Happy New Year to all
my readers! I wish you all the best for 2018!
Weak GDP growth, high inflation, depreciation of
the Congolese Franc (CDF), decrease of the country international reserves, etc
characterized 2016.
Well, from those indicators perspectives, 2017
was not better than 2016. Not only the CDF depreciated by another 32% against
the USD but also the inflation skyrocketed in 2017 (+54,71% in 2017 against
+23,6% the previous year). (There is a strong relation between the depreciation
of the local currency and the inflation as most goods consumed in the DRC are
imported).
The international reserves remained very low at
USD 858,7 millions representing only 3,77 weeks of imports. It only grew by USD
13,3m in one year. It is difficult to support your currency with such a weak
foreign exchange position.
This year, the government can’t blame the World
Economic Outlook as the world grew faster in 2017 than it did in 2016. The DRC also enjoyed higher commodity prices
with the price of cobalt increasing by more than 130% and the copper by 31% in
2017. Those commodities represent more than 90% of our exports and their
production actually increased in 2017 despite the electricity challenges.
The direct impact of this is an expected growth
of 3,5% in 2017 compared to 2,4% in 2016. However, with a population growing at
an average rate of 3,3% over the last five years, this growth is simply
insufficient to impact the population standards of leaving.
In 2017, we have witnessed the weirdest
monetary policy measure ever applied by our government when trying to stabilize
the CDF. It consisted in forbidding Bureau de Change displaying their exchange
rates outside their building! Apparently it was the source of the depreciation!
One lady was even jailed for displaying the rates…
Nestlé has decided to close its Congolese plant
in 2017 leaving more than 120 people out of jobs (thousands of people will be indirectly
impacted by this measure). The official reason are the poor purchasing power of
the Congolese, the inflation and the products entering fraudulently from Angola
without paying taxes.
Heineken closed two of its plants in the
country with the same social consequences for its staff. Consumption of beer in
the country has always been a useful indicator of how the real economy is
performing. Indeed, when everything goes bad, beer is one of the last items on
the shopping list…
Mining companies are still waiting to be paid
back by the government their VAT for almost a billion of USD! For example, the government
owes to Rangold Resources USD 192 million in unpaid VAT rebates!!!
As I am typing this text, Internet has been
shut down by the government for the third consecutive day and no one knows when
it will be back. One can imagine the loss made not only by the Telco companies
but also by all organizations depending on their services.
The sad reality is that doing business in the
DRC is more complicated than ever despite the government being happy that the
country jumped two places in World Bank doing business report. We are still one
of the worst performers in the world.
Not only, we are not able to attract fresh significant
investments but we are also losing some of the key players that were already
operating here.
Can we expect 2018 to be better? With all the
political uncertainty surrounding the country presidential election one cannot
be sure…
