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Abstract
A common question asked across the Democratic Republic of Congo (DRC) and by international observers is whether Katanga's mining sector can contribute to growth and development in the country. This paper answers this question through the analysis of two indicators: the fiscal contribution and the development of economic linkages. Mining can contribute to growth and development in the medium to long term, but for the moment the fiscal contribution and the establishment of local supply chains and processing industries remain underdeveloped. The status quo can be linked to the logic of the perpetuation of the weakness of the Congolese state as a rents generator for vested interests. This negatively affects the good governance of fiscal revenues and also translates into political risk exposure for mining companies. The latter inhibits mining companies' and industry collective action platforms' ability to contribute more directly to growth and development by, for example, “de-risking” the market entry of supplier and processing industries. Successful strategies to increase the growth and development footprint of mining need to go beyond technical interventions. Built on a political economy and economic impact analysis they need to interlink with and support a political reform process that can help build a significantly broad political constituency around the ideas of sustainable growth and development in the DRC.
Acknowledgements
Nicholas Garrett's PhD was funded by the Heinrich-Böll-Foundation. Nicholas is also a Director of Resource Consulting Services Ltd., London, UK and a Research Associate at the Crisis States Research Centre, London School of Economics and Political Science, London, UK.
Notes
1. This paper is based on a chapter in Nicholas Garrett's doctoral thesis, and has benefitted from field research undertaken for a book chapter: Garrett, “Mining as a Source of Growth.”
2. French, “CRU/CESCO-Ivanhoe's Friedland.”
3. http://www.fcx.com/operations/AfricaTenke.htm (accessed August 1, 2010) and www.lundinmining.com/i/pdf/tenke_pres0711.pdf (accessed August 1, 2010).
4. CitationKaiser, DRC's Political Economy.
5. Compare CitationHesselbein, “Rise and Decline.”
6. Sachs and Warner, “Natural Resource Abundance.”
7. Collier and Hoeffler, “Greed and Grievance.”
8. CitationNathan, “The Frightful Inadequacies”; CitationMarchal and Messiant, “De l'avidité des rebelles.”
9. Brunnschweiler and Bulte, “Linking Natural Resources.”
10. Brunnschweiler and Bulte, “Linking Natural Resources.”, 617.
11. CitationAuty, “Mining Enclave,” 135.
12. CitationMcNeil, “Next for Afghanistan”; CitationBBC, “Afghans Say US Team Found Huge Potential Mineral Wealth.”
13. Hesselbein, Golloba-Mutebi and Putzel, “Economic and Political Foundations,” 10.
14. Hesselbein, “Rise and Decline,” 50.
15. Auty, “Mining Enclave,” 136.
16. Bebbington et al., “Contention and Ambiguity,” 2.
17. Bebbington et al., “Contention and Ambiguity,”, 46.
18. Bebbington et al., “Contention and Ambiguity,”, 56.
19. CitationEnglebert, “Why Congo Persists,” 6.
20. CitationEnglebert, “Why Congo Persists,”, 7.
21. CitationEnglebert, “Why Congo Persists,”, 9.
22. CitationGarrett, “How to Tame Predatory Elites.”
23. Hesselbein, “Rise and Decline,” 270.
24. Garrett, “Mining as a Source of Growth,” 14.
25. Askin and Collins, “External Collusion with Kleptocracy,”76.
26. “Exposé des motifs de la loi No 73/015 de Janvier 1973 portant organisation territoriale et administrative de la république,” as quoted in Mpinga and Gould, Les réformes, 73.
27. CitationSchatzberg, “Le Mal Zairois,” 343.
28. Confidential consultancy report (2009), seen by the authors.
29. Confidential consultancy report (2009), seen by the authors.
30. Interview with GÉCAMINES Financial Director, August 2009.
31. Official website of the GÉCAMINES: http://www.gecamines.cd/presentation.php (accessed July 27, 2010).
32. CitationKuediasala, “Mission au Katanga.”
33. Confidential consultancy report (2009), seen by the authors.
34. Confidential consultancy report (2009), seen by the authors.
35. Interview with GÉCAMINES Finanical Director, August 2009
36. Confidential consultancy report (2009), seen by the authors.
37. CitationLe Phare, “Congo-Kinshasa.”
38. Kuediasala, “Mission au Katanga.”
39. Confidential consultancy report (2009), seen by the authors.
40. CitationWorld Bank, Growth with Governance, 17.
41. CitationWorld Bank, Growth with Governance, 37.
42. CitationWorld Bank, Growth with Governance, 137.
43. CitationJopson, “Chinese Copper Entreprenuers.”
44. Kuediasala, “Mission au Katanga.”
45. Garrett, “Mining as a Source of Growth,” 30.
46. CitationTradingmarkets.com, “Glencoe Agrees.”
47. http://www.doingbusiness.org/economyrankings/ (accessed September 20, 2009).
