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Democratic Republic of CONGO - INTERVIEW 
Interview with Mr Jean-Claude MASANGU MULANGO
Governor of the Central Bank

Summit Communications: Could you point out some important dates related to the course that brought you to the position of Governor of the Central Bank?

Mr. Jean-Claude Masangu: I was born in August 1953 in the province of Katanga. My zodiac sign is the Leo, which stands for "temper of a fighter". Surprisingly, I was appointed to the position of governor on August 08, 1997. I admit that I was born under a good star because it occurred in August as well. My parents emphasized on my studies a lot and sent me to an International School in Geneva where I got the opportunity to study with pupils of high ranking persons in political, royal and imperial environment; this helped me to become open-minded. Furthermore, I went to the USA to keep on my studies in nuclear sciences. I graduated from mechanics, and afterwards I started working in an Aluminium Industry where I got a working accident which obliged me to leave the ALUSUISSE company in order to resume to study, and obtained an MBA degree in finance. This degree helped me to get a good career at the CITIBANK for 17 years as General Manager then finally the position of the Government of the bank was offered to me.

Summit Communications: Who are the mentors that inspired you in your responsibility to adjust financially the Congo considering the difficult post-conflict environment?

Mr. Jean-Claude Masangu: First of all, my colleagues prepared me to this current position during my training at the CITIBANK. Repeatedly, I occupied many positions where I was the personnel manager, Commercial manager and marketing manager as well. They motivated me to apply for the position of Governor of the Central Bank. Obviously, close friends of the late President Laurent Kabila emphasized on my file and I admit that we faced that challenge. Altogether it was necessary to observe the difference between the period preceding the arrival of President Laurent-Désiré Kabila and the accession of his son Joseph in considering that he inhered the prospects of this great Congo: it is prosperous and respected worldwide. From abroad, I was sponsored by Mr. Alfons Verplaetse who's the governor of the National Bank of Belgium. When I first met him he gave me a good piece of advice: go to Washington in order to speak with the World Bank and IMF chairmen in order to get their sponsors. At the offices of IMF, I met Mr. Allassane Ouattara who got acquainted of me through an intermediary person, when he was the Prime minister of Ivory Coast. Formerly, the Republic of Zaire had its regional head office in Abidjan, and the chairman of the Citibank has spoken a lot on behalf of me to Mr. Ouattara. The moment I met him, he promised me to write to partners, requesting them to support the Congo. I then encountered Mr. Madago who's the World Bank representative for Africa who I already met in Kinshasa before my appointment as Governor. After describing him the support I received from IMF, he agreed to back me up.

Summit Communications: You are considered as "the father of the unified Congolese Franc". Could you remind us the great path made to create the Congolese Franc?

Mr. Jean-Clause Masangu: It was the core mission that the President Laurent-Désiré Kabila has handed to the Central Bank. Actually, the former government rushed me to establish a hard currency within the first three months of its mandate, because the government promised to the population. However, I was assisted by experts who took part to the ancient monetary reforms of DRC and foreign managers who worked with the experts of the World Bank We should draw lessons of the past in order to avoid mistakes and promote positive aspects. Besides, as time lacked, we went to contact the President in explaining him that the period of three months was very short, and the operation is not as simple as exchange operation like from "Zaire currency to Congolese Franc"; but it needs a great operation rather. Noting that formerly we had several monetary frameworks, several exchange rate varying from one province to another. From then on, we have been deeply inspired from the preparation of the unique currency: the Euro. At first, we were using the dollar currency in order to harmonize the monetary framework. We planned to launch the "Congolese Franc" on June 30 :the independence's day because the date stayed worthwhile even for those who left the country before the accession of the new regime. Definitely, June 30 1998 the Congolese Franc was launched with the incredible media coverage. The bank notes printed aimed at gathering the Congolese nation around some cultural aspects, like crafts, or fauna, and not just individuals (except for the note of 1FC, which represented Patrice Lumumba). The slogan proclaimed: a unique currency for unified people. That's how the Congolese franc was founded and has been accepted.

Summit Communications: The Congolese Franc is consolidating itself and coming back in force since some weeks: the rate shifted from 500 to 400 Congolese Francs for one Dollar. What is your vision for the stability of Congolese Franc now and in the future?

