With shaky financial institutions closing and customers losing money, banking in the Democratic Republic of Congo is risky. The unreliable banking system is forcing people to seek out informal cooperatives or move their money across borders.
GOMA, DEMOCRATIC REPUBLIC OF CONGO — Eight months ago, Patrick Syaluha was rushed to the hospital after fainting on the steps of his bank in Goma, the capital of DRC’s North Kivu province.
For the last year, Syaluha had been working hard to save 4,723,550 Congolese francs ($3,000) in preparation for his wedding.
But when he went to his bank, the Mutuelle d’Epargne et de Crédit du Congo (MECRECO), he found a shuttered building.
“There wasn’t a soul in sight,” he says. “[Just] a notice posted on a door indicating the bank wouldn’t reopen for business at least 45 days after the date of posting of the notice.”
When he realized that the closed financial institution meant that his savings were gone, he fainted.
In the months since his financial institution closed – MECRECO is a financial cooperative, a common banking structure in DRC – Syaluha has joined others in signing a memorandum attempting to claim reimbursement from the country’s central bank, Banque Centrale du Congo. But requests have not been successful.
“I no longer place my trust in cooperatives or private banks,” Syaluha says.
In Goma, six savings cooperatives and two bank cooperatives have closed this year.
It’s becoming more common for financial institutions here to close with little or no notice. Customers say they are losing their money and, thanks to improperly regulated processes, aren’t getting their money back. Many are turning to informal saving schemes or are opening accounts outside of the country, where they say their money is more secure.
Mariam Aboubakar Esperance, GPJ DRC
Decades of political instability and violence have undermined economic development in DRC, economists say.
According to a 2014 consumer survey conducted by the Ministry of Finance and the United Nations Development Program, just 12 percent of surveyed Congolese adults use formal banking services, while 4 percent use microfinance institutions and 5 percent use savings cooperatives.
Charles Olenga, an economics researcher at the l’Université de Goma, says that cooperative banks in DRC started to deteriorate when the global financial crisis began in 2007.
As investment banks in the U.S. collapsed, Congolese banks that rely on U.S. dollar deposits incurred losses and struggled to provide quality services to customers, he says.
In 2013, the government introduced a new legislation to help regulate the microfinance sector, a move that some people say demonstrated the government’s interest in repairing a frail financial sector.
But now as large microfinance institutions and saving cooperatives in eastern DRC are folding, distrust for all banking schemes and institutions among Congolese is increasing.
Agnès Katungu, who owns a convenience store in downtown Goma, says a lack of reliable saving cooperatives often prevents people from starting businesses.
Katungu had a savings account with the International Bank of Africa in Congo, a large formal bank with a branch in Goma. But when the bank closed in November 2016, she says she lost two years’ worth of savings.
She says she now uses a rotating savings scheme common among women in DRC, called likelemba, where members of the group deposit into a group fund and make loans to other group members.
Prince Bangala, a businessman, says he also lost his money when the regional branch of Banque Centrale du Congo closed. Unlike others, he says he was able to get his money refunded.
“It took me more than two months to finally get my money back from DRC’s central bank. And what’s worse, I recovered it in dribs and drabs,” he says, meaning he did not get the whole sum back at once.
And during those two months, Bangala says his business came to a halt.
“I could no longer import goods from China because I did not have enough money to pay for the process,” he says.
“If anyone trusted banks, it was me,” Bangala says. “Today, however, I don’t trust Congolese banks anymore.”
Bangala now banks in neighboring Rwanda.
Officials from the Banque Centrale du Congo did not respond to multiple requests for comment.
Sylvestre Ndahayo, GPJ, translated the article from French.