The Democratic Republic of Congo in Africa is one of the world’s most resource-rich countries. A wide range of rare minerals can be found here in abundance, all commanding high prices in world commodity markets. Diamonds for jewellery, tantalum, tungsten and gold for electronics; uranium used in power generation and weaponry and many others. Congo has copious deposits of raw materials that are in high demand internationally but remains one of the poorest countries in the world.
From colonisation, with the horrors of slavery and other atrocities, to a turbulent and equally brutal present in which militant groups control the mines, Congo’s richness in natural resources has brought nothing but misery. Referred to as “conflict minerals”, these riches leave only a trail of death, destruction and poverty.
Under Belgian rule, Congolese labourers were often required to meet quotas when mining different minerals. Failure could mean punishment by having a hand cut off with a machete. The country gained independence in 1960, but that didn’t put a stop to slave and child labour or to crimes being committed to extract and exploit the minerals. Warring militant fractions from inside the country and beyond seized control of mines for their own benefit while terrorising local populations.
For our translator, Bernard Kalume Buleri, his country’s history of turmoil is very personal; like most Congolese people, he and his family fell victim to the unending mineral based power struggle. Born in the year of his country’s independence, he has lived through war and seen his homeland torn apart by violent looting and greed. His story is a damning testament, illustrating how nature’s bounty, instead of being a blessing, becomes a deadly curse.
Community leaders living within the 100,000 hectares covered byFeronia Inc.’s oil palm concession areas say the land was taken from them illegally and that they never gave their consent for Feronia to operate there. Feronia is violating DFI policies that prevent companies they invest in from operating on lands that were acquired without the free, prior and informed consent of local communities.
Feronia Inc. operates plantations and a large-scale cereal farm on 120,000 ha of land in the DRC. Its oil palm concessions were acquired from the transnational food company Unilever in 2009.
The company is over 80 percent owned by the UK’s CDC Group and a number of other DFIs – including the French Agency for Development (AFD) and the US government’s Overseas Private Investment Corporation (OPIC) – through their investments in the Mauritius-based African Agriculture Fund (AAF).
DFIs have a mandate to support poverty alleviation in developing countries and must operate according to strict policies that prevent them from investing in companies that grab land, violate labour rights or engage in corrupt practices. A new report, based on company records and testimonies from affected communities, shows how Feronia Inc. is in flagrant violation of the policies of its DFI owners.
“We demand, first and foremost, the start of negotiations to reclaim our rights over the lands that have been illegally taken from us,” reads a statement delivered to RIAO-RDC and the international organisation GRAIN on March 8, 2015 by over 60 customary chiefs and other community leaders from across the district of Yahuma, where 90 percent of Feronia’s Lokutu oil palm plantations are located.
Community leaders interviewed by RIAO-RDC and GRAIN at Lokutu also spoke of a brutal system of labour exploitation and community harassment that clearly violates the DFI’s policies on labour rights and national labour laws.
To receive a day’s pay, workers on Feronia’s Lokutu plantations say they must complete tasks that are impossible to complete in a day’s work. While the company’s directors are handsomely compensated, plantation and nursery workers say that by the end of the month they have earned around $1.50 per day, well below the DRC’s already low minimum wage.
“We calculated that in 2010, Feronia’s top directors were paid 1,000 times the average annual pay of the company’s plantation workers,” says Ange David Baimey of GRAIN.
One of the Feronia directors who profited most from the company is Barnabe Kikaya bin Karubi, the DRC’s Ambassador to the UK since August 2008 and, prior to that, President Joseph Kabila’s Private Secretary and Minister of Information.
Investigations by GRAIN and RIAO-RDC into Feronia’s company records show that Kikaya was paid a total of nearly $3 million in cash and shares during his time as director with the company from 2009-2014. Most of the money was paid through “rental fees” of between $120,000-$150,000 per year for his residence in Kinshasa and through a buyout of his stake in Feronia’s Cayman Islands holding company. The anti-corruption policies of Feronia’s DFI owners are supposed to prevent such payments to influential politicians. (Cayman Finance History)
Community leaders from Lokutu also told GRAIN and RIAO-RDC that Feronia prevents local people from raising livestock or farming within the company’s concession, even on lands that the company has abandoned. Community members caught by company guards carrying just a few nuts fallen from the oil palms are fined or, in many cases, whipped, hand cuffed and taken to the nearest prison.
“Community leaders from the areas where Feronia has its plantations have had enough of this company,” says Jean-François Mombia Atuku of RIAO-RDC. “They want Feronia to give them back the lands, so that they can once again benefit from the use of their forests and farms.”
“The CDC and the other DFIs that own Feronia need to do the right thing: give the people of the DRC back their lands and compensate them for the years of suffering they have endured,” says Graciela Romero Vasquez of the London-based organisation War on Want.