Mr. Jean-Claude Masangu: The vision is still the same. In the very beginning we had to establish a hard currency and then a stable one. The currency may be either hard or soft; the stability of the currency remained the most important issue in 1998. When we started it was hard because the parity was 75FC for 1 Dollar. We had enough reserves, but when the war was intensified we started having problems on the monetary level. At that moment, we experienced what we called "the second phase of Congolese Franc". However, the first measure to be taken by the President Joseph Kabila since January 2001, has been to recognize the concomitant circulation of foreign currencies and the Congolese Franc in order to allow companies in paying and billing in foreign currency without problems The second measure, the most important, was to outpace an administered and set exchange regime to a free and floating exchange regime by May 2001. During that period, we noticed a strong 80% devaluation; the rate deceased from 50 FC to 313 FC for a Dollar while the street rate added up to 350 FC for 1 Dollar. Likewise, the street rate rose quickly in catching up the official rate, the year 2001 ended with the rate of 311 FC. Afterwards, from 2002 to 2004, we experienced a stability period where the Franc got 15% depreciation per year within 4 years while the preceding decades, the Congolese Franc depreciated averagely on 75% per year, which makes a great difference. This period of stability has been interrupted early of 2005; we ended the year with the rate of 444 FC for 1 Dollar, before decreasing down to 515 FC for 1 Dollar on April 10, 2005 and rose up to 415 FC in early May. Such important variations as such are not appreciated neither by Businessmen, the government, nor the World Bank. We admit that we are entering afresh in the period of stability with regards to consolidation of the Franc since April and budgetary, monetary and fiscal measures, which were taken jointly between the World Bank, the ministries of Finance and Budget. This discipline of stability will permit to catch back the growth period that we experienced from 2001 to 2004. Even though the rate of growth was negative, anyhow we moved from 3.5% in 2002, 5.7% in 2003; and 6.8% in 2004. In the end of the year 2005, we expect to gain back 6% growth. It is interesting to compare this rate to the country's demographic growth which has added up to 3%. Therefore, after many years of the destruction of our economy, we started to fight against poverty and precariousness because currently income per capita rose, though it is still insufficient: we need to get the growth rate of more than 10% and we can reach that level within ten years. If we neglect to adjust the situation we would have to spend more than fifty years to reach the lifestyle of the independence period on June 30, 1960. That's the challenge to face, which I admit will be achieved only with the support of the international patriots and institutions. We possess human and material capacities. Rebuilding the infrastructures would help to get that quick growth back and develop it in the future.

Summit Communications: You stated during a speech held in April 1998, that " we cannot have great nation without setting a strong, respectable and respected Central Bank". What is the mission of the Central as it is nowadays and what are the main values which can make it a respectable Central Bank?

Mr. Jean-Claude Masangu: First of all the Central Bank must be creditable in order to be respectable, in so much the government and the Central bank give their opinion of a project and the Central Bank gives an opinion, the government will materialize it on the ground. That shows the credibility. The two first responsibilities of the Central Bank namely performing the monetary reform as well as backing up our efforts by foreign partners (The World Bank, the IMF) were crowned successfully and finally brought a great credibility. Furthermore, we are proposing reliable statistics in the reasonable deadline and we are trying to elaborate a law framing the independence of the Central Bank, and try to get it adopted by the Parliament. Currently, the targeted independence and reliability are to be deserved in continuing to make good results.

Summit Communications: How does the Central Bank get along with the institutions of Bretton-Woods, and how does it plan to improve this collaboration with foreign partners and others donors?

Mr. Jean-Claude Masangu: These institutions support our own efforts despite the current natural resources of the DRC, we need the foreign financial support. The very day that the DRC is going to get an increasing and sustained economy, the role of these institutions will change and they will intervene less than ever. Reliable relations that we have with our partners such as the World Bank and the IMF rely on quality and quantity performance criterias. Therefore, the presence of these institutions in the DRC offer a non-neglecting impact on several companies willing to invest. We, Congolese, can live up expectations of foreign investors but these avis may sometimes have a more important impact whenever a third entity expresses ideas on our behalf, we rely deeply on it.

Summit Communications: You mentioned previously the importance in having a strategy so that this fragile environment may have a framework that will consensually regulate everybody. What are the impressive facts of these strategies in which you can rely on to run the Central Bank?

Mr. Jean-Claude Masangu: The Central Bank has published a 2004 strategy project which contains the facing problems of the Central bank namely in the banking sector and generally in the financial sector. The stabilization of the macro-economy framework is the first issue to deal with. Furthermore, a legal framework aims to regulate Banking operations so that commercial banks can encourage the Congolese economy and companies set up in the DRC to be productive and profitable. Currently, we use cash foreign currencies as the payment term to the detriment of other currencies. The banking sector must be modernized in order to reach the major transaction realizations in the short reasonably delay. We have, nowadays, ten banks which are insufficient regarding the considerable geographical dimension of a country like ours. The informal financial sector, such as microfinance, small institutions and savings corporations, must be enlisted and supervised, according to the use of the simple accounting and fiscal rules. The most organized banking system on the country will allow to benefit from the technology advancement in the sector, which will set up in the future automatic bank note distributors. We conduct our strategy in the banking sector with other African central banks, peculiarly, those who are SADEC's states members. For instance, we are participating in the Project of Normalisation and Standardization of payment terms within the Southern African region and the Congo will undoubtedly profit from all this project.

Summit Communications: You mentioned that the Congo is extremely dominated by the use of the American currency. How can it prevent the regulating role of the Central Bank?

Mr. Jean-Claude Masangu: Proportionally, if our own currency is less used than the foreign currencies , the Central Bank has not sufficient possibilities to set up a credible and sustained monetary policy. We need to change it . If the Congolese economy is dominated by the Dollar due to the period of hyper inflations that the country experienced with the four figures rate, then the population intended their money in order to get refuge in the more stable currency. Moreover, we would revise regulation texts not to impose new laws but give the possibilities to people to choose which currency to use. Step by step, they'll consider to use the national currency and at the moment of the promulgation of a exclusivity of new laws of its circulation throughout the country, it will facilitate to them to comply on the aforesaid law easily. In order to reach that level, it requires creating a currency exchange framework so that we can recuperate the national currency, which will take ages. For example, in order to reduce the use of the dollar within the economy, we impose to the foreign companies to make their accounting records, using the national currency, which will actually permit to the Central Bank to control the process of implementation of its monetary policy.

