Relations and regulations in local gold trade networks in South Kivu, Democratic Republic of Congo

Abstract

This article aims to contribute to a better understanding of the local gold trade in Eastern DRC, a sector in which most activities are not officially registered and take place outside the regulatory framework of the state. Starting with the research on informal economies and networks, we find that in the absence of strong public and market institutions, personal relations are valued higher than pure market exchange. This is also demonstrated in the study of the local gold trade network. On the basis of fieldwork and in-depth interviews with traders and diggers, we describe how and why relationships are built in this context, what their nature is (credit and debt) and how they are maintained, reinforced and regulated. In order to fully understand the functioning of the network we also have to frame it in its specific local and historical context. The close connection between context and network dynamics is epitomized in a number of structural characteristics, which shape and are given shape by the network dynamics. This connection, and the specific relations and regulations in the network, need to be recognized if we want to make sense of formalization, a topical issue in Eastern DRC.

Keywords:

• informal economy
• gold trade
• artisanal mining
• credit
• trust

Acknowledgements

First of all I would like to thank my research assistants and the traders who gave us the necessary “trust” to talk to us. Secondly, I would like to thank the two anonymous reviewers for their very useful and supportive comments on the first version. I am also grateful for the valuable comments and insights from participants, discussants and fellow-presenters at the seminar on “Practical norms” at the Institute of Development Policy and Management, University of Antwerp, 25 March 2011. Obviously, all remaining errors are mine.

Notes

1. Garrett, Mitchell, and Lintzer, Promoting Legal Mineral Trade, 32. It is also estimated that 40 tonnes or $1.24 billion of gold is smuggled out of the DRC yearly (UN Security Council, Final Report, 32).

2. Garrett and Mitchell, Trading Conflict for Development; Mitchell and Garrett, Beyond Conflict; Vlassenroot and Perks, “From Discourse to Practice.” For recent discussion on the mining ban see Geenen, Kamundala and Iragi, “Le Pari qui Paralysait.” See also Hilson, “Small-scale Mining,” 3.

3. Titeca and De Herdt, “Regulation, Cross-border Trade,” 578.

4. Meagher, Identity Economics, 12.

5. Bayart, “Africa in the World”; MacGaffey, Entrepreneurs and Parasites; MacGaffey, The Real Economy of Zaıïre; MacGaffey, “Initiatives from Below.”

6. These concepts were respectively used by MacGaffey, The Real Economy of Zaıïre; MacGaffey, “Initiatives from Below”; Roitman, “The Politics of Informal Markets”; Reno, “Clandestine Economies”; Callaghy, Kassimir, and Latham, Intervention and Transnationalism.

7. MacGaffey, The Real Economy of Zaıïre, 39, quoted in Titeca and De Herdt, “Regulation, Cross-border Trade,” 582.

8. Hart, “L'entreprise africaine,” quoted in Titeca and De Herdt, “Regulation, Cross-border Trade,” 577.

9. Roitman, “The Politics of Informal Markets,” 683, 691.

10. Meagher, Identity Economics, 11.

11. Hart, “Kinship, Contract, and Trust,” 191.

12. Luhmann, “Familiarity, Confidence, Trust”; Grätz, “Gold Trading Networks,” 146; Seligman, The Problem of Trust; Granovetter, “The Nature of Economic Relationships”; Greif, Institutions and the Path; MacGaffey and Bazenguissa-Ganga, Congo-Paris. There is some discussion on how to use the concepts “confidence” and “trust”. Luhmann defines trust as a characteristic of interpersonal relations, in which trust is an answer to risk calculation, whereas confidence presumes no alternatives, and thus no risk. Grätz on the other hand used Seligman's definition, making a distinction between bilateral and multilateral relations: “‘Confidence’ relates to particular persons, ‘trust’ to a social system, institution, general norms and roles.” In this article we use ‘trust’ in Luhmann's sense as a response to risk calculation, and not as something which is immanent. Traders use the French term confiance both for their bilateral relations and to refer to multilateral relations or to “the gold business” as a system.

13. Hansen and Vaa, Reconsidering Informality; MacGaffey, The Real Economy of Zaıïre; MacGaffey and Bazengouissa-Ganga, Congo-Paris; Vlassenroot, Raeymaekers, and Menkhaus, “Governance without Government.”

14. Doornbos, “State Collapse”; Vlassenroot and Raeymaekers, Conflict and Social Transformation; Raeymaekers, “Protection for Sale?”

15. Meagher, Identity Economics, 21.

16. Bayart, “Africa in the World”; Chabal and Daloz, Africa Works; Collier, “Rebellion as a Quasi-criminal Activity”; Duffield, Global Governance; Le Billon, “The Political Ecology of War”; Reno, “Clandestine Economies”; Roitman, Fiscal Disobedience.

