09 08 13 Congo Siasa – Guest post: Mining transparency in the Congo––Cautious optimism despite strong headwinds

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