Letter to the editor: How business really gets done in the DRC

Regarding the article “African Copperbelt: still risky after all these years” (T.N.M., Feb. 7-13/11), the problems in the Democratic Republic of the Congo (DRC) have not yet begun.

Most foreign investors have not the slightest idea on how to deal with the locals in the DRC. These investors are conditioned to respect government bureaucrats, but this does not apply in the DRC, for the simple reason that most bureaucrats are out to extort as much money as they can – especially from expatriates. In time, this can become quite riling and undermine one’s morale.

As someone who has had decades of on-the-ground experience in the DRC, I’d recommend that Western investors keep in mind that there are broadly four kinds of people involved in mining in the DRC: the rulers, the bureaucrats, the foreign investors, and the people. Let’s go through these groups one by one.

1. The rulers live lavishly at everyone else’s expense, expatriates included. Although it does not happen systematically, quite too often an investor going to meet a minister or a governor must come in with a fat check – tens of thousands of dollars – that he gives to a secretary. This is not a rule because the rulers have other means to fatten their incomes.

2. The chief bureaucrats have a lot of imagination to interpret the law in their interest. They have no real power but most Western investors do not realize that and quite too often end up paying hefty penalties on mostly imaginary infractions.

They’ll come in your office, showing you a list of so-called infractions which could amount to millions of dollars. I have been shown fines of up to $25 million, which could be settled for a few thousand or tens of thousands of dollars.

Once one starts to pay, there is no end in sight. Every ministry or department will find some kind of infraction and, as those people change every year or two, one has to do it all over again. And it is almost impossible to fix any problem: every time one is fixed, it creates four or five more.

The best way is to send them packing, but with a caveat: one has to be sure to be within his rights. Then they are powerless. Problems arise when investors start to play the same game and cheat on their production to retrieve part of the money.

3. Investors who want to work in the DRC have to create a local company, which involves quite a few documents that have to be retrieved from a bunch of different ministries or departments.

This is where second-tier bureaucrats come into play. They require what they call “motivation,” which could amount to a few hundred to several thousand dollars. This is mostly paid in advance and in full, without any guarantee but they usually keep their word.

What one has to keep in mind is that these second-tier bureaucrats are at work but seldom see any salary. They have to till a parcel of land to be able to feed their families, which they do at night or very early in the morning. If you want to get your documents, you had better pay or you will never see any. I would not call this a bribe, as in this case the investor stands in for the government.

4. Then there is the little guy who tries to scrape a living, digging for copper in the old Gécamines open pits. There were a hundred thousand or more of these people just a few years ago. This encompassed not just the diggers, but also the loaders bringing the ore out of the pit, local police plus lot of kids and women. The people were working in horrendous and very dangerous conditions, with hundreds killed every year in tunnel collapses.

Foreign investors do not realize that when they take over an old mine, they put thousands of people out of business – people with families of up to eight or nine kids. Almost every time it ended up with the police shooting at the diggers and killing several of them.

Some investors tried to compensate with money but it was derisory, enough to feed those people for a month or two. Even so, when you pay two hundred dollars per head and you have 2,500 diggers, it represents a lot of money. But nothing to endear the investors to them.

The mining companies also try to compensate by building villages, schools, roads and clinics. This is commendable but does not put food on these people’s tables. It does nothing to alleviate hunger, but creates anger that could explode any time. If nothing is done, this is what is going to happen in the future: riots, roadblocks in which expatriates could be maimed or killed, army intervention, and more dead people.

The only way to avoid such a scenario is to organize and supervise these people, putting them to work, either as employees, diggers or even farmers.

The employees should be trained to become guards, miners, drivers or whatever. The diggers, who could be given a small deposit to mine, have to be closely monitored. They should be paid on productivity but work as independents, with their production to be sold to the mining company owning the deposit, and paid according to grade and volume.

And the mining company has to make sure that they work in safe conditions, including helping them with trucks and explosives. The goal for the mining company is not to make money but to allow some people to earn a living in good conditions.

Obviously, not all mining companies have a deposit to give to the diggers, so many of the diggers could end up unemployed. In this case, there is an alternative: local chiefs own huge tracts of open land suitable for growing corn, vegetable and even fish-farming. The chiefs are willing to give them away provided they get back a percentage of the production.

The DRC’s mining provinces are in dire need of corn. Those potential crop areas, provided they are amended, could solve the problem. This is a different sort of undertaking altogether, encompassing the building of roads, camps and machinery, but with no guarantee that the diggers will agree to work on it.

But then there is only so much a mining company can do. If the diggers don’t want to work on farms, then they are on their own. Granted, this won’t be a sinecure but it is a sine qua non to earn the respect of the locals, all the while teaching them how to run a business.

It could go a long way in precluding a lot of trouble in the future.

René Coda, president

Exploreco Inc.

Val d’Or, Que.