The report, “Agro-colonialism in the Congo: European and US development finance bankrolls a new round of colonialism in the DRC”, is authored by GRAIN and RIAO-RDC in collaboration with Fundación Mundubat, War on Want, Association Française d’Amitié et de Solidarité avec les Peuples d’Afrique, World Rainforest Movement, Food First, SOS Faim, and CIDSE.
DFI investors in the African Agriculture Fund include:
Agence française de développement (AFD)/Proparco (FISEA), $30M + $10M = $40M
The new law was eventually passed in late January of this year without the census provision, but it appears that Kabila has yet another card to play.
On March 2, he set a 120-day deadline for the implementation of découpage, a constitutional change introduced in 2006 intended to divide Congo’s 11 provinces into 26. The 2006 constitutional change was a milestone in the country’s transition from almost a decade of civil war and was meant to transform Congo into a fully fledged democracy. However, while Kinshasa should have completed découpage by 2010 in accordance with the constitution, the process has not yet even begun. The delay is not surprising given that découpage is one of the most complex processes that the government has had to grapple with since the official end of the war. As a result, it neither budgeted nor designed an execution plan for découpage.
In pursuing découpage now, Kabila can ostensibly hold on to power. In the last few months, a number of his former supporters, such as the political party Union of Federalists and Independent Republicans, defected from the ruling majority. In December 2014, one of his allies, Moïse Katumbi—the powerful governor of Katanga Province and representative of the ruling party in Katanga—publicly opposed Kabila’s quest to extend the presidential term limits and run for a third term. The speech sent shock waves across the business and political scene; although Katumbi was widely believed to harbor his own presidential aspirations, his ties to Kabila were generally seen as essential to his potential ascension.
If implemented, découpage could allow Kabila to marginalize such power brokers and defectors. Katumbi and many others would be replaced once their provinces were dissolved and reconfigured into smaller ones.
At the same time, if logistic, financial, and political reasons prevent the successful implementation of découpage (and that is quite likely), the process may not only help delay the electoral process but also serve as a convenient justification for Kabila to amend the constitution. After all, if the constitution’s call for découpage is no longer practical, Kabila might argue that other conditions—such as the two-term limit—also require amending.
The Democratic Republic of Congo's President Joseph Kabila.
Katanga, Congo’s industrial mining hub, is perhaps the only province in which découpage is viable. Its districts are relatively well established and the province generates most of the country’s revenues. Yet even there, issues with the division seem nearly insurmountable. Katanga would be divided into four new provinces, and at least two of those are fiercely resistant to the change. Meanwhile, leaders from the mining town of Kolwezi insist that their district should constitute an independent fifth province.
The prospect of dissecting Katanga has heightened ethnic tensions, with some groups in the south of the province such as the Lunda viewing découpage as a means to increase regional influence and others, such as the Balubakat—Kabila’s own ethnic group—seeing it as a recipe for marginalization. In an effort to discourage the government from implementing découpage, some members of the Balubakat have thrown their support behind a regional militia, prompting a major humanitarian crisis in the so-called Triangle of Death in north-central Katanga.
Other provinces—such as Équateur and Orientale—would also be likely to experience growing competition over resources, power, and representation if découpage was implemented. This could spark localized conflicts with largely unpredictable consequences.
There are many other, less visible pitfalls from découpage as well, particularly for the private sector. For example, découpage might well lead to more bureaucracy and corruption. As new decision-making structures are created at what are now district levels, companies are likely to encounter additional delays and unexpected costs in their operations. The central government and provincial authorities already ask companies to follow contradictory and ambiguous regulations and taxes, a problem that découpage is also likely to exacerbate. Meanwhile, the advent of new local authorities is likely to expose companies to increased extortion and demands for bribes.
Foreign Affairs
In Katanga specifically, mining companies may face new export restrictions and taxes if the province is quartered. Some companies currently operating across multiple districts may be forced to change their export routes—local governments often require that exports originate from within their own province so that they can collect additional export taxes. Such requirements would have major operational and potentially financial repercussions for businesses.
Businesses are also concerned that découpage could herald more instability in their contracts. A government-led contract review in 2007–09 heavily dented investor confidence; it was a terribly corrupt process, and some companies that failed to bribe the reviewers lost their licenses. Mining companies are now keeping a close eye on the current review of the mining code, which could elicit a new round of contract renegotiations. Découpage adds to this uncertainty, potentially invalidating certain contractual terms following the division of the country’s provinces.
Kabila’s attempt to redraw provincial boundaries reflects broader uncertainty in Congo. Nobody knows for sure how this year and 2016 will play out. Even if Kabila succeeds in his bid to stay in power by pursuing découpage, the next years are likely to see more volatility. To prevent Kabila from having his way, the opposition would need to overcome its huge internal divisions, realign itself around a single leader—such as Katumbi—and pressure the government to respect the electoral time frame. Either course promises to be fraught.
