The DRC must participate in the regional bloc's industrial revolution to help influence regional and global manufacturing and economic growth.
- The Democratic Republic of the Congo (DRC), about the size of Western Europe, is sub-Saharan Africa's biggest nation.
- The DRC has opted for unity, regionalism, and multilateralism.
- The entry of the DRC into the EAC, with a population of 95 million, has been heralded as a game-changer.
Structure and economic profile
The Democratic Republic of the Congo (DRC), about the size of Western Europe, is sub-Saharan Africa's biggest nation. DRC is endowed with remarkable natural resources. These resources include minerals such as copper and cobalt, hydroelectric potential, substantial arable land, incredible biodiversity, and the second-largest rainforest in the world.
Nonetheless, a lengthy history of hostility, political upheaval, instability, and authoritarian control has resulted in a severe, continuing humanitarian crisis. As a result, the DRC is one of the five poorest countries in the world. In 2018, around 73% of Congolese, or approximately 60 million individuals, lived on less than $1.90 per day.
READ MORE: DRC in the EAC. The world's best-placed economic bloc?
After a pandemic-induced decline to 1.7% in 2020, economic growth rose to 5.7% in 2021. Copper and cobalt output increased by 12.0% and 7.6%, respectively, in the mining industry, which was a primary driver of development. Despite the economic restraints imposed by COVID-19, non-mining industries (primarily services and agriculture) grew by 3.9% in 2021.
Despite the Russia-Ukraine war, the economic forecast for the DRC remains positive, with GDP growth in 2022-23 reaching 6.4%. Priority investments must continue to bolster domestic demand. Transport and logistical infrastructure enhancements are anticipated to assist mining and restore non-extractive businesses, services, and industries, boosting exports and tax revenues.
DRC has taken its place in the East African Community (EAC)
Africa's post-Covid economic recovery measures must incorporate the trinity of integration, multilateralism, and regionalism to stimulate industrialisation, economic growth, and development.
Africa is one of the most affected economies in the world. The World Bank estimates that the pandemic's devastating impact has pushed approximately 40 million people on the continent into extreme poverty. However, the pandemic just exacerbated problems that Africa has experienced for decades.
African states must adopt new aspects for the continent's industrial, technical, and economic advancement to improve their post-pandemic socioeconomic situations. Thus, nations must readjust their individual and regional economic strategy and eschew unilateralist policies.
The DRC has opted for unity, regionalism, and multilateralism. The central African nation signed an accession pact with the EAC on April 8, 2022. Consequently, the DRC became the seventh member of the regional bloc, comprising Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Rwanda.
As a regional bloc, the EAC seeks to develop relations between its member nations via a single market and a unified customs tariff to promote economic growth in the area.
The EAC provides a doorway for most emerging and developed nations to reach the Horn of Africa and position themselves strategically in commerce, manufacturing and industrialisation, socioeconomic concerns, and security and peace. Therefore, the regional bloc must improve or attain labour division, specialisation, and economies of scale.
The DRC's manufacturing and economic dividend for EAC and Africa in general
Regional connectivity and reduction in transport infrastructure challenges
The contribution of DRC to EAC's commercial potential is enormous. According to trade experts from around the continent, forty per cent of the region's trade expenses are linked to transportation, high electricity costs, and gaps in trade facilitation.Regional countries and trading partners have been prosperous in reducing specific non-tariff barriers, but this has had minimal effect on trade costs, which the consumer bears. A great deal must be done bilaterally to solve these difficulties if trade costs are to be reduced.
With this block now extending from the Indian Ocean in the east to the Atlantic Ocean in the west, the DRC has the potential to open the Indian Ocean to the Atlantic Trade Corridor and connect the area to Central Africa, North Africa, and other sub-continental regions.
The DRC will gain from the EAC Common Market and Customs frameworks, obtaining cheaper and more seamless access to Kenya and Tanzania's markets and seaports. Kinshasa's significance in terms of infrastructural development cannot be overstated.
With the anticipated construction of the railway from Tanzania to Burundi and, by extension, to the DRC, Congo's entrance into the area has the potential to stimulate further growth in the region. Connecting the DRC railway network to the EAC would provide access to EAC markets and lower intraregional trade costs.
