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Africa

Here’s How Mining Firms Are Playing with Fire in the DRC

 5 min read / 

The DRC’s biggest business – mining for gold, diamonds, cobalt, and other precious minerals – is just as dirty as ever, according to new reports. Last week, Canadian regulators announced they were investigating mining giant Glencore over allegations that a subsidiary paid more than $100m to an offshore company owned by an Israeli businessman who’s been accused of bribing Congolese officials.

The payments started in 2013, according to Global Witness, an investigative NGO that recently published a new report showing how mining companies and other businesses continue to plumb one of the world’s least-developed countries for private profit. Their investigation shows how between 2013 and 2015, as much as $1.3bn in mining revenues – twice the amount country spends every year on health and education – never reached the treasury, due to the dysfunctional state-owned mining company, opaque tax agencies, and corrupt government-linked networks.

Corruption

The DRC has long been known for its failure to translate its vast natural resources – not only rare minerals but also timber and oil – into prosperity for its people. But changes in the political context means that this persistent corruption has implications that go far beyond the robbing of ordinary Congolese.

The latest reports lay bare the extent to which Western firms have played a role in stoking systemic and elite corruption in the country, not only harming their own long-term commercial prospects but also propping up an aspiring dictator. It will take much more than simple talk of “supply chain sustainability” on their part if the Congolese people are ever to benefit from a functioning political system and, in turn, their own country’s vast wealth.

The Global Witness report came in the midst others written by Congo Research Group (CRG), Bloomberg, and Le Monde, which connect the dots between President Joseph Kabila’s efforts to continue stalling long-overdue elections, his family’s vast commercial empire, and the global companies that have been operating in the country.

Extractive Policies

Among the most jaw-dropping accounts, the CRG report found that the Kabila family wholly or partially owns more than 80 companies in the country and abroad, invested in nearly every sector of the economy, with addresses as far from Congo as Panama and with revenues tallying in the hundreds of millions of dollars since 2003.

The business interests of the president’s brother, Zoe Kabila, alone comprise stakes in at least 12 Congolese firms, in addition to contracts with major foreign mining companies like Ivanhoe. The new revelations of the family’s business network raise questions of serious conflicts of interest, if not flat-out violations of Congolese law, and show the extent to which foreign firms are compelled to bribe government officials in order to do business in the country.

Congo: From Country to ATM

Given the fact that the president and his family have mastered the art of turning a political office into a personal ATM, it’s little wonder that he is now manoeuvring to stay in place for the long haul. And as long-delayed elections, now slated for the end of the year, raise the prospect of cutting off Kabila’s cash flows, his tactics are becoming increasingly desperate.

He had already managed to sideline his most credible presidential challenger, the widely popular and now-exiled Moise Katumbi, with a politically motivated conviction in June 2016 over an allegedly fraudulent land deal.

Any hopes for justice at the appeal hearing, which started on July 20th, were dashed by an assassination attempt against Judge Mbuyi Likasu. He had been slated to participate in the panel and is viewed as one of the few justices in the country committed to impartiality.

Interfering with Justice

The absence of any chance for Katumbi to receive a fair hearing has prompted the opposition coalition, Le Rassemblement, to demand an end to the sham lawsuit. And it’s not only Katumbi who has been the object of Kabila’s wrath. The president still refuses to allow the repatriation of the body of former opposition leader Etienne Tshisekedi, who died this February.

Not surprisingly, Kabila’s increasingly frantic attempts to stay in power have been met by strong resistance both internally and among members of the international community. This Monday, the civil society group La Lucha called for an unprecedented demonstration against the president, which has received the backing of Katumbi and other opposition officials.

Most recently, the UN Security Council urged the government to swiftly implement a timeline to hold elections. Yet none of this – not even the IMF’s warning that it might cut off assistance – seems to have made any difference in the presidential palace. Meanwhile, ordinary people continue to suffer as the central bank said inflation was expected to rise to 44% this year, and currency exchange services have been banned from displaying rates as a way to cover up the growing economic crisis.

