Transparency Initiative (EITI)

70 Case Study: Democratic Republic of the Congo (DRC)
8.3.3 ANTI-CORRUPTION
8.3.4 TRADE AND INVESTMENT CLIMATE
Many interviewees questioned the EITI’S legitimacy because
it has not brought significant, if any, real change on
the ground, particularly to those communities around operations.
However, a significant number of administrative
changes have taken place which point to an upward trajectory,
saving significant cost and time as well as building the
capacity of the regulatory agencies which are crucial to a
well-run sector.
Tax Identification Numbers: For the first time in modern
DRC history, there is one tax identification number for
each company, which allows for significant coordination
across ministries. As one interviewee relayed, “Now we understand
how much we are receiving. Some contracts are
very one-sided, towards the companies. Now we hope that
we can hold a debate potentially changing some of those
contracts, so that the government’s take is more.” While it is
unclear if the EITI process can take full credit for tax identification
numbers (the IMF advocated heavily for their introduction),
it is part of the general improvement in the
sector.
Coordination: The MSG meetings bring together up to five
ministers together to discuss policy. Some CSOs questioned
their motivation for being there, however, their presence
ensures that the EITI process receives significant attention
and that coordination between them takes place. Each MSG
member reportedly receives USD 500 per MSG meeting just
for their participation. The existence of an inter-ministerial
informal network was noted, which helped the exchange
of information and to assist with the creation of key focal
points for required information.
Capacity: The Inspecteur General des Finances (Auditor
General) has played an important role, recapturing its former
role as the main regulatory body in public finance and
building on it. A number of interviewees mentioned the
much-strengthened IGF and its role as a harbinger of sustained
change and that it is becoming an institution “with
teeth”, according to one interviewee. As capacity is built and
confidence grows, public sector culture is positively changing,
moving towards transparency.
The impact in the country’s trade and investment climate
is for the moment unclear and it is premature to state that
the EITI has had a positive quantifiable impact in attracting
foreign investment. The EITI is geared to attract the “right
kinds of investors” – those wanting a long-term sustainable
relationship, willing to pay a premium for a more transparent
environment in investing significantly in the country’s
natural resources, and expect a sufficient reward for
taking that risk.
It is unclear how much the DRC government wants to capitalize
on its EITI involvement and increased transparency,
to use it as a differentiator to attract further investment.
At a 2015 South African Mining Conference, an audience
member remarked that the EITI was not mentioned at all in
the DRC’s speech. Reports or brochures were not available
at the government’s exhibition stand. As trade and investment
climate usually improves with transparency, it was
perceived as a surprise that DRC’s promotion did not mention
the EITI. The view of the officials responsible could
be described that because of the geological resources the
country will remain on a certain level of interest to investors
for the next several decades with or without EITI.
As mentioned above, Moody’s gave a B3 credit rating to
DRC in 2013, six steps below investment grade. In the section
“Very Weak Institutional Strength”, Moody’s stated,
“The authorities have also embarked on a series of reforms
to enhance transparency and improve the business climate,
including the DRC's commitments to both the Extractive
Industries Transparency Initiative….” (Moody’s 2013). That
rating remains unchanged.
During both missions, the consultant spoke with the lone
Senator who is working in the EITI process. He was enthusiastic
that the 2015 Report could bring about change, as it
would be the first time that the EITI Report would inform
the budgetary process. He was also keen that an array of
laws and procedures be introduced to harness the process
into the country’s laws. It was too early to understand if this
was achievable with an, up to now, weak engagement strategy
within the Parliament. If a structured and focused approach
to the country’s lawmakers is undertaken, the necessary
reforms could be introduced, bringing about the
necessary impact in DRC’S institutions and legal processes.