Democratic Republic of the Congo vs. Burundi

The economy of the Democratic Republic of the Congo - a nation endowed with vast natural resource wealth - continues to perform poorly. Systemic corruption since independence in 1960, combined with countrywide instability and intermittent conflict that began in the early-90s, has reduced national output and government revenue, and increased external debt. With the installation of a transitional government in 2003 after peace accords, economic conditions slowly began to improve as the government reopened relations with international financial institutions and international donors, and President KABILA began implementing reforms. Progress on implementing substantive economic reforms remains slow because of political instability, bureaucratic inefficiency, corruption, and patronage, which also dampen international investment prospects.

Renewed activity in the mining sector, the source of most export income, boosted Kinshasa's fiscal position and GDP growth until 2015, but low commodity prices have led to slower growth, volatile inflation, currency depreciation, and a growing fiscal deficit. An uncertain legal framework, corruption, and a lack of transparency in government policy are long-term problems for the large mining sector and for the economy as a whole. Much economic activity still occurs in the informal sector and is not reflected in GDP data.

Poverty remains widespread in DRC, and the country failed to meet any Millennium Development Goals by 2015. DRC also concluded its program with the IMF in 2015. The price of copper - the DRC's primary export - plummeted in 2015 and remained at record lows during 2016-17, reducing government revenues, expenditures, and foreign exchange reserves, while inflation reached nearly 50% in mid-2017 - its highest level since the early 2000s.

Burundi is a landlocked, resource-poor country with an underdeveloped manufacturing sector. Agriculture accounts for over 40% of GDP and employs more than 90% of the population. Burundi's primary exports are coffee and tea, which account for more than half of foreign exchange earnings, but these earnings are subject to fluctuations in weather and international coffee and tea prices, Burundi is heavily dependent on aid from bilateral and multilateral donors, as well as foreign exchange earnings from participation in the African Union Mission to Somalia (AMISOM). Foreign aid represented 48% of Burundi's national income in 2015, one of the highest percentages in Sub-Saharan Africa, but this figure decreased to 33.5% in 2016 due to political turmoil surrounding President NKURUNZIZA's bid for a third term. Burundi joined the East African Community (EAC) in 2009.

Burundi faces several underlying weaknesses - low governmental capacity, corruption, a high poverty rate, poor educational levels, a weak legal system, a poor transportation network, and overburdened utilities - that have prevented the implementation of planned economic reforms. The purchasing power of most Burundians has decreased as wage increases have not kept pace with inflation, which reached approximately 18% in 2017.

Real GDP growth dropped precipitously following political events in 2015 and has yet to recover to pre-conflict levels. Continued resistance by donors and the international community will restrict Burundi's economic growth as the country deals with a large current account deficit.

NA

NA