Conclusion

The IMF’s unwillingness to deal with the corrupt regime is a welcome sign. But Western governments and multilateral institutions must enact much broader sanctions that also strike the Kabila family businesses and their affiliates if there is to be any hope of swaying the aspiring president-for-life. The US and EU already blacklisted several top officials earlier this summer, but it only hits one of the ruling family’s business interests, and at this point, it might be too little too late. So too, might be the Canadian regulators’ long-overdue investigation of Glencore.

What would be best is if foreign corporations active in the DRC took Global Witness’ advice to heart and demanded that Gécamines publish audited, yearly accounts, to ensure government officials did not steal their funding and if investors in those companies urged management to ensure they were not channeling cash into Congolese agencies known to be corrupt. Absent such proactive action on the part of corporations, it’s an open question whether Congo’s mining wealth will ever make its way into the hands of the people.

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Africa

Investing in Zimbabwe – Gamble or Jackpot?

 6 min read / 

Investing Zimbabwe

After nearly four decades of rule, Robert Mugabe finally stepped down as president of Zimbabwe late last year. A nation that has been crippled by corruption, plagued by poverty and ostracised from the international community now has an unprecedented opportunity to reform its economy and re-establish itself as a major African power. President Emmerson Mnangagwa has already announced his intention to revive the country’s flagging finances, open up to foreign investors and crack down on corruption.

The first signs are encouraging. On January 15th, South African tycoon Robert Gumede pledged to invest $1.2 billion in the country to develop IT and infrastructure projects. But Mnangagwa and his new government must learn from past mistakes if Zimbabwe is to realise its potential. Otherwise, the country will almost certainly lapse back into the stagnation, inequality and squalor that came to define the Mugabe era.

Is Zimbabwe a bull market?

If history is any guide, foreign investors would be wise to play it safe. This is not the first time a hopeful figure ousts an ageing African dictator after decades of misrule, promising reform only to prove themselves equally unfit for the task. The most notable example is perhaps the Democratic Republic of Congo (DRC), which spent three decades under the thumb of its own Mugabe-like figure: Mobutu Sese Soko. Mobutu, a textbook totalitarian, embezzled substantial amounts of state aid, played minority groups against each other and ruled with an iron fist.

After his ouster in 1997, hopes were high that the DRC’s new leader – Laurent Kabila – would steer the country in a more judicial direction. Instead, Kabila maintained the same power structure as his predecessor and ramped up the violence. His forces slaughtered thousands of Rwandan refugees within months of taking the presidency. Assassinated by one of his own bodyguards just four years into his regime, Kabila was replaced by his son, Joseph, who is still clinging to power today.

Though Joseph Kabila has proven to be slightly less bloodthirsty than the father, he appears to be every bit as addicted to his position. Despite agreeing to step down in December 2016, Kabila has repeatedly delayed elections, citing logistical obstacles and financial deficiencies. Protests at his continued reign have become increasingly violent – seven were killed at the turn of the year – while his most popular political opponent, Moïse Katumbi, has been hounded out of the country on entirely politically motivated fraud charges.

Recent polls suggest Katumbi would replace Kabila with ease, though the former provincial governor and current opposition leader is reluctant to return to his homeland as he fears for his life. Katumbi is asking for international protection and is leveraging his time abroad to maintain global pressure on Kabila’s regime.

Unsurprisingly, foreign investment in the DRC has cratered. Most outside commercial interests in the country are concentrated in the mining sector – itself embroiled in international scandals involving Dan Gertler, an Israeli tycoon added to the U.S. sanctions list for his ties to the murderous leadership in Kinshasa. Economic development has stagnated and the country’s GDP per capita stands at around half of its 1970s levels.

There are eerie parallels – not to mention unsavoury connections – between the Congolese and Zimbabwean political ordeals. When Robert Mugabe came to power as the first prime minister of the newly liberated Zimbabwe in 1980, his appointment was greeted with rapturous optimism by the world. Mugabe was even nominated for the Nobel Peace Prize the following year. Unfortunately, the ‘freedom fighter’ rapidly showed his true colours, using intimidation, bribery and, at times, outright slaughter to maintain his grip on power. The Matabeleland Massacres alone which claimed between 10,000 and 20,000 civilian victims between 1983 and 1987.

