goodwill and hard bargains · 2016-05-03 · public policy, and to encourage ... sino-congolese...

South African Instit

ute of Inte

rnat

iona

l Affa

irs

African perspectives. Global insights.

China in Africa Project

O C C A S I O N A L P A P E R N O 1 1 4

Goodwill and Hard Bargains: The DRC, China and India

M a r c h 2 0 1 2

G r e g o r y M t h e m b u - S a l t e r

A b o u t S A I I A

The South African Institute of International Affairs (SAIIA) has a long and proud record

as South Africa’s premier research institute on international issues. It is an independent,

non-government think-tank whose key strategic objectives are to make effective input into

public policy, and to encourage wider and more informed debate on international affairs

with particular emphasis on African issues and concerns. It is both a centre for research

excellence and a home for stimulating public engagement. SAIIA’s occasional papers

present topical, incisive analyses, offering a variety of perspectives on key policy issues in

Africa and beyond. Core public policy research themes covered by SAIIA include good

governance and democracy; economic policymaking; international security and peace;

and new global challenges such as food security, global governance reform and the

environment. Please consult our website www.saiia.org.za for further information about

SAIIA’s work.

A b o u t t h e C h I N A I N A F R I C A P R o J e C t

SAIIA’s ‘China in Africa’ research project investigates the emerging relationship between

China and Africa; analyses China’s trade and foreign policy towards the continent; and

studies the implications of this strategic co-operation in the political, military, economic and

diplomatic fields.

The project seeks to develop an understanding of the motives, rationale and institutional

structures guiding China’s Africa policy, and to study China’s growing power and influence

so that they will help rather than hinder development in Africa. It further aims to assist African

policymakers to recognise the opportunities presented by the Chinese commitment to the

continent, and presents a platform for broad discussion about how to facilitate closer

co-operation. The key objective is to produce policy-relevant research that will allow Africa

to reap the benefits of interaction with China, so that a collective and integrated African

response to future challenges can be devised that provides for constructive engagement

with Chinese partners.

A ‘China–Africa Toolkit’ has been developed to serve African policymakers as an

information database, a source of capacity building and a guide to policy formulation

SAIIA gratefully acknowledges the generous support of the main funders of the

project: The United Kingdom Department for International Development and the Swedish

International Development Cooperation Agency.

Project leader and series editor: Dr Chris Alden, [email protected]

© SAIIA March 2012

All rights are reserved. No part of this publication may be reproduced or utilised in any form by any

means, electronic or mechanical, including photocopying and recording, or by any information or

storage and retrieval system, without permission in writing from the publisher. Opinions expressed are

the responsibility of the individual authors and not of SAIIA.

Please note that all currencies are in US$ unless otherwise indicated.

A b S t R A C t

The economic and political engagement of China and India with the African continent is

growing, but the complex dynamics of this engagement, particularly at country-specific

level, remain under-researched. This study explores historical, political and economic

aspects of India and China’s relationship with the Democratic Republic of Congo (DRC). It

first traces the historical development of China and India’s political and trade relations with

the DRC from the 1950s to the present day. There follows specific consideration of Indian

and Chinese involvement in mining, construction, finance, and telecommunications. The

study shows that while Indian and Chinese business and governments are both significant

drivers of growth in the DRC, the nature of their engagement differs substantially. Significantly,

unlike its Indian counterpart, the Chinese government facilitates access by Chinese state-

owned companies to large mining deposits in the DRC through loans from the state-owned

Export-Import Bank. In the telecommunications sector, however, the most successful Chinese

company, Huawei Technologies, receives no noticeable state assistance. Meanwhile India’s

Bharti has become the DRC’s biggest telecommunications investor and operator. Politically,

China has positioned itself as a close ally of President Joseph Kabila while India, the main

troop contributor to the UN mission to the DRC, has a more strained relationship. The study

concludes that China and India’s role in delivering infrastructural development to the DRC

is welcome, but that projects required continued and careful scrutiny by civil society and

the country’s democratic institutions.

A b o u t t h e A u t h o R

Gregory Mthembu-Salter is a researcher and author on Africa’s political economy. He

writes for the Economist Intelligence Unit and a range of other publications, and has served

on the UN Group of Experts on the DRC. His main research interests are unrecorded trade,

and the links between conflict and natural resources.

4

S A I I A O C C A S I O N A L P A P E R N U M B E R 114

C H I N A I N A F R I C A P R O J E C T

A b b R e v I A t I o N S A N d A C R o N y m S

ACGT AgenceCongolaisedesGrandsTravails

(CongoleseAgencyforGreatWorks)

AFDL AlliancedesForcesDémocratiquespourlaLibérationduCongo-Zaïre

BCPSC BureaudeCoordinationetdeSuividuProgramme

Sino-Congolais TheofficefortheCo-ordinationandFollowUpofthe

Sino-CongoleseProgramme

CITCC ChinaInternationalTelecommunicationConstructionCorporation

CREC ChinaRailwaysConstructionCompany

CCT CongoChinaTelecommunications

DRC DemocraticRepublicofCongo

FNLA FrenteNacionaldeLibertaçãodeAngola

(NationalFrontfortheLiberationofAngola)

Gécamines LaGénéraledesCarrièresetdesMines

ITRI InternationalTinResearchInstitute

MMR MiningMineralResources

MPLA MovimentoPopulardeLibertaçãodeAngola

(PopularMovementfortheLiberationofAngola)

MPR MouvementPopulairedelaRévolution

NDRC NationalDevelopmentandReformCommission

NGO Non-governmentalorganisation

OCPTC OfficeCongolaisdesPostesetTélécommunications

SADC SouthernAfricanDevelopmentCommunity

SOMIKA SocietéMinièreduKatanga(MiningCompanyofKatanga)

UNITA UniãoNacionalparaaIndependenciaTotaldeAngola

(NationalUnionfortheTotalIndependenceofAngola)

USSR UnitedSovietSocialistRepublic

G O O d w I L L A N d H A R d B A R G A I N S : T H E d R C , C H I N A A N d I N d I A

5


I N t R o d u C t I o N

Toanoutsider,theymayseemaperfectfit.TheDRChasbountifulnaturalresources

and a growing consumer base, set against a desperately poor infrastructure, a

shortageofskilledlabour,ahighlychallengingbusinessenvironmentandalong-standing

lackofaccesstocapital.Ontheotherhand,thePeople’sRepublicofChinaandIndia

areundergoingrapideconomicgrowth.Theyarethenewworkshopsoftheworldbut

whilerichinhumanresources,includingskilledlabour,increasinglytheylackthenatural

resourcesandrawmaterialstofueltheirdevelopment.Inaddition,ChinaandIndiahave

eachaccumulatedsignificantcapitalreserves,towhichtheirstate-ownedbankshave

privilegedandreadyaccess;andbothshowanincreasingappetiteforrisk,specifically

inAfrica.Furthermore,althoughthereisalong-establishedIndianbusinesscommunity

intheDRC(whichhasattractedmuchcriticismovertheyearsfrommanyCongolese)

neither IndianorChinacarriesasignificantmoralburden in thecountrybywayof

colonialorpost-colonialassociations.

Finally,astheDRC’straditionalWesternalliesanddonorshavegrownmorecritical

andparsimonious,theCongolesepoliticaleliteisseekinglessjudgemental,freer-spending

foreignpartners.Chinaand(toalesserextent)Indiathusfarhavebeenwillingtoassume

thatposition.Ateverygovernment-levelmeetingbetweentheDRC,ChinaandIndia

thereismuchtalkofgoodwilland‘win-win’,anditistruethatthereseemsanamplitude

ofgoodwillonallsides.Atthesametimehardbargainsarebeingdriven.Indianand

ChinesebusinessinterestsseekprofitablytoengagewiththeDRCwithoutfallingvictim

toitsmultiplepoliticalandeconomicrisks;whiletheCongolesegovernmentandbusiness

sectorlooktoextractmaximumadvantage;intheshorttermforthemselvesand–itisto

behoped–inthelongrunfortheircountryasawhole.

Thispaperseekstounderstandthesedynamicsastheyplayoutindiplomacy,politics

andeconomicsatinternationalandnationallevel.ItwillexaminetheDRC’skeyeconomic

sectors–mining,telecommunications,constructionandinfrastructure–aftersettingthe

scenewithabriefanalysisofpoliticalandmilitaryrelationsbetweentheDRC,Indiaand

China.

P o L I t I C A L A N d m I L I t A R y R e L A t I o N S

Respectively under ‘great helmsman’ Mao Zedong and Prime Minister Jawaharlal

Nehru,inthe1950sChinaandIndiagavevocalsupportforthethenBelgianCongo’s

independencemovement.Becauseof itsactive interest inexporting itsownstyleof

communistrevolutionwhileblockingtheadvanceoftheSovietUnion’sMoscowversion,

ChinawentfurtherthanIndiaincultivatingtieswiththeCongo’sindependenceactivists.

ChinesegovernmentofficialsfirstmetCongoleseindependenceleaderPatriceLumumba

inAccra,Ghana,attheFirstAll-AfricanPeople’sCongressin1958,andlateratthesecond

suchcongressthefollowingyear.1Lumumba,however,appearedlittleinterestedinChina,

and–tothehorroroftheUnitedStatesgovernment–begantodevelopclosertieswith

theUnitedSovietSocialistRepublic(USSR).

Lumumba,who12weeksearlierhadassumedofficeas thecountry’s first legally

electedprimeminister,wasdismissedbyPresident JosephKasa-Vubu inSeptember

6



1960,butthelegalityofthatactionwasstronglycontested.Lumumba’sdeputy,Antoine

Gizenga,subsequentlyestablishedarivaladministrationinStanleyville(nowKisangani).

ChinaswiftlyestablisheddiplomaticrelationswithStanleyvilleandinaletterdated12

September121960,offeredtheadministrationGBP21million(itisnotclearwhether,

or to whom, the money was actually disbursed3) yet waited several months before

actuallyopeninganembassyinthecity.AfterLumumbawasmurderedinJanuary1961

andreplacedasprimeministerbyCyrilleAdoula,Chinafinallysentanambassadorto

Stanleyville;buttheembassyoperatedforonlytwomonths.Inmid-1961theStanleyville

administrationcloseditselfdownfollowingreconciliationbetweenGizengaandAdoula’s

governmentinLeopoldville(nowKinshasa).Chinaestablisheddiplomaticrelationswith

theLeopoldvillegovernmentinDecember1961,butGizengaandAdoula’samityproved

short-lived,andGizengawasarrestedinearly1962.InanycasetheChinesegovernment

hadbeenunimpressedbyGizenga’srevolutionarypotential,withareportwrittenbya

visitingChineseministerin1961allegingthat:

‘thenational liberationmovementof theCongo ismainly ledby capitalistnationalist

elements.Amongthemwaveringandcompromiseprevailandsotheycannotundertake

correctandfirmleadership.’4

TheUNSecurityCouncilauthorisedmilitaryinterventioninCongoinFebruary1961to

endthedeclaredsecessionofthecountry’sKatangaandKasaïprovinces.Amonthlater

IndiacontributedaninfantrybrigadeaspartoftheUNdeployment.Inlate1962andearly

1963thebrigadeplayedamajorrolein‘OperationGrandSlam’inKatanga,throughwhich

UNforcesseizedcontrolofElisabethville(nowLubumbashi)andJadotville(nowLikasi)

fromthesecessionists.TheUNoperationcompleted,IndiantroopswithdrewfromCongo

inmid-1964.5

PierreMulele,fromKwilu(nowBandundu)provinceinthesouth-west,spent1961as

theStanleyvillegovernment’sambassadorinCairo.In1962hemovedtoChinaandfor

severalmonthswastrainedtherein‘revolutionaryguerrillawarfare’.Mulelereturnedto

Congoin1963andin1964launchedaMaoistrebellioninKwiluthatlastedfiveyears.In

1965JosephMobutuseizedthepresidencyofthecountryanddirectedconsiderableenergy

tocrushingMulele’sKwilurevoltandastringofotherrebelinsurgencieselsewhereinthe

country.Underintensepressurefromgovernmentforces,MulelefledtoBrazzavillein

1968,whencehewaslatertemptedbacktoCongowithapromiseofamnestybyMobutu,

whothenhadhimpubliclytorturedtodeath.6Mulele’smurdercrushedChina’shopesof

successfullybackingrevolutioninthecountry–asMobutumusthavehopeditmight.

