icon caret Arrow Down Arrow Left Arrow Right Arrow Up Line Camera icon set icon set Ellipsis icon set Facebook Favorite Globe Hamburger List Mail Map Marker Map Microphone Minus PDF Play Print RSS Search Share Trash Crisiswatch Alerts and Trends Box - 1080/761 Copy Twitter Video Camera  copyview Whatsapp Youtube
Hungry for Change: The Economics Underlying DR Congo’s Political Crisis
Hungry for Change: The Economics Underlying DR Congo’s Political Crisis
Stabilising the Democratic Republic of Congo after an Apex Power Struggle
Stabilising the Democratic Republic of Congo after an Apex Power Struggle
Op-Ed / Africa

Hungry for Change: The Economics Underlying DR Congo’s Political Crisis

Originally published in African Arguments

At the heart of disenchantment with President Kabila’s government lie deep economic woes.

High taxes. Harassment by the revenue authorities. Lack of a stable exchange rate. Cheap imports from neighbouring countries. Lower demand.

All these factors and more were cited in a 4 November letter sent by the local Federation of Congolese Enterprises (FEC) to Kongo Central province officials, in western Democratic Republic of Congo. The revealing message was informing the authorities of the forthcoming closure of the Bralima brewery, a major employer in the city of Boma.

The concerns raised echo structural problems expressed by other Congo-based businesses contacted by Crisis Group during the past year in Bukavu, Lubumbashi and Kinshasa as well as by the national FEC.

The combination of political uncertainty, predatory state institutions and low commodity prices are contributing to an increasingly toxic situation.

As the DRC’s political crisis deepens – with the official end of President Joseph Kabila’s mandate on 19 December fast approaching – the combination of political uncertainty, predatory state institutions and low commodity prices are contributing to an increasingly toxic situation.

Recent street protests, in which dozens are estimated to have died, have focused on the constitution and delays to the electoral process. But the wish for change, usually focused on Kabila’s failure to improve the lot of ordinary people, has a strong economic sub-text.

Stagnant GDP, Shrinking Budget

Over the last ten years, the government has focused on macro-economic stability and investment in high-profile prestige projects such as Congo Airways, a new government building, airports, and roads in the wealthier parts of Kinshasa. This has done little to alleviate Congo’s deep inequalities. Nevertheless, riding on high mineral prices, Congo’s GDP growth averaged 7.7% from 2010 to 2015.

This year, however, the economy has hit a slump, leading official growth projections to be revised down to 4.3% for 2016, only slightly outpacing demographic growth. This stagnant outlook has seriously affected the already meagre state budget. Over the course of the year, the government lowered spending from $8 billion to $6 billion, though actual expenditure will come in even lower at around $4.5 billion. This leaves very little for new policies or to fund future elections whose cost is estimated at over $1 billion.

In January 2016, then Prime Minister Matata Ponyo announced a package of 28 measures to restructure the economy. In October, the government and parts of the opposition reached an agreement following their National Dialogue to push the presidential election due this year back to 2018. African regional powers quickly backed the deal, and soon afterwards opposition figure Samy Badibanga was appointed prime minister in accordance with the agreement.

But Badibanga will struggle to continue his predecessor’s donor-friendly reform programme at the same time as responding to various political pressures. This is especially the case since the reforms’ impacts – including desperately needed diversification of the mining-dependent economy – will only be felt in the medium-to-long term at best.

Currency Troubles

The economic crisis has also caused a serious depreciation of the Congolese franc (FC). This currency was stable at 920/930 FC per $1 for about three years, but has recently dropped to 1,170 officially, though rates are even lower on the street. Confidence continues to wane amid fears of a return to undisciplined money printing and consequent spiral of inflation.

The Central Bank’s resources to support the franc are also decreasing; foreign reserves are currently estimated at below $1 billion, less than four weeks of imports. Meanwhile, the government has reverted to paying the money it owes large companies in Congolese francs, drawing the ire of the business community.

In October, the government announced measures to cushion the effects of currency depreciation, including reducing import taxes and making available hard currency to import basic foodstuffs such as sugar and palm oil. But their impact is expected to run out in March 2017, after which price evolution will become more uncertain according to businesses consulted by Crisis Group. Fuel prices cause greatest concern; they have been stable due to subsidies and the low international market price, but any rise would have knock-on effects on commodities and urban transport relied on by most city dwellers.

Corruption is also an ongoing drag on the economy. The government’s anti-corruption taskforce, led since June 2015 by a former justice minister, has had little impact, though several high-level cases have recently come to light, including one that touches on election financing.

