The Democratic Republic of the Congo and the World Bank

Last updated
Location of the Democratic Republic of the Congo Cg-map.png
Location of the Democratic Republic of the Congo

The World Bank Group is a family of five international organizations, which has continuously given leverage loans and financial assistance to developing nations like the Democratic Republic of the Congo, commonly known as the DRC. The country has received assistance from the World Bank in the form of social programs in order to induce and sustain economic development. This assistance has been directed toward conflict prevention, investments in education, and addressing environmental degradation. [1]

Contents

The DRC has an abundance of natural resources, such as minerals, human capital, water and livestock. [2] Primarily due to this abundance, the World Bank sees the DRC as a developing nation with a high possibility for economic growth, to the benefit of not only the country but potentially the entirety of the African continent. [3] Over the years, the DRC has shown signs of economic progress, including efforts to improve security, expand the economy, and initiate democratic governance. However, significant challenges such as poverty and conflict remain. While the country suffers from an ongoing conflict, the DRC has made considerable efforts to unify their army. [2]

However, despite its advancing economy, the DRC consistently shows a low Gross National Income (GNI) per capita and Economic Vulnerability Index (EVI) due to internal conflicts that began in the 1990s. [4] These conflicts have created many obstacles to economic development, including internal protests, violence stemming from rebel groups, inability to sustain economic growth, political instability, weak governance, and deforestation. [5]

Projects and Alliances

The World Bank has an investment portfolio for the Democratic Republic of the Congo that includes 29 active projects totaling US$3.8 billion in association with the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). The portfolio is divided among various sectors, with 63% allocated for infrastructure, 16% for human development, 15% for development of the private sector and agriculture, and 6% for governance and mining projects. [6]

The DRC's Country Assistance Strategy (CAS), [3] implemented by the World Bank, aimed to help the country reach Millennium Development Goals (MDGs) and increase growth rates. This program came to a halt in 2017 and has been subjected to further review for noncompliance. [7] As of 2018, the World Bank is developing a new country partnership framework, where implementation is expected between the years of 2019 and 2021.

Between 1992 and 1994, the World Bank suspended aid to the DRC, citing corruption concerns amid broader socio-political instability in the country. [8] In collaboration with the UN, there has been significant progress in demobilizing combatants, raising education, and increasing health. Other alliances with UNICEF and USAID have helped in the protection of children's human rights. [9] Unfortunately, the DRC still has a score of just 0.37 out of 1 on the World Bank's human capital index scale, which uses key determinants to calculate a child's chance of survival and overall success. [10]

IDA

The International Development Association (IDA) has awarded over US$3.7 million in credits and approximately US$5.5 million in grants to the DRC over the course of their relationship. [11] As of 2018, a little over US$1 million in credit and US$2.7 million in grants is currently being disbursed. The current credits (loans) and grants are financing projects that help with development, infrastructure, environmental rehabilitation, raising education levels, and increasing women's rights, among other areas. [11]

IFC

The International Finance Corporation's (IFC) investments amount to over US$429 million, which funds projects committed to the development of the DRC. The IFC has eight active projects that primarily focus on the manufacturing sector by expanding access to financing. [12] The IFC is assisting the DRC to improve the business environment, including easing the process of obtaining permits, starting businesses, and paying taxes. Additionally, the IFC created the Conflict-Affected States in Africa (CASA) initiative to suggest methods of improving the DRC's overall investments and increasing support for small businesses. The IFC has primarily partnered with the World Bank in order to encourage further investments in the DRC. The IFC also works with the Organization for the harmonization in Africa of Business Law (OHADA) in order to induce further economic growth. Management training programs have been offered by the IFC, which have helped in the growth of local, small businesses. [13]

