On this page: Forestry Sector | Mining Sector | Energy Sector
The World Bank resumed its lending to the Democratic Republic of Congo (DRC) in 2001, after a nearly ten-year hiatus, and has since committed over $3 billion in IDA loans and grants. Local and international civil society groups have raised concerns about the magnitude and pace of the Bank's investment in the DRC since its reengagement and the absence of appropriate social, environmental or fiduciary safeguards. Much of the $3.1 billion committed is provided on an "emergency" basis, under the Bank's operational policy 8.50, which allows for a one-year waiver of the application of social and environmental policies in order to facilitate rapid disbursement of funds. The other significant portion of the portfolio is comprised of adjustment loans or development policy operations; this type of financing for policy and institutional reforms is entirely exempt from the social and environmental measures that apply to investment lending.
The DRC is still emerging from a violent war that has claimed the lives of more than 5 million people since 1998. Numerous studies, including investigations by the United Nations, have revealed the links between the conflict and control over the minerals, timber and other natural resources with which the Congo is richly endowed. The World Bank’s lending to date, however, has focused disproportionately on facilitating private sector participation in the exploitation of DRC’s natural resources; at the same time, both the IFC and MIGA have provided financing directly to private mining companies operating in southeastern DRC, and have indicated their intentions to scale up their portfolios in the country’s mining industry. This trend runs contrary to the findings and recommendations of the Bank’s own conflict unit regarding financing for post-conflict countries, which emphasize the need to focus aid on community-driven development and provision of services over private sector investment in longer-term productive contracts, and caution that conflict is likely to reemerge if root causes (such as struggle over resource control) are not addressed.
Forestry Sector
According to the World Bank, the DRC has 125 million hectares of tropical rain forest, and approximately 35 million people (nearly 60% of the entire population) are dependant on forests in some way. While the Bank claims its role in DRC’s forest sector is “to advise the Government about how to promote sustainable forest management that benefits the Congolese people while avoiding unsustainable and destructive logging,” the Bank’s portfolio has supported the DRC’s government’s efforts to make the forest sector a main engine for growth in the coming years.
The World Bank assisted the DRC government in drafting a new Forest Code, which was adopted in August 2002. However, the Forest Code is still not being fully implemented. To date, only a few aspects of the Code, including those pertaining to concession allocation and the forest title conversion process, have been adopted. Key implementation decrees concerning community forests and logging companies’ contracts with local communities have not yet been approved. Furthermore, early reports have shown that the distribution of 40% of area tax receipts to the local and provincial level, as required by the Forest Code, is not occurring.
Congolese civil society, including indigenous peoples associations, has long called for participatory zoning of the country’s forested areas to identify lands for community use, industrial logging and conservation, and to help resolve conflicts regarding land and resource use. However, the World Bank Group’s original pilot forest zoning exercise was dropped from its 2003 Emergency Economic and Social Reunification Support Project (EESRSP). Nevertheless, under the same project, the WBG continues to support other forest sector activities, such as the logging title legal review/conversion process, which risks confirming and extending logging rights in areas where there are unresolved conflicts with local communities, and which will make it possible for the government to begin distributing new logging concessions in the near future.
In December 2005, Congolese civil society organizations, including representatives of forest-dependent indigenous peoples, filed a complaint to the World Bank’s accountability mechanism, the Inspection Panel, concerning the impacts of forest sector reforms supported under the EESRSP and the then-proposed Transitional Support for Economic Recovery (TSERO) project. The complaint alleged that the Bank’s failure to comply with its safeguard policies in its promotion of forest sector reforms, such as forest zoning and the concession allocation system, was likely to harm indigenous, forest-dependent peoples.
As controversy continues to surround the ongoing legal review process, several other forest-related initiatives have been approved or are under discussion at the World Bank. While these activities reflect increased donor attention to Congo’s vast forest resources, experts in the DRC and abroad remain concerned that the rhetoric and dollars have yet to translate into effective protection of the world’s second largest rainforest.
Mining Sector
Since it re-engaged with the DRC, the World Bank has emphasized the need to increase foreign investment in the country’s mining sector in order to boost economic recovery and growth. In a country that has been wracked by natural resource-related conflict and corruption for years, and where the government lacks the capacity to mitigate the impacts of mining and ensure that investments benefit the Congolese people, this approach has not been without problems.
