05.08.10 Menas Associates
News Digest: Africa Mining Comment & Analysis – Congo (DRC)
Congolese Prime Minister Adolphe Muzito yesterday asserted his administration's intention to respond to investors'
demands for “more engagement, more participation and much more listening” on the part of the government. At a full meeting of the Congolese Business Federation (FEC) in Kinshasa, Muzito also indicated that the government would “reconsider our position” on export taxes imposed in April on semi-processed minerals.
(News Sources: Le Potentiel, Reuters)
Chris Melville , Africa mining consultant with Menas Associates today commented:
"Muzito's decision to meet more frequently with the business community is
to be welcomed. However, the key ingredient in improved relations between
government and the private sector will be whether more meetings actually turn
into
better engagement."
"The ongoing arbitration over the Kolwezi tailings project is casting a
pall over external perceptions of the Congolese investment environment. But for
many of those mining companies that renegotiated with the government last year,
recent months have seen the government take a number of less high-profile but
equally arbitrary actions that have continued to erode investor confidence
within the
country."
"Muzito's suggestion that the government may reconsider new export taxes on
semi-processed copper and cobalt would certainly be a step forward, but we
don't
believe that this would be the end of the government's efforts to capture
greater financial benefit from the mining sector. What investors want is
stability and
predictability; unless there is a sea-change in the government's approach, they
are likely to see only more uncertainty."
"Unfriendly government decisions are clearly part of the problem. However,
on a day-to-day basis, unwieldy bureaucracy and the lack of any predictability
in the implementation of the regulatory framework are often the biggest
bugbears
for mining companies – these are also issues much harder for Muzito to remedy
than determining the direction of government policy at national level."
Background
At the meeting of the FEC – which represents foreign and domestic private sector interests –Muzito
responded to a series of complaints outlined by the Confederation in a memo
drafted by FEC President Albert Yuma in late July. In addition to concerns over arbitrary and excessive taxation,
Yuma identified judicial corruption and legal insecurity as among the most
significant constraints on private sector development in Congo.
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