The World Bank’s second governance credit releases cash against reforms done, then hands the hard part to ministries.

By Kanisa Magazine · March 2023

The World Bank announced on 29 March 2023 a US$500 million International Development Association credit for the Democratic Republic of the Congo, the second and larger of two budget-support operations under its Foundational Economic Governance Reform series. The money is released against reforms already completed, which means the Bank is paying for the first step and betting on the next ones. Those next steps sit with the finance, portfolio, mines, telecoms and environment ministries at once.

The first operation, approved in June 2022, was US$250 million. Together the pair put US$750 million behind a reform list that the Bank’s own appraisal document calls long-pending and well analysed, and which it dates back to the Bank’s re-engagement with Kinshasa in 2001.

What the credit is paying for

Eight reform areas, each with an owner in a different part of government.

The World Bank’s announcement lists the milestones behind the second operation: core treasury and accounting functions, stronger public procurement, wider digitalisation of revenue collection, implementation of the 2020 telecommunications law, competitive selection of leaders at the power and water utilities and the national road fund, oversight of the Mining Fund for Future Generations, procedures for selling state-owned mining assets, and progress on a review of forest concessions. A US$400 million Girls’ Learning and Empowerment Project was approved alongside it. Country director Albert Zeufack called the approval a recognition of the authorities’ reform programme.

The appraisal document that set out the series describes the working design. A single-tranche credit has no staged release, so the conditions sit in front of the money. Prior actions are completed before the Board votes, and indicative triggers for the second round are agreed in advance.

How a budget loan produces change

Conditions bind before disbursement; afterwards only institutions can hold the gains.

The appraisal document shows what the triggers were meant to test. One was a working Treasury and Public Accounting directorate, with its director and six division heads appointed. Another was LOGIRAD, the non-tax revenue software, running in at least five provinces, including Kinshasa, Lualaba and Haut-Katanga, where copper is concentrated, and in five collecting bodies including the Ministry of Mines, with use compulsory from 1 January 2023. A third was the competitive recruitment of chiefs at SNEL, REGIDESO and FONER.

The appraisal also set a result for the end of 2023: the primary education and health ministries directly executing at least half of central non-wage spending. That figure is the cleanest test in the package, because it shows spending authority actually moving from the finance ministries to line ministries.

The state of the economy it lands in

Reserves have slipped and inflation has climbed, so fiscal credibility matters more.

The BCC statistical digest of 29 March, covering the week to 24 March, shows the backdrop. Year-on-year inflation stood at 17.04 per cent. The policy rate was 8.25 per cent, and the franc traded near CDF 2,037 to the dollar. Gross international reserves were US$4.24 billion, or 2.29 months of imports, down from US$4.38 billion and 2.63 months at 30 December. Provisional 2022 output reached 2,359,824 tonnes of copper and 111,309 tonnes of cobalt, so the mining base that finances the state is large.

That scale is why the royalty measures matter: non-tax mining revenue is only manageable if the treasury can see it, and LOGIRAD is meant to make it visible.

Where coordination can fail

A reform that needs five ministries to sign in the same quarter is a scheduling problem as much as a policy one.

Telecoms illustrate the issue. The appraisal made the 2020 law’s implementing texts a trigger: a decree creating the regulator, a decree creating the Universal Service Fund, and a ministerial order on infrastructure licences. Each depends on a different office finishing a text. The same holds for SOE transparency, where the Portfolio Ministry’s circular on publishing annual reports and audited accounts only works if companies comply and auditors are chosen by boards.

The appraisal designed the series to consolidate momentum before the December 2023 presidential elections. Time is the binding constraint, not the money.

What to watch next

Look for published documents, not announcements.

A business or investor can run its own audit with four tests: whether the SOE performance report appears on schedule, whether mining royalties are paid through LOGIRAD in Lualaba and Haut-Katanga, whether the telecom regulator and Universal Service Fund exist in law, and whether the heads of SNEL, REGIDESO and FONER are in post through open selection. Each can be checked in the Official Gazette or on a ministry website, and together they give a lender or bidder a clearer view of state capacity than any press release.