Thursday, 26 February 2015

Difficulties at the DRC port of Matadi

In my last post, I talked about the competition between seaports for exports from the DRC.  The DRC's own port at Matadi wasn't mentioned.  There's an account on Matadi's difficulties at Radio Okapi.  In English (my translation from the French):

"Ships have difficulties docking recently in the international port of Matadi and Boma, following a fall in the water level and the lack of maintenance of the upper part of river Congo by Congolese Seaways (CVM)."

Monday, 23 February 2015

East versus West: which port gets Congolese exports?

There's a report in Tanzania's Daily News about DRC business representatives pushing the Dar es Salaam port authorities to speed up their clearance of goods.   The senior representative noted that Congolese businesspeople have access to other ports, notably Cabinda in Angola, and these ports are improving.  The Tanzanian authorities said there were trying to improve things, so it is nice to see that competition is working as it should.

I don't have access to relevant statistics for Cabinda, but I do for other ports.  A company survey from 2006 found the following average statistics for Dar es Salaam exporters:

Time to clear customs: 6.3 days
Value lost through theft: 3.0 percent
Value lost through breakage or spoilage: 2.9 percent

For companies operating in the major west coast ports in Luanda (Angola), Cotonou (Benin), and Pointe-Noire (Congo), the statistics (in 2009-2010) were:

Time to clear customs: 10.4 days
Value lost through theft: 2.8 percent
Value lost through breakage or spoilage: 2.7 percent

It looks like Dar es Salaam was outperforming these ports.  However, look at the statistics for the Kenyan port of Mombasa in 2007:

Time to clear customs: 2.5 days
Value lost through theft: 0.5 percent
Value lost through breakage or spoilage: 0.3 percent

Assuming the data is reliable, it makes me wonder why Mombasa is not a stronger contender for the DRC's exporters (I seem to remember that it may have been in the past).  Perhaps the border crossing between Tanzania and Kenya is a headache for them.

Sunday, 22 February 2015

Burundi is speaking a different language to the East African Community

The presidents of the member states of the East African Community met in Nairobi last Friday.  The leaders of Burundi, Kenya, Rwanda, Tanzania, and Uganda talked about business, the potential entry of South Sudan and Somalia, and other affairs.  The details are here.

The colonial language of government and public affairs in Burundi is French, whereas in Kenya, Tanzania, and Uganda it is English.  Rwanda used to be French speaking, but has moved to dominance of English in the last twenty years.  Swahili, a common language in the first three countries, is less frequently used in Burundi and Rwanda.  The language gap matters because trade is easier among people who speak the same language, people can move between regions more easily, and technology transfers more easily.

Burundi is smaller than the other economies of the East African Community, so it seems unlikely that there will be a major move from them to promote French.  The language gap is primarily an issue for Burundi.  There are several solutions that could be adopted.  One is to intensify the use of Swahili.  However, Burundians would then have to be fluent in French, Kirundi, and Swahili, and probably good in English too.  Some of the time spent on learning languages may be better spent on learning other subjects, notably maths and science.

Another solution would be replace French with English as the national language.  This seems like extreme social engineering, although it was done in Rwanda.  However, in Rwanda, the leadership had already learnt English while in Uganda, and had other political motivations for the change.

A further solution would be to increase the learning and use of English, but retain French as the national language.  Such an evolution seems most natural.  In future years when Burundi's infrastructure and training has been developed further, the country could market itself as an entry point to East Africa for companies from French speaking countries, as Rwanda has perhaps closed off that source of funds.

Thursday, 19 February 2015

The prominence of women in Burundian and Rwandan business

Many women have had high profiles in the political life of Burundi and Rwanda.  Burundi has 35 percent and Rwanda has 57 percent of its parliamentary places taken by women, and figures such as Agathe Uwilingiyimana, Agathe Habyarimana, Louise Mushikiwabo, Sylvie Kinigi, and Antoinette Batumubwira have occupied senior leadership positions (including before the wars of the 1990s).  The prominence is unusual by international standards.