TheUSgovernmenthadbeeninstrumentalinMobutu’sassumptionofpowerandfor

atimethetwohadacloserelationship.Unsurprisingly,givenitsactivesupportforMulele

andotherrebellionsagainsthisrule,MobutuwashostiletoChina,althoughlessfervently

sothanhewastotheUSSR.In1973MobutuvisitedChinaandthefollowingyearagain

wentthere,andtoNorthKorea.HereturnedwithapromisefromChinaof$100millionin

technicalaid,ideasfornew,leftistpolicyinitiativesandvaluabletipsonhowtogenerate

apersonalitycult.

ShortlyafterhisreturnthepoliticalbureauoftherulingMouvementPopulairedela

RévolutionannouncedaMao-style,ten-point‘radicalisation’programmeinwhichthe

numberonescourgewasidentifiedas‘libertybeingconfusedwithlicense’.Theproposed


7


remedywas‘discipline,fidelitytoMobutu,andthedesignationofplaceswhichmarked

thelifeofthepresidentassitesofpilgrimage’.InJanuary1975Mobutu,whohadtakento

referringtohimselfas‘theHelmsman’,announcedthatfoodshortageswouldbeovercome

withagriculturalbrigades.Hefurtherdeclaredthatunemploymentwouldbe‘liquidated’

bytheendoftheyear,andthatsinceinflationwas‘amaladyinherentinthecapitalist

system’ itwouldbeabolishedbystate-decreedprice reductions.Heraldinga rashof

ultimatelydisastrousnationalisationsinthecountry,Mobutufurtherstatedthat‘major

economicinitiatives’shouldbe‘theexclusivedomainoftheState’.7

Meanwhilein1974,thepost-SalazarPortuguesedictatorshipcametoanend,paving

thewayforindependenceandsubsequentcivilwarinPortugal’smainAfricancolonies,

MozambiqueandAngola.Mobutuwasfriendlywithoneofthearmedgroupscompeting

for power in Angola, the Frente Nacional de Libertação de Angola (FNLA), which

alsoenjoyedsporadicsupportfromtheCentralIntelligenceAgency.Hewas,however,

hostiletotheMovimentoPopulardeLibertaçãodeAngola(MPLA),themainbackerof

whichwastheUSSR.FollowingMobutu’svisitstoChinatheChinesegovernmentalso

begansupportingtheFNLAandinaddition,theUniãoNacionalparaaIndependência

TotaldeAngola(Unita);mainlyitseemsasawaytothwartSovietambitionsinAfrica.8

Soon,ChineseweaponrywasmakingitswaytoFNLAmilitarycampsinsideZaïre(as

MobutuhadbythenrenamedCongo),whiletheUSSRandCubarampedupsuppliesto

theMPLA.WhilethiscollaborationdidmuchtoimproveSino-Zaïreanrelations,itwas

notenoughfortheFNLAtoconquerAngola.TheMPLAcapturedLuanda,proclaimed

AngolanindependenceinNovember1975,anddecisivelydefeatedtheFNLAinFebruary

1976.Unita,however,formanyyearscontinuedtocontrollargeswathesofthediamond-

richAngolanterritoryborderingZaïre,andfoughtonuntilthedeathofitsleaderJonas

Savimbiin2002.AlthoughMobutuprovidedsupporttoUnitaandtradeddiamondswith

itsleadershipuntilhelostpowerin1996,theChinesegovernmentbrokewithSavimbiin

thelate1970sandestablishedpoliticalrelationswiththeMPLAin1980.9

TheIndianbusinesscommunityinZairewasbadlyaffectedbyMobutu’s‘Zaïreanisation’

policyofthemid-1970s,whichledtotheforcibletransfertowell-connectedZaïreans

ofmajorityshareholdings inIndian-ownedbusinesses.NewDelhi,however, tookno

discerniblestepstoprotectIndianbusinessesinZaireandindeed,appearedtohavelittle

politicalinterestinthecountryasawholeduringMobutu’srule.RajendraRai,India’s

ambassadortoZaireduringtheearly1980s,hasrecountedthat:

TherewasnotmuchprospectforenhancedtradeaslongasZaïre’sdifficultiesinpayingfor

itsimportscontinued.TherebeingnoPakistaniembassyinKinshasa…therewasnotgoing

tobethestaple…IndiandiplomaticactivityofcounteringPakistanipropagandaorstating

theIndiancaseonJammuandKashmir.

Ihadatotaloffourtête-à-têteswithMobutu,includingtheoneafterthepresentationofmy

credentialsandtheonefortakingleave.TherewasnotenoughcontentinIndia’srelations

withZaïretowarrantmorethantheothertwomeetingsIhad.10

IndiawithdrewitsambassadorfromZaïrein1993,anddidnotsendanotheruntil2006.11

In1996aRwandan-ledrebelgroup,AllianceofDemocraticForcesfortheLiberation

ofCongo-Zaire(AFDL),invadedZaïreandmovedswiftlythroughthecountry,easily

8



crushing what little resistance it encountered from Zaire’s armed forces. It entered

Kinshasaon17May1997.LaurentKabila,whomtheRwandanmilitaryhadpreviously

selectedasthepublicfaceoftheAFDL,12declaredhimselfpresidentofthecountry,which

herenamedtheDemocraticRepublicofCongo.Mobutuhadfledthecitythedaybefore,

anddiedinexileinMoroccofourmonthslater.13

Kabilawasoriginallya‘Lumumbist’.Hiscareerasarebelcommanderbeganwhen

LumumbasenthimtoBurundiinJanuary1964tomakecontactwithChineseofficials

thereandenlisttheirsupportforarebellionineasternKivuprovince.14Therebellionwas

dulylaunchedwithChinesesupport.Itrumbledoninconclusivelyforyears,degenerating

attimesintounprincipledbanditry(suchaswhenKabila’sforcesin1975kidnapped

several foreign students from Jane Goodall’s chimpanzee research camp in Gombe,

westernTanzaniaanddemandeda$500,000ransom).15

Kabilahadtravelledto,andspentseveralmonthsin,Chinaduringthelate1970s

andonceinstalledaspresidentoftheDRCsoonrevivedhisChineselinks.Fromthe

starthismainconcernwasmilitaryassistance,andChinaobliged,reportedlysupplying

largequantitiesofweaponsduringthelate1990s.16AnumberofKabila’smilitaryofficers

includingoneofhissons,JosephKabila,alsowenttoChinafortrainingduringthe

same period.17 At this time Kabila’s relations with the DRC’s former Western allies

oscillatedbetweenlukewarmandfrigidlyhostile,withfewdonorswillingtoprovide

assistanceonKabila’s terms. In addition toobtainingmilitary assistance, therefore,

KabilawaskeentoexpandeconomiclinkswithChina.Themainfruitofhisefforts

wastheformationofajointventurebetweentheDRCgovernmentandaChinesestate-

ownedtelecommunicationscompany,ZTE,in2000.ZTEtooka51%stakeinanew

mobilephoneoperatingcompanycalledCongoChineTélécoms(CCT),withtheOffice

CongolaisdesPostesetTélécommunications(OCPT)takingthebalance.

BarelyamonthafterKabilaorderedallRwandantroopsoutoftheDRCinJuly1998,

anotherRwanda-backedrebelmovement,theCongoleseRallyforDemocracy,beganawar

againsthisgovernment.TheconflictswiftlydraggedinmostoftheDRC’sneighbours.

UgandaalsoopposedKabilabutAngola,NamibiaandZimbabwesupportedhim.After

ayearoffighting,inJuly1999apeaceaccord(theLusakaCeasefireAgreement)was

signedinLusaka,Zambia,bythepresidentsoftheDRC,Zimbabwe,Angola,Rwanda

andUganda.InSeptemberof thatyeartheUNlaunchedamilitaryoperationinthe

DRCintendedtooversee,andifnecessaryenforce,thefragileagreement.Asithadbeen

duringthe1960s,IndiaagainbecameoneofthemaintroopcontributorstotheUN

Mission(Monuc)intheDRCfromitsbeginningin2000.ParticularlyinNorthKivu,

whichbordersRwandaandisamongtheDRC’smostviolentandtroubledprovinces,

Indiadeployedthousandsoftroops,andequipmentincludingcombathelicopters.

ChinafirstcontributedtroopstoMonucin2001andin2008therewere234Chinese

militarypersonnelintheDRCoutofatotal1487postedinUNmissionsworldwide.18

By2011,meanwhile,Indiahadmorethan4000troopsintheDRC.19

KabilawasassassinatedbyoneofhisbodyguardsinJanuary2001andwasswiftly

replacedbyhissonJoseph.Thechangeinleadershipprovidedimmediateimpetusto

thecountry’sfalteringpeaceprocess.InJuly2002KabilaandRwandanpresidentPaul

KagamesignedapeaceagreementinPretoria,SouthAfrica,brokeredbySouthAfrica’s

PresidentThaboMbeki.Most foreign troopsdeparted theDRCsoonafterwards. In

December2002,alsoinPretoria,alandmarkpoliticalagreementwassignedbetween


9


Kabila,theleadersofthearmedgroupsopposedtohim,andrepresentativesofthose

politicalpartieslackingprivatearmies.Thisinturnledtoanewunitygovernmentheaded

byKabila,whichwassworninon17July2003.20

China continued to sellmilitary equipment to theDRCuntil some time around

2008,sincewhennomajorsaleshavebeenreported.Chineseinstructors,however,have

continuedtoprovidetrainingtotheCongolesemilitaryattheKaminabaseinManiema

province,whileeachyearanumberofCongolesemilitaryofficersaresenttoreceive

traininginChina.21AftertheDRCMinisterofDefenceCharlesMwandoNsimbavisited

ChinainOctober2009fortalkswithhisChinesecounterpartLiangGuanglie,anofficial

Chinesestatementsaidthatthetwogovernmentswerereadytoraiserelationsbetween

theirarmedforcesto‘ahigherlevel’.22

Kabilahasbeenaskeenashis father (andas theChinesegovernment) to foster

economiclinkswithChina.EquallyenthusiastictoextendChina’seconomicreachinthe

DRC,inSeptember2007Beijingsignedamultibilliondollarresources-for-infrastructure

dealbetweenLaGénéraledesCarrièresetdesMines(Gécamines),aCongolesestate-

ownedminingcompany,andtwoChinesestateconstructioncompanies.Themoneywas

tocomefromChina’sstate-ownedExport-Import(Exim)Bank.

