## Transcript of an IMF Book Forum--Postconflict Economics in Sub-Saharan Africa: Lessons from the Democratic Republic of the Congo

_IMF News, May 5, 2005_

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## Bibliographic details
- Published: May 5, 2005

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### Overview
- Event: IMF Book Forum on "Postconflict Economics in Sub-Saharan Africa: Lessons from the Democratic Republic of the Congo"
- Date and place: Thursday, May 5, 2005, Washington, D.C.
- Moderator: Mr. Bio‑Tchané, Director of the African Department
- Presenters/authors on the panel included Jean Clément, Ragnar Gudmundsson, Wim Fonteyne, Jacob Gons, Bernard Laurens, Benoit Mercereau, and Xavier Devictor (World Bank).
- Contextual scale: about half of the 44 Sub‑Saharan African countries experienced a period of conflict in the last two decades; one out of three Africans affected directly or indirectly.

### Key findings on causes of conflict
- Main drivers: slow growth, weak institutions, corruption, and poverty (Charles Yartey chapter).
- Natural resource risk: countries with abundant natural resources face a higher risk of conflict; calls for greater transparency in resource management (Paul Collier and Anke Hoeffler confirmation).
- Revenue constraint: low revenue-to-GDP ratios undermine governments’ ability to pay wages and provide basic services, increasing conflict risk (Benoît Mercereau chapter).
- Regional contagion: conflict in the DRC negatively affected real GDP growth in neighboring countries such as the Central African Republic.

### Empirical scale and human cost (DRC / Great Lakes)
- Major conflict period referenced: 1998 to 2002 in the Great Lakes region.
- Human toll cited: three million deaths; a million displaced people.
- Additional impacts: destruction of schools and hospitals; increased pandemics such as HIV/AIDS; life expectancy plunged.
- Probability of war in the Great Lakes region: 27 percent versus 9 percent in Sub‑Saharan Africa.
- Reported wartime death rates comparison (participant comment): 1,000 deaths a day vs 5,000 to 7,000 previously.

### DRC macroeconomic turnaround and key statistics
- Hyperinflation trajectory: more than 600 percent in 2000 declined to 9.7 percent at end‑2004.
- Growth: real GDP growth reported as 7 percent in 2004 after 14 years of negative growth.
- Debt relief: external debt stock reduced by about 80 percent.
- Capital flows: direct foreign investment and foreign aid increased to more than $1 billion in 2004.
- Administrative/geographic facts: DRC is the third largest country in Africa, one and a half the size of Western Europe, population cited as 56 million, and 11 provinces.

### Lessons and policy recommendations (synthesized from presentations)
- Early, proactive, coordinated international engagement
  - Early IMF and World Bank engagement—even during conflict—was critical to creating momentum and catalyzing support.
  - Personal contacts with government, rebel movements, and civil society helped establish communication channels and common diagnosis.
- National ownership and openness
  - Broad national ownership (e.g., inter‑Congolese dialogue with ~350 representatives) is crucial.
  - Openness, including frequent press contact, supports implementation and consolidation of peace.
- Economic pillar of peace agreements
  - Peace agreements must include an economic pillar tailored to postconflict realities; absence of an economic pillar risks relapse.
- Flexibility and sequencing of policies
  - Postconflict policy must be flexible; first‑best policies may not be immediately appropriate.
  - Use transition‑appropriate instruments while administrative capacity is rebuilt.
- Technical assistance and administrative capacity
  - Timely technical assistance is crucial given weakened administrative capacity; continuous monitoring and frequent program reviews are required.
- Aid sequencing and persistence
  - Aid flows should be well sequenced and sustained over time: humanitarian aid immediately, followed by reconstruction aid focused on institutions, services, and infrastructure.
  - Study finding cited: foreign aid tends to be most effective in stimulating growth five years after the end of a conflict (World Bank study referenced).
- Security, demobilization, and reintegration
  - Funding and timely implementation of demobilization and integration programs (regional and national) and formation of a professional, accountable army and police are essential.
- Financial sector and exchange regime
  - Rebuilding the financial system and payment systems facilitates investment and macro stability; unify foreign exchange regimes and liberalize exchange rate policies to break hyperinflation cycles (Wim Fonteyne).
  - Strengthen prudential regulation and banking supervision to reassure investors and prevent illegal accumulation of wealth that could finance conflict (Bernard Laurens).

