What have been the main developments at Standard Bank DRC over the past year?

Standard Bank is the largest corporate investment bank in the DRC, and we continue to be very active across all sectors. In the last 12 months, we have put over US$300 million in financing into the country and our balance sheet has tripled in size compared to the previous financial year. Standard Bank has been at the forefront of significant deals, including projects that are a first for the continent.

The Central Bank (DRC) slashed interest rates in the last year. Can you help our audience better understand the current fiscal framework and the borrowing environment?

Interest rates have been reduced from a high of 18.5% down to around 8.5% in local currency terms. Corporates are able to borrow dollars at lower rates than previously thanks to the high liquidity in dollar terms. With the introduction of the new mining code in 2018, all mines are required to localize 60% of their export proceeds. That means that banks are sitting on high dollars liquidity, and the Central Bank is in discussions over how best to manage this. From a macroeconomic perspective, the country’s reserves have also significantly gone up to about US$5.0 billion from US$700 million, and the local currency has been quite stable.

Could you comment on the banks’ current credit capacity?

All banks are well capitalized at this point in time, with a high lending capacity. The capital adequacy ratios (CAR) or Capital to Risk Assets Ratio are also very high and we do not perceive any systemic risk across the banking industry. Notwithstanding the pandemic, non-performing loans have also been well managed in the country.

How do you observe the penetration of mobile banking in the DRC?

The DRC remains a cash-dominated market, but the pandemic has led to a greater sophistication in the range of online banking products and services that banks offer. At Standard Bank, 95% of our transactions are realized using BOL our online banking platform. This year, Standard Bank DRC also launched a mobile banking platform specifically tailored to our corporate clients.

Where is investment mostly directed to in the mining sector?

Demand for copper and cobalt – two of DRC’s key minerals – has been going up significantly; cobalt demand is pushed by the electric transition and the need for batteries to power this transition, while copper is very much linked to the industrialization drive. Consequentially, prices have been very favorable for these two commodities, central to the DRC’s mining industry.

The country sees rather limited M&A activity. Instead, investment goes mostly into capacity building. Mines that have been on care and maintenance were brought back into production, and projects in the early development stages have quickly advanced into production, with the yields very high in the sector. The Congolese side of the Copperbelt has significantly higher yields compared to the Zambian side, which makes DRC mines more profitable.

Projects in other minerals are also ramping up, and various majors that had exited the country are considering making a comeback.

From a regulatory and government perspective, new initiatives to regulate the artisanal mining sector are being rolled out. This is good news for the country and will help protect both formal and informal miners, as well as reduce the incidence of accidents and casualties resulting from illegal mining practices.

How is the DRC ranking as an investment destination?

Moody’s rating for the DRC has improved in 2021 to a “positive” outlook. The rating is at Caa1, which is still considered a high credit risk, but the investment profile has been slightly upgraded as more favorable. This US$24 trillion in resources value makes the DRC a high-opportunity country, but this is tempered by high risks. The government is working to mitigate these risks and improve the country’s attractiveness for investors. Besides its mineral endowment, the DRC has 7 million ha of arable, irrigated land. With the right investment, the DRC has a propensity and a real opportunity to become Africa’s breadbasket.

Do you have a final message for our audience?

The run-up to the next elections in 2023 will be a very important period for the country and we will continue to work together with the Central Bank and the Ministry of Finance and Government to ensure that we are all prepared.