MIGA

As of late 2018, the Multilateral Investment Guarantee Agency (MIGA) has not made any guarantees to the DRC. Prior contributions have helped the DRC to build its infrastructure and rehabilitate its private sector. Between 2009 and 2016, MIGA contributed more than US$187 million worth of guarantees to the country. Most projects focused on securing shareholder loans and building infrastructure to attract foreign investment, while aiming to address challenges like environmental degradation and infrastructure gaps. [14] This has the potential to help in addressing the degradation of roads and infrastructure in the country caused by past and current conflict. [15]

Reception

The World Bank's involvement in the DRC has been highly controversial. This controversy is due in part to the problems that remain despite the DRC receiving loans for development since the 1960s, with brief periods during which the World Bank suspended relations. [16]

Successful projects

The World Bank has helped to promote foreign investment in the DRC. It created the National Investment Promotion Agency (ANAPI), which provided investors with information, advisory services, and potential tax benefits. [17] Foreign direct investment in the DRC increased significantly from US$72 million in 2000 to US$1.3 billion in 2017, peaking at US$3.3 billion in 2013. However, the distribution of these investments' benefits across the population remains a concern. [18]

With the help of the World Bank, the DRC has seen an improvement in access to healthcare. The DRC is highly dependent on aid to fund its health services, of which the World Bank contributes 25%. Some sources attribute the increase in child immunization rates from 5% to 81% to the World Bank's role as the second-largest contributor to health service funding in the DRC. [19]

Criticism

Despite the World Bank's funding of its health system, the DRC has been affected by the ongoing Ebola outbreak which began in 2018, which has been difficult to contain. [20] Additionally, 64% of the DRC's population still lives below the poverty line. [21] Despite the World Bank's ongoing interventions, the DRC continues to face significant challenges, including corruption, gender violence, unemployment, low GDP, and economic stagnation, indicating the complexity of achieving sustainable development. [22]

Critics have raised concerns about the focus of World Bank projects, arguing that large-scale initiatives, such as dam construction, may prioritize industrial and urban needs over rural electrification. An article in The Guardian reported on a purported strategic plan suggesting the World Bank prioritizes large-scale infrastructure projects over smaller-scale initiatives, potentially limiting rural electrification efforts. [23]

Other critics have commented that the World Bank fails to account for historical precedence when attempting to influence government. [24] An example of this issue occurred in 2001 when the World Bank attempted to attract FDI by restructuring one of the largest mining companies that were located in the Katanga province, known as the Gécamines. This action led to the laying off of 10,000 workers, and has been claimed[ by whom? ] to have caused regional and ethnic conflicts. [25]

Related Research Articles

<span class="mw-page-title-main">Economy of the Democratic Republic of the Congo</span>

The economy of the Democratic Republic of the Congo has declined drastically around the 1980s, despite being home to vast potential in natural resources and mineral wealth; their gross domestic product is $69.474 billion as of 2023. During the last five reported years the exports of Democratic Republic of the Congo have changed by $15.2B from $13.3B in 2017 to $28.5B in 2022. The Economy of DRC is largely underestimated because the majority of Gold/Cobalt is sold on Black Market or Smuggled.

<span class="mw-page-title-main">World Bank Group</span> Group making loans to developing countries

The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group. The bank is headquartered in Washington, D.C., in the United States. It provided around $98.83 billion in loans and assistance to "developing" and transition countries in the 2021 fiscal year. The bank's stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity. Total lending as of 2015 for the last 10 years through Development Policy Financing was approximately $117 billion. Its five organizations are:

<span class="mw-page-title-main">Mining industry of the Democratic Republic of the Congo</span>

The mining industry of the Democratic Republic of the Congo produces copper, diamonds, tantalum, tin, gold, and more than 70% of global cobalt production. Minerals and petroleum are central to the DRC's economy, making up more than 95% of the value of its exports.

The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against political and non-commercial risks in developing countries. MIGA is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States.

<span class="mw-page-title-main">Canada–Democratic Republic of the Congo relations</span> Bilateral relations

Canada and the Democratic Republic of the Congo diplomatic relations were established in 1960, following the independence of the D.R. Congo. Canada has an embassy in Kinshasa and D.R. Congo has an embassy in Ottawa.

