Democratic Republic of Congo
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Democratic Republic of Congo Kinshasa key figures • Land area, thousands of km² 2 345 • Population, thousands (2007) 62 636 • GDP per capita, USD at constant 2000 prices (2007) 93 • Life expectancy (2007) 46.5 • Illiteracy rate (2007) 29.5 Democratic Republic of Congo Lake Édouard Lake Maï-Ndombe Lake Tanganyika Lake Moero IN 2007, THE COUNTRY RECORDED economic growth continuing reforms have not made sufficient progress of 6.2 per cent, lower than the objective of 6.5 per to address the problems weighing on the Congolese cent but higher than the rate of 5.1 per cent rate posted economy. in 2006. A faster growth rate is forecast for 2008 and 2009. Poor macroeconomic Even with peace and performance, slow reforms stability, current reforms However, 2007 raised many expectations amongst and non-implementation of are not enough. the Congolese and not all have been satisfied. the Growth and Poverty Institutions have been established and the Reduction Strategy Paper (GPRSP) prevented the DRC decentralisation process has been laid out, but conflicts from reaching the completion point of the Enhanced persisted in the eastern part of the country. The new HIPC (Heavily Indebted Poor Countries) Initiative at government, installed in February 2007, has undertaken the end of 2007 as planned. efforts to ensure the rigorous management of public finances. But macroeconomic stability did not Social tensions grew in 2007. Many companies materialise over the course of the entire year and and government services were affected by strikes, and 243 Figure 1 - Real GDP Growth and Per Capita GDP (USD at constant 2000 prices) I Congo (DRC) - GDP Per Capita I Central Africa - GDP Per Capita I Africa - GDP Per Capita ——— Congo (DRC) - Real GDP Growth (%) Real GDP Growth (%) Per Capita GDP 8 1000 900 6 800 700 4 600 2 500 400 0 300 200 -2 100 -4 0 2001 2002 2003 2004 2005 2006 2007(e) 2008(p) 2009(p) Source: IMF and national sources data; estimates (e) and projections (p) based on authors’ calculations. 1 2 http:// dx.doi.org/10.1787/316323201325 © AfDB/OECD 2008 African Economic Outlook D.R. Congo the labour market has become increasingly tight; access and represented 48 per cent of GDP in 2006. In 2007, to drinking water and electricity remains problematic; the agricultural sector recorded a growth rate of hunger is killing thousands of people; the number of 3.1 per cent, a decline from the previous year. This fall people with HIV/AIDS continues to rise; and insecurity was the result of the decreased production of certain was still a factor in 2007, especially in the eastern part products, particularly palm oil (down 45.9 per cent), of the country. cacao (down 31.3 per cent) and rubber (down 14.6 per cent). The agricultural sector has considerable In November 2007, the Congolese government potential for large-scale farming operations, but the and its bilateral and multilateral partners met in Paris country’s conflicts have prevented it from regaining its to discuss the economic performance achieved by the vitality. The sector remains dominated by small farms country in recent years and its future prospects. The that have had difficulty developing as a result of rundown parties agreed to a new triennial programme (2008-10) transport infrastructures and the lack of bank credit. with a budget of USD 4 billion. In December 2007, the World Bank decided to grant the DRC aid, as Mining and quarrying industries (8.2 per cent of defined by its Country Assistance Strategy (CAS), for GDP in 2006) grew at a rapid pace. This performance 2008-11. The strategy aims to expand the state’s primarily resulted from an economic upturn in Katanga authority, restore security in the east, end violence province, an upswing in diamond production in the against women and children, promote good governance, two Kasaï provinces,and growing world demand for fight HIV/AIDS and promote education. minerals. The increased global demand for non-ferrous metals led to a considerable price rise, which has benefited Congolese mining production. Copper 244 Recent Economic Developments production increased by 2.5 per cent, cobalt production by 3.5 per cent and zinc production by 8.1 per cent. Growth slowed in early 2007 because of Total diamond production rose by 7.5 per cent at the macroeconomic instability and strong political tensions. end of June 2007 because of an increase in small-scale The situation improved in the second half of the year production (19.1 per cent). Industrial diamond after public finances were stabilised. Inflation declined production declined as a consequence of a business and productive activity accelerated, with a growth rate downturn at MIBA (Minière de Bakwanga). MIBA