scoop on the issue of the larger denomination bills of the Congolese
Franc--(ISO 4217 Currency Code CDF)--captures the bipolar dynamic of
currency circulation at the microeconomics level in the DRC.
On the right, there are wads of the CDF, which is (in)formally
shadowed in almost every transaction by the American dollar (USD), on
the left.
On the website of the International Organisation of Standardisation,
this dogging of the CDF by the USD is soberly described more elegantly
as follows:
"Our currency rankings show that the most popular Congo/Kinshasa Franc
exchange rate is the USD to CDF rate."
(ISO: "Currency codes are composed of a country's two-character
Internet country code plus a third character denoting the currency
unit.")
Before the launch of CDF in 1998, shortly after the fall of Mobutu,
the currency then called Zaire was likewise dogged by the USD.
Hence, the ubiquitous "cambistes" (money changers) at every street
corner of Kinshasa and other Congolese urban centers--then and now.
With the exception of the short-lived ban on dollar transactions under
the regime of Mzee Laurent Kabila--an impractical ban and a con that
died with the death of the assassinated president.
Even then, "cambistes" continued to briskly carry out their business
in back streets off of the main boulevards and thoroughfares. And,
when caught, they'd readily bribe arresting officers.
Most of the CDF wads of banknotes shown in the image above are in 500
denominations--the largest Congolese denomination in circulation
today.
Below CDF 500--today worth $0.50--there are only three other subunits
currently in circulation: 1) CDF 200; 2) CDF 100; and 3) CDF 50.
There were CDF banknotes in denominations of 1, 5, 10, and 20 that
have disappeared and died their natural death--without government
intervention.
There were also plans to issue subunits of CDF with face values of 1,
5, 10, 20, and 50 "centimes" (or cents)--all in paper currency. No
coins. But these Congolese "centimes" never saw the light of day.
You'd think that if the DRC wanted to tamper with its currency, it'd
first consolidate its foundation--namely, release smaller
denominations of the DRC, like the forgotten "centimes" or the smaller
bills that have since vanished into thin air.
Not a chance.
Congo is after all the topsy-turviest place in the world, and where
things are done willy-nilly. And where houses may be built from the
rooftop down the foundation.
Consider the following strange development.
Three days ago, Minister Delegate to the Prime Minister in charge of
Finance, Patrice Kitebi, told Radio Okapi that, by the beginning of
July of this year, the Banque Centrale du Congo (BCC) will issue large
denomination banknotes with face values of CDF 1,000; 5,000; and even
a whopping CDF face value of 10,000!
Said Kitebi:
"At the strictly technical level, there's an essential condition: the
global volume of the flowing liquidity should be in balance with the
needs of the economy."
He further told Radio Okapi that these denominations had already been
printed an unspecified number of years ago, and that the government
held back releasing them just over an "issue of opportunity."
And Kitebi confided to Radio-Okapi what this opportunity is all about:
"We figure that now, the moment is very opportune because we have a
macroeconomic stability that has been lasting for two years."
Mark that qualifier in Kitebi's sentence: "macroeconomic."
These guys have been soaring far too long in stratospheric altitudes
they've completely lost sight of the microeconomic ground zero level
where normal people walk.
Little wonder then that to balance their macroeconomic books, former
Finance Minister and current Prime Minister Matata Ponyo introduced at
the end of last year the 18%-TVA (Value-Added Tax).
Such opportune introduction that it triggered a spike of prices,
further eroding the already crippled purchasing power of impoverished
households right when they had to do their Christmas and New Year
shoppings.
Economists point out that the "macroeconomic stability" Minister
Delegate Kitebi is boasting about depends on volatile indicators, over
which a country such the DRC would have little control.
To be more charitable to the motives of the technomorons in charge of
finance, maybe they think that by simply issuing larger denominations
of CDF they'd motivate businesspeople and investors to transact
business in Congolese Franc, and not in dollars.
If such is truly their thinking, then they're deluding themselves.
There are companies and NGOs established in Congo that directly pay
their workers in dollars and make their transactions in dollars. And
Congolese entrepreneurs who deal with MONUSCO are compelled to bid and
be paid in USD.
I don't see any of these stakeholders relinquishing the stability of
the dollar and opting for a limping currency.
(God help us if they are thinking of banning the dollar again!)
Besides, last year, during the political campaign leading up to the
general general elections of November, the CDF exchange rates to the
dollar fluctuated so wildly that the Central Bank and then Finance
Minister Matata Ponyo himself had to resort to the Congolese version
of "quantitative easing" to stablilize the rates.
The end result of injecting into the economy these large denominations
would be to trigger brutal price increases of basic commodities and
consumer goods.
Which could even beget hyperinflation, ever larger banknote
denominations and, unavoidably, a spate of countrywide food riots.
Maybe the technocrats have forgotten that conservative estimates put
the rate of urban youth unemployment at 96% (a permanent security
risk), and that the 1993 urban military riots were caused by soldiers'
refusal to be paid in worthless 5-million Zaire banknotes!
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