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Africa

DRC: Tense business climate amid political uncertainty

In the DRC, delayed elections have contributed to an economic slowdown and a tense business climate. DW's Sella Oneko was in Kinshasa to examine the effects of the political uncertainty on the business community.

Philippe Ntumba has a special stake in the Democratic Republic of the Congo (DRC) elections, now set for December 23 after delays over almost three years. The young entrepreneur and his wife offer a tracking service that can monitor vehicles and their movements, providing GPS data and live updates. Ntumba's potential client is the national electoral body, CENI, which wants to use the service to keep track of the delivery of voting materials.

In his small apartment, not far from Kinshasa's business district, he demonstrates the app. A number of cars move around on a map. You can click on them to check their data and some have video footage of the road from a dashboard camera.

"I'm so focused on the project with CENI," says Ntumba. "So hopefully it can work." In 2014, the electrical engineer moved back to the DRC from South Africa, where he had been studying. It took him a year and $5,000 (€ 4,350) to launch his company, Congo Protection System.

"It's not easy to set up a business here, especially in Kinshasa," he says. "Everything in Kinshasa is run with money. You have to have connections with the big guys. That means the minister, army generals, etcetera."

You need a 100 percent readiness to take risks if you're going to do business here, Ntumba says. DRC still ranks 182nd out of 190 countries on the World Bank's "Ease of doing business" ranking, due to factors such as poor access to electricity and red tape when it comes to paying taxes.

Philippe Ntumba (DW/S. Oneko)

Entrepreneur Philippe Ntumba: "In DR Congo you need 100 percent risk readiness to do business"

A highrise view

The capital Kinshasa is a city of contrasts. The super rich live next to the middle classes who often lack electricity and running water, and the urban poor who struggle to make a living.

From his office on the 13th floor, A.L. Kitenge looks down on to Gombe, the central business district, with its four-lane boulevard, government buildings, and apartments that many foreigners rent for $1000 a month.

Kitenge runs a consulting and planning firm, which advises foreign and local companies, as well as governments on their business ventures in DRC.

"Look at this city. Of course there are some problems, but there are problems anywhere. Kinshasa is no exception, it just has a bad reputation," he says.

"Congo is so many places, not just one place. When you go to the 26 provinces they have nothing in common," he says. The media, he adds, only ever show the one side of the DRC, the troubled east, but that is over 2,000 km (1,242 miles) away.

It's a good client pitch. "The best way to do things is to try and have a local partner. It gives you a better understanding of what is going on," Kitenge says. "It actually gives roots to your business. The main mistake people make is that they try and see Congo and read economic data and indexes from a seat in Washington."

A.L. Kitenge (DW/S. Oneko)

Kinshasa-based investment consultant A.L. Kitenge: "If you want to wait for the next elections before you invest, you don't know what you want"

The looming elections

The DRC has been anything but stable. The conflicts in the east are ongoing, there is unrest in the Kasai region and camps for internally displaced people and those displaced by the crises in Burundi or the Central African Republic,

Kinshasa is not representative of the rest of the country, explains Felicien Kabamba Mbambu, a political scientist at the University of Kinshasa.

Parts of DRC have so many militia groups, they are explosive, he says. "There are places where you go, where the state doesn't exist," he says.

The repeated postponement of the elections has made the situation worse. In December 2015, the poll was put off, with CENI saying the country was not ready and President Joseph Kabila's bid for a third term sparking protests.

Read more: Violence continues as Congo's presidential poll results are delayed

In the meantime, the economy has suffered. Economic growth slowed from 6.9 percent in 2015 to 2.4 percent in 2016. It rose by one percent in 2017 due to a rise in the price of minerals like cobalt and copper. 

According to the data portal Index Mundi, informal economic sectors, including activities in the mining industry, are not reflected in the official figures.

"We saw a lot of investors pull back, waiting for the situation to calm down. The tourism industry declined," says Kabamba Mbambu.

"Many development projects with foreign donors, Europeans or the World Bank were at a standstill because people wanted to see what would happen. In a crisis situation, you can't guarantee continuity for your projects."

Patience Barandenge, an entrepreneur and banker saw the same development. "As a banker I can say that a lot of clients' money was going abroad because they said, 'We don't know what is going to happen," she says. "They didn't know if the president would leave or not, so it was scary."

In June 2018, Kabila finally chose a successor from his inner circle, Emmanuel Ramazani Shadary. Many observers believe this will allow Kabila to continue calling the shots. 

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'The Chinese understand'

"To me this is just wrong," say Kitenge. The investment consultant shakes his head. "We will have elections on a regular basis, so if you want to wait for the next elections before you invest, then you don't know what you want."

The Chinese, for example, don't wait, he says. "The Chinese understand how to navigate all that and they invest and they're buying everything. They're buying American companies, they're buying Australian companies and they're taking control of the sources of the strategic minerals." On October 16, 2018, Kabila signed a $14 billion (€12.18 billion) deal with China's Three Gorges Corporation and a Spanish construction company to develop a six-phase mega dam project.

Read more: Africa jumps aboard China's express train

Investors want to know which government they are dealing with – whether it's to identify the right person in charge of the paperwork or for the outright payment bribes. "This is very true and very dangerous," Kitenge says. "It costs a lot in terms of money and reputation. Some business people, even big, internationally recognized companies – when they come to Congo, they try to hook-up with some politicians and then it takes them down the drain of corruption. And then they complain about it."

There are people who chose to work properly, he says. It might take longer, but in the long-run it's better for your business.

 Patience Barandenge (DW/S. Oneko)

Patience Barandenge, a banker in Kinshasa, says clients were taking their money abroad

It's the small man or woman who suffers

For Philippe Ntumba, whose company is still in its starting phase, the problem is not as easy as that. Having set up his company in DRC, he can't just return to South Africa. He depends on the stability of the country, and if elections don't happen, his major deal with the electoral body will also fall through.

Paulin Ndjikat, who runs a small drinks distribution company and owns four properties in Kinshasa is also affected by the instability. "There is a fear," he says. "We're afraid to put our money in local banks … and the banks don't give out loans because they aren't certain they can get the money back." A few months back, Ndijkat himself failed to repay a loan after some of his trucks were attacked and looted by militia in the provinces. As a result he had to sell some of his properties.

As a banker and entrepreneur, Patience Barandenge understands the fear. For many years she headed her bank's branch for women's banking. "If you have clients who decide to close and leave the country, then you lose your business," she explains. According to her, women's businesses have grown immensely over the past few years. But the DRC is a country where, until two years ago, a woman was officially not even allowed to open a bank account, let alone take out a loan without her husband's signature. Understandably, she says, many women are still more risk averse than their male counterparts when it comes to investing. If the elections take place, there will be less tension and things will be better, she hopes.

For the investor Kitenge, the outlook is more bold. A great deal needs to be done, he agrees. What he would like to see is a move away from the mineral dependency. The country needs to invest in the agro-industry, in energy production through hydro-electricity, but also in education and infrastructure. This could be done in 15 to 20 years, if there is a proper strategy, he says. "I'm 100 percent sure," Kitenge says. "If we want to do this and if politicians can get rid of what I call their self-oriented vision – if we can give a chance to common sense - we have the potential to develop this country quicker than ever."

This report was supported by the International Women's Media Foundation (IWMF)

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