Foreign Aid, Economic Growth, and Corruption in the DRC

Like most of its regional neighbors, the Democratic Republic of Congo receives great deal of foreign aid, and has since its independence, according to USAID’s overview of the country. The DRC however is notoriously corrupt, and it is hard to tell just how and where its foreign aid is being put to use.

Notable unilateral donors to the DRC include the United States and China, while the World Bank is its largest multilateral donor. According to a Global Humanitarian Assistance report, in 2013, the United States provided $1.9 billion in official development assistance to the country, and an additional $0.4 billion in humanitarian relief. In March 2016, the World Bank had a total commitment of $3.3 billion to the Great Lakes nation, of which 63% was designated for infrastructure, 16% for health, education, and social programs, 15% for agriculture, and 6% for governance. The United States commitment is allotted for similar projects. To some extent, foreign aid appears to have been and continue to be helpful to the DRC’s economic development.

The DRC is developing rapidly, at least on paper. The World Bank cites the DRC’s 2015 GDP growth rate as 6.9%, and its 2013 inflation rate at 1.9%. Between 2005 and 2012, the poverty rate was reduced from 71% to 63%. Inflation rates were drastically reduced from a high of 53% in 2009, due to close work with the World Bank, and more careful monetary and fiscal policies. The growth rate is well above average for Sub-Saharan Africa. Economic appears to be going smoothly, and foreign aid seems to be an important factor.

How is it then, that, although reduced, the poverty rate is one of the highest in the world? Why does the DRC rank 176 out of 187 countries in the Human Development Index? (2015). Why is per-capita income ($380 in 2015) among the lowest in the world? Although obvious, the answer lies in corruption, opaque institutions, and lack of responsiveness by the government to its citizens.

As Dambisa Moyo asserts, aid creates a vicious cycle, in that it creates dependency, halters investment, and facilitates corruption. During his time as President of Zaire, Mobutu is estimated to have stolen about US $5 billion. His corruption did not go unnoticed, and watchdogs were well aware of Mobutu’s motivations.  An IMF representative vacated his post in Zaire  in 1978 after seeing the rampant corruption, and giving up all hope for the country. Soon after, the IMF gave the largest loan it had ever, to that point, given an African country.

Today, the DRC still receives enormous aid packages, however corrupt institutions keep this aid from being used for its full potential. In turn, this creates situations where more aid is appropriate, showing how Moyo’s vicious cycle is still at work.

Current President Joseph Kabila exploitatively utilizes the DRC’s natural resources, notably its mining resources for personal gain, which keeps growth rates lower than they could be, and suffocates the middle class, who have no voice, as Kabila has little need for their tax money and thus is not responsive. As poverty rates remain extremely high, donors are incentivized to respond with aid packages. Indeed, as Moyo points out, oftentimes aid goes to the most corrupt countries.

Although USAID and the World Bank both note concerns about transparency in the government, and transparency in the way aid is used, which Kabila has agreed to rectify, long legislative proceedings and an incompetent bureaucracy ensure that Kabila, his friends, family, and closest advisors will continue to use foreign aid to their personal financial advantages for years to come. The resources that the citizens of the DRC so desperately need will continue to fail to reach them in any significant capacity, and thus poverty and quality of life will remain significant issues. Even as growth overall increases steadily, the people of the DRC will see no substantial benefits from foreign aid.

 

Sources

https://www.usaid.gov/democratic-republic-congo.

https://www.worldbank.org/en/country/drc.

http://www.globalhumanitarianassistance.org/countryprofile/democratic-republic-of-congo.

Dead Aid: why Aid is not Working and how there is a Better Way for Africa – Dambisa Moyo

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