Congo, Democratic Republic of the (DROC) - Economy





The DROC has a wealth of natural resources that should provide the foundation for a stable economy. However, in September 1991 mutinous military troops looted all major urban centers bringing the economy to a virtual standstill. A large government deficit, primarily to pay salaries for the military and civil servants, was financed by printing currency. Hyperinflation, rapid devaluation, and abandonment of the formal economy ensued. As a result of the accompanying widespread uncertainty and civil disorder, most businesses that were unable to leave the country adopted a defensive stance, minimizing their exposure in the DROC and waiting for an upturn in the economy. After the civil war began in August 1998, the government depreciated the franc four times to keep up with inflation. This did not help the economy, only serving to increase mistrust in the currency.

When operational, the DROC's economy is mixed. The state dominates the mining and utility sectors, but private industry is dominant elsewhere. Except for petroleum products, utilities, and parts of the transportation sector, market-determined prices are the norm, and many parastatal enterprises compete with private ones. Although the DROC possesses large amounts of unused agricultural land, its urban population is dependent on imported food due to the lack of a transportation network. Foreign exchange for food and other imports is generated primarily through export of diamonds, crude petroleum, and coffee.

The government under Joseph Kabila in 2001 implemented stabilization measures designed to break the spiral of hyperinflation and currency depreciation caused by the war. Growth of the GDP was expected to reach 6% in 2003, fueled by the mining, export agriculture, and forestry sectors. International donors supply the DROC with humanitarian aid, including the EU, World Bank, IMF, African Development Bank, and such bilateral donors as Belgium, Canada, and France. In 2003, a debt cancellation program under the Heavily Indebted Poor Countries program was to come into effect, with 80% of the DROC's external debt being written off.

Because the government only controlled the Western and Southwestern regions of the DROC in 2002, any estimates of the state of the economy applied only to those regions. The war caused an increase of government debt; reduced government revenue and economic output; increased corruption; caused a collapse of the banking system; and, because many industries and businesses could not operate, relegated much of the population to subsistence agriculture and barter. A UN report released in 2002 stated that over 85 multinational corporations, largely based in Europe, the US, and South Africa, had taken advantage of the instability caused by the war and violated ethical guidelines by dealing with criminal networks exploiting the DROC's natural resources, including gold, diamonds, cobalt, and copper. This activity must be seen against the backdrop of the plunder undertaken by the combatants themselves and other African nations involved in the fighting.

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