01 10 13 loomberg – Congo’s Leaders Urge Steps to Spur Economic Growth, Create Jobs
Greater spending on industries such as agriculture and more
support for small- and medium-sized companies could reduce
Congo’s reliance on mining and increase employment, the report
says. The draft was obtained by Bloomberg and verified by
members of the economic committee of the country’s national
conference on unity and governance that began on Sept. 7 and may
end this week.
Congo’s current economic policies “impose a quasi-
permanent austerity on the country, thus blocking a revival that
will create wealth and jobs,” the report says.
The Central African nation is still recovering from four
decades of dictatorship and war that destroyed its
economy. While annual economic output has grown by an average of
6 percent in the past decade, only about 4 percent of Congolese
have formal employment, the report says. Congo’s economy may
expand 8.3 percent this year, compared with 7.1 percent in 2012,
according to the International Monetary Fund.
The growth rate “remains insufficient in the short term to
transform in a significant way the social conditions” of the
country’s 70 million people, the report says. “The Congolese
economy relies essentially on extractive industries, which do
not generate sufficient employment.”
Metals, Oil
Congo is the world’s eighth-largest producer of copper, the
biggest source of cobalt, which is used in rechargeable
batteries, and Africa’s largest tin producer. It’s also
exploring for oil.
The country needs to invest in electricity, transport and
water to encourage trade, while focusing on agriculture to
generate new jobs, said former central bank Governor Jean-Claude
Masangu, a member of the conference’s economic committee.
“If we continue with a growth rate of 7 percent, for
example, in 20, 25 years when the population doubles, it will be
like we’ve done nothing,” Masangu said in a Sept. 27 interview
in Kinshasa, the capital. The country, which is sub-Saharan
Africa’s largest by landmass, also needs to expand its internal
markets, he said.
Fidele Babala, an opposition member of parliament on the
committee, said the government should increase social spending
and reduce expenditure on administration. In 2012, the
government only disbursed about half the money budgeted for
education and about 22 percent of funds earmarked for health,
according to documents on the Budget Ministry’s website.
Budget Implementation
The draft report advises that Congo stop managing its
budget on a cash basis to improve implementation. The country’s
2013 budget is projected to be about $8 billion, according to
the report.
“Such a budget does not allow the government to control
its national territory, to truly administer it, nor to
significantly engage the hopes of an impatient people,” the
report says.
Babala urged the government to be more transparent with its
spending and called for better oversight of the sale of mining
and oil concessions to prevent corruption, he said in a Sept. 27
interview.
Maplecroft, the Bath, U.K.-based political risk firm,
ranked Congo and Somalia as the most corrupt countries in the
world in its 2014 corruption risk index released Sept. 24.
‘Group Psychotherapy’
Congolese President Joseph Kabila convened the national
conference amid a continuing rebellion in the east of the
country and persistent complaints from the opposition about his
2011 re-election. Babala called the conference “group
psychotherapy for the nation.”
The talks will also produce recommendations on governance,
decentralization of power, disarmament, and conflict, peace and
reconciliation. Several opposition groups boycotted the
meetings, including two of the country’s largest political
parties. Opposition members are worried Kabila may try to change
the constitution to extend his term beyond 2016.
“We can’t touch the constitution,” Babala said.
The draft report also calls on the government to improve
the business climate for small- and medium-sized companies by
settling internal debts and increasing access to credit. The
state’s reluctance to pay off its more than $1.4 billion in
internal debts handicaps Congolese businesses and discourages
further investment, the report says.
Moody’s Investors Service this month gave Congo a B3 credit
rating, six steps below investment grade and on par with
Nicaragua and Belarus. The rating has a stable outlook.