DRC: Why Kenya is so keen on Kinshasa joining the East African Community

As the DRC moves closer to formal admission to the East African Community (EAC), Kenya organised a 200-member trade mission to the central African country in November 2021. According to Equity Group, the 15-day trade mission to the DRC (between November and December 2021) was aimed at deepening trade relations between Nairobi and Kinshasa.

The idea for the Kenyan banking giant was to “highlight trade and investment opportunities in the DRC” and this “as part of a government programme to foster regional trade and stimulate business growth by unlocking investment opportunities in East and Central Africa”.

Through this trade mission, Kenyan companies, SMEs and entrepreneurs will have the opportunity to showcase their offerings and partner with their DRC counterparts…

The trade delegation’s programme includes meetings with Congolese economic operators in four of the country’s largest cities: Kinshasa, Lubumbashi, Goma and Mbuji Mayi. “The DRC has the strongest regional interconnectivity in the region, which is favourable to cross-border trade. It has 11 major economic corridors that facilitate trade flows in the region while connecting to Central Africa, Southern Africa and parts of East Africa,” Equity Group said in a statement.

“Through this trade mission, Kenyan companies, SMEs and entrepreneurs will have the opportunity to showcase their offerings and partner with their DRC counterparts, who will also present their business offerings and seek to partner with Kenyan entrepreneurs,” the Kenyan banking group said.

Final stretch

On 22 November, in Arusha (Tanzania), the Council of Ministers of the East African Community validated the DRC’s application for membership during its 44th extraordinary meeting. Bordering five member states of the organisation – Tanzania, Burundi, Rwanda, Uganda and South Sudan – the DRC had been assessed from 25 June to 5 July on its level of compliance with the organisation.

On 17 January, Christophe Lutundula Apala Pen’Apala, DRC Deputy Prime Minister and Minister of Foreign Affairs travelled to Arusha, where he expressed his hope that his mission would “mark the last round of negotiations before the admission” of Kinshasa into the Community.

He met Kenyan Adan Mohamed, chairman of the Community’s Council of Ministers and minister in charge of the ECA, who also said he expected the negotiations to be concluded within ten days.

We are going to see people moving from the DRC to the [East African] region and vice versa, so the integration of the DRC is going to be a game-changer in terms of intra-regional trade in East Africa.

“The report on the negotiations will then be presented to the Council [of Ministers] which will then submit it to the ECA Heads of State Summit for consideration,” notes an official record of the meeting. For his part, Peter Mathuki, ECA secretary-general, noted that “once this phase is successfully completed, it will pave the way for the accession phase which literally concludes the admission process and, as soon as the Summit [of heads of state] decides on the matter, the DRC will be admitted as the seventh member of the EAC.”

The DRC’s intention to join the Community is not a default choice. “The DRC shares borders with five EAC member states, namely Tanzania, Burundi, Rwanda, Uganda and South Sudan,” he added.

A young population and many resources

Speaking to the Kenya Broadcasting Corporation on 12 November, Equity CEO James Mwangi said the group saw opportunities in the DRC because of its population of nearly 100 million, most of whom are young. “When we went to the DRC, only 4% of the population had bank accounts and it reminded us of Kenya in the early 1990s. It was this huge opportunity that we saw: to facilitate access to financial services in Congo,” he said.

The banking group is also banking on the DRC’s wealth of natural resources. “Today, the world will not be able to succeed in its bet in clean energy, especially […] in electric cars, without the DRC, because it produces 70% of the world’s cobalt and almost 50% of the world’s copper… We have also seen the potential of the DRC in hydroelectric power production and in agribusiness production, we want to be pioneers in financing the DRC so that it can reach its full potential,” James Mwangi said.

According to the Kenyan entrepreneur, agriculture, the timber industry and local and regional supply chains, especially in the manufacturing sector, are among the most attractive sectors of the Congolese economy.

Expected increase in goods imports

According to the African Development Bank, real economic growth in the DRC is estimated at +3.3% in 2021 and expected to reach +4.5% in 2022 – despite the shocks linked to Covid-19. This is thanks to the rise in prices of the main mining products, such as copper, and the recovery in consumption and investment. The country’s economic growth, the construction of roads, schools, health centres and consumer goods factories are also opening up business opportunities.

In an interview with the Kenyan newspaper The Star, the secretary-general of the East African Community (EAC), Peter Mathuki of Kenya, also pointed to the demographic potential of the DRC. “We are going to see people moving from the DRC to the [East African] region and vice versa, so the integration of the DRC is going to be a game-changer in terms of intra-regional trade in East Africa,” he noted.

“In 2018, for example, the value of goods imported into the DRC amounted to $7.4bn. While the value of goods from the EAC amounted to only $855.4m, which represents barely 11.5% of the DRC’s imports,” noted Mathuki, pointing to the larger market shares of countries outside the zone such as China, South Africa or even Zambia. Formal economic integration of the DRC into the East African Community could quadruple the latter’s share of the country’s imports, according to the Kenyan diplomat.

Everyone wants a piece of the action

Kenyan companies that have expressed interest in the DRC include Jubilee Insurance, Equity Bank and Kenya Commercial Bank (KCB). Equity Bank is already present in the DRC. In August 2021, the KCB Group announced its intention – as part of its expansion on the continent – to enter the DRC through the acquisition of a local bank. Its managing director, Joshua Oigara, explained at the time that KCB was negotiating with “two to three banks” in the DRC to set up in Kinshasa in the near future.

Jubilee Insurance, the region’s largest insurer, announced in October 2015 that it was setting up shop in the DRC, where it planned to tap into the strong demand for cover. The Kenyan insurer has so far partnered with state-owned Sonas to offer medical and life insurance products. Jubilee is targeting a portfolio of 5.5 million customers over the next five years.

Jambo Jet, a subsidiary of Kenya Airways, launched flights to Goma in eastern DRC in September 2021 to open up the region to tourism and business opportunities for Kenyans. “We have an ambitious plan to grow our network, and we are proud to be the first low-cost airline to venture down this path,” said Karanja Ndegwa, Jambojet’s CEO, at the launch of the inaugural flight on 10 September 2021.

Two months later, in November, Jambo Jet increased the frequency of its rotations to three flights per week, citing increased passenger demand.

The Kenyan government at the helm

The enthusiasm of Kenyan companies for the Congolese market is supported by the executive in Nairobi. Almost a year ago, in April 2021, President Uhuru Kenyatta paid a state visit. The two countries signed agreements on transport, security and trade to improve bilateral trade.

Among the agreements signed between Presidents Kenyatta and Felix Tshisekedi was an agreement on the handling of goods at the port of Mombasa, granting certain facilities to DRC entrepreneurs.

Kenya also announced the opening of diplomatic missions in Goma and Lubumbashi, in eastern DRC, to facilitate consular services for traders.

The economic sectors targeted by the general framework of cooperation signed by the two countries are agriculture, education, health, sports and tourism, but also the environment, SMEs, housing, energy and infrastructure development.