Zaire

The Economy

Traditional wooden mask

INDEPENDENT ZAIRE HAS NEVER lived up to its enormous economic potential. The political turmoil that followed independence from Belgium in 1960 irrevocably disrupted the economy. Even after political and civil order was restored by Mobutu Sese Seko in the mid-1960s, efforts at economic revival consistently fell short. Indeed, the government's misguided and overambitious economic policies, first of Zairianization and nationalization of foreignowned enterprises and then of large-scale industrialization, undertaken on the basis of the country's mineral wealth and at the expense of the agricultural sector, brought economic disaster in their wake. The regime resorted to heavy foreign borrowing to fund economic development and grandiose industrial projects. When the prices of commodities (especially copper), on which Zaire was heavily dependent, dropped drastically in the mid-1970s, export earnings and government revenues dropped sharply, and Zaire faced a grave economic and financial crisis. Thereafter, the country, urged on by Western donors and by the World Bank (see Glossary) and the International Monetary Fund ( IMF--see Glossary), attempted a series of economic reforms and structural adjustments. But ultimately all efforts at reform or significant change were undercut by the patrimonialism (see Glossary) and rampant corruption that characterized the regime.

In the early 1990s, as the regime of President Mobutu appeared on the verge of collapse, the economic situation was desperate. The country remained heavily indebted and impoverished, despite its vast mineral wealth and early economic promise. A large proportion of its population lived outside of the formal economy, eking out a marginal existence through subsistence agriculture and informal trade or barter. The standard of living for most of the population was low and continued to decline as inflation skyrocketed.

By most accounts, the export-oriented Zairian economy has been in a free-fall for a number of years, suffering the effects of monumental, institutional corruption, neglect, and mismanagement. But the economic crisis was worsened by the rampant looting and by rioting by unpaid troops in late 1991 and again in early 1993, which in turn led to the mass exodus of the foreign technicians who had kept the economy going--in particular copper production and the maintenance of economic infrastructure.

By the end of 1992 and throughout 1993, Zaire's economy was described as being in ruins, the formal economy having virtually ceased to function. The banking system had in essence collapsed because of the rampant hyperinflation and drastic fall in the value of the currency. Most banks were closed; those that were open had no reserves, so only cash transactions were possible. Shoppers reportedly circulated in Kinshasa with sackfuls of virtually useless paper currency. The central bank, which had in the past served as Mobutu's personal piggy bank, was for all practical purposes bankrupt. The tax collection system was defunct, and few if any customs revenues were collected. Most foreign aid had been cut off, and copper production, long the mainstay of the economy and the main source of government revenues, had dropped off significantly. The government was able to pay its bills only by printing new currency. But even that avenue was being closed off as foreign printing companies rebelled at printing money without being paid.

The effects of the economic chaos on Zairian society were enormous. Unemployment and poverty were widespread. According to press reports, the public-service sector was no longer operational. The economic infrastructure had virtually broken down as well. The telephone, electrical, and the transportation systems were all a shambles. By some estimates, as little as 10 percent of the road network in existence at independence was still functioning. Road and rail links between major cities were being overgrown by the jungle.

Data as of December 1993

Zaire - TABLE OF CONTENTS