The Global Financial Crisis or Great Recession which sparked from a U.S. real estate mistake, spread like wildfire across the globe. One specific area hit hard was the Democratic Republic of Congo (DRC). The DRC saw economic growth stop to a halt and looked towards foreign aid to pull them out of the standstill.
The economy seized to a halt as a result of the Global Financial Crisis. The global
Financial Crisis is defined as happening between 2007-2008 but most of the effects weren't felt until 2009 when economic growth declined from 6.2% in 2008 to 2.8% in 2009. Along with the economy coming to a halt, the DRC saw a sharp increase in inflation. Inflation rose to 53.4% in 2009 compared to 27.6% in 2008 and an objective inflation rate of 48.7% which was set by the government, but the target was missed and their effort to control the rate of inflation failed. (
Walliser).
The impact of the Global Financial Crisis had an impact on the markets of key exports. Exports of copper, cobalt, and diamonds that the DRC relies on to keep the economy afloat. The DRC is the leading producer of cobalt, "the Global Financial Crisis and economic slowdown have resulted in a sharp decline in world commodity prices, including those of copper, cobalt, and diamonds which accounts for no less than 80% of the DRC's export earnings. (
O). The economy was quickly grinding to a halt and the DRC needed to do something about it. But how could they get out of such an economic standstill with such high inflation? The answer was to look to foreign aid.
"On December 11, 2009, the International Monetary Fund (IMF) executive board approved a $551 million Poverty Reduction and Growth Facility (PRGF) arrangement and additional in term assistance of about $72.68 million under the enhanced Heavily Indebted Poor Countries Initiative (HIPC), Thus the country will be embarking on a three year programme to strive to meet the enhanced HIPC initiative requirements and triggers to reach the completion point, giving way to debt relief under the Multilateral Debt Relief Initiative (MDRI) as soon as possible" (
O). The DRC was bailed out by international donors who gave over three billion dollars from 2007 to 2009. The international donors were primarily made up of the United States, the UK, and Belgium. Together the three nations contributed 65% of the funding from bilateral donors. I did not find any specific industries that were privatized during this time, but a large part of the DRC's economy is mining and the Global Financial Crisis put a huge dent in the price of precious metals. Getting this industry back on its feet was a key part to recovering from the Global Financial Crisis but I did not find any specific examples on how the government got the industry back up but I would assume they had to put special adjustment programmes like Steger talks about along with the one I mentioned earlier with the HIPC agreement.
The result from the policies put in place to lift the DRC out of the recession was astonishing. The UN summarizes it best in an article when they say "Except for a slump in 2009 when the economy grew by only 2.8% economic growth has averaged 7.7% over the last five years. According to the World Bank this is "well above the average in Sub-Saharan Africa" (
DRC Economy). For future scale the "economic growth for 2016 is expected to rise to 8% which will make the DRC one of the fastest growing economies in the world" (
DRC Economy). The DRC has recovered from the Global Financial Crisis but still faces other problems like an unstable government and fighting around the country.
Works Cited
DRC economy: The giant awakens | Africa Renewal. (2016, August). Retrieved September 28, 2020, from https://www.un.org/africarenewal/magazine/august-2016/drc-economy-giant-awakens
O. (2010, January). Global Financial Crisis Discussion Series Paper 15: Democratic Republic of Congo Phase 2. Retrieved September 28, 2020, from https://www.researchgate.net/publication/282852979_The_effects_of_the_global_financial_crisis_on_the_Democratic_Republic_of_Congo
Walliser, J. (2010, February). DRC Economic Report. Retrieved September 28, 2020, from http://159.203.189.251/system/attachments/assets000/000/669/original/WB-DRC-economic- report-2010.pdf?1430929551
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