The political turmoil that followed independence from Belgium in 1960 resulted in the collapse of civil administration and severe economic dislocations (see The Crisis of Decolonization , ch. 1). The rapid departure of Belgian administrators and technicians left government and industry in the hands of low-level cadres. Vital transportation facilities and trade services were disrupted. Export earnings declined. After political and civil order were restored following the rise to power of President Mobutu in 1965, the government of the Congo (as the country was then known) soon launched a comprehensive and ambitious attempt to achieve economic independence through nationalization. The largest expropriation was that of the Belgian-owned mining company, UMHK, and its transformation into General Quarries and Mines (Générale des Carrières et des Mines--Gécamines). After much wrangling with Belgian industrialists and the government, Zaire and Gécamines agreed to a reimbursement plan, which included a percentage of revenues of the new company to be paid to the former owners.
The government also promoted a series of development programs designed to transform a primarily agrarian economy into a regional industrial power. Zaire's enormous mineral wealth of copper, cobalt, gold, and diamonds was intended to serve as the engine for this transformation. The ultimate goal was ostensibly to move the economy to a stage of development comparable with that of the Western industrial powers. The new Congolese government thus expected to realize the early colonial aspirations for the country to be the breadbasket and principal industrial power of Africa.
This strategy of industrialization was to be financed through external lending and was based on projections of increases in mineral prices, production, and sales. Justified by the doctrine of economic nationalism, grandiose and ill-conceived projects based on copper and energy development and financed on terms unfavorable to Zaire were undertaken. In 1967 the IMF concluded an agreement with the Congo for monetary and economic reform. The currency was devalued to control inflation, and the Congolese franc was replaced by the zaire (for the value of the zaire--see Glossary). Within two years, the reform program, combined with political tranquility, a rise in the price of copper, and increased exports, had led to a stable currency and an increase in foreign-exchange reserves. Zaire (as the nation was called from 1971) rode high on the commodity price boom of the early 1970s along with other primary commodityproducing countries.
In retrospect, it appears that the economic and financial policies of this period were the result of both a desire to transform Zaire into an industrial power and to maintain in power, as well as enrich, what was to become the country's ruling political and economic elite. As several observers have noted, Mobutu's authoritarian paternalism gave rise to rampant corruption incompatible with economic diversification and development. Regardless of the motives for the economic decisions of the late 1960s and early 1970s, economic decline set in as grace periods expired on the enormous debt that the government had incurred from foreign governments, as well as international lending agencies, to finance its ambitious industrial development projects and as the neglect of transport and agriculture began to take its toll.
The cost of living rose rapidly, while new foreign borrowing raised the nation's external debt from US$763 million at the end of 1972 to US$3 billion by 1974. In November 1973, Mobutu announced measures to place all businesses in the hands of Zairians.
Data as of December 1993