Summit Communications: Recently, you underlined the importance of the payment and credit terms as sources of development. Nowadays, the rate of credit still remains insufficient. How do you estimate the impact of the banking sector in the advancement of the DRC's economy?

Mr. Jean-Claude Masangu: At first, a country must rely on its resources so that it can be developed. Actually, resources from abroad such as aid and assistance are fleeting. Therefore, it is compulsory to introduce internal savings, which must be picked by financial institutions that are present in Congo, which is not the case nowadays. The monetary mass in Congolese Francs adds up to 120 billion $ while 100 billion dollars are used out of the banking system and only 20 billion Congolese Francs are injected into the banking circulation. Therefore, it is necessary to raise savings, which implies developing micro- financial institutions and credit collective ownership. We have noticed that the savings were existing even during the hyper inflation period even though it was in insufficient quantity at the moment and the place that is needed. Our challenge is to establish a solid banking system. However, the Central Bank must intervene in the preservative manner, and not after winding up of a bank that is bankrupted. We are bound to detect negative signals in order to allow commercial banks to remain viable and solid. Actually, you cannot reach the development without credit because it permits a long term investment and not only with ownership capital, which is fleeting. Anyhow, we are satisfied about the situation that an important deposit of foreign and national currencies still exists. A significant increase of the volume of credits is noticeable. For instance, the Trust Merchant Bank, which is the first bank entirely Congolese, to be created a few months ago in Lubumbashi, which specializes in micro finance and in small-scale credit.

Summit Communications: The DRC is too often associated with corruption and money laundering, which might eventually block potential investors. What are the methods used by the Central Bank to fight these issues and what efforts do you perform in reinforcing the good governance and the transparency?

Mr. Jean-Claude Masangu: We elaborated a law on July 19, 2004, which consists of two parts: the first one goes against laundring money and the second one fights the financing of terrorism.We are bound to keep on this thrive thanks to the creation of the National Inquiring Financial Cell as well as other committees of struggle against laundring. These structures depend on the ministries of Justice and Finance. Therefore, we must also join an alliance of sub-regional struggle against money laundring and financing terrorism. Presently, regulations are ready but we have to press on examining, adopting and publishing them. It is essential that the Central Bank may know its client because it is a security pledge. Moreover, this arrangement is already settled in all the countries which deal with it. Therefore, our corresponding commercial banks abroad would decide to avoid to cooperate with Congo if the profiles of certain of our clients are put at doubt. From then on, we have to take the bull by the horns and define a legal framework, which we already did. It's well-know that Congo is a country with abounding diamond and gold that are easily transportable. Nowadays, it becomes easy to notice the cash laundering operations instead of precious stones traffics. Unfortunately, the certificate of Kimberley for the diamond sector allows to fight against the fraud. In terms of transparency, the Central Bank has never been so much audited than for the last five years. That is to say that the transparency is compulsory, which will bring confidence and credibility. The transparency is also indulged to commercial banks, where we require both internal and external auditing.

Summit Communications: According to the President Joseph Kabila's point of view, the USA is present in Congo, but not as much as needed. What are the needs that Congo requests as support from the USA?

Mr. Jean-Claude Masangu: Obviously, the presence of the USA could have been more noticed in the financial level but at first, they were concentrated on the geopolitical level. What can we offer to the American investors at the moment? We have an important mining sector, an oil sector which requires to be developed and a forestry sector, which is the most important in the world. Apart from that, we have set up an investment code which allows Congo to be competitive. Furthermore, there is the "single office" (Guichet Unique) set up by the National Agency for the Promotion of Investments (ANAPI), allowing those who would like to invest in Congo to reveive quick information and necessary authorizations. Of course, we understood that is just depends on us to sell ourselves well.

Summit Communications: According to your point of view, what are the most adapted methods to set up in order to reinforce the collaboration with the USA?

Mr. Jean-Claude Masangu: It is a matter of financial techniques, investment and capitalisation. Actually, we have to put more dynamics into our approach. For example, we appointed another chairman for the FEC, the federation of companies of Congo, who brought a new breath in the way of working. It is a matter of image. The President of the Republic and other personalities emphasized what is happing in Congo. We shifted from a post-conflict situation towards a burst of a new democracy. In addition, this peace process should be sustained so that we can attract foreign investors. Peace and democratic process are both conditions of stability. On the economical level, great progress has been made in a very short time; for five years we moved from three figures to two, regarding the inflation. The economical growth was in deficit from 1990 to 2001, but nowadays, we experienced a positive rise. The national currency works according to the floating regime and foreign currencies circulation. The achievement of which I am proud of is the setting of monetary stability around the reunified Congolese Francs, as well the possibility to invest in Congolese Francs.