DRC 2016 Political Economy Review

A “round up” on the ending financial previous year

The Democratic Republic of Congo (DRC) is the second largest country on the continent and has the third largest population in Africa. The DRC is also renowned for its mineral resource endowment. As such, the country’s main investment opportunity involves mineral exports. Despite significant natural resources and a geographically strategic position, conducive to regional integration benefits, the DRC has not yet been able to engage in a development process that will allow it to achieve a decisive and lasting transformation of its economy. The DRC’s geographic centrality makes trade possible with countries from the SADC, Eastern and Western regions of Africa.

 

Due to low global commodity prices over the last two years, the DRC has seen a large decrease in the sale of copper which is one of its primary mineral resources. Despite the decrease the DRC recorded the third fastest growth rate in the world in 2014 thanks to relative economic stability; albeit from a relatively low economic base1. The DRC’s nominal GDP for 2016 is estimate at USD 39.8 billion which equates to USD 473 per capita. This places the DRC as the second poorest SADC member state, in per capita terms, after Malawi.

 

In 2015, the DRC saw economic growth of 7.7%, while relatively high, it is lower than the 9.2% achieved in 2014. Growth is estimated to recover to 8.0% in 20172, primarily due to the recovery of global commodity prices and the positive effects of structural reforms and the rebuilding of infrastructure. The key driver of infrastructure and development in the DRC is its ability to export mineral resources, which include, but are not limited to diamonds, copper and oil.

 

Private consultants have estimates that, in order to develop infrastructure and catch up with the rest of the world, the DRC needs to invest USD 5.3 billion a year over the next decade, of which USD 1.1 billion needs to be spent on maintenance alone. Currently the infrastructure spend of USD 700 million per year falls far below the necessary levels of investment, with a shortage of USD 4 billion per year3.

 

High levels of poverty in the DRC have an adverse impact on the country’s growth, as many skilled citizens seek opportunities elsewhere on the continent and overseas.


1 International Monetary Fund
2 African Development Bank
3 Access Africa


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