and the agri-food chain; (ii) forestry and wood processing and marketing industries; (iii) mining; (iv) buildings and construction materials; (v) tourism and hotels; and (vi) financial services.

With a view to the balanced development of the regions, the diversification strategy will be reflected in the creation of Development Light Points ("PLD"), which contain Agro-Industrial Parks and/or Special Economic Zones. Taking into account the country’s natural assets and the geographical location of natural resources, the Government envisages the development of Growth Poles, which are in reality the PLDs, twenty (20) agro-industrial parks and several SEZs.