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Democratic Republic of CONGO - INTERVIEW 
Interview with Mr. Onno Rühl
The World Bank Representative in DR Congo

Summit Communications: Following your speech during the donor conference in Kinshasa late last year, you said that the country had decades of bad governance, that it needed at lot of macro economic improvements and infrastructure rebuilding; we know that the World Bank had left the country for many years and then you decided to come back to the Congo in 2001. Why did you did decide to come back, especially in a country at war and could you also tell us how you engaged and what have you tried to achieve so far in these first couple of years?

Mr Onno Rühl: Of course, we had been in the then Zaire, now Congo, for many years and Zaire was often described as a collective failure, to a certain extent in my view all partners contributed to this failure and the World Bank is no exception. We decided to come back in 2001 because when President Joseph Kabila took power in January of the same year, a few days later he made a trip to Paris, Brussels, Washington. In Washington, he asked to meet the World Bank President. We had no idea about what he was going to say but this was a country that we were forced to leave because Mobutu had refused to work with the International Institutions. After Mobutu we tried to engage with Laurent Desire Kabila but unfortunately, he didn't want to engage with the International Community.
When his son Joseph Kabila met the World Bank President in Washington, he said that he wanted us to help him improve the economic situation of the Congo and that he wanted the World Bank to come and examine the country and if possible assist him in improving the economic obstacles, together with other international institutions. He also told him he was going to form a government of technocrats. He was not an economist, and therefore needed people to help him.
From the World Bank's perspective, this was a very positive message in the context of the millennium development goals and of a renewed mandate to fight against poverty, especially in Africa where poverty has been the most persistent and where the fight against poverty has been the least successful due to the political and armed conflicts in the Congo, particularly in the 10 years preceding 2001. To engage with the Congo was a very welcoming idea for us. We then set up a mission to observe the country. Meanwhile President Joseph Kabila also approached the IMF which enabled us to have a joint mission while he was appointing his first government.
Of course, in 2001 the country was still at war. Therefore, we came simply because Congo is a shareholder of the W B and the president asked us to come, there was no question as to the legal recognition of that government. What was new was that we hadn't engaged in a country prior to a peace agreement. We usually went as far as doing some analytical work, like in Bosnia while negotiations were taking place, just to start preparing but we didn't engage. So here in the Congo, we examined the situation and what we found in 2001 was a country at war, divided, a country suffering from a very bad reputation internationally and nationally, a very bad relationship between the government and its people, infrastructures were non-existent and completely destroyed by the forest in some parts, terrible health and education indicators and a 14 billion dollar debt, an inflation rate of 500%, no cooperation structure during the last 10 years, and generally no track record of success.
In addition to that the International Community was very divided about how to deal with Congo because of the Interhamwe problem. There was a perceived link between how you deal with Congo and how you deal with Rwanda and some of our shareholders were quite positive about us engaging in Congo but others were very reluctant. Our joint analysis with the IMF concluded that if we did nothing while political negotiations in view of a peace agreement were taking place, it was likely, once the peace agreement was struck, that the country would relapse into another war because of the deterioration of the economic situation which usually occurs in post-conflict situations, according to one of our internal reports. And Congo had very serious problems in almost all sectors because there was no platform for growth. You couldn't have growth with all the difficulties we found. We then decided to help the IMF on the micro-economic front to stabilise the economy, which was the starting point, to build up credibility and get access to HIPC (Highly Indebted Poor Countries Process). The aim was to achieve a prospective debt relief and a possible and visible progress to build up credibility both with donor partners and with the population. Therefore, to create a platform for growth as soon as the political situation permits it.
We started one of the programs with the IMF, aiming at a liberal exchange rate and the reduction of the fuel price, which immediately stabilised economic growth. We also started working on public expenditure, customs to increase revenues and transparency in the budget. There was no voted budget, so we voted a budget and had to monitor its execution, and we undertook some more visible and useful projects with the EU to repair the road from Kinshasa to the port of Matadi (about 350 km), an obvious winner in terms of economic impact and credibility recovery. We increased activities in the HIV/AIDS sector, we financed some community-based projects because that was a very good way of helping people improve their own lives.
At the same time the government asked us to start building up a donor coalition, so we started organising donor meetings which at the beginning were informal and then gradually became formal, in order to fight the significant controversy in the donor community about engaging in the Congo. I really think this was a very remarkable strategic decision to engage in 2001.
To me, there are two things that are clear to all Congolese politicians on the economic side. The first is that everybody knows that you cannot work if you don't stabilise the micro-economy. This country has suffered from hyperinflation so often, anybody in the street will tell you. The other thing that everybody agrees with is that without a solution to the debt problem, the economy doesn't have a future and the HIPC process is therefore a very important driver. I think it contributed to the confidence that the warring parties had in signing the peace agreement. Indeed, without HIPC there was no need to call this a country: with a 14 billion dollar debt, you could just stay on the road like the country did for a while and continue like that hadn't we decided to come back with others.
The impact was very favourable, to the extent that economic growth was already restored in 2002: from 2.6%, in 2003, it increased to 5.6 % and then to about 7% last year. These are relatively good figures in a post-conflict context considering the goal was to reach a two-figure growth. There is no doubt that having engaged in July 2001 before the peace agreement was signed in July 2003 was radical in economic terms. The W B, together with other international institutions, played an important role in improving the country in different aspects. By 2003, Congo had a remarkably strong donor coalition behind it which, given the fact that donors had all walked away from Zaire with much anger, was quite a good achievement.

