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Hungry for Change: The Economics Underlying DR Congo’s Political Crisis
Hungry for Change: The Economics Underlying DR Congo’s Political Crisis
De-escalating Tensions in the Great Lakes
De-escalating Tensions in the Great Lakes
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

De-escalating Tensions in the Great Lakes

President Tshisekedi’s plans for joint operations with DR Congo’s belligerent eastern neighbours against its rebels risks regional proxy warfare. In this excerpt from our Watch List 2020 for European policymakers, Crisis Group urges the EU to encourage diplomatic efforts in the region and Tshisekedi to shelve his plan for the joint operations.

This commentary is part of our Watch List 2020.

Since assuming office in early 2019, the Democratic Republic of Congo’s (DRC) president, Félix Tshisekedi, has stressed his determination to dismantle the dozens of Congolese and foreign armed groups blighting the troubled east of the country. He has also prioritised repairing ties with neighbouring states, which have historically both backed and fought against rebels in the eastern DRC over various cycles of war in the last two decades. Today, tensions are again mounting among the DRC’s neighbours – between Burundi and Uganda, on one hand, and Rwanda, on the other – potentially compounding the country’s security challenges. Alongside Tshisekedi’s diplomatic efforts to calm tensions, he has floated plans to invite these three neighbours to deploy their armed forces into the DRC to conduct joint operations with Congolese forces against rebels. Yet insofar as tensions among those countries remain high, such operations could pave the way for them to step up support to allied groups even while fighting rivals, and thus fuel proxy warfare. Civilians in the eastern DRC are likely to suffer most.

In line with its December Foreign Affairs Council conclusions that lay out the EU’s plans for re-engagement with the DRC, and to help President Tshisekedi de-escalate regional tensions, the EU and its member states should:

  • Reinforce the International Contact Group for the Great Lakes region, an informal gathering comprising the UN (including both the UN’s special envoy to the Great Lakes and the head of its mission in the DRC, MONUSCO), the U.S., the African Union and South Africa, as well as the EU and several European states that are important donors in the region, such as Belgium, the UK, Germany, France, the Netherlands and Sweden. The EU and European governments could designate senior EU and other European ministerial appointees to fill the group, over and above the working-level desk officers who normally tend to participate.
  • Use the increased clout this would bring to push for a mechanism whereby each of the three neighbours airs allegations against states they believe are backing armed groups in the DRC and supports the charges with evidence. Allegations can then be investigated by the UN Group of Experts and the Expanded Joint Verification Mechanism of the International Conference of the Great Lakes Region (the ICGLR comprises regional states and is a guarantor of a 2013 regional peace agreement; its joint verification mechanism and the UN expert group already have mandates to investigate claims of support to armed groups). Their findings could inform diplomatic efforts to de-escalate tensions among neighbours and end their backing of insurgents in the DRC.
  • At the same time, encourage President Tshisekedi to shelve, at least for now, his plan for joint operations with neighbours’ security forces.
  • Offer financial and technical support for the national disarmament, demobilisation and reintegration (DDR) process, to ensure that Congolese militias linked to foreign rebels operating in the eastern DRC have a safe pathway to giving up their fight.

Security Challenges

In recent months, eastern DRC-based foreign insurgencies have escalated attacks on both the Congolese army as well as soldiers and civilians in neighbouring countries. The Burundian, Rwandan and Ugandan presidents are all rattling their sabres in response, accusing one another of proxy warfare.

On 4 October, DRC-based fighters killed fourteen people in Kinigi village in Rwanda’s Musanze district. Rwandan authorities blame the Forces démocratiques de liberation du Rwanda (FDLR) rebels. They say the FDLR is working with another DRC-based rebel group, the Rwanda National Congress (RNC), which they allege is run by one of President Paul Kagame’s former generals. They also say both the FDLR and the RNC enjoy Burundian and Ugandan support. In a speech, Kagame vowed to retaliate against anyone seeking to attack Rwanda.

After the Kinigi killings, fighters crossed into Burundi from the DRC to launch two separate deadly attacks. Burundian RED-Tabara rebels, whom Burundian officials say are backed by Rwanda, claimed the first attack. No one claimed the second, but Burundian President Pierre Nkurunziza, recalling Kigali’s support for mutineers in a 2015 coup attempt, blamed Rwanda for both attacks, alleging that Kigali supports RED-Tabara. Ugandan officials, for their part, assert that Rwanda is collaborating with the Allied Democratic Forces, a rebel movement with roots in Uganda that is implicated in dozens of massacres in the Beni area of North Kivu since 2014.

