Editorial Note
The dire consequences of war and political instability have inflicted untold miseries to its people.
At an abysmally low GDP per capita of US $500, Democratic Republic of Congo (DRC) is perhaps the poorest country in the world. A colony of Belgium prior to 1960, DRC was destined to emerge as one of the jewels among African economies through substantial investments in extractive industries and infrastructure from multinational corporations and sovereign funds. The prospect of economic progress and social mobility was obliterated by years of wars and civil unrest. Bloodshed and violence have become the modus vivendi for this distraught nation.
The dire consequences of war and political instability have inflicted untold miseries to its people. A World Bank report confirms that 72% of the population live in abject poverty, (penury to be precise) on less than $ 1.90 a day, without access to nutritional food, clean drinking water, sanitation and other existential needs. As a result DRC is one of the largest beneficiaries of food and humanitarian aid from wealthy G8 nations and international charity organizations, NGO’s and welfare trusts. UNICEF, Medicines Sans Frontiers and Bill and Melinda Gates Foundation are few of the biggest benefactors sustaining the primary needs of the blighted population.
Notwithstanding the widespread devastation, the Central African country of Congo sits on a treasure chest of abundant natural resources that could have catapulted it into an economic powerhouse. Precious metals, mineral deposits, crude oil fields, diamond reserves and natural gas basins adorn its rich geographical landscape but most multinational corporations are unwilling to invest in the country apprehended by the lack of a stable government for decades. The country has 24 trillion dollars of untapped mineral resources and has a million tons of lithium, apart from huge reserves of gold, copper, tantalum, tin, cobalt and coltan. Unfortunately, the only stability in this country is instability.
The Second Congo War, a fallout of the Rwandan Genocide, fought between 9 neighboring countries and 25 armed insurgent groups with the epicenter in DRC, have claimed around 5.4 million lives since 1996, making it the deadliest conflict since World War II. Disease and starvation were rife throughout those lost decades in the DRC and accounted for most casualties. Only 10% of the country is electrified and less than 1.8% of the existing roads are tarred, 43% of children are malnourished, 20% have access to sanitation and only 43% households can access drinking water. The Congolese armed groups and sections of the military have a long brutal history of recruiting children soldiers in frontline combat.
The perpetual reliance on humanitarian aid in food and clothing have dealt a death-knell for the emergence of any small businesses in Congo, that are the backbone of any economy. How could any enterprise compete with a zero price, aid agencies? The entity that engages in any commercial activity is the military that has interests in diamond mining, predominantly manual operations and employing thousands of child labor who works in appalling and hazardous conditions. Juxtaposing a Rio Tinto diamond mine-field in Diavik in Northwestern Canada, where upstream operations are conducted using ultramodern, sophisticated machinery by a professional workforce, a seamlessly integrated downstream infrastructure and global market linkages have resulted in high wages and increased social mobility and excellent quality of life for the miners.
Greenfield investments, Brownfield acquisitions, capital expenditure spending and knowledge spillovers from the developed world to emerging and poor economies can materialize only on the impregnable foundations of political stability and policy continuity. Such economies that have provided a conducive investment climate have witnessed substantial income leveling and prosperity within its borders. The African Continental Free Trade Area (AfCFTA) signed by 54 African nations effective from July 2019, will probably revive the fortunes of DRC by promoting a zero-tariff intra-African continent trade zone for goods, commodities and services. If the political climate doesn’t relapse into unrest, Congo could get a significant chunk of overseas investment as part of strengthening and streamlining regional value chains. ‘IF’ is the sole defining paradigm and conditional clause of revival and success.
A nation’s GDP output grows when factors of production – land, labor, capital and enterprise – are fully employed. Increasing productivity and application of technology are instruments to boost growth and output when scarce resources are fully used up. Unless a healthy, educated and skilled human capital becomes the cornerstone of socioeconomic development, a nation’s demographic dividend and core competencies will lay waste under the yoke of sectarian/communal violence, haphazard policy regulations and oppressive regimes.
Abundant natural resources, liquid currency, low inflation, skills capital and enterprise are promising economic and non/economic indicators for investment targeting. But these incentives are a deal breaker if the political economy is hostile and unstable. Political turmoil ruins societies and reduces them into a wealth of breathing miseries. And there is no better testimony of this fact than the warn-torn and vulnerable Democratic Republic of Congo. Man, mostly, is his own worst enemy.