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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
Need for International Unity as DR Congo Awaits Electoral Results
Need for International Unity as DR Congo Awaits Electoral Results
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
An Independent National Electoral Commission (CENI) agent seals a ballot box in front of observers in the Lubumbashi's Mapala district on December 30, 2018, following the close of polls in DR Congo’s presidential, provincial and national elections. CAROLINE THIRION/AFP
Statement / Africa

Need for International Unity as DR Congo Awaits Electoral Results

The Democratic Republic of Congo awaits the official results of 30 December 2018 elections, amid hints that unofficial numbers show an opposition presidential candidate winning. Conflicting tallies could spark violence. Outside powers should stand together in urging calm and careful verification of the electoral outcome.

The Independent Electoral Commission in the Democratic Republic of Congo will likely declare results of the 30 December elections this week. Already there are worrying signs of divisions among international actors, after a statement by the Catholic Church, which fielded the largest election observation mission, indicating an opposition victory. Failure to respect the electoral result would risk throwing the country into a major political crisis. If there are indications the electoral commission has attempted to manipulate results, international actors, starting with the UN Security Council which plans to meet on Friday, should call for thorough and credible investigation before those results are accepted as definitive. They must remain united in their response and, led by African powers, encourage the Congolese to undertake delicate negotiations to ensure a peaceful outcome that reflects the will of the people.

On Sunday 30 December, millions of Congolese voted to elect a new president and provincial and national lawmakers. Despite growing tensions over repeated delays and the unwarranted exclusion of around 4 per cent of the electorate, mainly in North Kivu province, the vote passed off in relative calm. Both the African Union (AU) and the Southern African Development Community (SADC), who fielded the biggest international observation missions, concluded the poll was adequately run despite some unrest and technical problems.

On 3 January, the Episcopal Council of the Congolese Catholic Church, known as CENCO, issued a statement based on information gathered by its forty thousand observers, present in many of the 75,500 polling stations, and on its parallel vote tabulation. The CENCO is widely regarded as credible in the DRC and has observed many previous elections. It stated that the irregularities and problems it had observed had not prevented the Congolese people making a democratic choice and that a single candidate had emerged as clear winner. CENCO is barred by law from naming a victor before official results are proclaimed, but in urging the largely government-controlled Independent Electoral Commission (CENI) to respect the vote’s outcome, it strongly hinted that the incumbent President Joseph Kabila’s preferred candidate, Emmanuel Shadary, had not won. Subsequent sources briefed by CENCO point to opposition candidate Martin Fayulu as the winner.

The split between CENCO and the ruling majority has left diplomats struggling to reach consensus.

CENCO’s calculation, if correct, could have far reaching consequences. Fayulu, a long-time opposition figure and former businessman, is backed by two exiled opposition heavyweights, Moïse Katumbi and Jean-Pierre Bemba. The government’s successful moves to exclude those two men from the presidential contest added to their already bad relations with those in power in Kinshasa, many of whom would expect a Fayulu presidency to look into their alleged past crimes and corruption. Indeed, for President Kabila and his close allies a Fayulu victory is the worst possible outcome; they regard the other main opposition candidate Felix Tshisekedi as more conciliatory. There is a real danger they push the election commission to engineer a result more to their liking.

The split between CENCO and the ruling majority (which has strongly criticised CENCO’s declaration) has left diplomats struggling to reach consensus. It threatens the international cohesion of the past twelve months which led to increased pressure on President Kabila and partly explains his August 2018 decision not to stand for a third term in office. Worryingly, the CENCO position is being portrayed by some in private as a “western” position, potentially playing into an unhelpful Africa versus the West narrative. The UN Security Council has been unable to agree upon a position. Its members and other international actors all concur that Congolese politicians should respect the election results. But they disagree over whether to put immediate pressure on the electoral commission, and by extension the government, by urging the commission to rapidly publish results and warning that it must respect the voters’ choice, or to give it the benefit of the doubt and allow it time to publish official results, thereby avoiding giving too much weight to the CENCO’s tallies. An important Security Council meeting has been pushed back to Friday in the expectation that the electoral commission will have declared results by then. It is foreseen that the council will be briefed by outside experts, including the CENCO and possibly regional actors – the AU and SADC – that observed the vote.

It is vital that the electoral commission declares the result of the election transparently.

The situation is tense. Internet communications are mainly suspended in-country and the Congolese rumour mill is generating unhelpful and polarising conjecture that feeds into the international debate. Many Congolese are caught between hope for change and uncertainty as to what will happen next. To encourage calm, all three candidates and their entourages must pass constructive messages of reassurance, urge supporters to remain calm, call for patience and avoid inflammatory statements.

It is vital that the electoral commission declares the result of the election transparently, and in enough detail for their conclusions to be verified, and if necessary challenged in the courts. Any attempt to manipulate results would likely generate enormous anger and potentially spark violence countrywide. On the other hand, many of those currently in power have much to lose in what could be a dramatic shift of fortunes. If Fayulu has won, it is important they receive assurances about their future to the extent possible so as to improve prospects of a peaceful transition.

International actors must remain steadfast in calling for the result to be respected. They should, however, resist drawing hasty conclusions that could widen international divides. Foreign powers must avoid splitting along pro-Kabila, pro-opposition lines, which would likely embolden each side just as delicate negotiations and signs of inclusivity and accommodation are needed. In this light, the Security Council meeting on Friday provides a crucial occasion for a display of unity. The council should call for calm and for all parties to respect the outcome of the vote. If the electoral commission declares a result significantly at odds with figures collected by the CENCO and other observers, including those of political parties, the council will have to call for a thorough and credible investigation before results are accepted as definitive. As they did in persuading Kabila to step down, African powers should again take the lead to help Congolese actors negotiate a peaceful outcome that respects the will of the people.