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You Are Here: Home » Africa/International » DR Congo to adapt China deal to appease IMF
The Democratic Republic of Congo will put part of its $9-billion investment agreement with China on hold to take into account concerns voiced by the International Monetary Fund, said Moise Ekanga, who oversees the accord for Congo.
The central African country has put a $3-billion chunk of infrastructure investments by their Chinese partners ”on the back-burner” to satisfy objections by the IMF that the agreement will add to Congo’s $11-billion external debt, said Ekanga, the executive-secretary of the Coordination and Monitoring Office for the Sino-Congolese Program.
“We’re the IMF’s partner,” Ekanga said today in an interview in the capital, Kinshasa. “We can’t close our ears to what they say.” This change in the Congolese position means the $3 million second-phase deliveries will be considered only after completion of the first, he added, without specifying the projects.
Last year’s agreement gives four Chinese companies including state-owned Sinohydro Corp. and China Railway Engineering Corp. rights over more than 10 million metric tons of copper deposits and 600,000 tons of cobalt. In turn, they were to invest $6 billion in building roads, railways, hospitals and schools to help President Joseph Kabila live up to election promises. A further $3 billion will go into the joint mining project.
IMF Managing-Director Dominique Strauss-Kahn last week said Congo wouldn’t qualify for $10 billion in debt relief and another $500 million in financial support until the agreement is altered.
Difficult Position
“The IMF is putting us in a difficult position because they want to cut our investment,” Ekanga said. “It’s a loss for us.”
Struck by the global financial crisis, the IMF expects Congo’s economy to grow 2.7 percent this year, down from 6 percent last year. After metal prices tumbled last year, more than half the miners in the southern Katanga province stopped output. The province holds a third of the world’s cobalt reserves and 4 percent of copper.
The IMF’s opposition to the deal represents an attempt by the West to counter China’s investments in Africa, according to Gregory Mthembu-Salter of the South African Institute of International Affairs. “It’s a confrontation between the Western donors and China in Congo,” he said in a June 2 interview. “The fall guy in this will be the Congolese.”
Credit Guarantee
The Congolese state is guaranteeing the credit from the Export-Import Bank of China, which means it should be seen as national debt, according to the Washington-based lender.
China’s ambassador to Congo, Wu Zexian, this week denied there would be any changes to the agreement. Exim Bank will be taking the risk and it doesn’t burden the Congolese state, he said.
The state will need to take on debt only if the mining project, which will repay the loan, fails, Ekanga said. This is covered by the mineral reserves supplied, he added. “There is risk everywhere in the world,” he said. “Does this mean we won’t stick with the contract? No. The risk is totally minimized.”
Congo also agreed a longer maturity on the credit, which improves the repayment conditions to meet with IMF requests, Ekanga said.
The Chinese companies have already started infrastructure investments worth over $300 million, Ekanga said. Another $400 million in developments is currently being planned, he added.
Sicomines, the joint mining venture in which Congo holds a 32 percent stake, will complete its geological study by the end of the year, Ekanga said.
Trade between China and Africa grew to $55 billion in 2006 from $10 billion in 2001 according to the IMF. Angola has received more than $5 billion, while Nigeria may benefit from a $8.3 billion railway project.
Source: Bloomberg
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the europeans must some times come up with some real mind, since the Drc got the independancy from belgium, congo was a privite tool to them, they loot the country for more than 38years and even they did not construct one mile of road neither any thing that congolese may see and show to they children or grand sons, so they have to understand that it is now the time of china, let see what china will do for us and if they need competition, yes, they is a place for every one in congo, but we are not sure if they will change they evil plan, to bring war and other evils things.
VIVE LE CONGO POUR L’INDEPENDANCE!!!!.
good science, good technology that chinese people bring to us, easier life for wonderful people of congo, we must use our mind and think for what ours grand papas put in our national himn. nous batirons un pays bien qu’en avant dans la paix, nous alons dellegue tout a notre posperites, alors il nous demande un sacrifice, aimez notre pays, mourrir pour notre pays, utilises tout nos efforts pur notre pays, comme les chinois pour leure pays voila comment la chine devient! et commkent pas les congolais, come on people! do not be lazy until you want to be putting a food in the mouth, “WE ARE WONDERFUL PEOPLE”all the world need us, we are few but may in our land full of minerals. 50% that we have half of the world.
There is a place for every one, in congo. the IMF must come with good ideas so that the congolese government may understand and give them a place, WE NEED DEVELOPMENT BUT NOT LOOTING, WE ARE TIRED SINCE THE LAST METROPOL LEFT THE COUNTRY UP TO NOW.
NEXT TIME.
we must adapt also the culture and accept others in the world, il ns se melange avec d’autres race enfin de bien etre develop.
I feel sorry for my country. I don’t expect all the time to be given that the country will change for better. You need first an initiative to inforce taxe return to all government employees and put a structure to use that money by starting to create small busness and for the well being of your countrymen . In addition, reduce the port tarrif to let fluence exchange of goods and that will reduce the price of goods for everybody to afford. Those are small step wiil creates big project in the future
Thanks
Frank
to Frank, extract from DRC investment consultacy bureau
Investments realized in DRC are reassured by several mechanisms provided for by the Constitution as well as by particular laws of the country. They are inter alia:
vExclusion of nationalisation and expropriation;
vFreedom of transferring abroad dividends and other investment generated income;
vno withdrawal of guarantees and advantages granted by mining,
vInvestment Codes and others, through a subsequent provision;
vdispute settlement under CIRDI convention (International Centre of Dispute Settlement° BOSED IN Washington City;
vCreation of commerce courts and labour courts within which representatives of businessmen sit.
vAdoption of many bilateral conventions on reciprocal protection and promotion of
investments between DRC and various friend countries.
· The Government grants various customs and tax advantages through investment project approval to the unique system of Investment Code among which mention may be made of :
Customs advantages.
v With the exception of the administrative tax (5 %), a full exemption from duties and taxes on import for machinery, new tools and equipment, new spare parts no exceeding 10 % of CIF value of the said equipment for public utility investments ;
v Full exemption from duties and taxes on import for machinery, new tools and equipment, new spare pasts not exceeding 10 % of CIF value of the said equipment for public utility investments.
v Exoneration from duties and taxes on export for all or part of finished products, carved or semi-carved in good conditions for the balance of payment
Tax advantages.
v Full exemption from professional tax on income for profits made by approved investments ;
v Exemption from land tax (on land concessions and developed properties) ;
v Exemption from ad valorem duty on the constitution or increase of the share capital of Limit Liability Companies (SARL)
v SME / SMI benefit in addition, of:
o Full exemption from duties and taxes on import for machinery and equipment, event second hand tools ;
o The possibility of calculating their provision for depreciation according to a digressive mode ;
o Deduction of taxable profit from expenses made for the training or improvement of the staff, protection and conservation of the environment;
o Exemption from duties on the charters and the registration fees in the new trade register
Depending on the economic region of investment location, all these advantages are granted for a period between 3 and 5 years which starts as soon as the goods and services produced by the approved company are on the market.
I do beleive in working hard in life to achive what or where you want to get to ,this is what lacking our country’s people, we have to work hard and do not expert things to be handed to us be in control of the country ,stop thinking about ourself ,creat employments and start paying taxes to rebuild thiis country, to do all this we need the right type of people with the right type of mind who are willing to work hard and make change, no to get rich for themselve having lots of money in europe’s banks that’s taking the country to the ground not helpinp the economy .