The DRC's role in enhancing continental trade
DRC, alongside Tanzania, is a member of the Southern Africa Development Community (SADC). Its admission into the EAC strengthens the EAC-SADC bridge and boosts current bilateral discussions for a Grand Free Trade Area, including the EAC, SADC, and Comesa.
Before Kinshasa's admittance, EAC nations had already inked bilateral agreements. Uganda and Rwanda, for example, are now developing three highways into eastern DRC to facilitate commerce and enhance trade and investment between the countries.
Rwanda is the region's major exporter to Congo, followed by Uganda. Uganda's primary exports consist of cement, cooking oil, rice, sugar, and pipes and tubes. It also exports food, and merchants anticipate that the Congo will offer a market for things including food, spirits, textiles, and plastics.
As per Rwanda's Institute of Statistics, DRC contributed 96 per cent of Rwanda's total re-exports in the fourth quarter of 2021, including food and live animals ($39.87 million) and mineral fuels and lubricants ($33.55 million).
Formerly, the DRC had only bilateral deals with EAC member nations, which restricted the advantages available to its businesses. After joining the EAC, DRC merchants can access specific trade frameworks. For example, small merchants will be exempt from tariffs while doing business inside the bloc.
The entry of the DRC into the EAC, with a population of 95 million, has been heralded as a game-changer. The new EAC has a combined market-driven economy of 266 million people and a $243 billion GDP. DRC, the biggest nation in the sub-Sahara, will also be the largest in the EAC. The Covid-19 pandemic impacted intra-trade, infrastructural developments, health, and food security within the EAC.
Raw materials and the potential to drive global industrialisation
The resource portfolio of the Democratic Republic of the Congo, the newest member of the EAC, is unrivalled in the region. DRC possesses cobalt, gold, diamond, aluminium, copper, and other valuable minerals, 95 million people, multiple water bodies, extensive farmland, abundant biodiversity, and the second-largest rainforest in the world.
President Félix Tshisekedi has pledged to optimise utilising these economic assets in partnership with his collaborators. This commitment is music to the ears of many EAC individuals and businesses who have been drooling over the potential Kinshasa presents.
Energy transition, for example, is one of the hottest investment sectors. Given the worldwide issues associated with the growth of industries, many nations are attempting to generate income via this transition.
The world is courting Kinshasa for its mineral deposits and the hydroelectric power potential of the massive Inga dam. The dam represents a showpiece project of Agenda 2063 intended to contribute to the East African Power Pool. And now, the EAC gets first dibs on transition-related projects.
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The DRC is the biggest producer of cobalt, used to make batteries. It is also the fourth-largest producer of copper. Copper is used in making electric vehicles and the infrastructure of the majority of renewable energy sources. Approximately 130 million tons of lithium reserves are located in the southeast.
Consequently, during the Fourth Industrial Revolution, Kinshasa plays a pivotal role in the supply of primary resources. Without these resources, crucial technical components would not exist.
Most mineral ores used to manufacture computer chips and electric cars, two technologies driving the future, are located in Congo. Gold and copper are essential components in assembling computer monitors, chips and printed circuit boards.
The DRC and EAC prospects
The DRC must participate in the industrial revolution within the regional bloc. This will help to influence regional and global manufacturing and economic growth. In 2020, mineral ores generated $17.8 billion for the DRC, representing almost 91% of the nation's total exports and 36% of its GDP. However, value addition would have increased the DRC's export earnings.
Industrialisation liberates societies. Consequently, the East African Community may achieve the industrial revolution if member nations pool their resources and construct high-tech enterprises that add value to their mineral ores.
The challenge facing the EAC is not the lack of natural resources but the lack of high-tech industries. China is a perfect example of a country that transformed from an agricultural civilisation to an industrial one. More than 850 million individuals have been lifted out of poverty due to recent economic growth brought about by China's industrialisation.
Without involvement in the fourth industrial revolution, the EAC would never be able to escape its state of backwardness. Therefore, the DRC will catalyse industrial transformation inside the East African Community, Africa and the world.
READ MORE: East Africa's GDP hits US$250 billion after DRC's entry