Political position can be related to the choices of relatively few people.  Participation in business is a much larger phenomenon, reflecting the choices of far more people in supply and demand of labour.  The table shows the percentages of companies with at least one female owner in selected African countries.  There were 24 countries surveyed, including Rwanda and Burundi.

1      Zimbabwe       58%
2      Ghana              49%
3      Zambia            42%
4      Rwanda           41%
7      Burundi           33%
22    Guinea Bissau 19%
23    Mauritania       16%
24    Sierra Leone    10%
Source: World Bank Enterprise Surveys

Rwanda is near the top of the list, and Burundi is not far behind.

I'm not sure why women have such a prominent position in Burundian and Rwandan business, and public life generally.  Some of the broadest influences on their society - early German colonisation, Catholic majority religion, later UK and US affiliation (in the case of Rwanda) - would seem to suggest less female representation.  So I'm puzzled.

Monday, 16 February 2015

Rwanda to be a non-agricultural society within six years? Hmmm.

The Rwandan New Times newspaper is reporting on a Rwandan Prime Ministerial speech to business development advisors.  PM Murekezi reportedly said that the country is aiming to create 200,000 off-farm jobs each year.

That seems like a lot, so I did some fact checking.  Rwanda has a recent working-age population of 5.8 million, with a ratio of employment to the working age population of 0.710 and a share of agriculture in total employment of 0.753.  I think that means that the present agricultural population is 3.1 million, and the non-agricultural population is 1.0 million.

200,000 extra off-farm jobs a year is a growth of 20 percent in the non-agricultural population.  The non-agricultural population would be larger than the agricultural population within six years.  If we allow for population growth, the results are still pretty close.

These are heady days for the development of Sub-Saharan countries, and the prime minister (or his speech-writers) have better information than me.  But all the same, that figure still makes me pause.

750 days since the fire at Central Market of Bujumbura...

... and still little redevelopment there.

Sunday, 15 February 2015

Entrepreneurial opportunities in the DRC depend heavily on the subregion

The DRC is big; the size to Western Europe is the usual comparison in the UK media.  It is also quite difficult to reach different parts by transport, and the communications infrastructure is under development, so it would be surprising if the business environments faced by companies in different regions were the same.

They're not, according to data from the World Bank's Enterprise Surveys.  Here are the primary challenges to operations reported by companies based in the capital, Kinshasa:

Financial management is the main issue here for almost three quarters of companies - getting finance, handling tax, and paying tax.

Here are the main challenges reported by companies based in Kisangani, in the heart of the North West:

There's good money to be made by solving financing problems, but electricity supply offers almost as many opportunities.  Although Kisangani is not too distant from the remaining areas of Congolese conflict (about 500 km from the Kivu regions), political instability hardly registers as the main problem for companies there.

For Lubumbashi in the South East near the Zambian border, the problems are:

Companies in Lubumbashi also require financing, but handling informal sector competitors is another issue there.  There appear to be opportunities for financiers, brand differentiation, and perhaps sales of capital equipment to differentiate the products of a formal sector business from the products of informal sector rivals.  Transport, labour regulations, and corruption are also concerns.  The transport and consultancy seem to have scope for development, as well as companies that offer advice or intermediary services when handling government bureaucracy.

For companies in Matadi in the West near the Atlantic coast, the following problems are most concerning:

In Matadi, political instability is the major problem.  In the absence of a solution from politicians themselves, there seem to be openings in risk management consultancy, security, and supply of business interruption services (such as premises relocation or reconstruction) able to handle disruption easily.

Ways and outcomes of splitting the DRC's revenue

I wrote in my last post about the split of revenue between the mineral-rich Katanga region and the rest of the DRC.  Since then, I've been thinking about ways in which the division could occur, and the outcomes from the division.  Here are some of them:

An aggressive central government
The DRC government takes all the revenue, and if there are any disturbances in Katanga it fights them.  The government gets the revenue minus its side of the losses from conflict, and Katanga gets only its side of the losses.

