The Democratic Republic of Congo (DRC), where violence and corruption once reigned supreme, is in the midst of a renaissance: a transformation from war-torn battleground to thriving epicentre of commerce and democracy.
For too long now, the DRC’s growth has been crippled by civil unrest – oftentimes inflicted by neighbouring nations. However, there now exists a greater willingness for change, as political and business leaders endeavour to rehabilitate the nation, restore its economy and strengthen its core foundations for generations to come.
Today, under the stewardship of President Joseph Kabila and Prime Minister Matata Ponyo Mapon, the transformation of one of Africa’s largest and most populous nations, while nascent, is beginning to take shape.
It is in the capital, Kinshasa, with its nearly 10 million inhabitants, that the country’s economic growth and rehabilitation can best be seen. Impressive buildings are well into their construction phases, skyscrapers are beginning to take shape, and freshly paved highways are lining the city. This is not to say that the change has been limited to the capital, though; the agricultural sector continues to gain in stature and natural resources drive the economy onwards and upwards.
A national plan
President Joseph Kabila, who was initially elected in 2006 and again in 2011, began his leadership of the DRC following the assassination of his father, then-president Laurent Désiré-Kabila, in 2001. Kabila junior saw the need to introduce far-reaching reforms to unite the country after his father’s death and a prolonged period of civil strife, and he and his entrusted advisors looked to rebuild the fabric of the nation and create a framework to better facilitate economic growth.
It is in the capital, Kinshasa, with its nearly 10 million inhabitants, that the country’s economic growth and rehabilitation can best be seen
It was under this framework, entitled Les Cinq Chantiers de la RDC (the Five Pillars of Democratic Republic of Congo), that Kabila developed a long-term plan to improve domestic welfare, supplement the country’s trade policy with foreign governments, and boost domestic investments. Today, as ever, he strives to create a better nation through improved infrastructure, education, higher employment and housing for all, ultimately distancing the population from the country’s long history of socioeconomic turmoil.
Endowed with one of the most promising agricultural sectors in Africa and over $24trn worth of mineral wealth – including copper, diamonds, coltan and oil – the DRC is now at the forefront of exploration, research and trading in Africa. What’s more, the myriad opportunities in the country have inspired the DRC’s political and business leaders to set their sights on securing its reputation as a new African superpower, and to signal to the world that the country has the capacity to sustainably develop and create an environment for growth in Central Africa.
A healthier nation
Improving the nation’s healthcare infrastructure ranks among President Kabila’s topmost priorities, and while South Africa and Dubai have long been traditional healthcare destinations for Africans, the DRC is quickly making a name for itself as a suitable alternative by offering world-class facilities and physicians.
One example of progress in the healthcare space is the opening of the Hopital du Cinquantenaire in Kinshasa, which President Kabila and Minister of Public Health Felix Kabange Numbi inaugurated in March 2014. Funded through a joint venture with Sinohydro, a large Chinese engineering firm, Jubilee is a 500-bed hospital that brings world-class medicine back to the DRC. The hospital will be operated by the Padiyath group, which manages hospitals throughout India and the Middle East.
The Ministry of Public Health is working towards a countrywide healthcare pricing structure that will allow easy access to affordable healthcare for Congolese citizens at this and other planned world-class hospitals currently under development.
The focus on healthcare is significant for the country because it has previously been unable to carry macroeconomic gains into aspects of human development. Regardless of its rich resource base, the DRC is still one of the poorest nations worldwide, and will continue to be so for as long as economic gains fail to reach the entirety of its population. Therefore, the decision to focus on matters such as healthcare signal the beginning of a new era for the country, in which wide-reaching reforms look to benefit all and rid the country of the social injustices that have too often muddied its past.
Also integral to the success of the president’s reform programme are public-private partnerships (PPPs), of which the Hopital du Cinquantenaire is an example. Kabila has sought to build infrastructure and help build businesses through PPPs, which not only efficiently deploy capital, but also create demonstrable changes for the Congolese people.
The country’s decision to enact a new law on February 11 was specifically aimed at PPPs, but was more broadly designed to create an efficient business environment for interested parties and a method by which the legitimacy of PPP projects could be determined. The law dictates the eligibility and content of any public-private contracts, and goes some way to protecting the country against any losses incurred from illegalities.
