Democratic Republic of the Congo: Selected Issues
Author: International Monetary Fund. African Dept.
Publication Date:
13 Oct 2015
eISBN:
9781513590189
Language:
English
Keywords:
ISCR; CR; Congo; budget; rate; inequality in DRC; poverty incidence; growth elasticity; recede in the Democratic Republic of the Congo; Congolese authorities; Poverty reduction
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This Selected Issues paper takes stock of poverty in the Democratic Republic of the Congo (DRC). Poverty has receded in the DRC over the last decade on the back of gradual stabilization in the security and political situation, strong economic growth, and sharp decline in inflationary pressures. Most social indicators also improved during the period. However, poverty remains pervasive with a level still among the highest in sub-Saharan Africa, and DRC will likely not achieve any of the Millennium Developments Goals by 2015. Policy actions should focus on fostering the development of labor-intensive sector, increasing social spending, and redirecting public resources to the poorest regions of the country.

Abstract

This Selected Issues paper takes stock of poverty in the Democratic Republic of the Congo (DRC). Poverty has receded in the DRC over the last decade on the back of gradual stabilization in the security and political situation, strong economic growth, and sharp decline in inflationary pressures. Most social indicators also improved during the period. However, poverty remains pervasive with a level still among the highest in sub-Saharan Africa, and DRC will likely not achieve any of the Millennium Developments Goals by 2015. Policy actions should focus on fostering the development of labor-intensive sector, increasing social spending, and redirecting public resources to the poorest regions of the country.

Taking Stock of Poverty in the Democratic Republic of the Congo1

Poverty has receded in the Democratic Republic of the Congo (DRC) over the last decade on the back of gradual stabilization in the security and political situation, strong economic growth, and sharp decline in inflationary pressures. Most social indicators also improved during the period. However, poverty remains pervasive with a level still among the highest in sub-Saharan Africa (SSA), and DRC will likely not achieve any of the Millennium Developments Goals (MDGs) by 2015. Progress in poverty reduction has been uneven across regions and inequality has risen. Policy actions should focus on fostering the development of labor-intensive sector, increasing social spending, and redirecting public resources to the poorest regions of the country.

A. Recent Progress in Poverty Reduction

1. Indicators of poverty have improved in recent years, but poverty remains pervasive and geographically concentrated. Poverty incidence, measured by the share of the population living below the national poverty line,2 fell from 71.4 percent in 2005 to 63.4 percent in 2012. Based on the standard measure of $1.25 a day, it also decreased, but only marginally (5 percentage points). Despite the relatively steep decline in rural poverty, poverty is more pronounced in rural areas (65.2 percent) than in urban ones (areas?) (60.4 percent), and affected more men (56 percent) than women (49 percent). The DRC accounted for 5 percent of the number of extremely poor people in the world in 2011 and the second in SSA, behind Madagascar (Figure 1). The country is significantly off-track regarding the MDG of halving, to less than 40 percent, the share of the population living below the national poverty line by end-2015.

Figure 1.
Figure 1.

Democratic Republic of the Congo: Indicators of Poverty

Citation: IMF Staff Country Reports 2015, 281; 10.5089/9781513590189.002.A001

Sources: World Development Indicators; Congolese authorities; and IMF staff estimates.

2. Other social indicators improved as well. Life expectancy increased to 51.7 years in 2013 from 47.8 years in 2005, while the rate of child mortality decreased by 30 percent, between 2007 and 2012, to 104 deaths for 1000 births (see Table 1). Education is considered as the MDG in which DRC made the most significant improvements. Indicators of access, coverage, and academic achievements doubled between 2002 and 2012, exceeding the average of comparators in SSA. For example, seven out of ten children finished the last year of primary school in 2012, against three out of ten in 2002, and access to primary school is quasi universal with children attending school two years longer than their parents did.

Figure 2.
Figure 2.

Democratic Republic of the Congo: Selected Social Indicators, 2005–12

Citation: IMF Staff Country Reports 2015, 281; 10.5089/9781513590189.002.A001

Source: World Development Indicators, World Bank.

