Improved EITI Report reflects the significant challenges of the sector.
The EITI process is proving to be magnet for information gathering and heated discussion about the management of the oil, gas and mining sectors in the DR Congo. With an improved process, comes increased expectations.
Increased activities of EITI reporting in 2015
EITI DRC is on track to publish two EITI Reports and two studies in 2015. The 2013 EITI Report was released in July. By request of the Prime Minister and of parliamentary committees, the 2014 Report is due to be published by 31 December 2015.
Two studies on the artisanal and forestry sectors are also underway under the auspices of the EITI process. The Ministry of Finance also publishes quarterly reports of government revenues from the extractive sector, which are later reconciled with company data, broken down by company, and published on the EITI-DRC website.
More detail provided and further improvements recommended
The 2013 Report includes better quality information on licenses, production and exports data, social payments, employment data and the sector’s overall contribution to the economy (98% of exports, 29% of government revenues, 21%of GDP, and 6% of formal employment in 2013).
The government reported USD 1.5 billion in revenue from the sectors in 2013, of which 73% went to the national budget. The report showed a record 48% increase in copper production to 920,000 tons in 2013. Copper and cobalt are the country’s main export products accounting for 68% and 17% of total exports respectively.
The Report also provides greater details of beneficial ownership, including the nationality of some individual owners of mining companies and discloses the name of politically exposed persons.
Further, the Report recommends building and maintaining a public registry of beneficial ownership. Other recommendations for future reporting include greater disclosure of revenue flow to and from State Owned Enterprises (SOE) and the publication of contracts. Disclosure of contracts was decreed by the Prime Minister Decree of May 2011 but has not yet been fully implemented. While some contracts are published on the website of the Ministry of Mining and others on the website of the Ministry of Hydrocarbon, the report recommends complete disclosure of all contracts on a single government portal.
Falling commodity prices squeeze government budget
In August 2015, the Government of the DRC lowered its forecast of GDP growth in 2015 from 10.4% to 8.4%, due to the decline of commodity prices, especially copper. In addition to the falling commodity prices, on-going institutional reforms, such as divisions of the seven provinces into 26 provinces, each with its own local government and the ongoing process of updating the mining code, may increase uncertainty and affect the business environment.
Early evidence on impact of the EITI, but more work is needed
With support from the German development agency GIZ, the civil society coalition Publish What You Pay of the DRC conducted an impact evaluation study of the EITI process in the DRC over the period 2005-2015.
While it is too early to demonstrate impact of the EITI on local communities, the study concluded that the EITI has contributed to behavioural change in the management of the sector. Preliminary results suggest substantial gains in government revenues from the sector. The extent to which EITI implementation had contributed to this increase was not clear.
There was a widely held belief among respondents that the DRC deserved its EITI compliance status, achieved in July 2014, but the report noted that more work was needed to ensure effective management of the sector and increased social benefits. The study recommended mainstreaming the EITI in the “daily management” of the sector, widening the scope of EITI reports, implementing regulatory reforms, better use of EITI data by parliamentarians and increasing the capacity of civil society groups.
While the EITI International Secretariat does not endorse the methodology and the content of the report, it welcomes the strong engagement of the civil society constituency in the DRC.
The 2013 EITI Report can be downloaded here.
The evaluation report of Publish What You Pay (PWYP) DRC is available here (in French).