Congolese Franc (CDF) depreciation,
Inflation, slower growth, budget costs (and in deficit), financial scandals, a
big bank bankrupt, etc.
The least we can say is that the DRC
economy is not doing well at all in 2016.
In less than a year, the CDF has
lost more than 32% of its value against the US dollar while it was stable for
the last 5 years. The reduction of
foreign currencies (Forex) entering in the country due to the decrease of
repatriation from mining companies is the main explanation. This situation will
continue to pressurize the CDF as the mining sector (the biggest generator of
Forex) continues struggling with low commodities prices and inadequate power
supply.
As a result, the government has
already reduced his GDP forecast 3 times! From 9% to 6.6% to 5.3% to 4.3% and
he could do it again before the end of the year.
This high level of depreciation, in
a country where even tomatoes are imported, led to higher consumer prices. The
inflation is skyrocketing (+6,4% y-o-y) while it was contained below the 2%
over the last two years. Some shops in Lubumbashi (the economic capital) have
stopped displaying prices below items because they are moving too often…The direct
consequence is the increase of the Central Bank prime rate to 7% from 2%
leading to a higher cost of borrowing for those borrowing in CDF (a minority as
more than 90% of the loans are disbursed in USD but still…)
The prime minister has presented his
budget for 2017 and the latter stands at USD 4,5 billions. This is a 50% decrease compared to the 2016
budget (that was also reduced by 22% few months ago).
Thousands of people have lost their
jobs and this will continue if we do not take the necessary measures and those
measures include creating the environment for investors to put their money in
this country! The political uncertainty surrounding the (not-to-be-held-on-time
presidential elections) is not conducive to business…
