Corruption and suspicion slow investment in DRC mining riches

20 September 2008 | 04:56 Code : 18087 Geoscience events
Corruption and resistance to basic reforms have made Democratic Republic....

Corruption and resistance to basic reforms have made Democratic Republic of Congo the world’s worst country in which to do business, an official from the World Bank’s investment arm said on Thursday.Congo was rated last this week in the World Bank’s Doing Business report released for 2009, which measures the expected ease or difficulty of investing in 181 countries based on evaluations of business regulations and their enforcement.The vast, mineral rich central African nation also placed last in the previous report issued for 2008."It wasn’t a big surprise. Last year, there was no major reform," Adamou Labara, Congo country representative for the World Bank’s International Finance Corporation (IFC), said."That’s in part because of resistance, fear of change, a lack of previous experience, etc," he told Reuters.Congo is still recovering from decades of mismanagement under former ruler Mobutu Sese Seko’s kleptocratic dictatorship and a 1998-2003 war that left much of the former Belgian colony’s infrastructure in ruins.Analysts say a three-year post-war transition period was plagued by widespread corruption as government loyalists and rebels vied for key jobs in ministries and public companies.Labara said Congo’s failure to push through basic reforms, like simplifying cumbersome business registration procedures, has created an atmosphere that continues to breed corruption."What we are trying to do is streamline the procedures ... Once you have clear guidelines, it will reduce the potential for corruption," he said.Having held its first successful democratic elections in more than four decades in 2006, the government of President Joseph Kabila is counting on a boom in the mining sector to help boost its struggling economy and fund post-war reconstruction.Mining companies including Freeport-McMoRan, BHP Billiton , and AngloGold Ashanti, have already begun investing in the sector, a treasure trove of largely untouched concessions.However, Labara said a government review begun last year of 61 mining contracts, most of which were negotiated during the war years and the ensuing transition period, had slowed investment in what should be Congo’s most lucrative cash cow.The renegotiation of contracts is due to end this month after repeated delays. Watchdog groups have criticised the process as lacking transparency."Clearly it has created a climate of suspicion. There is this atmosphere now where people are thinking twice before investing," Labara said.The IFC, which promotes reforms to improve investor confidence, is planning to invest between $100 million and $150 million over the next year, compared with $6 million last year.IFC investment in private companies will mainly target mining, industrial agriculture, and the finance sector, including financial backing for Congo’s budding banking system.  (Editing by Pascal Fletcher; Ron Askew)

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