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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
Moïse Katumbi’s Return Portends Shifting Alliances in Congolese Politics
Moïse Katumbi’s Return Portends Shifting Alliances in Congolese Politics
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
Democratic Republic of Congo opposition leader, former governor of Katanga Moise Katumbi waves as he arrives in Lubumbashi on 20 May 2019 after three years in self-imposed exile. AFP / Junior KANNAH
Q&A / Africa

Moïse Katumbi’s Return Portends Shifting Alliances in Congolese Politics

On 20 May prominent opposition leader and businessman Moïse Katumbi returned to the Democratic Republic of Congo from exile. In this Q&A, Crisis Group’s Deputy Project Director for Central Africa Nelleke van de Walle discusses the possible impact on Congolese politics, five months after Felix Tshisekedi’s controversial election as president.

Who is Moïse Katumbi, and why has he returned?

Moïse Katumbi is one of the richest persons in the Democratic Republic of Congo (DRC) – and a political force to be reckoned with. A self-made man, he accumulated his wealth running mining and transport companies in the southern Katanga province. He is popular in Katanga, in part because he is president of a successful football team, Tout Puissant Mazembe, based in the provincial capital Lubumbashi.

Katumbi first fled the DRC to neighbouring Zambia in the chaos of the civil war in the 1990s. In the early 2000s, President Joseph Kabila, who had succeeded his father, Laurent, after his assassination in 2001, invited Katumbi back to the country to help him fix Katanga’s mining sector. Katumbi chose to return on 11 July 2003, to coincide with the date when the state of Katanga declared its short-lived independence – a period many Katangais still recall with nostalgia.

His political career took off in 2007 when he was elected Katanga’s governor. He boosted his popularity by contributing to the province’s economic development – targeting corruption, encouraging foreign investment and improving infrastructure. For years, he was a member of Joseph Kabila’s People’s Party for Reconstruction and Democracy. In the summer of 2015, however, he had a falling-out with Kabila after trying and failing to dissuade the former president from seeking a third term. (The Congolese constitution bound Kabila to a maximum of two terms, but he long sought ways to overcome this limitation.) In September of that year, Katumbi resigned as governor.

Many Congolese expected him to run for president in elections initially scheduled for November 2016. But in May, after the government accused Katumbi of hiring mercenaries in a coup plot, he fled the country again, this time to Belgium. He subsequently was convicted in absentia on separate property fraud allegations and sentenced to three years in jail. Katumbi has consistently denied all charges, calling them politicised. In August 2018, he tried to re-enter the DRC in order to submit his candidacy for president in polls that Kabila, after several delays, had finally slated for that December. The government denied him entry.

The legislative balance of power could shift further were FCC deputies to defect, whether out of political opportunism or for other reasons.

Ultimately, under pressure from African and Western governments, Kabila decided not to run for a third term. Instead, he sought to handpick his successor. That proved no easy feat. His preferred candidate, Ramazani Shadary, failed to win at the polls and a parallel vote count, widely regarded as credible, suggested that Martin Fayulu, an opposition politician backed by Katumbi, had prevailed in a landslide. Yet the Electoral Commission declared Félix Tshisekedi, another opposition figure, the winner. Kabila appears to have engineered victory for Tshisekedi, whom he viewed as less dangerous to his interests than Fayulu; Kabila and Tshisekedi reportedly struck an informal deal pursuant to which the new president gave his predecessor unspecified assurances about his future.

Under Tshisekedi, the DRC’s political space is opening up. In his inaugural speech he pledged to free political prisoners, close the secret police’s detention centres and allow exiled politicians to return. He has made some progress toward fulfilling all these promises. Katumbi has been one beneficiary: in late April, the Court of Cassation, the DRC’s supreme court of appeals, overturned the property fraud conviction. In May, prosecutors also dropped the coup plot investigation, paving the way for Katumbi’s return.

In keeping with his proclivity for historically resonant dates, he chose 20 May for his return to Lubumbashi, three years to the day since his exile, and a national holiday under the DRC’s long-time president, Joseph-Desiré Mobutu (1965-1997). Dressed in white – a colour he chose to symbolise peace – Katumbi arrived in Lubumbashi, where he was welcomed by tens of thousands of supporters, also wearing white, who proceeded to rally peacefully in the city centre. National and local media covered the homecoming favourably.

What impact will his return have on the DRC’s politics?

Tshisekedi could use an ally in pursuing his ambitious political agenda, and Katumbi arguably fits the bill.