Former PM Ponyo previously complained that he had no control over large parts of the economy, including the mammoth parastatal mining company Gecamines, and that he had to “navigate crocodile infested waters”. Large-scale corruption scandals damage the economy, though citizens and businesses suggest they are most concerned by the omnipresent, mid-level or “petty” corruption which permeates their daily lives.

Prices Rise, Salaries Fall

With the prices of bread, rice, cornmeal and palm oil rising steadily over the past six months, poorer urban families are seeing their precarious living conditions eroded. A normal loaf of bread still costs 200 FC but now it is much smaller. Households dependent on cornmeal have seen their food expenditure increase by 12%.

Corn is particularly important in southern provinces, where a price spike earlier in 2016 added to local political tensions and led the government to send senior officials to Zambia to try to increase imports. But Congo’s southern neighbours have themselves been hit by a recent drought. In early December 2016, prices increased again.

Education, a cornerstone for social change, is a high priority for the population, but both access and quality have suffered.

The salaries of public servants, except for those in the security services, have declined by 30% since June, typically from the equivalent of $100 to $70. Food allowances were also cut for soldiers. In the private sector, businesswomen called maman ya zando have struggled because of the franc depreciation. Commercial banks contacted by Crisis Group said they have recently seen more small businesses defaulting on debt repayments.

Particularly vulnerable groups such as sex workers, often the sole bread winners for their households, are also feeling the pressure. The numerous, mostly young, street traders selling shoe shines or paper handkerchiefs for 250 FC barely survive in normal conditions. Even a small increase in their costs can push them and their dependents into hunger.

Financial pressure on families also puts the solidarity system within communities under stress, particularly in dealing with illness and schooling. In Ituri, primary school fees have increased dramatically from 1,500 to 5,500 FC for the 2016-2017 school year. The minimum fees in Kinshasa are around $350 per year, an ever-increasing sum in local francs. This has pushed numerous children out of school. Education, a cornerstone for social change, is a high priority for the population, but both access and quality have suffered.

The Economy Turns Political

Economic troubles are gaining political prominence. In a defensive 15 November state of the nation address, President Kabila painted a positive picture of his 15 years in power, but also acknowledged that “the absence of jobs and the resulting idleness obscure future prospects”. He warned that such frustrations should not be used for political ends.

At the start of the school year in September, the opposition platform le Rassemblementattempted to tie the economic and political crises together through actions known as écoles mortes (school boycotts). Many children did stay away from school, partly for fear of violent incidents.

Youth groups, in particular Lutte pour le changement (Lucha), focus on the economy and unemployment, but they too see politics and economics as two sides of the same coin. Initially campaigning for better public services in Goma, they are now focused on protecting the constitution, particularly the provision that the president can only serve two terms.

Students are easily mobilised when confronted with rising costs, such as tuition fees. In early November, a fee increase at a higher education institute in Kinshasa led to violent riots. The measure was quickly reversed and the institute’s director sacked. On 19 November, one month before the end of Kabila’s second term, Lucha in association with other youth platforms launched the new campaign “bye bye Kabila” on social media and on the street, but it was quickly repressed by authorities.

The economic slowdown is most visibly felt in the cities. Illuminating new research shows differences in the evolution of prices across the country, pointing to possible different political reactions in rural areas. This suggests that economic decline will not necessarily lead to more coherent political protest as people are driven first and foremost by survival, something the government is keenly aware of. But as the government’s resources for patronage shrink, things could unravel even in remote areas. New provinces hurriedly established through the breakup of existing provinces (decoupage) in 2015 lack resources, and the appearance of new armed groups in North Kivu and recent violence in Kasai Central province are provoking considerable stress.

Prime Minister Badibanga and his new government have to allay social unrest while funding what will be a costly election process. This may prove a near-impossible task, while the combination of political uncertainty and a major economic recession is creating a dangerous impasse.

The risk is not just an explosion of anger on 19 December when Kabila’s term was supposed to end, but a slow atrophy thereafter.

The risk is not just an explosion of anger on 19 December when Kabila’s term was supposed to end, but a slow atrophy thereafter. A major concern is the funding of salaries and operational expenditure for the army and other security forces. If this significantly deteriorates, it is likely to cause major disorder as was the case in 1991 and 1993.

The population is hungry for change, but is frustrated by the lack of development and socio-economic opportunities, and by the complacency of the governing elite. Economic mismanagement fuelled popular anger during the slow decline of the Mobutu regime in the 1990s.

Political change through elections symbolise hope, and the government and the international community should do all they can to make them happen in the right conditions, with no further undue delay.

Read the PDF version here.

