Economy of the Democratic Republic of the Congo
Encyclopedia
Sparsely populated in relation to its area, the Democratic Republic of the Congo
(DRC) is home to a vast potential of natural resources and mineral
wealth, its untapped deposits of raw minerals are estimated to be worth in excess of US$ 24 trillion, yet the economy of the DRC has declined drastically since the mid-1980s. At the time of its independence in 1960, DRC was the second most industrialized country in Africa after South Africa
; it boasted a thriving mining sector and its agriculture sector was relatively productive. The two recent conflicts (the First
and Second Congo War
s), which began in 1996, have dramatically reduced national output and government revenue, have increased external debt, and have resulted in deaths of more than five million people from war, and associated famine
and disease. Malnutrition
affects approximately two thirds of the country's population.
Agriculture
is the mainstay of the economy
, accounting for 57.9% of GDP
in 1997. In 1996, agriculture employed 66% of the work force.
Rich in minerals, the DRC has a difficult history of predatory mineral extraction, which has been at the heart of many struggles within the country for many decades, but particularly in the 1990s. The economy of the second largest country in Africa
relies heavily on mining. However, much economic activity occurs in the informal sector and is not reflected in GDP data.
In 2006 Transparency International
ranked the Democratic Republic of the Congo 156 out of 163 countries in the Corruption Perception Index, tying Bangladesh
, Chad
, and Sudan
with a 2.0 rating. President
Joseph Kabila
established the Commission of Repression of Economic Crimes upon his ascension to power in 2001.
(IBRD) Trust Fund for the Congo.
Poor infrastructure
, an uncertain legal framework, corruption, and lack of openness in government economic policy and financial operations remain a brake on investment and growth. A number of International Monetary Fund
(IMF) and World Bank
missions have met with the new government to help it develop a coherent economic plan but associated reforms are on hold. Faced with continued currency depreciation, the government resorted to more drastic measures and in January 1999 banned the widespread use of U.S. dollars for all domestic commercial transactions, a position it later adjusted. The government has been unable to provide foreign exchange for economic transactions, while it has resorted to printing money to finance its expenditure. Growth was negative in 2000 because of the difficulty of meeting the conditions of international donors, continued low prices of key exports, and post-coup instability.
, palm oil
, rubber
, cotton
, sugar
, tea
, and cocoa. Food crops include cassava
, plantains, maize
, groundnuts, and rice
. In 1996, agriculture employed 66% of the work force.
report on the country’s strategic significance and its potential role as an economic power in central Africa
. Fish are the single most important source of animal protein in the DRC. Total production of marine, river, and lake fisheries in 2003 was estimated at 222,965 tons, all but 5,000 tons from inland waters. PEMARZA, a state agency, carries on marine fishing.
resources, and commercial development of the country’s 61 million hectares (150 million acres) of exploitable wooded area is only beginning. The Mayumbe area of Lower Zaire was once the major center of timber exploitation, but forests in this area were nearly
depleted. The more extensive forest regions of the central cuvette and of the Ubangi River
valley have increasingly been tapped. Roundwood removals were estimated at 72,170,000 m3 in 2003, about 95 percent for fuel. Some 14 species are presently being harvested. Exports of forest products in 2003 totalled $25.7 million. Foreign capital is necessary in order for forestry to expand, and the government recognizes that changes in tax structure and export procedures will be needed to facilitate economic growth.
ore, and a major producer of copper
and industrial diamond
s. The Congo has 70% of the world’s coltan
, and more than 30% of the world’s diamond reserves., mostly in the form of small, industrial diamonds. The coltan
is a major source of tantalum
, which is used in the fabrication of electronic components in computers and mobile phones. In 2002, tin
was discovered in the east of the country, but, to date, mining has been on a small scale. Smuggling of the conflict minerals
, coltan
and cassiterite
(ores of tantalum
and tin
, respectively), has helped fuel the war in the Eastern Congo. Katanga Mining Limited
, a London-based company, owns the Luilu Metallurgical Plant, which has a capacity of 175,000 tonnes of copper and 8,000 tonnes of cobalt per year, making it the largest cobalt refinery in the world. After a major rehabilitation program, the company restarted copper production in December 2007 and cobalt production in May 2008.
Ground transport in the Democratic Republic of Congo has always been difficult. The terrain and climate of the Congo Basin
present serious barriers to road and rail construction, and the distances are enormous across this vast country. Furthermore, chronic economic mismanagement and internal conflict has led to serious under-investment over many years.