The World Bank’s work to revitalize private investment in the mining sector has focused primarily on three areas: the development of a new Mining Code, adopted in 2002; the establishment of a Mining Registry or Cadastre, to coordinate the allocation of new mining titles; and the restructuring of the country’s state-owned copper company, Gecamines. Despite the precarious state of DRC’s institutions, however, the WBG has not placed equal emphasis on building capacity and equipping government agencies to manage new investments in the sector, particularly at the provincial and local levels.
Because of poor dissemination of the Mining Code and its inconsistent application, the Code’s provisions concerning artisanal miners and affected communities are not well understood. Furthermore, tax rates set under the code have been criticized as unduly favorable to mining companies, some of whom are reporting record profits. Meanwhile, provisions in the Mining Code pertaining to the distribution of 40% of mining revenues from taxes and royalties to local and provincial governments are reportedly not being implemented.
The World Bank itself has recently admitted that the Mining Cadastre, which it helped to put in place, is not functioning. A lack of office capacity has thwarted efforts to keep pace with the large volume of applications for new mining titles that have flooded in since it was opened in 2003 under the transitional government. As of April 2006, the Cadastre had reportedly issued 2,300 licenses, and its emphasis on rapid processing of applications and allocations of permits is particularly troubling given the low level of government capacity to monitor and mitigate environmental and social impacts of mining sector activities or to ensure adherence to rules governing land use and title boundaries.
The Bank’s support for the restructuring of Congo’s state-owned copper company, Gecamines, has failed to “revive the sector” as originally intended. While the World Bank Group was advising the DRC government on the reforms, but before a plan for the company’s restructuring was agreed upon, government officials in Kinshasa signed three deals with private mining companies that, according to a confidential World Bank memo, effectively transferred over 70% of Gecamines’ most valuable copper and cobalt reserves into private hands. The terms of these agreements have been widely criticized as unfavorable to the DRC. The Bank has also received criticism for its apparent reluctance to leverage the Congolese government to renegotiate, revoke or cancel the deals, which the Bank itself acknowledges were approved with “a complete lack of transparency.”
Energy Sector
Power lines from the Inga hydroelectric site on the Congo River
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The World Bank Group has played an active role in the DRC's energy sector since its re-engagement in 2001, supporting the rehabilitation of energy infrastructure, new electricity power supply and distribution projects, and the restructuring of the national electricity company, Société Nationale d'Electricité (SNEL).
The Bank’s involvement in the country’s power sector, however, has focused almost exclusively on the exploitation of the 100 meter Inga Falls on the Congo River, which is reported to be the largest single source of hydropower in the world. The World Bank, IFC and MIGA are all considering supporting the rehabilitation of the existing Inga I and II hydroelectric sites, which are currently operating at less than half their installed capacity.
The World Bank has also given indications that it will support Inga 3, a proposed project expected to generate 3,500 MW of hydroelectric power, over two and a half times the combined capacity of the first two Inga facilities. Inga 3 is the centerpiece of the Westcor partnership, which envisions the interconnection of the electric grids of the DRC, Namibia, Angola, Botswana, and South Africa. The World Bank, the African Development Bank, the European Investment Bank, bilateral donors and the southern African power companies have all expressed interest in pursuing the project, estimated to cost between $5 and $7 billion.
This has generated serious concerns from local and international groups, particularly given the country’s turbulent history and ongoing instability, as well as the government’s poor track record regarding project oversight, infrastructure maintenance and revenue management. Furthermore, the project is seen by many as a first step toward the construction of the Grand Inga complex, which is reported to have the potential to produce as much as 35,000 MW of electricity, over twice the generation capacity of the Three Gorges Dam in China. Estimated at $50 billion, this massive project is being touted not only as the solution to Africa’s electricity deficit, but also as a viable source of energy for export to the Middle East and Europe.
The proposed projects at Inga raise significant concerns regarding the risks of reliance on hydropower at a time when Africa is becoming increasingly susceptible to climate change-induced drought. In a country where only 6% of the country’s population has access to electricity, critics have also charged that the rehabilitation and expansion of Inga is geared to serve large mining and timber interests in the country, and will not contribute meaningfully toward increasing electricity access for the poor, particularly in rural, off-grid areas.