DRC unrest puts dent on regional trade

Armed men travel in a pickup truck, devoid of any insignia or markings, as they drive through a street in Goma on January 28, 2025. Gunshots rang out through parts of the besieged DR Congo city of Goma on January 28, 2025, as Congolese soldiers clashed with militia fighters backed by Rwandan troops ahead of a UN Security Council meeting. [AFP] The viability of regional trade has been put to question by the ongoing unrest in Democratic Republic of Congo (DRC). The fighting between M23 rebels and DR Congo's army and its allies has had a devastating effect on Goma, while riots by protestors over the seizure of Goma by the rebels in other parts of the country including the capital Kinshasa is now having its toll on the region. East Africans are feeling the impact of the violent clashes in the DRC with fears that the impact will spread to the neighboring countries, in what is anticipated to be a trickle down effect. Economists have said that the unrest in DRC Congo postpones the dream of a unified region. Economist Ken Gichinga of Mentoria Economics notes that the unrest is going to complicate supply chains and could trigger inflation. Goma, a key transit point in the transport corridor into DRC and economic hub. The economist has said the projected outcome for Kenya is that there will be disruption in the supply chains that will complicate deliveries and increase the cost of doing business. The unrest, economists have said will also increase the risk profile of the East African Community and, "investors could start scouting for alternative routes". "Such a move will negatively impact the business environment," Gichinga said. Professor Samuel Nyandemo, a lecturer of economics at the University of Nairobi, noted that the conflict affects business activities as well as socio-economic lives. Kenyans have significant investments in DRC, including banks, all of which will be affected by the conflict. "That notwithstanding, most Kenyans doing business in DRC are going to be affected and it will affect their incomes," said Nyandemo, adding that DRC has been a big market for Kenya. If the current conflict persists, he said, trade flows between Kenya and DR Congo are likely to shrink, compromising the activities within the northern corridor, affecting Kenya investors. "DR Congo has been shaky for decades and that impacts trade relations. The heads of state within EAC should resolve the issue to ensure regional unity and viability of regional trade." The involvement of Rwanda in the DRC conflict, Nyandemo added, will disenfranchise business activities within the region. A soldier from the Armed Forces of the Democratic Republic of Congo (FARDC) on duty. [AFP] For Kenyans in the DRC, the economist has said the conflict will suffocate their incomes ultimately affecting their livelihoods. Regional conflicts have been a major handcuff of inter-regional trade, "the trade along the EAC corridor is going to be drastically affected," Nyandemo said, adding it will affect flow of goods along the corridor. Many Kenyan firms and even individual traders have over the last decade been trooping in search of opportunities attracted by the country's more than 100 million people as well as its admission to the East African Community (EAC), which eased movement of goods and people. Kenyan banks led the charge to DR Congo with KCB Group and Equity Bank subsidiaries being among the leading lenders in the country. Equity Bank started operations in DR Congo in 2015 following its acquisition of ProCredit Bank. It later acquired a majority stake in Banque Commerciale du Congo (BCDC) in August 2020, which was later followed by a merger with Equity Bank Congo to create Equity Commercial Bank of Congo (Equity BCDC). The lender is one of the biggest foreign banks in DR Congo. Equity Bank has in the past noted the massive potential in DR Congo nad noted that it would in the coming years overtake Kenya in terms of asset base and profitability. KCB Group in 2022 acquired an 85 per cent stake in DR Congo's Trust Merchant Bank. The two Kenyan owned banks, together with Rawbank, control about two thirds of the DR Congo market. The Kenya Association of Manufacturers (KAM) said the Kenyan business community is concerned about the situation in Eastern DRC. KAM chief executive Tobias Alando acknowledged the strong social and economic links between DRC and Kenya. "The crisis in Eastern DRC challenges the free movement of goods, services and people in line with the EAC protocol. We are looking forward towards the speedy resolution," Mr. Alando said. Residents carry their belongings on a truck as they flee from Kibati, where fighting has intensified, towards the city of Goma on January 26, 2025. The M23 armed group has seized further territory in the east of the Democratic Republic of Congo and on Sunday was continuing to tighten its grip on provincial capital Goma, which is almost surrounded by fighting. [AFP] The value of exports to DRC nearly doubled over the five year period to 2023 to Sh26.4 billion from Sh15 billion in 2018, according to data by the Kenya National Bureau of Statistics (KNBS). Animal and vegetable fats and oils, pharmaceutical products, tobacco, iron and steel, leather and footwear, vegetables, fruits, nuts, plastics, paper and paper board are some of the key exports to DRC. Annabel Kamondo, a Kenyan trader whose company, Belle Anka International, exports tea to DRC through Uganda said she has not been able to release any consignment to Goma since the chaos erupted. "There is a lot of tension in DRC, and our goods are not able to get to their destination," said Kamondo, who has been exporting to the market since 2023. "Because of the tension, you don't know if they can attack you or tracks transporting goods." She was looking to benefit from an exhibition organised by KAM in March this year, but that too has been dwarfed by the tension. "The expo would have opened more businesses. Right now we do not know if it will still happen." She said her distributor in Goma has also expressed fears and is looking for ways to get himself and his family out of Goma. "We were communicating with the Kenyan Embassy in DR Congo, and since the attack, we don't know what will happen going forward." Early this week, Kenyan budget airline JamboJet cancelled all its flights between Nairobi and Goma over safety concerns and closure of airspace. This means lost revenue. The halt comes barely three years after it started flight services to the eastern DRC in a bid tap into a projected jump in demand for air travel in Africa and boost its cargo business.

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