Mugabe prioritised military endeavours and total control over society, famously proclaiming in 1998 that “countries don’t go bankrupt!” when sending troops to the Congo in support of the elder Kabila. At the same time, he oversaw the decimation of his own country’s economy. Mugabe’s continued threats to nationalize the nation’s best performing industries has discouraged foreign direct investment (FDI). In 1992, the Land Acquisition Act decreed that the government could lawfully strip white landowners of their property and redistribute it among the indigenous population.

This bill was forcibly enacted in 2000 when 4,000 white farmers were forced into giving up their land. Mugabe then gifted the assets to friends, relatives and assorted cronies instead of promoting the interests of impoverished Zimbabweans. Agricultural output plummeted immediately. The resulting food shortages prompted the need for increased imports, financed by an unsustainably zealous attitude towards money-printing.

Predictably, inflation spiralled out of control. At its peak in 2008, monthly inflation reached 7,900,000,000% and prices doubled overnight. Gross national income (GNI) per capita fell from $890 USD in 1990 to just $300 in 2008; only in recent years has it returned to the previous levels. Even now, inflation remains at 348%. The industrial sector is operating at below 30% capacity and unemployment remains above 90%. Clearly, reform is needed – and fast.

Can Mnangagwa do it?

Fortunately for him, Zimbabwe’s economic opportunities are still there for the taking. The country was formerly known as the “breadbasket” of Africa, but a glance at its natural resources makes such a description seem positively miserly. With the world’s third-largest reserves of platinum, the fifth-biggest lithium production output and plentiful mines of coal, copper, diamonds, gold and iron ore, the country is a veritable cornucopia of resources. Mnangagwa hopes to harness that potential with a raft of measures designed to boost the economy by 4.5% in 2018.

Among other incentives, Mnangagwa has pledged to repeal the indigenisation law (so crucial to Mugabe’s regime and so damaging to the economy) from all industries except platinum and diamonds. He has also indicated that local businesses will be granted a tax amnesty on interest and fees, allowing them to clear debts and concentrate on the future. Additionally, he will also need to introduce a stable domestic currency in order to combat cash shortages that currently result in Zimbabweans queuing outside banks for days on end. Only then will the target of 4.5% become feasible.

Democracy just as important as the dollar

Even if Mnangagwa is successful in enacting his proposed measures (in itself a tall order), all that will mean nothing if he can’t get his own house in order. Corrupt political institutions will not encourage FDI or catapult the country out of its current pariah state, and if Zimbabwe is to flourish, it will need the help of the international community.

The signs thus far do not seem encouraging. New Justice Minister Ziyambi Ziyambi has dismissed calls for electoral reform, claiming they are not needed. Mnangagwa’s opponents say that the new president – and longtime Mugabe lieutenant – will turn out to be a carbon copy of his predecessor. Unless Mnangagwa can banish such anxieties and demonstrate a real desire to reform, Zimbabweans could come to face the same Sisyphean fate as their Congolese counterparts.

Keep reading |  6 min read

Africa

Zimbabwe’s President Announces the Country’s First Free Elections

 1 min read / 

Zimbabwe’s President, Emmerson Mnangagwa, has declared a clean break with the past by announcing the country’s first post-Mugabe elections.

The elections, which are expected to take place in the next four to five months, will be completely free and fair, according to the new president, Under his predecessor, Robert Mugabe, elections were rigged, opponents were intimidated and calls for electoral reform were either ignored or silenced.

The move is expected to form part of a charm offensive for Mnangagwa to attract much-needed investment into the country. Under Mugabe, the once-prosperous Zimbabwean economy went into freefall with land forcefully reallocated to party cronies and the imposition of a harmful indigenisation law which curtailed potential investment from abroad.

Some remain cynical over the President’s bon homie. Up until the coup in November, Mnangagwa was Mugabe’s longstanding ally and henchmen. The opposition has said Mnangagwa’s Zanu PF has already made moves to win the rural vote by gifting all-terrain vehicles to tribal chiefs. Something the President has refuted.

Mnangagwa, nicknamed ‘the crocodile’ for his political cunning, has said he plans to attend the Davos Economic Forum later this month. He has also expressed interest in reforging close ties with Britain, its former colonial power.

