Mining set the headline in 2021, but the household economy grew at barely two-thirds the pace.

By Kanisa Magazine · May 2022

Congo’s economy grew 5.7 per cent in 2021 on the World Bank’s estimate, 6.2 per cent on the BCC’s, after a pandemic year of 1.7 per cent. Mining did the heavy lifting. Outside the extractive sector the World Bank puts growth at 3.9 per cent, roughly two-thirds of the headline, and the weekly statistics that touch households tell a quieter story still.

The gap between the two economies is the most useful fact a business reader can hold in May 2022. It decides which customers can pay, which suppliers can scale and which investments will meet demand when they open.

The extractive engine

Copper up 12 per cent, cobalt up 7 per cent, and a record quarter at Kamoa-Kakula.

The BCC digest of 25 May records provisional 2021 copper output of 1,797,836 tonnes against 1,601,208 a year earlier, and cobalt at 93,011 tonnes against 86,591. Quarterly figures from the Kamoa-Kakula joint venture show revenue of $519.6 million for January to March. Such operations pay royalties and taxes in dollars, but they employ few people for each dollar of output.

The quieter economy

Telecoms and cement grew while water and power slipped.

The World Bank’s May economic update says manufacturing and services contracted in 2021 except telecoms, which rose 16.2 per cent after 30.8 per cent in 2020. The BCC’s provisional production table shows cement at 1,428,137 tonnes, up 11 per cent, a sign that construction is moving. The same table shows drinking-water output at 262,077 thousand cubic metres, down 11 per cent, and electricity at 12,053 thousand megawatt-hours, down about 3 per cent. A growing city that produces less water and power is a city where private operators and generators fill the gap at higher cost.

Why mining growth does not spread by itself

Dollars arrive through taxes and contracts, not through payrolls.

The mechanism is structural. A copper mine pays most of its bill to equipment suppliers, contractors and the state, and the state spends the money through the budget. The World Bank reports that revenue rose from 8.7 to 11.2 per cent of GDP in 2021 and that spending rose from 10.1 to 13.1 per cent, with the accounts balanced. Whether household income follows depends on how much of that spending reaches wages, roads and clinics. The same report puts private-sector credit at about 7 per cent of GDP, against 38 per cent in Sub-Saharan Africa, so firms outside mining have little finance to scale. Agriculture employs more than 60 per cent of working-age people, and 72 per cent of the population is poor, according to the Bank.

What the prices say about demand

Food and fuel are rising faster than the general index, squeezing the household budget.

The BCC’s retail index for Kinshasa rose 6.9 per cent over twelve months to the week ending 22 May, and within that the meat index jumped 1.7 per cent in a single week while electricity, gas and other fuels rose 1.6 per cent. Households spending most of their income on food and energy have little left for discretionary purchases, which weakens demand for consumer goods even when the mining headline is strong.

How to plan around a two-speed economy

Follow mining capital spending for volume and household data for margin.

Suppliers of cement, power equipment, logistics and security can plan on the extractive pipeline, with Kamoa-Kakula’s Phase 3 expansion an example of orders that will arrive over the next two years. Companies selling to households should assume slower volume growth than the headline implies, hold prices stable where they can and favour customers in the better-served corridors. The indicators to track in the weekly digest are cement output, water and power production, and the food index, which together describe the economy that mining growth has not yet reached.