Figure 1: Merchandise Trade Balance in the DRC (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Total merchandise imports to the DRC have moderated to USD 5.2 billion in 2018, from an annual average of USD 5.3 billion from 2015 to 2017[1]. Exports have grown more strongly to USD 8.8 billion in 2018 from an annual average of USD 6.4 billion from 2015 to 2017[2]. The faster growth in exports has assisted the DRC’s growing merchandise trade surplus to USD 3.6 billion in 2018 from an average of USD 1.0 billion from 2015 to 2017[3]. The increase in export earnings has slowed depreciation of gross official reserves which was also supported by slower growth in imports due to the depreciation of the CDF.
Figure 2: Gross Official Reserves in the DRC (2016-2024)
Sources: IMF 2019a, DRC 2019 Article IV Report; IMF 2015, DRC 2015 Article IV Report. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019.
Gross official foreign exchange reserves decreased to USD 657.0 million in 2018 from an annual average of USD 920.0 million from 2015 to 2017[4]. During this period, the CDF depreciated by -8.9% in 2018 to CDF 1,624.0 per USD (2017: -30.8%)[5]. The persistent depreciation in the currency since 2015 has driven the slower growth in imports. The CDF depreciated by an annual average of -13.5% from CDF 926.0 per USD in 2015 to CDF 1,480.0 per USD in 2017[6]. Gross official reserves are projected to increase to USD 1.0 billion in 2019, which is equivalent to 3.7 months’ import cover[7]. In the forward-looking medium-term from 2020 to 2024, gross official reserves are projected to increase to an annual average of USD 1.5 billion (approx. 4.5 months’ import cover)[8]. The faster growth in exports has not been enough to improve the DRC’s current account balance because the slower depreciation in 2018 led to increased imports in 2018.
The DRC’s current account balance deteriorated to a deficit of -USD 2.2 billion in 2018, from a deficit averaging -USD 1.4 billion from 2015 to 2017[9]. Even though the faster growth in merchandise exports improved the current account balance, this was undermined by increased demand for services imports and foreigners’ income from the DRC. Services imports increased to USD 2.8 billion in 2018 (2017: USD 1.7 billion) and foreigners’ income from the DRC increased to USD 1.8 billion in 2018 (2017: USD 1.1 billion)[10]. The current account balance is projected to improve to a deficit of -USD 1.7 billion (approx. -3.5% of GDP) in 2019[11]. In the forward-looking medium-term from 2020 to 2024, the current account balance is projected to deteriorate to a deficit averaging -USD 2.5 billion (approx. -4.4% of GDP)[12].
Figure 3: Current Account Balance in the DRC (2016-2024)
Sources: IMF 2019a, DRC 2019 Article IV Report; IMF 2015, DRC 2015 Article IV Report. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019.
However, the DRC is still heavily dependent on mining exports, particularly copper, which have been affected by commodity price volatility and the general decline in commodity prices since 2014. For example, copper prices declined by an annual average of -12.6% from USD 6863.4 per MT in 2014 to USD 4867.9 per MT in 2016, before recovering to 6169.9 per MT in 2017[13]. Copper constituted 74.1% of the DRC’s total export earnings in 2018 which has increased from the average of 48.8% from 2015 to 2017 (2014: 58.8% of exports)[14]. In spite of this concentration of exports, the DRC is highly integrated in terms of regional trade with neighbouring countries in COMESA and the SADC but its trade is unbalanced and concentrated in commodities.
The top export from the DRC to COMESA is copper, which constituted 32.1% of total exports in 2018 (2015-‘17: 5.3% of total exports)[15]. The value of copper exports from the DRC to COMESA increased to USD 2.8 billion in 2018 from an annual average of USD 374.2 million from 2015 to 2017[16]. The other top-four exports from the DRC to COMESA are metallic ores (5.6%), inorganic chemicals (3.1%), gold (0.7%) and timber (0.1%) which contributed an additional 9.4% of total exports in 2018. Therefore, the top-five exports constituted 41.5% of total exports from the DRC in 2018 (2015-‘17: 7.2% of total exports)[17]. The value of the top-five exports from the DRC to COMESA increased to USD 3.7 billion in 2018 from an average of USD 503.7 million from 2015 to 2017[18].
