The conflict in the East of the Democratic Republic of Congo (DRC) has severely damaged social and economic development in Kivu, a region in the DRC where the long running conflict is taking place. Nevertheless, any belief that the DRC’s eastern neighbouring countries, namely Burundi, Rwanda and Uganda, have economically benefited from the instability in the east of the DRC can evidently be challenged. It is becoming clear that the East of the DRC conflict is a big disruption to long-term economic prospects for the countries of the Great lakes region and for the Eastern African Economic Community as a whole. An account of wasted economic development opportunities for regional citizens due to this conflict remains a fiasco to incumbent regional policy makers that aspiring regional policy makers should draw lessons from.
The East of the DRC has encountered conflicts since the country gained its independence in 1960. The worse conflict hit the region in the late 1990’s and is still going on. The area affected by the conflict in the east of the DRC is the “Kivu region”. With an estimated area of 120,000 Km square of land and 12 million inhabitants. The North and South Kivu region (see map) are bigger than Burundi and Rwanda combined and the region is not as densely populated as Burundi, Rwanda and Uganda. The Kivu region is known for its highly fertile soil in the North and for having abundant deposits of valuable minerals such as Cassiterite, Gold, Coltan, Wolframite, Prochlore, diamonds, amethysts and tourmaline, dispersed throughout the North and South of the region.
The ongoing conflict in the Kivu region is among the deterrents for the region’s social and economic development for decades. The death toll in the region as a result of the conflict is estimated at six million and counting. The region’s citizens continue to go through psychological and physical sufferings including appalling women rape and forced displacement due to frequent wars that are continuously taking place in the region. The environment is also at stake as wherever displaced people are settling, deforestation is occurring. The ongoing smuggling of timber is exacerbating the environment. The eastern DRC conflict has turned the Kivu region into a hostile environment for investment despite its abundant resources which span from minerals, land, forestry, tourism attractions and a potential two billions barrels of oil deposits that lay deep in the Lake St Albert close to the border with Uganda. While it is clear that Kivu has been losing enormously out of the ongoing instability in the region, claims that neighbouring countries of the Kivu region, namely Burundi, Rwanda and Uganda have economically gained out of that instability are unceasingly. In my view such claims can evidently be challenged. The following is a list of wasted economic opportunities for Burundi, Rwanda and Uganda’s citizens as a result of the ongoing conflict in Kivu.
Loss of opportunity to develop trade cooperation
The conflict in Eastern DRC has never enabled Burundi, Rwanda and Uganda to build strong and long lasting relations with the DRC. This was partly because of these countries alleged involvements in the conflict in Kivu region. Had good relationships been fostered between the DRC, Burundi, Rwanda and Uganda, a trade cooperation aiming at capitalising on the natural resources of Kivu region to promote the economic development of the entire Great Lakes region could have been ideal and worked on. This would have been achieved through engaging cooperation discussions with the DRC through the Economic Community of the Great Lakes Countries (CEPGL), a sub-regional organisation set up among other reasons to promote trades between Burundi, Democratic Republic of Congo and Rwanda in 1976. Uganda could have pulled into the CEPGL in the same way that Burundi and Rwanda joined the East African Community (EAC) in 2009. Unfortunately, due to the eastern DRC conflict and strained relationships with DRC, Burundi, Rwanda and Uganda have missed out an opportunity to exploit their geographical proximity advantage with the natural resource rich Kivu region and subsequently promote sustainable social and economic progress in their respective countries. Recently DRC introduced visa requirements on Rwandans crossing into the Congo through the Rusizi-Bukavu border. Whilst the reasons for taking such decision is still unknown, it has been reported that the decision has already taken a toll on the border communities in the area, as it has disrupted trade and education to Rwandans students who attend school in the DRC. It remains a puzzle how Burundi, Rwanda and Uganda will resolve the fractious relationship with DRC so that the desired economic cooperation with the Kivu region is established. It is in everyone’s interest after all.
Market monopoly and loss of revenue
The Eastern DRC conflict has enabled the smuggling of the Kivu region’s natural resources towards the world markets through Burundi, Rwanda and Uganda. However, this does not imply that these countries’ economies as a whole have benefited from the illicit trade.
Firstly, the plundering and trading of DRC natural resources has only benefited individuals involved in such activities and not the economies of their respective countries. For instance, the business of trading the east of the DRC‘s natural resources is a monopoly, as it is open to only those with the power and the capacity to coordinate the supply chain of plundered natural resources from within a conflict zone to the world markets.
