A short guide to get rich fast as a manager of a State-Owned-Enterprise or any government agency…

If you have red the Congolese news lately, you probably saw the articles on the hearing of the deputy Minister of Finance at the Senate regarding dodgy transactions that took place in a commercial bank…

One of the concerns raised by the senator who has requested for that hearing was that the pricing offered to these entities (Ministry of Finance (projects) and BCECO) was higher than pricing offered to non-public (sector) organizations which seems weird if your plan as a manager is to reduce the cost of running your company…

Well, there are several reasons that can explain the higher pricing for public sector institutions.

One of them is the risk associated with those institutions. As you need to factor in the risk in your pricing, interest rates will tend to be higher for them than for other companies. Those institutions are riskier because they generally have bad track record when it comes to credit, poor (non-audited) financials, non-realizable collateral, the lack of recourse in case of non-repayment, etc. As a result, commercial banks have a low credit appetite for those institutions. Therefore, the few ones ready to take that risk will charge a fee high enough to compensate the latter.

Now if you take other services such as transfers and cash withdrawal for example. There is absolutely no reason, in theory, that the latter be more expensive for the Public Sector as mentioned in the senator complaint…

So, how one can explain this difference in pricing? One can argue, the lack of knowledge of the banks general pricing can explain this but it will demonstrate once again the poor management of those companies or it could be something else…

It could be simply another form of corruption. Indeed, to ensure they attract as much business as possible some commercial banks are ‘buying’ deposits. The practice is very simple and takes several forms. It can be payment of interests on current accounts/ term deposits in cash instead of paying on the account. Sometimes the interest rates or commission rates are simply higher because after taking its normal fees, the commercial banks will ‘incentivize’ the managers in cash obviously…

All those transactions are recorded in the company’s book as bank fees- ni vu ni connu. The only thing you will see in the

The result is richer banks and (public sector) managers while the companies they are managing continue to perform poorly.

The permanent electricity shortage and its impact on the economy…

I have been traveling several times to the Katanga province lately- for the reader not familiar with the DRC geography, the Katanga is the ‘mining area’ of the country and is considered to be the economical lungs of the DRC. 

All the major mining groups have been, at some point in time, involved in this part of the country (BHP Billiton, Vale, Freeport, Anglo American etc). Unfortunately some of them have left for different reasons. However, the sector is still booming thanks to the Chinese demand that remain quite strong.

One thing that will not go unnoticed when you spend few hours in Lubumbashi (the capital of the province) is the constant electricity cuts. 

The main issue with this situation is that mining companies are not spared and today most of those companies are working far below their full capacity. I have even visited a plant operating using generators! Imagine the diesel bill at the end of the month (also imagine how cheap must be the cost of production for that plant to remain profitable using a generator). 

(Some sectors such as oil distribution are taking advantage of this situation but the impact of those firms on the economy remain marginal especially that a big part of them are not even paying taxes…)

The level of production has become so insufficient that today we have to import electricity from both Zambia and Zimbabwe. Countries where we used to export until recently…

Below is a snapshot of the electricity situation as it stands according to official data.

Supply in MW		Demand in MW
Local production	600	Mining	1140
Import Zambia	150	Others	240
Import Zimbabwe	50
Deficit	580

Several projects to develop the electricity sector have been in the pipes for decades but we are still for at least one of them to materialize. By 2020, the demand for the Katanga province is forecasted to reach 4 000MW.

Fewer projects mean fewer investments, jobs and wealth created. Let’s hope that while we are waiting for new power projects to come to life, China’s appetite for commodities will remain as strong as now…