Breaking News

Tweet TWEET

Copper-Rich Congo Province Sees More Cash After Rebel Defeat

Photographer: Junior D. Kannah/AFP via Getty Images

Children play on a burned tank, which formerly belonged to M23 rebel soldiers, in Kibumba, Democratic Republic of Congo, on October 31, 2013. Close

Children play on a burned tank, which formerly belonged to M23 rebel soldiers, in... Read More

Close
Open
Photographer: Junior D. Kannah/AFP via Getty Images

Children play on a burned tank, which formerly belonged to M23 rebel soldiers, in Kibumba, Democratic Republic of Congo, on October 31, 2013.

The Democratic Republic of Congo’s provincial governments expect a windfall of reconstruction and development funds after an insurgency by M23 rebels ended, said Moise Katumbi, governor of the copper-rich Katanga province.

Congo’s government diverted cash meant for the provinces to pay for its fight against the M23 insurgents in the east of the country, Katumbi, 48, said in an interview in Lubumbashi, Katanga’s capital. The rebels ended their 20-month rebellion on Nov. 5 after Congo’s army seized key positions, including the rebel stronghold of Bunagana.

“Our budget for reconstruction has been blocked by the central government because of the war,” Katumbi said on Nov. 11. “Without this war, there will be more money.”

Congo’s provinces have complained that the central government in Kinshasa keeps too much of their revenue. The state is required by law to send 40 percent of a province’s revenue back to the provincial government in a process called retrocession. Last year, when M23 began its rebellion, the government provided only 43 percent of $1.06 billion it budgeted for retrocession to Congo’s 11 provinces, according to documents on the Budget Ministry’s website. It spent about $330 million on national defense, compared with the $310 million the department was allocated, the documents show.

In the nine months through Sept. 30, the central government disbursed only about 16 percent of the more than $440 million budgeted for Katanga for 2013, according to provisional Budget Ministry data.

Copper Mining

Katanga is home to almost all of Congo’s copper and cobalt production, the main source of the country’s mining income, which accounted for more than 15 percent of Congo’s economy in 2012, according to the International Monetary Fund. Miners including Freeport-McMoRan Copper & Gold Inc. (FCX) and Glencore Xstrata Plc (GLEN) have projects in the province.

An increase in revenue for Katanga will allow the provincial government to fix its transport, electricity, and water infrastructure, which are dilapidated after decades of mismanagement and conflict, Katumbi said. Faster development will also help address growing resentment among some Katangans, who have increasingly turned to separatist armed groups in the face of few job prospects, he said.

“When there’s misery, people say: ‘Ah, if we were autonomous we’d have more money,’” Katumbi said. “I think the day when we’re self-sufficient with food, when we’ve realized the promise of elections, I think this problem will end.”

Fighters Surrender

Hundreds of members of local militias, often called by the generic name Mai Mai, have already surrendered in recent months amid a campaign by the government and army to convince them to lay down their weapons, Katumbi said.

The governor, a former mining investor, called for publicly traded companies to come to Congo to increase transparency in the mining industry. He also called for the government to sell state-owned companies to private investors, including Gecamines, which is based in Lubumbashi.

Gecamines is facing scrutiny for recent sales of its assets, which advocacy groups like U.K.-based corruption watchdog Global Witness say were sold well below market prices. Earlier this year, the company also failed to tell the Mines Ministry of a possible sale of its stake in Glencore’s Kamoto Copper Co. to billionaire Dan Gertler.

The company should be able to sell stakes in its joint ventures if it holds international open tenders, Katumbi said.

‘Respect Tenders’

“If they think that in selling X project, or in reducing their stake, for example, in Freeport’s Tenke mine -- because one day that will happen -- to invest in their own mine, and they do an open tender,” that would be acceptable, Katumbi said. “What’s important is that Gecamines respect the tender.”

This year, Congo’s miners may ship about 750,000 metric tons of copper, a 20 percent increase from 2012, Katumbi said. Output could be as high as 1.5 million tons if the province had enough electricity, he said. Congo is the world’s eighth-largest producer of copper and the biggest source of cobalt, which is used in rechargeable batteries

Katanga has a power deficit of more than 300 megawatts, according to the Energy Ministry. Katumbi, who also owns TP Mazembe, one of Africa’s top soccer clubs, said he would return to private life after leaving the governorship, in spite of speculation he may seek Congo’s presidency once current President Joseph Kabila’s final term ends in 2016.

“I will start another career and I’ll continue to contribute to my country outside politics,” he said.

To contact the reporter on this story: Michael J. Kavanagh in Kinshasa at mkavanagh9@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.