Guest post: Mining transparency in the Congo––Cautious optimism despite strong headwinds

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. 

A few months ago, the DRC got suspended from the Extractive Industries Transparency Initiative. Congo is commonly perceived as a basket case for natural resource governance; any outsider might have nodded and thought, “Surprise, surprise.” What the Government failed to convey was that suspension actually represented a positive decision. The DRC’s failure to comply with some of the EITI rules could have lead to its exclusion from the process altogether, a development that would have benefited no one but secrecy adepts. Instead, the DRC now gets a second chance to address some of the flaws of its previous reporting efforts by March 2014 - in particular to ensure data certification is rigorous and the report is comprehensive.

Congo has been given a second chance for a reason. Since early 2012, a few key political players have given the EITI process significant political backing. For the upcoming reporting cycle, some have been working day and night to ensure that all criteria are complied with. In a country with more than 500 mining title holders and a wide variety of legal and contractual revenue flows, this is more daunting than one might imagine. The international consultancy firm appointed to determine the next report’s scope is behind schedule, struggling to gather all data needed to come up with a solid draft report.

The EITI wave in DRC has started generated ripple effects that some countries might only dream of. The mere fact that the government is to collect revenue data has initiated institutional change. In the last report, the Finance Inspection had, for instance, refused to certify $88 million in payments to one of the three central tax-collecting agencies. The agency, called DGRAD, is now finally making progress on digitizing its tax management system, something it impeded for over a decade. In the copper-rich province of Katanga, the omission of about $75 million in provincial taxes in the last report alerted the local tax authorities of the need to participate in the process. The process brought to light a common practice whereby mining companies pay construction companies directly for road works in exchange for provincial road tax credits, hindering tax traceability and parliamentary oversight.

This year, mining companies requested EITI reporting forms before the reporting cycle even started. They have been demanding more rigorous paperwork from their transport sub-contractors, who pay some of the provincial taxes in their stead and sometimes shove diverse payments into one single undecipherable bill that disrupts the administrative paper trail. The industry has also become slightly better (although not yet perfect) at obtaining confirmation that their payments made it to the Central Bank, rather than accepting receipts from the tax agencies as sufficient proof of payment.

While local corporate operators and committed political actors have been instrumental throughout the process, one group has become particularly proactive: the Katanga civil society network. Albeit not officially members of the DRC EITI Executive Committee, this local civil society network chose not to wait for the next report to be sloppy before voicing their criticisms. This time they wanted flawless coverage from the start and have worked tirelessly to ensure all significant revenue flows and all major contributors are included in the next report. Two weeks ago, at 8.30 pm on a Saturday night, one of the activists suddenly realized he was running late for his friend’s wedding, too busy sifting through the tax contributions of over 150 companies active in the province. Last Saturday, as cheering resounded from the neighborhood bar upon another goal scored by the local soccer team, another activist looked up from his Excel sheet and commented, “Why am I missing the TP Mazembe game again? Ah oui, l’ITIE…” This civil society group’s determination to constructively contribute to the country’s EITI validation, by catching any gaps in reporting ahead of time, far surpasses previous efforts.

Not everyone is surfing the EITI wave yet. Among the potential stumbling blocks ahead are the controversial sales of state company assets that occurred in 2011. At the latest EITI meeting, the Ministry of Mines gave state-owned company Gécamines an ultimatum to provide all requested data needed to define the next report’s scope. It eventually met the deadline, but now the Ministry of Portfolio, Gécamines’ single shareholder, is hesitant to endorse the data. Meanwhile, the EITI Secretariat is trying to reach the entities that bought the assets. Registered in the British Virgin Islands, their official representative in the DRC is a law firm that claims it doesn’t keep its clients’ books. As long as these actors do not add their voice to the new transparency chorus, validation is still at risk. While they are catching up, those missing weddings and soccer games for the sake of EITI should tell other countries to catch the wave and ride it into March 2014 and beyond.