Democratic Republic of the Congo: Selected Issues
Author: International Monetary Fund. African Dept.
Publication Date:
04 Sep 2019
eISBN:
9781513512853
Language:
English
Keywords:
ISCR; CR; Congo; country; government; DRC government expenditure; poverty situation; health outcome; spending efficiency; transfer program; consumption survey; Social assistance spending
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Selected Issues

Abstract

Selected Issues

Poverty and Government Social Spending1

A. Update on Poverty and Vulnerability

1. Poverty remains pervasive across all dimensions (Table 1). The last household income and consumption survey, which took place in 2012, remains the main source of available data, though there have been other surveys related to social sectors. According to the data, out of the 83 million Congolese, 77 percent live below the poverty line of PPP$1.9 a day (the SSA average is 43 percent); 90 percent of workers make less than PPP$3.10 a day and are therefore working poor; and 42 percent of the population is in severe multidimensional poverty. These indicators are significantly worse than most countries in a group of peers.

Table 1.

Poverty, Vulnerability, Inequality, and Social Indicators in Selected Countries

article image
Sources: UNDP Human Development Reports, 2018

2. A high level of vulnerability suggests that poverty could continue to worsen. Vulnerability refers to the risk of falling into poverty if identified events were to occur. There are many such events or potential occurrences in DRC including, to name a few, armed conflict, political crises, natural disasters, disagreements with neighbors (such as the one that resulted recently in the deportation of hundreds of thousands of Congolese from Angola), and epidemics. The number of Congolese vulnerable to multidimensional poverty is almost 18 percent. More than six million Congolese are either refugees or internally displaced and many are either poor or facing the risk of falling into poverty.

3. The socio-political situation in the DRC contributes to creating more poverty. The Ebola outbreak in the North-East shows no sign of abating. To the contrary, the lethality rate is picking up, as efforts to combat the disease are being thwarted by armed groups who routinely attack Ebola screening and treatment facilities. Cholera, which is endemic is many parts of the country, killed more people than Ebola in 2018. Hundreds of armed groups around the eastern border are disrupting economic activities and contributing to the increase in poverty and vulnerability in the affected communities. Millions of internally displaced and deported refugees are living in squalor under temporary shelters, breeding more poverty.

4. Income and gender inequality in DRC worsen the poverty situation. The Gini coefficient, at 42 percent, is relatively high, although not the highest among peer countries. However, the gender inequality index is the highest (Table 1), along with the gap between the human development index for males and females. Specific areas are particularly problematic. Sexual violence against women and girls in conflict-afflicted eastern regions of the country has reached epidemic proportion, famously leading to the activist doctor Denis Mukwege winning the 2018 Nobel peace prize for denouncing such abominations and for devoting his professional life (at a very high risk for his and his colleagues’ lives) to assist the victims.

5. Some of the social indicators reflect the high level of poverty and may reinforce poverty. The rates of child mortality, lack of immunization, and child malnutrition and stunting in DRC are among the highest compared to peer countries. Overall mortality attributable to polluted air and unsafe water and poor hygiene is also very high, as well as malaria incidence. On a brighter side, both inputs and outputs in the education sector appear to be within ranges in peers.

B. Government Strategies and Policies to Tackle Extreme Poverty and Vulnerability

6. The authorities have developed a national social protection policy (SPP) focusing on four dimensions of social protection. The SPP dimensions include (1) access to health care through universal health coverage; (2) early childhood, with an emphasis on nutrition, health and education for children; (3) income security for people in difficult circumstances, especially the most vulnerable, and (4) old age, especially the elderly who are indigent. However, not all of these dimensions have been operationalized and only a few concrete programs have been implemented.

7. The government has set up several social assistance mechanisms that are part of the SPP, which so far have benefited only a limited number of people. These mechanisms include (i) social insurance, (ii) social safety nets, and (iii) social assistance programs.

  • Social insurance schemes cover risks related to work and provide pensions for disability, old-age, and survivors as well as family allowances for the Katanga province.

  • Social safety net mechanisms are non-contributory transfer programs (conditional or not) that aim to directly support the consumption of poor and vulnerable people as well as guarantee their access to essential social services.

  • Social assistance programs promote investment in human capital. These programs support populations affected by shocks and aim at breaking the intergenerational cycle of poverty transmission.

8. The main social safety net mechanisms provide conditional assistance or transfers. These include exemptions from fees to access some health and education services, based on the “certificate of indigence,” issued by the Ministry of Social Affairs. Such certificates target vulnerable children and women, the elderly, internally displaced persons, and refugees. However, the program has been abused as well-to-do civil servants have had access to it. In 2013, the program covered around 5,604 people, 69 percent of them in Kinshasa. The administrative cost of US$25 to US$50 to obtain the certificate has essentially eliminated the vulnerable populations that the program was supposed to target. There is also a cash transfer program funded by DFID and administered by UNICEF that aims at providing vulnerable families affected by forced population movements with access to unconditional cash transfers. During the 17 months of program implementation, 23,534 families (117,670 people) have been assisted.