Secondly, the revenue from trading plundered natural resources of Kivu region is not invested towards developing any of the Great lake member’s countries. In contrast, the revenue from smuggled mineral trade is reinvested towards financing further looting and trading of the minerals from the Kivu region and the rest reinvested far away from the region through blurred and illicit transactions. A recent report on illicit financial flows from developing countries by the Global Financial Integrity of 2012 reveals that on average Burundi lost $74 million through illicit financial transaction between 2002 and 2011, for Rwanda the figure was $211 million and for Uganda it was $739 million. Whether or not, all or a portion of these millions of money illegally taken away from these countries came from the trade of smuggled minerals from Kivu region, cannot be confirmed. However, among the effects of illicit financial outflows relevant to Burundi, Rwanda and Uganda’s economies are a reduction of tax collection and investment inflows and worsening of poverty while the rich continue to become richer.
Economic growth versus instability in Eastern DRC
It is often argued that the instability in eastern DRC has benefited the economies of Burundi, Rwanda and Uganda. In my view such claim needs to be re-examined. The high economic growths that are said to have been achieved by these countries from smuggling and trading the natural resources from eastern DRC region are not inclusive. The majority of the population from these countries have not truly benefited from their country’s economic growth.
According to the International Monetary Funds estimates, Burundi, Rwanda and Uganda economies have on average expanded remarkably from late 1990’s up until 2012. Burundi’s growth was 3%, Rwanda’s 8.5% and Uganda’s 6.6%. However, these economic growths mask high inequalities in the human development of the citizens from these countries. The most recent human development report reveals that Rwanda and Uganda’s human development index (HDI) levels have been increasing. However, when these HDI levels are discounted for inequality in education, health and income, the levels become low, as they were in 1980s. This means that the human development for the majority of the population in these countries has not improved despite the high economic growth said to have been achieved by smuggling and trading the natural resources from eastern DRC region (see table below).
The outstanding economic achievements made by these countries are being undermined by the conflict in the east of DRC. For instance, in 2005 the International court of Justice ordered Uganda to pay $6 – $10 billion to the Democratic Republic of Congo to compensate for five year occupation of the eastern DRC. The reimbursement of this compensation is a significant unforeseen capital outflow from Uganda treasury that will have a great impact to the country’s economic development. Aid donors have also suspended and delayed payments to Rwanda in 2013 due to its alleged involvement in the DRC conflict. The International Monetary Fund has highlighted in the article IV of 2013 on Rwanda that such a delay of aid payment is a crucial challenge to Rwanda’s economic development. In fact Rwanda missed its forecasted economic growth of 6.6 percent in 2013. The country only achieved a 4.6% growth due to cuts in the country’s budgetary support by aid donors.
Other often disregarded economic losses
Some of the overlooked facts that affect the economic progress of the DRC’s eastern neighbouring countries as a result of the instability in the Kivu region, include the tarnished reputation and the loss of integrity of particularly Rwanda and Uganda within the international community. It is on this same international, economic and political circle that these countries rely on to promote their economic and social development. Due to their tarnished reputation, some foreign investors may abstain from investing in Rwanda and Uganda.
The impact of continuous influx of DRC refugees into the DRC’s neighbouring countries due to the eastern of DRC conflict conflicts should also be taken into consideration. The UNHCR estimates that in 2013 there were 75,000 refugees in Rwanda and if the conflict in the DRC continues the number of refugees in the country for 2014 may rise to almost 91,000 persons. Uganda is said to be hosting over 66,000 Congolese refugees as per July 2013. By the beginning of 2014, Burundi has been anticipated to be hosting over 50,000 refugees, most coming from the DRC. This increasing number of refugee influx in these countries could put even more pressure on limited financial and land scarcity that the citizens of Burundi, Rwanda and Uganda already experience.
Finally, the flow of human capital consisting of young men and women – in most cases children – from Burundi, Rwanda and Uganda that is recruited by different stakeholders involved in the conflict is detrimental. In March 2013 Human Rights watch reported that an estimated 20,000 Ugandan children have been abducted by the rebel Lord’s Resistance Army (LRA) – a rebel group involved in the east of DRC conflict – during the 16 years fight between the rebel group and the Ugandan government. The same source reported that in June 2012, between 200 and 300 Rwandans were recruited in Rwanda to fight alongside M23 forces, a rebel group that has also been fighting with the Congolese government army in the East of DRC. If this human capital were to be managed efficiently, it could have been a crucial asset to employ towards realising these countries ‘respective social and economic development.