B. Drivers of Progress

3. Stabilization of the political and security situation was the foremost driver of progress. This stabilization followed the signature of political agreement between some of the warring parties in 2002 in South Africa (Sun City) and the election of a legitimate government in 2006. This political dynamics translated into improvement in the security situation, which allowed the return of millions of internal displaced and refugees to their homes, and the revival of commercial and agricultural activities. It also facilitated the deployment of the central administration to the provinces, and the resumption of provision of basic public services destroyed or severely degraded by a decade of conflicts. Finally, it created the enabling environment for the private sector to invest.

4. Strong economic growth and sustained disinflation also contributed. The cumulative growth rate from 2007 to 2012 exceeded 33 percent, translating into an increase of real income per capita of about 15.5 percent. The mining sector was the main engine of this strong economic performance, above the SSA average. The agriculture sector also contributed, albeit to a lesser extent, with the gradual return of displaced and refugees to their villages. This may explain the stronger reduction in poverty in rural areas (-14.0 percent) than in urban areas (-2.3 percent). Over this period, the DRC has also experienced a sharp decline in inflationary pressures (from 46.2 percent in 2009 to 5.7 percent in 2012),3 as the result of the implementation of a fiscal anchor adopted in 2009 in the context of Fund-supported program.

Figure 3.
Figure 3.

Democratic Republic of the Congo: Macroeconomic Performance and Poverty

Citation: IMF Staff Country Reports 2015, 281; 10.5089/9781513590189.002.A001

Sources: Congolese authorities and IMF staff calculations.

C. Main Challenges Going Forward

5. Progress in poverty reduction was uneven across regions. From 2005 to 2012, poverty increased in the two Kasai provinces (+35.2 percent in Kasai Occidental and +25.4 percent in Kasai Oriental), while declining in the conflict-torn provinces of North and South Kivu that benefited from significant dividends of stabilization. In the mineral-rich Katanga province, despite an intensification of mineral activities, poverty receded by only 4.2 percent. Overall, poverty rates range from 36.8 percent of the population in the province of Kinshasa to above 70 percent in four provinces (Kasai Occidental, Kasai Oriental, Equateur, and Bandundu).

A01ufig01

Poverty growth rate 2005–12

(Percent)

Citation: IMF Staff Country Reports 2015, 281; 10.5089/9781513590189.002.A001

Source: Congolese authorities

6. Inequality is rising. From 2005 to 2012, the Gini index increased by three points, highlighting a rise in inequality in the DRC. The index of economic well-being computed in context of the Demographic and Health Survey4 revealed that 85 percent of people living in urban areas are in the two highest quintiles of well-being while more than half of the rural respondents were ranked in the two lowest quintiles. Comparison with SSA countries shows that inequality in DRC, as measured by the consumption-based Gini index, is slightly above the SSA average with 0.45 in 2012, far from the South Africa and Namibia with respectively 0.65 and 0.61.

Text Table 1.

GINI Coefficient for Selected SSA Countries

article image
Source: World Development Indicators.

7. Under nutrition is also prevalent. For instance, the 2014 Finscope survey revealed that only 22 percent of people surveyed never skip a meal and 26 percent unable to send their children to school. Despite improvements, child malnutrition and its consequences are widespread, with 43 percent of children under age five stunted or short in comparison to average height. The 2013 Human Development Index of the United Nations Development Program ranked DR Congo 186th out of 187 countries and territories listed.

D. Policy Recommendations

8. Fostering the development of labor-intensive sectors is critical. In the 1-2-3 Survey in 2012, 65.6 percent of surveyed Congolese considered the lack of employment as the main source for poverty. In urban areas, this figure rose to 77.2 percent. The growth elasticity of poverty was quite low over 2007–12, as the main engine for growth was the mining sector, which is capital intensive. In DRC, 1 percent of GDP growth led to 1.1 percent of reduction of the poverty rate, against 18.1 percent in South Africa, 7.3 percent in the Republic of Congo, or 4.6 percent in Uganda. Investing to increase productivity in labor-intensive sector such as agriculture and strengthening small and medium enterprises in urban areas are a promising strategy to curb poverty. This requires better transportation networks to improve farmers’ access to markets and investment in power generation. Better access to finance would allow farmers and entrepreneurs to invest in more inputs and equipment.