is of 6.2 per cent, mainly boosted by the mining and suffering from obsolete production equipment and a quarrying industries as well as by the wholesale and retail decline in the geological grade of industrial diamonds trade. caused by the depletion of detrital deposits. Moreover, in the first half of the year, productivity declined at Some 70 per cent of the population are dependent MIBA and its 6 500 employees demanded back pay on agriculture, which is the main activity in rural areas and threatened to go on strike. Figure 2 - GDP by Sector in 2006 (percentage) Public administration Trade and commerce Transport and communications 5.3% 3.8% 4.3% Wholesale and retail trade 16.6% 47.4% Agriculture, forestry and fisheries 8.7% Construction and electricity 5.3% 8.6% Manufacturing Mining and quarrying Source: Authors’ estimates based on local authorities' data. 1 2 http:// dx.doi.org/10.1787/317477377082 African Economic Outlook © AfDB/OECD 2008 D.R. Congo While the price of oil increased significantly in CINAT (Cimenterie nationale) – totalled 249 839 2007, Congolese production dropped by 4.2 per cent tonnes compared with 252 372 tonnes the previous year. compared with 2006. This decline, which began in That figure represented a one per cent decline while 2005, resulted from the temporary closing of certain demand grew by 2.6 per cent. The drop in production wells, maintenance work on some machinery and strikes resulted from equipment breakdowns at CILU and against the enterprise Perenco, which operates in the cash flow problems at CINAT. Demand pressures led Muanda costal area. to a rise in cement prices. The construction sector recorded a growth rate of Manufacturing production slightly increased in 5.6 per cent in 2007, significantly lower than the figure 2007. Several factors explain this loss of momentum: recorded in 2006. This downturn stemmed from an obsolete production equipment, a limited ability to insufficient supply of cement due to a quasi- use new technologies and the lack of competitiveness monopolistic situation and the country’s limited cement with foreign products. This situation also followed the production capacity (less than 100 000 tonnes per April shutdown of Congotex, one of the country’s month). Cement production did not meet construction largest textile factories, which faltered due to foreign needs, particularly for PMURR (Emergency Multi- competition. The manufacturing sector’s poor Sector Programme for Rehabilitation and performance was mitigated by the increased production Reconstruction) projects. At the end of the first half- of beverages. Between June 2006 and June 2007, the year, production by the country’s two largest cement production of non-alcoholic and alcoholic beverages manufacturers – CILU (Cimenterie de Lukalu) and rose by 9.9 and 15.3 per cent respectively. 245 Table 1 - Demand Composition Percentage of GDP Percentage changes, Contribution to real (current prices) volume GDP growth 1999 2006 2007(e) 2008(p) 2009(p) 2007(e) 2008(p) 2009(p) Gross capital formation 16.5 13.4 10.0 15.7 17.5 0.8 1.3 1.6 Public 1.1 3.4 10.0 15.0 16.0 0.2 0.3 0.4 Private 15.4 10.0 10.0 16.0 18.0 0.6 1.0 1.2 Consumption 77.4 97.0 6.6 6.2 5.8 6.2 5.9 5.5 Public 6.1 8.8 6.7 6.8 6.8 0.9 0.9 0.9 Private 71.3 88.2 6.5 6.1 5.6 5.4 5.0 4.6 External sector 6.1 -10.3 -0.9 -0.6 0.0 Exports 23.7 31.7 0.2 2.5 4.1 0.0 0.3 0.4 Imports -17.6 -42.0 6.3 6.1 2.9 -0.9 -0.9 -0.4 GDP growth rate, volume -----6.2 6.6 7.1 Source: IMF data: estimates (e) and projections (p) based on authors’ calculations. 1 2 http:// dx.doi.org/10.1787/320834204144 The very important water and electricity production The transport and communications sector (4.1 per and distribution sector recorded a 0.8 per cent drop cent of GDP in 2006) recorded actual growth of in 2007 because of its obsolete network and production 8.6 per cent in 2007. This performance results from equipment. The sector’s poor performance imposes the increased demand for mobile phones. The number enormous economic costs on other sectors and has a of subscribers reached 5 million. Over the past few negative impact on household conditions as well. years, the communications segment has experienced © AfDB/OECD 2008 African Economic Outlook D.R. Congo strong growth: an average annual figure of approximately of formal relations with the IMF, the government set 67 per cent. up an IMF Staff Monitored Programme (SMP). Within the framework of the SMP, it was agreed that Faster growth beginning in the second half of 2007 government budgetary policy should focus on stabilising also stemmed from the good performance of private public finances and redirecting public spending to the consumption and gross fixed-capital formation, which poor while reducing non-priority expenses.