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Africa Last Updated: Feb 7, 2024 - 1:42:03 PM


DRC’s ‘contract of the century’: China to pay 7bn for infrastructure
By Socrate Nsimba, Africa Reports, February 5, 2024
Feb 7, 2024 - 1:42:03 PM

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After eight months of negotiations, the revised 2008 mining deal with the Chinese includes constructing 7,000km of roads. But is the agreement the best DRC could hope for?

Félix Tshisekedi couldn’t have wished for anything better to launch his second term as president of the Democratic Republic of Congo (DRC). On 19 January, on the eve of his inauguration, an agreement was reached between his government and the Groupement d’Entreprises Chinois (GEC), a Chinese consortium, as part of renegotiations on the so-called ‘contract of the century’.

The agreement, originally signed in 2008 under then-president Joseph Kabila, provided for the granting of cobalt and copper deposits to a joint venture called Sicomines (68% owned by the GEC and 32% by Gécamines) in exchange for Chinese investment in the country’s infrastructure.

According to the new contract reached between the two governments, the total amount of investment in infrastructure – mainly national roads – has been increased from $3bn to $7bn.

This deal, the fifth in 15 years, stipulates that the DRC will benefit from $324m a year for infrastructure projects over 15 years. For 2024, the amount to be released will be $624m. Tshisekedi can thus hope to honour his commitments over “the thorny issue of opening up [our] territories”, as he emphasised in his inauguration speech on 20 January at Kinshasa’s Stade des Martyrs.

Tough talks – 7,000km road project

In June 2023, on Tshisekedi’s return from his first trip to Beijing, the Congolese and Chinese parties started discussions to renegotiate the contract. More than 120 delegates from the DRC president’s office, the ministries of finance, budget, mining, justice, infrastructure, public works and foreign trade, as well as representatives of various administrative departments and financial authorities, participated in the discussions. The Chinese side was made up of some 20 delegates.

    Did we get the most we could have gotten? That, I cannot say

The Congolese, who had demanded $20bn, settled for $7bn and Gécamines’ shares were not revised upwards. However, the DRC’s share in the management of the Busanga hydroelectric dam in Lualaba province was increased from 25% to 40%.
READ MORE DRC-China: Infrastructure component of ‘contract of the century’ pinned down

The national company will still receive royalties amounting to 1.2% of annual sales and will be responsible for marketing 32% of Sicomines’ annual production. Is Kinshasa satisfied with this result?

“If we agreed to sign this contract, it’s because we’re happy with it,” the head of the Inspection Générale des Finances (IGF) Jules Alingete Key, who took part in all the discussions, tells The Africa Report. “Imagine building 7,000 km of roads for this country – it is huge. But did we get the most we could have gotten? That, I cannot say,” he says.
‘Unbalanced’ investment

The original agreement signed by Kabila, provided for Chinese investment in DRC infrastructure to the tune of $9bn. This amount has since been revised downwards to $3bn, which IGF director Key considered  “unacceptable” from 2021 on. While the agreement has made China the leading destination for Congolese mining exports, representatives from the DRC felt the country had yet to benefit.
READ MORE DRC: Tshisekedi wants to renegotiate Kabila’s ‘contract of the century’ with China

In a report Tshisekedi commissioned and which was published on 15 February 2023, the IGF indicated that the DRC had only benefited from $822m worth of infrastructure over the preceding 15 years, compared to more than $10bn for the Chinese side.

The document also denounced overbilling in certain projects, amounting to more than $400m of the $822m disbursed to date for infrastructure. The Chinese countered by saying those figures were “unrealistic”. The inspection department linked to the president’s office estimated that Gécamines’ shares in Sicomines were undervalued.
READ MORE DRC: Can Gécamines rise from the ashes?

Since March 2022, a prime ministerial decree has replaced the office for the coordination and monitoring of the Sino-Congolese programme, then led by Moïse Ekanga – an associate of Kabila, in charge of infrastructure projects under the contract – with the APCSC (Agency for the Steering, Coordination and Monitoring of Collaboration Agreements between the DRC and its private partners).

Headed by Freddy Shembo Weloli, the APCSC will manage future projects financed by Sicomines.

“The Congolese who initially signed and managed this agreement were no choirboys,” says Key. “The proof is that they all got rich.”


Source:Ocnus.net 2024

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