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.

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