Democratic Republic of the Congo
The second largest country in Africa
DR Congo, the second largest country in Africa and the size of Central Europe, is still plagued by unrest; in spite of its vast wealth of natural resources the country is one of the poorest nations in the world. Government structures are weak, while violent conflicts particularly in the eastern part of the country keep on raging. On behalf of the German federal government, KfW Development Bank is supporting long-term peace and reconstruction processes, for example by improving the water supply and basic sanitation, developing the financial sector and stimulating local business. These efforts are complemented with extensive investments to preserve the unique tropical biodiversity in select protected areas. With its engagement in the electricity sector, KfW Development Bank follows a regional approach and is financing investments in the expansion of regional cooperation.
The Democratic Republic of the Congo has the most plentiful water supply of all African countries. Nonetheless, only one in every four Congolese has access to hygienically safe water, and only one in every six enjoys proper sanitation. KfW Development Bank is supporting the water utility REGIDESO in rapidly improving the supply of drinking water: for example, new generators and water meters are being supplied, pipe leakages repaired and standpipes are set back into operation. Parallel to this, large-scale construction measures are being implemented to completely overhaul and expand the supply network. Furthermore, in the two most populous cities, Mbuji Mayi and Kikwit, first public basic sanitation measures will be implemented.
The purpose of the project is to improve the population's supply of potable water and basic sanitation. By means of training measures, the water utility is being assisted in setting up economically profitable and efficient operations. Furthermore, awareness campaigns among the population are helping to increase demand for hygienically safe drinking water.
KfW is currently financing water supply infrastructure in 19 secondary towns of the provinces Bandundu, Kasai-Oriental, Kasai-Occidental and Equateur.
DR Congo is a natural paradise: two thirds of the country's territory is covered by tropical rainforests, which are the source of more than half of Africa's fresh water. The forests are crucial for the regional climate and one of the most important global carbon sinks. They are home to a globally important biodiversity. Congo's rainforests also have a significant economic importance: the incomes of millions of people depend directly on them, even though the economic potential (for example tourism) has not yet been tapped.
10 % of the country's territory is already protected, and another 7 % is to follow suit. Yet the protected zones are seriously at risk because of civil unrest and armed conflicts in many parts of the country and because poaching and deforestation are rife. Congolese nature conservationists do not have enough capacity to safeguard the long-term future of the protected areas.
This is why Germany, working together with international nature conservation organizations, is supporting Congolese partners such as ICCN (Institut Congolais pour la Conservation de la Nature) in preserving and ensuring the sustainable use of six protected areas, three of which are UNESCO World Heritage sites. KfW finances the introduction of effective management methods as well as the building of necessary infrastructure. Administrations in the protected areas are becoming better equipped and economic promotion measures are being implemented for the local population. KfW is also involved in setting up a lasting nature conservation funding mechanism in the Democratic Republic of the Congo.
There is barely any other country in Africa that is as fragile as the Democratic Republic of the Congo. Although peace agreements have been concluded and elections held in recent years, violence still remains prevalent, particularly in the east of the country, where the state is essentially absent. More than two million people are fleeing wars and conflicts, their livelihoods have been largely destroyed and the economy is in tatters. Due to a distinct lack of future prospects for the largely poor population, the only ways for them to earn money often are to work in illegal mines or for armed groups.
In this difficult environment, KfW Development Bank on behalf of the German federal government has set the aim of improving the livelihoods of people in the conflict zones, especially in the east of the country. By means of a peace fund, KfW supports the Congolese state in building schools, medical stations, roads and other important basic facilities. This provides work for as many people as possible who are therefore, at least in the short term, able to earn their own income. The reconstruction is designed to have a stabilizing effect and to send a signal that things are looking up.
KfW equally supports the United Nations in its work with people who are undernourished because of the crises – the majority of whom are displaced women and children. Within the framework of the peace fund, a new KfW project will help combat youth violence in the capital city Kinshasa. KfW's efforts here are designed to improve the conditions for lasting peace – and finally to offer the people a stable future.
In the wake of decades of conflict, the energy supply in Eastern Congo and in neighboring Burundi and Rwanda is in a disastrous state of repair. Only one in every fifty people in Eastern Congo has access to electricity, while in Burundi it is one in every twenty five. There are barely any power plants in the Great Lakes Region, and the ones that do exist are powered by diesel and heavy oil, making the electricity very expensive and having detrimental effects on the environment. The transmission and distribution networks - if they even exist - are outdated, which results in regular power cuts that hinder economic development.
The aim of KfW Development Bank is to promote the low-cost generation of renewable energy and the distribution in and between all three countries. There is certainly enough potential: the Ruzizi river along the border could generate 500 megawatts of environmental friendly electricity.. In order to achieve this, a regional approach is needed as the resources are owned by more than one country.
Furthermore, international electricity trading offers the most cost-effective and eco-friendly opportunity to cover the medium to long-term demand in the region. A self-sufficient national supply of electricity would be uneconomical given the limited national markets and their geographical positions. Thanks to joint market, operating power plants become more efficient, bottlenecks in production and surpluses can be balanced out on a regional basis, while expensive diesel and heavy oil facilities can be replaced by renewable energies. The required political cooperation between the three states (also in terms of network expansion) is being driven forward by EGL (Energie des Grands Lacs).
German financial cooperation on behalf of the German Government is supporting the three countries with the planned expansion of their regional cooperation in the electricity sector, with respect to electricity production by funding the construction as well as rehabilitation of power plants on the Ruzizi river as well as related transmission lines and the corresponding infrastructure.
The financial sector in DR Congo is extremely underdeveloped, with substantial deficits in both structure and regulation. This is particularly a problem for micro enterprises and SMEs (Small and Medium-sized Enterprises), in which four out of every five people in the economically active population are employed. Most of these companies are found in the informal sector and drive economic growth. They create jobs and ensure growing incomes for broad swathes of the population. In spite of this, micro enterprises and SMEs barely have any access to financial services like loans, as the majority do not have the collateral normally required by banks in DR Congo. This leads to a gap in the supply chain that severely hampers economic growth.
KfW Development Bank has set its objective of improving the range of financial services offered to micro businesses and SMEs and thereby alleviating poverty in the country. Two microbanks were established for this purpose while an existing micro financing institution was refinanced with long-term debt capital. A fund set up by KfW has the aim of professionalising the operations of selected financial institutions and supplying them with long-term refinancing. This benefits micro enterprises and SMEs as well as poor but economically active households that work as service providers for such companies.
Furthermore, KfW is involved in improving the institutional architecture on the financial market, focusing on establishing a credit agency and a deposit insurance fund.