New Congo government identifies bioenergy as priority for industrialisation

Each continent has regional 'superpowers' whose political and economic state partly determines the course of development for the rest of the continent. In Africa, this is the Democratic Republic of Congo (formerly Zaire), a vast country the size of Western Europe, with an enormous and so far largely unexploited wealth in natural resources. Precisely because of this wealth, Congo was dragged into the bloodiest and most underreported war since the Second World War, killing approximately 4.5 million people, in what has been called 'Africa's World War'.

After ten years of conflict and a transition phase between 2003 and 2006, Congo held its first democratic elections in 40 years. Dubbed a 'miracle', the 2006 elections - financed and monitored by the EU and the UN - were a great success, certainly if you consider the fact that the vast country has around 65 million inhabitants living spread out over 2.3 million square kilometres of land, serviced by only 300 kilometres of paved roads... The poll brought Joseph Kabila to power as president and Antoine Gizenga as prime minister.

The challenges Congo faces are enormous. Coming out of a situation of total state-collapse, basic infrastructures, social, educational and health services, political and economic institutions all have to be rebuild. If political stability reigns, the country's future does look bright, though. Last year, it achieved an impressive economic growth of around 7%, but per capita incomes remain the lowest in the world at US$120 per year. The EU has launched several initiatives to support the revival of Congo's economy. Amongst them, an Energy Partnership and a €5 billion infrastructure fund for Africa, of which Congo will receive a substantial share. Likewise, the World Bank has stepped in with credits and called upon the international community to support the country's fragile transition from conflict to peace.

Speaking to Kinshasa-based publication Le Potentiel, the country's new Minister of Industry, Simon Mboso Kiamputu, explains [*French] which areas he thinks need priority investments. He includes bioenergy and biofuels. The country's technical potential for sustainably produced green energy is in fact so large, that in theory it could easily rival the largest producers. Kiamputu explains that Congo is suffering under high fuel import bills which form a barrier to development. By becoming oil-independent, the country can leapfrog beyond the petroleum-era and into an energy future in which energy security, renewability and decentralisation are key.

Congo has some 170 million hectares of potential arable non-forest land, of which only a tiny percentage is currently cultivated. The country's climate allows for the most productive energy crops - eucalyptus, tropical grasses like sugar cane, starch crops like cassava (map, click to enlarge) and palms - to thrive. However, in order to produce and market these bioenergy feedstocks and biofuels, transport infrastructures, policies and investment instruments must be created.

Kiamputu: "together with my collegues from the Department of Hydrocarbons, I am preoccupied with the prospect of biofuels and bioenergy. Imported fossil fuels drain our treasury", and shortages are frequent (earlier post):
bioenergy :: biofuels :: energy :: sustainability :: ethanol :: biodiesel :: biomass :: energy security :: Congo ::

"I have recently visited the CINAT (Cimenterie Nationale - National Cement Producer) and the CILU (Ciments de LUKALA) in the Bas-Congo province. Fuels represent 50% of their production costs. This is a heavy burden."

"It would be good if we were to produce biofuels from palm oil and sugar cane in order to become energy independent. Likewise, bioenergy can be used to electrify the country-side [where 70% of Congolese live]. Despite all the efforts by the SNEL (National Electricity Company), the rural areas remain largely unelectrified."

"I am sending an expert to Hannover to attend a conference on the production of bio-energy on the basis of woody feedstocks. We are going to collaborate with a sugar producer in Kwilu-Ngongo which already makes ethanol."

"Most importantly, together with my collegue from the Department of Hydrocarbons, we have created a joint commission to draft legislation on biofuels which will allow the blending of green fuels like biodiesel and ethanol into fossil fuels. This will reduce our dependence on imported oil and lower the import bill."

Other priority areas
Simon Mboso Kiamputu sksetches four other key areas that need to be relaunched in order to bring Congo's economy back on track. The fields of agro-industry and the construction of transport infrastructures are amongst them and tightly linked to the establishment of a viable biofuels industry.