Summit Communications: The W B certainly did a great job here in stabilising the macro-economic framework, but what about the achievements of this transitional government that was set up thanks to the peace agreement ending the five-year armed conflict?

Mr Onno Rühl: I want to underline that when we engaged with President Joseph Kabila's government before the transition, we did have informal discussions with the then rebel leaders. We couldn't work with them at that time but we did talk to them about the fact that we had been asked to engage. They approved our engagement and told us that if it was good for Congo, it would automatically be good for them and also insisted that we shouldn't interfere in internal politics.
During the peace negotiations of Sun City, in South Africa, the work that had been done by the previous government on the economic front with the support of the International Community was endorsed as a framework and that was very important. This endorsement showed that there were no differences in terms of economic approach between the different parties and that the war in Congo was not opposing a Marxist-type rebel group against a capitalist group. The country has a strong free market tradition but also a strong social tradition with a sense of realism about micro economic realities. So I would say that the transition government's policy is one of continuity.
In terms of strategies, the main achievement has been the stabilisation of the micro-economy because it is the building block of the whole process. There have been important achievements in terms of revenues and expenditures, but here you get much closer to the half full, half empty glass story because the starting point was no budget, no transparency. Now there is a budget and a budget classification, you can see how the budget is being executed and the chamber of auditors is performing its job. These are all major achievements.
In terms of the budget system, there is considerable progress towards something that could eventually become positive; I think that the revenues have trebled since we started. The lack of funds for the state was one of the main problems and the budget was very small. Our philosophy was to restructure and establish a transparent budget.
In the mining sector, there is significant progress, as well as in the forestry sector. But I'm still very concerned about what is happening on the ground. Another good achievement is the fact that there was a pervasive tradition of corruption at all levels which made it very difficult to improve good governance because the mentality was not one of control. Obviously corruption is a big problem, it is very important that the government fights against it immediately because it is not the W B or any other foreign body which will have to do that. This is the role of the Congolese institutions. And in this respect Professor Mabi Wa Mulumba, Head of the chamber of auditors published an audit report on public owned enterprises. There were some spectacular conclusions, mainly on the salaries that people granted to themselves and also other practices. What was interesting was that the press picked this up and there was a huge public debate on these enterprises. The report went to parliament and the parliament did another report which was sent to the government. The final result was that 6 ministers and 10 Managing directors of public enterprises were first suspended and then fired with the threat of being brought to justice for corruption and misappropriation of public funds.
What was remarkable was the fact that the press, the parliament and the chamber of auditors could play their constitutional roles without interference because corruption is simply the powerful stealing the less powerful. I think it was a very interesting episode that showed that you can actually build a government based on the Congolese institutions.

