Congo (Dem Rep)

Politics:

• Background

  Congo (Dem Rep): Constitution and institutions

  The post-transition constitution

  A new constitution was passed by the National Assembly in May 2005 and approved in a national referendum in December. The new constitution provides for a semi-presidential system of government, with both a president and a prime minister. The president is directly elected for a term of five years and may serve no more than two terms. The president appoints as prime minister whoever can command a parliamentary majority. The federal legislature is a bicameral parliament comprising the 500-seat National Assembly and the 108-seat Senate. Parliament will meet twice a year from mid-March to mid-June and from mid-September to mid-December. Members of the National Assembly are elected by direct vote for five-year terms. Members of the Senate are indirectly elected by the legislative assemblies of the provinces.

  The constitution creates 25 new provinces (Kinshasa will continue to have the same status as a province) and gives them greater autonomy than the current 11 provinces (including Kinshasa). This is a major change for the country, which has traditionally been ruled in a highly centralised manner, a concession to the provinces and districts that have long complained about the over-centralised system in which Kinshasa is the main beneficiary of the country's resource wealth. The new provinces' increased autonomy will allow them to develop economies suited to their location and their proximity to neighbouring countries. In a country of the size and racial complexity of the DRC, an increased measure of devolution is seen as a way of securing the maximum support for national institutions and thereby consolidating national unity. One of the root causes of the country's recurrent crises since independence in 1960 has been the failure of national institutions to achieve universally accepted legitimacy. Each province is governed by a provincial legislative assembly and government consisting of a governor and deputy-governor, elected by the assembly, and up to ten provincial ministers. To finance the operations of provincial government the provinces will retain 40% of intra-provincial revenue, including taxes on exports of minerals, timber and energy resources. The remaining revenue will become part of the national budget.

  An important clause in the constitution confers nationality on all groups that were present on national territory at the time of independence, determining once and for all the status of the Banyamulenge (Congolese Tutsi) community in the DRC, the descendants of immigrants from present-day Rwanda both before and during the colonial era. Their status as Congolese nationals has been heavily politicised and manipulated over the past 25 years, being called into question and revoked several times as a result of changing political winds. This ambiguity has been the reason for much abuse of the Banyamulenge and has also fuelled their resentment towards the Congolese government.

  November 01, 2007

• Structure

  Congo (Democratic Republic): Political structure

  Official name

  Republique democratique du Congo

  Form of state

  Unitary republic

  National legislature

  An elected National Assembly of 500 seats was installed on September 19th 2006; a 108-seat Senate was elected by the provincial assemblies on January 19th 2006

  National elections

  July 30th 2006 (first round of the presidential election and National Assembly election); October 29th 2006 (second round of the presidential election); next elections due in 2011

  Head of state

  Joseph Kabila

  National government

  Appointed on October 26th 2008; its members are from parties affiliated to the pro-Kabila Alliance pour la majorite presidentielle (AMP)

  Main political parties

  Parti du peuple pour la reconstruction et la democratie (PPRD), Mr Kabila's party, dominates the government, but also represented are Parti lumumbiste unifie (Palu), which holds the post of prime minister and several other ministries, Forces du renouveau, Mouvement social pour le renouveau and Union des democrates mobutistes; the opposition coalition, Union pour la Nation, is dominated by Mouvement de liberation du Congo (MLC); Union pour la democratie et le progres social (UDPS) is a prominent opposition party but boycotted the 2006 elections

  President: Joseph Kabila Kabange

  Prime minister: Adolphe Muzito

  Deputy prime ministers

  Reconstruction: Emile Bongeli

  Security & defence: Mutombo Bakafwa Nsenda

  Social needs: Francois Joseph Mobutu Nzanga

  Key ministers

  Agriculture: Norbert Basengezi

  Budget: Michel Lokola Elamba

  Decentralisation & land-use planning: Antipas Mbusa Nyamwisi

  Energy: Laurent Muzangisa Mutalamu

  Environment, conservation & tourism: Jose Endundo Bononge

  Finance: Athanase Matenda Kyelu

  Foreign affairs: Alexis Thambwe Mwamba

  Hydrocarbons: Rene Isekemanga Nkeka

  Industry: Simon Mboso Kiamputu

  Infrastructure, public works & reconstruction: Pierre Lumbi Okongo

  Information & government spokesman: Lambert Mende

  Interior: Celestin Mbuyu

  International & regional co-operation: Raymond Tshibanda Ntungamulongo

  Justice: Luzolo Bambi Lesa

  Mines: Martin Kabwelulu

  National defence & veterans: Charles Mwando Nsimba

  National economy & trade: Vacant

  Planning: Olivier Kamitatu Etsu

  Posts & telecommunications: Louise Munga

  Relations with parliament: Adolphe Lumanu

  State enterprises: Jeannine Mabunda Lioko

  Transport: Mathieu Pita

  Governor of central bank

  Jean-Claude Masangu Mulango

  March 03, 2010

Economy:

• Background

  Congo (Dem Rep): Economic background

  Main economic indicators, 2006
  Real GDP growth (%)	5.1
  Consumer price inflation (av; %)	13.2
  Current-account balance (US$ m)	-644
  Exchange rate (av; FC:US$)	468
  Population (m)	60.6
  Sources: Banque centrale du Congo; IMF; Economist Intelligence Unit.

  Download text file (csv format)

  November 01, 2007

• Structure

  Congo (Democratic Republic): Economic structure

  	2005(a)	2006(a)	2007(a)	2008(a)	2009(b)
  GDP at market prices (FC bn)	3,366	4,114	5,148	6,526	8,729
  GDP at market prices (US$ m)	7,103	8,785	9,972	11,668	10,780
  Real GDP growth (%)	6.5	5.6	6.3	6.2	2.7
  Consumer price inflation (av; %)(c)	21.4	13.2	16.7	18.0	44.7(a)
  Population (m)(d)	59.08	60.80	62.52	64.26	66.05
  Exports fob (US$ m)	2,071	2,931	6,143	6,585	6,500
  Imports fob (US$ m)	2,473	2,892	5,257	6,711	6,900
  Current-account balance (US$ m)	-778	-183	-153	-1,840	-2,190
  Official reserves excl gold (US$ m)	131	155	181	78	1,000
  Total external debt (US$ m)	10,600	11,201	12,283	13,400(b)	13,500
  External debt-service ratio, paid (%)	5.7	6.9	7.1	7.0(b)	12.0
  Copper production ('000 tonnes)(c)	26.4	99.1	96.4	335.1	309.2(a)
  Cobalt production ('000 tonnes)(c)	7.3	14.6	17.3	42.1	55.8(a)
  Diamond production (m carats)(c)	32.6	28.9	28.3	20.9	18.0(a)
  Exchange rate (av; FC:US$)	473.9	468.3	516.8	559.3	809.8(a)
  (a) Actual. (b) Economist Intelligence Unit estimates. (c) Banque centrale du Congo. (d) IMF mid-year estimates.

  Download text file (csv format)

  March 03, 2010

• Outlook

  Congo (Democratic Republic): Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The next presidential election is due in 2011 and the incumbent, Joseph Kabila, is likely to be re-elected by a comfortable margin. Instability is likely to continue in the east. The government will follow the programme attached to its new poverty reduction and growth facility (PRGF) with the IMF. Real GDP growth will rise to 5.2% in 2010, owing mainly to increasing mining output. Inflation will remain high, at 25% in 2010, as a result of currency depreciation and lax fiscal policy. The current-account deficit will fall to 15.1% of GDP in 2010 as exports rise faster than imports, the income deficit narrows owing to debt relief, and foreign aid increases following the settlement with the IMF.