<span class="mw-page-title-main">China and the World Bank</span> Overview of the relationship between China and the World Bank

China originally joined the World Bank Group (WBG) on December 27, 1945. However, after the Chinese Civil War, the World Bank recognized the Republic of China as its member, until the relationship ended in 1980, when the membership was replaced by the People's Republic of China. The People's Republic of China (PRC) did not become involved with the World Bank group until 1980, when it first joined the World Bank in April due to the market reforms known as reform and opening-up. Prior to the economic reform and its relation with the World Bank, according to CRS, "China maintained policies that kept the economy very poor, stagnant, centrally controlled, vastly inefficient, and relatively isolated from the global economy". Since its entry into the World Bank, China has transformed into a market-based economy and has experienced rapid economic and social development. Currently, although China has become the world's second largest economy with 1.4 billion population, it still has a close relationship with the World Bank in areas such as poverty, environmental protection and new challenges from the reform.

<span class="mw-page-title-main">Honduras and the World Bank</span>

The World Bank Group is a family of five international organizations that has provided leveraged loans and monetary assistance to the Central American country of Honduras in order to assist with the funding of critical tasks needed to ensure security of Honduran access to financing, expansion of social program coverage, and rural development. The country is the second poorest in Central America and its high poverty rate of 66% in 2016 has prompted an increased focus on the importance of diversification of rural income sources, quality education, and targeted social programs as a way of spurring economic growth.

The World Bank Group country partnership framework aims to support Haiti's efforts to reduce poverty and provide economic opportunities for all Haitians. The framework aims to strengthen institutions, government capacity, and public financial management as aid and concessional financing rapidly decline.

<span class="mw-page-title-main">Poverty in the Democratic Republic of the Congo</span> Overview of poverty in the Democratic Republic of Congo

Poverty is widespread and unchecked across the 26 provinces of the Democratic Republic of the Congo (DRC). Despite being the second-largest country in Africa, with an approximate area of 2.3 million square kilometres (890,000 sq mi), and being endowed with rich natural resources, the DRC is the second-poorest country in the world. The average annual income is only $449 US dollars. In 2019, the United Nations (UN) Human Development Index (HDI) ranked the DRC as the 175th least-developed country out of 189 countries with an HDI of 0.480. In 2023, almost 75% of Congolese people live on less than $2.15 a day, defined as the threshold for extreme poverty.

<span class="mw-page-title-main">Uruguay and the World Bank</span>

Uruguay and the World Bank have been working together for a long time. This is because they both mutually benefit.

<span class="mw-page-title-main">Vietnam and the World Bank</span> Vietnams relationship with the World Bank

Vietnam joined the World Bank Group (WBG) on 21 September 1956. Before the mid-1980s, Vietnam was one of the world's least developed countries. A series of economic and political reforms launched in 1986, known as Đổi Mới, caused Vietnam to experience rapid economic growth and development, becoming a lower middle-income country. The World Bank (WB) has maintained a development partnership with Vietnam since 1993. As of 25 March 2019, it has committed a total of US$24 billion in loans, credits, and grants to Vietnam through 165 operations and projects, 44 of which are active as of 2019 and comprise US$9 billion. With an estimated extreme poverty rate below 3% and a GDP growth rate of 7.1% in 2018, Vietnam's economy continues to show fundamental strength and is supported by robust domestic demand and export-oriented manufacturing.

The relationship between Ethiopia and the World Bank was formalized on December 27, 1945.

In 1980, Djibouti became a member of the World Bank Group (WBG). The WBG includes five different organizations: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). Accounting for more than thirteen thousand projects across 173 countries, the WBG is one of the main lending facilities of the world. The WBG works together with governments and private sectors in order to enhance countries efforts towards development and poverty reduction.

