Democratic Republic of the Congo: Mining Sector

Abstract

The Democratic Republic of Congo (DRC) has taken its new name in 1997 after the demise of the reign of president Mobutu who governed autocratically for over two decades. The last years of Mobutu’s were characterized by hyperinflation and negative economic growth. Laurent Kabila, spokesman of the rebellion that set aside president Mobutu, became the new president, but the licensing of his (Rwandan) military chief of staff in 1998 sparked off a devastating war, commonly called the “first international African war” (1998–2003). After the murder of Laurent Kabila in 2001, his son Joseph took over power and negotiated – under the aegis of the international community – a peace agreement in 2003. This also marked the start of a macroeconomic recovery through opening up to the international community. Chart 1 shows the growth rate of the economy as well as the control of inflation after 2001. Since 2003 (after introduction of the new Mining Code in 2002), there has been consistent growth (between 5 % and 9 % per annum except for the year 2009, due to falling world prices and export quantities of copper and cobalt, the main export goods) (Banque Centrale du Congo 2013). Undoubtedly growth rates (the seventh highest in the world) were triggered by booming mineral production, which spectacularly recovered through reforms led by the World Bank. Better control of the money press and international monitoring by the Bretton Woods institutions brought down inflation under two digit figures. The steady increase of exports has sustained a stable free exchange rate for more than a decade now, which is a postcolonial record. However, absolute levels of production are still very low by international standards (700 dollar PPP per capita, ranked 228 in the world). Formal employment is estimated to have risen from about 10 % in 2001 to some 28 % in 2014 (Marysse 2015). This means that about two thirds of the active population have to fend for themselves in the informal economy. A due account of this informal economy may change income figures, but cannot conceal huge poverty and below standard functioning of the economy, even in comparison with less endowed economies in sub-Saharan Africa. Most observers agree that neo patrimonial politics and deeply rooted corruption (DRC is ranked last but one in the Transparency International corruption index) are main reasons for this low performance.