The Relay Economy  
Wednesday, July 17, 2013
Daron Acemoglu and James Robinson

Before tackling the legacy of the Kuba state, it’s good to get up to speed on the economy of the modern city of Kananga.

Nobody quite knows what the population is. It’s probably around 1 million people but to be sure is hard since the Democratic Republic of the Congo hasn’t had a census since 1961.

According to Wikipedia, Kananga is the largest city in the world that lacks both electricity and running water, both of which facts we can verify. Kasai Occidental also lacks roads. Once you drive a short distance outside the city limits, highway N1, the main road north to Mweka and Ilebo, merges with the bush. If you’re lucky the trip to Mweka, a mere 250 kms, takes 12 hours in a 4 wheel drive.

It’s hard to imagine that such an isolated place has much of an economy, and it doesn’t, though there is a brewery built by the Belgians. In fact most of the existing infrastructure and large buildings were constructed by the Belgians in the 1950s who, possibly inspired by the construction of Brazil’s capital Brasilia, hatched the brilliant notion that the capital of the country should be moved from Leopoldville (now Kinshasa) to Kananga (then Luluabourg) since this was right in the middle of the country.

Such a scheme might be regarded as a little bizarre in a country with such poor infrastructure. Indeed, after independence the Congolese scrapped the plan.

The economic result of the isolation and the many institutional impediments to having a modern economy lead to what a friend, Jim Mukenge, suggested calling the “Relay Economy”.

Production and consumption are low and most people instead engage in various types of arbitrage activity – they relay goods from one person to another.

In fact perhaps the main economic activity in Kananga involves trying to insert oneself in a chain of transactions between two parties. To change money you don’t go to the bank or an official moneylender. You go to a person on the street. The rate is a little worse, but convenience greater, you give him or her the dollars, they exchange these for Congolese francs at a slightly better rate than they give you. That person exchanges with another person who gives a slightly better rate etc. Eventually the money ends up in the bank and 4 or 5 people got enough to eat that day.

Even an apparently simple transaction like renting a vehicle to drive to Mushenge, the Kuba capital, turns into a long relay. Say, you want to rent a car. Someone owns the car. A simple deal should result but it doesn’t, because somehow 3 or 4 people manage to insert themselves into the transaction, relaying the deal from one to another, and thus make enough to eat that day.

At some level, the relay economy is “institutionalized”. Nobody does things themselves, you ask someone to do it for you, they ask someone else, who asks someone else and eventually the word gets to the person who has the thing you want. This delivers great convenience, like beer or food delivered to your front door, at just a little extra cost and it keeps people fed.

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (
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