48. The KMT case and the regulation of property rights in the DRC is the subject of a forthcoming academic paper written by Nicholas Garrett and despite its significance will not be discussed further in this paper.
49. Interview with several mining companies in Katanga, October 2009.
50. Interview with Katanga Mining Sector Analyst, August 2009.
51. CitationHooge, “DRC Mining Sector Review,” 6.
52. CitationDiJohn, “Taxation,” 30.
53. CitationDiJohn, “Taxation,”, 31.
54. World Bank, Growth and Governance, 11.
55. CitationManson, “Congolese Court.”
56. Englebert, “Why Congo Persists.”
57. Interview with Katanga Mining Sector Analyst, August 2009.
58. World Bank, Growth and Governance, 6.
59. Garrett, “Mining as a Source of Growth,” 32.
60. Interview with international mining sector finance specialist, Katanga, August 2009.
61. Interview with Katanga Mining Sector Analyst, August 2009.
62. Bird and Rotman, “Tax Challenges,” 35.
63. World Bank, Growth and Governance, 22.
64. CitationWallis, “Congo Debt Relief.”
65. EITI, Advancing the EITI in the Mining Sector, 15.
66. Garrett, “Mining as a Source of Growth,” 55.
67. Interview with Katanga Mining Sector Analyst, August 2009.
68. Bellver and Kaufmann, “Transparenting Transparency.”
69. CitationKolstad and Wiig, “Is Transparency the Key.”
70. EITI, DRC, http://eitransparency.org/DRCongo (accessed April 25, 2010).
71. Paris and Bartlett, “The EITI and the Mining Sector.”
72. CitationDiagnostic Trade Integration Study, “Liberia, Tapping Nature's Bounty.”
73. Garrett, Mitchell and Lintzer, “Promoting Legal Mineral Trade,” 50.
74. Garrett, Mitchell and Lintzer, “Promoting Legal Mineral Trade,” 50.
75. http://web.worldbank.org/WBSITE/EXTERNAL/EXTSITETOOLS/0,,contentMDK:21727814~pagePK:283622~piPK:3544780~theSitePK:95474,00.html (accessed May 10, 2010).
76. http://web.worldbank.org/WBSITE/EXTERNAL/EXTSITETOOLS/0,,contentMDK:21727814~pagePK:283622~piPK:3544780~theSitePK:95474,00.html (accessed May 10, 2010).
77. International Conference, Berlin, “Transparency in the Extractive Sector.”
78. CitationAfrican Union, Africa Mining Vision, 7.
79. CitationPedro, “Mainstreaming Mineral Wealth,” 5.
80. UNECA, CitationMinerals Cluster Policy Study, 7.
81. CitationLydall et al., “Assessment of the Copperbelt,” 57.
82. CitationLydall et al., “Assessment of the Copperbelt,”, 60.
83. Garrett, “Mining as a Source of Growth.”
84. Lydall et al., “Assessment of the Copperbelt.”
85. Lydall et al., “Assessment of the Copperbelt.”, 41.
86. Lydall et al., “Assessment of the Copperbelt.”, 42.
87. Compare CitationFreeport-McMoran, Core Values, 2008.
88. Lydall et al., “Assessment of the Copperbelt,” 56.
89. Interview with mining company, Katanga, August 2009.
90. Interview with several mining companies, Katanga, August 2009.
91. Garrett, “Mining as a Source of Growth,” 45.
92. Interview with several mining companies, Katanga, August 2009.
93. CitationMcKay, “DRC Starts on Rocky Road to Recovery.”
94. CitationCramer, “Can Africa Industrialize,” 1247.
95. Lydall et al., “Assessment of the Copperbelt,” 56.
96. Lydall et al., “Assessment of the Copperbelt,”, 57.
97. CitationMining Journal Online, “Zambia Copperbelt.”
98. Interview with donor representative, Kinshasa, July 24, 2009.
99. CitationBavier, “Chinese Firms.”
100. CitationEuropean Investment Bank, “Tenke Fungurume Mining Project.”
101. Cramer, “Can Africa Industrialize,” 1247.
102. Cramer, “Can Africa Industrialize,” 1247.
103. Englebert, “Why Congo Persists,” 39.