Currency, Payments Drag DRC Down

FILE: A man buys groceries at an open air market in Kinshasa, Democratic Republic of Congo. Taken March 28, 2020.

KINSHASA - A falling local currency, salary arrears payments and war spending have pushed up prices in impoverished Democratic Republic of Congo, leaving locals struggling to afford basics.

Since the new year, the DRC franc has depreciated about 15 percent against the US dollar, according to official figures and money changers, hitting the poorest hardest.

Two thousand Congolese francs usually trade for $1. The exchange rate has risen to more than 2,320 francs per dollar, according to the latest central bank figures.

Several people interviewed by AFP said that in some cases the weakening franc has sent prices much higher, doubling or more.

The price hikes follow increased government spending to battle the M23 rebel group - which has captured swathes of territory in eastern DRC since last year.

Add global inflation and an economy reliant on imports and US dollars, and many DRC people are feeling the pinch.

The nation's Inflation was already running at 13 percent by the end of last year, owing partly to the economic fallout of Russia's invasion of Ukraine.

Standing in the mud in a market in the capital Kinshasa, Bibiche Musabili brandished a bushel of sweet-potato leaves - a local staple used in stews, known as matembele.

"We used to buy this for 500 francs ($0.25). It's become 3,000 francs," said the woman.

"What are we to going to do?" added Musabili, who said her children were going hungry.

Transport fares in the megacity of an estimated 15 million people have also risen.

Herdi Lomboto, a 19-year-old business student waiting for a collective taxi downtown, said his trip home cost 500 francs not long ago - now it is between 1,500 and 2,000 francs.

"It hurts," Lomboto said, explaining that his parents were scrambling to find the money to meet the extra costs.

About two-thirds of the DRC's population of 100 million people live on less than $2.10 a day, according to the World Bank.

- Dollar dominance -

The International Monetary Fund said in February that the DRC increased spending in 2022 to respond to the conflict in the east, as well as to pay salary arrears.

The DRC's late 2022 spending spike led to a flood of DRC francs on the market, and a surging demand for dollars, according to an economic expert following the situation closely.

The economist, who declined to be named, said that government spending had gone on imports likely related to the conflict, as well as on salary arrears for public servants.

The central African nation has one of the most dollarized economies in the world, a legacy of runaway inflation during the rule of former dictator Mobutu Sese Seko.

In a money-changing district in Kinshasa, currency dealers also said the market was awash with DRC francs.

"It's the law of supply and demand," said one dealer, Mamman Mireille, sitting beside wads of banknotes, who explained that clients were looking for dollars.