A money maximising central government
The DRC government takes the amount of revenue that maximises its revenue.  If there are no disturbances in Katanga, then it takes everything.  If disturbances occur in Katanga, then the central government takes money so that the income minus the disturbance losses are maximised.  The outcome may be that all of Katanga's money is taken (if the disturbance can be suppressed easily) or none of Katanga's money is taken (if the disturbances are expensive to suppress).  Katanga would get the remaining money minus its losses from the disturbance.  The government may attempt to call Katanga's bluff, if both sides would lose from conflict (this situation is typically analysed through "game theory").

A pro-Katanga central government
The DRC government takes none of the revenue, and Katanga is richer than the rest of the DRC.  There are no losses by disturbance, but the outcome is national inequality.

A national revenue maximising central government
The national government maximises the revenue to itself plus the revenue to Katanga.  As revenue is maximised when there are no disturbances.  One outcome in which there are no disturbances is when Katanga keeps all the money, and a central government which acts in this way increases the incentive for Katanga to have disturbances.

A government valuing equity and national peace
The national government maximises its income minus its losses through disturbances minus Katanga's losses through disturbances.  This is like a money maximising government, but one that recognises Katanga's losses in conflict.  If the government can fight cheaply but at great cost to Katanga, it is less likely to do so when it acts in this way.

The last approach seems to have the nicest outcomes.

Wednesday, 11 February 2015

Splitting revenue to keep the DRC stable

There's a report here on the distribution of wealth between the DRC central authorities and Katanga province, in the South East of the country.  Katanga is the origin of much of the country's mineral wealth, and was historically secessionist.

The exact division of wealth between Katanga and the centre presents a challenge to the government.  It seems likely that the centre will want to maintain as much wealth for itself as possible, for reasons including power and equity between citizens.  On the other hand, if insufficient funds are returned to Katanga, there is the risk that the region will experience economic disruption and civic disturbance.  An initial economic approach would be to maximise the central funds - the government keeps revenue so its value minus losses is the highest possible.  But this wouldn't necessarily be acting in the best interests of the country,  because Katanga might make very little money.  I don't know what the best approach is.

Tuesday, 10 February 2015

Economy discussions on the websites of the Rwandan and DRC ruling parties

In my last post, I noted that the Burundian ruling party (CNDD-FDD) does not mention the economy on their website.  By comparison,  the ruling party in the DRC (PPRD-DRC) mentions "économie" 22 times on their website (google search "économie").  The Rwandan ruling party (RPF) mentions "economy" 268 times on their website (search "economy").

The 2013 GDPs per capita of the countries (in purchasing power parity) are $1608 (Rwanda), $877 (Burundi), and $655 (DRC), under IMF estimates here.  Now, it's possible that richer countries have more economy to discuss, but surely that can't explain the massive gap in the amount of discussion between the Rwandan and other governments.  Another explanation is that the Rwandan government has been more focused on economic matters, and it is showing in the national income.

Sunday, 8 February 2015

The Burundian ruling party's position on the economy is...

not on their website,, despite elections due this year.

I looked on the site myself, and found very little.  So I used google to search, "économie" and got no links.  Then I tried "économique", and got three links mentioning the economy only in general terms.  There is also almost no discussion of the major concerns of Burundian business, as highlighted on this site last week ("électricité" or "finance"), or tax ("taxe" or "impôt").  There are 15 mentions of holidays ("fête"), however.

To be fair, a website isn't a government.  But the absence of economic discussion does not give the appearance of a government focussed on income generation, which it should be in one of the poorest countries.  And the waste of having the central market in Bujumbura empty for two years, despite reported offers of private sector help, reinforces the appearance.

CNDD-FDD look certain to win the presidential and legislative elections this year.  As they are the only game in town, they should raise their game.

Friday, 6 February 2015

Leaving the DRC tidy when you go

People often say that they remember where they were when a big event happened or some famous person died, like the planes flying into the American towers on September 11th 2001, or the landing on the moon in 1969.  For me, the assassination of Laurent-Désiré Kabila in 2001 was one of those events.  The former president was assassinated by his bodyguard, with some uncertainty about whether he was alive or dead.

His son Joseph Kabila is due to stand down as president in 2016.  However, there has been some criticism of planned changes of the electoral law, and the political opposition claims that he could stay on beyond 2016.  After riots in the country, the law has been changed to deal with the opposition's concerns.

