Painting by Cheri Samba

Lokuta eyaka na ascenseur, kasi vérité eyei na escalier mpe ekomi. Lies come up in the elevator; the truth takes the stairs but gets here eventually. - Koffi Olomide

Ésthetique eboma vélo. Aesthetics will kill a bicycle. - Felix Wazekwa

Saturday, March 2, 2013

Mining transparency in the DRC: all or nothing?

This is a guest blog by Elisabeth Caesens, DRC Mining Governance Project Coordinator for the Carter Center. The views expressed here are her own and do not represent those of the Carter Center. 

‘Transparency’ is not a word one normally associates with Congo’s extractive industries. Yet, the Government has made substantial efforts to disclose information throughout the past year. When these advances, however, fall short of internationally mandated transparency benchmarks, should we throw the baby out with the bathwater?

That is the dilemma transparency activists are now facing with regards to the Extractive Industries Transparency Initiative (EITI): that the DRC, in spite of all its efforts, has failed to comply with international revenue transparency benchmarks, and may get excluded from further participation. In the coming weeks, EITI’s Board will consider whether to validate the DRC as an EITI-compliant country, a good governance distinction the DRC has failed to acquire twice. If it fails to comply with one of the 21 EITI requirements, theoretically it is considered to have failed as a whole. Problematically, the DRC’s exclusion would primarily benefit those who enjoy the dark, while hurting those pushing for transparency.

That the Congolese Government is still falling short of reforms was made evident by the recent International Monetary Fund (IMF) decision to let expire an outstanding $225 loan after it failed to publish the contract of a particularly suspicious deal. But the IMF decision eclipses the fact that the new government has disclosed more than 100 contracts of which we had started to suspect they would never come out.

Similarly, the Government has shown more political will to implement the EITI. The Initiative aims at shedding light on revenues from mining and oil projects. Some African governments consider radiation as a blessing rather than a curse. Exit revenue transparency? Good riddance. But the DRC Government has gone to great lengths to prevent that scenario. Data collection for the most recent EITI report, which covers extractive revenues for 2010, took about 20 days. The same process took more than 20 months for the last report. Minister of Mines Martin Kabwelulu personally rang up major mining companies in Katanga. “Monsieur le Directeur, you haven’t submitted your formulaire yet for the Extractive Industries Transparency Initiative. We need it now.” A particularly dynamic national EITI coordinator, Prof. Mack Dumba, developed the bad habit of ringing up people in the middle of the night to clarify outstanding gaps in the report. His obstinate efforts have even led to threats against him and his family – the strongest and most regrettable sign that the walls protecting confidential revenues are starting to crumble.

The tangible result is a 120-page report full of disaggregated figures – by company, by revenue, by tax agency (for an English version, click here). Civil society actors have started digging into the numbers. They are wondering why, as the report shows, there is no comprehensive law requiring company audits in the DRC. They want to understand why the Ministry of Finance lacks oversight over one of its tax collecting agencies, as the report says. They are starting to appreciate the diverse contractual revenues that benefit Congo’s state-owned companies, revenues no one really seemed to master entirely throughout the EITI data collection.

Given Congo’s complex and traditionally opaque revenue management system, it is no surprise that a lot of payments were missing in earlier drafts of the report. One by one, the EITI Committee has tried to include them, tackling hurdles of insufficient knowledge and political sensitivity. Notably, the Committee overcame its own reluctance to incorporate the transactions under the Chinese minerals-for-infrastructure deal. This key pillar of Kabila’s 5 chantiers program now has its own annex in the 2010 report.

One of the few remaining reporting gaps is a $15 million payment, which state-owned company Gécamines received for selling its stake in one of its joint ventures, SMKK. Gécamines lost a lot of money in the transaction: the buyer, a British Virgin Islands vehicle associated with Dan Gertler, soldthe stake four months later for $75 million to a Kazakh multinational, ENRC. Despite the loss, $15 million is still worth more than 2% of all revenues Congo got from mining in 2010. The EITI DRC Secretariat is now trying to get in touch with the buyer to fill the gap. Mister Gertler, could you please pick up the phone? There is a country trying to get EITI validation here.

