In DRC, mo­bile phone air­time is the new cur­rency ex­change

The National - News - Business - - Analysis - Tom Wilson

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.”

Papy Mu­longo / AFP

Touts in Kin­shasa are re­selling air­time cards at high ex­change rates in an­tic­i­pa­tion of do­mes­tic cur­rency de­pre­ci­a­tion.

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