Congolese Financial System and the Financing of Economic Activities in the Democratic Republic of Congo

Abstract

The financial systems of Sub-Saharan African countries, including the Democratic Republic of Congo, are shallow and poorly developed. They rely mainly on a weak and concentrated banking sector, offering mostly short-term financing. The financial markets of Sub-Saharan African countries, including the Democratic Republic of Congo, are embryonic with bond markets dominated by the issuance of sovereign bonds and stock markets reserved for a few large companies. Governments and the international community have a major role to play in developing and deepening the financial systems of sub-Saharan African countries and thereby maximize the contribution of private domestic resources to development finance: governments, by limiting the uncertainties associated with regulation, by building institutions and infrastructure to promote agent trust and market efficiency and by promoting competition and the integration of financial systems into the global market, and the international community, by accompanying reforms, providing technical assistance and capacity-building services, or by supporting companies in the sector. Any reflection on the link between finance and growth comes up against three major difficulties. The first is to define and measure "financial development". The second consists in unraveling the web of causalities obviously crossed between the development of financial systems and growth. The third relates to the definition of appropriate public policies, which are likely to find a satisfactory balance between market imperfections, which can result in extremely serious crises, and the costs of inappropriate regulatory policies, but also to guide the financial development for maximize the impact on long-term growth.