In the Democratic Republic of the Congo, the government has committed to a three-year program with the International Monetary Fund (IMF). In exchange for $ 1.5 billion, the government con ...

Nicolas Kazadi (DRC): "We want the IMF, like an auditor, to come and attest to our efforts"

Audio 05:05

Congolese Finance Minister Nicolas Kazadi (right) and IMF resident representative Gabirel Leost in Kinshasa on July 19, 2021. © Sonia Rolley / RFI

By: Sonia Rolley Follow

16 mins

In the Democratic Republic of the Congo, the government has committed to a three-year program with the International Monetary Fund (IMF).

In exchange for $ 1.5 billion, the Congolese government pledged to launch reforms, but also to demonstrate transparency, especially in the mining sector.

Finance Minister Nicolas Kazadi, who handled most of the negotiations with the IMF, is RFI's guest.

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RFI: How is this program with the International Monetary Fund crucial for the reforms you want to initiate?

Nicolas Kazadi:

Quite simply because it is the way which opens the resolution of all our economic structural problems.

This program is part of the government program.

So the elements affected by this program are already elements that were foreseen in the government program before we entered into discussions with the IMF program.

But why do you need the IMF for that?

Is it the expertise or is it the fact that it is complicated to implement these reforms because there may be resistance in certain administrations?

But no, it is first of all an effort of transparency and then there is a concern for support.

And we want the IMF, like an auditor, to come and attest to our efforts to improve the macroeconomic situation and pave the way for more investment, better income distribution, and economic and social progress.

What are the main axes of reforms on the Central Bank?

We have seen that it was regularly cited in the financial scandals of recent years.

The Central Bank has a big effort in its restructuring which is an ongoing process that started a long time ago. It must control its costs. In terms of monetary policy, it must continue the effort to de-dollarize the economy, which presupposes an effort to maintain stability. It must accompany the government's policy in the fight against money laundering, the financing of terrorism and the excessive handling of cash, including in foreign currency. She has a lot to do. Access to credit must be strengthened, banking inclusion must be improved. With regard to credit, it is time to strengthen information on credit, that is to say the credit bureau, so that banks have more facilities to grant it to companies and individuals.

How are you going to get the central bank to really control the commercial banks?

RFI has taken part in several surveys which show that the Central Bank does not play its role at all and allows a lot of transactions to go through ...

Nothing is immutable in life.

The Central Bank is, as I said, in a process - as I said - of restructuring.

It has a new team at its head which will continue to do so and which comes with a very clear mandate.

So we will no longer see transfers from the Central Bank directly to the account of private companies or even the creation of sub-accounts or accounts in commercial banks on which money had been diverted?

The mandate they received is a mandate to improve the situation, move away from bad practices, move away from the incidents you are talking about.

You talk about it as if there was just that, no, these are incidents that could have happened.

But what is clear is that the new management team has a mandate to do better, to move the bank forward in all its aspects.

Will she have the authority to stop cash payments?

Because we know that money laundering is done mainly through this means.

But today, in most banks, we withdraw millions of dollars in cash.

And that was still true in recent months.

Yes, we have already made a lot of progress, we have already strengthened control bodies such as CENAREF [National Financial Intelligence Unit, Editor's note] and others. The difficulty we have is that we are in a mining country where mining, mineral trade takes place within the country and in particular on an artisanal basis. All of this requires a lot of use of cash. And so we are fighting against this excessive use of cash in a difficult context. But it is clear that we are advancing on these issues, we are advancing our laws, our controls. Today, we also receive a lot of exemption requests, because users are well aware that it is less and less easy to withdraw large amounts in foreign currency or Congolese francs. So there is clear progress on this issue.

Suddenly, with this change of team at the Central Bank, are we going to see sanctions against commercial banks which have been involved in scandals?

Yes, on these issues, it is a shared responsibility between the Ministry of Finance and the Central Bank.

We are working on these issues with CENAREF as I told you.

