Completing the Inga III hydroelectric project will turn the DRC into a power exporter.
With the Democratic Republic of Congo (DRC) now enjoying stable growth President Félix Tshisekedi must seize the opportunity to finally diversify the economy and make the country more competitive. But it's a gargantuan task.
On 17 July, Félix Tshisekedi had no choice but to go to Lumumba Boulevard himself for a much anticipated public relations operation. On this artery, which links N’Djili International Airport to downtown Kinshasa, the construction of a three-lane flyover – intended ultimately to improve traffic flow – has been causing traffic jams for weeks.
This project, like others across the country, is part of the ambitious 100-day programme launched by the president after taking office earlier this year.
Objective: to set up visible projects that promise solid changes in the daily lives of Congolese people.
Cost of the operation: $304m, part of which – due to a lack of budget – is drawn from the reserves of the Fonds de Promotion de l’Industrie (FPI) and the Fonds National d’Entretien Routier (Foner).
It won’t make a difference to the housewife’s shopping basket”
“It’s very little on a national scale, but it’s positive to want to be doing something all over the country,” says Baraka Kabemba, a partner at consultants EY.
“It won’t make a difference to the housewife’s shopping basket,” counters Florimond Muteba, president of the Observatoire de la Dépense Publique (Odep).
As a sign that times are changing in Kinshasa, the IMF delegation that visited capital city from 22 May to 5 June (the first in two years) delivered optimistic conclusions. The main macroeconomic indicators show a balance.
GDP growth rose from 3.7% in 2017 to 5.8% in 2018 and is expected to stabilise at around 4.5% in 2019.
The IMF forecasts a slowdown in the mining sector due to falling cobalt prices, but ” doubling of growth in the non-mining sector.
However, 60% of the population lives below the poverty line of $1.90 a day and is still waiting to see the benefits of this economic improvement.
“Promises are not enough,” warns one of the president’s advisers.
Mining, local content
The extractive sector remains the driving force of the economy. It represents up to 95% of the country’s exports, but barely 20% of the government’s revenue. The sector has been is shaken by mining companies’ challenges to the code adopted in 2018, which gives more power to the state.
“In 2002, Gécamines produced 30,000tn of copper. Today, it produces more than 1m tonnes per year. But revenues have not increased as much,” says Mabolia Yenga, Promines’ national coordinator. “Since we only export raw minerals, the state has little to gain.”
Experts argue for a law on subcontracting to be applied, which could make it possible to “develop a network of local companies in mining areas,” says EY’s Kabemba. “We need to invest in geological knowledge and infrastructure so Congolese businesses can be involved,” adds Promines’ Yenga.
Agriculture and processing, decentralisation
Tshisekedi is expected to diversify the economy to reduce dependence on the extractive sector. “Agriculture and agro-industry must become a driving force. Tens of millions of hectares are not exploited. This is the only way to bring the 80% of Congolese who live from the informal sector into the economy,” says Ambroise Tshiyoyo, president of the Franco-Congolese Chamber of Commerce and Industry. It would also enable the government to implement a real decentralisation policy as the law dictates.
“We must work at the provincial level to exploit the resources of each province. Centralising everything in Kinshasa does not work,” says Kabemba, who also argues for taxation to be digitalised so that “revenues are properly redistributed, allowing equal chances of development to each province.
Training, technology, infrastructure
Diversifying the economy also means investing in the training of a skilled workforce in the fields of technology and infrastructure. There is no shortage of major projects in this area. One example is the relaunch of the road-rail bridge between Kinshasa and Brazzaville, whose construction should begin in mid-2020. But several sources in the Presidency believe that priority should be given to developing the deep-water port of Banana, the country’s only opening onto the Atlantic Ocean.
Power production, energy exporting
In the strategic energy sector, the Inga III project, entrusted in October 2018 to a Sino-Spanish consortium composed of China Inga III and Pro Inga of Spain, continues its slow progress. This mega hydroelectric complex will have an installed capacity of 11,000 MW. This will supply enough for the country, but also to export to other giants such as South Africa and Nigeria, which have already expressed an interest in the production of Inga III.
The point of these adjustments is to make the DRC more competitive, which has become an imperative since the entry into force of the African Continental Free Trade Area (AfCFTA) at the beginning of July.
“The country is lagging behind in skills and technology. It is likely to become an import market. We must build the entire industrial fabric and not be afraid to take protectionist measures,” says EY’s Kabemba.
From this point of view, the rapprochement initiated by Félix Tshisekedi with his neighbours in Central and Eastern Africa can help to create a healthier climate. “We need to be able to talk to our neighbours to create economic stability,” confirms a presidential adviser, who points to another priority: attracting investors.
Improving the business environment
This is a major challenge for the DRC, which ranks 184th out of 190 countries in the World Bank’s 2019 “Doing Business” ranking.
“Business leaders do not have sufficient administrative and legal security. And they have no one to talk to,” complained the chamber of commerce’s Tshiyoyo in July. “We must stop preying on entrepreneurs, who are wealth-creators! ” said Félix Tshisekedi, on 6 September at the Makutano forum in Kinshasa.
Millions of dollars in opaque contracts, an explosion in the annual budget… Since Tshisekedi’s investiture the Presidency has struggled to convince people that there has been a real break with past abuses. “The problem remains the same, politically exposed economic operators weaken the country,” says a representative of an international organisation in Kinshasa. This must now be addressed. “The government knows it will have to set to and provide answers, if only to give direction to a disoriented private sector,” he concludes.