Contributors

Former Senior Analyst, DR Congo
Former Fellow, ​Central Africa
Commentary / Africa

Stabilising the Democratic Republic of Congo after an Apex Power Struggle

As power shifts into the hands of DR Congo’s President Tshisekedi, the risk of conflict with Kabila supporters still looms. In this excerpt from our Watch List 2021 for European policymakers, Crisis Group urges the EU and its member states to assist the government in fighting corruption and help keep the two camps on speaking terms. 

In the Democratic Republic of Congo (DRC), power is finally shifting into the hands of President Félix Tshisekedi, but it is unclear if stability will follow. Two years into his term of office, Tshisekedi is taking bold steps to consolidate his authority and diminish the influence of his predecessor Joseph Kabila, who has continued to control institutions and revenue streams since stepping down after elections in 2018. Tshisekedi capped recent moves to strengthen his own position, including installing three allies as Constitutional Court judges, by exiting a coalition with Kabila. The way is now open for him to form a new parliamentary majority, which in turn will allow him to make ministerial and military appointments more freely and ideally pursue the reform the country desperately needs. But the risk of conflict with Kabila’s camp still looms. Moreover, even as Tshisekedi promises change, some allies or potential allies appear set on feeding off state funds and expropriating property, thus deepening the kleptocracy that has ruined the country and invited past rebellions. Armed groups continue to plague the country’s east, the crucible of prior wars. The struggle between the president and his predecessor may exacerbate this problem as the two camps could enlist rebels to stoke trouble or intimidate opponents.

To push President Tshisekedi and his government toward reform, while avoiding a return to conflict, the EU and its member states should: 

  • Assist the Congolese government in fighting widespread corruption by allocating some funding available under the EU’s 2021-2027 budget cycle to relevant projects, including support for the newly established anti-corruption agency, and pressing officials to allow it to operate independently. 
     
  • Step up efforts to keep Tshisekedi and Kabila on speaking terms. While pushing for independent anti-corruption efforts, the EU should simultaneously encourage the president to continue engaging with his former coalition partner to demonstrate that he will not use these measures as a political tool to punish rivals. The conversation could be broadened to focus on how both could prevent their allies from using armed groups for political gain.
     
  • Offer financial and technical support to a community-based and coherent national disarmament, demobilisation and reintegration (DDR) process, to further ensure that politicians do not use Congolese armed groups and militias for their own purposes.
     

Consolidating Power, Dealing with Corruption

After two years of sparring with Kabila, President Tshisekedi has gained the upper hand. The two leaders reportedly cut a backroom deal after the 2018 elections to share power in a coalition government, but continuous tensions marked their alliance. Kabila’s bloc had an overwhelming majority in both houses of parliament, and also controlled many key cabinet positions, including the prime minister’s office. The former president, now a senator for life, also retained the loyalties of numerous army officers and employees of state-owned companies, giving him uninterrupted access to the country’s wealth. But in mid-2020 dynamics started to shift. Pressured by his own party, which wants to show progress ahead of 2023 elections, and encouraged by the U.S., Tshisekedi started to clip his predecessor’s wings. In July, he blocked a Kabila ally’s appointment as electoral commission head; three months later, he pushed through three constitutional court judges against the former president’s wishes. Finally, in December, Tshisekedi ended his coalition with Kabila, having pulled many of the latter’s parliamentary supporters into his own camp. In a clear sign that power is shifting in Tshisekedi’s favour, deputies then voted to remove Jeannine Mabunda, another Kabila backer, as the National Assembly speaker and, on 27 January 2021, passed a vote of no confidence in Prime Minister Sylvestre Ilunga, a Kabila ally. Tshisekedi now seeks a new parliamentary majority.

In consolidating power, however, Tshisekedi risks repeating his predecessor’s errors.

In consolidating power, however, Tshisekedi risks repeating his predecessor’s errors, if his entrenchment in power becomes a means for his allies to indulge in their own corruption and abuse. Diplomats and other sources tell Crisis Group that members of Tshisekedi’s entourage are allegedly squandering state funds and enriching themselves ever more rapidly. Now that he is relying on former Kabila supporters in addition to his own original backers, Tshisekedi will likely also need to extend the former president’s ex-affiliates some form of patronage to keep them loyal, potentially using state resources to secure their continued support. Meanwhile, there are signs that he may be taking a more repressive turn, clamping down on dissent. In the past year, the authorities cracked down on opposition members and critics. Security forces used tear gas to disperse crowds during two demonstrations organised by opposition leader Martin Fayulu. In May, they arrested a leader of Kabila’s youth league who stated that Tshisekedi had not won the elections and in July, youth members of Tshisekedi’s party beat demonstrators who were asking the governor of Kasai province, a Tshisekedi ally, to resign. In November, authorities arrested a famous singer who had released a song that could be interpreted as criticising Tshisekedi for turning against Kabila. 