Mounting economic losses
Further conflicts in the region will worsen the economic and social development of the Great lakes regions. These will have extra repercussions on key economic sectors of Rwanda and Uganda namely the tourism and natural resource sectors. Rwanda and Uganda’s tourism sectors are important for these countries’ economies. According to the World Bank data, international tourism receipt in Rwanda and Uganda was 35% and 24% of the total export in 2010 respectively. Further conflict will put at risk the tourism in both Rwanda and Uganda. This is because the most attractive tourism attractions for Rwanda and Uganda, namely the Volcanoes National Park of Rwanda and Mgahinga Gorilla National Park of Uganda, known to host the rare and extraordinary mountain gorillas, are located closer to their borders with DRC, where the fighting has been taking place. Enduring conflict in the east of the DRC will to some point diminish the numbers of tourists as they perceive these attractions to be located within or close to a conflict zone.
Furthermore, Rwanda has natural gas deposits under Lake Kivu whilst Uganda has 3.5 billion deposits of oil barrels in Lake Albert. Given that these resources are located in a slight proximity of the conflict area, any outbreak of war close to these lakes could decelerate gas exploration in Rwanda and oil production in Uganda. Thus, impede future social and economic development of both countries. Lastly, evidence of alleged involvement of Rwanda in the conflict in the east of DRC will lead to further aid cuts which will then decrease the country’s economic performance affecting its credit rating level the country uses to raise capital in the international money market.
Overall, claims that Burundi, Rwanda and Uganda’s economies have benefited from the instability in the Eastern DRC must be substantially supported with solid evidence. The aforementioned account clearly demonstrates that the instability in Eastern DRC benefited very few individuals involved in the trade of looted natural resources to the very detriment of the social and economic development of the ordinary people from the DRC, Burundi, Rwanda and Uganda.
A hazard to the East African Community
The eastern DRC conflict showed how dangerous it could be when it extended its strain amongst the East African Community (EAC) member states. In doing so, it threatened to destroy the existing relationship of its members and subsequently put at risk the economic cooperation between the citizens of the EAC. The EAC is the regional intergovernmental organisation of the Republics of Burundi, Kenya, Rwanda, Uganda and the United Republic of Tanzania. The aims of the EAC are to widen and deepen cooperation among the partner states in, among other, political, economic and social fields for their mutual benefit. The community established a Customs Union in 2005 and Common Market Act in 2010. This means that the entire region offers a consumer base of more than 130 million people.
Moreover, the EAC has numerous projects that if realised could bring about more economic prospects to its citizens. For instance, EAC member states plan to construct new railway lines that could see landlocked countries members of the EAC namely Burundi, Rwanda and Uganda having access to the Indian ocean via the port of either Dar Es Salaam in Tanzania or Mombasa in Kenya. However, the EAC’s good intentions for its entire members were disrupted by conflict in Eastern DRC as the conflict’s strain extended among states within the organisation. Tensions rose between Tanzania and Rwanda after Tanzania suggested Rwanda to negotiate with the FDLR, a Rwandese armed rebel group in the East of the DRC. This was followed by a war of words between Rwanda and Tanzania. Subsequently, Tanzania was isolated within the EAC. To some extent Tanzania had to officially complain to the EAC Council of Ministers for being side-lined in the bloc. The worse that could have happened is that Tanzania would have withdrawn from the EAC taking with it all the economic opportunities it could have offered to other member countries of the EAC. These include Tanzania’s consumer base of 45 millions people, commercial opportunities from trading the country’s abundant natural gas, uranium and other minerals, Tanzania’s location as a gateway to Malawi, Zambia and Mozambique markets and to the Indian Ocean, the good relationship Tanzania has with the natural rich DRC and the good reputation it has within the international community for having embraced and practicing democratic values. All these are significant advantages which other members of the EAC do not necessarily have and which they could to some extent capitalise on towards achieving the EAC’s economic and political objectives. Fortunately, Tanzania did not withdraw from the EAC for the obvious reasons that other members of EAC also have economic advantages that the country could benefit from. However, the experience remains an example of how the east of DRC conflict could be a disruption to the achievements of the EAC.
A hindrance to the EAC’s economic prosperity
The conflict also constitutes a great risk of blocking the economic prospect of the EAC if it is not ended peacefully. Last year, Tanzania and Kenya announced two complementary projects aiming at renovating the ports of Dar Es Salam in Tanzania and the port of Mombasa in Kenya and overhauling the transport corridors linking all EAC members ‘countries to the Indian Ocean. The subject transport corridors to be revamped are the northern and central corridors. The northern corridor development (blue line on the map) is controlled by Kenya and will link Uganda, Rwanda, Ethiopia, South Sudan and eastern DRC. Tanzania controls the development of the central corridor (red line on the map) which will link Rwanda, Burundi, Uganda and additionally the eastern part of the DRC, Zambia, Zimbabwe and Malawi. Once the development of these transport corridors has been completed and are operational, channelling imports to any member country of the EAC will be easier. Consequently, this will increase commercial activities within the EAC and attract investments, particularly to the EAC’s landlocked countries because transport from and to the Indian Ocean would have been made more accessible.
