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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
What Does Opposition Leader Tshisekedi’s Death Mean for DR Congo’s Road to Elections?
What Does Opposition Leader Tshisekedi’s Death Mean for DR Congo’s Road to Elections?
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

Senior Analyst, Congo
Fellow, ​Central Africa
Op-Ed / Africa

What Does Opposition Leader Tshisekedi’s Death Mean for DR Congo’s Road to Elections?

Originally published in African Arguments

The death of the veteran politician deprives the opposition of a well-known rallying figure. Without him, uncertainty and growing popular anger are likely to lead to more instability.

The death of prominent opposition leader Etienne Tshisekedi has deprived the Democratic Republic of Congo (DRC) of a unique political figure who was at the forefront of the fight for democracy for over three decades.

His loss is a major blow to the main opposition coalition, the Rassemblement, which he led alongside the relative newcomer, ex-Katanga Governor Moïse Katumbi. It also undermines the DRC’s faltering transition and may play into the hands of the ruling majority that has consistently sought to delay elections.

As popular anger mounts, the opposition will have to work hard to rebuild a credible leadership

Coming just a month after the signing of a political agreement, which would have put him at the head of an important follow-up committee, his departure robs the opposition of a leader able to combine genuine street-level popularity with an ability to squeeze out political deals. As popular anger mounts, the opposition will have to work hard to rebuild a credible leadership, capable of concluding a deal with the majority.

A fragmented opposition loses its figurehead

The 84-year-old Etienne Tshisekedi launched the Union for Democracy and Social Progress (UDPS) opposition party in 1982 and built a strong following in his native Kasai region and in the capital Kinshasa. He symbolised the struggle for democracy in the waning days of the President Mobutu Sese Seko regime. He also opposed President Laurent Kabila, who overthrew Mobutu in 1997, and his son Joseph Kabila, the current president.

Unable to resist the populist option, he made a strategic error when he boycotted the relatively credible 2006 elections. In 2011, he ended up coming second in a hard-fought but less credible election, and did not accept the result, proclaiming himself president in a parallel swearing in ceremony.

In more recent years, despite living abroad, he again became the symbolic figurehead of the struggle for democracy

In more recent years, despite living abroad, he again became the symbolic figurehead of the struggle for democracy, this time over the defence of the constitution, and particularly its two-term limit for the president, and the need to organise elections on time in December 2016. They have since been delayed.

This position allowed him to improve cooperation with his fellow opposition leaders, and in June 2016 he was a driving force behind the creation of the Rassemblement, combining the forces of several parties and high-profile figures, including Moïse Katumbi and those in the “G7” (an umbrella group of opposition parties that left the ruling majority in 2016), giving the opposition renewed cohesion and strength.

When Tshisekedi returned to Kinshasa on 27 July 2016 after years of self-imposed exile, he was greeted by massive crowds, demonstrating his unique credibility and ability to get people out onto the street. These were seemingly undamaged by simultaneously being in direct and secretive talks with Kabila’s governing majority.

As president of the Rassemblement’s “governing council” (Conseil des sages), Tshisekedi provided legitimacy and political credibility to the other parties and individuals, most of whom had been part of the ruling majority or held positions in government. These actors needed Tshisekedi’s street credibility and popularity as they tried to build a more pragmatic negotiation strategy. At several moments, tension within the Rassemblement was palpable as the G7 tried to manage the unpredictability of the platform’s leader.

After the elections were pushed back by 18 months, a combination of mounting popular tension and pressure by the international community led to the signing of the 31 December 2016 global and inclusive agreement mediated by the Congolese Catholic Church. It called for a transitional government, a promise that President Kabila will not run for another term, and elections to be held in 2017. Tshisekedi no longer had the physical strength to participate in the talks, but his symbolic importance was underlined when he was appointed as the president of the critical follow-up committee, the Conseil National de suivi de l’accord et du processus électoral (CNSA).

The transition process stalls

Tshisekedi left Kinshasa on 24 January as negotiations on the implementation of the 31 December agreement stalled over several issues, including the procedure to appoint a new prime minister and the division of ministerial positions. The lack of progress, in the context of deepening economic malaise and insecurity in several provinces, including Tshisekedi’s native Kasai Central, will increase popular frustrations and tensions.

Those now taking over the mantle of political opposition will find it hard to channel the frustrations of the population

Tshisekedi had symbolic importance for the population; despite his at times vainglorious or inflammatory approach, he represented hope of a better political future. Those now taking over the mantle of political opposition will find it hard to channel the frustrations of the population, already deeply sceptical about politicians, into constructive political engagement. The only moral authority and beacon of hope at this stage remains the Catholic Church, currently attempting to resuscitate the agreement it mediated in December.

Before his demise, Tshisekedi’s party had already been struggling with the succession question. And while some have been pushing for Tshisekedi’s son Felix to take over, others refuse moves that make the party seem like a hereditary monarchy, whatever the strength of the name Tshisekedi. This struggle played out in the broader political negotiations and disputes over who should become prime minister, with some pushing for Felix to take that role in the name of the Rassemblement.

Charles Mwando Nsimba, the G7’s president and Rassemblement’s vice-president, who died in December. Moïse Katumbi would be an obvious choice to take on a more prominent leadership role. But he is still in a form of exile abroad, pending an eventual agreement on his judicial prosecution (a sensitive case, that is now, per the December agreement, managed by the National Episcopal Conference of Congo [CENCO]). Moreover, while Katumbi has a certain national popularity, he does not have the political party, political weight or legitimacy as an opposition leader that Tshisekedi could command.

Talks that had been extended for a week by CENCO after the failure to meet the 28 January deadline are likely to be halted for a while during the funeral and mourning period. After that, there is an opportunity for political leaders to work in good faith to implement the 31 December agreement and to open up political space. But renewed popular anger will be an increasing challenge as people’s faith in the political process plumbs new depths.

Read the PDF version here.

Contributors

Project Director, Central Africa
richmoncrieff
Senior Analyst, Congo