Kinshasa in the Democratic Republic of the Congo is a new destination for Nairobi financiers and die-hard merchants. If all goes well, this fledgling relationship could be a catalyst for Central Africa’s digital transformation and a significant boon for the East African tech market.

The Democratic Republic of the Congo (DRC) has only joined the East African Community (EAC) for just four months, but even before joining the EAC there were economic ties that made it possible. rice field. The border towns of Goma and Bukavu are active market places where merchants from the Democratic Republic of the Congo, Uganda, Burundi and Rwanda exchange consumer goods. There are also a number of artisanal mines staffed by miners from neighboring countries and the Democratic Republic of the Congo.

In addition to petty cross-border trade, the DRC’s rich mineral resources have also attracted the attention of neighboring countries. Some of that attention has been covertly or overtly violent, helping the DRC fight rebel groups in several parts of the country. The resulting instability has turned the Democratic Republic of the Congo into a boxing ring of neighboring countries vying to defend their interests on Congolese lands.

With more than $24 trillion of untapped mineral deposits and 90 million inhabitants, the DRC is an attractive market for investors around the world.

However, a shift in political winds in 2018 led to the resignation of long-time ruler Joseph Kabila in 2019, and Kenyan merchants, high and low, poured into the DRC. consolidated its position in the country with the acquisition of Banque Commerciale Du Congo (BCDC) (it had purchased a majority stake in ProCredit Bank).

Equity Banks’ entry made the news, but years before Equity Bank entered the DRC, a small Kenyan concern had already begun its trek west. In 2016, her Kenyan mechanic, Dorine Akinyi, built a truck and heavy equipment repair shop in Lubumbashi, the mining hub of the Democratic Republic of the Congo, and it was a blast.

But more recently, in the months leading up to joining the East African Community, large Kenyan companies have started to show promise in the DRC. After EAC status was confirmed, the equity bank said more than 20 Kenyan firms had pledged to invest a total of $1.6 billion in the trade mission. This includes his $100 million that the bank added to his DRC subsidiary. The trade mission was organized by Equity Bank and the government of Kenya and his DRC.

The Democratic Republic of the Congo occupies a considerable expanse of central Africa. Mostly landlocked except for the southwest jetty that terminates at the mouth of the Congo River, which empties into the Atlantic Ocean, it is the second largest country in Africa, with nine countries (Angola, Burundi, Central African Republic, Republic of the Congo, Rwanda and the South) is adjacent to Sudan, Tanzania, Uganda, Zambia), becoming the African country with the most borders.

The eastern flank where the Democratic Republic of the Congo meets Uganda, Rwanda, Burundi and Tanzania is remarkable and central to this story. In addition to forming along the line of the West Great Rift, the western branch of the East African Great Rift slowly pulling the continents apart, it is almost all part of Africa’s Great Lakes Lake Kivu, Lake Tanganyika , is the natural boundary formed by Lake Mwell. , Lake Albert and Lake Edward.

The region has established informal cross-border trade and is home to large deposits of natural minerals in the heart of the conflict-ridden Democratic Republic of the Congo.

These same minerals may be at the heart of the sudden inspiration to enter into formal business relationships in the Democratic Republic of the Congo. Banks are in control, but mining money is calling them.

In essence, Kenya wants tentacles beyond banking in the Democratic Republic of the Congo. Watching Great Lakes politics whetted my compatriots’ desire to go underground and secure the bag from El Dorado, the Democratic Republic of the Congo, researcher and policy analyst Nanjira Samburi told her TechCabal. Told.

Equity Banks Group managing director James Mwangi told Kenyan media earlier this year that he wanted to disrupt the value chain.

The value chain can be an agent of development. As such, there are plane conversion plans for East and Central Africa. We’re talking to investors like Tesla’s Elon Musk, and instead of importing cobalt, why not set up a factory for electric car batteries in the Democratic Republic of the Congo? Instead of sending copper ore to China, why can’t we also make copper wire there?

Following in Equity Banks’ footsteps, Kenyas KCB Group has finally announced on August 2 that it has entered into a definitive agreement to acquire Trust Merchant Bank (TMB), a leading lender in the Democratic Republic of the Congo. The announcement confirms a deal that has been the subject of speculation in the Kenyan banking world for more than a year. At the time, KCB Groups CEO Joshua Oigara pledged to buy his DRC bank nationwide, available in all states. TMB operates DR Congo’s largest bank branch network with 110 branches in 20 of his 26 provinces in the DRC.After purchasing an equity bank

All resources are linked to the financial or banking system, so it makes sense to be the banker of choice, Sambri said.

When asked why he is optimistic about the DRC, Mwangi replied: Global commodity prices for raw materials produced by the Democratic Republic of the Congo are at record highs. That is why the current account balance turned from a deficit to a surplus.

Is there room for digital transformation?

It’s tempting to see the story only through the lens of the massive extractive industry of the Democratic Republic of the Congo. But financiers aren’t the only ones looking to trade in Congo.