Rwandan and Ugandan officials continue to trade accusations that each is plotting to destabilise the other.

Rwandan and Ugandan officials continue to trade accusations that each is plotting to destabilise the other. Both governments have purged their security services of suspected traitors. Rwanda has now also closed a main border crossing into Uganda, suffocating trade between the two countries. Meanwhile, Burundi and Rwanda have dispatched troops to their mutual border while Uganda has deployed troops to its western frontier facing North Kivu. Should these tensions heighten, they could fuel more proxy fighting in the eastern DRC, further threatening regional stability.

Recognising the dangers, Tshisekedi invited Rwanda and Uganda for talks in July and August hosted by Angolan President João Lourenço in the Angolan capital Luanda. They culminated in a memorandum of understanding, signed on 21 August, in which both countries promised to halt “actions conducive to destabilisation or subversion in the territory of the other party and neighbouring countries”. In addition to these diplomatic efforts, the DRC president floated plans that would involve the armed forces of Burundi, Rwanda and Uganda conducting joint military operations with Congolese forces against insurgents in the eastern DRC. Absent political de-escalation among the neighbour governments, such operations could pave the way for all three to ratchet up support to proxies opposing their respective rivals. The eastern DRC could again become the arena for a multi-sided melee.

Calming Regional Tensions

In its latest Foreign Affairs Council Conclusions on the DRC in December 2019, the EU asserted its readiness to redefine its relationship with the country. This comes after relations between Brussels and Kinshasa cooled at the tail end of Kabila’s presidency, when the EU sanctioned some of his top henchmen in late 2018. President Tshisekedi has expressed an increasing willingness to work with Brussels even as the EU renewed sanctions in December 2019 against twelve of the fourteen Kabila-era officials. In particular, the EU could help de-escalate regional tensions and lessen neighbours’ support to foreign armed groups while contributing to pathways to surrender for Congolese fighters allied to such groups.

The immediate priority is to encourage President Tshisekedi to reinvigorate diplomatic efforts to calm tensions among DRC’s neighbours.

The immediate priority is to encourage President Tshisekedi to reinvigorate diplomatic efforts to calm tensions among DRC’s neighbours while putting aside, at least for now, plans for those neighbours to conduct military operations in the eastern DRC. The EU’s best bet for pressing for an approach along these lines would be to increase its influence in the International Contact Group for the Great Lakes, the informal group to which it and a number of European states belong. Brussels and other European capitals should commit more senior officials both to the contact group itself and to liaising with the group and with regional governments. Together with the UN special envoy to the Great Lakes, Xia Huang, who has recently been instrumental in bringing together the Burundian, Congolese, Rwandan and Ugandan intelligence chiefs to discuss their deteriorating relations, the EU should use its weight in the group to prioritise the need for a political solution to tackling foreign armed groups in the eastern DRC.

Such a solution could entail Xia encouraging the three states to lay out their allegations and evidence of support by their rivals to armed groups in the DRC. He could share all information received with the UN Group of Experts and the Expanded Joint Verification Mechanism of the International Conference of the Great Lakes Region. The evidence provided by regional states, and investigations conducted by the expert group and joint verification mechanism, could collectively inform diplomatic efforts to halt or diminish support to DRC-based insurgents.

By financially and technically supporting the national DDR process, the EU can also back Tshisekedi’s priority of tackling the plague of Congolese armed groups. Congolese insurgents, many of whom are sucked into alliances with more powerful foreign armed groups, often lack an alternative in the absence of a fully funded DDR program. Under Kabila, the Congolese authorities gave only limited resources to DDR. Several donors pulled out, frustrated by Kinshasa’s lack of commitment to funding a national program. Despite the uptick in attacks in the east, there are signs that some fighters are placing greater hope in Tshisekedi’s presidency and expressing greater desire to surrender. MONUSCO’s new mandate, adopted at the end of December 2019, encourages the DRC’s government to appoint a senior coordinator to lead the DDR effort. The EU could consider supplying this person with the necessary funding and expertise to carry out the mandate.