And believe me, we are moving forward with the objective of no longer allowing banks to perpetuate these practices and in general, to strengthen transparency on the use of cash in the country.

Are there any warnings given to certain banks?

We have seen that Afriland First Bank had changed leaders in the Congo.

It is not my role to give specific examples, but I believe that there is indeed a movement which is going in that direction.

So clear warnings?

Absolutely!

Talking to you about strengthening foreign exchange reserves is one of the objectives of this program.

Is it really possible to double foreign exchange reserves in three years?

Yes, absolutely, look.

Between December 2020 and June 2021, we went from $ 900 million to $ 1.4 billion.

1.4 billion, these are the reserves placed abroad.

This is what meets the IMF nomenclature.

But if we take all the reserves available to the Central Bank, we are already around two billion.

Unfortunately, the part of foreign currency that is held in the local banking system is not counted as international foreign exchange reserves according to the international nomenclature.

In this program with the IMF, there is one aspect that is important, and that is transparency in the mining sector.

You have regularly promised and you have already started to publish all mining contracts.

But will this transparency effort go so far as to audit Gécamines, the state mining company?

Yes, we ourselves had planned to do this audit of Gécamines and it is also planned in the program.

So there will be this Gécamines audit.

We will produce these audited accounts.

And will this also be the case for Sicomines, the joint venture with Chinese companies?

We know that civil society has greatly decried the management of what are called Chinese contracts.

Yes, why would Sicomines escape it?

We need to clarify the accounting and financial situation of these major projects which are important to us.

And we are in a relationship with the Chinese side of transparency, improvement of transparency and efficiency in this Sicomines project.

So you are currently in discussion to try to correct what was denounced by the NGOs?

Very clearly, very clearly, we are not going to go back to the past.

But very clearly, we are engaged in a process of rectification of the famous Chinese contracts.

We have a very clear roadmap on this and we are going to all the mistakes of the past.

But when you say that you are not going to go back to the past, that is to say that you are going to improve the contracts, but that does not mean that there will be lawsuits related to that?

To my knowledge, that is not the order of the day today.

It's not just this program with the International Monetary Fund.

The DRC is expected to receive $ 1.5 billion in special drawing rights, likely in late August or early September.

It is unconditional help.

What are you going to do with this money?

Yes, this is a special allocation under special drawing rights wanted by the international community through the IMF to allow developing countries like the DRC to stimulate their economy and revive it after the impact of the crisis. crisis linked to the Covid pandemic.

As for the use of this money, it is clear at this stage that a part will come in reinforcement of the reserves and another will be used on the budgetary plan for other actions to stimulate the economy.

But I'd rather not talk about it at this point, but we have discussions going on to make a really innovative proposal in the use of these resources.

How are you going to finance the next electoral cycle in this context where you are going to have to have really rigid management?

As we have committed, the Prime Minister was very clear in his inauguration speech, he announced that we will make provisions year after year to be able to finance the elections in all serenity.

We have already started and as we speak we have provisions made.

When the budget collective is published, you will be informed of the allocations for this year. Which will, I hope, coincide with the start of the operation of the new Ceni. And so, we are on the right track from that point of view. That said, beyond internal funding, we are open, as has been the case in the past, to partner support for the electoral cycle. But we start by doing our duty and making provisions to finance the Ceni.

Because that is precisely one of the difficulties that have been encountered in previous electoral cycles: having budgets that literally explode and ultimately relatively few controls.

We have seen that in the last Ceni report, there was no real control and there are not enough figures in it to explain how the money was used.

Yes, I agree with you that with regard to efficiency, there is a big effort to be made and that does not only concern the Ceni, it is general.

And we have a lot of progress to make in order for our public spending, and the quality and efficiency of our public spending, to be strengthened.

Guest Africa - Nicolas Kazadi (DRC): "We want the IMF, like an auditor, to come and attest to our efforts"

Nicolas Kazadi (DRC): "We want the IMF, like an auditor, to come and attest to our efforts"

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