9. The coordination of social protection activities needs to be strengthened. Several organizations have been set up to coordinate social protection activities undertaken by different ministries. However, there is unnecessary redundancy which needs to be eliminated.

C. Assessment of DRC Government Expenditures

10. DRC fares worse than peers in terms of spending efficiency. This analysis is based on FAD’s Expenditure Assessment Tool (EAT).

11. Total expenditures remain modest and current expenditure have increased more than investment in recent years. Between 2004 and 2016 spending in DRC increased by 4.4 percent of GDP, more than in SSA, but the majority went to current spending. In 2016, current spending represented 65 percent of all spending, while capital expenditures amounted to 19 percent (73 percent and 27 percent in SSA, respectively). Data from 2015 shows that investment picked up since the early 2000s, but the stock of public capital in percent of GDP is just a little more than half the average of LIDCs.

12. The wage bill in DRC has steadily grown from less than 1 percent of GDP in 2000 to around 5 percent of GDP in 2014. While the wage bill in percent of GDP in the DRC is in the 10-percentile range of emerging and middle-income countries, it is close to the 90-percentile range in terms of percentage of public expenditures, with the compensation of government employees representing over one third of expenditures, against 28 percent in LICs. This also reflects the fact that DRC expenditures are relatively low as a result of limited government revenue.

Figure 1.
Figure 1.

Government Spending and Economic Classification 1/

Citation: IMF Staff Country Reports 2019, 286; 10.5089/9781513512853.002.A003

Source: IMF FAD Expenditure Assessment Tool (EAT), World Economic Outlook.1/ Coverage refers to general government as per World Economic Outlook metadata.2/ Dashlines are the average of SSA.

13. DRC social spending is generally lower than peers.

  • Health public spending measured across a broad range of indicators is lower than the average for LICs, and out-of-pocket payments by households is higher than in other LICs (Figure 2).

  • DRC spending in education is comparable to other LICs in relative terms. The DRC government devoted around 17 percent of its spending to education. But in percent of GDP, DRC lags comparators as it spends only around 2.5 percent of GDP against around 4.5 percent for the reference groups. In PPP terms, DRC government spending per student is just a few dollars in the primary and secondary education and a little less than US$500 in the tertiary education. These levels are several multiple lower than the average in LICs.

Figure 2.
Figure 2.

Health and Education Spending in Context

Citation: IMF Staff Country Reports 2019, 286; 10.5089/9781513512853.002.A003

14. Health spending outcomes are weak, which given DRC’s low level of spending paradoxically would put DRC on the health efficiency frontier.

  • Health outcomes are poor across the board, sometimes markedly weak compared to LIDCs, although not all the data monitored is available. For instance, the number of infant deaths per 1,000 people in DRC is 72, against around 45 in LIDCs (Figure 3). DRC is located on the Southwest end of the efficiency frontier with low spending and low outcomes, implying that there is a degree of efficiency in utilizing scarce resources.

  • Budgetary allocations rarely reach reference hospitals, which then need to resort to service fees at levels that would price out the poorest and most vulnerable (DFID, 2018). The lack of government oversight in the education of medical doctors expose patients to poor medical services and exaggerated drug prescriptions. The DFID study demonstrates that there is significant scope for improving the efficiency of health services and stresses the need for the government to devote more budgetary resources to health.

  • Regarding education, DRC actually has a higher teacher-student ratio per 100 compared to reference groups for both primary and secondary education. In terms of outcomes, the adult literacy ratio at 77 percent is similar to reference groups.

Figure 3.
Figure 3.

Health Outcomes and Spending Efficiency

Citation: IMF Staff Country Reports 2019, 286; 10.5089/9781513512853.002.A003

D. Conclusions and Policy Recommendations

15. Addressing DRC’s social development needs will require a complex set of policies and interventions. For a start, bringing peace to conflict-afflicted parts of the country would help reduce poverty and vulnerability by boosting economic activity and employment. No intervention can succeed unless there is peace and stability, as demonstrated by the difficulty of bringing medical assistance in some Ebola-afflicted areas. In that respect, policies should target the reduction of both poverty and vulnerability.

16. There is an urgent need to increase government spending for social outlays, which would require both mobilizing more revenue and prioritizing spending in social sectors. Given scarce resources, policies should focus on improving spending efficiency.

17. Support efforts by civil society and social activists can hugely help and should be protected. The inspiring story of Dr. Mukwege underlines the need to combat decisively violence against women and more generally make efforts to promote gender equality.

18. Improving data quality and availability is critical to proper design and implement social programs. In particular, household consumption and income surveys should be refreshed to get updated data; better data would help improve and support the targeting of government programs.

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Prepared by Philippe Egoume with contributions from Emmanuel Gbadi and Yanki Kalfa.

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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 2019: Issue 286
Publisher:
International Monetary Fund
ISBN:
9781513512853
ISSN:
1934-7685
Pages:
31
DOI:
https://doi.org/10.5089/9781513512853.002

Government Spending and Economic Classification 1/

Health and Education Spending in Context

Health Outcomes and Spending Efficiency