Following the change in the mining code which requires mining companies to repatriate 60% of revenues against 40% previously, the total deposits in commercial banks in the DRC fell from 5.63 billion USD in March 2020 to 10.33 billion USD in September 2021, informs an IMF report which carried out a study on the Congolese financial system.
According to the conclusions of this study conducted in February 2022, the financial system in the DRC is “relatively small, largely dominated by banks and very concentrated”. Total financial assets amount to 24.7% of GDP (2021) and bank assets make up 97 percent of the financial system, IMF experts argue.
However, there are three types of banks in the DRC: local (4), pan-African (9) and international (2). Two banks hold 55% of the assets of the banking system. About 90% of loans are located in two of the 26 provinces, namely Kinshasa and Haut-Katanga.
The same document also indicates that the surplus funds held by banks are mainly the result of foreign currency deposits which have doubled since the start of the pandemic as a result of higher currency repatriation obligations.
Another characteristic of the Congolese financial system is that most commercial bank customers prefer to save in foreign currency. This maintains the extremely high degree of dollarization of the banking system and its excess liquidity. In September 2021, foreign currency deposits in commercial banks accounted for around 85% of total deposits.
To conduct this study, the Monetary and Capital Markets (MCM) Department of the International Monetary Fund (IMF) carried out a Financial Sector Stability Review (FSSR) mission (virtually) from January 5 to 28, 2022 in Democratic Republic of Congo.
At the end of this study, the Mission identified five macro-financial vulnerabilities: the weakness of the capital of the banking system; the difficulty in valuing non-performing loans (NPLs) following the COVID-19 measures; risks related to financial dollarization; the termination of correspondent banking relationships (RCB) due to de-risking; the centralization of cash from bank subsidiaries in the DRC with parent companies abroad.