"The first disease that kills people in our country", the Minister says, "is not malaria, but hunger. Because those who don't have enough to eat are more susceptible to malaria and die more easily because of it. We are going to support the agro-food sector massively to integrate it with both agriculture and industry, in order to facilitate the processing of agricultural products into finished goods. The fishing and food industry is our absolute priority."

"We are going to support the creation of proximity industries that will process agricultural products there where they are produced. We produce a billion kilos of fish each year that go to waste because we lack the processing, storage, and distribution infrastructures needed to bring them to market."

"The third priority area is that of construction materials, industrial wood and iron bars. In order to achieve the goals set out by the president of the Republic, we must build infrastructures on a massive scale: roads, railroads, inland water ways, ports. This will allow us to relaunch the economy and it gives farmers the opportunity to produce for large markets and industries once again."

"Fourthly, the pharmaceutical industry requires support and investments. In order to make the Congolese healthy, we need a real pharmaceutical industry that deals with intellectual property in an appropriate way, and policies that combat those who distribute fake medicines. Today, the wide-spread use of fake medicines is a serious problem."

"Finally, we need to relaunch an industry of spare parts for all kinds of machines and equipment. We have no such industry, which limits the durability of machinery." Those spare parts have to be imported from abroad and are often of low quality.

Financing needs and instruments
Asked how the Minister of Industry will finance investments in all these different areas, he says money alone is not the problem. There is a general lack of management skills as well.

"I have recently visited the Bas-Congo province and found entire industries that are closed. The brewery of the Cataractes has not produced drinks for 10 years. All the equipment is there, so there is no need for new investments in machines, but the company lacks funds to restart operations and management skills."

"At the Ministry of Industry we have now established a program, with the aid of the Fund for the Promotion of Industry to revive this kind of plant. We will finance them because all they need is an initial infusion of money to kickstart operations again. We will proceed in the same way as the Central Bank, which succeeded in helping the commercial banks to get back on track, by interventions in magagement."

"Take the CINAT: this company only produces 100,000 tons while it has an installed capacity for 300,000 tons. This needs an initial boost and a restructuration program. In cooperation with my collegues at the planning department, we have developed urgency plans that allow such a factory to relaunch activities, create employment and flood the market with cement, a commodity that is very scarce at the moment."

Le Potentiel remarks that the banking sector in the Democratic Republic of Congo is very weak, and asks where the Minister will get the credits to finance all the projects.

"It is true that there is insufficient capacity in the banking sector to finance industries with medium and longterm credits. The banks basically finance over the short-term only. But obviously, industrial projects require a longer time horizon, the medium to long term.

"Replacing equipment in a steel-making factory like the Socider or a mining company like the MIBA requires large capital inputs because the return on the investment takes a relatively long time. But once such an industry is on track, the investment is very profitable."

"Short-term credits are meant for commerce and semi-industrial activities. Together with the FEC [Federation of Enterprises of Congo], we are pressuring the World Bank to open a credit-line for us. We have asked for US$ 120 million, but there is no agreement with the Bank yet. When the president of the World Bank visited Kinshasa [Paul Wolfowitz, who toured the country earlier this year], the government has once again attempted to get a committment. At the same time, we are sollicitating other lenders like the Belgian Investment Fund (BIO) and the Agence Française de Développement (AFD)."

"It must be said that with the collapse of the SOFIDE [Société Financière de Développement], we no longer have a robust financing mechanism adapted to funding industry."

"Today, the FPI [Fonds de promotion de l'industrie) limits it credit lines to US$1 million dollars maximum. Large industrial sectors need much larger funds than this. It is absolutely critical for us to relaunch heavy industries, because they drag smaller sectors along."

"We are an elected government, with legitimate executive powers. Once security and peace is entirely restored in the country, I think we will see financial instutions flooding the country which will allow us to revive Congo's economy over the next five years."

Adapted and translated by Jonas Van Den Berg

More information:
Le Potentiel [via AllAfrica]: "Cinq domaines prioritaires pour promouvoir l'industrialisation de la RD Congo" - April 24, 2007

Biopact: EU proposes €uro 5 billion aid for African infrastructure - July 16, 2006.

Biopact: EU forges energy partnership with Africa - March 15, 2007.