Atthesametime,China’sgovernmenthasbeenincreasinglywillingtouseitsseat

ontheUNSecurityCounciltothebenefitoftheDRC.Forexample–andmuchtothe

irritationoftheUS,BritishandFrenchgovernments–acandidateforaUN‘Groupof

Experts’ontheDRCwasvetoedbyChinaintheUNSecurityCouncilinearly2010atthe

requestoftheDRCgovernment,whichhadtakenumbrageatthecandidate’sformerwork

foraUS-basedlobbygroup,HumanRightsWatch.23TheChinesegovernmenthasalso

affirmedthatshouldtheCongolesegovernmentgiveMonuc’ssuccessororganisation,the

UNStabilisationMissionintheDRC(newlynamedMonuscoin2010),acleardeadline

toleavethecountry,itwouldsupportthatdemand.24

In July 2007, international news agencies reported allegations contained in UN

documentsthatsince2005someIndianpeacekeepersineasternDRChadbeentradingin

goldwithaRwandanrebelmilitia.AnIndianarmygeneralwasapparentlyimplicated.25

FurtherallegationsaboutillegaltradebetweenIndianpeacekeepersandCongolesearmed

groups,whichweresaidtohavemadetheformerreluctanttoassistinMonuc’seffortsto

disarmthelatter,surfacedthefollowingyear.TheUNSecurityCouncilvotedtoincrease

Monuc’stroopdeploymentinNovember2008,butaccordingtoaUSStateDepartment

cablelaterreleasedbythewebsiteWikileaks26theDRCgovernmentrequestedthatthis

shouldnotincludemoreIndianforces.TheIndiangovernmentthereuponthreatenedto

pullallitstroopsandhelicoptersoutoftheDRC,amovethatwouldhavesubstantially

underminedMonuc’smilitarycapacity.

TherefollowedsustaineddiplomaticeffortsbyUNSecretary-GeneralBanKi-moonand

theUSgovernment,resultinginKabila’swritingpersonallytoPrimeMinisterManmohan

SinghofficiallythankinghisgovernmentforitstroopcontributionsandaskingIndia

to remain engaged in the DRC. The initiative worked, and the Indian government

rescindeditsthreattopullout.27ReactingtoIndiangovernmentcomplaintsaboutits

relativelackofinfluenceintheupperechelonsofMonuc,BanKi-moonappointedmore

Indianstocommandpositions,asaresultofwhichIndia’sLieutenant-GeneralChander

PrakashbecameforcecommanderinJuly2010.28Yetinmid-2011whenRogerMeece,

theAmericanheadofMonusco,requestedthatIndiacontinuetoleaseitshelicoptersto

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themission,therequestwasrefused.MeececommentedthatthewithdrawalofIndia’s

helicopters would significantly weaken Monusco’s military capacity, but the Indian

governmentwasunrepentant,retortingthatitwasnottheonlycountryintheworldwith

combathelicopters.Indiadid,however,agreetoleaveitstroopsinplaceatleastuntilthe

conclusionofthenextDRCpresidentialandlegislativeelectioninlateNovember2011.29

TheIndiangovernmenthasnobilateralmilitaryco-operativearrangementswiththe

DRC30buthasbeguntotakemoreinterestinstimulatingtradebetweenthetwocountries.

Inthemid-2000sthestate-ownedExport-ImportBankofIndia(EximIndia)offereda$57

millioninitiallineofcreditatpreferentialinterestratestoIndiancompanieslookingto

investorexpandintheDRC.In2011,EximIndiaannouncedanotherlow-interest$267

millionlineofcreditforIndiancompanieslookingtodobusinessintheDRC.31

t R A d e

AccordingtodatacompiledbytheTradeandLawCentreforSouthernAfrica(tralac),32

China’stotaltradewiththeDRCincreased33-foldbetween1996and2009,from$44

millionto$1.4billion.33Themainincreasescamefrom2004onwards,withaparticularly

significantleapin2008,whentradealmostquadrupledinoneyear.Nonethelessthe2009

DRC-Chinatradetotalwasstillonly4%ofthevalueofSouthernAfricanDevelopment

Community(SADC)recordedtradewithChinathesameyear,and8.5%ofChina’strade

withAngola.ThislattertradeconsistsmainlyofAngolanoilexports,togetherwithsome

Chineseconstructionandtelecommunicationsitems.Typicallyitaccountsforabouthalf

ofSADC’stradewithChina(SADCcontributed45%ofAfrica’stotaltradewithChinain

2008,and43%in2009).

Table 1: China’s trade with Africa (import and export), selected indicators, 1995–2009 ($ million)

DRC Angola SADC Africa

1996 44 272 1,920 4,031

1997 31 633 2,569 5,672

1998 52 190 2,162 5,533

1999 20 372 2,429 6,485

2000 19 1,876 4,466 10,598

2001 20 768 3,536 10,799

2002 31 1,148 4,423 12,390

2003 52 2,351 7,117 18,564

2004 136 4,911 12,240 29,456

2005 225 6,954 16,168 39,801

2006 437 11,825 24,182 55,472

2007 553 14,125 31,711 73,543

2008 1,810 25,301 48,922 38,219

2009 1,441 17,046 106,752 90,007Source:tralac,http://www.tralac.org.za


11


TheDRChasrecordedatradesurpluswithChinasince2003.Itsrecordedexportsto

Chinaarealmostexclusivelyrawmaterials,withcobaltproductsfirstfollowedbycopper

products,thentimber,tungsten,niobium,tantalum(coltan)andzinc.China’srecorded

exportstotheDRC,bycontrast,arehighlydiversified.Telecommunicationsequipment,

thelargestsinglecategory,accountedforjust6.5%ofthe2009total.Otherrelatively

significantitemsincludedtinnedvegetables,footwear,medicines,batteries,andmotor

vehicles.

ThesestatisticsarederivedfromChina’snationaltradefigures.Iftheglobaltrend

intradefiguresappliesinthiscase,theyareprobablyfairlyaccurateasregardsChina’s

importsfromtheDRC,butlesssoaboutitsexports.DisaggregatedCongolesestatistics

foritstradewithChinawouldmakeforausefulcomparisonbuthavethusfarproved

hardtofind.InanycasethereliabilityofDRC’snationaleconomicdataisnotoriously

poor,particularlyforproductionandtrade.AgricultureisallbutabsentfromCongolese

productionandtraderecordsandmineralproductionfiguresconsistentlyunder-capture

output.34Furthermore,widespreadcustomsfraudmeansthecountry’simportstatistics

arealsohighlyunreliable.

Box 1: Artisanal miners, taxis and Chinese motorbikes

Most vehicles imported from China are motorcycles, which are popular throughout the

dRC, particularly in artisanal mining areas. In the gold-rich Ituri district of the north-eastern

Orientale Province, artisanal diggers who ‘strike it rich’ often invest in Chinese motorcycles,

which they then use as taxis. Bunia, the largest Ituri town, teems with thousands of motorbike

taxis, churning up red dust in its unkempt and un-tarred streets. Nearly all the machines

in Bunia are Chinese and a large proportion of their drivers are associated with artisanal

gold mining. Chinese motorcycles are popular in Bunia, and it seems elsewhere in the dRC,

because they are the cheapest available.

Taxi drivers acknowledge that their Chinese machines are of significantly lower quality

compared to their Japanese counterparts, but in 2011, at just $600-$800, the former cost

roughly half of the latter. Japanese motorcycles were referred to as ‘bikes for the bosses’

by taxi drivers but the Chinese ones were ‘bikes for us’. In Bunia, Indian motorcycles did

not appear to be in widespread use. Indian-manufactured bicycles are more common

nationwide, though anecdotal evidence from Kinshasa, Lubumbashi, Bukavu, Goma and

Bunia suggests that they too are being supplanted by less expensive, though poorer quality,

Chinese products.35

As they are in other parts of the country, taxi motorcycles in Ituri are subjected to gruelling

treatment. They carry passengers and goods loads that are frequently enormous, for long

distances over poor roads. Taxi operators do not expect their Chinese machines to last

more than eight months. They calculate, however, that in their short life the motorcycles can

earn enough to pay for a replacement and generate additional profit besides.36

12



Table 2: DRC–CHINA disaggregated trade data, 1997–2009 ($ million)

DRC exports to China

Of which:

Cobalt ores and

concentrates

Copper ores and

concentrates

DRC imports

from China

Of which:

Telecommuni- cations

equipment

1997 2 0 0 29 0

1997 2 0 0 50 0

1997 1 0 0 19 0

2000 1 0 0 18 0

2001 7 4 0 13 0

2002 12 8 0 19 0

2003 27 24 2 25 0

2004 100 94 3 37 0

2005 176 148 20 50 0

2006 368 214 105 69 7

2007 460 243 77 93 21

2008 1,579 851 138 232 23

2009 1,119 458 124 321 21

Source:tralac,http://www.tralac.org.za

OfficialIndiantradestatisticsindicateaverylowlevelofIndianexportstotheDRC.

India’s recorded exports, which were worth a mere $1 million in 2007, peaked at

$15million in2009,and then fellback to$10million in2010.Theofficial figures,

however,aremuchtoolow.Indianpharmaceuticalimportsalonearesaidtoexceedofficial

totalsbyalargedegree;thefactthatsomanyoftheseimportsallegedlyhaveexceeded

theirexpirydatesmayaccountfortheirabsencefromIndia’sofficialrecord.37Evenso,at

agenerousestimatetotalIndianexportstotheDRCareunlikelytoexceed$50million

ayear,insignificantagainstIndia’sexportstoAfrica’smoredevelopedeconomies,such

asSouthAfricaandKenya.In2010recordedIndianexports toSouthAfricatotalled

$2billionandtoKenya,$1.5billion:togetherthosetwocountriesconsumedone-thirdof

allthecontinent’simportsfromIndia.

Table 3: India’s exports to Africa, selected indicators, 2006-2010 (April-March) ($ million)

2006 2007 2008 2009 2010

Africa 5,441 8,407 11,539 11,391 10,308

South Africa 1,526 2,242 3,606 1,980 2,058

Kenya 577 1,309 1,585 1,362 1,452

DRC 2 1 4 15 10

Source:Governmentof India,MinistryofCommerceandIndustry,DepartmentofCommerce,

System on Foreign Trade Performance Analysis. http://www.commerce.nic.in/ftpa/rgncnt.asp

accessed17July2011


13


IfIndia’sofficialtradestatisticsaretobebelieved,Africaasawholeexportsroughly

twiceasmuchtoIndiaasitimports.SouthAfricaisthecontinent’smainexporterto

India,responsiblein2010for27%ofrecordedtotalexports.India’sstatisticssuggestthat

IndiastartedbuyingoilfromAfricainsignificantquantitiesin2007.InthatyearNigeria’s

exportstoIndiaroseto$7billionfrom$72millionin2006,whileAngola’srosefrom

$3millionto$245million,increasingto$1billionin2008.TheDRC,meanwhile,hasrun

amodestrecordedtradesurpluswithIndiasince2008andin2010itsrecordedexportsto

India,at$145million,werenearly15timesthevalueofitsimports.Themainrecorded

exportsarecopperoresandconcentrates, followedbycobaltoresandconcentrates.

Ifthereisanexporttradeintimber,itisallbutunrecorded.DiamondsfromtheDRCare

oftencutandpolishedinIndia,buthavegenerallybeenexportedthroughBelgium,Israel

orLebanonanddonotthereforeappearinbilateraltradestatistics.

