Banking in Congo - Cash in a canoe

IMAGINE if, to collect your salary each month, you had to walk to the nearest town, perhaps tens of miles away, to congregate in a school or a football pitch or a church. There, you and your colleagues wait for a man to arrive from the capital, perhaps a thousand miles away, with a suitcase of cash. Most of the time, you do not receive as much money as you should. Sometimes the man does not arrive at all.

Until recently, that is how most government employees in the Democratic Republic of Congo were paid. But over the past three years the government has been urging civil servants to open bank accounts, to which their pay can be transferred directly. In the process, it is accelerating the spread of banking in an economy that, according to Michel Losembe, the bow-tied president of the Congolese Banking Association, is “not very far off barter”.

Few countries are as corrupt as Congo. A persistent national joke concerns a mythical “Article 15” of the constitution, which reads “Débrouillez-vous”—“You’re on your own”. Mobutu Sese Seko, a former strongman, used state funds to charter a Concorde to take him on shopping trips to Paris. By the time of his overthrow in 1997, graft was endemic. Government employees were not paid but rather expected to use their positions to make a living.

Civil war engulfed Congo in the 1990s and 2000s. As it wound down, government was rebuilt and money again began to flow out of Kinshasa, the capital, to roughly 1m functionaries in the rest of the country. But corruption did not disappear. Among the most prized government jobs was that of accountant: the people responsible for transporting bags of cash to the provinces to hand out to employees.

In 2012, however, the Congolese government started helping civil servants to open bank accounts. Around three-quarters of them—some 670,000 people—now have one. In the process, the government has weeded out tens of thousands of ghost employees, since the embezzlers who invented them could not open accounts in their names without a matching ID.

Yet in a vast country with fewer roads than Luxembourg, hardly anyone lives anywhere near a bank branch. So Congolese banks must now do the work the government accountants used to: shipping money to the back of beyond. Cash has to be transported to branches in regional capitals, and thence to account-holders on the backs of motorbikes, in canoes or by foot, explains Oliver Meisenberg, the German boss of Trust Merchant Bank, one of Congo’s biggest.

Bank staff with suitcases of cash make easy targets, just as they did in the west of America in the 19th century. Though they usually travel with army escorts, there have been at least ten armed robberies of bank employees since January, says Mr Losembe. One particularly brutal raid in September in South Kivu, in the wild east of the country, killed 13 people.

Congolese bankers hope that the new system will spur the growth of a proper banking sector. At the moment banks are little more than money-transfer companies, and not very sophisticated ones at that. The transfers tend to go only one way—out of Kinshasa—so cannot be netted against each other; instead cash almost always has to be moved physically. Depositors mistrust both banks and the Congolese franc. To attract dollar deposits, banks must pay at least 6% annual interest; rates for borrowers are generally as high as 25%. There is hardly any corporate lending beyond short-term overdraft facilities.

A decade ago there were just 50,000 bank accounts in the whole country, which has a population somewhere between 60m and 80m. Now there are 3m. As more employees get accounts, selling them loans and insurance, and moving them from cash to mobile transactions, becomes more realistic. In the meantime, actually receiving their salaries at all marks a big step forward for civil servants.