Another hallmark of President Kabila’s tenure has been creating a far more hospitable business climate. Owing to recent government reforms, business opportunities are growing exponentially, as a greater number of multinationals come to see greater potential in the DRC. Today, investors can take advantage of the nation’s mineral wealth, agricultural opportunities and growing middle class, in addition to a decrease in bureaucracy and light-touch government regulation.
While the DRC has for some time now occupied a lowly position on the World Bank’s Doing Business report, anti-corruption drives of various sorts and a focus on good governance and transparency mean that the country’s prospects are on the up.
According to Steve Dunmead, Vice President and General Manager of OM Group, an American cobalt refining firm, “The business climate in the Democratic Republic of Congo has improved significantly over the past 10 years since President Kabila came to office. He has done a good job, but there is still much to do.”
The country’s economic platform is well founded, with the rate of growth showing no sign of slowing any time soon. In 2013, the nation’s GDP grew by 8.3 percent, according to the IMF and government sources, and growth in 2014 is expected to reach double digits. Although investment, agricultural productivity and infrastructural development have all played a part in boosting the country’s GDP, improved policy and budget planning are only now beginning to bolster its structural deficiencies as well.
Prudent monetary policies have not only encouraged this growth, but have kept inflation at its lowest rate since the nation first gained independence over half a century ago. Whereas in years past, the country has fallen far short of its economic potential, recent reforms and an improved business climate have been crucial in fending off corruption and in instilling a greater measure of stability.
Prime Minister Ponyo believes the country is on the rise. “Our economic performance is the strongest since the 1960s. We have an inflation rate from January to the present of just 0.3 percent. We will register 8.2 percent real GDP growth this year. That makes us number five on the continent in GDP growth. This country is on the move.”
In addition to the impressive growth figures, a host of other macroeconomic indicators show encouraging signs of progress. The nation’s currency, the Congolese franc, has remained stable; national wealth has doubled due to more efficient tax collection; and perhaps most importantly, public and private investment has increased significantly.
A former minister of finance, Ponyo has become popular, both in his country and internationally, as a technocrat with the ability and passion to bring about positive change to the Central African nation. Ponyo, a firm believer in stability and the private sector as the key to growth, has worked tirelessly throughout his career to encourage free enterprise in the DRC and Africa as a whole. During his time with the ministry, Ponyo helped change the investment climate of the nation and even set about enacting new measures to protect shareholders and boost capital flow to the country.
Making good on potential
Although the turmoil of the past two decades has put a lid on the country’s economic output, this is not to say that its resource and agricultural potential are any less. Inflows have skyrocketed in the last decade and come to constitute a considerable chunk of the country’s growth, with foreign direct investment having risen from -$116m in 2006 to $3.3bn in 2013.
In 2013 alone, the country’s copper output rose by 52 percent on the year previous, irrespective of any ongoing issues with regard to inadequate power supply and infrastructure. The DRC’s mining sector potential today is far and above most nations, and, if managed correctly, could boost the country’s fortunes and geopolitical clout far and above what they are at present.
One key development in the mining space has been a greater focus on transparency. Whereas the country has for some time enjoyed a great deal of mineral wealth, much of it has failed to translate into material gains for the population, with corruption and mismanagement having starved the nation of the gains it so deserved. Fast-forward to today and a steady stream of government initiatives, as well as increased cooperation with international parties, has resulted in a vast improvement in accountability and openness in all corners of the industry.
The Extractive Industries Transparency Initiative (EITI) has seen the country’s mining sector take on a far more compliant shape. And although the EITI suspended the DRC’s membership only last year for failing to “meet all requirements,” the country was more recently lauded by the Oslo-based initiative for “dedicated efforts in a challenging environment.”
The nation’s willingness to subject its mining revenues and spending to sharpened public scrutiny again illustrates the lengths to which the country as a whole is willing to go in order to cement a more responsible reputation among the international community. Given that the DRC is endowed with tremendous natural resources, Prime Minister Ponyo sees the need, and opportunity, to diversify the nation’s economy away from commodities towards services and agriculture.
“While the country is very wealthy in natural endowments regarding mineral resources, it is imperative to diversify beyond this wealth alone to propel the Democratic Republic of Congo to a state that can compete economically at a global scale,” says Ponyo.
