Corruption hinders Congo economic progress-World Bank

By Jonny Hogg

KINSHASA, June 7 (Reuters) – Poor government and corruption have hindered Congo’s economic progress and hampered efforts to tackle massive unemployment, the World Bank said on Tuesday.

A combination of extortion and badly targeted taxation was preventing the creation of small businesses which are the lifeblood of economies and employment in most countries, it said in a report.

The vast mineral-rich country, which is due to hold an election in November, is still suffering from widespread poverty following a civil war that ended in 2003 with more than five million people dead.

After November’s polls, the new government should adopt an urgent economic plan to stimulate growth and create more opportunities for skilled workers, the World Bank said.

Since the war, poor government at the state level has stopped the emergence of small and medium-sized businesses, which could be an important driver of growth but currently employ less than 5 percent of the workforce, it said.

“Poor governance translates itself into abuses by public bodies and officials, who collect both formal and informal taxes from the private sector,” the report said.

Large private businesses have more or less succeeded in insulating themselves but small and medium-sized businesses with few resources and little political clout have been unable to overcome these obstacles, it said.

The unemployment rate in the formal sector is at about 75 percent in Congo, a vast Central African nation of around 67 million people, of whom 71 percent live below the poverty line, according to the World Bank.

Congo achieved more than 7 percent economic growth last year, according to IMF figures, driven largely by a booming mining sector in the south of the country, where major international companies are exploiting copper reserves.

But mining alone will not help lower unemployment unless the profits are re-invested wisely by the government, said Marcelo Giugale, the World Bank’s poverty reduction and economic management chief for Africa.

“The truth is that extractive industries, by definition of their technology, don’t employ a lot of people directly. But they can create jobs indirectly through expenditure if the government manages this effectively,” he told a briefing.

Poverty indicators for Congo remain poor in comparison to other countries in the region, with infant mortality running at 15 percent and less than a quarter of the population having access to drinking water, the World Bank report said. (Editing by Bate Felix and Jonathan Lynn)