The World Bank draws up a harsh observation on the management of Congolese public companiespointing out underperformance which weighs heavily on state finances and slows down the country’s economic dynamics. The Bretton Woods institution invites Brazzaville to initiate an in-depth reform of its public portfolio, considered costly and insufficiently profitable in view of the resources mobilized.
A public portfolio under budgetary tension
I diagnosed him posé par World Bank on public enterprises in the Republic of Congo is part of a series of analyzes devoted to the budgetary sustainability of Central African states. According to the institution, companies owned by the Congolese state show a majority of deficit results, even though they benefit from recurring public transfers, tax exemptions and sovereign guarantees. This accumulation of support not compensated by the creation of tangible value increases the public debt and limits Brazzaville’s budgetary room for maneuver.
The review covers several strategic sectors, from hydrocarbons to electricity, including transport, water and telecommunications. In each of these segments, public operators are struggling to cover their operating costs, honor their supplier obligations or invest in the renewal of their assets. The picture drawn highlights chronic undercapitalization, coupled with improvable governance where trade-offs relate more to administrative logic than performance criteria.
Governance, transparency and sovereign risks
Au-delà des chiffres, the World Bank emphasizes the fragility of the governance framework surrounding these companies. Poorly structured boards of directors, irregular financial reporting, incomplete audits: the standards observed deviate significantly from the good practices recommended by the Organization for Economic Co-operation and Development (OECD) in terms of management of state-owned enterprises. This opacity complicates the assessment of the real liabilities carried by the public portfolio and exposes the Congolese Treasury to conditional commitments that are difficult to anticipate.
The question of crossed arrears between administrations, public companies and private suppliers also comes up in the analysis. When the State delays paying for the services of the companies it owns, or vice versa, the chain effect disrupts the local economic fabric, weakens subcontracting SMEs and fuels distrust among financial partners. For rating agencies and multilateral donors, this type of circuit constitutes an aggravating factor in sovereign risk.
The fact remains that Congo is not an isolated case on the continent. Several neighboring countries, from Gabon to Cameroon, are the subject of similar analyzes on the performance of their public champions. The Congolese specificity is, however, due to the place occupied by hydrocarbons in the formation of revenues, and to the sensitivity of the budgetary trajectory to world crude prices. Any failure of a strategic operator quickly results in increased pressure on public accounts.
What avenues for recovery for Brazzaville
The recommendations formulated converge towards a rationalization of the public portfolio and a professionalization of its supervision. There World Bank evokes the need for an exhaustive inventory of state participations, a classification of companies according to their strategic nature and a road map specifying, for each entity, the horizon for returning to balance. Non-viable companies could be subject to restructuring, partial sales or orderly dissolutions.
The institution also calls for the establishment of an agency or department dedicated to monitoring public participation, based on the model adopted by other emerging economies. This system would make it possible to consolidate financial information, harmonize audit practices and centralize the State’s shareholder function. Concretely, this involves more clearly separating the roles of regulator, shareholder and supervision, which are still largely confused in the Congolese administrative organization.
For the authorities, the issue goes beyond just public accounting. Congo’s credibility with its creditors, including the International Monetary Fund (IMF) with which a program is underway, depends in part on the ability to demonstrate increased discipline in the management of the parapublic sector. The next budgetary decisions and the timetable for structural reforms will show whether Brazzaville intends to transform this warning into a lever for modernization. According to Financial Afrik, the institution’s report constitutes a clear signal addressed to Congolese decision-makers.
To go further
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