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Is it just curse? God didn’t give them like it gave to Europe? And is it good place to invest? I will try to answer these questions.
Every time when World Bank or IMF announced yearly report on Gini Index or GDP per Capita, I’m directly getting exciting and trying to look at the rankings. This is weird, because I’m from Turkey and I’m living in Poland. Why weird? Because nothing is happening to us in the list, Poland is in top middle’s and Turkey is in middle-middle’s all the time. Nothing is surprising me… What is so exciting and mysterious is bottom of the ranking, where is backyard of Europe and USA. Yes, you know it AFRICA!
Firstly, I would like to share with you bottom of GDP per Capita list by IMF
182. Niger
183. Liberia
184. Burundi
185. Malawi
186. Democratic Republic of Congo
187. Central African Republic
Now it is time for some statistical data about Democratic Republic of Congo (DRC);
To start with, DRC is the 11th biggest country in the world and 2nd in Africa continent with 2,344,858 km². I can easily say that investors have no problem about how to find LAND which is factor of production.
Secondly, what is the other factor of production? Labour, which we will consider as population of a country. DRC is again in the top of the list. DRC has 69,360,000 as a population which makes them 19th most populated country in the World and 3rd in Africa. Therefore, Investors have no problem about LABOUR also. Also the unemployment rate is almost 50% which means almost 30 million people is jobless. (at least on the reports)
Why are they poor?
At the beginning of this article I shared with you GDP per Capita list and DCR has the second lowest GDP per Capita (PPP) index in the world which is just $655 per year. But shocking thing is when DRC gained independence at 1960, after South Africa, DRC had the second biggest industry in Africa. However, at middle of 80’s country entered economic crisis and still crisis is ongoing. Like it is not enough at the middle of 90’s this time Civil War started and caused small growth rates, lower income and gross domestic product. Eventually external debts increase and country entered poverty cycle.
Moreover, Democratic Republic of Congo has very, very and very big underground economy which is 9 times bigger than GDP of the country. In this underground economy, we can call some big multinational companies also.(like they don’t have money to pay tax) What is more, DRC has important resources such as gold, copper and cobalt which makes this country one of the unique country in Africa.
Despite the fact that, DRC has very low purchasing power, we have to take into consideration about DRC’s high population and make analysis about that.
Positively, GDP is improving year by year thanks to country’s agriculture and mining. (2012; 7,2% - 2013;8,1%) But without stopping that underground and illegal economy, GDP will never improve like it should be. Growth is expected to continue as 8,4% in 2015 also which is relatively high and fast. With the help of flexible money policy, it is expecting that country’s economy should be more powerful. With the help of tight monetary policy, inflation dropped incredibly from %500 (in 2000) to 9,3% and it shown as the inflation will continue its downward trend as government continue fiscal and monetary policy.
Conclusion
All in all, Democratic Republic of Congo is low-developed country but they are not the only guilty about it. Civil wars, illnesses, corruption, underground economy makes them more poor. What world can do? IMF, UN, World Bank is helping DRC as giving credits and aids but what Democratic Republic of Congo needs real world economy. They have resources and this resources are wasting or using illegally. S&P report shows that DRC has `B-` as a credit rating which means `non-stable but worth to invest` which is a big opportunity for World Investors and DRC. DRC is a big bazaar for companies which is aiming success in Africa. They have lands, they have people, they have growing economy and they are becoming better yearly.
Now it is time for some statistical data about Democratic Republic of Congo (DRC);
To start with, DRC is the 11th biggest country in the world and 2nd in Africa continent with 2,344,858 km². I can easily say that investors have no problem about how to find LAND which is factor of production.
Secondly, what is the other factor of production? Labour, which we will consider as population of a country. DRC is again in the top of the list. DRC has 69,360,000 as a population which makes them 19th most populated country in the World and 3rd in Africa. Therefore, Investors have no problem about LABOUR also. Also the unemployment rate is almost 50% which means almost 30 million people is jobless. (at least on the reports)
Why are they poor?
At the beginning of this article I shared with you GDP per Capita list and DCR has the second lowest GDP per Capita (PPP) index in the world which is just $655 per year. But shocking thing is when DRC gained independence at 1960, after South Africa, DRC had the second biggest industry in Africa. However, at middle of 80’s country entered economic crisis and still crisis is ongoing. Like it is not enough at the middle of 90’s this time Civil War started and caused small growth rates, lower income and gross domestic product. Eventually external debts increase and country entered poverty cycle.
Moreover, Democratic Republic of Congo has very, very and very big underground economy which is 9 times bigger than GDP of the country. In this underground economy, we can call some big multinational companies also.(like they don’t have money to pay tax) What is more, DRC has important resources such as gold, copper and cobalt which makes this country one of the unique country in Africa.
Despite the fact that, DRC has very low purchasing power, we have to take into consideration about DRC’s high population and make analysis about that.
Positively, GDP is improving year by year thanks to country’s agriculture and mining. (2012; 7,2% - 2013;8,1%) But without stopping that underground and illegal economy, GDP will never improve like it should be. Growth is expected to continue as 8,4% in 2015 also which is relatively high and fast. With the help of flexible money policy, it is expecting that country’s economy should be more powerful. With the help of tight monetary policy, inflation dropped incredibly from %500 (in 2000) to 9,3% and it shown as the inflation will continue its downward trend as government continue fiscal and monetary policy.
Conclusion
All in all, Democratic Republic of Congo is low-developed country but they are not the only guilty about it. Civil wars, illnesses, corruption, underground economy makes them more poor. What world can do? IMF, UN, World Bank is helping DRC as giving credits and aids but what Democratic Republic of Congo needs real world economy. They have resources and this resources are wasting or using illegally. S&P report shows that DRC has `B-` as a credit rating which means `non-stable but worth to invest` which is a big opportunity for World Investors and DRC. DRC is a big bazaar for companies which is aiming success in Africa. They have lands, they have people, they have growing economy and they are becoming better yearly.
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