Before colonisation, the economy in what is now the Democratic Republic of the Congo (DRC) was mainly characterised by cultivation, hunting, fishing, and gathering.
During the colonial period, when the DRC was occupied by Belgium, products for export and cheap labour were prioritised over food production.
After gaining independence in 1960, the ensuing political turmoil resulted in severe economic dislocations. The DRC's enormous wealth in various minerals aided in the relief of the economy.
Today, poor infrastructure and corruption in the government results in stunted economic growth. Currency depreciation is also an issue.
Early economic activity
In the precolonial era, economic activity in most communities in what is now the Democratic Republic of the Congo was largely subsistence in nature, characterized by a varying combination of shifting cultivation, hunting, fishing, and gathering. The agricultural technology of most groups was comparatively simple. Livestock was limited to chickens and the occasional goat or sheep. In most communities — particularly those in and on the fringes of the forest — the men valued hunting far above agriculture and devoted to it not only time but much ritual activity. This pattern was consistent with the division of labour: at best, men played a small part in cultivating, usually cutting and burning forests or bushes before planting. The high social status of hunting persisted even where the declining availability of games made it economically less critical..
Along the Congo River and its many tributaries, thriving river economies developed. The men of some groups devoted themselves wholly to fishing and the women to pottery, and they exchanged these items for food and other goods produced by their neighbors. These fishermen were also active traders along the navigable waters.
Other groups devoted themselves entirely to hunting and gathering. Occasionally these groups lived in villages with settled agricultural communities. More often, they lived in physically separated hamlets but in symbiosis with specific farming communities, exchanging the products of the hunt for bananas and other crops.
Various groups in the precolonial Democratic Republic of the Congo also played a substantial role in trading such commodities as ivory, rubber, copper, and enslaved people. Demand for these goods sustained the caravan trade of Arab and Arab-African traders throughout Central Africa's interior, now the Democratic Republic of the Congo. Although never great traders themselves, the Lunda profited handsomely from controlling and supervising the caravan trade of others. And both the Kazembe Kingdom and, later, the Luba Empire prospered due to their control of the ivory trade..
Colonial times
After the 1884-85 Conference of Berlin gave sovereignty of the region of the modern Democratic Republic of the Congo to King Leopold II of Belgium, he restructured the area's economy to suit his needs. His stated goal was to make an economically viable and self-sustaining entity out of the Congo Free State.
In 1908 the Belgian parliament voted to remove the region from direct control of the king, make it a colony, and rename it the Belgian Congo. The Belgian government wanted to avoid subsidizing the new colony while reaping its revenues. Therefore, the colony itself was made responsible for financing its own administration and security.
Although considerable exploitation of the country's mineral and agricultural wealth took place during the colonial period, its economic development bore little relationship to the needs of its population. Cash crops for export were prioritized over food production. Monetary benefits accrued almost entirely to non-Congolese, the foreign shareholders of industrial and agricultural companies, and the colonial state, which had holdings in many of the companies.
The colonial government encouraged foreign investment in the Belgian Congo to develop agricultural commodities —- particularly rubber — for export, to exploit the country's mineral resources, and establish a transportation infrastructure to facilitate the export of goods. The colonial state concerned itself very little with such basic social needs as health care or education, which were provided by Christian missions, and to some extent by large concessionaire companies.
State economic objectives emphasized ensuring an adequate supplies of cheap labor, including forced labour. The state also restricted foreign traders, lest they encourage farmers to produce surpluses for sale rather than take low-paying work on plantations and in mines.
Through coercion, colonial authorities obtained the indigenous labor necessary for public works and private investment projects. A decree of 1917, for example, required Africans to devote sixty days a year to agricultural work, and mandated penal sanctions for disobedience.
By offering exceedingly generous terms, the Belgian government induced major foreign financial groups to invest in its colony. The colonial state itself laid claim to a significant share in the ownership of corporations in the extractive and transportation sectors. In 1906 the Société Générale de Belgique (SGB), (General Holding Company of Belgium) a powerful Belgian trust, formed the Union Minière du Haut-Katanga (UMHK), (Upper Katanga Mining Union) the International Forest and Mining Company (Societe Internationale Forestiere et Miniere — Forminiere), and the Compagnie du Chemin de Fer du Bas-Congo au Katanga (BCK), (Bas-Congo to Katanga Railroad Company). A majority shareholder in the UMHK and Forminère, the colonial state could potentially have run both companies. State capitalism did not extend to active involvement in company affairs, however; the colonial administration merely collected its dividends.