Table 4: India’s imports from Africa, selected indicators, 2006–2010 (April–March)

($ million)

2006 2007 2008 2009 2010

Africa 4,041 11,363 14,928 18,904 20,715

South Africa 2,472 2,470 3,605 5,514 5,675

Nigeria 72 7,009 7,612 8,900 7,288

Angola 3 245 1,024 1,386 4,243

DRC 14 17 14 117 145

Source:Governmentof India,MinistryofCommerceandIndustry,DepartmentofCommerce,

System on Foreign Trade Performance Analysis. http://www.commerce.nic.in/ftpa/rgncnt.asp,

accessed17July2011

RecordedIndiantradewiththeDRCisclearlyafractionofwhatitcouldbe.According

tosomeintheIndianbusinesscommunity,oneofthemainobstaclestoincreasedtradeis

thelackofabilateralinvestmentprotectionagreement(BIPA).Althoughthepotentialfor

profitabletradeintheDRCisgreat,foreigninvestorshavefacedsomeextremelydifficult

challenges;expropriation,government-sanctionedlootingbythemilitary,hyperinflation,

civilwarandtheapparentlyarbitraryalterationorcancellationofcontracts.ABIPA

cannotdefendacompanyfromcivilwarorhyperinflationandwouldprobablybeoflittle

useagainstauthorisedlootingbytheDRCarmedforces,butitcouldhelpwitharbitrary

contractalterationsandcancellations.In2011,abilltoinstituteaBIPAwithIndiacame

beforetheDRCNationalAssembly,withtheIndo-CongoleseChamberofCommerceand

IndustryinKinshasacommentingthatitsadoptioncouldbethekeytoenticing30–40

majorIndianinvestorstotheDRC.38

As the number of Chinese companies in the DRC grows and the value of their

investmentsrises,Beijingalsowantsabilateral investmentagreementwiththeDRC.

TheChinesegovernmentisacutelyawarethatinNigeria,multi-billiondollaroil-for-

infrastructureagreementsnegotiatedwithPresidentOlusegunObasanjoduringthelate

1990swerearbitrarilyditchedbyhissuccessorPresidentUmaruMusaYar’Adua;China

14



doesnotwant thesametohappenintheDRC.OneseniorChineseembassyofficial

inKinshasa remarked: ‘That iswhyweneed this investmentcode.Wearecurrently

negotiatingthiscode.’39

m I N I N G

Aswithitsinformal,unrecordedcounterpart,theDRC’sformal,recordedeconomyis

dominatedbymining.Inadditiontoitsindustrialminingenterprisesithasthousands,if

nottensofthousands,ofartisan-minedsitesworkedbyhundredsofthousands,perhaps

millionsofpeople.TheminesrangefromthegolddepositsofOrientaleProvincetothe

tinandcoltanminesoftheKivus,ManiemaandNorthKatanga,fromsouthernKatanga’s

copperandcobaltminestotherichdiamonddepositsoftheKasaïs.

IndianandChinesecompaniesintheDRC’sminingsectoraremainlyinsouthern

Katanga,wheretheymine,processandtradecopperandcobaltoresandconcentrates.In

manyinstancestheseoresarepurchasedfromartisanaldiggers.OneIndiancompanyis

tradingandminingtinandcoltaninnorthernKatanga,andoneChinesecomptoir(buying

house)alsobuysfromartisanaldiggers.OneIndianandthreeChinesecomptoirsbuytin

andcoltanfromartisanalsintheKivusandManiema.Thereappearstobenosignificant

presenceofIndianorChinesecompaniesinminingortradinggoldinOrientale,norin

miningortradingKasaïandiamonds.

Copper and cobalt

Morethan100Chinesecompaniesarethoughttobeinvolvedinmining,semi-processing

andtradingcopperandcobaltoresandconcentratesinKatanga.40Inaddition,bylate

2011China’sJinchuanGroupLtdwasedgingclosertoacquiringJohannesburg-based

MetorexLtd,whichoperatestheRuashicopperandcobaltmineinKatanga,forZAR41

9.1billion($1.1billion).MetorexshareholdersvotedtoacceptthetakeoverinSeptember

2011.42Alsoinlate2011Perth-basedAnvilMiningLtd,whichoperatestheKinsevereand

MutoshicopperandcobaltminesinKatanga,agreedtoa$1.3billiontakeoverbyChina’s

state-ownedMinmetalsGroup.(Gécamines,Anvil’sminoritypartnerinthetwoKatanga

mines,subsequentlyinsistedthatitsconsentwasrequiredforthedeal,whichstipulation,

AnvilwarnedinlateOctober2011,mightjeopardisethesale.43)

Shouldtheysucceed,thosetwotakeoverswouldchangethefaceofChinesemining

intheDRC.Atthetimeofwriting,however,ChineseminingcompaniesinKatangaare

allsmall,low-volumeproducers,rarelyinvolvedinextraction.Instead,mostpurchase

oresfromartisanaldiggersandprocessthemintoconcentrates,orlessoften,intothe

metalsthemselves.AmongthemainChinesecompaniesprocessingcopperandcobalt

oresinKatangaareVolcanoMining,GuangAnCotaMetalCo(CotaMining),Shaanxi

JiaxinMiningCompanyLtd,Magma-Lubumbashi,operatingnearLubumbashi,andthe

HuachincompanyinLikasi.AccordingtotheKatanganprovincialminesdivision,during

2010thesefivecompaniesbetweenthemproduced10457tonnesof‘blackcopper’(which

containsabout95%copper)outofarecordedoutputinKatangaof53801tonnes,and

35308tonnesofcobaltconcentrate.44Thatamountedto16%oftherecordedtotalof

cobaltconcentrateand19%ofthatforblackcopper.Itshouldbenoted,however,that


15


mostrecordedcopperoutputintheprovinceislistednotasblackcopperbutas‘copper

concentrate’(withthepercentageofcontainedcoppernotdefinedintheofficialfigures),

forwhich2010totalrecordedproductionwas328779tonnes.

MagmahasoperatedinKatangasince2002butbeganprocessingmineralsonlyin

2007whentheprovincialgovernmentprohibitedtheexportofmineralores.Ithasadaily

processingcapacityof70tonnesofore,broughttotheplantforsalebyartisanalminers.

Inmid-2011Magmaemployed24Chinesestaffandhadnoimmediateplanstoexpand

production.UnlikemanysmallChineseminingcompaniesinKatanga,Magmacontinued

itsoperationstherewhencommoditypricescrashedin2008.45

Some, but by no means all the Chinese companies that left during 2008, have

sincereturned.Thereisoftenanairofimpermanencetotheoperationsofthesesmall

companies,withinvestmentininfrastructureatplantsitestypicallykepttoaminimum,

possiblytoenablethemtoclosedownrapidlyandwithoutgreatlossshouldtheneedarise.

Inaddition,thecompanies’Chineseemployeesseemreluctanttobringtheirfamiliesto

Katanga,andalthoughthereareChinese-ownedrestaurants,casinos,clinicsandbrothels

inLubumbashi,thereisnoChineseschoolorsupermarket.46

There are several small Indian companies in Katanga, also processing minerals

purchasedfromartisanaldiggers.TheyincludeGoldenAfricanResourcesinLubumbashi

andDelhi-basedMehulMiningLtdandCongoMinMet inLikasi. Inaddition,three

medium-sizedIndiancompanies,RubaminLtd,ChemafandSocietéMinièreduKatanga

(Somika),areengagedinlarger-scaleoperations.

According toan inspector in theKatangaprovincialgovernment’sdepartmentof

labour:

Ihavebeenaninspectorfor11years,andhaveinspectedalotofChinesecompanies.The

conditionsarebarbaric.Theydon’trespectpeople…WesternandSouthAfricancompanies

respondtoourrecommendationswith improvements,buttheIndiansandChineseare

terrible.Insteadofrespondingtoourrecommendations,theyprefercorruption.Wegetpaid

$50amonth,soitiseasytocorruptus.47

IntheviewofMoïseKatumbi,thegovernorofKatanga:

TherearebigChinesecompanies thatrespectour lawsandIndiancompanies too.But

therearemanysmallercompaniesthatdonotrespectourlaws…especiallyconcerning

pollution.48

Thegovernorclaimsthattheproblemwithhisprovince’sinspectorateisnotcorruption

butcapacity.‘Itisalackofexpertise.Theyarenottrainedandweaskfortraining.We

havenolaboratories.’49

RubaminisIndia’s largestprocessorofzincoxideandcobaltbutitssubsidiaryin

KatangaisitsonlyAfricanventure.ThecompanyarrivedintheDRCin2004andin

2008invested$25millioninaplanttoprocesscopperandcobalt.Theplantcanproduce

10000tonnesofblackcopperand15000tonnesofcobaltconcentrate(7–8%cobalt)a

year.Rubaminitselfactivelymineduntil2010whenitsexplorationpermitwasrescinded

andsincethenhasreliedonorepurchasedfromAnvilMiningandartisanaldiggers.

DependenceonthesesourcesalonehasmadeRubamin’saccesstocopperandcobaltores

16



moredifficultbutnonethelessthecompanyplanstoincreaseitscopperandcobaltore

productionto50000tonnesayear.ItexportsitsoutputalmostexclusivelytoChina.50

In2010RubaminrecordedproductioninKatangaof564tonnesofcopperconcentrates

and348tonnesofblackcopper.Curiously,provincialstatisticsdonotshowanycobalt

output.51

ChemafisasubsidiaryofIndian-ownedShalinaResourcesLtd,whichisregisteredin

theUnitedArabEmirates.In2003ChemafacquiredfromGécaminestheEtoileopenpit

mineandUsokemineralprocessingplantnearLubumbashi.In2008,Chemafupgraded

the Usoke plant to permit copper cathode production through a process of solvent

extraction and electro-winning (SX-EW), which increases output and quality while

reducingcosts.ShalinahassinceindicatedthatitintendstolistontheLondonMetal

Exchange.52Chemaf’srecordedoutputin2010was504tonnesofcobaltconcentrate,

17055tonnesofcobaltcarbonate(CoCO3),and15196.5tonnesofcoppercathode.53

TheUsokeplantisnotoriouslocallyforallegedenvironmentalpollution.According

toonenon-governmental organisation (NGO) inLubumbashi,Chemaf’s operations

generatelargeamountsofdust;theplantpollutesthelocalwatersupply;pumpsout

sulphurousair;andposesaserioushazardtonearbyresidents.TheNGOfurtheralleges

thatChemafhasrefusedtodiscusstheseconcernswiththelocalcommunityandinstead

handedouttokenfinancialcompensationtoasmallselectionofthoseaffected.54In2010

theprovincialmining environmental inspectorate instructedChemaf to construct a

waterpurificationplant.Asofmid-2011theinspectoratehadnotverifiedwhetherornot

thishadtakenplace.Theinspectoratehasblamedpowercuts,notChemaf,forUsoke’s

sulphuremissions.55ChemafappearsreluctanttomeettheNGOorlocalcommunity

representativesbuthasvigorouslydefendeditsrecordinthelocalpress,insistingitis

notpollutingthewatersupply;isworkingonthedustissue;andisactiveinarangeof

socialinitiatives.ApersonalvisittotheUsokeplantinmid-2011confirmedthatthe

airwasheavywithsulphurandheavytruckactivitywasthrowingupdust.56Theclose

proximityofresidentialsettlementstoChemaf’soperationsisclearlyhighlyproblematic

andifpeoplearetoremaintherethesituationneedsurgentattention.Usokeislocated

inaminingandindustrialzoneofLubumbashi,however,andthequestionofresidential

settlementappearsoneforthemunicipalityratherthanChemaftoresolve.