In addition to mining, the DRC is looking to further develop its agricultural sector, considering it is one that is unrivalled in all of Africa. Given the potential for water, land, energy and various other inputs, the nation can develop an industry of commercial farms offering fishing, livestock and vegetable production, connected to a coherent network of production and food distribution channels.
The approach will enable the country to take advantage of the entire supply chain of food production, from farm inputs to the development of effective irrigation, distribution and transportation systems. According to Prime Minister Ponyo, “Agriculture must be one of the main sectors of focus used to spearhead the Congolese economy to unprecedented levels.”
Investment in agricultural extension services, research, energy, science and technology is also vital to developing a world-class agricultural sector. Significant attention to those sectors will create an opportunity not only to drive the economy by fortifying the export market, but also to help in the fight against hunger and malnutrition throughout the DRC and the African continent as a whole.
The current plans for the agricultural sector fall within the framework of the national strategy for food security. Encouraging public-private partnerships to harness these large-scale investments, Ponyo encourages investors to consider the potential value of the industry. To support agriculture and encourage private-sector participation, Ponyo developed and launched a nationwide programme known as the National Agricultural Investment Plan (NIPA). In short, the NIPA’s main objectives are to ensure food security and to develop the agribusiness sector. Its first project will be the development of 16 large agro-parks.
According to Councillor John Mususa, one of the leaders spearheading the project, “These parks will serve as an important part of the country’s rehabilitation and construction process by providing access to agricultural inputs and by combining laboratories, training facilities, storage centres and health facilities.”
Ponyo believes developing the agriculture sector can have the most significant positive impact on the population. For example, if the sector grows by six percent over the next decade, the level of Congolese poverty will be halved. Many of the issues plaguing the nation today can be resolved through investment, organisation and proper management. The creation of food security, paired with an increase in employment and social welfare, will help the country continue on its path to prosperity.
Power sector as growth catalyst
Apart from agriculture, a robust energy sector is also key to driving economic growth in the DRC, especially as its large-scale industrial sectors remain an area of significant growth. In a continent plagued by underdeveloped power generation capabilities and transmission facilities to transport power over large distances, the need for development in this sector cannot be understated. Nonetheless, the nation’s power sector is beginning to see significant investment and development from indigenous firms in addition to international companies and governments.
Large-scale investments in the Inga Dams, for example, are seen as a key component of the Congo’s – and Africa’s – future. Comprising a series of hydroelectric dams, the Inga Dams hold the potential to not only provide electricity to the DRC and all of Africa, but also the capacity to export energy to Western Europe. The centrepiece of the Inga Dams, the Grand Inga Dam, is the world’s largest hydropower project and is an instrumental factor in Africa’s future energy strategy.
The country’s electrification percentage rate is still far short of double figures, and many businesses to this day cite lack of energy supply as the number one obstacle to progress. The issue is especially pertinent in rural communities, where electrification rates stand at one percent and act as a major contributor to the country’s enduring issue of poverty. The Inga Dams will help to rid the country of one of its biggest issues and hopefully set the country on the path to self-sufficiency.
In 2013, the site of the Inga Dams was visited by Dr Rajiv Shah, the head of the US Agency for International Development (USAID), who not only lauded the progress of the facilities, but also pledged aid from the US Government to further develop the project.
Harbouring the potential to generate some 38,000 MW of energy at a cost of $80bn, the immediate effects of the dam would help power South Africa, Botswana, Angola, and Namibia in the short term. The capacity of the power production would also tower over the current record holders – the Three Gorges Dam in China and the Itaipu Dam in Brazil.
Additionally, the Inga Dams are vital not only for providing energy to the soon-to-be one billion inhabitants of Africa, but also for the industries that will drive African nations into self-sustaining superpowers. By allowing access to readily available and cost-effective energy – a gap that exists today – manufacturing, agricultural and mining industries will be able to reach new heights. Likewise, the powerful Congo River, a celebrated natural resource of the country, has the potential to power African nations and feed the continent.
Growth in the DRC is real, although the abundant opportunities in the country have yet to be fully uncovered. The country has posted impressive GDP growth for close to a decade now; however, it is only with the introduction of recent reform programmes that the DRC’s potential has expanded to all corners of the country, and to the international stage.
The changes in the DRC are indicative of a total transformation from a war-torn nation to an emerging African superpower. Under the leadership of President Kabila and Prime Minister Ponyo, the nation is in the early stages of a renaissance that will set the standard throughout Africa and the developing world as a whole.