  DOMESTIC POLITICS: Although Mr Kabila has failed to fulfill his election promises from 2006 to build social and economic infrastructure and create jobs, and there is little mood among the country's electors to reward him for a job well done, his potential challengers are weak and too disorganised to defeat his well-funded political machine. There is a profound crisis within the main opposition party, Mouvement de liberation du Congo, whose president, Jean-Pierre Bemba, is on trial at the International Criminal Court in The Hague for war crimes and whose leaders within the Democratic Republic of Congo (DRC) are embroiled in in-fighting. This has paralysed the party and weakened its coalition with other opposition parties in the National Assembly, many of whose representatives now vote regularly with the coalition of parties that support Mr Kabila, the Alliance pour la majorite presidentielle. The former speaker of the National Assembly, Vital Kamerhe, who resigned in March 2009, might conceivably stand against Mr Kabila in 2011. Mr Kamerhe was a member of Mr Kabila's Parti du peuple pour la reconstruction et la democratie until his expulsion for opposing the decision in early 2009 to invite the Rwandan army into eastern DRC. The only other credible presidential candidate is likely to be Etienne Tshisekedi, the 77-year-old leader of Union pour la democratie et le progres social. Mr Tshisekedi served as prime minister several times during Mobutu Sese Seko's long presidency and became one of his most fervent opponents. The Economist Intelligence Unit no longer believes that the local elections, originally scheduled for 2008, will take place in 2010. The 2010 budget contains an allocation for the electoral commission but will probably not be passed in time for the commission to organise credible elections before the end of the year, which we suspect is the government's intention. At some point in 2010 we expect the government to propose holding the local elections at the same time as national elections in 2011, and although donors will not like it, they will grudgingly acquiesce. Western donors are also in little mood to challenge Mr Kabila and the government over the poor human rights situation, and we expect the security and intelligence services to continue harassing, arresting and even eliminating opposition politicians, journalists, business people and civil society activists without any significant international reaction. A military operation, code-named Amani Leo, launched in early 2010 in eastern DRC by the Congolese armed forces, Forces armees de la Republique democratique du Congo, against a Rwandan rebel militia, Forces democratiques de liberation du Rwanda, is likely to continue for most of the year. The humanitarian impact of the operation—and its predecessor, code-named Kimia II—has been appalling, and donors will be called on to increase their emergency assistance to the region during 2010-11. The UN mission in the DRC, Mission de l'Organisation des nations unies en Republique democratique du Congo, is providing logistical support to Amani Leo at increasing cost to its reputation, and will be relieved when the operation is over. Discussion will intensify over 2010-11 about when and under what conditions MONUC will leave the DRC; if the 2011 elections pass off peacefully and result in a more or less credible win for Mr Kabila, the argument for the mission to stay much longer will lose force, even if armed conflict persists in eastern DRC.

  INTERNATIONAL RELATIONS: Relations with Angola will be tense over 2010-11, mainly because of a dispute between the two countries over their maritime border and offshore oil. The DRC government has suffered a sharp downturn in revenue and is desperate for the funds that more offshore oil acreage would bring. The country appears to have a strong case and is likely to seek international arbitration if the joint commission set up in 2009 to consider the issue fails to produce a satisfactory result. The Angolan government therefore has an incentive to settle the matter bilaterally, although it is doubtful whether it would ever surrender lucrative oil blocks voluntarily. China's involvement with the DRC will continue to grow. China now takes nearly one-half of the country's exports, compared with around one-tenth in 2005: 80% of mineral-processing plants in Katanga are owned by Chinese companies and more than 90% of the province's minerals go to China. The multi-billion-dollar infrastructure-for-minerals deal, although revised at the insistence of longstanding creditors, will boost construction over 2010-11 and produce long-term benefits for the economy. Moreover, the DRC and China are planning a step-change in their military co-operation, which may cause some anxiety among neighbours in Central Africa.

  POLICY TRENDS: The government's policy priority will be to implement the economic reform programme attached to its recently agreed PRGF arrangement with the IMF, at least for as long as it takes for the country to reach completion point under the heavily indebted poor countries (HIPC) debt initiative, when it will receive substantial debt relief. This will require at least six months of programme implementation, implying that the government will have to maintain a tight fiscal and monetary stance and make convincing noises about its commitment to structural reform. At the same time, and with an eye on the elections scheduled for 2011, the government will seek ways to maximise spending on projects to impress voters and to ensure that it has sufficient funds for its electioneering needs. The government has taken steps to shore up the real economy, particularly the mining sector, by concluding its review of most mining companies' contracts and cutting their taxes. Yet even though the review is now largely complete, the damage that it has inflicted on the DRC's reputation as an investment destination will persist. The government's best hope for the infrastructural investment it seeks is a multi-billion-dollar loan from China's Export-Import (Exim) Bank, for which several Katangan mining deposits stand surety. To this has been added a similarly structured US$750m deal with Korean companies, which will provide water infrastructure also in return for Katangan mines. The government has responded to the revenue downturn by freezing or cutting expenditure, including salaries and payments to domestic creditors, which has earned the IMF's approval but cannot be sustained for long without stirring up discontent in the public sector. The strategy is also taking a toll on the already grossly inadequate delivery of public-sector services, but emergency balance-of-payments support received in 2009 should make it possible for the government to unfreeze current expenditure during 2010, ensuring that civil servants are paid and enabling public services to expand. However, as the 2011 elections approach, the quality of public expenditure management is likely to deteriorate as the government starts spending freely on electioneering and patronage. We expect the authorities to maintain the current tight monetary stance for at least the first half of 2010; with a PRGF is in place, there will be a temptation for the authorities to ease monetary policy, mainly through a reduction in interest rates, in a bid to stimulate activity in the economy.