Summit Communications: What about the judicial system? Are these dismissed people going to be prosecuted?

Mr Onno Rühl: At least these people were supposed to be but there are very significant differences in the burden of proof for being suspended or fired. I've seen ministers in many countries resign for suspicions of corruption but they haven't been condemned in court. So it is important not to be too mechanical about how this takes place here, especially in a post conflict environment.
If I can say one more thing on achievements, I would say that in Kinshasa you can see that there is an economic boom, you can see people repairing or building everywhere, the infrastructure is starting to be repaired on a major scale, you can see some impacts on the social side, especially in the health sector which has been gradually improving. But I really think that by and large there is no sustained improvement of the social situation outside Kinshasa because it takes a lot to get the process started and then have an impact without roads. It is difficult to deliver health care services outside big cities, you can't get kids in schools and it is therefore a big challenge. You know these have to be the primary motives to continue engagement here.

Summit communications: You talked earlier about reconstructing, rebuilding the social infrastructure and the social links. What would you say is the main program of the World Bank in addressing social issues?

Mr Onno Rühl: We have been absent for almost a decade, so we are not well- placed to initiate our own programs. We have evolved over the decade to a position of partners or supporters of the government programs which is a different approach. We agreed that if we wanted to have a social impact outside Kinshasa, we should find actors that are already trained and skilled. Since we have started the mandate we have done a lot of the government's financing activities including the financing of NGOs and other similar structures. Because of the absence of the State, the World Bank cannot be present where the government has no structure, so we then had to rely on the NGOs. The government was willing to work in this way.
I would like to say in terms of these cooperative activities that we are trying to widen our activities as much as we can. We undertook analytical work on vulnerable groups, we did an analysis of the country's statistical reports on health and education. There is an analytical basis to fairly handle HIV/AIDS because Congo was the 1st country in the world to have a national AIDS program, it was our last program before leaving the country and it was also the first World Bank AIDS project. That is why we agreed to work on AIDS in our re-engagement.
Many of the NGOs are more focused on health than education because in humanitarian situations health is more of a priority than education. What we are now working on is a second generation of sector operations, so we are helping the government with operations on the social front that will kick off soon. The health care project follows the same model but on a much larger scale, with the involvements of NGOs. I've already had 100 million dollars granted for it in text. We believe based on evidence that all these sectors need many more partners, not only the World Bank. There is a dialogue between the government and the World Bank with the involvement of the Belgians, the French, the Americans, the EU, the UN system in the health, education, and HIV/AIDS activities. We all believe that if we don't help the government to start investing in its own people, they will be a very low sustainability, we lost one generation already in this country in terms of education and that's a very high priority. The maternal mortality figures are also dreadful.

Summit communications: Are you involved in the demobilisation, the integration and insertion process in the army? If so can you tell us what has been done and also tell us if this is part of the program?

Mr Onno Rühl: It is a separate program. In 2001 a group of donors led by the W B initiative built a multi country, multi donor partnership to deal with demobilisation in the Great Lakes Region. It led to the creation of a partnership which has a very important involvement of UNDP in particular and also many other donors such as the IMF and the EU. It took a while for the transition government to set up and deal with DDRRR ( Disarmament, Demobilisation, Reunification, Resettlement and Reinsertion program) because when a rebel leader joins the government, the first impulse is not to start demobilising but to start building a government and gain trust until they can feel comfortable with the way things are going. DDRR also means that you first have to build an integrated army before you can mobilise and create a national army.
It is funded by the World Bank although donors have no mandate to fund military activities, so the coordination between these activities is difficult. The government has just decided to address institutional issues. Most people would agree that political unwillingness to demobilise is no longer an issue from the perspective of the rebel leaders who wanted to give up their armies, about which President Tabo Mbeki doesn't hesitate to remind them. About 40% of the declared soldiers don't exist in the public services or in the Army, they are what we call fictive in the army and ghost in the public services. This is a very difficult nut to break.
We can see this momentum is building because you can now see people demobilising, receiving money and going to their village, and reintegration activities are starting. We are supporting the government in implementing all these difficult tasks. I'm more optimistic but it has been one of the more problematic sectors. By the way, the 40% figure is a guess, it comes from the percentage of ghost workers that were found in the civil service in Kinshasa. It is reasonable to expect that the percentage will be the same for the Army.