### Operational policy implications and sequencing (practical measures)
- Revenue mobilization
  - Restore tax base and rebuild tax and customs administrations; prioritize broad‑based, equitable, simple, and monitorable instruments (including border taxes) that can scale with capacity.
- Public expenditure focus
  - Immediate public spending should prioritize basic social services, infrastructure, and fair allocation across regions/ethnic groups.
  - Strengthen public procurement transparency (DRC created BECECE to ensure transparent bidding).
- Structural reforms sequencing
  - Emphasize removing major economic distortions, price liberalization, improving legal/regulatory frameworks, and anti‑corruption measures; keep reforms simple and sequenced.
- Donor coordination and modalities
  - Donor involvement should be predictable and sustained; complement humanitarian aid with project aid, direct budget support, and debt relief.
  - Technical assistance should be frontloaded and sustained to build provincial and local administrative capacity (importance of buttressing provincial administrations across 11 provinces).

### Contested issues and operational tradeoffs raised in Q&A
- Elections logistics and timing
  - Original election target was June 2005; postponement argued necessary to ensure appropriate logistical conditions across a vast country.
  - Practical constraints include enormous logistical challenges to reach remote areas.
- Small arms proliferation
  - Problem includes legacy stock from collapse of the Eastern bloc; supply reduction via producer pressure unlikely to fully resolve the issue.
  - Approaches such as buyback programs and tighter border controls are ongoing and described as work in progress.
- IMF postconflict financing modalities and concessionality
  - Debate over Emergency Postconflict Assistance (EPCA) terms versus PRGF/IDA concessionality.
  - EPCA repayment terms cited as three years with non‑subsidized interest rates; concerns that countries failing to transition to a PRGF could face higher debt burdens and arrears (Guinea‑Bissau example discussed).
  - Mitigation example: topping up the PRGF first tranche to repay postconflict assistance (Guinea‑Bissau case described).
  - Panelists emphasized the need for up‑front capacity building and grant‑like support where needed (Liberia approach contrasted with past cases).
- Regional and political dimensions
  - Need for a cross‑sector UN/IFIs task force to integrate political, military, security, economic, and financial perspectives in the Great Lakes region.
  - IMF/World Bank neutrality and engagement: support focuses on practical problem solving while consulting mandated political actors and multilateral partners.
- Gender and inclusion
  - The PRSP framework includes policies addressing gender and education goals (e.g., Millennium Goals to improve girls’ school attendance).
  - Comment noted absence of women on the forum panel despite women contributors to the broader team.

### Outstanding challenges for the DRC highlighted by panelists
- Consolidate national ownership of the economic program across diverse transitional coalition.
- Further develop culture of good governance and transparency beyond institutional reforms.
- Ensure timely financial support for security sector reforms and demobilization/integration programs.
- Maintain macroeconomic stability and continue structural reforms while adapting to evolving political conditions.
- Build administrative capacity at provincial and local levels so peace dividends reach the majority.
- Organize transparent and credible elections to avoid political uncertainty and social destabilization.

*Transcript of an IMF Book Forum—Postconflict Economics in Sub-Saharan Africa: Lessons from the Democratic Republic of the Congo, May 5, 2005.*

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## References

- [Democratic Republic of the Congo and the IMF](http://www.imf.org/external/country/COD/index.htm)
- [Guinea-Bissau and the IMF](http://www.imf.org/external/country/GNB/index.htm)
- [The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance)
- [The IMF's Poverty Reduction and Growth Facility (PRGF) -- A Factsheet](https://www.imf.org/external/np/exr/facts/prgf.htm)
- [Technical Assistance -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-capacity-development)
- [Transcripts](https://www.imf.org/en/news/searchnews)
- [Postconflict Economics in Sub-Saharan Africa: Lessons from the Democratic Republic of the Congo](https://www.imf.org/External/NP/EXR/BForums/2005/050505.htm)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr050505_