DRC: Matata takes on a daunting economic challenge

Mélanie Gouby

Decades of financial mismanagement, a culture of corruption and the ravages of war have left the Democratic Republic of Congo languishing at the bottom of global development and economic league tables. But could Augustin Matata Ponyo, the newly appointed prime minister, be the man to turn the country around?

After three years of relative stability that brought hopes for development, 2012 has been a difficult year for the Democratic Republic of Congo (DRC). A dormant conflict has reignited in the east of the country, impeding development efforts and bringing business to a standstill in an area already devastated by decades of war. Ranked bottom of the UN’s Human Development Index and 78th out of 183 countries by the World Bank in its ‘Doing Business 2012’ report, Congo is not only one of the poorest countries in the world, it is also a financial

‘Wild West’ where most of the economy is informal, making it difficult for the state to retrieve the taxes essential to development. And to make matters worse, corruption is rife throughout the country.

Most of the ills of Congo’s economy originate in the 32-year reign of Mobutu Sese Seko. Shortly after the country became independent from Belgium in 1960, Mobutu took power during a coup and established a dictatorship that slowly crippled the economy. Although at the beginning of his rule industrial mining and agriculture were flourishing, presaging a bright future for Congo, Mobutu’s greed in the 1970s became incontrollable – in total, according to Transparency International, he could have stolen over $5 billion from the state coffers.

On top of sinking Congo into debt, the kleptocracy Mobutu established to satisfy his decadent lifestyle corrupted society at all levels. One of Mobutu’s most enduring legacies is the infamous Article 15, his advice to the population and state employees who were rarely paid to “help themselves” (“débrouillez-vous“). The notion that corruption is okay because no one, including the state, will help you to survive, has become engrained in the country’s mentality – whether it be an administration employee asking for a fee to simply stamp a document, a journalist taking an envelope from an official “to cover transport costs”, or a minister receiving a suitcase full of dollars to grant an estate.

Mobutu’s dismissal in 1997 was followed by a decade-long war that completed the delinquency of the state: millions of people were displaced and died, infrastructure crumbled, resources were pillaged by armed groups, functioning state institutions became a long-gone memory and Congo’s economy reached ground zero.

Since his rise to power in 2001, Joseph Kabila has done little to rebuild the country.The cities’ main roads are not paved, electricity and running water are luxuries, most of what should be state services are provided by foreign NGOs and the UN, and long-term development plans tapping into Congo’s natural resources are undermined by state-level corruption. “The government does not really have a political organisation that can work throughout the country, nor does it have a plan,” says Dr Gabi Hesselbein, a specialist on Congo’s economic resource mobilisation at the London School of Economics. “There is no comprehensive plan for agriculture, and certainly no industrial policy. In mining and logging, the Wild West has to stop in order to make sure that money is earned and invested into these sectors to improve [them]. But corruption in the DRC starts at the very highest level, that is the government.”

The appointment of Augustin Matata Ponyo as prime minister in April this year has been seen as a positive sign, however. Matata is a technocrat with a solid reputation. He was the finance minister in the previous government and successfully managed to stabilise inflation and the exchange rate, and negotiate a $12 billion debt reduction with international creditors. His economic programme has been based on austerity, fighting corruption and improving the business climate.

In September, Congo became a member of the Organisation for the Harmonisation of Business Law in Africa, a measure that Matata described as an “important step” that will make the country attractive to foreign investors. But as so often with Congo, the problem is in the implementation. If the government seems to be making real efforts, the lower ranks of the administration do not seem to be following. “Matata is putting in place a new culture, a new open vision. But he can have all the good will in the world, the rest must follow,” says John Kanyoni, a member of the Congolese Business Federation.

Little progress has been made regarding fighting corruption, partly due to the lack of independent judiciary. But the biggest obstacle to Matata’s plans now is the conflict that has restarted in the east and is draining state resources and energies. In North Kivu, where most of the fighting is taking place, many business projects have been postponed and border trading posts closed.

Even if the government manages to improve the business climate and generate income for the state, the population needs to see the benefits. Despite growth averaging 6 percent every year, unemployment remains above 80 percent. Most people make do with informal jobs such as selling phone credit or vegetables in the street. Basic state services are mostly inexistent or supported by foreign aid. Matata, whose name means ‘problem’ in Swahili, has his hands full and most likely does not have all the answers.

About the author:

Mélanie Gouby is a freelance journalist based in eastern Congo


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