DR Congo – Missing Mining Revenue

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More than double the amount spent on health and education disappears into corrupt financial networks. 

Between 2013 and 2015 more that US$750m in mining revenues went missing from the Treasury, moving instead into a dysfunctional state mining firm and other national level tax agencies, according to a report by Global Witness released on July 21st.

Although there is no solid evidence of where the cash has ended up, there is evidence that some of it has made its way into corrupt networks linked to the Congolese President Joseph Kabila.

Around $129.9m made its way to provincial tax agencies, around $95m to state-owned companies, around $52m to national tax agencies, and around $70m to other government agencies.

These funds, amounting to around a fifth of mining revenues, are stifling finance from already embattled health, infrastructure and essential public services, which across much of the country, are underfunded.

Since 2012, Global Witness also claims that the government has siphoned off $1.4bn in deals with offshore mining companies, twice that spent on health and education, this is alongside the funds lost amidst an inefficient and opaque tax system, headed by powerful individuals close to the Kabila regime.

State mining company Gécamines has been engaged in numerous suspicious transaction while also failing to contribute to the national treasury, with billions of dollars of debt. The company’s collapse in the 1990s has been attributed to many years of “looting” by former President, Mobutu Sese Seko.

The DR Congo is the largest producer of copper and supplier of cobalt in the world with cobalt resources though to be worth as much as $10bn, but regions such as Katanga, where huge multinational mining firms are at work, are also some of the poorest.

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Artisanal miners in Kailo – CC 2007. 

In a separate report, the Congo Research Group (CRG) found that president Joseph Kabila’s family “either partially or wholly owns” more than 80 businesses operational inside and outside the country.

Alongside over 100 mining permits for diamond and gold, President Kabila owns 70,000 hectares of farmland. The President’s sister Jaynet Kabila owns a stake in the country’s largest mobile network Vodacom Congo, while the President’s brother Zoe Kabila has business interests with several mining firms, reported Quartz Africa. 

United Nations (UN) experts have voiced concern that Congolese military officer, Major-General Gabriel Amisi Kumba, appears to own gold mining operations in the northeast of the country, on the Awimi River in Tshopo province.

In November 2012, Amisi was suspended as commander of Congo’s land forces after a report accused him of distributing weapons to armed groups and poachers operating in the east. Amisi was cleared by the military authorities in July 2014 and appointed to his current position the following September.

The UN also said that “almost all artisanally sourced gold in the DR Congo was exported illegally and underestimated in both value and volume.” It is estimated that during 2013, 98% of artisanally produced gold, valued at around $409m, was smuggled out of the country, reported Bloomberg

On August 17th the government announced it was suspending VAT payments on mining imports, intended to assist the government in a $700m backlog of payments owed to mining companies. Following mineral price falls in 2016 the Congolese currency lost around 21% of its value.

Find out more in the Africa Research Bulletin:

RWANDA – DR CONGO: Cross Border Market
Economic, Financial & Technical Series
Vol. 54, Issue. 4, Pp. 21669A–21670C

GENERAL: Mining Indaba
Economic, Financial & Technical Series
Vol. 54, Issue. 2, Pp. 21621C–21622A

Gold: DR Congo – Mine Collapse
Economic, Financial & Technical Series
Vol. 53, Issue. 12, Pp. 21549A

Subscribe to the Africa Research Bulletin today. 

 

 

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