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DRC: May 17, 1997 marks the advent of the Congolese franc!
History page] – The revolution of May 17, 1997, marked the advent of the monetary reform that sanctioned the arrival of the Congolese Franc (CDF). The Central Bank of Congo, the technical body of the government in the monetary field, did not go through four ways to see it at that time. Zoom Eco recalls this page of history told by François Kabuya Kalala and Tshiunza Mbiye in the publication entitled “The Congolese economy and the monetary reform of June 1998”.
“The political change in the country since May 1997 that changed the name of the country should also imply a change in the monetary unit whose name was associated with that of the country. It is the same with the name of the Institute of issue taken over banknotes, “said the BCC through a note from its Technical Unit for the Monetary Reform (CETEREM) published in July 1998 (p.6) .
motivations
Moreover, in view of the economic situation prevailing in 1997, it became even more urgent for the Government to take corrective measures through a two-part economic adjustment program: short-term monetary stabilization and recovery of the economy in the medium term.
Indeed, reminded the CETEREM, “the macroeconomic indicators of the last ten years attest that the Congolese economy bends under the effect of the fundamental imbalances, in spite of various measures of recovery implemented”.
For the defender of Mobutu, the liberator Mzee Laurent-Desire Kabila, the issuance of a new currency called “Congolese franc” had a dual political motivation: that of marking the advent of a new power, and that of claiming subtly of a currency, of the same name, which had been characterized by its relative stability in the colonial era.
Alarming numbers
The BCC estimated at the time that GDP declined by 42.9% between 1990 and 1994; this downward trend only faded slightly in 1995-1996 before continuing in 1997. Excluding a surplus of $ 57.1 million in 1995 resulting from a large volume of unregulated suspensions at the end of year, the consolidated deficit was $ 157.1 million in 1994 and $ 51.7 million and $ 62.5 million respectively in 1996 and 1997. These budget deficits were substantially by monetary creation.
In 1994, one year after the monetary reform of October 1993, the monetary expansion was 10,323.2% before being reduced to 308,8% in 1995 and 471% in 1996. In addition, Inflation remained very high: the highest level was reached in 1994 with an annual rate of 9,769%, compared to 370% and 753% in 1995 and 1996.
As for the monetary sector, it was pinned on the one hand the gradual demonetisation of the economy. The money supply / GDP ratio had fallen to 4.3% in 1997 from an average of 10% in previous years. On the other hand, the checks suffered a heavy discount in transactions, thus devoting the break of the parity between the fiduciary money and the scriptural money.
The banks themselves were plagued by strong financial disintermediation, while the soaring “dollarisation” was a not-too-obvious sign of the widespread loss of confidence in the national currency.
One reform, four objectives
In the context described above, the monetary reform was particularly necessary to: clean up the monetary and financial environment characterized by the persistence of hyperinflation, the disruption of the payments system and the multiplicity of exchange rates; stabilize the currency and unify the national monetary space; increase the liquidity rate to finance the economy; and, encourage the revival of production activities.
Indeed, the launch of the Congolese franc was only the final step of all the measures forming part of a program of economic adjustment and monetary consolidation. Several prior actions were carried out between May 1997 and June 1998 to stabilize the currency, restore the fiduciary and par value convertibility of bank money into fiduciary money, gradually unify the national monetary space, and to reduce the disparity of the exchange rates between the different places.
Thus, when it was put into circulation on 30 June 1998, the Congolese franc exchanged at the rate of 1 CDF = 100 000NZ in Kinshasa and everywhere circulating the so-called “new zaïres” banknotes. On the other hand, it was exchanged at the rate of 1 CDF = 14 000 000Z in the two provinces of Kasaï where circulated the old Zaïres. This release was spread over a whole year, a time considered sufficient to allow the people of the hinterland to easily exchange their money.
As regards the external parity of the Congolese franc, the monetary authorities have stated (by adherence to the principle of flexible exchange rates) that this parity will be determined according to the prevailing market forces on the eve of the launch of the new currency.
As at June 30, 1998, history indicates that the official exchange rate posted was US $ 1 = CDF 1.3 against US $ 1 = CDF 1.48 a year later on the parallel market. Currently, 20 years later, 1 US dollar = 1650 CDF.
This represents a depreciation of about 111,000%.
Eric TSHIKUMA | Eco Zoom
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DRC: USD 58 million down payment to oil distributors for loss of earnings
Through the Minister of Finance, Doudou Fwamba Likunde Li-Botayi, the central government has announced the payment of $58 million, a first instalment of shortfalls, to all oil tanker corporations in all distribution zones.
The announcement was made at a meeting held on Monday November 4, 2024 by the Minister of Finance with a delegation of oil companies representing the various distribution zones in the Democratic Republic of Congo.
According to the Minister of Finance, this payment is part of the Government’s efforts to clear, in instalments and as quickly as possible, the revenue shortfalls for the 2023 financial year.
He also reassured oil companies that the next instalment would be paid shortly.
“Doudou Fwamba Likunde Li-Botayi declared: “The process of clearing these shortfalls is irreversible, and the Government’s various commitments, made through the Ministry of the Economy, will be honored in the interests of all parties.
AGNES KAYEMBE
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Africa: start-ups raised USD 254 million in October 2024
The platform Africa: The Big Deal recently published the monthly financial report on African start-ups.
According to the report, in October 2024, African start-ups raised $254 million, a record for this month since 2019 as forty-two (42) companies raised financing despite a global context of tightening liquidity.
Indeed, these figures, places October as the second best month of 2024, after July, with an increase of almost 50% compared to the average of the last 12 months, a contrast to the global trend.
“The main highlight of the month was the transaction by Moniepoint, a Nigerian fintech, which closed a $110 million Series C financing round, representing 43% of the total raised in October. This fund-raising, one of the largest in the sector, could establish Moniepoint as the eighth African unicorn, a title reserved for companies valued at over one billion dollars. Other major deals of the month included the $42 million raised by BasiGo in Series A, and the $33 million obtained by cryptocurrency exchange platform Yellow Card in Series C.
In addition, the report notes that since the beginning of 2024, African start-ups have raised a total of $1.7 billion, spread over 393 deals exceeding $100,000, although this performance remains down 32% on the previous year.
Of these, 137 transactions exceeded the million-dollar mark, a year-on-year decline of 20%, reflecting the persistent tensions in the financing of technology start-ups.
AGNES KAYEMBE
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World: sustainable forest management, World Bank calls for annual investment of USD 536 billion
The World Bank is sounding the alarm on the massive financing needs to protect the world’s forests and support the fight against climate change.
In its new report, the institution informs that to achieve conservation, biodiversity and land restoration objectives, stakeholders would need to invest 536 billion dollars each year, four times the current amounts, for a total of 8.4 trillion dollars by 2050.
Similarly, the Global Challenge Program: Forests for Development, Climate, and Biodiversity (GCP-F), launched by the World Bank, aims to transform forest management practices.
he objective of this program is to promote forests as economies in their own right, generating economic opportunities and sources of sustainable development.
This economic model, note the experts, is based on exploiting forest resources in harmony with nature, mobilizing private investment while meeting conservation challenges.
By integrating key sectors such as agriculture, energy and infrastructure, the World Bank aims to encourage “standing” forests, capable of supporting livelihoods, storing carbon and generating global public goods.
Flory Musiswa
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