The Democratic Republic of the Congo Scores High on Growth, Lags in Poverty Reduction

Growth remains strong but poverty pervasive

Generous mining code and weak governance limit government revenues from sector

Falling commodity prices and general elections add pressure on limited budget

The IMF’s latest annual economic assessment indicates that while growth rates for 2014 were as high as 9.2 percent, poverty rates in the DRC are still among the highest in the world. And while the report notes some social improvements, like better access to education, it’s unlikely the DRC will achieve any of the Millennium Development goals.

In an interview with IMF Survey, Norbert Toé, IMF mission chief for the Democratic Republic of the Congo, discusses how the authorities are working towards increasing and better distributing government revenues from the mining sector.

IMF Survey : What struck me while reading this report is how the country has managed to maintain one of the highest growth rates in the world while, at the same time, having one of the worst business environments, according to the United Nations. How can that be?

Toé: One thing to keep in mind, is that the high growth over the past several years is mostly driven by the mining sector, or broadly speaking the natural resource sector, because in addition to mining copper, diamonds, gold, and so forth, the DRC also exports oil. So the economic growth is by and large driven by the mining sector, which is an enclave industry and it’s highly capital-intensive. So they don’t really employ a lot of people in the formal sector.

IMF Survey : So they’re separate from the actual domestic business environment?

Toé: Yes, absolutely. The government adopted a mining code, what we call the 2002 Mining Code, which many people agree is overly generous towards the industry in terms of tax provision and security of the tax regime. So when foreign investors bring in capital, the environment is stabilized for them. This is what has attracted substantial foreign direct investments to the country.

IMF Survey : So it seems that a lot of the wealth and the profits that were made in the commodity industry have not trickled down over the years to the general population. Poverty rates are still extremely high. And even with some advancement in terms of access to education, for example, in the last 10 years the report indicates that has almost doubled. Why can’t people lift themselves out of poverty?

Toé: One thing… and as I said before, the mining sector in particular and the natural...