I acknowledge the fact that today people
in general and Congolese in particular are more focused on the country political
situation as today is supposed to be the last day in office of the incumbent
president but the probability for him to leave by tomorrow is null.
However, the political situation has
a serious impact on the economy of this country and the latter on the lives of millions.
Therefore, it is important to talk a little bit about the economical situation as
it stands currently.
The former primer minister was very
proud of his macroeconomics achievements. Therefore, I would like to summarize
some of the key indicators, few weeks after his resignation.
The GDP growth rate forecast for
2016 went down from 8,8% to below 4,3% and it is expected to grow to 5,5% in
2017 according to Central Bank. Data. The shrinkage of the economy led to
several (small) businesses to close shop. The impact on the financial sector is
enormous with a significant increase in provisions for non-performing loans. This
could further damage the sector already weaken by the bankruptcy of the fourth
largest lender.
The reduction of foreign currencies
inflows has put pressure on the Congolese Francs that has depreciated by 38% since
the beginning of the year leading to an inflation of 16,39% y-o-y. I hear, here
and there, that this is mainly due to the mining companies revenues decrease following
weak copper and cobalt prices. Although this is partly true, the lack of energy
is one of the major reasons the output of those mining companies has dropped.
Mining companies have been crying for years for a more electricity but nothing
has been done except of lot of conferences on the country hydroelectric
potential.
In addition to that, the failure to
diversify our economy has increased our dependency to the commodities market
(the mining sector was representing 50% of the GDP last year…) and made us vulnerable
to any price shock…
With the Central Bank prime rate up
to just 7% p.a., the real interest rate on the local currency is actually
negative. This will lead people wanting more and more hard currencies with
further depreciation to come.
The 2017 state budget has being
presented at USD 4 billion against 8 billion the previous year. This will have
a negative impact on several industries, as the State is the #1 customer in
many of them such as automobiles, airlines, hotels, etc.
Why is the budget size extremely
important for the years to come? Because the budget constraint was the main
argument used not to organize elections this year. Therefore, I wonder how are
we going to organize those costly elections in 2018 with a budget 50% smaller
than the one not big enough to organize the 2016 elections…
There are many more things we could say
regarding the (poor) state of this economy but my heart is not there… I will
stop here by saying that while politicians are fighting to obtain positions, no
wealth is created and worse, no (serious) investors will risk their money in
this long period of uncertainty ahead of us…
But I guess the name of the game for
them is to make as much money as possible in the shortest time possible to
ensure their family can study and receive medical treatments in proper schools
and hospitals they deny to their own people but I digress here… this is not a
political blog remember? but I guess I am just a concerned citizen…