  INTERNATIONAL ASSUMPTIONS: After contracting by 0.9% in 2009, world GDP (on a purchasing power parity basis) is forecast to expand by 3.7% in 2010 and by a further 3.5% in 2011. Growth in the OECD countries will decline from 2% in 2010 to 1.6% in 2011 as the effect of fiscal and monetary stimuli on the developed economies fades. The average price of dated Brent Blend is forecast to rise by 26% in 2010, driven by the recovering global economy, and to fall by 6% in 2011 as the growth of demand in the OECD falters. The average price of copper will rise sharply in 2010 as global demand recovers, exceeding the peak reached in 2008, and will barely decline in 2011, to the continued benefit of Congolese mining companies and the government's tax take from them.

  ECONOMIC GROWTH: Agriculture accounts for a declining proportion of Congolese GDP—around 37% in 2008—but employs more than 75% of the labour force. We expect agricultural output to increase over 2010-11 as producers and traders start to benefit from improvements in national infrastructure. Agriculture will thus contribute to overall growth, although the main source will be mining, which we expect to recover strongly over 2010-11 after the difficult conditions experienced in 2009. There will also be strong growth in the construction sector during 2010-11, owing largely to public infrastructure projects financed by China's Exim Bank, although private construction will expand too. Consumer spending in the telecommunications sector shrank by around 30% during 2009, but spending will rebound strongly over 2010-11. Nevertheless, companies will be cautious about committing themselves to new investment. Overall, we expect real GDP growth of 5.2% in 2010, rising to 6% in 2011.

  INFLATION: Declining world oil and food prices have been more than offset by the fall in the value of the Congolese franc, and inflation is far above its target range. Higher agricultural production and the improved distribution of produce around the country will help to contain inflation over 2010-11, as will tighter control over the money supply. As a result, we forecast that inflation will fall to an average of 25% in 2010. In 2011 renewed fiscal pressures due to the elections will put the currency under pressure and fuel inflation, which we expect to rise to an average of 30%.

  EXCHANGE RATES: Tighter monetary policy will help to support the Congolese franc, which is forecast to average FC820:US$1 in 2010 and FC850:US$1 in 2011. However, the currency will remain highly susceptible to depreciation. Weaker export earnings than currently expected, owing to lower copper prices or mining output, as well as the possibility of an unplanned and oversized fiscal deficit during 2011, are the main risks to the forecast at present.

  EXTERNAL ACCOUNT: Mining export volumes are forecast to rise during 2010-11, owing mainly to the Tenke Fungurume copper-cobalt mine at Kolwezi in Katanga, but also to higher production at other mines to cash in on higher copper and cobalt prices. This will push up export earnings, although import costs will also increase sharply, driven by both higher commodity prices and strong demand for intermediate and capital goods from Chinese-financed mining and infrastructure development. Nevertheless, we forecast that the trade deficit will fall from an estimated US$400m in 2009 to US$200m in 2010-11. We expect the DRC to reach completion point under the HIPC initiative in late 2010, and the resulting debt relief will ease the country's debt-servicing requirements significantly over 2010-11. Debt relief and a new PRGF are likely to trigger increased funding from donors, helping to contain the current-account deficit, which we forecast will fall from an estimated 18.3% of GDP in 2009 to 15.1% of GDP in 2010 and 9.8% of GDP in 2011.

  March 01, 2010

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Country Briefing

Land area

2,344,885 sq km

Population

64.26m (mid-2008; IMF estimate)

Main towns

Population ('000; 2009 World Gazetteer estimates)

Kinshasa (capital): 9,519

Lubumbashi: 1,714

Mbuji-Mayi: 1,547

Kolwezi: 910

Kisangani: 600

Boma: 528

Climate

Tropical

Weather in Kinshasa (280 metres above sea level)

Hottest months, March-April, 22-32°C; coldest month, July, 18-27°C; driest months, July-August, 3 mm average rainfall; wettest month, March, 221 mm average rainfall

Languages

French (official and business), Lingala, Swahili, Kikongo, Chiluba, other local

Measures

Metric system

Currency

Congolese franc (FC) = 100 centimes; the currency trades on the parallel market at a slight discount; average (official) exchange rate in 2008: FC559:US$1

Time

Kinshasa, Mbandaka 1 hour ahead of GMT; Lubumbashi, Kisangani, Goma 2 hours ahead of GMT

Public holidays

January 1st (New Year's Day); January 4th (Martyrs of Independence Day); January 16th-17th (Heroes' Day); Easter Day; May 1st (Labour Day); May 17th (Liberation Day); June 30th (Independence Day); August 1st (Parents' Day); December 25th (Christmas Day)

March 03, 2010