SGB was given mineral rights to already-prospected ore deposits in Katanga Province (now Shaba Region) and a 99-year monopoly on any mineral deposits it could identify within a six-year period on a tract of 140 million hectares. BCK was given mineral rights to 2 1 million hectares in the area along the two main rail lines, from Matadi to Léopoldville (now Kinshasa) and from Port Francqui (now Ilebo) to the mining centers in Katanga. It also was permitted to run the railroad with African labor provided by the colonial state. By the 1920s, the rich mineral base was being exploited, and SGB had consolidated its control over the three companies that dominated the colony's economy.
After World War II, government recognition of growing social discontent among the African population led to support for wage increases and to promoting the development of a Congolese middle class. Import-substitution industries were established to meet the growing demand for consumer goods. The colonial administration encouraged corporations and missions to expand social services and to construct hospitals and educational facilities for the Congolese. These reforms, however, were largely unsuccessful; at independence the economy was still primarily export-led, that is, geared toward the export of primary raw materials, and expatriates held most of the managerial and technical positions.
Independence
The political turmoil that followed independence from Belgium in 1960 resulted in the collapse of civil administration and severe economic dislocations. The rapid departure of Belgian administrators and technicians left government and industry in the hands of low-level cadres. Vital transportation facilities and trade services were disrupted. Export earnings declined. After political and civil order were restored following the rise to power of President Mobutu in 1965, the government of the Congo soon launched a comprehensive and ambitious attempt to achieve economic independence through nationalization. The largest expropriation was that of the Belgian-owned mining company, Union Minière du Haut-Katanga (UMHK), and its transformation into Générale des Carrières et des Mines Gécamines), (General Quarries and Mines). After much wrangling with Belgian industrialists and the government, the Democratic Republic of the Congo and Gécamines agreed to a reimbursement plan, which included paying a percentage of its revenues to the former owners.
The government also promoted a series of development programs designed to transform a primarily agrarian economy into a regional industrial power. The Democratic Republic of the Congo's enormous mineral wealth of copper, cobalt, gold, and diamonds was intended to serve as the engine for this transformation. The ultimate goal was ostensibly to move the economy to a stage of development comparable with that of the Western industrial powers. The new Congolese government expected to realize the early colonial aspirations for the country to be the breadbasket and principal industrial power of Africa.
This strategy of industrialization was to be financed through external lending and was based on projections of increases in mineral prices, production, and sales. Justified by the doctrine of economic nationalism, the government undertook grandiose and ill-conceived projects based on copper and energy development, financed on terms unfavorable to the Democratic Republic of the Congo. In 1967 the IMF concluded an agreement with the Congo for monetary and economic reform. The currency was devalued to control inflation, and the Congolese franc was replaced by the zaire. Within two years, the reform program, combined with political tranquility, an increase in the price of copper, and increased exports, led to a stable currency and an increase in foreign reserves. Zaire (as the nation was called from 1971) rode high on the commodity price boom of the early 1970s along with other primary commodity-producing countries.
In retrospect, it appears that the economic and financial policies of this period were the result of a desire both to transform Zaire into an industrial power and to maintain in power and enrich the country's ruling political and economic elite. As several observers have noted, Mobutu's authoritarian paternalism gave rise to rampant corruption incompatible with i and development.
Regardless of the motives for the economic decisions of the late 1960s and early 1970s, economic decline set in as grace periods expired on the enormous debt to foreign governments and international lending agencies that the government had incurred to finance its ambitious industrial development projects, and as the neglect of transport and agriculture began to take its toll.
The cost of living rose rapidly, while new foreign borrowing raised the nation's external debt from US$763 million at the end of 1972 to US$3 billion by 1974. In November 1973, Mobutu announced measures to put all businesses in the hands of Zairians.
Zairianization
Economic nationalism was a common theme throughout post-independence Africa, frequently manifesting itself in the expulsion of foreign merchants and/or expropriation of foreign assets. For Zaire, economic autonomy and political independence were seen as dependent on one other. Zairianization, the expropriation plan announced in November 1973, represented both a combination of the nationalistic impulse for economic independence and personal aggrandizement for President Mobutu, who practiced a form of patrimonialism. Zairianization created a vast pool of goods and money for distribution to loyal family members and to the political class, government and army officials. It was the final and clearest demonstration that political power was the primary means of acquiring wealth. The entrepreneurial risk and initiative to build up the businesses required to develop an infrastructure for economic development were not characteristic of the Zairian elite that came to dominate the country's economy.