The new president is struggling in the face of resistance by Kabila, who remains an important power behind the scenes. Though Kabila’s intended successor Shadary lost the presidential election, his Common Front for Congo (FCC) coalition won a parliamentary majority in the legislative contests, the results of which were equally disputed. The FCC’s several constituent groups control almost three quarters – 346 of 500 – of the National Assembly seats and the constitution mandates that the prime minister hail from the parliamentary majority’s ranks. It took Kabila and Tshisekedi four months to settle on a candidate before finally naming Sylvestre Ilunga Ilunkamba, a member of Kabila’s party and experienced politician, on the day of Katumbi’s return, diverting some attention from events in Lubumbashi.

Although Tshisekedi cannot come close to challenging the FCC’s majority even if he forges an alliance with Katumbi, he could nonetheless strengthen his position. Katumbi’s Ensemble is the largest opposition coalition, with at least 66 seats, and Tshisekedi’s Heading for Change alliance has at least 47. (Both could gain additional seats in Beni, Butembo and Yumbi where polls were postponed due to security concerns.) Moreover, the legislative balance of power could shift further were FCC deputies to defect, whether out of political opportunism or for other reasons.

In short, a Tshisekedi-Katumbi alliance might not carry immediate benefits for the new president but it would help balance Kabila’s overwhelming influence. Yet, although it would be more natural than his tense “marriage of convenience” (as press outlets have called it) with Kabila, it would represent a break from the recent past.

Katumbi was welcomed in Lubumbashi by tens of thousands of supporters, who proceeded to a peaceful rally in the city centre. Lubumbashi, 20 May 2019. CRISISGROUP/Paul Kaboba

Indeed, in a sign of friction between the two men, Katumbi backed Tshisekedi’s rival Fayulu in the 2018 presidential race. Along with other major opposition leaders, Katumbi and Tshisekedi had formed a coalition called Lamuka (“Wake Up”, in Lingala) to contest the elections. Lamuka decided to throw its weight behind the relatively unknown Fayulu as its presidential candidate. But Tshisekedi broke ranks shortly after the coalition was formed, under pressure from his party, the Union for Democracy and Social Progress, to run separately. Fayulu, convinced that he was robbed of his victory, has maintained his call for new elections and for Tshisekedi’s resignation.

In an interview with Crisis Group on 15 May, Katumbi said he saw no point in being too hard on Tshisekedi. “The enemy of the population is not the one who won the elections, but the one who organised them”, he explained. While refraining from overtly supporting Tshisekedi, he praised the new president for his work to protect freedom of expression. Referring to the Court of Cassation decision, he maintained his innocence and rejected the idea that the court’s decision to rescind his conviction was politically motivated. Importantly, he stressed the importance of separating Tshisekedi from Kabila and avoiding pushing the president into his predecessor’s arms. He sounded the same note while addressing the crowd in Lubumbashi on 20 May, when he urged Kabila to afford his successor some space, using the metaphorical phrase “un véhicule ne peut pas avoir deux chauffeurs (a car can’t have two drivers)”.

What does Katumbi’s return mean for the Congolese opposition?

With Katumbi now serving as its rotating head, Lamuka is still projecting a united front. But it is unclear how long this can hold. The coalition featured Katumbi’s return prominently on Twitter, and in interviews announcing his return he reaffirmed his commitment to the opposition coalition. He likewise has made clear that he would not join the government. Still, when he spoke to Crisis Group, Katumbi said he has advised Fayulu to forget the past and move forward, because his demand for new elections is untenable. He cited this stance as evidence that he is “un homme pragmatique (a pragmatic man)”.

Lamuka’s other major figure is Jean-Pierre Bemba, Kabila’s vice president from 2003-2006. Bemba was also barred from running in 2018 and likely continues to harbour presidential ambitions. On 13 May, with Fayulu by her side, Eve Bazaiba, secretary general of Bemba’s Movement for the Liberation of the Congo, announced that Bemba would also be returning to the DRC within three weeks. His homecoming may further strain the coalition. Like Katumbi, he will tour the DRC’s 26 provinces in the coming months. Whether he will do so with Katumbi or with Fayulu has not been confirmed.

The DRC’s political landscape remains fractured, with shifting alliances and ongoing tactical manoeuvring. This presents the president with a dilemma: enjoying only a relatively weak base of support, he will need to look to the opposition to bolster his presidency’s stability; yet the main opposition figures also have their own ambitions and, if given significant space, could quickly become powerful contenders in the 2023 election.