Copper lifts the GDP headline, but state capital spending and household budgets tell a narrower story.

By Kanisa Magazine · October 2023

Congo’s mines are growing at a pace most economies would envy, and the central bank’s October digest shows how little of it reaches the public purse and the household budget. Provisional growth for 2023 stands at 6.6 per cent in the BCC’s table, with nominal GDP of US$66 billion and income per head of US$695. Yet the same digest records Kinshasa prices running about 42 per cent above a year earlier.

Mining output explains the first figure. The rest of the picture comes from what the state spends, what it collects and what households can afford.

A growth number with a narrow base

The headline is carried by a few large copper and cobalt operations, not by broad demand.

On the BCC’s provisional production table, copper for January to September reached 2.11 million tonnes, already within sight of the 2.39 million of the whole of 2022. Cobalt is behind, at 69,280 tonnes. The International Monetary Fund’s staff-level agreement of 31 October, which expects growth above 6 per cent in 2023, also records that domestic revenue fell short of programme projections in the first three quarters. The same statement lists falling cobalt prices, insecurity and currency depreciation as the setting. A sector can lift GDP without lifting the tax base at the same pace, because mining runs on imported inputs and its royalties and taxes arrive with a lag.

Where the public money goes

Wages and “exceptional” spending take almost half of the cumulative outlay; capital spending takes 12 per cent.

The digest’s fiscal chart for the cumulative position to 20 October splits state spending as follows: remuneration 32.8 per cent, other current spending 23.1 per cent, exceptional spending 16.3 per cent, capital 12.1 per cent, subsidies 11.2 per cent and other items 4.6 per cent. Capital outlay is the part that normally creates demand for cement, trucking, engineering and local contractors. At 12 per cent of the total it is smaller than the exceptional category alone. The 2024 budget presented to deputies in September, at US$16.6 billion with 12 per cent earmarked for agriculture, drew deputies’ complaints that institutions were getting more than roads, schools and clinics.

What households face

Prices are rising faster than any plausible income, and the gap shows in the food and transport lines.

The BCC’s Kinshasa basket rose 0.67 per cent in the week to 22 October and is 37.6 per cent higher since December. Food and soft drinks stand at 262.8 on the BCC’s December 2018 base, and the index for cassava, tubers and bananas has moved from 804 to 937 in five weeks. Those are the goods a household in Kinshasa cannot substitute away from. The central bank’s own policy-rate calculation uses a lower annual inflation figure, 21.7 per cent, taken from the national statistics institute, and the digest offers no sign of non-mining incomes keeping pace with either figure. The World Bank’s October regional update, in which 28 of 48 Sub-Saharan countries had their 2023 growth estimates downgraded, is a reminder that the regional backdrop for consumers is not generous.

What an operator in the non-mining economy should do

Build the plan on dollar-linked demand, and treat mass-market volume as the variable.

The consequence for a retailer, a manufacturer or a builder is a two-speed market. Customers linked to mining payrolls, contractors and export services carry dollars and keep spending. Households outside that circle are being squeezed by food and transport costs that move weekly. A company serving both should keep dollar-priced lines for the first group, protect volume with smaller pack sizes and tighter credit for the second, and avoid inventory it cannot turn inside a quarter.

The decisive indicator is not the GDP headline but the capital line in the fiscal table. When capital spending moves above a fifth of the total, the mining boom is starting to reach the wider economy through public works. Until then, plan for growth that stops at the mine gate.