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The huge potential of a multibillion-dollar deal between the Democratic Republic of Congo and China risks being undermined because the agreement is opaque and key terms are ill-defined says a new Global Witness report published today, entitled China and Congo: Friends in Need.
The deal between Congo and China was originally signed in 2007, covering an investment of $9 billion in infrastructure and mining – making it roughly the same value as the Congolese budget at the time. In 2009, it was renegotiated to $6 billion. Congo promised Chinese state firms up to 10 million tonnes of copper and hundreds of thousands of tonnes of cobalt, in return for a range of infrastructure projects, including roads, railways, hydroelectric power stations, universities and health centres.
The deal is now in the early stages of implementation, but China and Congo: Friends in Need highlights fundamental concerns over some of its key provisions. Neither the Congolese nor the Chinese parties have properly explained how the minerals are to be priced, nor what infrastructure is to be built and at what cost. This ambiguity makes it very hard to measure whether pledges are being met. Much of the financial risk appears to be loaded onto the Congolese side of the bargain – take, for example, Congo’s risky guarantee that the Chinese companies will make a 19 per cent profit.
“If you can’t tell what’s been promised, you can’t tell whether it has been delivered, or even if you want it at all. So only when the agreement is published and all related payments are accounted for will the people of Congo be certain of the agreement’s benefits, and that their country’s natural wealth is bringing them the development they deserve,” said Lizzie Parsons, campaigner for Global Witness.
In addition:
- none of the parties has ever published any version of the agreement, making public scrutiny of it reliant on leaked copies.
- there are questions over the destination of nearly half of a $50 million signature-bonus payment to the state copper-and-cobalt firm, Gécamines;
- a clause in the leaked contract could mean that the joint venture company running the mines will be exempt from any new laws that Congo passes;
- no consideration is given in the leaked contract to issues of social and environmental protection.
Global Witness is calling on the Congolese government to publish the entire active agreement, including any supplementary clauses and annexes. It is also appealing for full transparency and accountability for all payments related to the agreement, whether in money or minerals.
China’s cabinet, the State Council, stated in a recently published report that “As sunshine is the best antiseptic, transparency represents the best supervision of power”. This is a welcome commitment to openness of information – the Congo-China deal presents a timely opportunity for China to put the principle into practice.
“Congo is due to get $3 billion-worth of infrastructure under this deal which could transform millions of lives. However, the Congolese people haven’t seen the most up-to-date agreement, and have been left in the dark over its most basic details. The terms should be improved and there should be greater oversight to ensure the deal really delivers,” said Parsons. “China is striking similar deals across Africa. This agreement will be a revealing test case for whether these deals really will deliver mutual benefits to those who sign them,” continued Parsons.
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Contact: In Kinshasa: Lizzie Parsons +243 82 38 16 306; Daniel Balint-Kurti +243 82 293 8730. In London: Oliver Courtney on +44 (0)7815 731 889, [email protected]
Notes to editors:
1. In analysing the deal, Global Witness has referred extensively to an April 2008 leaked contract, as well as the original 2007 Memorandum of Understanding. For details of the renegotiated 2009 contract, Global Witness has relied on interviews and a summary published by the IMF.
2 Extra material is available online at www.globalwitness.org, including copies of the September 2007 and April 2008 agreements and relevant Chinese state guidelines.