17. MacGaffey, The Real Economy of Zaıïre.

18. See both academic literature and policy-oriented reports by international organizations and NGOs: UN (Security Council reports by the Panel of Experts on the Illegal Exploitation of Natural Resources in the DRC, especially 2001, 2002 and 2009); Enough, A Comprehensive Approach; Global Witness, Same Old Story, Under-mining Peace, Faced with a Gun; Human Rights Watch, The Curse of Gold; Jackson, “Making a Killing”; NiZA, The State vs. the People; Pole Institute and International Alert, Natural Resource Exploitation; Prendergast and Lezhnev, From Mine to Mobile Phone; Sullivan and Atama, Digging In; Turner, The Congo Wars; Vlassenroot and Raeymaekers, Conflict and Social Transformation.

19. Bayart, Ellis, and Hibou, Criminalization of the State in Africa, 114.

20. Titeca and De Herdt, “Regulation, Cross-border Trade,” 578. See also Raeymaekers, “Brokering Networks.”

21. MacGaffey, “Initiatives from Below,” 246–7.

22. Garrett and Mitchell, Trading Conflict for Development.

23. Titeca and De Herdt, “Regulation, Cross-border Trade,” 582.

24. Geenen, “Constraints, Opportunities and Hope.” In previous work we deal with the organizational aspects of artisanal mining and trade, studying in detail the actors involved.

25. For other studies addressing these issues, see Grätz, “Gold Trading Networks” (study on trust among gold traders in Western Africa); Rubbers, “We, the Congolese” (study on copper and heterogenite traders in Katanga). Recent studies on artisanal mining have mainly focused on livelihoods, see among others Bryceson and Jonsson, “Gold Digging Careers”; Bush, “Soon There Will Be No-one Left”; Hilson, “Land Use Competition”; Hilson, “Small-scale Mining”; Hilson, “Once a Miner, Always a Miner”; Jonsson and Bryceson, “Rushing for Gold.”

26. Meagher, Identity Economics, 22; Hart, “Multiple Trajectories,” 341; Hart, Disabling Globalization. At this point we follow Kate Meagher, who believes that both views on social networks (social networks as social capital and as social liabilities respectively) are reductionist. Meagher argues for a study of particular networks in their particular context. She also refers to Gillian Hart, who argues for a study of local trajectories that defy notions of path dependency.

27. During the first fieldwork period in 2008 we concentrated on the artisanal exploitation process of gold in Kamituga. In 2009 we closely studied trade relationships in Kamituga and Bukavu. In 2010 we researched cross-border trade relations in Bujumbura, Uvira and Bukavu. In 2011 we visited Kamituga, Luhwinja and Lugushwa and concentrated on issues of artisanal/ industrial exploitation and the impact of the mining ban.

28. On colonial policies in Katangese mining camps, see Cuvelier, “Men, Mines and Masculinities,” 72–106.

29. “Declaration of W. Norbert in name of the Congolese MGL workers,” September 1, 1962, unpublished, MGL archives, Royal Museum for Central Africa, Belgium.

30. Bezy, Peemans, and Wautelet, Accumulation et Sous-Développement, 85–93.

31. MacGaffey, Entrepreneurs and Parasites; MacGaffey, The Real Economy of Zaıïre.

32. MGL was replaced by “Sominki” – Société Minière et Industrielle du Kivu – in 1976.

33. Bulambo Katambu, Capitalisme Minier.

34. Raeymaekers, “The Power of Protection,” 82. Until the mid-1990s most gold flew to Bujumbura, which was the central regional hub for gold exports, thanks to a free-trade regime introduced by president Buyoya. However, after a military coup, a civil war, and a sanctions regime in Burundi in 1996, the centre moved to Kampala. Nowadays both Kampala and Bujumbura are major hubs, the former receiving gold mostly from Orientale and North Kivu, the latter from South Kivu.

35. Dupriez, Bushi.

36. Vlassenroot and Raeymaekers, Conflict and Social Transformation, 220–1. Some reasons for this were internal disputes, constant attacks on more remote sites by FDLR (Forces Démocratiques pour la Libération du Rwanda) and Mayi-Mayi groups, and the resistance of small-scale miners, traders and export offices at all levels.

