Thursday, 5 August 2010
News Digest: Africa Mining Comment & Analysis – Congo (DRC)
Congolese Prime Minister Adolphe Muzito yesterday asserted his administration's intention to respond to investors' demands for “more engagement, more participation and much more listening” on the part of the government. At a full meeting of the Congolese Business Federation (FEC) in Kinshasa, Muzito also indicated that the government would “reconsider our position” on export taxes imposed in April on semi-processed minerals.
(News Sources: Le Potentiel, Reuters)
Chris Melville , Africa mining consultant with Menas Associates today commented:
"Muzito's decision to meet more frequently with the business community is to be welcomed. However, the key ingredient in improved relations between government and the private sector will be whether more meetings actually turn into better engagement."
"The ongoing arbitration over the Kolwezi tailings project is casting a pall over external perceptions of the Congolese investment environment. But for many of those mining companies that renegotiated with the government last year, recent months have seen the government take a number of less high-profile but equally arbitrary actions that have continued to erode investor confidence within the country."
"Muzito's suggestion that the government may reconsider new export taxes on semi-processed copper and cobalt would certainly be a step forward, but we don't believe that this would be the end of the government's efforts to capture greater financial benefit from the mining sector. What investors want is stability and predictability; unless there is a sea-change in the government's approach, they are likely to see only more uncertainty."
"Unfriendly government decisions are clearly part of the problem. However, on a day-to-day basis, unwieldy bureaucracy and the lack of any predictability in the implementation of the regulatory framework are often the biggest bugbears for mining companies – these are also issues much harder for Muzito to remedy than determining the direction of government policy at national level."
At the meeting of the FEC – which represents foreign and domestic private sector interests –Muzito responded to a series of complaints outlined by the Confederation in a memo drafted by FEC President Albert Yuma in late July. In addition to concerns over arbitrary and excessive taxation, Yuma identified judicial corruption and legal insecurity as among the most significant constraints on private sector development in Congo.
© 2010 Menas Associates