The main challenge for the EAC is how its members will fully capitalise on the transport corridors for export purposes considering that members of the community are primarily importers. The corridors will comparatively increase the export in the region if EAC members develop a manufacturing industry consisting of exporting processed products to the world markets. The glitch is that to develop a manufacturing industry requires the region to invest not only in transport, but also in electricity generation projects. The EAC member countries being primarily importers do not have abundant tangible goods to export towards the world markets and make the most out of the developed transportation corridors. However, Eastern DRC has lavish minerals and timber which need to be shipped to the world markets. Once the corridors have been extended until this region, the EAC members will be able to profit of its developed transport corridors for export purposes. However, this can only be achieved if the conflict in the east of the DRC has ceased and the EAC members are willing to support the DRC in developing its mining and timber industry for the benefit of the entire Great Lakes region and the EAC. Otherwise, the conflict in the Kivu region will remain a significant obstacle to fully capitalising on the development of the transport corridor routes for export purposes and ultimately prevent the EAC from maximising its economic prospect potential.
The way forward
In order to move forward one has to take advantage of the fact that the DRC is open to undertake trade and development projects with other countries worldwide. For instance, in September 2007, the DRC and China signed a cooperation agreement which has the potential to transform the DRC’s economic standing and at the same time benefit China. The deal was that China provides $9 Billion of finance for nationwide construction of roads, railways, hospitals, schools and dams as well as for mine development. In exchange DRC agreed to provide China with up to ten million tonnes of copper and hundreds of thousands of tonnes of cobalt from mines in the south-eastern province of Katanga. The deal has raised a lot of concern and critics amongst different stakeholders in the DRC and on the international stage which led to the deal being revised. However, it remains a concrete example illustrating that the DRC wishes to build trade and development cooperation with other countries.
Another example is an agreement that the DRC signed with South Africa in October 2013. The two countries signed a cooperation treaty to jointly develop the Inga III Dam whereby South Africa will purchase at $12 billion, 2,500 MW of the total 4,300 MW that the dam will produce once completed. The project to develop the Inga III is said to be the largest hydroelectric project in the world with the potential to power half of the African continent. It is claimed that once completed, the hydropower scheme will provide cheaper and readily available energy and allow Africa’s industrial and manufacturing industry to take off.
It is evident that the DRC would like to capitalise on its resources and build trade relations with countries that possess the capital and concrete development project ideas. Most importantly, these are countries that have courteous approaches to DRC’s sovereignty and the Congolese people. China and South Africa, being the leading economies in their respective regions, have the capital to invest in the DRC and the projects that these countries have decided to invest in are seemingly solid and positive. The most outstanding of all – that policy makers in the Great lakes and EAC should learn from and follow suit – is the approaches that China and South Africa have used to convince the Congolese to work with them.
China and South Africa have used a soft power approach to build economic cooperation with DRC. Soft power is opposed to hard power which resorts to economic incentives and military strength. China’s soft approach with the DRC and other African countries consists of China portraying itself as sharing a similar vision on mutual economic benefits. Furthermore, through the concept of South-South cooperation and the promotion of an alternative model of partnership as a political legitimacy, China has peacefully gotten its tight grip on the natural resources of the DRC.
South Africa’s soft power approach in building economic cooperation with the DRC was based on the ubuntu concept. After signing the crucial treaty on the Grand Inga Hydropower, the President of South Africa said: “In the spirit of ubuntu, which means “I am because we are” and which is a core principle underpinning the world of the South African government, we will continue to stand side by side with the DRC”.
Will the policy makers of the Great Lakes and the EAC learn from China and South Africa and formulate constructive approaches to capitalise on their proximity with the rich Kivu region in the East of the DRC? Will they really be able to promote sustainable economic development in the Great lakes region and the East of African community? Or they will also be remembered for wasting economic development opportunities?
It could be argued that it is idealistic for policy makers in the Great Lakes and EAC community to forge economic cooperation with the DRC because of the political issues in the region. But yet again, one has to wonder about the added value of politics that favour individual enrichment through conflict to the detriment of regional economic development. Perhaps this is the time for reflection and change.
Written by Aimé Sindayigaya , edited by Jules Niyibizi
The views expressed by the author in the above article are solely the author’s personal views and not his employer.
 A report by the UN Economic Commission for Africa (UNECA) entitled The state of governance in Africa: The Dimension of Illicit Financial flows as a Governance Challenge, classifies illicit money into three main forms 1) the proceeds of theft, bribery and other forms of corruption by government officials, 2) the proceeds of criminal activities including drug trading, racketeering, counterfeiting, contraband and terrorist financing, and 3) the proceeds of tax evasion and laundered commercial transactions.