JOHANNESBURG (Business Day) -- Elections have been held, politicians have met, pontificated, dined and signed treaties, but now the real economy is moving. Organised by the Association of SADC Chambers of Commerce and Industries (ASCCI), a delegation of more than 200 people, representing more than 100 businesses, met in Kinshasa, capital of the Democratic Republic of Congo, recently. They ranged from multinational heavyweights through to micro and mini enterprises. The topic of discussion: how to get goods, services and investments flowing between SADC (Southern African Development Community) states and the Congo. Years of civil war, spurred by the natural resources available in the Congo, have left the economy and the infrastructure in tatters. However, in this huge country, with a population of 60-million, lie copper, cobalt, diamonds, uranium, zinc, iron, coal, bauxite, petroleum, water and hardwood in great abundance.
In a post-conflict situation, the newly elected government of Joseph Kabila has already made significant strides. Political and country risk is considerably lower, particularly following the departure of the main rebel leader, Jean-Pierre Bemba, to Portugal.
In Lubumbashi, heart of the cobalt and Copper Belt, the city is shaking off its war camouflage.
Cranes, shiny painted offices, warehouses and homes, road-repair crews and flowing vehicle traffic are evidence of this. Businesses and households are reaching out to suppliers of equipment, services and consumer goods.
As businessmen took on the heat, humidity and disrepair of Kinshasa, the discussions were of a rebirth of the economy. But this was not just a talk shop. These were serious, senior businessmen, taking time out of their hectic schedules for discussions they believed would add to the order books of their organisations. There were also cabinet ministers from the Congo — young, articulate and with economic and business savvy.
Given the mineral richness and the part minerals play in the economy, the major discussions focused on the mining and energy sectors. The production of the Inga hydroelectric plant, the major electricity supply source, is erratic, and power distribution tenuous. However, $300 million has been made available to restore the output and distribution of Inga to its design capacity of 1120 megawatts.
There have also recently been concerns about government interference in the mining industry.
First, the government announced that all contracts related to mining exploration, concessions and activity were to be revisited. The government felt that many of these had loopholes that allowed mining and processing operations to minimise tax income from the mining sector.
Mining director-general Jean-Felix Mupande explained that contracts were under review only, in order to ensure that they conformed with all aspects of the Congolese law and the mining code. No changes were envisaged for exploration contracts, but the main concern was with the 60 or so partnerships entered into between state companies and foreign partners. Initial scrutiny had revealed that some of these had tax and legal loopholes that needed to be closed.
Then Moise Katumbi, the governor of Katanga province, banned the export of ore from the Congo, which caused a huge outcry among miners, and a lengthy backup of trucks at border posts. Again, Mupande explained that it was forbidden by the mining code to export raw ore, unless the ministry had given permission.
What does all this mean for business organisations and investors?
First, that business organisations such as ASCCI have an important role to play in boosting trade and investment in the region. While politicians should be creating an environment in which the free flow of goods, services and investments can take place, only businesses can bring this into being.
Second, that while the Congo is still a risky place to do business, it has improved dramatically. There are significant opportunities in retail, banking, transport, construction, and particularly in mining.
Finally, for investors, check out the mining counters of those companies active in the Congo, particularly the junior miners, where a significant upturn in activities in the Congo will have a major effect on their overall results.
Darryl Moss is GM, mining distribution, at Metso Minerals.
