Killing the Dollar Softly In The Democratic Republic of Congo

Top Congolese leaders say it's time the DRC got off the US currency and returned to the local franc. But ending "dollarization" comes with risks if not done properly.

Congo's Central Bank President Jean-Claude Masangu Mulongo
Congo's Central Bank President Jean-Claude Masangu Mulongo
Raoul Biletshi

KINSHASA - The Democratic Republic of Congo is one of several countries, both in Africa and elsewhere in the developing world, that uses the U.S. dollar as its de facto national currency. But is it time to put an end to "dollarization"?

The DRC government now says it wants to phase out the dollar, to be replaced with local Congolese francs in all financial transactions. Prompted by a four-month spurt of economic growth, the government is convinced that it is time to begin a reform, which it assures will be meticulously overseen by the monetary authority.

Still, in order to reassure citizens, banking officials and investors, the move is not going to happen overnight.

A meeting last year, led by Deputy Prime Minister Daniel Mukoko Samba, which included representatives from the top Congolese employers and banking associations, was billed as “Solutions to de-dollarize the Congolese economy.”

“To this day, despite the significant fall of inflation and a certain stability of the exchange rate, the dollarization level in the Congolese economy remains very high,” noted Mukoko Samba, who also serves as Budget Minister.

Most of the banking deposits in DRC are in foreign currencies, while bank credits are as high as 95%.

“How did we end up here?” asked Congo's Central Bank President Jean-Claude Masangu Mulongo in front of trade representatives from Belgium, Luxembourg and DRC meeting in late November in Kinshasa to discuss the subject.

Masangu Mulongo recalled a bit of recent history to provide some context. The 1980s and 1990s were a time when the ex-Zaire was struck by a severe economic crisis that included basic infrastructure collapse, looting of production tools, excessive external debt, the end of international cooperation and depreciation of the national currency compared to foreign funds. By 1994, inflation had reached the extreme rate of 9,769%.

The roads are long

Given both the political and economic instability, financial operators and the general population turned to the American dollar to protect their purchasing power and to benefit from discretion in commercial transactions. This situation led to the dollarization which is, in Daniel Mukoko’s terms, “induced by the use of a safe haven currency different from the national currency in economic transactions.”

But this process is ultimately detrimental to the country. It may lead to, among other things, “difficulties when it comes to finance the economy with national currency; a higher risk of a crisis in the banking sector in case of physical currency shortage,” explains Masangu Mulongo.

The central banker says those past conditions have changed, and the macroeconomic signals are looking good: an economic growth of 7.2% in 2012, with a 8.2% projection for 2013; an inflation rate of about 3%; a stable Congolese franc compared to the U.S. dollar; a peak in the financial sector confirmed by a larger number of banks and micro-financing institutions with an expansion of the credit and deposit volume.

The so-called "de-dollarization" process requires a balance between controlling the negative effects of giving up the U.S. currency, and beginning to push the regular use of the national currency.

To set the example, the 2012 budget was voted by the Parliament in Congolese francs. The Central Bank even recommends that the public sector settle the payment of any tax or outstanding charge in national currency. It even sent a letter to the financial operators urging them to display the prices in Congolese currency.

“De-dollarization cannot be imposed by law, it cannot be forced,” specifies the central bank governor. "It’s a seven to 10-year process minimum for those who manage to carry it out. It can only be achieved in a progressive, participative manner with a series of incentives.”

As far as the exchange regulations go, Masangu Mulongo added that everyone “will be free to use the currency he likes, it’s out of question to force people to convert their Foreign Currency Resident accounts (FCR) or Non-Foreign Currency Resident accounts (NFCR) into national currency.”

Economics Professor Grégoire Bakandeja believes that the currency reform can succeed only if it's carried out nationwide, and if exports continue to be handled in foreign currencies. “De-dollarization is a good thing, but exchange measures must be taken and resources exported in such a way that it remains profitable for the state.”

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How Thailand's Lèse-Majesté Law Is Used To Stifle All Protest

Once meant to protect the royal family, the century-old law has become a tool for the military-led government in Bangkok to stamp out all dissent. A new report outlines the abuses.