On the other hand, the Democratic Republic of Congo has thousands of kilometres of navigable waterway
s, and traditionally water transport has been the dominant means of moving around approximately two-thirds of the country.
Democratic Republic of the Congo
The Democratic Republic of the Congo is a state located in Central Africa. It is the second largest country in Africa by area and the eleventh largest in the world...
(DRC) is home to a vast potential of natural resources and mineral
Mineral
A mineral is a naturally occurring solid chemical substance formed through biogeochemical processes, having characteristic chemical composition, highly ordered atomic structure, and specific physical properties. By comparison, a rock is an aggregate of minerals and/or mineraloids and does not...
wealth, its untapped deposits of raw minerals are estimated to be worth in excess of US$ 24 trillion, yet the economy of the DRC has declined drastically since the mid-1980s. At the time of its independence in 1960, DRC was the second most industrialized country in Africa after South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
; it boasted a thriving mining sector and its agriculture sector was relatively productive. The two recent conflicts (the First
First Congo War
The First Congo War was a revolution in Zaire that replaced President Mobutu Sésé Seko, a decades-long dictator, with rebel leader Laurent-Désiré Kabila. Destabilization in eastern Zaire that resulted from the Rwandan genocide was the final factor that caused numerous internal and external actors...
and Second Congo War
Second Congo War
The Second Congo War, also known as Coltan War and the Great War of Africa, began in August 1998 in the Democratic Republic of the Congo , and officially ended in July 2003 when the Transitional Government of the Democratic Republic of the Congo took power; however, hostilities continue to this...
s), which began in 1996, have dramatically reduced national output and government revenue, have increased external debt, and have resulted in deaths of more than five million people from war, and associated famine
Famine
A famine is a widespread scarcity of food, caused by several factors including crop failure, overpopulation, or government policies. This phenomenon is usually accompanied or followed by regional malnutrition, starvation, epidemic, and increased mortality. Every continent in the world has...
and disease. Malnutrition
Malnutrition
Malnutrition is the condition that results from taking an unbalanced diet in which certain nutrients are lacking, in excess , or in the wrong proportions....
affects approximately two thirds of the country's population.
Agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
is the mainstay of the economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
, accounting for 57.9% of GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
in 1997. In 1996, agriculture employed 66% of the work force.
Rich in minerals, the DRC has a difficult history of predatory mineral extraction, which has been at the heart of many struggles within the country for many decades, but particularly in the 1990s. The economy of the second largest country in Africa
Africa
Africa is the world's second largest and second most populous continent, after Asia. At about 30.2 million km² including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area...
relies heavily on mining. However, much economic activity occurs in the informal sector and is not reflected in GDP data.
In 2006 Transparency International
Transparency International
Transparency International is a non-governmental organization that monitors and publicizes corporate and political corruption in international development. It publishes an annual Corruption Perceptions Index, a comparative listing of corruption worldwide...
ranked the Democratic Republic of the Congo 156 out of 163 countries in the Corruption Perception Index, tying Bangladesh
Bangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...
, Chad
Chad
Chad , officially known as the Republic of Chad, is a landlocked country in Central Africa. It is bordered by Libya to the north, Sudan to the east, the Central African Republic to the south, Cameroon and Nigeria to the southwest, and Niger to the west...
, and Sudan
Sudan
Sudan , officially the Republic of the Sudan , is a country in North Africa, sometimes considered part of the Middle East politically. It is bordered by Egypt to the north, the Red Sea to the northeast, Eritrea and Ethiopia to the east, South Sudan to the south, the Central African Republic to the...
with a 2.0 rating. President
President of the Democratic Republic of the Congo
The President of the Democratic Republic of the Congo , is Congo's elected Head of State, and the ex officio "Supreme Commander" of the Armed Forces of the Democratic Republic of the Congo ....
Joseph Kabila
Joseph Kabila
Joseph Kabila Kabange is a Congolese politician who has been President of the Democratic Republic of the Congo since January 2001. He took office ten days after the assassination of his father, President Laurent-Désiré Kabila...
established the Commission of Repression of Economic Crimes upon his ascension to power in 2001.
History
1990s
International Bank for Reconstruction and DevelopmentInternational Bank for Reconstruction and Development
The International Bank for Reconstruction and Development is one of five institutions that compose the World Bank Group. The IBRD is an international organization whose original mission was to finance the reconstruction of nations devastated by World War II. Now, its mission has expanded to fight...
(IBRD) Trust Fund for the Congo.
