E CONOMIC R EFORM E FFORTS

The catastrophic economic record of Mobutu’s kleptocracy has been mentioned already.

Unsettling economic decline set in with Mobutu’s nationalisation policies. During the last years Year (data of) HDI Rank GDP per capita

of his regime, Mobutu resorted to the printing machines, causing inflation to climb several thousand per cent per year. Accordingly, the World Bank excluded the country from its data tables. By 1993, GDP per capita was just about one third as high as it had been at independence (Kaplan 2007, 301f). Periodically, the army could not be paid and engaged in looting the country, including ransacking the capital (Prunier 2009, 78f).

The government of L.-D. Kabila proved not only unable to stop the complete economic decline of the country (Prunier 2009, 161-167, 212f) – Kabila’s outdated, purportedly "socialist"

economic policies were disastrous. His attempts to centralise the export of commodities through a state agency led only to increased smuggling and even less customs revenue. L.-D.

Kabila’s ideological enmity towards the international community and frequent verbal attacks on "the imperialists" did not help the economy either. During the years of his presidency (1997 to 2001), a national budget did not even exist (ICG 2006d, 3). A fixed exchange rate with a grossly overvalued Congolese franc was introduced, the holding of foreign currency was prohibited. Foreign trade virtually halted as a consequence. The two Kasai provinces even boycotted the franc in 1997. They used their own, more stable currency, while inflation continued to ruin the rest of the country. By 2000, inflation still surpassed 500 per cent and GDP per capita had fallen to USD 100. Per capita income had over the years fallen to a level that was difficult to even measure, ranging from about USD 630 in 1980 to about USD 80 in 2001.

After the death of L.-D. Kabila in January 2001, the dismal economic situation slowly started to improve. Joseph Kabila inherited an utterly ruined economy: GDP had declined by as much as 40 per cent in the ten years before he took office. Exports had dropped by almost half since his father had taken over the country and inflation was out of control. Public dept was standing at USD 16 billion according to the World Bank, and not much less according to Kinshasa’s own numbers. Nevertheless, Joseph Kabila ushered in an economic recovery by opening up the country to the world again. He enacted policies which were much more suited to foreign investors and donors than those of his father.

For example, Joseph Kabila floated the Congolese franc in 2001, causing a massive depreciation in the official exchange rate, but ending runaway inflation (Prunier 2009, 277-280; Bertelsmann 2003, 8). As foreign investment was now welcome again, a new law on investment was passed in 2005, followed by the creation of a National Agency for Investment Promotion (Bertelsmann 2010, 11).

Mining has been the main pillar carrying the rest of the economy. After decades of steep decline, the mining sector has been revived in recent years. In 2005, total revenues generated in the sector have tripled compared to 2000 (ICG 2006d, 3). With assistance of the World Bank,

mining companies to invest in the DRC once more. The price hike in commodities, which started in those years, helped to make the DRC an interesting investment opportunity for multinational mining companies now that the war was over (BMI 2007). The National Investment Promotion Agency was established as a one-stop-shop for international investors, lessening bureaucratic hurdles (Kisangani 2004, 117). The out-dated and defunct parastatal Congolese mining companies were coerced into forming joint-ventures with foreign investors, and vice versa (Tetzlaff 2004, 267-269). The mining code was designed with a view towards adopting international best practices; however, it only applies to the formal economy. Despite the fact that a licensing system based on a specific annual minimum turnover was introduced to curb it, artisanal mining is still important. There are other problems the code does not address. For example, it stipulates that only adult Congolese citizens may obtain an artisanal miner’s card, yet there is no law on citizenship and a substantial number of artisanal miners are in fact children. In the end, the presidency retained actual power over the semi-state-run mining enterprises (ICG 2006d, 7f), as the presidency concluded new contracts and granted concessions.

To best profit from mining opportunities, the country’s decrepit infrastructure will have to be overhauled. The sheer size of the country, of course, hampers such projects (Global Insight 2007). From roads to electricity and internet, basic infrastructure is in abysmal condition. In fact, only 14 per cent of the roads available in 1960 are passable today (Kaplan 2007, 302).

Presently, under the "infrastructure for national resources" deal with China already mentioned in subchapter 4.C.1, Chinese companies are building a four-lane road from Katanga’s capital to the border with Zambia (Braeckman 2006). It is meant to speed up transportation of minerals from Katanga’s mines.

The ascent of China as a trading partner will certainly have great economic impact in the future. China exports to the DRC increased more than tenfold in less than five years, from USD 25 million in 2002 to 335 million in 2006. That was more than France or the U.S. had exported to the DRC. At the same time, imports from Belgium decreased by half from USD 911 million to 463 million (Tetzlaff 2004, 267-269). Over time, this shift will make the DRC’s government more independent of Western donors and institutions. The debate whether this is to be embraced or feared has only just started. Certainly China’s policy of non-interference that does not tie contracts to provisions of good governance makes it an even more attractive partner, but also fuels concerns in the West.

In summary, the economic problems have been close to insurmountable (Kisangani 2004, 99).

While reforms have brought economic growth, the benefits have not been spread across the DRC. Without greater purchasing power across the population, there is little hope that Congolese businesses will start to turn to the domestic market.