Pro-Democracy protest at The Criminal Court in Bangkok, Thailand

Laura Valentina Cortés Sierra

"We need to reform the institution of the monarchy in Thailand. It is the root of the problem." Those words, from Thai student activist Juthatip Sirikan, are a clear expression of the growing youth-led movement that is challenging the legitimacy of the government and demanding deep political changes in the Southeast Asian nation. Yet those very same words could also send Sirikan to jail.

Thailand's Criminal Code 'Lèse-Majesté' Article 112 imposes jail terms for defaming, insulting, or threatening the monarchy, with sentences of three to 15 years. This law has been present in Thai politics since 1908, though applied sparingly, only when direct verbal or written attacks against members of the royal family.

But after the May 2014 military coup d'état, Thailand experienced the first wave of lèse-majesté arrests, prosecutions, and detentions of at least 127 individuals arrested in a much wider interpretation of the law.

The recent report 'Second Wave: The Return of Lèse-Majesté in Thailand', documents how the Thai government has "used and abused Article 112 of the Criminal Code to target pro-democracy activists and protesters in relation to their online political expression and participation in peaceful pro-democracy demonstrations."

Criticism of any 'royal project'

The investigation shows 124 individuals, including at least eight minors, have been charged with lèse-majesté between November 2020 and August 2021. Nineteen of them served jail time. The new wave of charges is cited as a response to the rising pro-democracy protests across Thailand over the past year.

Juthatip Sirikan explains that the law is now being applied in such a broad way that people are not allowed to question government budgets and expenditure if they have any relationship with the royal family, which stifles criticism of the most basic government decision-making since there are an estimated 5,000 ongoing "royal" projects. "Article 112 of lèse-majesté could be the key (factor) in Thailand's political problems" the young activist argues.

In 2020 the Move Forward opposition party questioned royal spending paid by government departments, including nearly 3 billion baht (89,874,174 USD) from the Defense Ministry and Thai police for royal security, and 7 billion baht budgeted for royal development projects, as well as 38 planes and helicopters for the monarchy. Previously, on June 16, 2018, it was revealed that Thailand's Crown Property Bureau transferred its entire portfolio to the new King Maha Vajiralongkorn.

photo of graffiti of 112 crossed out on sidewalk

Protestors In Bangkok Call For Political Prisoner Release

Peerapon Boonyakiat/SOPA Images via ZUMA Wire

Freedom of speech at stake

"Article 112 shuts down all freedom of speech in this country", says Sirikan. "Even the political parties fear to touch the subject, so it blocks most things. This country cannot move anywhere if we still have this law."

The student activist herself was charged with lèse-majesté in September 2020, after simply citing a list of public documents that refer to royal family expenditure. Sirikan comes from a family that has faced the consequences of decades of political repression. Her grandfather, Tiang Sirikhan was a journalist and politician who openly protested against Thailand's involvement in World War II. He was accused of being a Communist and abducted in 1952. According to Sirikhan's family, he was killed by the state.

The new report was conducted by The International Federation for Human Rights (FIDH), Thai Lawyer for Human Rights (TLHR), and Internet Law Reform Dialogue (iLaw). It accuses Thai authorities of an increasingly broad interpretation of Article 112, to the point of "absurdity," including charges against people for criticizing the government's COVID-19 vaccine management, wearing crop tops, insulting the previous monarch, or quoting a United Nations statement about Article 112.

Juthatip Sirikan speaks in front of democracy monument.

Shift to social media

While in the past the Article was only used against people who spoke about the royals, it's now being used as an alibi for more general political repression — which has also spurred more open campaigning to abolish it. Sirikan recounts recent cases of police charging people for spreading paint near the picture of the king during a protest, or even just for having a picture of the king as phone wallpaper.

The more than a century-old law is now largely playing out online, where much of today's protest takes place in Thailand. Sirikan says people are willing to go further on social media to expose information such as how the king intervenes in politics and the monarchy's accumulation of wealth, information the mainstream media rarely reports on them.

Not surprisingly, however, social media is heavily monitored and the military is involved in Intelligence operations and cyber attacks against human rights defenders and critics of any kind. In October 2020, Twitter took down 926 accounts, linked to the army and the government, which promoted themselves and attacked political opposition, and this June, Google removed two Maps with pictures, names, and addresses, of more than 400 people who were accused of insulting the Thai monarchy. "They are trying to control the internet as well," Sirikan says. "They are trying to censor every content that they find a threat".

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