Strategies for Effective De-dollarization in the D.R. Congo: Prioritizing the Public Sector

An effective strategy for de-dollarizing an economy hinges on prioritizing the transition of the public sector away from dollar reliance to foster citizen trust. Public perceptions of monetary policy efficacy not only shape the central bank's credibility but also impact the national currency's value. The Central Bank of Congo faces this significant challenge as it endeavors to de-dollarize the Congolese economy, a task fraught with potential populist implications. To navigate this shift prudently and mitigate instability risks, the central bank must initially focus on eradicating dollar usage within the public sector.

Proposed amendments to the 2006 Congolese constitution outline crucial steps toward achieving this objective. Key measures include mandating that all public fees, taxes, and budgets be exclusively denominated in the national currency. Transactions conducted by or on behalf of public institutions must strictly adhere to the national currency, with any linkage to foreign currencies strictly prohibited. These measures are essential for effectively implementing de-dollarization policies, fostering economic stability, and strengthening national monetary sovereignty.

Before embarking on de-dollarization efforts in the private sector, comprehensive solutions to these challenges must be developed. It is imperative to acknowledge that alongside the dollar, currencies from neighboring countries often dominate over the national currency in various regions of the nation.

However, the primary hurdle for the Congolese central bank lies in achieving optimal monetary policy outcomes while minimizing costs for consumers. Suboptimal monetary performance restricts crucial growth opportunities for the nation. Ultimately, the management and issuance of the national currency for the real economy carry profound significance for citizens.

Show me the money! Understanding Financial and Real Economies

Imagine the national economy as a human body: money acts like blood, transporting vital elements and removing waste. Financial infrastructures function as blood vessels, financial institutions as platelets, and monetary policies as plasma. Just as the heart circulates blood throughout the body, income flows through the economy in constant motion. During economic challenges, platelets and plasma intervene to mitigate financial losses.

Financial money, used by banks, is created by central banks as reserves and has minimal impact on commercial banks' lending decisions. Its primary function is to facilitate the monetary system.

In contrast, real economy money is generated through bank loans and government deficits. Banks’ loans and Government deficits inject money into the private sector without prior savings.

Then again, creating real economy money through deficits and loans can cause inflation if the sponges, labor and resources, cannot expand sufficiently to absorb the increased money supply. Ineffectively targeted deficits also have minimal impact on the real economy, much like the challenges faced by low-income individuals in accessing substantial loans. Similarly, when the government "repays its debt," it removes significant resources from the private sector. These economic challenges reflect the policies and realities confronting Congolese citizens in the DRC

Practical Diagnosis: Financial Hurdles for Online Entrepreneurs in the DRC

Lumumba.online offers users a platform to upload and sell PDF books, distinguishing itself by allowing transactions not only through traditional payment gateways like PayPal but also via mobile payment services, unlike Amazon.

Integrating PayPal is straightforward—simply open a business account online, obtain the PayPal API, and seamlessly integrate it into the site.

In contrast, in the DRC, integrating M-Pesa or other mobile payment services on a website is a daunting task. Applicants must write to the central bank governor, who then routes the request through multiple layers of bureaucracy without a clear timeline. Even if approval is eventually granted, entrepreneurs must further negotiate individually with each mobile payment provider for their API access. This cumbersome process proves impractical for individuals in remote areas like Katakokombe, situated in the heart of the subcontinent, where traveling to Kinshasa and dedicating at least a month is essential, yet offers no guarantee of success.

Entrepreneurship and commerce thrive on facilitating products and services in exchange for compensation. However, rather than fostering economic growth through entrepreneurs and traders nationwide, the Congolese central bank stifles progress with cumbersome regulatory barriers.

Redirecting the Central Bank's Mission to What Truly Matters to Citizens

Economic growth thrives from the grassroots, yet societal change often originates from the top. President Félix Tshisekedi has prioritized addressing wage disparities among state agents and officials, overshadowing the importance of the guaranteed minimum wage (SMIG), crucial for the national economy.

In many developing nations, underdeveloped financial markets, banking concentration, and rigid regulatory requirements like detailed depositor information hinder effective monetary policy transmission.

What, then, should be the core of monetary policies? The pursuit of price stability holds little value without striving to achieve full employment. However, even after sixty-four years of independence, the DRC remains unaware of its unemployment rate and population size.

Introducing affirmative action is crucial for establishing diverse banking institutions owned by Congolese citizens. Implementing my proposal in the 2006 constitution amendment, which mandates that the state transact exclusively with entities in the DRC where Congolese own over 50% of shares or are held by Congolese citizens, would necessitate the use of Congolese banks or cooperatives for national payroll. This policy shift would empower local financial institutions to inject funds into the real economy by offering loans to public servants, with loan repayments deducted directly from their salaries. Such a framework demonstrates the potential benefits of fostering indigenous ownership and financial independence within the DRC.

Modernizing the financial system must become a logistical and regulatory priority to expand access to non-monetary payment services nationwide.

De-dollarization risks appeasing nationalist egos and political agendas, potentially imposing significant costs on the national economy without benefiting citizens.

This perspective emphasizes the need for the central bank to refocus on inclusive economic policies that promote growth and empower local financial institutions. Such efforts are essential for fostering sustainable development and economic resilience throughout the DRC.

Jo M. Sekimonyo is a theorist, human rights activist, political economist, and social philosopher