The value of total exports from the DRC to COMESA increased to USD 3.7 billion (approx. 42.4% of total exports) in 2018 from an average of USD 825.3 billion (approx. 13.0% of total exports) from 2015 to 2017[19]. These are very high levels of intra-regional trade given that the COMESA average intra-regional exports level was 11.9% of total exports in 2018. The COMESA intra-regional exports, meaning total exports amongst COMESA countries, as a share of total exports to the world increased from an average of 10.5% from 2015 to 2017[20]. Hence, the DRC is highly integrated and far exceeds the COMESA average intra-regional export levels.
Figure 4: Nominal Exchange Rate in the DRC (2015-2018)
Sources: IMF 2019a, DRC 2019 Article IV Report; IMF 2015, DRC 2015 Article IV Report; BCC 2017, 2017 Annual Report; BCC 2016, 2016 Annual Report.
The DRC’s top-five imports from COMESA are inorganic chemicals, cement, sugarcane products, iron and soaps. Although these imports are diversified they constituted 14.5% of total imports to the DRC in 2018 (2015-‘17: 3.5% of total imports)[21]. The value of the top-five imports from COMESA to the DRC increased to USD 752.8 million in 2018 from an annual average of USD 580.4 million from 2015 to 2017[22].
The value of total imports from to the DRC from COMESA increased to USD 2.0 billion (approx. 32.5% of total imports) in 2018 from an annual average of USD 708.7 million (approx. 13.3% of total exports) from 2015 to 2017[23]. These are very high levels of intra-regional trade given that the COMESA average intra-regional imports level was 6.5% of total imports in 2018[24]. The COMESA intra-regional imports, meaning total imports amongst COMESA countries, as a share of total imports from the world increased only from an average of 5.5% from 2015 to 2017[25].
Table 1: COMESA Regional Trade for the DRC (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Hence, there is significant room for the DRC to increase its imports from COMESA countries given the trade surplus that the country enjoys with the region. The significant growth in intra-regional trade with COMESA in 2018 reflects re-engagement with the DRC’s regional partners, especially its neighbours in the Great Lakes and East African regions. The domestic political impasse under former President Joseph Kabila and the impact of conflicts in North and South Kivu which involve the DRC’s neighbouring countries like Rwanda, Uganda and Burundi may have been the main constraint to intra-regional trade. This seems to be changing under the incumbent President Félix Tshisekedi. The DRC also has a significant trade surplus with its COMESA partners which means that the country is taking advantage of its strategic proximity to Southern and East African countries.
The top export from the DRC to SADC is copper, which constituted 30.5% of total exports in 2018 (2015-‘17: 7.7% of total exports)[26]. The value of copper exports from the DRC to SADC increased to USD 2.7 billion in 2018 from an annual average of USD 522.9 from 2015 to 2017[27]. The other top four exports from the DRC to SADC are metallic ores (5.6%), inorganic chemicals (3.1%), diamonds (0.1%) and non-ferrous metals (0.1%) which contributed an additional 8.9% of total exports in 2018. Therefore, the top-five exports constituted 39.4% of total exports from the DRC in 2018 (2015-‘17: 9.7% of total exports)[28]. The value of the top-five exports from the DRC to SADC increased to USD 3.5 billion in 2018 from an average of USD 654.4 million from 2015 to 2017[29]. Given the overlap in membership between SADC and COMESA, these figures and the composition of trade suggests that the DRC is trading its main commodity exports with one or a few SADC member state and gaining maximum benefit from SADC rather than COMESA. In addition, the DRC has been highly integrated for a longer and more sustained period in SADC compared to COMESA.
Table 2: SADC Regional Trade for the DRC (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
The value of total exports from the DRC to SADC increased to USD 3.5 billion (approx. 39.8% of total exports) in 2018 from an average of USD 1.1 billion (approx. 16.9% of total exports) from 2015 to 2017[30]. These are very high levels of intra-regional trade given that the SADC average intra-regional exports level was 17.9% of total exports in 2018. The SADC intra-regional exports, meaning total exports amongst SADC countries, as a share of total exports to the world decreased from an average of 20.8% from 2015 to 2017[31]. Hence, the DRC has also increased its exports to SADC countries in 2018 and has become highly integrated by far exceeding the SADC average intra-regional export levels.