Keep reading |  1 min read

Africa

Standing Defiant: African Countries Respond to Trump’s Comments

 5 min read / 

Africa Trump

Trump’s recent bout of racism has given African states the opportunity to exert considerable agency on the world stage and also take the moral high ground of dignity and respect. Though Trump’s comments are of a vulgar and vile nature, they represent nothing new: African countries are severely misunderstood and misrepresented in mindsets and media, in particular by those of some western publics.

This is to everyone’s detriment, as African countries are strategic partners in trade and security and will only grow more vital to the state of global, economic and political affairs – it is estimated that the majority of the world’s population growth will take place on the African continent.

The African Union’s Response

Trump’s comments are an opportunity for the African Union, or AU, and for individual African states to exert agency and also strengthen their moral standing. Trump’s outright racism and the ensuing African diplomatic response and the strong voices on social media represent a key moment in recognising Africa’s all too often under-appreciated importance to global affairs. The African Union condemned Trump’s comments in the strongest of terms, and issued a statement declaring that:

“The African Union Mission wishes to express its infuriation, disappointment and outrage over the unfortunate comment made by Mr. Donald Trump, President of the United States of America, which remarks dishonor the celebrated American creed and respect for diversity and human dignity.” The comments were further characterized by African envoys as “outrageous, racist, and xenophobic.”

Botswana has been a major voice in this response, describing the comments as “irresponsible, reprehensible, and racist.” Among the larger African states, Nigeria has not issued an official response, though South Africa is issuing a diplomatic protest over the comments, stressing that “relations between South Africa and the United States, and between the rest of Africa and the United States, must be based on mutual respect and understanding.” US diplomats were summoned in Ghana, Botswana, and Senegal – more African countries are expected to follow suit.

American Views on Africa

The racism and ethnocentrism inherent in labelling “distant” countries (such as Haiti and nations in Africa) pejoratively is nothing new. Though most Americans would not express their worldviews in such crass and vulgar terms, there is widespread ignorance about African countries, with little recognition that African countries represent strategic trade and security partners, not to mention their vast cultural wealth. This problem lies in all facets of American society, from predominantly negative and homogenising news coverage about the African continent to the Eurocentric focus of the education system.

These comments were made in a larger context of domestic demographic change within the US, in which white people will enter minority status by 2044, in addition to the global power shifts of the wider world. Not only are Trump’s comments steeped in racism and ignorance, but they represent the uncertainty and deep discomfort many white Americans feel in the midst of the changing domestic demographics and a world order in which the US is no longer the lone superpower.

Africa is the Future

The African continent is the future, as African population growth will account for the majority of the world’s global population with half of the world being African by 2100. African countries are already strategic partners in trade and security, and will only become stronger players in global political and economic affairs.

Though it is certainly a desired goal for public opinion – the worldviews of western publics in particular – to recognise and appreciate the importance of African countries in their right and their integral significance to international relations, in some respects it doesn’t matter what Americans might think about a massive continent of 54 countries. As John and Jean Comaroff have written in ‘Theory from the South‘, “Lagos is not catching up to us. Rather, we are the ones catching up to Lagos.” African countries are not waiting on Western publics’ enlightenment.

Due to the rise of emerging powers changing the global landscape of power relations, African countries have more opportunity than ever to exert agency in selecting their partners and leveraging relations for national gain. Though the US is a key economic partner for much of the continent, African countries have many other options and it is well known that the approach of China and other emerging powers are, in many respects, regarded more positively than traditional western approaches. Relations between the US and African countries have been marked by longstanding goodwill, but Trump’s comments may complicate relations, ranging from security cooperation to trade ties.

Most important is African ownership of African development, in which the harmonisation of external partners aligns with domestically articulated goals and aims in respect to the continent’s nations. African countries, and all of the diversity within them, must be appreciated in their own right and understood on their own terms.

Conclusion

African countries have their own visions and national development plans and are charting a course marked by innovation and holistic strategies aimed at meeting both human and environmental needs. It is time African countries are recognised and respected for the leaders they are on the world stage and that western publics realise that society’s global future is very much an African one.

Trump’s comments are of course vulgar and crude, but should make people think very seriously about society’s own failings in how people portray – and learn about – Africa, an incredibly diverse continent of 54 countries, from our media to our classrooms. Africa is the future, and – following Trump’s comments – African countries have taken the opportunity to exert agency on the world stage and take the moral high ground.

Keep reading |  5 min read

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