Poor infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
, an uncertain legal framework, corruption, and lack of openness in government economic policy and financial operations remain a brake on investment and growth. A number of International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) and World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
missions have met with the new government to help it develop a coherent economic plan but associated reforms are on hold. Faced with continued currency depreciation, the government resorted to more drastic measures and in January 1999 banned the widespread use of U.S. dollars for all domestic commercial transactions, a position it later adjusted. The government has been unable to provide foreign exchange for economic transactions, while it has resorted to printing money to finance its expenditure. Growth was negative in 2000 because of the difficulty of meeting the conditions of international donors, continued low prices of key exports, and post-coup instability.
2000s
Conditions improved in late 2002 with the withdrawal of a large portion of the invading foreign troops. A number of IMF and World Bank missions have met with the government to help it develop a coherent economic plan, and President Kabila has begun implementing reforms.2010s
The DRC is embarking on the establishment of special economic zones to encourage the revival of its industry. The first SEZ should come into being in 2012 in N'Sele, a commune of Kinshasa, and will focus on agro-industries. The Congolese authorities are already planning to open another dedicated to mining (Katanga) and a third dedicated to the cement (in the Bas-Congo).Agriculture
Agriculture is the mainstay of the economy, accounting for 57.9% of the GDP in 1997. Main cash crops include coffeeCoffee
Coffee is a brewed beverage with a dark,init brooo acidic flavor prepared from the roasted seeds of the coffee plant, colloquially called coffee beans. The beans are found in coffee cherries, which grow on trees cultivated in over 70 countries, primarily in equatorial Latin America, Southeast Asia,...
, palm oil
Palm oil
Palm oil, coconut oil and palm kernel oil are edible plant oils derived from the fruits of palm trees. Palm oil is extracted from the pulp of the fruit of the oil palm Elaeis guineensis; palm kernel oil is derived from the kernel of the oil palm and coconut oil is derived from the kernel of the...
, rubber
Rubber
Natural rubber, also called India rubber or caoutchouc, is an elastomer that was originally derived from latex, a milky colloid produced by some plants. The plants would be ‘tapped’, that is, an incision made into the bark of the tree and the sticky, milk colored latex sap collected and refined...
, cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
, sugar
Sugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
, tea
Tea
Tea is an aromatic beverage prepared by adding cured leaves of the Camellia sinensis plant to hot water. The term also refers to the plant itself. After water, tea is the most widely consumed beverage in the world...
, and cocoa. Food crops include cassava
Cassava
Cassava , also called yuca or manioc, a woody shrub of the Euphorbiaceae native to South America, is extensively cultivated as an annual crop in tropical and subtropical regions for its edible starchy tuberous root, a major source of carbohydrates...
, plantains, maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
, groundnuts, and rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
. In 1996, agriculture employed 66% of the work force.
Fishing
The Democratic Republic of Congo also possesses 50 percent of Africa’s forests and a river system that could provide hydro-electric power to the entire continent, according to a United NationsUnited Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
report on the country’s strategic significance and its potential role as an economic power in central Africa
Central Africa
Central Africa is a core region of the African continent which includes Burundi, the Central African Republic, Chad, the Democratic Republic of the Congo, and Rwanda....
. Fish are the single most important source of animal protein in the DRC. Total production of marine, river, and lake fisheries in 2003 was estimated at 222,965 tons, all but 5,000 tons from inland waters. PEMARZA, a state agency, carries on marine fishing.
Forestry
Forests cover 60 percent of the total land area. There are vast timberTimber
Timber may refer to:* Timber, a term common in the United Kingdom and Australia for wood materials * Timber, Oregon, an unincorporated community in the U.S...
resources, and commercial development of the country’s 61 million hectares (150 million acres) of exploitable wooded area is only beginning. The Mayumbe area of Lower Zaire was once the major center of timber exploitation, but forests in this area were nearly
depleted. The more extensive forest regions of the central cuvette and of the Ubangi River
Ubangi River
The Ubangi River , also spelled Oubangui, is the largest right-bank tributary of the Congo River of Central Africa. It begins at the confluence of the Mbomou and Uele Rivers and flows west, then bends to the southwest and passes through Bangui, after which it flows south to the Congo at Liranga....
valley have increasingly been tapped. Roundwood removals were estimated at 72,170,000 m3 in 2003, about 95 percent for fuel. Some 14 species are presently being harvested. Exports of forest products in 2003 totalled $25.7 million. Foreign capital is necessary in order for forestry to expand, and the government recognizes that changes in tax structure and export procedures will be needed to facilitate economic growth.
