Goma, Nord Kivu January 25th
Many things can pass through your mind as you walk through an informal market in Africa. They are noisy and chaotic with squawking animals, crowds and burning rubbish in the street. One can choose to be horrified although it is far better to be fascinated: they are enormously active and creative places. In the informal markets of Goma simple goods are laid out on the ground for sale or on tables and in basic shops, made from scrap wood. There are whole functional areas: the tableware selling section, electronic goods area, book and stationary district, the mechanics’ section and then the workshops of craftsmen—tinkerers making pots, pans and buckets from metal sheets, baskets and wicker-ware, and carpenters making furniture, wheelbarrows and one truly remarkable Congolese invention, the “chikudo”, a kind of giant wooden bicycle that serves as a rolling wheelbarrow and that you see carrying enormous loads around town, usually with a boy rider guiding them precariously. Such inventions and products are what is called in the development world: “appropriate technology”, goods and services of simple design and manufacture that are accessible to those making or using them. They are low-cost and low-technology and provide an income for those who build them and displace imported goods to boot. In development and economic terms, these are win-win conditions; truly bottom up economic activity that is sustainable, poverty reducing and geared to local needs and capabilities.
If a visitor looks past the garbage and the noise, these markets, rabbit warrens of activity, are remarkable, economically active, areas where livelihoods are being earned. I find them enormously heartening places to be and as a foreigner, your welcome is generally warm, even if people tend to make a double-take as they pass which says they are not used to seeing muzungus here. After a week in Goma it is apparent that I am probably one of the only foreigners passing through them on foot. But this is my community and the world I wish to know and I make it my business to know these districts and their informal markets and the people earning a living there.
But Congo is a place of contrasts and at the other end of the economic scale it is apparent that there is actually a lot of money in Goma, much of it coming from mining—diamonds, gold, coltan—and other resources, in addition to all the other rackets going on. Army generals are, in particular, economically active, to the point that these interests and agendas have come to dictate military policy and the shape of security in the districts of the province, places which are still unsettled, wild west towns of mining, money, bandits, rebels, the private armies of generals, and the occasional presence of the UN and humanitarian workers. I have travel to these places in store, including Rushuru and Walikale, the latter a half stabilised area that is a planned project site for KRC, and is Ferdinand’s home town.
But for anyone who has made it financially in the Kivus, Goma is the place to be, and the place to flaunt it and it does not take sophisticated measurement to discern this new wealth. Shiny late model SUVs, even BMWs, ply the streets and there are shops selling high end luxury goods. There is also a construction boom, with enormous houses and buildings being built all over town, most of them following the architectural vernacular of the Kivus—an odd, practically Alpine design with tall 2 and 3 story buildings with steep pitched roofs and gabled windows. I know from Dominique, a civil engineer, that the cost of construction, including materials, is high—any of these buildings will cost hundreds of thousands of dollars to build.
Land is not cheap either; the Kivu Reintegration Centre has just been evicted from its computer lab after the building was sold. And no, in Congo the tenant does not get two months notice, you can be asked to leave from one day to the next. The sale price was $300,000. As a non-descript boxy warehouse type building, it is not something I would see changing hands for that kind of money even for the land value in my own hometown, in Toronto Canada. But there is a demand for land here, this is what people can afford to pay and are getting for it from somewhere. They are also paying in cold hard cash and in full. There is no credit here.
In a place like Congo, even in far more stable developing countries, credit is scarce and expensive; more sophisticated debt products, like a mortgage market, do not exist. Credit, when it is available—usually to those with extensive collateral—is on short term and at high rates of interest. In reality, most business and individuals have to be self-financing. The real interest rate—the difference between inflation and the lending rate—tends to be extremely high, 10-20%, as opposed to 1-5% that would be more typical in a western country and makes such debt affordable. That real rates are so high represents the extent of risk for a lender. In a country without the rule of law or strong independent institutions, courts cannot be used to pursue loan defaulters or enforce contracts. Government policies can change quickly without warning or compensation, political instability—“or country risk”—is high.
In short, there is a lack of “trust” in these economies and societies, the confidence that underlies the thousands and thousands of business transactions that occur every day in a developed market economy, where a bank is willing to lend you money for a house and agree not to be paid back for 20-30 years. Consider if there were no mortgage market in Canada or the UK or US. You could not afford to buy a house outright—currently averaging roughly $400,000—and to the extent you do actually own your own dwelling, it would probably be a self-built structure that you are adding to one bit at a time, when you are able to save enough—in cash—for the next step. That is exactly what most people in Congo—or other developing countries—do, both the poor and the middle class. Without trust, there is no credit, no leverage, none of the other sophisticated financial and credit markets—from stocks and bonds to credit cards and home and car loans, and all the benefits and affluence that flow from them. Let Wall Street have its greed and its complex financial instruments—I will be happy if that and one severe downturn every 80 years is all it takes to have markets I can borrow from at reasonable rates or invest in and make a safe return.
With huge buildings being built and basic property changing hands for $300,000 cash in Goma, in the middle of a zone of conflict in a country that is among the poorest in the world and where there is no credit, it is obvious that some people here have a lot of money on hand and that they are getting it from somewhere.