SomikahasbeenactiveinKatangasince2001.ItoperatesKisanfumemineinKolwezi

asajointventurewithGécamines,andaprocessingplantinLubumbashi.Commissioned

in2003,thelattergetsthebulkofitsmaterialfromKisanfume,withanother30%from

artisanaldiggersandothermines.Theplant,whichhasbeenupgradedtousetheSX-EW

process, produces copper cathode and a cobalt concentrate containing 30% cobalt.

AccordingtoSomika’smanagementtheplantproduces300tonnesofcoppercathode

andafurther300tonnesofcobaltconcentrateeachmonth,withanincreaseto1000

tonnesofeachbytheendof2011.ItsellsitsoutputtoChina,shippingthroughDares

SalaaminTanzania.SomikadoesnotusetheraillinkbetweenKatangaandDaresSalaam

buttransportsitsproductbyroadduetotheapparentlyexcessivelogisticalproblems

involved inrailmovement.57KatangaMinistryofMinesstatisticsshowthat in2010

Chemafproduced24332tonnesofcobaltconcentrate,12412tonnesofcobalthydroxide

and2840tonnesofcoppercathode.58

In 2008 Gécamines, two Chinese parastatals (China Railways and Sinohydro

Corporation),andtheZhejianHuayouCobaltCompanyformedajointventurecalled


17


Sicomines.SicominesintendstodeveloptheMashambaWestandDikuluwecopperand

cobaltdepositsinKatanga,forwhichithasearmarkeda$3billioninvestment.Themoney

isintheformofaloanfromChina’sEximBankbutisconditionalonthecompletionofa

feasibilitystudythatcanshowthatthemineshaveprovenreservesof10milliontonnes

ofcopper.59

Inmid-2011aSicominesrepresentativeinLubumbashicouldnotconfirmthatthe

companyhadbeenabletoprovetherequiredreserves,butstatedthatafeasibilitystudy

had been sent to China’s National Development and Reform Commission (NDRC).

ShouldtheNDRCacceptthestudyitappearsthatEximBankwillreleasethefunds.The

representativesaidthecompanyconsidereditfeasibletodeveloptheminingassetsand

thattheprojectwasprogressingmoreslowlythanhadbeenenvisagedbutwas‘developing

favourably’.60CompletionofthefeasibilitystudyanditssubmissiontotheNDRCwasalso

confirmedbytheDRCgovernment’sBureaudeCoordinationetdeSuividuProgramme

Sino-Congolais (BCPSC), which is in charge of administration and finance for the

agreement’sinfrastructuralprojects.61AseniorofficialintheChineseembassyinKinshasa,

however,commentedthattheissueofSicomines’reserveswas ‘abigquestion,which

worriesus.’62TheriskisthatifMashambaWestandDikuluwereservesareinsufficient

theEximBankmaynotreleasepromisedfunds–notonlythosefordevelopingthemines

butalsoamootedfurther$3billionloantofinanceplannedinfrastructuralprojectsacross

thecountry.

Tin and coltan

In 2009 Somika established a tin and tantalum division, Mining Mineral Resources

(MMR).MMRoperatesseveralcomptoirsthatpurchaseartisan-minedtinandcoltanin

northKatanga.In2010,theprovincialgovernmentgrantedMMRexclusiveaccessto

fourminesitesinthatregion,whereMMRisalsodevelopingsemi-industrialmining.In

return,MMRhasbegunaseriesofsocialprojectsinandaroundthosesites.MMRisalso

implementingamineralstaggingandtraceabilityschemedevisedbyInternationalTin

ResearchInstitute(ITRI),aUK-basedassociationworkingundertheauspicesoftheUN

SecurityCouncil.ThetraceabilityprojectispartofITRI’sprogrammetoimplementdue

diligence,63asdefinedbytheOrganisationforEconomicCooperationandDevelopmentin

itsguidanceforcompaniessourcingmineralsfromconflict-affectedandhigh-riskareas.64

MMRhasappliedtotheminesministryinKinshasaforexploitationrightstoitsnorth

Katanganassets,butbyJanuary2012hadreceivedtheserightsforonlyoneofthemines.

InthesixmonthstoApril2011MMRsaiditexported1000tonnesoftinconcentrate,

containing65%tin,apparentlytoChina.65

MMRhasalsobegunconstructionofatinsmelterinLubumbashionthesiteofthe

existingSomikacopperandcobaltprocessingplant.Thiscouldhaveasignificantimpact

ontheDRCtinandtantalumminingsector.TheMMRsmelterisscheduledtobegin

operationsduring2012,andwillbringthecompany’stintoahighlevelofpurity,ensuring

thatsomeofthemetal’saddedvalueremainsintheDRC.Thesmeltercouldalsoenable

MMRtoreceiveoutputfromothertinminingcompaniesinthecountryfortolltreatment.

SomeKivu-basedtinandcoltancomptoirs,taintedbytheirassociationwithso-called

‘conflictminerals’inthoseprovinces,havebeenexcludedfromdoingbusinessinKatanga.

18



ThishasbeenacontroversialmovebutGovernorKatumbihasbeenunapologetic:

Inotherprovinces[intheDRC]peoplehaveusedmineralstokillpeople.Idon’twant

thosepeoplecominginanddoingbusinessinmyprovince.Idon’twanttohearthatthese

peoplearecomingtobuyinKatanga.Sowehaveinsistedontraceability.Anythingthatcan’t

betracedcannotbeexported.Anyway,Ican’tallowKivumineralsin.Thesemineralsare

blockedbyUSlaw.Also,Isaidtheotherdaybeforeeveryone,publicly,thatwhoeverdoes

thisminingmusthaveastrongsocialelement,andwehavetoknowwheretheyarebased.

Theymustbeseriouscompanies.Theirmineralsmustbetraceable.Thatishowwewillbe

abletoexport.66

Katumbi’sstancehaspromptedaccusationsfromaffectedKivu-basedcomptoirsthathe

hasanundisclosedbusinessrelationshipwithMMR,aclaimthatbothheandMMRhave

denied.

In2010–2011severalKivu-basedcomptoirsthathadsurreptitiousbuyingoperations

innorthKatangadisruptedchangedtheirapproachandestablishedtheirownofficially

registeredbranchesinKatanga.67TheChinese-ownedcompanyTTTMining,withitshead

officeinGoma,NorthKivu,wasoneofthoseaffected.Duringthisperioditsetupan

officialcomptoirinKalemie,northernKatanga,whereitwasreputedtopayhigherprices

thanMMR.68

Until 2010 the provinces of North and South Kivu and Maniema produced and

exportedfarmoretinandcoltanthandidKatanga.Duringthatyear,however,again

inabidtocomplywiththeSecurityCouncil’srequestregardingduediligenceandUS

legislationonconflictminerals,manyofthemaininternationaltinandcoltansmelters

introducedastipulationthattheywouldbuyonlytaggedmaterialfromtheDRC.No

taggingscheme,however,hasyetbeenimplementedineithertheKivusorManiema.

Thishasledtoadefactoembargoonmaterialfromthoseprovinces,exceptforminerals

smuggledoutofthecountry,orboughtbycomptoirssellingtosmeltersthathavenot

introducedtheserequirements.AlmostallsuchsmeltersareinChina.

ThemaincomptoirscarryingoutthesepurchaseshavebeenTTT,HuayingTrading

andDonsonInternational,allChinese-owned.Inmid-2011AfrometbasedinGomaand

BukavuwastheonlyIndian-ownedcomptoiroperatingintheKivus.AllAfromet’soutput

issenttoIndiaforsmeltingatthefacilityofthecompany’sDelhi-basedowner,MetTrade

IndiaLtd.69

I N F R A S t R u C t u R e , C o N S t R u C t I o N A N d F I N A N C e

China’s Exim Bank committed itself in 2008 to a $3 billion loan for a variety of

infrastructuralprojects,includingroadandrailwayconstructionandrehabilitationand

thebuildingofnewuniversities,hospitalsandschools.Theseprojectsinthemainareto

beimplementedbytwoChinesestate-ownedcompanies,ChinaRailwaysConstruction

Company(CREC)andSinohydroCorporation.Thisloanisadditionaltothe$3billion

loantodevelopminingassetsheldbySicomines,inwhichChinaRailwaysandSinohydro

aremajorshareholders.ThemoneyistobereleasedasandwhentheEximBankapproves

theSicominesfeasibilitystudyreferredtoabove.


19


ThetermsoftheEximBankloanagreementhavebeenthesubjectofmuchcontroversy

sinceitwasfirstannounced.ThefirstobjectionscamefromtheIMFandtheParisClub

groupingoftheDRC’s(mainlyWestern)creditors.Theydemurredatthescaleofthe

$9billionoriginalloan,whichtheyarguedwouldplungetheDRCgovernmentbackinto

debtjustastheParisClub,IMFandWorldBankwereabouttowriteoffthebulkoftheir

loanstothecountry.TheChineseandDRCgovernmentsarguedthatthedebtwouldbe

owedbySicominesandnottheDRCgovernment.Given,however,thatGécaminesisa

majorSicominesshareholderwhichinturnisownedbytheDRCstate,theIMFandParis

ClubwereunconvincedandwerenotpreparedtoprovidetheDRCwithdebtreliefuntil

thematterwasresolvedtotheirsatisfaction.Thisledtoaprolongedstand-off,butin

October2009BeijingannouncedthattheEximBank,CRECandSinohydrohadsigned

anamendmenttotheloanreducingitfrom$9billionto$6billion.Theyalsochanged

aclausethathadstipulatedthatshouldthereservesofSicomines’MashambaWestand

Dikuluwecopper andcobaltdepositsprove insufficient to cover the loan, theDRC

governmentwouldprovidefurtherminingassetstomeettheshortfall.Underthenew

agreementthislatterrequirementwouldcomeintoforceonlyafter25years.70OtherIMF

andParisClubdemands,respectivelyforaloweringoftheinterestrateandareductionin

EximBank’srequirementofa19%internalrateofreturnwerenotmet,butinNovember

2010theParisClubnonethelessagreedtocancel$7.35billionofDRCdebt.71

The most vocal critics of the loan agreement since then have been NGOs, with

UK-basedGlobalWitnessallegingina2011reportthatthetermsoftheagreementwere

tooopaqueandappearedtobehighlydisadvantageoustotheDRC.Echoingtheviewsof

theIMF,GlobalWitnessarguedthat‘thelevelof…internalrateofreturn…isextremely

highandsubstantiallyremovesthecommercialriskfortheChineseinvestors.’72

Thereportcontinued:

WithoutaproperandopenbiddingprocessamongChinesecompaniesforeachitemof

infrastructure,itisuncertainwhetherCongoisgettinggoodvalueformoney.Similarly,

withoutaclearinfrastructuremanagementprocesstheremaybeverylittleto…preventcost

inflationinanyinfrastructurecontracts.73

TheGlobalWitnessallegationsangeredtheChineseandCongolesegovernmentsalike.

