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Can the World Bank do better here in the DRC?

MONUC | Published on March 13, 2007

Joseph Kabila, Paul Wolfowitz Criticised for their different interventions here in the DRC, the World Bank decided to take up the challenge. President Paul Wolfowitz visited the country from March 8 to 9 2007, within the framework of reinforcing relations between the DRC and the Bank, and with a view to preparing the programmes for economic reform and the consolidation of the peace.

The World Bank was criticized on the manner in which they have intervened here in the DR Congo, as were the agencies with which they work.

The Bank has been criticized for allowing the signing of certain mining contracts which are seen as destabilising for the DRC, as some of these interventions have underestimated the risks for the population, whereas others simply will cost too much for the Congolese to obtain their objectives.

Also the efficiency of the aid is a cause for concern. This is why, given the actual socio-political situation in the DRC, the Bank has proposed a new strategy for aiding the country in the post conflict phase, with a democratically elected president hailed by the international community.

The Mining Sector

The underwriter for political risks for the Bank, the Multilateral Investment Guarantee Agency (MIGA), approved political risk insurance for Anvil Mining, a Canadian company who used the logistical support of the FARDC in September 2004 to violently suppress a group of rebels in the town of Kilwa, located 50km from Dikulushi.

Kilwa is an export point to Zambia for copper and other precious minerals coming from the province of Dikulushi. The repression affected the civilian population and the FARDC committed summary executions, looting, extortion and illegal detention.

Within this framework, Paul Wolfowitz has demanded the Compliance Advisory Office (CAO) to conduct an audit into the manner in which MIGA were involved in this incident. Unfortunately, the CAO did not examine the implication of Anvil in the Kilwa incident. Nevertheless, the reports have shown that MIGA did not consider the risk of the involvement of Anvil in the conflict, or the social repercussions and activities of the Canadian company, before awarding them a contract guaranteed by political risk, to the value of US$13.3 million.

The role of the Bank is equally in doubt in relation to mining contracts. In effect, the mining contracts appear one sided, having been signed by the World Bank at a time when the Bank is implicated in the reform of this sector in the DRC. However, a Bank memorandum reports that three joint venture contracts between Gécamines and three international mining groups indicate that the contracts did not have “proper analysis and evaluation” before the signing of the contracts.

And the memo recommended the “unilateral” renegotiation of contracts. The Bank has also contributed to an evaluation of the reform of Gécamines

Yet officials from the Bank state that the Bank is not responsible for the signed of mining contracts between a sovereign government and private companies.

Programme of demobilisation and reintegration of combatants

The Bank has supported the DR Congo with US$100 million in the multi country Demobilisation and Reintegration programme (MDRP).According to the Bank, close to 100,595 former soldiers have been disarmed and demobilized, of which 69,000 have already been reintegrated into society.

The militants have also liberated around 30,000 children from their ranks, and 80% have been reunited with their families.

Nevertheless the demobilized have protested since the start of the programme, in order to claim the reintegration kits that were promised; up till today CONADER, who are in charge of the coordination of the programme, claim not to have any more money.

Therefore the World Bank estimates that despite the progress, the new DRC government should encourage close to 60 to 70,000 ex armed group troops to return to civilian life, with a total of US$60 million of funding for this project. This means that the MDRP project has already cost more than US$200 million in total for the donors involved.

The efficiency of the aid

Moreover, even if the mining concessions were signed by the government and all the participants in the conflict, and as millions of Congolese still flee from conflict in the east of the country, the World Bank has renewed its support to the DRC in 2003, to a country devastated, with no road or administrative infrastructure.

Despite the approval of 82 credits for a total amount of around US$121 million up to February 2007 (including aid under the Mobutu regime), the country is classified as the 167th poorest in the world, according to the UNDP 2006 human development index.

But when the DRC becomes more stable, there are promising signs for the economy. More than one million US dollars of foreign investment reached the country in 2006, despite it classification as one of the world’s worst, according to ‘doing business’ indicators.

Despite the country been virtually ruined in recent decades, the Congo is rich in human and natural resources, with fertile soil, abundant rainfall and mineral resources (copper, cobalt, diamonds, gold, zinc and other precious metals), as well as petroleum.

This potential, with a legitimate government now in place, is the guarantee of a better future, and is the foundation of hope for the Congolese people. But the President of the World Bank had said “more than one billion people across the world live on one dollar a day, as corruption threatens the hope of a better life and a more promising future.”

Preconditions for aid

But to guarantee the efficiency of the aid and to assure the best possible exploitation and redistribution of national wealth, Paul Wolfowitz wants from now on to have good governance preconditions on aid for developing countries. Thus the next loans from the World Bank will have conditions attached, as Transparency International has classed the country as the sixth most corrupt in the world.

It is within this framework that Mr. Wolfowitz declared “when we discovered that development aid is already insufficient to attain the objective of helping the poor, we must act. The activities of the Department of Institutional Integrity helps us to focus on working for the poor, and to discourage the practices of fraud and corruption, and to start working in coordination with other services across the Bank in order to limit the risk for future operations.”

This initiative, which is supported by the United States, has been heavily criticised by Great Britain, France and Germany, and has hit 58 enterprises in 2007, with 54 others excluded from markets due to fraud and corruption.

Thus the DRC, one of the poorest countries in Africa in a post conflict situation where three quarters of the population live on less than a dollar a day, need to take up the challenge of consolidating the peace and improving the living conditions of the population.

In order to better aid the DRC, the new World Bank strategy of assistance to countries, which will be presented in 2007, and will cover sectors such as good governance, peace, macroeconomic stability, economic growth, access to social services and reduction of vulnerability, the AIDs issue and the promotion of dynamic communities.

Mr. Wolfowitz announced during his visit that the Bank will make a first donation of US$180 million for constructing roads and water points in Kinshasa, which will also create employment at the same time.

This is just a fraction of the World Bank support to the DRC in 2007, as the total envisaged is US$380 million.

“We have already started planning for projects in 2008, and we expect to give US$1.4 billion worth of loans to the DRC over the next three years,” Mr. Wolfowitz concluded.

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