When a presidential succession is violent, the transition can clearly damage the economic performance of the country.  But there is potential damage done by the uncertainty in the transition, due to "real option" effects.  A company may want to invest, but may delay investment until after the transition to make sure that the investment is not damaged.  So investment takes longer because of the uncertainty.

So there are at least two economic reasons for leaving the country tidy when the president leaves.

In blood stepped in so far

The character Macbeth in Shakespeare's play said that

"I am in blood stepped in so far that should I wade no more, Returning were as tedious as go" over,

meaning that he has already killed so many people that he should stay on the same path.

One commentator wrote that the Revolutionary United Front, the Sierra Leone rebel group, used a similar tactic in its recruitment in the 1990s.  They forced children to kill their families so that they could never return to their homes.  The current violence perpetrated by the Nigerian group Boko Haram may be pushing them in the same direction.

The Interahamwe, who massacred Tutsi civilians and Hutu moderates in Rwanda in 1994, were similarly excluded from society by their actions and were forced to flee into the East of the DRC for the last 21 years.  The fighting force is no longer primarily the soldiers who fought back then, but their children or new recruits.  Whether this next generation will find it easier to put down their arms, or whether they are too stepped in blood, may help to decide the Eastern DRC's fate.

Thursday, 5 February 2015

Restoring some of the benefits of Bujumbura's market

It's been two years since a major fire destroyed Bujumbura's central market, and the effects are still being felt in Burundi's capital.  The devastation is visible on-line here, and market traders who were formerly based there are having to work elsewhere.  Here's a recent account from a trade person:

"I was running my business at Bujumbura central market. I had many customers because the central market was a point where everyone gathered, and my customers knew where to find me easily. But now, I lost my customers. Now my business is not as good as before the central market burned. But I have no choice; I have to continue to work in order to support my family and I have to run my business here [away from the central business district] because town is expensive, and I lost much when the Bujumbura central market burned; all my business burned".

This seller's account demonstrates that the market destruction caused the loss of information connecting buyers and sellers, as I noted in a post last week.  Other sellers formerly present in central market indicate that prices of alternative central locations are prohibitive, so that they can not readily move back to a highly visible area.

One solution would be to build new, inexpensive commercial premises in central Bujumbura (the market has not yet been redeveloped, as described here), but more immediate and cheap solutions may be required.  One would be establishment of regional markets in Bujumbura, able to act as smaller versions of the old central market. Another solution would be information provision by written or verbal advertising.  Often a private sector company or producers' organisation will arrange these activities, but in the absence of sufficient basic funding or coordination, they may not be done.

Wednesday, 4 February 2015

Made in Congo, if that's best

The DR Congolese government has just launched a campaign to promote Congolese goods.  It is described in French here.

Where two consumer goods are of comparable standards, with one from abroad and one from Congo-Kinshasa, Congolese purchases seem likely to benefit the economy.  Local consumption of consumer goods (goods purchased by people for final use, rather than by companies for production of new goods) increases local demand and give companies the opportunity for accumulation of capital.  Even if locally produced consumer goods are slightly lower quality, then these reasons are strong enough to make the campaign a good idea.

A similar campaign might be a bad idea when it applies to capital goods (used by companies to produce other goods) if the locally produced capital goods are worse in quality than foreign produced capital goods.  In many cases, the capital goods may not be available locally.  Local companies can produce more and increase their productivity if they choose capital goods based on merit.

Monday, 2 February 2015

What doesn't worry Rwandan companies

I mentioned on Friday that the World Bank's Enterprise Surveys are a useful source of information to entrepreneurs.  It's also informative to compare the concerns across the different countries.  In Burundi, electricity is the main problem, by far.  It is also the main problem in DRC.  In Rwanda, it isn't a problem at all.

Rwandan companies also don't report political instability as a problem, unlike companies in the other two countries.  The government in Rwanda is the most established, to the concern of some human rights organisations who find it to be oppressive.  One of the best-known newspapers in the UK (The Times) had a critical front page report about their human rights record last week, and their links with the British establishment.