Context
The majority of the population of the Democratic Republic of the Congo, a resource-rich state, lives in extreme poverty. Efforts in the country to make effective use of the mining sector's potential with a view to improving the economic and social situation of the population have so far been unsuccessful. The reasons for this are mainly to do with fundamental problems such as lack of statehood and corruption. For instance, the levying of taxes and duties is often an arbitrary matter and only covers part of the raw materials that are actually mined.
Objective
Regular and transparent monitoring of the fiscal and non-fiscal performance of the mining sector demonstrably contributes to poverty reduction.
Approach
Support for the implementation of the Extractive Industries Transparency Initiative (EITI). The project supports the implementation of EITI in the Democratic Republic of the Congo. Civil society, businesses, the government and the national EITI Secretariat are working together on this. Companies disclose what they have paid in taxes and duties to the government, and the government discloses the taxes and duties it has received from companies. An independent auditor compares the data. The annual EITI report documents if and to what extent the statements from the companies, the treasury and the central bank differ.
Strengthening public finance reforms. The project also supports the public finances reform committee (COREF). In order to improve the efficiency and transparency of the financial administration, the project works with its partners to improve the exchange of data between the tax authorities and the Ministry of Mines.
Support for harmonising environmental and social standards for mining companies. In Katanga Province, the project strengthens dialogue between the government, civil society and the private sector within the framework of the IDAK (Investissement Durable Au Katanga) dialogue platform.
The project is working closely with the German Federal Institute for Geosciences and Natural Resources (BGR), which is supporting the development and implementation of a system to identify the source of and certify mineral resources in the Democratic Republic of the Congo.
Results
The Democratic Republic of the Congo was validated as an EITI compliant country in July 2014. The reported government revenue from the mining sector rose from 405 million to 1.05 billion US dollars between 2007 and 2012. The number of companies submitting reports has more than tripled, with an increase from 26 companies (2007) to 82 (2012). An active civil society is supporting the process and has made an important contribution towards achieving validation through its constructive criticism.
At events held to discuss taxation in the mining industry, participants analysed necessary reforms concerning the tax authorities, and representatives of the public and private sectors debated measures to improve the business climate. The steering committee COREF has drawn up a priorities plan for the Ministry of Finance, which is intended to serve as a basis for improved coordination and implementation of public finance reforms.
IDAK has established itself as an important platform for dialogue between the government, the private sector and civil society on socially and environmentally responsible practices in Katanga. To date, 20 meetings have taken place.