<span class="mw-page-title-main">Croatia and the World Bank</span>

Croatia joined the World Bank in 1993, two years after declaring independence from the Socialist Federal Republic of Yugoslavia in 1991. The World Bank's projects from the mid-1990s to the mid-2000s primarily focused on infrastructural and environmental projects.

<span class="mw-page-title-main">Poland and the World Bank</span>

After separating from the World Bank and other International Financial Institutions for decades due to pressure from the Soviet Union, Poland rejoined the World Bank on June 27, 1986. The World Bank was instrumental in financing and providing technical assistance for Poland as it transitioned from a Command Economy into a Market-Oriented Economy. As a middle income country, Poland has worked primarily with the International Bank for Reconstruction and Development since it is not eligible for loans from the International Development Association. Additionally, Poland has had a few projects with the Multilateral Investment Guarantee Agency and the International Finance Corporation. Currently, most of Poland's engagements with the World Bank Group concern environmental concerns and public finances.

<span class="mw-page-title-main">South Korea and the World Bank</span>

South Korea first joined the World Bank Group as a member in 1955. Over the years, South Korea manages to develop its economy in a successful and positive manner. The country now is a financial contributor to the World Bank to help other, rather than an aid recipient in the old days. Under the help and cooperation with the World Bank, South Korea became a rapid growth country in economy begin in the 1970s, and it now became a large shareholder of the institution to help out other developing countries.

Uganda joined the World Bank on September 27, 1963, along with the IBRD, IDA and IFC. It later joined the ICSID on October 14, 1966, and the MIGA on June 10, 1992. Uganda also holds the chair for the 22 nation Africa Group 1 Constituency, headed by Anne Kabagambe. Uganda holds 0.07% of the vote in the IBRD while its constituency holds 1.92%. In the IFC, Uganda holds 0.05% of the vote while its constituency holds 1.31%. Uganda in the IDA holds 0.18% of the vote, while the Africa Group 1 Constituency commands 4%. In the MIGA, meanwhile, Uganda has 0.21% while its constituency holds 3.54% of the vote.

Jamaica first joined The World Bank Group (WBG) on 21 February 1963, when the island nation became a member of The International Bank for Reconstruction and Development (IBRD), which lends to middle and low income nations. This occurred the same month as Jamaica joining the International Monetary Fund (IMF), and one year after declaring political independence. Since joining The World Bank, Jamaica has received in excess of $3 billion US Dollars in loans and grants. Jamaican Minister of Finance, Donald Sangster, led the Jamaican delegations to World Bank and International monetary Fund meetings between 1963 and 1966, while also serving as Governor of the World Bank and IMF. Sangster would go on to serve briefly as the Prime Minister of Jamaica.

<span class="mw-page-title-main">Kazakhstan and the World Bank</span>

Kazakhstan joined the World Bank in 1992 after it had gained independence from the Soviet Union in 1991. Kazakhstan has one of the fastest growing economies in the world, and as a result had its classification changed from a lower-middle income state to an upper-middle income state in 2006. Because of this, Kazakhstan has begun to rely less on international financing than in than previous decades; however, Kazakhstan still takes out loans from the World Bank, primarily relating to the country's environmental issues.

<span class="mw-page-title-main">Belarus and the World Bank</span>

The World Bank Group is a large international financial institution that continuously provides loans and grants in order to fund capital projects in poor and developing nations across the globe. Its main goal is to reduce poverty worldwide. It consists of five other large international financial banks within in, each providing funding for different types of projects. Belarus joined the World Bank back in 1992 and has since then received over $2.5 billion in lending commitments since then and in the form of grant financing, it has received $31 million, with much of this funding going towards programs that include civil society partners. Currently, Belarus's active portfolio within the World Bank has a total of $933 million, with it containing a total of nine different projects, as well as two more projects that are currently still in preparation in the areas of energy efficiency and higher education. The majority of this funding has been directed towards the themes of pollution management and environmental health, climate change, and rural services and infrastructures, with the majority of the funding going directly into the central government, other agencies and extractives, and forestry sectors of the country, as well as sustainable energy. In looking to have more economic growth, improving the private sector environment within Belarus could help.