Mining
The economy of the second largest country in Africa relies heavily on mining. The Congo is the world's largest producer of cobaltCobalt
Cobalt is a chemical element with symbol Co and atomic number 27. It is found naturally only in chemically combined form. The free element, produced by reductive smelting, is a hard, lustrous, silver-gray metal....
ore, and a major producer of copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
and industrial diamond
Diamond
In mineralogy, diamond is an allotrope of carbon, where the carbon atoms are arranged in a variation of the face-centered cubic crystal structure called a diamond lattice. Diamond is less stable than graphite, but the conversion rate from diamond to graphite is negligible at ambient conditions...
s. The Congo has 70% of the world’s coltan
Coltan
Coltan is the industrial name for columbite–tantalite, a dull black metallic mineral from which the elements niobium and tantalum are extracted. The niobium-dominant mineral is columbite, hence the "col" half of the term...
, and more than 30% of the world’s diamond reserves., mostly in the form of small, industrial diamonds. The coltan
Coltan
Coltan is the industrial name for columbite–tantalite, a dull black metallic mineral from which the elements niobium and tantalum are extracted. The niobium-dominant mineral is columbite, hence the "col" half of the term...
is a major source of tantalum
Tantalum
Tantalum is a chemical element with the symbol Ta and atomic number 73. Previously known as tantalium, the name comes from Tantalus, a character in Greek mythology. Tantalum is a rare, hard, blue-gray, lustrous transition metal that is highly corrosion resistant. It is part of the refractory...
, which is used in the fabrication of electronic components in computers and mobile phones. In 2002, tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
was discovered in the east of the country, but, to date, mining has been on a small scale. Smuggling of the conflict minerals
Conflict minerals
Conflict minerals are minerals mined in conditions of armed conflict and human rights abuses, notably in the eastern provinces of the Democratic Republic of the Congo, by the Congolese National Army and various armed rebel groups, including the Democratic Forces for the Liberation of Rwanda...
, coltan
Coltan
Coltan is the industrial name for columbite–tantalite, a dull black metallic mineral from which the elements niobium and tantalum are extracted. The niobium-dominant mineral is columbite, hence the "col" half of the term...
and cassiterite
Cassiterite
Cassiterite is a tin oxide mineral, SnO2. It is generally opaque, but it is translucent in thin crystals. Its luster and multiple crystal faces produce a desirable gem...
(ores of tantalum
Tantalum
Tantalum is a chemical element with the symbol Ta and atomic number 73. Previously known as tantalium, the name comes from Tantalus, a character in Greek mythology. Tantalum is a rare, hard, blue-gray, lustrous transition metal that is highly corrosion resistant. It is part of the refractory...
and tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
, respectively), has helped fuel the war in the Eastern Congo. Katanga Mining Limited
Katanga Mining
Katanga Mining is a mining company in the Katanga Province of the Democratic Republic of the Congo , majority-owned by Swiss commodity trader Glencore.-DCC:...
, a London-based company, owns the Luilu Metallurgical Plant, which has a capacity of 175,000 tonnes of copper and 8,000 tonnes of cobalt per year, making it the largest cobalt refinery in the world. After a major rehabilitation program, the company restarted copper production in December 2007 and cobalt production in May 2008.
Informal sector
Much economic activity occurs in the informal sector and is not reflected in GDP data.Transport
Congo Basin
The Congo Basin is the sedimentary basin that is the drainage of the Congo River of west equatorial Africa. The basin begins in the highlands of the East African Rift system with input from the Chambeshi River, the Uele and Ubangi Rivers in the upper reaches and the Lualaba River draining wetlands...
present serious barriers to road and rail construction, and the distances are enormous across this vast country. Furthermore, chronic economic mismanagement and internal conflict has led to serious under-investment over many years.
On the other hand, the Democratic Republic of Congo has thousands of kilometres of navigable waterway
Waterway
A waterway is any navigable body of water. Waterways can include rivers, lakes, seas, oceans, and canals. In order for a waterway to be navigable, it must meet several criteria:...
s, and traditionally water transport has been the dominant means of moving around approximately two-thirds of the country.
See also
External links
- Democratic Republic of the Congo latest trade data on ITC Trade Map
- First Blood Diamonds, Now Blood Computers? by Elizabeth Dias, Time Magazine, July 24, 2009
- Oasis Kodila Tedika et Francklin Kyayima Muteba, The sources of growth in DRC before independence. A cointegration analysis, CRE Working paper, n°02/10, juin 2010