Kinshasa walking a tightrope to rebuild economy
IN SUMMARY
- After signing peace agreements with more than 18 rebel groups since January last year, the country is struggling to invest and foster good neighbourliness.
Like a great footballer with a bad personality, the Democratic Republic of Congo has always had great potential. And it seems it is now ready to exploit that potential, going by the events of the past year.
After signing peace agreements with more than 18 rebel groups, resulting in relative calm, the government has initiated plans to improve the country’s economy, as well as its relations with Rwanda, its neighbour to the east.
Just last week, the World Energy Council’s manager for Africa, Latsoucabe Fall, announced that the Grand Inga Dam project, which has the potential “to light up Africa”, could be up and running by 2025.
“It’s a great plan for the future,” said an African diplomat in Kinshasa who requested anonymity. “But we’re nowhere near the future.”
Methane gas
In neighbouring Rwanda, which has been at odds with the DRC, there is talk of working together on a range of power-generating projects. In addition, the two countries are working on harnessing methane gas from Lake Kivu to convert it into energy for export.
But for all the lofty talk, there has been little action by the government of President Joseph Kabila. For instance, there are no serious signs of investment in the Grand Inga Dam project.
Things are no better on the political scene, with parliament split over a highly controversial foreign policy. Then there’s the nagging issue of the government’s inability to get former rebel leader Gen. Laurent Nkunda from Rwanda.
The situation has been aggravated by the global economic crisis. Take retrenchment, for instance. While it is true that people in other countries are also losing their jobs, the situation is a lot worse in the DRC.
There have been reports of hundreds, and in some cases thousands, of employees have been laid off by American automobile factories, but in the DRC, about 300,000 miners in Katanga Province alone lost their jobs at the end of last year. This is in addition to 9,000 wood workers in the northern forests.
Few Congolese have jobs, and even fewer make enough money to survive on. Yet it is these very people who are losing their livelihoods.
Meanwhile, inflation is rising. At 31 per cent, it is more than double the original government estimate for this year.
The Congolese franc has taken a beating from the major world currencies, and parliament will have to revise its budget for this year. To curb expenditure, the government last month slashed spending on all non-essential operational spending by 50 per cent.
The mining sector, which is the backbone of the economy and earns the government 60 per cent of its revenues, is in decline. And the price of copper, one of the country’s most abundant resources, fell by half in July last year.
Particularly notable is the case of tin, especially cassiterite, which is used in the manufacture of cell phones and computer chips. This much sought-after mineral has been in such high demand that multinational corporations were reported to be enlisting the help of rebels and militia to get access to, and maintain control over, mines.
Indeed, Gen. Nkunda’s offensive in late 2008 as a result of a disagreement over coltan and cassiterite drew the world’s attention to the new conflict over resources. Many multinational companies have now realised that they can no longer do business in the DRC the way they used to.
Traxis SA, a Belgium-based mineral buyer, mostly of tin, suspended its operations in the DRC a fortnight ago as the United Nations began putting pressure on companies to reveal the sources of the minerals they buy. It is a well-meaning move but is unlikely to achieve much.
The saying “one man’s trash is another man’s treasure” is highly applicable in the DRC.While most countries are shunning it, China is making inroads in various sector. A controversial $9 billion mining and infrastructure deal is in the offing, despite criticism from various quarters.
According to the deal, China will build schools, hospitals and roads, among other things, in exchange for concessions on copper, cobalt and tin.
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