The 2010 report cover features the following caption: “les lignes bleues [sur la couverture] sont plus sombres à la naissance et deviennent de plus en plus transparentes, ce qui traduit le processus de mise en œuvre de l’ITIE en RDC.” A 2011 report could build on the lessons learned and help address the structural problems that have come to light in the 2010 edition.

But the question remains whether there will be a next report. EITI rules technically call for a black or white judgment. In comparison, the IMF  is now discussing bottleneck governance issues before writing a new check. The IMF decision to cancel its loan with the DRC might have hurt the country in the short term, but it has already spurred serious conversations about transparency and corruption at the highest levels of Congo’s government. If those conversations result in tangible reforms, the IMF can reengage and everyone wins.

EITI rules don’t provide for constructive re-engagement on how to fix a country’s tax collection system. But if EITI leaves Congo entirely, it’s possible that everyone – EITI, the Government, and Congo’s citizens – will lose out. The EITI would benefit from a wider range of carrots and sticks to encourage countries that make progress and mark those who are stagnant or regress. It has already started thinking in that direction in some cases. It is this long-term engagement rather than a pass/fail system that will help the DRC move upwards along the blue transparency lines.


James North said...

Elisabeth Caesens makes a persuasive argument here that some progress on EITI is better for the Congolese people than leaving the process entirely. She is obviously extremely well informed on mining in DR Congo, and therefore she must be taken seriously.
What is also needed, though, is even more pressure from donors and lenders. She explains that when the IMF finally canceled the $225 million loan rather than allow the Kabila government to continue hiding contracts, it started to reveal more facts.
Relations between the DR Congo government and the mining multinationals that are returning to the country get much less attention than the violent flare-ups in the eastern part of the country. But you could argue that such relations are even more important for the future of the country.

muana congo said...

This was an excellent article until the author mentioned the IMF.

For starters there should be an “absolute transparency” in DRC’s mining sector, not to please NGOs or so called donors (rather lenders), but as a internal requirement of openness and good governance.

That said, the decision by the IMF to suspend the $225M loan to DRC was primarily “political”. Remember that it was taken just as Kagame troops (M23) invaded Goma. Then the Rwanda/Kagamist head of African Development Bank Kaberuka also cancelled loans to DRC in “solidarity” with IMF, so he said. In other words, all joined in to kick a lying man that was Congo. This has never happened to any other country in the world, only against Congolese people.

Coming to the Gecamines-Comide-Straker contract that IMF used as an excuse to punish Congolese people. The IMF decision was disproportionate and disingenuous. First, the DRCgov has published more than 130 contracts including Gecamines-Comide-Straker contract. The contention was rather on the term “technical litigation” used by DRCgov. If so why did IMF not seek further explanation from DRCgov, and just rushed to cancel the loan? Does the IMF support Dodd Frank Act on Congo as well?

In any case, the cataclysm expected to Congolese economy didn’t happen. The hyperinflation envisaged didn’t happen. Rather, all macroeconomic fundamentals remain sound. The resilient African giant (Congo) marches on!

All in all, IMF and WB are a bane on African economies. NO country has developed with their “one fits all” policies of structural adjustments and the “Washington Consensus” dogmas. It is a pity that Africans are intimidated by these bullies. Like Koreans, Japanese, Brasilians, Chinese… real development does not come from politically motivated statistics by IMF and WB. It comes from infrastructure development and indegenisation of the economy.

Humanity needs an alternative to the IMF and WB. Let’s hope that the new bank to be created by the BRIC nations (Brasil, Russia, India, China and South Africa) will provide that.!

muana congo

Celina Smith said...

It contains useful and beneficial content. To me, you are doing the excellent. Your way with terms is elegant and relatively attractive. so keep it up.
Business loans for bad credit


he post is pretty interesting. I really never thought I could have a good read by this time until I found out this site. I am grateful for the information given. Thank you for being so generous enough to have shared your knowledge with us.
merchant cash advance

E Caesens CongoMines said...

Thanks for both comments. While this piece was not primarily about the IMF and contract disclosure, muana congo's response almost calls for a second blog post.

I agree transparency should come from the inside rather than through lender or NGO pressure. But transparency is as much a matter of nurture as of nature, and nurture is a long-term thing. Both tax and contract disclosure are new trends, barely a decade old. The rhetoric is already there - "rassurez-vous, we'll publish everything from the protocole d'accord to the liquidation terms". But not everyone shares the rhetoric and practice is therefore hindered. International pressure can help those within the government who genuinely see disclosure as a matter of good governance to convince those who don't.