The DRC’s top-five imports from SADC are inorganic chemicals, cement, sugarcane products, fish and iron. Although these imports are diversified they constituted 13.4% of total imports to the DRC in 2018 (2015-‘17: 4.7% of total imports)[32]. The value of the top-five imports from SADC to the DRC increased to USD 698.5 million in 2018 from an annual average of USD 253.8 million from 2015 to 2017[33].
The value of total imports to the DRC from SADC increased to USD 1.7 billion (approx. 32.5% of total imports) in 2018 from an annual average of USD 1.6 billion (approx. 29.4% of total exports) from 2015 to 2017[34]. These are very high levels of intra-regional trade given that the SADC average intra-regional imports level was 20.9% of total imports in 2018[35]. The SADC intra-regional imports, meaning total imports amongst SADC countries, as a share of total imports from the world increased only from an average of 20.7% from 2015 to 2017[36].
Hence, there is significant room for the DRC to increase its imports from both COMESA and SADC countries given the trade surplus that the country has with the regions, which has only turned into a surplus for SADC in 2018. This illustrates the reliance of the DRC on SADC for its imports, which is above the average intra-regional trade levels. In addition, the DRC might want to reassess the benefits to its COMESA membership given that it seemingly receives more benefit and is more highly integrated with SADC countries – in spite of the unbalanced trade. Therefore, there is significant room to increase the DRC’s imports from both regions and diversify its exports to COMESA and SADC away from its current dependence on mining commodities.
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 26 September 2019].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] UNCTAD 2019. UNCTADStat Database, ibid.
[4] IMF 2019a. DRC 2019 Article IV Report; International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 26 September 2019]; IMF 2015. DRC 2015 Article IV Report, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 26 September 2019].
[5] BCC 2017. 2017 Annual Report; Central Bank of Congo: Kinshasa, D. C. Available At: http://www.bcc.cd/ [Last Accessed: 26 September 2019]; IMF 2019a. DRC 2019 Article IV Report; ibid.
[6] BCC 2017. 2017 Annual Report; ibid.; BCC 2016. 2016 Annual Report; Central Bank of Congo: Kinshasa, D. C. Available At: http://www.bcc.cd/ [Last Accessed: 26 September 2019]..
[7] IMF 2019a. DRC 2019 Article IV Report; ibid.
[8] IMF 2019a. DRC 2019 Article IV Report; ibid.
[9] IMF 2019a. DRC 2019 Article IV Report; ibid.; IMF 2015. DRC 2015 Article IV Report, ibid.
[10] IMF 2019a. DRC 2019 Article IV Report; ibid.
[11] IMF 2019a. DRC 2019 Article IV Report; ibid.
[12] IMF 2019a. DRC 2019 Article IV Report; ibid.
[13] IMF 2019b. IMF Primary Commodity Prices, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 4 October 2019].
[14] UNCTAD 2019. UNCTADStat Database, ibid.
[15] UNCTAD 2019. UNCTADStat Database, ibid.
[16] UNCTAD 2019. UNCTADStat Database, ibid.
[17] UNCTAD 2019. UNCTADStat Database, ibid.
[18] UNCTAD 2019. UNCTADStat Database, ibid.
[19] UNCTAD 2019. UNCTADStat Database, ibid.
[20] UNCTAD 2019. UNCTADStat Database, ibid.
[21] UNCTAD 2019. UNCTADStat Database, ibid.
[22] UNCTAD 2019. UNCTADStat Database, ibid.
[23] UNCTAD 2019. UNCTADStat Database, ibid.
[24] UNCTAD 2019. UNCTADStat Database, ibid.
[25] UNCTAD 2019. UNCTADStat Database, ibid.
[26] UNCTAD 2019. UNCTADStat Database, ibid.
[27] UNCTAD 2019. UNCTADStat Database, ibid.
[28] UNCTAD 2019. UNCTADStat Database, ibid.
[29] UNCTAD 2019. UNCTADStat Database, ibid.
[30] UNCTAD 2019. UNCTADStat Database, ibid.
[31] UNCTAD 2019. UNCTADStat Database, ibid.
[32] UNCTAD 2019. UNCTADStat Database, ibid.
[33] UNCTAD 2019. UNCTADStat Database, ibid.
[34] UNCTAD 2019. UNCTADStat Database, ibid.
[35] UNCTAD 2019. UNCTADStat Database, ibid.
[36] UNCTAD 2019. UNCTADStat Database, ibid.
