18 11 13 Bloomberg: Copper-Rich Congo Province Sees More Cash after Rebellion Ended

Congo’s government diverted cash meant for the provinces to pay for its fight
against the M23 insurgents in the east of the country, Katumbi, 48, said in an
interview in Lubumbashi, Katanga’s capital. The rebels ended
their 20-month rebellion on Nov. 5 after Congo’s army seized key positions,
including the rebel stronghold of Bunagana.

Children play on a burned
tank, which formerly belonged to M23 rebel soldiers, in Kibumba, Democratic
Republic of Congo, on October 31, 2013. Photographer: Junior D. Kannah/AFP via
Getty Images

“Our budget for reconstruction has been blocked
by the central government because of the war,” Katumbi said on Nov. 11.
“Without this war, there will be more money.”

Congo’s provinces have complained that the central government in Kinshasa keeps too much
of their revenue. The state is required by law to send 40 percent of a
province’s revenue back to the provincial government in a process called
retrocession. Last year, when M23 began its rebellion, the government provided
only 43 percent of $1.06 billion it budgeted for retrocession to Congo’s 11
provinces, according to documents on the Budget
Ministry’s website.
It spent about $330 million on national defense, compared with the $310 million
the department was allocated, the documents show.

In the nine months through
Sept. 30, the central government disbursed only about 16 percent of the more
than $440 million budgeted for Katanga
for 2013, according to provisional Budget Ministry data.

 

Copper Mining

Katanga is home to almost all of Congo’s
copper and cobalt production, the main source of the country’s mining income,
which accounted for more than 15 percent of Congo’s economy in 2012, according
to the International Monetary Fund. Miners including Freeport-McMoRan
Copper & Gold Inc. (FCX) and Glencore Xstrata Plc (GLEN) have projects in the province.

An increase in revenue for Katanga will
allow the provincial government to fix its transport, electricity, and water
infrastructure, which are dilapidated after decades of mismanagement and
conflict, Katumbi said. Faster development will also help address growing
resentment among some Katangans, who have increasingly turned to separatist
armed groups in the face of few job prospects, he said.

“When there’s misery, people say: ‘Ah, if we
were autonomous we’d have more money,’” Katumbi said. “I think the day when
we’re self-sufficient with food, when we’ve realized the promise of elections,
I think this problem will end.”

Hundreds of members of
local militias, often called by the generic name Mai Mai, have already
surrendered in recent months amid a campaign by the government and army to
convince them to lay down their weapons, Katumbi said.

 

Mining Transparency

The governor, a former
mining investor, called for publicly traded companies to come to Congo to
increase transparency in the mining industry. He also called for the government
to sell more state-owned companies to private investors, including
Lubumbashi-based Gecamines.

Gecamines is facing
scrutiny for recent sales of its assets, which advocacy groups like U.K.-based
corruption watchdog Global Witness say were sold well below market prices.

This year, Congo’s miners
may ship about 750,000 metric tons of copper, a 20 percent increase from 2012,
Katumbi said. Output could be as high as 1.5 million tons if the province had
enough electricity, he said.

Katanga has a power deficit of more than
300 megawatts, according to the Energy Ministry. Katumbi, who also owns TP
Mazembe, one of Africa’s top soccer clubs, said he would return to private life after leaving
the governorship, in spite of speculation he may seek Congo’s presidency
once current President Joseph Kabila’s final term ends in 2016.

“I will start another career and I’ll continue
to contribute to my country outside politics,” he said.