37. Author's own survey in Kamituga, July and August 2009.

38. See Geenen, “Constraints, Opportunities and Hope.”

39. Bayart, Ellis, and Hibou, Criminalization of the State in Africa, 83.

40. Vlassenroot and Raeymaekers, Conflict and Social Transformation.

41. Geenen, “Constraints, Opportunities and Hope.”

42. Traders use fixed formulas to calculate the price they pay. Author's fieldwork.

43. Panella, “Patrons and Petits Patrons.” In this article Panella describes hierarchical relations in the antique market in Mali, in which market suppliers and intermediaries have no information at all about prices paid higher up in the chain, and in which, as typical in an art market, prices are not fixed. This situation thus stands in contrast to the one we describe here.

44. Englebert, Africa: Unity, Sovereignty and Sorrow.

45. Roitman, “The Politics of Informal Markets,” 681. Roitman develops the argument that although the “informal sector” is usually defined in opposition to and independent of the state, “the extent to which these activities actually depend on infrastructure and channels of distribution that are clearly controlled by the state is significant.”

46. Granovetter, “Economic Action and Social Structure”; Granovetter, “The Nature of Economic Relationships”; Platteau, Institutions, Social Norms and Economic Development; Greif, Institutions and the Path.

47. Interview with commission agent in Kamituga, August 19, 2009. See also other interviews with traders in July–August 2009.

48. Hart, “Kinship, Contract, and Trust,” 179.

49. Geertz, “The Bazaar Economy,” 30.

50. Geertz, “The Bazaar Economy,” 30.

51. Interviews with commission agents in Kamituga, 2008 and 2009.

52. For example Delta Force, Shamamba, Zakashimba, etc.

53. See Grätz, “Moralities, Risk and Rules,” 14–15.

54. Hart, “Kinship, Contract, and Trust,” 179.

55. Granovetter, “The Nature of Economic Relationships,” 19.

56. Interview with the owner of a buying office in Kamituga, August 21, 2009.

57. Interview with a commission agent in Kamituga, August 11, 2009.

58. Granovetter, “The Nature of Economic Relationships,” 19.

59. Interview with a commission agent in Kamituga, August 12, 2009.

60. Interview with a commission agent in Kamituga, August 19, 2009.

61. Kranton, “Reciprocal Exchange,” 830.

62. See Hart, “Kinship, Contract, and Trust,” 179; Lyon and Porter, “Market Institutions, Trust and Norms,” 912.

63. Interview with a digger in Kamituga, April 4, 2008.

64. Interview with a commission agent in Kamituga, August 13, 2009.

65. Grätz, “Moralities, Risk and Rules,” 16.

66. Interview with a miner in Kalingi, a neighbourhood in Kamituga, August 7, 2009.

67. Hart, “Kinship, Contract, and Trust,” 191.

68. Interview with a commission agent in Kamituga, July 23, 2009.

69. Interview with a commission agent in Kamituga, August 7, 2009.

70. Definition based on Coleman, Foundations of Social Theory, 91; Luhmann, “Familiarity, Confidence, Trust,” 95; Molm, Takashi, and Peterson, “Risk and Trust in Social Exchange,” 1422; Tilly, “Trust and Rule,” 4–5.

71. A large majority of the traders interviewed said that their business is “a business of trust.” Kamituga and Bukavu, July–August 2009.

72. Interview with the commission agent of a small-scale gold mining company in Kamituga, August 20, 2009.

73. Interview with a Bukavu-based trader, July 28, 2009.

74. Granovetter, “The Nature of Economic Relationships,” 27.

75. Interview with a trader in Bukavu, July 28, 2009.

76. MacGaffey, “Initiatives from Below,” 247.

77. Interview with a commission agent in Kamituga, August 14, 2009.

78. Interviews with commission agents in Kamituga, August 12 and 20, 2009.

79. Interview with a commission agent in Kamituga, August 17, 2009.

80. Interview with the owner of a buying office in Kamituga, August 19, 2009.

81. Interview with a commission agent in Kamituga, August 7, 2009.

82. Interview with a commission agent in Kamituga, August 10, 2009.

83. Interview with the owner of a buying office in Kamituga, August 12, 2009.

84. MacGaffey, “Initiatives from Below,” 247.

85. Interview with a commission agent in Kamituga, August 13, 2009.

86. Interview with the owner of a buying office in Kamituga, August 12, 2009.

87. Interview with a commission agent in Kamituga, August 12, 2009.

88. Interview with a commission agent in Kamituga, August 13, 2009.

89. See Clay, “Trade, Institutions, and Credit,” 508.

90. See Kranton, “Reciprocal Exchange,” 831.

91. Interview with a commission agent based in Bukavu, July 27, 2009.

92. See for example Platteau, Institutions, Social Norms, and Economic Development, 241; Greif, Institutions and the Path, 58.

93. Meagher, Identity Economics, 22; Hart, Disabling Globalization.

94. Hilson, “Small-scale Mining,” 3.