Kinshasa has a brand new Convention and Financial Centre and its four gleaming skyscrapers are being touted as a symbol of renewal at a time when the government is keen to deflect attention from the worsening security situation in the east. Inaugurated with great fanfare in December 2023 in the presence of President Félix Tshisekedi, the high-rise development in Gombe was built in partnership with Turkey.

“We have made the DRC a hub for investments in Africa,” says Turhan Mildon, CEO of the Turkish group Milvest, which invested $40m in the project.

However, the ultra-modern buildings housing ministries and company headquarters cannot hide the challenges facing the economy. The DRC remains among the five poorest nations in the world. According to the World Bank, about 74.6% of Congolese live on less than $2.15 a day. Around one in six people living in extreme poverty in sub-Saharan Africa resides in DRC.

Just a few kilometres from the new financial centre, at the Kalembelembe market, the atmosphere is markedly different. Mamie Mushiya sells cassava leaves, known as pondu. But lately, customers are scarce.

“Just a few months ago, we sold pondu for 3,000 CFA francs, but today it costs CDF?5,000,” says the 40-year-old trader. “No one can afford it and I struggle to feed my family.”

Global shocks cause inflation to soar

Throughout 2023, inflation remained particularly steep in the DRC, reaching 23.8%. Besides the conflict ravaging North Kivu, the country is still reeling from the impacts of the Covid-19 crisis and the war in Ukraine. These global shocks disrupted supply chains and caused worldwide price increases.

When the US Federal Reserve raised interest rates, which weakened all African currencies, the Congolese franc was badly affected. A year ago, the dollar traded for CDF?2,000; now, more than CDF?2,800 are needed on the parallel market, while the Central Bank of Congo has set the exchange rate at CDF?2,400.

Our villages … are the real lever for our take-off. To achieve this, we need to transform the entire education system to align it with development needs

To break this vicious cycle, the Central Bank of Congo has raised its key interest rate several times over the past year – it is now at 25%. The institution also ordered mining companies to pay their taxes in Congolese francs. The national currency has not yet recovered.

DRC is one of the world’s most dollarised economies. “Salaries are often paid in dollars; rent, fuel, even bank deposits are made in dollars,” says French economist Bruno Cabrillac. This situation heavily burdens the purchasing power of Congolese, the vast majority of whom do not have access to dollars.

“We have an economy that is too dependent on mineral exports,” says Congolese economist AL Kitenge. “We also have significant disparities between rural and urban areas. Our villages have been neglected since the colonial period, even though they are the real lever for our take-off. To achieve this, we need to transform the entire education system to align it with development needs.”

Mining is still the mainstay

Despite these persistent challenges, the trend seems to be reversing according to the latest economic report from the Congolese authorities. ‘The depreciation of the national currency in the market contrasts with the appreciation observed on the exchange market, while a slight deceleration of prices is observed in goods and services,’ the Central Bank said in a statement.

While the majority of Congolese remain poor, the country’s economy shows one of the highest GDP growth rates in the world. According to the International Monetary Fund (IMF), which completed a mission in the country on 8 May: ‘Real GDP growth is now estimated at 8.3% for 2023, supported by strong growth in the extractive sector.’ However, in 2024, GDP growth is expected to slow to around 6%.

Mines contributed about 70% to overall growth in 2023, and the sector is likely to continue driving the economy over the coming years. The DRC’s mineral reserves are among the largest in the world and constitute a major source of revenue for the country – 43% of the national budget, 47% of GDP, 95% of exports and 25% of jobs.

While the sector is regularly marred by corruption scandals, one of Tshisekedi’s first moves on taking office was to evaluate contracts signed during his predecessor Joseph Kabila’s term. Notable among these is the ‘contract of the century’ – the minerals for infrastructure agreement signed in 2008 between the DRC and a consortium of Chinese companies.

Renegotiating with Chinese partners

In February 2023, the DRC’s national auditor, the Inspection Générale des Finances (IGF), pointed out a significant imbalance in the 2008 agreement, revealing that Chinese companies had generated estimated profits of nearly $10bn, while the DRC had only received $822m in infrastructure investment.

Mechanisms must be established or strengthened to ensure the proper use and governance of these funds

On 14 March 2024, after tough and lengthy negotiations, the parties signed an amendment to the agreement. This provides for a significant increase in investment in infrastructure, raising the amount from $3.2bn to $7bn. According to the Congolese authorities, this will translate into the construction of about 5,000km of roads.

The IMF mission recommended that the authorities integrate ‘the positive impact of the amendment recently signed with the mining company Sicomines, both in terms of revenue and investment spending’ into the 2024 budget. ‘Furthermore, mechanisms must be established or strengthened to ensure the proper use and governance of these funds.’

For the first time in its history, the DRC completed an IMF programme. The May visit focused on the final review of an Extended Credit Facility (ECF) agreement for about $1.52bn. The DRC is expected to receive the final tranche of $217m in the coming weeks.

‘The results obtained under the programme have generally been positive, with most quantitative targets met and key reforms implemented, albeit at a slow pace,’ said the IMF. Previous agreements had been interrupted, mainly due to a lack of transparency in the mining sector.

It is now up to the Congolese authorities to confirm these initial steps in the right direction.