Summit Communications: Coming back to the economy and all the sectors that have been re-launched so far; earlier, you mentioned forestry and mining. Can you tell us the amount pledged by donors for your mission in Congo?

Mr Onno Rühl: In a post-conflict economy, the first source of growth is funding by donors, as was the case in Europe in 1945 and in Bosnia and Afghanistan more recently. This is an important source of growth due to the lack of internal resources in a post conflict economy. The total international pledge is about 5 or 6 billion dollars which is 50% of the budget in a year, including investment budget - mostly investment financing. About the same percentage is provided in Uganda.
In Kinshasa there is a "Sarajevo effect", i.e. growth is based on people like us living here and consuming, and as a result, services, restaurants and shops emerge. This is a post-conflict characteristic: where the infrastructure exists, services and industries develop around the donors.
The telecommunication sector has experienced significant growth in Congo. It went from less than 200,000 subscribers in 2001 to 2.5 million now with coverage of all the main cities. The cell phone companies are among the highest contributors to the improvement of private investments in the country since 2001. Some other private investors are still holding back to see what is going to happen after the elections. If peace is established for good, there will be many more investments.
In addition, an internal market is emerging with people building almost everywhere, textile companies have set up a partnership with Chinese companies, soap companies have started to develop with an important palm oil market, and many manufacturers are returning…
The mining sector can create a framework for growth with copper and cobalt exploitation in Katanga which needs to be regulated, as well as the significant diamond production of the country. But I think the country should not only focus on mineral resources for growth as they have done in previous years, because there are so many other resources that need to be optimised.
The Congolese rain forest is another important resource but which unfortunately suffers from a lack of effective regulation, like many other promising sectors that can provide the country with a sustainable shared growth that all Congolese citizens can benefit from. That is why we are trying to find a way to work on setting up a monitoring mechanism that can have an impact on the ground. Logistics represent a big challenge but we are working step by step with the government in order to have shared growth across the country.

Summit Communications: Where are the activities benefiting from the donors' concerns?

Mr Onno Rühl: The donors have collectively subscribed to the government's investment program, the main activities are in health care, education, HIV/AIDS where there is a significant commitment. But there is a less enthusiastic level of engagement in infrastructure. Many donors have abandoned the infrastructure sector and are now faced with a country that has a very bad infrastructure, causing serious adaptation problems. The World Bank and the African Development Bank are financing the infrastructure but only at community level because they can't deal with the big infrastructures, except with some technical systems but these require significant financing.
But other partners are financing infrastructure projects especially in transport and water. Water is easier to sell, it has a very important social impact on health, so water is better served.
Electricity with the Inga may attract many private investors because it is a key source of electricity in the future for the Central and Southern African region, given the fact that its needs are important. With the exception of the World Bank and the African Development Bank, no other donor is willing to provide a budget to support these activities because they fear bad management of the public expenditure. We do not because we are working on management ourselves, we're involved and therefore we know what is happening. It takes some courage to do budget financing, knowing the lack of budget tradition here.

Summit Communications: You mentioned the importance of public management what about foreign investment? What role do you see for foreign investment in Congo?

Mr Onno Rühl: It is very important that the foreign investments go towards services before anything else, telecoms and other services. It is really the tourism of the donors. But there is a very low level of investment because it is not a very high capital industry. Construction is quite high, which is obvious because anybody who wins the World Bank contract to finance roads needs to buy equipment as they don't have it. So you see a much more diversified part of that in the glass view of the Congolese economy and what you would see is a reflection of the road story.

Summit Communications: The energy is part of the tensions in the country but when you read for example the investment portfolio it seems energy is at the forefront?