In the DRC, the internalization process has been going on since 2007, when the Ministry of Finance published most of the contracts signed
before 2006 at the beginning of the contract review process. This disclosure at an unprecedented scale was the result from IMF and NGO pressure though. At the end of the contract review, renegotiated terms remained secret.

The IFIs would still put selective pressure, but only for new, controversial deals (e.g. Metalkol, Sodifor). Yet, the Ministry of Mines went further. To comply with the 2011 contract publication decree (in itself a WB requirement, sure), it sent a letter to all state-owned companies asking for copies of the renegotiated agreements. Sodimico complied pretty instantly, SOKIMO took a bit longer. Gécamines only agreed to publish the controversial Mutanda and Kansuki contracts because the IMF loan was at risk.

The eventual trigger to get the missing Gecamines (and most other) contracts out was another problematic deal, the Comide transaction, the mere existence of which remained secret for almost a year. This time the IMF didn't just ask for Comide, it insisted that all contracts be published. One by one, the contracts came out. Yet the wide-scale contract disclosure was not merely the result of external pressure, it's the result of some within the government who are in favor of disclosure. The fact that it coincided with more serious EITI implementation is not a coincidence.

Again, not all share this view, and the Comide contract symbolizes that. While other contracts got out, the Comide deal didn't. According to the Government, there actually is no real contract that regulates the transfer of the Comide stake from Gecamines to Straker (a Gertler company). Instead of publishing a contract, the Government released a memo ( But the memo didn't touch upon some of the issues the IMF had asked clarification about. As a result, they let the loan expire. Political decision at a difficult time for sure, but also the result of a back-and-forth about disclosure which has been going on for years.

The most interesting time is now. Does the government keep publishing contracts or does it really need the IMF's insistence on additional
disclosure? Will the Government address the underlying structural problems that make them reluctant to release contracts in the first
place, or will they try to avoid such finer conditionality in upcoming discussions with the IMF? The good thing is that these issues are now
on the table, that the process is as lively as ever, and that there is a group within the government who wants to tackle these issues.

muana congo said...

@ E Caesens CongoMines

Thanx for your insightful posts. In truth my intervention has two hands.LOL.

On one hand I fully agree with the thrust of your point; corruption in a country like Congo is intolerable, disclosure of contracts and transparent operations in the extractive industry there cannot be debated. I would even suggest that there be a clause in the Congolese constitution that enforces this. You are also right that a minority in DRCgov wants things to change. On their own, companies like TenkeFunkurumeMining and Randgold & AngloGoldAshanti now regularly publicise their dealings. But things should be formalized. All major companies in the sector should be compelled by law to be public and listed on a securities exchange. That way, their dealings and financial results will be properly scrutinized. Why is such an obvious thing not yet done? Your guess is mine too: opportunism, amateurism and sheer incompetence of many amongst those in charge.

On the other hand, it is now evident that the overwhelming pressure from the IMF-WB and affiliates on Congo is more of a malicious assailment than anything genuine. When it comes to Congo, ad-hoc standards are unfairly applied, new conditions are invented, unreachable goal posts keep getting shifted. If it is not the “revision of Chinese contracts”, it is the handing over of Ntaganda to ICC, or the elections, or the mining contracts disclosure, or whatever else.

It should be said that about human affairs, it is nurture rather than nature. What (democracy, transparency…) looks now like nature in some places has been nurtured over time with ebbs and flows. A just and transparent governance in Congo generally is attainable too. We shall all pressure those in charge to this end.


Junaid Walayat said...

Latest Stocks and Shares Rates, Exchange Rates of International Market News Updates, Brokers Directory, National News, Stock Markets, TopNews Arab Emirates, Dollar Exchange Rates, Current Exchange and More Forex Business Update News.

zahid ahmed said...

Many of the Online Jobs and Online Earning System in internet online Business, but here is a best and legit online earning systems with life time opportunity.

intercad said...

I've been using Google Sketchup Pro for just over a year and I think I'm ready to move onto a better, more professional software. What do you recommend?.

Solid works

Post a Comment