ECONOMY
Sparsely populated in relation to its area, the Democratic Republic of the Congo is home to a vast potential of natural resources and mineral wealth. Nevertheless, the D.R.C. is one of the poorest countries in the world, with per capita annual income of about $120 in 2006. This is the result of years of mismanagement, corruption, and war.
In 2001, the Government of the D.R.C. under Joseph Kabila undertook a series of economic reforms to reverse this steep decline. Reforms were monitored by the IMF and included liberalization of petroleum prices and exchange rates and adoption of disciplined fiscal and monetary policies. The reform program reduced inflation from over 500% per year in 2000 to only about 7% at an annual rate in 2003. Inflation rose to 15%-20% percent in 2006. In June 2002, the World Bank and IMF approved new credits for the D.R.C. for the first time in over a decade. Bilateral donors, whose assistance has been almost entirely dedicated to humanitarian interventions in recent years, also are beginning to fund development projects in the D.R.C. In October 2003, the World Bank launched a multi-sector plan for development and reconstruction. The Paris Club also granted the D.R.C. Heavily Indebted Poor Country (HIPC) status in July 2003. The D.R.C. lost its eligibility for interim debt relief when it failed to make its sixth IMF review in 2006. If the D.R.C. successfully completes its current non-disbursing staff-monitored program with the IMF and qualifies for a new IMF disbursement program, it will be back on track for HIPC debt relief. This debt relief will help alleviate the D.R.C.'s external sovereign debt burden and potentially free funds for economic development.
Agriculture is the mainstay of the Congolese economy, accounting for 56.3% of GDP in 2002. The main cash crops include coffee, palm oil, rubber, cotton, sugar, tea, and cocoa. Food crops include cassava, plantains, maize, groundnuts, and rice. Industry, especially the mining sector, is underdeveloped relative to its potential in the D.R.C. In 2002, industry accounted for only 18.8% of GDP, with only 3.9% attributed to manufacturing. Services reached 24.9% of GDP. The Congo was the world's fourth-largest producer of industrial diamonds during the 1980s, and diamonds continue to dominate exports, accounting for over half of exports ($642 million) in 2003. The Congo's main copper and cobalt interests are dominated by Gecamines, the state-owned mining giant. Gecamines production has been severely affected by corruption, civil unrest, world market trends, and failure to reinvest.
For decades, corruption and misguided policy have created a dual economy in the D.R.C. Individuals and businesses in the formal sector operated with high costs under arbitrarily enforced laws. As a consequence, the informal sector now dominates the economy. In 2002, with the population of the D.R.C. estimated at 56 million, only 230,000 Congolese working in private enterprise in the formal sector were enrolled in the social security system. Approximately 600,000 Congolese were employed by the government.
In the past year, the Congolese Government has approved a new investment code and a new mining code and has designed a new commercial court. The goal of these initiatives is to attract investment by promising fair and transparent treatment to private business. The World Bank also is supporting efforts to restructure the D.R.C.'s large parastatal sector, including Gecamines, and to rehabilitate the D.R.C.'s neglected infrastructure, including the Inga Dam hydroelectric system.
The outbreak of war in the early days of August 1998 caused a major decline in economic activity. Economic growth resumed in 2002 with a 3% growth rate, continuing in 2006 at 5.5%. The country had been divided de facto into different territories by the war, and commerce between the territories had halted. With the installation of the transitional government in July 2003, the country was "de jure" reunified, and economic and commercial links began to reconnect.
In June 2000, the United Nations established a Panel of Experts on the Illegal Exploitation of Congolese Resources to examine links between the war and economic exploitation. Reports issued by the panel indicate that countries involved in the war in Congo have developed significant economic interests. These interests may complicate efforts by the government to better control its natural resources and to reform the mining sector. A final panel report was issued in October 2003. The Panel of Experts mandate was not renewed.
GDP (2003): $5.6 billion.
Annual GDP growth rate (2006): 5.5%.
Per capita GDP (2006): $120.
Natural resources: Copper, cobalt, diamonds, gold, other minerals; petroleum; wood; hydroelectric potential.
Agriculture: Cash crops--coffee, rubber, palm oil, cotton, cocoa, sugar, tea. Food crops--manioc, corn, legumes, plantains, peanuts.
Land use: Agriculture 3%; pasture 7%; forest/woodland 77%; other 13%.
Industry: Types--processed and unprocessed minerals; consumer products, including textiles, plastics, footwear, cigarettes, metal products; processed foods and beverages, cement, timber.
Currency: Congolese franc (FC).
Trade: Exports (2002)--$1.040 billion. Products--diamonds, cobalt, copper, coffee, petroleum. Partners--EU, Japan, South Africa, U.S., China. Imports (2002)--$1.216 billion. Products--consumer goods (food, textiles), capital equipment, refined petroleum products. Partners--EU, China, South Africa, U.S.
Total external debt (2002): $8.211 billion.