AgenceCongolaisedesGrandsTravails(ACGT)managesthe$3billioninfrastructure

programmeatatechnicallevel.Accordingtoitsdirectorgeneral,CharlesMedardIlunga

Mwamba:

OurcontractwiththeseChinesecompaniesisapartnership.Privatepublicpartnerships

usuallytakeagestoputinplace.ButbecausetherewasgoodwillontheChineseside,this

dealhasmovedvery fast.TheChinesecompanieshavestartedworkherewithoutany

guarantees.Thatwasaverypositivedevelopment…

Iknowthereareconcernsabout the19%rateof return.Butas I said, therehas tobe

goodwill.TheChinesestartedworkearly,whichshowedtheirgoodwill.Ifthereareaspects

ofthecontractwearenothappywith,therearere-visitationclausesenablingustochange

them.Thecontractisveryflexible.Asforthequestionofhowtheirworkisvalued:thisis

20



notapublicmarket.Itiscompletelydifferent,soitisgoingtobemoreexpensivethenopen

tender.Butwehaveindependentconsultantswhoareevaluatingeverything.74

Ilunga’sargumentcaptures theessenceof theofficialDRCandChinesegovernment

position,namelythattheagreementispremisedonla bonne volonte (‘goodwill’)andthat

forthisreasoncriticswhobecometoofocusedonspecificsaremissingthepoint.Based

onthisgoodwill,andalsointhelightofare-visitationclauseinthecontract,Congolese

governmentofficialshavearguedthatanyproblematicaspectsoftheagreementcanalways

berevisitedsothatthepositionoftheDRCgovernmentvis-à-visChinawillalwaysbeone

ofgagnant-gagnant (win-win).Itcouldbepointedout,however,thattoolargeaninfusion

ofgoodwillcouldeventuallyworktothedisadvantageofChina;shoulditbecometoo

closeabedfellowitmightprovevulnerabletoanyunilateralwithdrawalorunprincipled

deploymentofleveragebytheotherparty.

Chinese government officials and representatives of CREC and Sinohydro in

KinshasahavealsodisputedGlobalWitness’scontentionthattheyhavenotassumed

anycommercialrisk.TheyhavepointedtothefactthatbothCRECandSinohydrohave

alreadystarted,andinsomecasescompleted,infrastructuralprojectsintheDRC,well

beforethecompletionandapprovaloftheSicominesfeasibilitystudythatisthetrigger

forthepromisedEximBankloan.75Theseprojectsincludetherehabilitationoftheroad

fromKasumbalesaontheZambianbordertoLubumbashiandthe30 Juin Boulevardand

othermajorroadsinKinshasa.EximBankisreportedtohavereleased$128millionin

2010,withplanstoreleaseafurther$622millionduring2011.Aspartofthisprocess,

inJanuary2011thebanksigneda$360millionloanagreementfortheconstructionofa

240MWdamatBusangainBas-Congoprovince.Onlyfrom2012onwards,itnowseems,

willthevalueofthefundsmadeavailablebythebankbedeterminedbytheproductivity

ofSicomines’miningassets.76

Moise Ekanga Lushyma, head of the BCPSC, which controls the finances of the

infrastructuralprogramme,providedevenhigherfiguresfordisbursements:

Since2009theEximbankhasreleased$518millionfortheSicominesagreement.In2009

wereceived$350million for infrastructureconstruction, including theCinquantenaire

hospital,theAvenuedeTourisme [and]theLubumbashi-KasomenoroadinKatanga…

$128millionwasreleased[in2010],andthatfinancedthe30Juin[Boulevard]…andthe

esplanadeforthePalaisduPeuple [inKinshasa]…TheChineseareinadvanceofwhatwas

envisaged.Itistheminingthatisgoingslower.77

TheprobablereasonforEximBank’sdecisiontoprovidefinancing,andforCRECand

Sinohydrotocommenceconstructionprojectsbeforebeingrequiredtodoso(which

musthavehadatleastBeijing’sconsentand,perhaps,explicitinstruction)isCongolese

politics.ForhisNovember2011electioncampaign,PresidentKabilaneededtoshowthe

Congolesepeopletangibleevidenceofhisoft-promisednationalreconstruction.In2006

Kabilacampaignedonaticketof‘cinq chantiers’(fivetasks),whichincludenewandbetter

infrastructure,butwithoutthehigh-profileeffortsofCRECandSinohydrotodatehe

wouldhavehadpreciousfewprojectswithwhichtoseektoimpresstheelectorate.There

canbenoquestionthatthe‘goodwill’decisionofChinesestate-ownedcompaniestolend


21


moneyandstartbuildingthreeyearsbeforethepolldateprovidedinvaluableassistance

toKabila’ssuccessfulre-electioncampaign.

Anotherprobable reason for theearly start is thatCRECandSinohydrobrought

considerableamountsofequipmentandlargenumbersofpersonnelintotheDRCin

anticipationoftheSicominesloan;theywouldbesittingidleifthecontractweretobe

followedtotheletter.Usingcapacityavailableonthegroundmayalsobewhy,since2009,

CRECandSinohydrohavesubmittedlowtendersfor,wonandimplementedarangeof

EU,AfricanDevelopmentBankandWorldBank-financedprojectsintheDRC.78These

includea400-metrebridgeinBandundufinancedbytheWorldBankandconstructedby

Sinohydro.Ithasdramaticallyeasedtransportlogisticsintheprovince.79

Utilising otherwise under-active capacity is certainly important for CREC and

Sinohydro,andtheoft-toutedgoodwillseemsgenuineenough,butthereisalsoahard

bargainunderlyingthebonhomie.China’sdomesticeconomicgrowthreliesonincreased

accesstonaturalresources,andparticularlyminerals,inaneraofrapidlyrisingcommodity

prices.TheDRCisacornucopiaofmanyitemsontheChinesegovernment’s‘wishlist’.

Beijingisthereforeseekinglong-termaccesstotheDRC’sresourcesonfavourableterms

andapparentlyhasdecidedthatthesurestroutetosuccessliesinprovidingdiplomatic

andfinancialsupportandconstructioncapacity,insuchawaythatDRC’scurrentpolitical

eliteremainsinplaceaslongaspossiblewhilebecomingincreasinglydependentonChina.

Inafurthersignofthetimes,inMarch2011thestate-ownedChinaDevelopment

Bank,wasreportedtohavesignedaloanagreementwiththeDRCforanundisclosed

sum.Themoneyistofinanceinfrastructuraldevelopmentinthemining,oil,roadand

agriculturalsectors.Ithasnot,however,beenrevealedwhat,ifany,Congoleseassets

willstandsuretyfortheloan,norwhich(presumablyChinese)companieswilldothe

work.80Thesuspicionamongsomecriticsisthatthetermsofthedealweresufficiently

controversialtobeheldbackuntilafterthe2011presidentialelection.81

TheIndiangovernmentlikestocontrastitsapparentlyfreemarketapproachwith

thegovernment-directedstrategyofChina.AccordingtooneofficialinIndia’sKinshasa

embassy:

WearenotincompetitionwithChina,andunlikethem,wedonotexchangeminerals

forinfrastructure.WhenIndiancompaniescomehere,theymightseekadvicefromus,

butwedonotopenthedoorsforthem.Ourbusinessesknowhowtodotheirjob.Indian

businessmenareverysmart.82

ByallaccountstheIndianembassyisrighttobemodestaboutitseffortstoassistIndian

businessintheDRC.Historically,however,India’sgovernmenthasnotbeenasfree-market

andnon-interventionistasitisnow.Indiangovernmentspractisedvariantsofsocialist

economicsfornearly50yearsafterindependencein1947,andthecountry’sbankswere

nationalisedbyPrimeMinisterIndiraGandhiin1969.Deregulationornot,inmid-2011

state-controlledinstitutionsstillcontrolled75%ofbankdepositsinthecountryandsince

2007oneofthelargestofthem,theStateBankofIndia,isreportedtohaveembarkedon

alendingspree,allegedlywithpoliticalovertonesthathave‘morethanawhiffofBeijing’

aboutthem.83

In2011,EximIndiaapproveda$267millionlineofcreditforIndiancompaniesdoing

businessintheDRC,withprioritytobegiventopowerprojectsandurbanrailways.

22



Althoughthereiscertainlyapoliticalaspecttotheseloanagreements,evidencesuggests

thatIndia’sambitionsforitsrelationswiththeDRCaresomewhatlowerthanthoseofthe

Chinesegovernment.JudgingbytheprojectssofarfinancedbytheEximIndialoan,the

Indiangovernmenthasrelativelymodesttargets,pushingforafewIndiancompaniesto

winconstructioncontractsandgainsomemarketsharewhileatthesametimeacquiring

expertiseinimplementingdevelopmentprojectsinAfrica.Asonewell-informedIndian

sourceinKinshasaputit:

We Indiansaren’tgoing formajorpublicity. It’smoreabout Indiancompaniesgaining

experience,implementingturnkeyprojectswithnothingelseaskedinreturn.Thereisno

barter.84

AmongtheprojectsfinancedwithEximIndiamoneyaretwodams,oneatKakobolaon

theLufukuRiverinBandundu,andtheotheratKatendeontheLuluaRiverinWestern

Kasai.Theformerhasadesignedoutputof9MWandhasbeencostedat$42million,and

thelatterwillproduce20MWandcost$168million.Theprojectsarebeingcarriedout

byNewDelhi-basedAngeliqueInternationalLtd.WorkonKakobolabeganinFebruary

2011.85

t e L e C o m m u N I C A t I o N S

AlsowithitsheadquartersinNewDelhi,India’sBhartiAirtelLtdisbysomewaythelargest

investorintelecommunicationsintheDRC.BhartiboughttheDRCnetworkoftheKuwaiti

telecommunicationscompanyZainGroupinmid-2010,renameditAirtelDRC,andison

tracktoinvest$400millioninitsoperationsbymid-2012.Subscribernumbershaverisen

fromfourtofivemillionsinceBhartitookover,withthecompanytargetingeightmillion

usersby2012.MobilephonenetworkcoverageisrelativelyextensiveintheDRC,butAirtel

DRChasnonethelessidentifiedsixtownswithpopulationsofmorethan100000,and238

with50000ormore,whichcurrentlyhavenonetworkcoverage.Airtelworkswitha

rangeofpartners,includingIBM,Sweden’sEricsson,andChina’sHuaweiTechnologies.Its

parentcompany,Bharti,hasbecomethefifthlargestmobilephonecompanyintheworld.

