In Zaire, as in many developing nations, a great deal of economic activity takes place outside of the official economy. Such activity, variously termed the informal, parallel, underground, unrecorded, or second economy, is in many cases so extensive that it should not be regarded as marginal or supplemental, but, rather, as the way such economies really work. In her study of the second economy (her preferred terminology) in Zaire, anthropologist Janet MacGaffey concludes that smuggling and other unofficial activities constitute the real economy of Zaire. Second-economy activities are fully institutionalized and in most respects more rational and predictable than official trade and production activities. The second economy provides access to goods and services unavailable in the official economy and compensates for the deficiencies of the official system in infrastructure and services, such as construction, transportation, distribution networks, and provision of capital.

The magnitude of the informal economy far exceeds official economic activity. In the early 1990s, Zaire's informal economy was estimated to be three times the size of the official GDP. In Zaire, as elsewhere, the size of the informal economy reflects the increasing inability of the official system to serve the needs of the populace. The informal economy has grown dramatically as economic and social conditions have deteriorated and as purchasing power has dropped. Citizens have increasingly been forced to turn to informal economic activity to survive.

The informal economy in Zaire includes a wide array of economic activities, similar only in that all are unmeasured, unrecorded, and, to varying degrees, illegal in that they are unlicensed and designed to avoid government control and taxation. They range from small-scale street vending to the production of illicit goods, to open and relatively large-scale trading and manufacturing enterprises, to cross-border smuggling, to barter arrangements such as rural-urban exchanges of food for manufactured goods, to various schemes intended to avoid the payment of taxes on legal production (e.g., concealing legal production and falsifying invoices).

Despite its significance, however, MacGaffey concludes that Zaire's bustling second economy is a mixed blessing. A cost-benefit analysis of the second economy provides a varied picture. On the plus side, the informal economy in Zaire has enabled the bulk of the populace to get by and occasionally to prosper. Profits from such activities have been invested in community services and in some instances in official economic activity, thus contributing to national prosperity. In the social realm, the informal economy has empowered women and various segments of the population not able to participate in the formal economy (see The Informal Sector Polarization and Prospects for Conflict Strategies of Survival The Status of Women , ch. 2).

Nevertheless, there are also negative aspects to the second economy. Drawbacks include the inherent unfairness and unevenness of both access to the resources needed to participate in the second economy and the distribution of benefits from such participation. Those already rich and powerful and the employed tend to benefit far more than the unemployed, the urban poor, or rural producers. There are also negative effects on the official economy in that the state is deprived of both revenue and foreign exchange (for example, smuggling out food crops because of price controls in Zaire forces Zaire to use scarce foreign exchange to buy imported food), and labor shortages may also result from the proliferation of unofficial economic activity.

On balance, although the second economy is dynamic and contributes to the well-being of most of the Zairian populace, long-term economic development and national prosperity depend on reforming and energizing the formal economy, transferring to it the dynamism of the second economy. The prospects for such a radical transformation, however, appear bleak so long as the Mobutu regime remains entrenched in power.

Data as of December 1993