Historical Sketch

The colonization of the Congo basin was promoted by the Belgian King Leopold II with the help of the Association Internationale Africaine, founded in 1876, which ostensibly pursued philanthropic goals. At the 1885 Berlin Congress, the territory was declared independent and open for free trade with Leopold as head of state. De facto, the "Independent Congo State" was transferred to Leopold's private ownership. The Belgian state took over the administration in 1908 since world-wide protests against the atrocities had made Leopold's personal rule untenable. In 1960, Congo (-Leopoldville) attained independence. Within days, the southern province of Katanga and the central province of South Kasai seceded. While the latter lasted only for a couple of months, the "Republic of Katanga" could be re-integrated only in January 1963 and after a bloody civil war. In 1971, the country's name was changed to Zaire to remove any reference to the colonial past. In the early 1990s, the Zairean government lost control over more and more parts of the country and, finally, got overthrown in 1997. The new government abandoned the name Zaire and reverted to Congo (-Kinshasa).

Monetary History Overview

In pre-colonial times, various metallic objects were used as money in trade. Iron tools like howes, axes and weapons like spear heads, swords or daggers were common in the northern and central parts of today's Congo. The objects were embellished and sometimes enlarged such that they were no longer fit for everyday use. In the copper-rich southern regions copper ingots in bar or cross form were utilized.

The establishment of state structures of the so-called "Independent Congo State" included the creation of a distinct currency. So the royal decree of July 1887 gave rise to the 1st Congolese Franc in the gold standard of the Latin Monetary Union, on par with the Belgian Franc. Belgian coins and paper money were legal tender in the Congo State but the Congolese Franc was not convertible into Belgian money. The currency remained unchanged when Belgium established the colonial rule in 1908, just the paper money and coins were exchanged to reflect the change. In June 1909, the Bank of Belgian Congo began operations and obtained the privilege for the money issuance. During First World War, Germany occupied Belgium. In consequence, the Congolese Franc appreciated against the metropolitan currency and received a mark-up of up to 20%. After the war, parity was restored, and the Congolese Franc was introduced also in the Rwanda-Urundi mandate territory that Belgium had taken over from Germany. In 1952, the colonial government created the Central Bank of Belgian Congo and Rwanda-Urundi to take over money issuance from the Bank of Belgian Congo whose privilege had not been renewed. The Congo-Rwanda-Burundi Franc replaced the Congolese Franc on par. New banknotes and coins were issued in July 1952, the former ones remained in circulation. The Congolese independence in July 1960 triggered an immediate abolition of the colonial monetary system. Congo withdrew from the common currency area with Rwanda-Burundi which remained under Belgian rule. A Monetary Council took over money issuance, and the 2nd Congolese Franc was created in September. The secessionist "Republic of Katanga" established a central bank in one of its first legal acts in August 1960 and created the Katangese Franc as distinct currency. The bank was dissolved immediately after the crushing of the secession in January 1963, the currency changeover was effected until mid-year without any confiscation. The Congolese Franc got devalued for the first time in late 1961, thus ending the parity with the Belgian currency. Political and economic instability caused another 57% devaluation two years later. The third devaluation since independence, 70% this time, came in June 1967. At the same time, three zeros were cut, and the 1st Zairean (Congolese) Zaire became the new currency unit. The currency remained unchanged at the name change from Congo to Zaire in 1971, with an artificially high peg to the US Dollar. In 1976, the Zaire re-pegged to the IMF Special Drawing Right (SDR) unit and started a series of mini devaluations until 1983. In late December 1979, the government ordered an exchange of banknotes at short notice and within five days. Cash holdings above a threshold were declared invalid. The confiscation did not stabilize the currency, and in November 1983, the still unrealistically high exchange rate was devalued by 80% and set to float. It continued to lose value and turned hyper-inflationary in the early 1990s, when the ongoing civil war already had eroded the state power. In October 1993, a currency cut was made, and the 2nd Zairean (New) Zaire was introduced with six zeros removed. The reform was not carried out in the Eastern and Southern provinces where the government had already lost its authority. Here, the old currency remained in circulation or foreign currency had displaced the Zairean money altogether. Hyperinflation continued as did the civil war. In May 1997, the government was overthrown, and the country was renamed back to Democratic Republic of Congo. The new authorities attempted to quickly remedy the monetary situation and to restore the single currency area. However, due to the political and economic turmoil the currency reform had to be postponed twice, so that only in June 1998 the 3rd Congolese Franc could be introduced. It had five zeros less than the New Zaire. The areas where the 1993 reform had not been implemented received preferred switchover rates, a cut of seven zeros instead of eleven. Already one year after its introduction, the Franc got devalued by 70%. A series of devaluations followed until June 2001, then the exchange rate was set to float. The decline continued until the early 2010s when a short period of currency stability set in. Since the mid-2010s, the Franc has continued its gradual depreciation.

Congo joined the International Monetary Fund (IMF) on 28.09.1963.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources