Democratic Republic of the Congo vs. Rwanda

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.

Rwanda is a rural, agrarian country with agriculture accounting for about 63% of export earnings, and with some mineral and agro-processing. Population density is high but, with the exception of the capital Kigali, is not concentrated in large cities - its 12 million people are spread out on a small amount of land (smaller than the state of Maryland). Tourism, minerals, coffee, and tea are Rwanda's main sources of foreign exchange. Despite Rwanda's fertile ecosystem, food production often does not keep pace with demand, requiring food imports. Energy shortages, instability in neighboring states, and lack of adequate transportation linkages to other countries continue to handicap private sector growth.

The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women, and temporarily stalled the country's ability to attract private and external investment. However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy well beyond pre-1994 levels. GDP has rebounded with an average annual growth of 6%-8% since 2003 and inflation has been reduced to single digits. In 2015, 39% of the population lived below the poverty line, according to government statistics, compared to 57% in 2006.

The government has embraced an expansionary fiscal policy to reduce poverty by improving education, infrastructure, and foreign and domestic investment. Rwanda consistently ranks well for ease of doing business and transparency.

The Rwandan Government is seeking to become a regional leader in information and communication technologies and aims to reach middle-income status by 2020 by leveraging the service industry. In 2012, Rwanda completed the first modern Special Economic Zone (SEZ) in Kigali. The SEZ seeks to attract investment in all sectors, but specifically in agribusiness, information and communications, trade and logistics, mining, and construction. In 2016, the government launched an online system to give investors information about public land and its suitability for agricultural development.

NA