Copper rose 36 per cent in 2022 while soft drinks, timber and port tonnage barely moved.

By Kanisa Magazine · December 2022

Congo’s economy grew about 6.6 per cent in 2022, according to the IMF and the Banque Centrale du Congo (BCC), but the growth came from the ground, not from the shop floor. Provisional BCC data for January to November show copper output up 36.3 per cent and cobalt up 24.3 per cent. Beer rose 7.0 per cent, wheat flour 5.6 per cent and soft drinks 0.1 per cent.

The gap between those numbers is the real economy beneath the mining headline. A business selling to households faced a different year from one selling to mines.

Two economies in one table

The BCC’s own production table shows mining volumes growing five to ten times faster than household-facing output.

Compare like with like across the BCC’s eleven-month table. Port handling at Kinshasa, Matadi and Boma grew 3.3 per cent. Electricity generation rose 2.5 per cent, drinking water 5.7 per cent, and sawn timber 0.2 per cent. Telephone traffic grew 4.4 per cent. Coffee exports, one of the few agricultural lines in the table, fell 15.5 per cent. Gold fell 16.5 per cent.

The two best performers, copper and cobalt, come from a sector the IMF describes as dominating growth. Over 2016 to 2021 extractive industries averaged 22 per cent of GDP, about 95 per cent of goods exports and 23 per cent of government revenue, and the IMF’s December staff report says mining output expanded 13.3 per cent year on year.

What the forecasters see

The World Bank pencils in 4.1 per cent for non-mining growth and 1.5 per cent for private consumption.

The World Bank’s October Macro Poverty Outlook projected non-mining growth slowing to 4.1 per cent in 2022 from 4.5 per cent. It put private consumption growth at 1.5 per cent, against 21.3 per cent for government consumption. Services were expected to grow 5.3 per cent, industry 7.8 per cent and agriculture 2.8 per cent.

The BCC estimates 2022 output at US$62.9 billion for 95.0 million residents, roughly US$660 a head, so even a 6.6 per cent rise adds only about US$40 per person in a year. It also puts population growth at 3.0 per cent. On those two figures consumption per head would fall by about 1.5 per cent. The Bank notes that agriculture employs more than 60 per cent of the working-age population, which makes its 2.8 per cent growth the best proxy for what most households experienced.

How mining growth reaches households

Mining pays in dollars, employs few people and reaches households through taxes, procurement and public spending.

Copper and cobalt mines are capital-intensive and dollar-denominated. A tonne of copper exported adds to reserves, tax revenue and the profits of the mining groups, but it adds relatively little to employment. The path to a Kinshasa household runs through three channels: the government spending taxes, such as the 21.3 per cent rise in public consumption, local service contracts to the mines, and wages paid to the comparatively small workforce.

When the IMF Executive Board completed its review on 20 December, it said that activity had proved resilient thanks to higher-than-envisaged mining production, with growth forecast at 6.6 per cent. That is the same story told from the top. At the same time inflation was expected to exceed 12 per cent by year-end, which erodes household incomes faster than a 1.5 per cent consumption gain can restore them.

What to do with a two-speed economy

Plan consumer volumes at 2 to 5 per cent growth and look to the mining supply chain for faster demand.

A brewer, miller, retailer or school operator should budget 2023 volumes on the household numbers, not on the 6.6 per cent headline. Flour at 5.6 per cent and beer at 7.0 per cent are the good case in the BCC table, yet both trail copper by a factor of five or more, and both are helped by price rises that inflate nominal sales.

The faster demand sits in services and industry, where the World Bank sees 5.3 and 7.8 per cent growth. Catering, logistics, security, equipment hire and engineering services for the mines grow with copper tonnage, not with household incomes. The practical move for a consumer-facing business is to open a second sales line to the mining chain, and to measure it separately so the household cycle does not mask it.