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Staying the course: Strengthening fundamentals despite adversity

By Nicolas Kazadi

Foresight Africa 2023The COVID-19 pandemic hit at a time when the Democratic Republic of Congo (DRC) had already initiated its program for structural change and transformation. In that respect, 2019 was a year to remember—the elections led to the first-ever peaceful change of leadership, which was an important step in the political history of the country. Very early on, the new course was set by the elected government, and priorities were identified: Protect the most vulnerable by increasing investments in health and education; strengthen growth prospects by capitalizing on a vibrant mining sector while increasing efforts towards diversification (both vertical and horizontal); build fiscal buffers to improve the external situation; and increase domestic revenue mobilization and improve spending quality to finance deeply needed infrastructure.

Despite the pandemic, the Congolese economy remained dynamic, achieving positive economic growth in 2020 even while growth in sub-Saharan Africa turned negative. This exceptional growth was due to good performance and windfalls in the mining sector, which remained resilient through the crisis, growing at almost 10 percent in 2020. However, growth in the secondary (manufacturing) sector turned negative, while the tertiary (services) sector coped only marginally due to restrictions introduced across the country in reaction to the global health crisis. Unlike these other sectors, no major mines closed owing to the limited spread of COVID-19 to the mining regions.

Thinking long term: Strengthen fundamentals, implement structural policies, and build buffers

The DRC has been working on strengthening the fundamentals to achieve sustainable and lasting results. It aims to accomplish this through a systematic method—identify the bottlenecks, find solutions, and bring everyone together to implement action plans. A striking example is the recent efforts by the Ministry of Finance to accelerate revenue mobilization, which benefited a lot from the implementation of performance contracts that set up clear and ambitious targets. On the external side, international reserves reached approximately $4 billion in August 2022, from around $900 million in 2019—an increase of 344 percent.

In addition, this ambitious agenda and strong performance has been achieved thanks to the renewed engagement of DRC with international stakeholders. The government’s reform mindset is anchored by the IMF’s $1.52 billion Extended Fund Facility program, which also acts as a catalyst for additional financing from other donors. Moreover, the DRC is working on strengthening its communication with international stakeholders, bilateral partners, and investors to improve the level of information on the dynamism of DRC. For example, a conference was organized in September 2022 in Kinshasa around country risk (the DRC Country Risk Conference) to discuss the risks and opportunities of the Congolese economy. We aim at having such interactive and engaging discussions on a yearly basis, giving us the opportunity to identify challenges and design solutions.

Preparing for future shocks

The continent has experienced a succession of shocks throughout the past few years, which has been both an eye-opener and a call for action. Our pre-crisis shared goals remain valid, but both the external and domestic situations have changed. Past development progress has been eroded because of the crisis, and a significant share of our population has been pushed into poverty. Nevertheless, inclusive and sustainable growth remains a priority. Moreover, as countries embark on a clean, renewable energy transition, we see a world where increasingly; the dynamics in terms of supply and demand—and more specifically regarding energy resources—have changed. Several countries in the region have an important role to play in that respect. DRC, thanks to its massive endowment in natural resources, remains at the forefront of this chance to harness the green transition. It is now urgent to seize this opportunity.

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