The move to pay public sector workers via bank accounts has already saved the government $29m. But what's in it for the banks?
The government's drive to pay civil servants through banks is shaking up the industry, with a few financial institutions ramping up their customer bases and taking in small but rapidly rising deposits.
Our goal is to get a grip on the number of workers in order to remove ghost workers from the list
The process is not without its pitfalls, as working with the government poses challenges and the country's lack of infrastructure leads to high operating costs.
The process of forcing civil servants to open bank accounts started in late 2011, and about a million public sector workers now have access to an account where they receive their salaries.
Today, the DRC's central bank estimates that 74% of bureaucrats are paid through banks.
It is the case for Darlose Soheranda and her husband, both of whom are teachers in Eringeti in eastern DRC.
"We prefer to go get our salary at the bank. There are no delays and at least we are sure to get our entire salary," she says.
Before 2012, workers would only get about half of their salaries because unscrupulous agents took cuts here and there throughout its transit to its destination.
Bankers initially welcomed the government's initiative, but all of the hard work has not been completed.
Jean-Louis Kayembe, the director of the civil service salary programme at the central bank, explains the importance of the project: "This reform was necessary because the public sector wage bill represents 40% of government spending, and having control of public spending is indispensable.
"Our goal is to get a grip on the number of workers in order to remove ghost workers from the list and to control salary payments in order to avoid fraudulent leakages."
Since 2012, the government has saved 27bn Congolese francs ($29m), which corresponds to thousands of salaries for fake employees.
This reform was not universally popular because it shook up corrupt networks that have deep roots in government offices.
"We were threatened. The prime minister, who championed the reform, was, too. We had to improve our security," explains Kayembe.
Three years after the launch of the bank payment programme, the system remains "laborious", according to prime minister Augustin Matata Ponyo: "We are putting in place a modern system based on the existence of the banking network, yet the DRC was unbanked 15 years ago. So, yes, there are still some difficulties."
Among the problems are the state's payments to banks.
Fifteen banks distribute civil service salaries and are paid $3.6 per transfer in well-served urban zones and $5.8 in areas with weak infrastructure.
Michel Losembe, chief executive officer (CEO) of the Banque Internationale pour l'Afrique au Congo and president of the Association Congolaise des Banques, explains the banks' complaints: "The last fees we received cover payments for the month of August 2014.
"This creates a heavy burden for the banks because, despite the salary payments, payments in cash remain high."
Another obstacle in the payment process is that the state has not finalised the list of public servants.
Patrick Kabisi, Ecobank's director of high-street banking, says: "One of the preliminary conditions for us to be able to provide banking facilities to civil servants is for the lists furnished by the government to be stable.
"We cannot afford to take the risk of giving a one-year loan to a worker if in three months he will no longer be on the lists."
With cars stuck in the mud and convoys attacked, one of the largest challenges is simply reaching workers. Many of them work in zones that are difficult to access.
The DRC is as large as Western Europe, has few practicable roads and has a low rate of electricity provision, raising costs for banks.
With ongoing conflict in the east, banks face problems of insecurity in transporting salaries to bank branches.
Some sites are so isolated that civil servants have to travel 200km each month in order to receive their salaries.
"For those workers, we have decided to pay them outside of the banking system until we can find other solutions. For the moment, they are paid through the Catholic charity Caritas," explains the central bank's Kayembe.
In view of these problems, what is in it for the banks, which, after all, have the goal of making profits?
Ecobank's Kabisi explains: "We will maximise our profitability when we are able to add other products and services to the simple execution of paying into an account – things like pay-day advances.
"Profitability will also be maximised when bureaucrats leave their money in their accounts. Banks base their loans on customer deposits."
It is generally difficult for workers, who earn about $100 per month, to have access to loans or savings accounts.
Hassan Wazni, CEO of Sofibanque, explains: "Our external auditor complained because this process is not bringing us enough money.
"We do not have any direct profitability from this, but of the 100,000 civil servant accounts that we have, 2,000 to 3,000 have received a loan, so that will earn for us in terms of the interest rate."
Fixed and mobile banking
Trust Merchant Bank (TMB) and Bank of Africa (BOA) have benefited from the civil service's contribution to the growth of the sector.
The number of public servants who bank with TMB rose 120-fold from 2011 to 2013, from 1,500 to more than 170,000.
The bank's deposits more than tripled over that period, and its total customer base rose to more than 460,000 as TMB managed the accounts of 29% of the DRC's civil servants by December 2013.
BOA reported in 2014 that the savings it manages rose 2.2 times during the government's programme roll-out.
However, BOA has been losing money since 2011 and the new customers have not led the bank into profit.
However, they helped reduce the bank's net loss to 1bn Congolese francs in 2013. On the other hand, TMB's annual net in- come rose more than six-fold to over 6bn Congolese francs in 2013.
It is not just the banks that want in on the game. Telecommunications operators are pushing mobile banking where banks do not or cannot go.
"It is a process that will bear fruit in the long term. We hope to reach bureaucrats with the other products that we are offering, ex- plains Samuel Brawerman, the head of Tigo Cash in the DRC.
Mobile operators first went after the most remote areas where there are no bank branches but there are mobile networks.
Banks have also welcomed the growing competition in bigger cities so that they can avoid the long queues that form each month in front of the country's banks. ●