Mr Onno Rühl: The current situation doesn't allow for private investment in the energy sector. However, the new public enterprise law is before parliament and would allow this. Even it were allowed, it is important to know that the complexity of the energy sector lies in the fact that 40% of the potential is in one location, the biggest in the world, the Inga site. That is a major billion dollar investment project; to repair the existing problems, to build other Inga (I, II, III), to increase its production capacity, then start building power lines for the different markets of the region. It will take ages to build and then you need to find people able to afford the electricity bill. Because it can feed the whole of Africa, it is every engineer's dream, but as an economist I would say it is a big and very risky investment.
It may be possible in the future because South Africa and other African countries need electricity and they will be able to pay for it. If you consider the building timeframe for Inga III, even if you applied a rapid procedure, with a year for the first phase, a couple of years for the second phase, a couple more years to get back to Inga I and II, you will already have spent 10 years on the line because these are big projects. So far, investors have been coming to discuss some scenarios but this will not ensure economic growth very quickly. It is a very high potential sector, very attractive for the country, but you know public infrastructure projects are slow and the political motivations are of course very limited. Investors are talking about investing but the reality is that they would like the transition behind them before you see the color of their money.

Summit Communications: If we talk about the Congo in general what will be your favourite business story?

Mr Onno Rühl: The most spectacular story is undoubtedly the development of the cell phone industry. But it is a very special sector, it says little about the country. It shows what the private sector can do if you let them work. I would like to underline that these people managed to create 2 cell phone networks that geographically cover the whole country even in places where there is no electricity. They managed to set up prepaid services with less than 25 cents per minute for local calls and 40 cents per minute for international calls. They are obliged to use a power generator where there is no electricity next to their pylons, but the generators consume fuel and must be guarded 24 hours a day. This is a wonderful achievement.
I helped a friend who worked for me. She wanted to work for herself, and I lent her 2,000 US dollars which she invested in a small store with a front terrace. She paid all the taxes and every month she pays some 30 US dollars to the tax collector. That business's turnover ranges between 700 and 900 US dollars a month and she pays 6 workers. Congo resembles Asia compared to the rest of Africa which seems very lethargic. I've been here for almost 4 years and I can tell you that any businessman who comes here with creative investment ideas plus some amount of courage to invest has made money, you can check for yourself in the restaurant and bar business, they are making money. It is a very high potential market from a businessman perspective, but you need to know how to operate in a difficult market. For American investors, it's not a very attractive market because it is well known that Americans are not good at doing things the Congolese way, but for genuine entrepreneurs there are tremendous opportunities. Some people are saying that we should wait and see what happens in the elections while others are investing, and it is quite clear who will do better. People who are investing, like the South Africans, the Indians, Pakistanis , Chinese including some Belgian and French, the traditional partners of the Congo, are here and they are making a head start.

Summit Communications: How do you see Congo's economy in the coming years?

Mr Onno Rühl : I would be very surprised and disappointed if there isn't a 2 digit growth in Congo in the coming years, certainly after the elections. I do think that the elections are a pending issue in terms of confidence, they make people hesitate more than they need to. I think it is relatively easy to generate growth based on the existing platform. The international community needs to continue to put pressure on local political actors, so that they can have a common vision that the only way forward is through a transition to a democratically elected government. If the politicians live up to the peace deal commitment and if they keep the same discipline in the economy to encourage investments, with a stable macro-economic framework thanks to the donors' commitment to continue supporting the government, the only thing that can stop this economy is war and as time goes by, it is becoming less and less likely.
I am about to leave after being here for 3 years, which is unlucky because Congo is a very nice place. I would really like to come back soon but I think once I come back, I wouldn't recognise the place; and that is very encouraging because it didn't look nice in 2001 when we arrived, but now I can tell you that it looks nicer. Congo is a very vibrant and lovely country, people are very welcoming wherever you go, the music is fantastic. I am leaving the country with a very colourful image very different from the dark image you read about in books before coming to the heart of Africa.