References

  1. ↑ "Projects & Operations - All Projects | The World Bank". projects.worldbank.org. Retrieved 2018-11-07.
  2. 1 2 "ABOUT CONGO | République Démocratique du Congo". ambardcusa.org. Archived from the original on 2018-12-03. Retrieved 2018-12-03.
  3. 1 2 Bank, The World (2013-04-12). "Congo, Democratic Republic of - Country Assistance Strategy for the period FY13 - FY16". Country Assistance Strategy Document.
  4. ↑ "Least Developed Country Category: Democratic Republic of the Congo Profile | Economic Analysis & Policy Division". Development Policy & Analysis Division | Dept of Economic & Social Affairs | United Nations. 2015-12-25. Retrieved 2018-12-03.
  5. ↑ "Overview". World Bank. Retrieved 2018-11-07.
  6. ↑ "Projects & Programs". World Bank. Retrieved 2018-11-11.
  7. ↑ "DRC: World Bank Suspends Disbursements for Civil Works for the High-Priority Roads Reopening and Maintenance (ProRoutes) Project". World Bank. Retrieved 2018-12-03.
  8. ↑ Ndikumana, Léonce; Boyce, James K. (1998). "Congo's Odious Debt: External Borrowing and Capital Flight in Zaire". Development and Change. 29 (2): 195–217. doi:10.1111/1467-7660.00076.
  9. ↑ "Overview". World Bank. Retrieved 2018-11-09.
  10. ↑ "Human Capital". World Bank. Retrieved 2018-11-11.
  11. 1 2 "WBG Finances - IBRD/IDA Lending Summary". financesapp.worldbank.org. Archived from the original on 2018-10-24. Retrieved 2018-11-11.
  12. ↑ "WBG Finances - IFC Summary". financesapp.worldbank.org. Archived from the original on 2018-10-24. Retrieved 2018-11-10.
  13. ↑ "DRC: the Resilience of an African Giant". www.ifc.org. Retrieved 2018-11-11.
  14. ↑ "Projects | Multilateral Investment Guarantee Agency | World Bank Group". www.miga.org. Retrieved 2018-11-11.
  15. ↑ "Congo Equipment SPRL | Multilateral Investment Guarantee Agency | World Bank Group". www.miga.org. Retrieved 2018-11-10.
  16. ↑ "Opinion | The World Bank's Diminishing Role in Africa" . Retrieved 2018-12-03.
  17. ↑ "The World Bank's Bad Business in the Democratic Republic of the Congo (DRC)". oaklandinstitute.org. Retrieved 2018-12-03.
  18. ↑ UNCTAD. "UNCTADstat - General Profile: Dem. Rep. of the Congo". UNCTADstat. Retrieved 2018-12-03.
  19. ↑ Olk, Sara (2018-11-18). "Immunization in the Democratic Republic of the Congo". Borgen Magazine. Retrieved 2018-12-02.
  20. ↑ Scutti, Susan. "Congo Ebola outbreak is 2nd largest, 2nd deadliest". CNN. Retrieved 2018-12-03.
  21. ↑ "Statistics". UNICEF. Archived from the original on 2018-12-03. Retrieved 2018-12-03.
  22. ↑ "How to Reform the Democratic Republic of Congo". Time. Retrieved 2018-12-03.
  23. ↑ Bosshard, Peter (2013-07-16). "The World Bank is bringing back big, bad dams". The Guardian. Retrieved 2018-12-03.
  24. ↑ Smith, Anna (2018). "Foreign Aid and Development in the Democratic Republic of the Congo: An Analysis of International Barriers to Development". Tul Journal.
  25. ↑ "Research - Corruption Q&As - Overview of corruption and anti-corruption in the Democratic Republic of Congo (DRC)". www.transparency.org. Retrieved 2018-12-09.

See also

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.