Dangers

While Congolese and external actors are surprised by the speed with which Tshisekedi has been able to sideline Kabila, the former president is unlikely to go quietly. Kabila built a vast political, military and financial network during his eighteen years in power. He still commands loyalty throughout the security services. Diplomats and Congolese military sources fear that his camp could activate rebel networks in the east or in the mineral-rich provinces once known as Katanga. Tshisekedi, who knows that networks in the army have cooperated with rebels for years, has tried to bring the military under his control, replacing the Republican Guard’s head, a Kabila loyalist, and removing his predecessor’s confidantes from other influential posts. In December, commanders in the third operational zone covering the eastern provinces, long known as hardened Kabila backers, instead expressed their support for Tshisekedi. It is unclear, however, what the switch of allegiance will mean in practice. 

Meanwhile, dozens of Congolese and foreign armed groups remain active in the country’s troubled east. Of this plethora of groups, some have strong military capacities and political influence, derived from alliances with provincial and national politicians and businessmen, while others are militias without serious political goals, often active in remote areas. Some are embedded in society, while others are more predatory toward the local population. Lastly, some have connections in neighbouring Uganda, Rwanda and Burundi, meaning that the DRC remains vulnerable to proxy conflicts playing out in its territory. Tshisekedi stressed his determination to dismantle these groups when he assumed office. But, seemingly distracted by Kinshasa politics and hindered by the task’s vastness and complexity, he has so far failed to deliver on this promise. The COVID-19 outbreak has stymied his attempts to reach out to and improve relations among leaders in neighbouring countries, which also could help calm tensions in the DRC’s east, though he could give these efforts a boost when he assumes the chair of the African Union in February. On the other hand, there is a risk that Tshisekedi will decide to deploy former rebels, some of whom have returned to Kinshasa at his invitation, to fend off Kabila-backed opponents if he feels the need. 

How the EU Can Help

Relations between the EU and the DRC cooled as the Kabila era drew to a close, but with Tshisekedi in power, Brussels has begun to re-engage. Its December 2019 Foreign Affairs Council conclusions proposed advancing political dialogue with the DRC and called for renewed efforts to promote respect for human rights, democratic principles, the rule of law and good governance. EU and member state officials have already held one formal dialogue with their Congolese government counterparts in October 2020, with a follow-up scheduled for June 2021. 

Brussels should step up efforts to encourage Tshisekedi to continue rooting out corruption and prosecuting the major theft of public funds.

In particular, Brussels should step up efforts to encourage Tshisekedi to continue rooting out corruption and prosecuting the major theft of public funds. The president himself has an interest in doing so: it would allow him to present the clean-up as an accomplishment going into elections in 2023. There are dangers to such reforms, however, notably that Congolese elites and people view them as partisan or a means of score settling. They could also stir up a violent reaction. At the same time, Tshisekedi may be tempted to allow his old and new allies to enrich themselves as he seeks to build a new coalition and free himself from his predecessor’s influence. He should refrain from doing so. Allowing corruption to spread would seriously damage his chances of re-election in 2023.

The EU can contribute toward successful anti-graft efforts. It should do as much as it can to create space for the newly established anti-corruption agency to operate independently. Brussels should make support to the agency, created by presidential decree in March 2020 and funded by the presidency, conditional on clear benchmarks. Selection of the agency’s staff should be transparent, and the agency should increase its financial independence, allowing it to also investigate the president’s entourage if needed. The EU should push for all corruption investigations to proceed on the basis of evidence, not political expedience. Ideally – and assuming credible allegations or evidence exist – the commission should undertake investigations into individuals from different political factions. Kabila allies already claim that the Tshisekedi camp is threatening to sue them for corruption to force them to join the new majority. The Tshisekedi government will have to strike a fine balance, accompanying investigations with negotiations aimed at retaining a minimum of trust with its erstwhile coalition partners. Such talks could also explore how to rein in armed groups and advance DDR. The EU could encourage and support such talks.

Support by the EU and its member states for a community-based and coherent DDR process could assist Tshisekedi in his core pledge to dismantle armed groups. The government has put the launch of a nationally coordinated DDR plan, which merges existing programs, on hold, while Tshisekedi tries to identify a new parliamentary majority. The draft plan seems to have taken international concerns into account; it offers neither an amnesty for armed group members who committed grave human rights violations, nor automatic reintegration of former combatants in the army – both of which donors feared. Under Kabila, international partners were reluctant to contribute, because the government often misused the funds and did not deliver the desired results. With Tshisekedi in charge, they should give authorities another chance. Kinshasa will need outside financing and technical assistance to make DDR work. In case of support to the new DDR plan, coordination among the EU and its member states will be crucial.