Democratic Republic of the Congo - Mining, Agriculture, Poverty (2024)

At independence in 1960, the formal economy of Congo was based almost entirely on the extraction of minerals, primarily copper and diamonds. Most of this economic activity was controlled by foreign companies, such as the Belgian Union Minière du Haut-Katanga (UMHK), whose assets in 1965 were valued at nearly $430 million. By that time, UMHK was one of the largest single sources of Congolese governmental revenue and accounted for a large proportion of the country’s foreign exchange earnings.

Following the coup carried out by Mobutu in 1965, however, the new government made plans to nationalize UMHK. The ensuing struggle between the government and UMHK ended in a compromise in 1967 whereby UMHK operations were taken over by a newly created state company, Générale des Carrières et des Mines (Gécamines), but daily operations were contracted out to a private management company created by the former UMHK.

This arrangement provided the blueprint for the Mobutu government’s steady acquisition of private economic concerns—heralded as the “Zairianization” of the economy. Mobutu appropriated the income from new state enterprises, using it to amass a huge personal fortune and to create a vast patronage network. In the 1970s and ’80s, he also portioned out control over state enterprises to shifting networks of associates whose loyalty he needed. He offered concessions to foreign private enterprises as well. Increasingly, the economy became an adjunct of Mobutu’s political machine.

At first, international agencies such as the International Monetary Fund (IMF) and the World Bank, as well as Mobutu’s allies in the West, turned a blind eye to his personal appropriation of the economy and the associated declines in productivity and exports. The fall in copper prices in the mid-1970s, however, led to audits of state enterprises that revealed high levels of embezzlement. Nonetheless, Mobutu remained an important Cold War ally for Western countries, and for the next 20 years international financial institutions and his Western allies continued to find ways to keep the sinking economy afloat.

Yet as the economy became less and less productive, funds directed toward the maintenance of Mobutu’s national, regional, and local patronage networks were becoming insufficient. Both state managers and private owners of enterprises increasingly resorted to extortion and force to maintain their wealth. Units of the army, as well as private militias, supplanted formal state authority in much of the country. In the early 1990s, with the collapse of the Soviet Union and heightened demands for democratic reform worldwide, Mobutu’s Western allies finally pressed for reforms in Congo.

By this time, however, the country was in crisis. Between 1990 and 1995, the economy demonstrated a negative annual growth rate of –8.42 percent. In the early 1990s the value of the national currency sank to remarkable lows. Average per capita income, which continued to fall drastically, was more than halved between 1990 and 2000 to become one of the lowest in the world. The state, nearly bankrupt, provided scarcely any services to the population, which, in any case, increasingly did its business in an unofficial parallel economy, or black market. The outbreak of civil conflict in the late 1990s deeply exacerbated the failures of the economy, which subsequently continued to decline.

At the beginning of the 21st century, Congo took steps to stabilize its economic situation; in 2001, for example, it shifted toward a more market-oriented economy. With the participation of the IMF and the World Bank, other structural reforms were undertaken to liberalize the economy, break hyperinflation, and encourage a more stable macroeconomic atmosphere. In 2002 the country experienced positive growth in its gross domestic product (GDP) for the first time in more than a decade, and the economy continued to expand throughout the remainder of the early 2000s, a factor attributed in part to increased stability following the end of the civil war.