ItbasesitsAfricanoperationsinNairobi;of15AfricadirectorsonlyoneisIndian,while

theremainderarefromAfrica.TheCEOofAirtelDRCisfromCameroun.86

CCTis51%ownedbyChina’sZTECorporationand49%bytheDRCgovernment’s

OCPT.Itwasformedin2000withaChinaEximBankloanof$12.5million,enablingCCT

topurchaseequipmentfromZTE.87Inmid-2011CCThadsomeonemillionsubscribers,

increasedfromabout600000in2008.CCT’snetworkcoverageisnotasextensiveasthose

ofAirteloritsmaincompetitorVodacom,butitsserviceisthecheapest.88Competitors

haveclaimedthatthisisbecauseCCTpaystoolittletax,butthecompanyinsiststhat

itreceivesnofavoursandhasalwayspaidasubstantialtaxbill.89ZTEdidnotinvest

significantfundsinCCTaftertheoriginalEximBankloanandinOctober2011soldits

shareinthecompanytoFranceTelecom-Orangefor$10million.FranceTelecom-Orange

alsopurchasedtheOCPT’sshareofCCTforafurther$7millionandagreedtopay$71

milliontotheDRCgovernmentforanew10-yearlicence,and$185milliontosettle

CCT’sdebts.90


23


HuaweiTechnologiesestablisheditselfintheDRCin2004andwonitsfirstmajor

contracttherein2006.Thatcontract,tosupplyequipmentatacostofmorethan$120

milliontoTigo,amobilephoneoperatorassociatedwithLuxembourg-basedMillicom

InternationalCellular,wascompleted in2009.91Huawei’s secondmaincontractwas

agreedin2008withOCPT,toinstallcode-divisionmultipleaccesstechnologyforits

network,startinginKinshasaandextendingtotherestofthecountry.Workbeganin

2010.ThefollowingyearHuaweialsobegancollaboratingwithVodacomandsupplying

equipmenttoAirtel.HuaweiacquiredsomeprimerealestateonKinshasa’sBoulevard

du30Juinwhereitisbuildinganoffice,atrainingcentre,asportscentreandapartment

blocksforitsstaff.Thebuildingswerescheduledforcompletionattheendof2011,ata

costofaround$20million.92

InadditiontoitsCCTinvestmentZTEhasitsownpresenceintheDRCasasupplier

ofequipmenttomobilephonenetworks,thoughonasmallerscalethanHuawei.The

companyisalsoreportedtobemakingtentativeinvestmentsincommercialagriculture.

Thegovernmentissaidtohaveapproved‘inprinciple’a100000hectareallocationtoZTE

in2007.93ZTE’swebsite,however,statesthatitsonlylandcurrentlyinproductionisa10

hectareexperimentalfarmforplantinghigh-yieldcrops.94

ThethirdprominentChinesecompanyinvolvedinDRCtelecommunicationsisChina

InternationalTelecommunicationConstructionCorporation(CITCC).CITCChasbeenin

theDRCsince2006,providingandlayingfibreopticcables.In2008itwonacontractin

conjunctionwithFrance’sAlcatel-Lucent(whichhasa50%stakeinChina-basedAlcatel

ShanghaiBell),toconnectKinshasabyfibre-opticcabletoMoandaontheAtlanticcoast.

Alcatel-LucenthadpreviouslyconnectedMoandatotheSouthAtlantic-3/WestAfrica

SubmarineCable,acommunicationscablelinkingPortugalandSpaintoSouthAfrica,

withconnectionstoseveralWestAfricancountriesenrouteandacontinuationlinkfrom

SouthAfricatoIndiaandSouthEastAsia.95CITCC’sworkwascompletedinlate2009,

leavingthecompanywithlittletodobutmaintaintheMoanda-Kinshasalinewhileit

seeksothercontracts.96

C o N C L u S I o N

ThepresenceofIndianandChinesebusinesses intheDRCis increasingandBeijing

andNewDelhiaresignificantdriversofthatgrowth.Thetwogovernments’professed

bounteousgoodwilltowardstheDRCseemsgenuineenough;butatthesametimeboth

wantaccesstothecountry’srawmaterialsandcontractsfortheirconstructioncompanies.

ThekeydifferencebetweentheapproachesofChinaandIndiaasregardsstate-bank

financeisthatChina’sloantotheDRCisnotsimplytofinanceinfrastructure,butalso

todevelopminingassetsjointlyheldbyChineseandCongolesestate-ownedcompanies.

EximIndia,bycontrast,hasnotlinkedanyofitsinfrastructureloanstominingorother

formsofnaturalresourceextractionbyIndiancompanies,anditdoesnotappeartobe

Indiangovernmentpolicytodosoinfuture.WhereasChina’sgovernmentisfacilitating

accessbyChinesestate-ownedcompaniestolargeminingdepositsthroughitsEximBank

loan,theonlyIndianminingcompaniespresentintheDRCareprivatelyownedand

competeforaccesstoDRCresourceswithoutanysignificantgovernmentassistance.(It

shouldbesaidthatliketheirIndiancounterparts,themorethan100privatelyowned

24



ChinesecompaniesinvolvedinminingintheDRCappeartoreceivelittlesignificant

assistancefromtheirgovernment.)

ChinesecompaniesarewellontheirwaytodominatingtheDRCconstructionsector,

thankstoprojectslinkedtotheEximBankloan,andothersfinancedbyinternational

developmentbanksandtheDRCgovernment.Thecompaniesarehighlycompetitive

oncostbut thequalityof theirwork isharder toassess.TheDRCgovernmenthas,

however,statedthatithasmechanismsinplace,includingexternalconsultants,toensure

thequalityofChinese-builtinfrastructure,andtheChinesecompaniesconcernedare

emphaticthattheirworkmeetsinternationalstandards.InthepasttheDRChasproveda

challengingenvironmentforinfrastructure;timewilltellhowdurabletheChinese-built

roads,buildingsand–perhaps–railwaysare.Atthisstage,Indianconstructioncompanies

arealongwaybehindtheirChinesecounterpartsandlooksettoremainso,althougha

few,suchasAngeliqueInternational,arepickingupworkinthepowersector,mostly

financedbyEximIndia.

Intheminingsector,IndianandChinesecompaniesintheDRCremainminnows

comparedwiththebigUS,Canadian,AustralianandSouthAfrican-listedcompanies.Two

ofthelast,however(MetorexandAnvil),areintheprocessofbeingboughtbyChinese

companies;andwitha$3billioninvestmentonthestocksandprobablywithaccessto

morecapitalifnecessary,Sicominescouldwithinadecadebecomeoneofthetopthree

miningenterprisesinthecountry.

ThescaleofBhartiAirtel’sinvestmentinCongolesetelecommunicationsdwarfsall

others,includingChinesecompanies.Huawei,however,isoneofBharti’ssuppliersinthe

DRC,andalsosuppliesmostothernetworksinthecountry.

InmanufacturedgoodsChina’sshareofDRCtotalimportsislikelytoincrease,inline

withglobaltrends,whileIndia’sseemssettoremainlow.TheDRCisthefourthmost

populouscountryinAfricawithmorethan60millionpeople,buttheirbuyingpoweris

low.ThepresenceofChinesecompaniesintheretailsectorremainsmodest;noCongolese

cityhasaChinatown.Bycontrast,asinsomanyAfricancountries,Indian-ownedshops

andbusinessesproliferate,insomecasesdatingfromthecolonialperiod.Theycommand

alarge,butunrecordedproportionoftotalretailtrade.

TheDRCgovernmenthasdrawn increasinglyclose toChinaandvaluesboth its

bilateral military assistance, and the diplomatic support the Chinese government

provides in theUN.ThisbuysChinese state-ownedcompanies active in theDRCa

goodmeasureofprotectionfromtheCongoleseauthorities.TheirChineseemployees,

forexample,seemabletoenterandleavethecountrywithoutmuchhindrancefrom

immigrationofficials,andtheirequipmentmovesfairlyreadilyatcustomsposts.Onlyin

thetelecommunicationssectorhavestate-ownedChinesecompaniesreportedproblems

withexcessiveandarbitrarytaxation.Lifeisharder,however,forprivatelyownedChinese

companies,whicharenotprotectedbytheirgovernmentandmustfendforthemselvesin

anoftenverydifficultoperatingenvironment.

TheDRC’spoliticalrelationswiththeIndiangovernmentaremuchpricklierthanthose

withChina.TheDRCgovernmentincreasinglyhasregisteredobjectionstoMonusco’s

presence,withthepresidentin2010callingonittoleavebytheendof2011.97Indiais

themission’slargestcontributoroftroops,andtheDRCgovernmenthasbeenparticularly

aggrievedthat,asnotedabove,someIndianUNtroopshaveattimesgrowntoofamiliar

withtherebelmilitiatheyaresupposedtooppose.Thiswould,perhaps,beacceptableto


25


theIndiangovernmentifitreceivedmorecreditfromtheinternationalcommunityforits

effortsintheDRC.Asitstands,althoughIndiahasreceivedsomeplauditsforitswork

inMonusco,itsgovernmenthasalsobeenirritatedbyperiodic,damninginvestigations

byWesternmediaintothebehaviourofitstroopsandbythepersistentreluctanceofUN

SecurityCouncilpermanentmembersandotherwell-resourcedcountriestosupplytroops

oftheirowninanysignificantnumbers.

Noscientificstudyoftheissuehasbeencarriedout,butitappearsawidelyheld

convictionintheDRCthatmostChineseandIndiancompaniesarepooremployers,

reportedly offering low wages and hostile working conditions and providing only

parsimoniouslyforsocialupliftmentprogrammes.Therearesomeshiningexceptions,

Bhartibeingthemainone,andmanyIndianandChinesecompaniesloudlyenumerate

their apparently generous social programmes. Yet negative perceptions remain, and

havebeennotedbyoppositionpoliticians.PresidentialaspirantEtienneTshisekedi,for

example,statedpubliclyseveraltimesbeforeandduringthe2011electioncampaignthat

ifelectedhewouldsuspendChineseinfrastructureandminingcontracts.Tshisekedi

professedtobeworriedabouta lackoftransparency;andindeedanecdotalevidence

suggests that theoft-notedpropensityofCongolese stateofficials to seekkickbacks

has been well understood by Chinese companies implementing the infrastructural

componentsofthecontracts.Ifbriberyhasbeenasprevalentasallegedthereisboundto

beresistancefromtheDRCauthoritiestoanyeffortstoshinealightontheprocess,for

fearofuncoveringtheirownmisdemeanours.

The lack of accountability of the authorities has been widely recognised as one

of the major problems in the Congolese political system. If China’s presence and

businesspracticesare furtherundermining it, thecountry’spoliticaldevelopment is

commensuratelyheldback.

WhilesomeofthepoliticalimplicationsofChina’sEximBankdealareworrying,the

Chineseand–toalesserextent–Indianroleindeliveringinfrastructuraldevelopment

intheDRCappearswhollywelcome.AtindependencetheDRCwasamongthemost

industrialised countries in sub-Saharan Africa (after South Africa),98 but today its

infrastructuremostlyliesinruins.Sincethelate1990sWesternbankshaveshownsome

appetite forriskattendingCongoleseminingventuresbuthavegenerallybaulkedat

thecountry’sinfrastructuralbacklog,leavingthefieldtointernationaldevelopmental

institutionssuchastheWorldBankandAfricanDevelopmentBank.Theselatterstill

haveavitalroletoplayintheDRC,buttheirfundsareinsufficientanditisineveryone’s

interestthattheyhavebeenjoinedbyChinese,Indian,andincreasingly,othercountries’

state-ownedbanks.

Thebestwaytoensurethemaintenanceofinternationalstandardsoftransparency

inall loanagreementswith theDRCwouldbe thecreationof institutional financial

partnerships on projects, and continued scrutiny by civil society and the country’s

democraticinstitutions.Thatreallywouldbe‘gagnant-gagnant’.Itwouldimprovethe

prospectsforafairandopenbalanceintheDRCbetweengoodwillandhardbargains,not

simplyonthepartofChineseandIndianparticipantsbutallthecountry’sinternational

partners.

26



e N d N o t e S

1 LarkinB,China and Africa 1949–1970: The Foreign Policy of the People’s Republic of Republic of

China. Berkeley:UniversityofCaliforniaPress,1971,p.47.

2 GBPisthethree-lettercurrencycodeforBritishPounds.

3 LarkinB, op. cit.

4 Ibid.,p.56.

5 Thememoirfromwhichthequoteistakencanbefoundat:http://www.bharat-rakshak.com/

LAND-FORCES/Army/Galleries/Wars/UN/Congo/.

