Jean-Claude Masangu Mulongo, Former Governor, Banque Centrale du Congo reflects on his role and career to date in the DRC and his reflections on the FI 2020 Forum and goals
The Challenge: Hyperinflation, disintermediation and dollarization
Prior to working as Governor of the Central Bank of Congo, I was Head of Citibank in Kinshasa in the DRC. I spent 17 years with Citibank, so I came from the private sector, I went to the public sector and I am now retired.
In order to understand financial inclusion in the DRC, you first have to look at where we started from when I entered the Central Bank of Congo. It was a period where we had hyperinflation and devaluation of the currency on a daily or hourly basis. Because of that, people did not keep money in the banking system, so we had disintermediation as well.
On top of that, we had the ‘dollarization phenomena’, where we had four currencies within one country, so we needed to put some order into that.
The results: from chaos to control
Inflation, we moved from 4 digits to 1 digit, going from 10,000% to 1%, or less than 1%, in 2013.
Stability of the local currency: we moved from devaluation and depreciation on a daily basis to stability in the last four years. Our currency against the dollar or the euro, moves 0.3% per year, which is normal. That gives visibility. That provides trust for those that want to get into the financial system, or use the financial services.
We also needed to reintermediate, or give the banks the chance to reintermediate with the debt. To give you an example, total loans into the system were $50 million. Today we are above $2 billion. Deposits, were similar: $100 million, because of the disintermediation. Today we are above $3 billion.
Pushing for microfinance
Now, on top of that, we pushed for microfinance. So I put a microfinance department in place at the Central Bank, with people in charge to look at that sector of the business. I trained them. They travelled all over the place to learn and then came back and took charge of that mission.
Today we have about 150 microfinance institutes that we supervise. In order to push forward that sector, we introduced mobile banking.
Before introducing mobile banking, we modernized and restructured the Central Bank, putting in place a new national payment system. As a result, we had online transactions and online transfers all over the country.
We then pushed the commercial banks again to invest with us and restructure - so they also came up with new products and services based on the new technology.
The result: a significant impact on the life of the small guys
So we moved from, 2% banking penetration to 6% banking penetration – bearing in mind that the DRC has about 70 million people. And I’m sure we can do a lot more with a good roadmap of financial inclusion. That’s why I came here, to get some ideas, and to see how we can push forward that financial inclusion.
The important thing about financial inclusion, for me, is that you can have a significant impact on development. You can have a significant impact on the life of the small guys if things are done right, properly, with ethics and so on. It will take time - it doesn’t matter how long it takes - but at the end of that time, we’ll make significant progress.
The major challenge to achieving the goal of full financial inclusion
The major challenge that I see - and again, I’m speaking from a DRC point of view, but I think it’s also valid for other countries as well – is that in order to have a significant impact on the poor, you need great coordination among the different sectors for financial inclusion to be successful.
For example, you need something from the telecoms sector, from the financial services providers, from the agricultural sector - if you need to be in the rural places. It’s the coordination of all those areas that becomes very challenging. I would recommend that you have the right people in place and that you work together with all the stakeholders.