Does DRC need IMF loans?

Author: Daniel Gatimu

• 2024-05-21 05:30:00

The International Monetary Fund (IMF) announced, on May 8, that it reached a staff-level agreement with the Democratic Republic of Congo (DRC) for the final review of a $1.5 billion loan programme. Once approved, the agreement will allow for the disbursement of a final tranche of around $200 million of funds expected to help the DRC ease fiscal pressure from heavy security spending.

The world's richest country in terms of wealth in natural resources holds significant untapped mineral deposits worth an estimated $24 trillion. However, the mineral-rich country is among the five poorest countries in the world.

The central African country has been experiencing violence and extensive abuses of power, especially in its eastern part. Long-drawn-out civil wars coupled with the unrelenting mismanagement of state resources placed DRC among the group of fragile states with the world's poorest infrastructure.

Despite its vast natural resources, corruption remains a significant obstacle to progress and improvement in the quality of life for its citizens.

In the DRC, rent-seeking, clientele politics, and instability are exacerbated by bribery, embezzlement, a lack of political integrity, and weak oversight institutions.

This has put it among the top 10 African nations with the highest level of corruption, according to Transparency International's Corruption Perceptions Index (CPI) as of 2024.

A financial audit into the Congolese government’s battle against M23 rebels shed light on high-level corruption and misuse of public funds to finance a fruitless war, with millions of dollars paid by the state to private military companies and arms brokers.

In December 2023, Congolese authorities sought to hire 2,500 military contractors from Latin America to fight in North Kivu Province, where a government-led coalition is pitted against the M23 rebels who are fighting against an existential threat. Successive Congolese regimes put their own interests before the well-being of the people. Government officials deny a humanitarian crisis in the country, in a sinister attempt to attract foreign investment and further enrich the people in power. The mining sector is particularly prone to corruption.

Valuable concessions are granted with little legitimate benefit to the state due to the lack of accountability and transparency in the management of country’s natural resources.

According to the press release issued by Congo Is Not for Sale (CNPAV), a non-government organization, on May 10, a $70 million donation of land to an obscure non-governmental organization, led by Jean-David E'Ngazi, a Chinese miner Zijin manager, and member of the board of directors of Cominière, a state owned company, raises alarming questions about the legitimacy and legality of such transactions.

It was also reported that, Jimmy Munganga, first president of the DRC Court of Auditors, went public with corruption accusations against former Gécames chairman Albert Yuma Mulimbi, a key figure in Congolese economic and political life, as well as ex-central banker Deogratias Mutombo Mwana Nyembo.

The two men, among other things, were accused of contributing to a $25 million fraud. The money mysteriously disappeared between 2018 and 2020. Speaking on a Radio-Télévision Nationale Congolaise (RTNC) news programme, in October 2023, Munganga said that “mismanagement” by the two men was behind “embezzlement amounting to $25,521,000” – $15m at the Congolese mining giant, Gécamines, and around $10.5m at the DRC public treasury.

The government’s lack of political will to investigate alleged wrongdoings and the opacity of financial operations have long enabled corrupt officials to enjoy impunity.

Related: DRC: Corruption case against former head of Gécamines speaks to Tshisekedi’s unfinished 'clean up operation'

Countless corruption cases in the country are documented and that is common knowledge in the country. The Congolese government stole UN payments intended for Congolese soldiers who contributed to peacekeeping operations in the Central African Republic.

The DRC, in fact, is an embarrassment to African countries. The country should have a better standard of living, without loans, since it could have used its own resources.

However, due to lack of political integrity and poor governance, DRC became a failed state, with foreigners, especially China and the West, exploiting the nation’s resources and leaving Congolese citizens impoverished. The IFM loans only make an already bad situation worse.