Support for good governance in the mining sector

Project description

Title: Support for good governance in the mining sector
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Democratic Republic of the Congo
Lead executing agency: Congolese Ministry of Planning
Overall term: 2016 to 2018

DR Congo. Copper sheets in a mine in the DR Congo, Katanga. © GIZ

Context

The Democratic Republic of the Congo (DR Congo) has endured a long period of conflict, political instability and mismanagement. It is considered a ‘failed state’. At the same time, it is one of the most resource-rich countries in the world. In the mining sector in particular, where extraction is practised both industrially and in an artisanal way, little has been done as yet to exploit the enormous potential for sustainable development and poverty reduction.

The principles of good governance are inadequately applied in the country’s mining sector: the levying of taxes and duties is inefficient. The sector is characterised by mistrust among the key stakeholders; dialogue mechanisms are insufficiently established and legitimised. There are no clear processes to facilitate the auditing and monitoring of adherence to agreed social investments by mining companies and state contributions to local development plans. Neither the population itself nor civil society organisations currently have the necessary resources to track and systematically demand compliance with the commitments undertaken.

Objective

Good governance in the mining sector in DR Congo is strengthened.

Approach

The project primarily operates in the capital Kinshasa, in the four provinces of what was formerly Katanga and in South Kivu. It comprises three areas of activity: (1) revenue, transparency and accountability in the mining sector, (2) mining dialogues at the national and local level and (3) sustainable development of the mining sector at local level.

The project aims to enable state institutions, civil society and companies to harmonise and monitor state and private development measures. At the same time, it sets out to improve government accountability for revenues derived from the mining sector and to strengthen trust among all stakeholders. In this way it establishes a basis for peaceful conflict resolution.

The project pursues a strategy to strengthen the expertise of the stakeholders at international level. This involves technical and in-process consulting, network building, implementation of dialogue formats and capacity development for individual staff in partner institutions.

The project can help to increase transparency and monitoring by promoting stronger demand for information. Specific support can also be given to the recommendations and demands of civil society and companies if controversial issues are negotiated within a dialogue.

Results

The support provided by the predecessor project for the Extractive Industries Transparency Initiative (EITI) has proved successful: companies now 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 difference between the figures supplied by the companies and those of the state fell from 10 per cent in 2011 to 0.9 per cent in 2012 and to 0.2 per cent in 2014. EITI reporting is currently being rolled out to include artisanal and small-scale mining.

The predecessor project also assisted the dialogue platform “Investissement Durable au Katanga” (IDAK), comprising representatives from the provincial government, mining companies and civil society. In collaboration with IDAK and regional experts, the project created a guideline on corporate social responsibility (CSR), which sets out the social standards to which companies are expected to commit. Up to 15 mining companies played an active part in drafting the guideline, which has since been verified and confirmed by the mining chamber of the Fédération des Entreprises du Congo (FEC – federation of Congolese enterprises). The preparation of the guideline was supported by a specially created CSR committee of the Chamber of Commerce / Chamber of Mines , which has since launched awareness-raising activities among members and civil society.