Africa Review Report on Mining

Africa has made improvements in creating a vibrant and a diversified mineral sector. However, these improvements have not been sufficient to secure a sustainable sector that is socially and economically integrated into the long-term development aspirations of its peoples.
The Economic Commission for Africa has identified and articulated preconditions necessary for the mining sector to make a telling contribution to the sustainable growth and development of the continent, and to the reduction of poverty as envisaged by the MDGs.

Faced with a gun, what can you do? War and the militarisation of mining in Eastern Congo. A new Global Witness report.
Illicit exploitation of natural resources is not a new phenomenon in the East of the DRC. It has been at the heart of the conflict since its beginnings in 1996, and has been well documented, notably by several NGOs, The Panel of Experts and the Group of Experts of the UN, and several journalists. Thirteen years later, the phenomenon remains unchanged, and even thoug the veracity of these activities has been amply demonstrated at many occasions, no measures were taken to halt this murderous venture. On the contrary, beliigerants have consolidated their economic bases and are henceforth more strongly enrooted than ever before.

While, on the one hand, it is widely acknowledged that Africa has great natural resource potential, on the other hand, one cannot but regret that the complex interplay between political and economic factors at the national and international level appears to make it impossible to use a more substantial part of the revenues from the exploitation and trade of these resources for the promotion of the well-being of people at the grassroots level. The IPS paper "Africa's natural resources in a global context", which concentrates on non-renewable natural resources, aims to disentangle some of the processes that explain the paradox between Africa’s natural wealth and its relatively limited level of economic development. It shows that the state of affairs in the resource sectors of most African countries is still to a large extent determined by external factors. Extractive industries in Africa tend to be export-oriented and contribute disappointingly little to local development.

A new IPIS report examines the impact of the global financial crisis on the mining sector in Katanga, the southeast province of the Democratic Republic of the Congo. As far as the industrial mining sector is concerned, it is shown that the crisis exacerbated the uncertainty of mining companies that were waiting for the results of the review of the mining contracts and that were often in the middle of starting up or expanding their activities in Katanga. Nevertheless, IPIS remains convinced that the renegotiation of the mining contracts is of vital importance for the long-term develop- ment of the Congolese mining industry. As far as the artisanal mining sector is concerned, it is pointed out that, due to the sharp decline in mineral prices, large numbers of artisanal miners have left the mines. While some of them appear to have found a new source of income in agriculture, there are disturbing reports that others may have chosen to engage in criminal activities in order to stay afloat.

Given the importance of the mining sector as a source of revenue for the Democratic Republic of the Congo, the devel- opment of a sound policy for crisis management is of vital importance to protect the health of the Congolese Treasury and to keep intact the possibility of stepping up government efforts in terms of poverty reduction and infrastructure development once the global economy starts to recover. This report shows that both the central government in Kin- shasa and the provincial government in Lubumbashi have taken a number of measures to cope with the consequences of the global financial crisis. Unfortunately, there are indications that the ongoing decentralisation process tends to complicate the cooperation between the two governments. Moreover, as a result of the exaggerated attention for the so-called ‘rétrocession’ issue in the Congolese press, there is a real risk that the anti-crisis measures of the Congolese authorities are not examined in a critical manner.

The report 'Trading Conflict for Development' suggests that military gain from the trade in Eastern DRCongo's minerals, which generated at least 4m US$ to the Congolese state in tax revenue in 2008, is not the primary cause of insecurity and violence in North Kivu. Though the report acknowledges deep-seated problems with the trade, it goes further and suggests that, in contrast to current policy approaches, security and trade issues should be addressed separately since trade-based solutions to security issues, such as sanctions, are likely to have little effect on the perpetuation of the conflict.

Research conducted in Ghana, Zambia, Tanzania, Sierra Leone, Malawi, DRC and South Africa by a group of African and international civil society organisations shows that African governments are foregoing millions of dollars in tax revenue from the mining industry. This is largely because of overly generous tax concessions, usually granted discretionarily in secret mining contracts, as well as tax avoidance and illegal tax evasion practices by multinational mining companies. Fuelling these losses is a lack of transparency and oversight of the financial remittances from mining companies to government institutions, coupled with the inability of government institutions to audit the complicated accounts of multinational mining companies. Read the report.