IMF Survey : The Democratic Republic of the Congo Scores High on Growth, Lags in Poverty Reduction

IMF News, October 13, 2015

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Growth rates for 2014 were as high as 9.2 percent, largely driven by the mining sector and the natural resource sector (copper, diamonds, gold, oil).
The mining sector functions as an enclave industry that is highly capital-intensive and does not employ large numbers in the formal sector.
The 2002 Mining Code is characterized as "overly generous" toward the industry in terms of tax provision and security of the tax regime, which has attracted substantial foreign direct investment but limited government revenue capture.
Poverty rates in the DRC remain among the highest in the world despite strong GDP growth.
The report notes some social improvements, including better access to education that "in the last 10 years ... has almost doubled," but judges it unlikely the DRC will achieve any of the Millennium Development goals.

The government budget "hovers around $5 billion U.S. dollars per annum."
The cost of the general election, as put out by the National Independent Electoral Commission, is "$1.1 billion U.S. dollars"; about "one-fifth of the budget of $5 billion."
Falling global commodity prices (notably copper) pose a risk to government revenue and the country’s growth rate because of price effects on exports.

Weak governance and lack of transparency in the management of natural resources reduce the government's ability to capture and use mining-sector revenues for development.
Because profits are often repatriated, the main domestic benefit from extractive activity is taxation; the combination of an overly generous mining code and weak transparency limits tax returns to the country.
Some mining-sector revenues have been used to bolster education and the health sector, generating measurable progress, but not enough to reduce pervasive poverty.

Revise the mining code: the DRC is "considering new mining code to increase revenues"; the IMF has advised that the new mining code be aligned with international best practices and embrace transparency.
Strengthen governance and transparency in the management of natural resources to increase government resources beyond changes in tax provisions.
Recognize that addressing enclave characteristics of the mining sector—ensuring better domestic capture and distribution of revenue—is necessary to transform mineral wealth into broad-based development gains.

Source: IMF Survey, October 13, 2015