In DRC, mobile phone airtime is the new currency exchange
Mobile phone airtime touts on the streets of the Democratic Republic of Congo’s capital have become the latest target in the government’s attempt to stop the slide of the Congolese franc.
The traders who peddle mobile credit to pedestrians in Kinshasa must stop speculating on the exchange rate and sell $1 airtime cards for no more than 1,000 Congolese francs (Dh4), according to a statement issued this month.
As of Tuesday the Congolese franc had weakened 2.6 per cent so far this year to 951.89 per dollar, after trading little changed all of last year, according to the central bank. The touts, who buy the airtime cards in dollars, have been reselling the minutes at effective exchange rates as high as 1,200 francs in anticipation of a further depreciation in the domestic currency.
The collapse in the prices of copper, the country’s biggest export, and other natural resources like cobalt and oil reduced the DRC’s foreign-exchange earnings, bringing pressure to bear on the franc. The DRC is Africa’s top copper producer and the world’s largest source of cobalt, which is used to make rechargeable batteries. It produced 995,805 tonnes of copper last year and pumps about 25,000 barrels of oil per day. The government has vowed to continue protecting the franc, but the gradual erosion of its reserves is limiting its options.
“We are concerned by the history of inflation in this country,” said Vincent Ngonga Nzinga, deputy cabinet director in the prime minister Matata Ponyo Mapon’s office. “This intervention should help to stabilise things,” he said.
Vodacom DRC, a unit of Johannesburg-based Vodacom Group, is the DRC’s biggest mobile operator. It competes with companies including Orange and Bharti Airtel.
Analysts including Glenn Tshiany, head of global markets at Standard Bank Group, have said they expect the franc to fall further and that it’s only a matter of time before it reaches 1,000 francs, citing the airtime rates as an important leading indicator. The franc is already trading at 978 per dollar on the parallel market on the streets of Kinshasa, according to figures from the prime minister’s office. Mobile phone companies in the DRC, which say they have no control over the street vendors, have raised concern about the inflated prices.
“It has meant a 20 per cent increase in the cost of recharging for our clients,” said Orange managing director for the region, Jean-Michel Garrouteigt. “So far the communications seem to be working and the price in Kinshasa has come back down.”
Touts in Kinshasa are reselling airtime cards at high exchange rates in anticipation of domestic currency depreciation.