The Treasury surplus fell from CDF 2,108 billion to 262 billion since May while grid electricity barely grew, so the windfall travels by payroll.

By Kanisa Magazine · September 2022

The Treasury’s cumulative surplus has fallen from CDF 2,108 billion at the end of May to CDF 262 billion on 23 September. Over the same months copper output rose by two fifths. The state has already collected more than in all of 2021, and it has spent even more.

That is how the mining headline reaches the real economy: through payroll and operating budgets, not through factories or the grid. The September digest of the Banque Centrale du Congo shows where the money goes and where it does not.

A record year for revenue, a thinning surplus

Receipts are 19 per cent above all of 2021, and spending is 25 per cent above it.

By 23 September the BCC’s weekly digest shows revenue of CDF 16,104 billion, against CDF 13,513 billion for the whole of 2021. Spending was CDF 15,843 billion against CDF 12,640 billion. Since the end of May, receipts have risen by CDF 6,105 billion and outlays by CDF 7,951 billion, which is why the surplus has shrunk by 88 per cent. The copper production index reached 285.4 in August, 76 per cent above a year earlier.

A budget that is spending faster than it collects, in a year of record mining income, has little room if copper prices fall further. The digest records the London price at US$7,814 a tonne on 23 September, a quarter below the spring peak.

Where the money goes

Pay, operating costs and emergency spending are rising, while capital spending sits at CDF 600 billion.

Remuneration reached CDF 5,060 billion by 23 September, already 90 per cent of the 2021 total with 73 per cent of the year gone, which on a straight line is about a quarter higher. Operating costs reached CDF 5,889 billion, against CDF 3,895 billion in all of 2021, and so-called urgent Treasury expenditure CDF 1,952 billion, against CDF 1,160 billion. The line for capital spending stands at CDF 600 billion and has not moved since 31 March.

Care is needed with that last number, because the table covers Treasury cash operations and may not capture projects financed from abroad. But the IMF’s second-review staff report also records that arrears accumulated towards oil importers and private suppliers, which is the other way public spending leaves the private economy exposed: unpaid invoices.

What the grid says

Copper volumes are up 41 per cent; grid electricity is up 1.2 per cent.

Production data for January to August put electricity at 8,866 thousand megawatt-hours, against 8,762 thousand a year earlier. Potable water supplied rose 6 per cent, to 201.5 million cubic metres. Copper rose 41 per cent, to 1,576,924 tonnes, and cobalt 35 per cent.

The gap matters for anyone planning a plant. Factories, cold stores and mills draw on the same network that has added almost nothing. The World Bank’s May economic update put non-extractive growth at 3.9 per cent in 2021 and said mining would remain the main engine, a pattern that this table confirms.

Households in the same economy

The price of the starch staple rose 12 per cent in eight weeks.

For households the same weeks have been costly. The Kinshasa sub-index covering tubers, cassava and bananas climbed from 234.6 in early August to 262.7 by the fourth week of September, a gain of 12 per cent, and annual inflation on the BCC’s Kinshasa index reached 11.19 per cent. Fuel scarcity was already lifting fares in Katanga and the east in January, as Actualite.cd reported on 21 January, when the ministry of the economy reset pump prices there.

The so-what for a business

Sell into the payroll, and price in the risk of late payment.

The consumers who are still spending are those whose pay is linked to the state’s receipts, and the contractors who are paid from it, from teachers and soldiers to road builders. Firms that sell to them should expect demand to hold while revenue holds, and should build late-payment risk into any contract with a ministry or agency, given the arrears the IMF recorded. For a factory, the planning assumption should be self-generated power, because the grid’s output is nearly flat. For a lender, the surplus line is an early signal: if it reaches zero while copper stays below US$8,000, spending will have to slow, and the first things to slow are usually contractor payments.