6 Nzongola-NtalajaG.The Congo from Leopold to Kabila: a People’s History. London:ZedBooks,

2002,pp.128–131.

7 Young C & T Turner, The Rise and Decline of the Zairean State. Madison: University of

WisconsinPress,1985,pp.350–353.

8 Ibid.,p.376.

9 UniversityofStellenbosch:CentreforChineseStudies.Evaluating China’s FOCAC commitments

to Africa and mapping the way ahead.Stellenbosch,2010,p.17.

10 See‘Mobutu’scountryandotherplaces’athttp://www.vidushaka.com/mcplaces.html.

11 InformationobtainedfromEmbassyofIndia,Kinshasa,May2011.

12 StearnsJ,Dancing in the Glory of Monsters. Philadelphia: PerseusBooks,2011,p.53.

13 Mthembu-SalterG,‘TheDemocraticRepublicofCongo:RecentHistory’,inAfrica South of the

Sahara 2011,London:EuropaPublications,2010,pp.322–323.

14 StearnsJ,op. cit.,p.83.


16 ShinD,‘MilitaryandSecurityRelations’,inRotbergR(ed.),China into Africa: Trade, Aid and

Influence.Baltimore:BrookingsInstitutionPress,2008,p.161.


18 ShinD,op. cit.,p.177.

19 PersonalinterviewwithUNofficial,Kinshasa,May2011.

20 Mthembu-Salter,G,2010,op. cit.,p.325.

21 PersonalinterviewwithMonuscoofficial,Kinshasa,May2011.

22 EconomistIntelligenceUnit,‘The Political Scene’.DRC Country Report December 2009,London,

2009,p.16.

23 PersonalinterviewwithUNofficial,NewYork,February2010.

24 PersonalinterviewwithYangDongju,politicalcounsellor,EmbassyofthePeople’sRepublicof

China,Kinshasa,May2011.

25 Agence France Presse,‘IndianpeacekeepersinCongoaccusedofgoldtrafficking’,13July2007.

26 Washington Post, ‘Urgentdemarche:ThreatenedIndianpeacekeeperswithdrawalfromthe

DRC’, http://www.washingtonpost.com/wp-srv/special/world/wikileaks/cable40.html.

27 See http://www.washingtonpost.com/national/national-security/indias-withdrawal-of-

helicopters-from-congo-points-to-wider-trend/2011/06/10/AGH5loUH_story.html.

28 See‘SecretaryGeneralnamesIndia’sLieutenantGeneralChanderPrakashForceCommander

forUNOrganizationStabilisationMissionintheDemocraticRepublicofCongo’,http://www.

un.org/News/Press/docs/2010/sga1255.doc.htm.

29 Washington Post,‘India’swithdrawalofhelicoptersfromCongopointstowidertrend’, http://

www.washingtonpost.com/national/national-security/indias-withdrawal-of-helicopters-from-

congo-points-to-wider-trend/2011/06/10/AGH5loUH_story.html.


27


30 PersonalinterviewwithIndianembassyofficial,Kinshasa,May2011.

31 PersonalinterviewwithRashidPatel,PresidentoftheIndo-CongoleseChamberofIndustry,

Trade,Mining,AgricultureandServices,Kinshasa,May2011.

32 Datasourcedfromtralac(TradeandLawCentreforSouthernAfrica)http://www.tralac.org/,

accessed1June2011.

33 See http://www.tralac.org/cgibin/giga.cgi?cmd=cause_dir_news&cat=1044&cause_

id=1694#china.

34 Personal interviewwithPierrotMalobaKitumba,ChefdeBureauProvinicaledesMines,

MinistèredesMines,DivisionProvincaleduKatanga,Lubumbashi,May2011.

35 Author’sobservations,2010–2011.

36 InformationinBox1principallyderivedfrompersonalinterviewsinMarch2011withWilly

Musingo,presidentofAssociationdesChauffeursduCongo–SectionMotoinBunia,and

IsiadoreTamile,administrativesecretaryofAssociationdesOrpailleurspourleDeveloppement

etleReconstructiondePaixenIturi,inMongbwalu.

37 Personalinterviewwithformerpharmaceuticalmanufacturer,Kinshasa,May2011.

38 PersonalinterviewwithRashidPatel,op. cit.

39 PersonalinterviewwithChineseembassyofficial,Kinshasa,May2011.

40 PersonalinterviewwithMoïseKatumbi,governorofKatanga,May2011.

41 ZARisthethree-lettercurrencycodeforSouthAfricanRands

42 Mining Weekly, ‘Metorex shareholders approve R9.1bn Jinchuan offer’ Johannesburg

2 September 2011, http://www.miningweekly.com/article/metorex-shareholders-approve-

r91bn-jinchuan-offer-2011-09-02.

43 Mining Weekly,‘AnvilwarnsMinmetalsdealcouldbeinjeopardy’Johannesburg31October

2011, http://www.miningweekly.com/article/anvil-warns-minmetals-deal-could-be-in-

jeopardy-2011-10-31.

44 DRCDivisionProvincialedesMines,ProvinceduKatanga.Statistiques des Notes De Debit

Relatives a la Redevance Minière de Janvier à Decembre 2010 (Produits Minières par Tonnes).

Kinshasa,2011.

45 PersonalinterviewwithSophieBai,MagmaMinerals,Lubumbashi,May2011.

46 Author’sobservations,andpersonalinterviewswithMagmaMineralsemployees,Lubumbashi,

May2011.

47 Personal interview with labour inspector, Katangan provincial department of labour,

Lubumbashi,May2011.

48 PersonalinterviewwithMoïseKatumbi,op. cit.


50 Personal interview with Navin Dalmia, managing director, Rubamin Ltd, Lubumbashi,

May2011.

51 DRCDivisionProvincialedesMines,ProvinceduKatanga,op. cit.

52 ChemafProductionupdate:Q42008, January2009.Sourcedfromwww.chemaf.com.

53 DRCDivisionProvincialedesMines,ProvinceduKatanga, op. cit.

54 PersonalinterviewwithJean-PierreOkenda,CarterCenter,Lubumbashi,May2011.

55 Personalinterviewwithminesenvironmentalinspectorate,Lubumbashi,May2011.

56 Author’svisittoUsokeplant,Lubumbashi,May2011.

57 PersonalinterviewwithManojPatil,generalmanager,Somika,Lubumbashi,May2011.

58 DRCDivisionProvincialedesMines,ProvinceduKatanga, op. cit.

28



59 ChinaRailwayGroupLtd,‘AnnouncementofDiscloseableTransactionInvestment,’in Societé

par Actions a Responsibilité Limitée, HongKong,2008

60 PersonalinterviewwithZhangQiyao,generalsecretariat,vice-director,Sicominingindustry

stockcompanylimited,Lubumbashi,May2011.(Companytitletakenfrombusinesscard.)

61 PersonalinterviewwithMoiseEkangaLushyma,executivesecretary,BureaudeCoordination

etdeSuividuProgrammeSino-Congolais(BCPSC),Kinshasa,May2011.

62 Personalinterviewwithseniorofficial,Chineseembassy,Kinshasa,May2011.

63 SeeUNSecurityCouncilResolutionS/Res/1952(2010).

64 OECD(OrganisationforEconomicCooperationandDevelopment)DirectorateforFinancial

andEnterpriseAffairs:Due Diligence Guidance for Responsible Supply Chains of Minerals from

Conflict-Affected and High-Risk Areas,Paris,2011,accessed9September2011http://www.oecd.

org/document/36/0,3746,en_2649_34889_44307940_1_1_1_1,00.html.

65 PersonalinterviewwithMineralMiningResourcesrepresentatives,Lubumbashi,May2011.


67 SpittaelsS&CaesensE,The Complexity of Resource Governance in a Context of State Fragility.

Antwerp:InternationalPeaceInformationService(IPIS),2010.p.21.

68 Personalinterviewwithcivilsocietyactivist,Lubumbashi,May2011.

69 PersonalinterviewwithAfrometrepresentatives,July2010.

70 EconomistIntelligenceUnit,2009,op. cit.

71 EconomistIntelligenceUnit,DRC Country Report December 2010,London2010.

72 GlobalWitness,China and Congo: Friends in Need,London:2011p.6.

73 Ibid.,p.6.

74 PersonalinterviewwithCharlesMedardIlungaMwamba,directorgeneral,AgenceCongolaise

desGrandsTravails,KinshasaMay2011.

75 Personal interviewswithChineseembassyofficials,CREC(ChinaRailwaysConstruction

Company)andSinohydrorepresentatives,Kinshasa,May2011.

76 Surveying Sicomines,Africa-AsiaConfidential4,5.March2011.

77 PersonalinterviewwithMoiseEkangaLushyma,executivesecretary,BureaudeCoordination

etdeSuividuProgrammeSino-Congolais,Kinshasa,May2011.

78 Personalinterviewwithdirectorofaninternationalbank,Kinshasa,May2011.

79 Fordetailsoftheprojectsee:http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/

AFRICAEXT/CONGODEMOCRATICEXTN/0,,contentMDK:22828886~menuPK:50003484~

pagePK:2865066~piPK:2865079~theSitePK:349466,00.html.

80 EconomistIntelligenceUnit,DRC Country Report June 2011,London,2011.

81 Personalinterviewwithmininglawyer,Lubumbashi,May2011.

82 PersonalinterviewwithIndianembassyofficial,Kinshasa,May2011.

83 The Economist,‘Thependulumswingsagain:China’sbankingsystemisnotagoodmodelfor

India.’,11June2011,p.67.

84 PersonalinterviewwithIndianbusinesscommunityleader,Kinshasa,May2011.

85 Africa Mining Intelligence,649,4,June2011.

86 PersonalinterviewwithAntoinePamboro,managingdirector,AirtelDRC,Kinshasa,May

2011.

87 Mthembu-SalterG,Price Power: China’s Role in the Telecommunications Sector of the Democratic

Republic of Congo,ChinainAfricapolicyreport5,Johannesburg:SouthAfricanInstituteof

InternationalAffairs,2008p.10.

88 Ibid., p.11.


29


89 PersonalinterviewwithCCTofficial,Kinshasa,May2011.

90 FranceTelecom,‘FranceTelecom-Orangetoacquire100%ofCongoChineTélécom(CCT)’,

pressrelease,Paris, 20October2011.

91 Mthembu-SalterG,op. cit.,p.10.

92 PersonalinterviewwithGauthierKadima,Huawei,Kinshasa,May2011.

93 BrautigamD,‘ChinaandtheAfrican“landgrab”:TheDRCoilpalmdeal’,15March2010,

http://www.chinaafricarealstory.com/2010/03/china-and-african-land-grab-drc-oil.html.

94 ZTEEnergyCompanyLtd,‘Congo(Kinshasa)agriculturalexperimentalplot’,http://www.

zte-e.com/en/prod_js.aspx?ID=738.

95 Mthembu-SalterG,2008,op. cit.,p.3.

96 PersonalinterviewwithCITCCrepresentative,Kinshasa,May2011.

97 ThedeadlinecameandwentwithnomovementfromMonusco,andthegovernmentreliedon

themissionforlogisticsduringpresidentialandlegislativeelectionsattheendofthemonth.

Butthegovernment’srhetoricalantipathytowardsMonuscohasremained.

98 EconomistIntelligenceUnit,DRC Country Profile 2008,London,2008.p.25.

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