This Wednesday, Longhorn Publishers, a multinational educational publisher, announced its entry into the DRC and a government contract for nine books. Longhorn chief executive Maxwell Wahome said his Nairobi-listed company hopes to reach his 20 million learners with the book.

Some have wondered if the promise of a regionally integrated DRC extends to the areas of technology and innovation. And that’s because it appears to be an untapped raw market, Michael Kimani told his TechCabal by phone. Kimani is the co-founder and head of growth of Fonbnk, a DeFi startup that uses blockchain technology to facilitate mobile payments.

In general, many Kenyan companies are only looking to expand into countries like Kenya, which have a competitive edge, especially in digital financial services, Kimani said.

bank to go [into the DRC] Samburi said it has a high risk appetite given its market share in Kenya. What’s not clear is whether the bank’s natural cousin clearing house will accept his DRC.

However, there are obvious gaps in the implementation of DRC. especially in payments. An estimated 75% of the population of the Democratic Republic of the Congo do not have formal financial accounts with banks or other financial institutions. And only 14% have a financial account. Among other factors, the Democratic Republic of the Congo has fewer than two bank branches per million inhabitants, highlighting both an opportunity and a warning sign.

Fintech companies love to bank for unbanked people. Congo also has low banking penetration (US Trade Administration figures claim this is below the sub-Saharan average of 25%) and poor transport infrastructure, making it difficult for people to There is a clear need to assist with payments and remittances.

Legislative changes and recent improvements in telecommunications infrastructure are expected to boost mobile penetration in the DRC (currently 45%) and increase internet access. Earlier this year, Airtel bought 58 MHz of additional spectrum to boost his 4G coverage, and in 2020 Liquid Telecom received a license to build his DRC landing station for Google’s Equiano submarine fiber cable. .

Congolese mobile network operators are already partnering with local fintech companies to promote mobile money adoption. The partnership between Orange Congos and Flash International is expected to enable more than 4,000 Flash agents to offer value-added services alongside Oranges’ money transfer services. Flash has also partnered with his MTN to allow users to send and receive money to and from the neighboring Central African Republic.

Apart from payments, the DRC has 80 million hectares of cultivated land and 4 million hectares of irrigated land. More than half of the country of 2.35 million square kilometers is forest, making the forests of the Democratic Republic of the Congo one of his two lungs of the world alongside the Amazon rainforest.

With Felix Tshisekedi’s appointment as Prime Minister of the DRC, relative political stability has allowed the United States to reinstate the Democratic Republic of the Congo to the African Growth and Opportunities Act.

The CEO of James Mwangi Equity Banks is not just drawn to the DRC’s huge and growing minerals and infrastructure sector. His bank will prioritize agriculture, he said. He also chose to become an agricultural transformation bank. And we’ve decided to raise agricultural loan balances from he 3% to 30%. It supports farmers throughout the value chain, from production to aggregation, logistics, manufacturing and export, he said in the same interview with a local media publication.

Kenyan agritech and agribusiness entrepreneurs may want to take a closer look at what Mwangi stands for.

If there are strengths, there are also weaknesses

Kenya is not the only country seeking broader business opportunities within the Democratic Republic of the Congo. BK Group, Rwanda’s largest bank by commercial assets, is also reportedly planning to enter his DRC in the form of a representative office. However, the relationship between the Democratic Republic of the Congo and Rwanda is problematic.

Just last week, the United Nations accused Rwanda of supporting the M23 rebel group with military equipment. Kinshasa’s government has fought the group since 2012, when nearly 300 soldiers turned against it. When the EAC pledged to send Kenyan-led forces to his DRC’s rebellious eastern flank, the part that shares the closest ties with the DRC exempted Rwandan soldiers from duty.

This latest political drama highlights the darker shadows casting a shadow over the dream trade bonanza.

Although the Democratic Republic of the Congo’s macroeconomic outlook is improving, the good news of GDP growth, record gains from the commodity trade bonanza and large trade deals has yet to reach the most vulnerable to poverty. not. The country has yet to generate widespread prosperity.

Congo’s mysteries are still unsolved, and previous trade deals are of little importance. The difference is that the Democratic Republic of the Congo and its neighbors, and her newly revitalized EAC, are determined to keep up the effort.

Appearances of political stability, approximately $24 trillion in natural mineral and rare earth commitments, and infrastructure financing opportunities may be the main drivers of Kenya’s interest in the DRC. But that’s a bet they’re willing to take. I repeat what Equity Banks Mwangi said.

Similarly, the opportunity for digital disruption in the Democratic Republic of the Congo is significant. Even if just to provide his B2B technology solutions to growing business sectors and dedicate time to consumer facing services.

The Democratic Republic of the Congo’s tech nascent ecosystem is centered in Kinshasa, where a few hardy entrepreneurs have set up shop in the form of hubs and a handful of tech companies. Of his $10.8 billion raised by African startups since 2019 (Big Deal data), tech companies in the Democratic Republic of the Congo only got him $24 million. Meanwhile, Kenyan startups received more than $2 billion from him.

The expansion of Kenyan tech companies into the Democratic Republic of the Congo could breathe new life into the country’s tech space.

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