Figure 4.
Figure 4.

Democratic Republic of the Congo: Poverty Reduction, Unemployment, Underemployment

Citation: IMF Staff Country Reports 2015, 281; 10.5089/9781513590189.002.A001

Sources: Congolese authorities, World Development Indicators, and IMF staff calculations.

9. Increasing public spending on priority social sectors could accelerate poverty reduction. Despite recent progress, per capita annual public expenditures on health and education are lower than the SSA average. Evidence shows that access to and use of basic social services is associated to lower poverty rates. A recent survey underscored that the likelihood of being poor decreases with the level of education (with a ratio of nearly 2:1 between persons who graduated from university and those who have never attended school). Raising pro-poor spending will require more domestic revenue mobilization and a reprioritization of expenditures.

Figure 5.

Democratic Republic of the Congo: Government Expenditures on Education and Health

Citation: IMF Staff Country Reports 2015, 281; 10.5089/9781513590189.002.A001

Source: World Development Indicators.
Figure 6.
Figure 6.

Democratic Republic of the Congo: Poverty and Education

Citation: IMF Staff Country Reports 2015, 281; 10.5089/9781513590189.002.A001

Sources: Congolese authorities; World Development Indicators; and IMF staff calculations.

10. There is a need to redirect public spending towards the poorest regions. In the DRC, the poorest provinces are not the prime recipient of public resources. For instance, in 2013, the government spent $4 per capita in education in Kasai Oriental, the poorest province in the DRC, against $57 for Kinshasa, the province with the lowest number of poor. Targeting could be a means to maximize the impact of limited public resources on poverty.

Table 1.

Democratic Republic of the Congo: Millennium Development Goals, 1990-2014

article image
Source: World Bank, World Development Indicators

References

  • United Nations Development Program, 2014, “Progress Evaluation Achieved by the Republic of the Congo towards the Millennium Developments Goals in 2012.”

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  • Ministry of Planning, 2014, “Résultats de l’enquête sur l’emploi, le secteur informel et sur la consommation des ménages in 2012.”

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  • Ministry of Planning and Ministry of Health, 2014, “Deuxième enquête démographique et de santé (EDS-DRC II 2013-2014).”

  • Ministry of Primary and Secondary Education, UNICEF and UNESCO, 2014, “Rapport d’état du système éducatif.”

1

Prepared by Jean-Paul Mvogo and Mesmin Koulet-Vickot.

2

In 2012, the national poverty line was at CDF 869.210 ($.945) in urban areas and CDF 579.248 ($.630) in rural areas.

3

Inflation was 21.3 percent in 2005.

4

The index is based on the ownership or use of durable goods and on access to electricity and to drinkable water, type of fuel used, and toilets and number of rooms available.

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Cover IMF Staff Country Reports
Democratic Republic of the Congo: Selected Issues
Author: International Monetary Fund. African Dept.
Volume/Issue:
Volume 2015: Issue 281
Publisher:
International Monetary Fund
ISBN:
9781513590189
ISSN:
1934-7685
Pages:
55
DOI:
https://doi.org/10.5089/9781513590189.002
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    Democratic Republic of the Congo: Indicators of Poverty

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    Democratic Republic of the Congo: Selected Social Indicators, 2005–12

  • View in gallery

    Democratic Republic of the Congo: Macroeconomic Performance and Poverty

  • View in gallery

    Poverty growth rate 2005–12

    (Percent)

  • View in gallery

    Democratic Republic of the Congo: Poverty Reduction, Unemployment, Underemployment

  • View in gallery

    Democratic Republic of the Congo: Government Expenditures on Education and Health

  • View in gallery

    Democratic Republic of the Congo: Poverty and Education

Democratic Republic of the Congo: Indicators of Poverty

Democratic Republic of the Congo: Selected Social Indicators, 2005–12

Democratic Republic of the Congo: Macroeconomic Performance and Poverty

Poverty growth rate 2005–12

(Percent)

Democratic Republic of the Congo: Poverty Reduction, Unemployment, Underemployment

Democratic Republic of the Congo: Government Expenditures on Education and Health

Democratic Republic of the Congo: Poverty and Education