Studies reveal that high taxes and complex administrative procedures encourage extortion, illicit trade and debt bondage
KOLWEZI, Democratic Republic of Congo, 21 March 2023/ – IMPACT (https://ImpactTransform.org/en/) is launching a new anti-corruption project in the artisanal cobalt sector of the Democratic Republic of Congo (DRC) with a first initiative to map taxes and royalties required by law.
Implemented in collaboration with the Human Rights Defence Action (ADDH), the Mapping the Fees project was inaugurated today with an analysis workshop in Kolwezi, Lualaba province, the hub of artisanal cobalt mining in the DRC. The workshop is the first in a series bringing together mining and financial experts, artisanal miners, traders, exporters and members of civil society to examine the taxes, royalties and procedures in place for the artisanal cobalt mining sector to document what is required by law.
“High taxes and the complexity of every administrative process pose a major obstacle to responsible sourcing. We have witnessed serious corruption and extortion by supply chain actors in the artisanal gold sector. Through this project, IMPACT would like to compare the experiences of the artisanal gold sector with the reality of the artisanal cobalt sector. By mapping the mandatory formalities and fees through a multi-stakeholder consultative process, we hope to remove any ambiguity in the taxation of artisanal cobalt and provide artisanal miners and traders with a useful reference guide that they can consult to ensure they are not being extorted,” says Joanne Lebert, IMPACT’s Executive Director.
In particular, the project will compare the situation in the artisanal cobalt sector with that of the artisanal gold sector, work that IMPACT has had to do in the Ituri province. In its experiment, in 2022, IMPACT developed four technical sheets (https://apo-opa.info/3JzCwgP) describing the taxes, fees and formalities required for the inter-provincial transport, export, purchase and sale of artisanal gold in Ituri Province and its extraction in the same province.
In the DRC, the artisanal mining sector is governed by a complex and unclear tax system. High taxes and cumbersome administrative procedures encourage the clandestine trade in the country’s natural resources. According to an OECD report (https://apo-opa.info/3Z56eQT), artisanal miners must pay kickbacks to cooperatives or government officials that deprive them of up to 20% of the total value of the material they extract.
These factsheets have proven to be useful reference guides for stakeholders, who can refer to them to find out what steps are required by law for the sector concerned. IMPACT has previously documented (https://apo-opa.info/42qAzfx) 26 steps to export artisanal gold in Ituri province, which cost exporters 12% of the value of the ore. As a result of all this work, this number has been reduced to 9 steps, and the total costs have also been reduced.
Since these documents were distributed, supply chain actors in Ituri province have used them to successfully discourage illegal payment claims.
The series of workshops in the Mapping the Costs project will also address possible reforms needed to improve fiscal governance in the artisanal cobalt sector at both provincial and national levels. Stakeholders will seek to formulate proposals to encourage transparency and efficiency in the DRC’s artisanal cobalt supply chains.
Since 2011, IMPACT has been assisting the Ministry of Mines to implement the six tools required by the ICGLR regional initiative to combat illegal exploitation of natural resources, including the harmonisation of legislation across all member states. IMPACT has also supported human rights in mining communities and the adoption of supply chain due diligence measures through its Just Gold project (https://apo-opa.info/3LyI26e), which brings legal, traceable and conflict-free artisanal gold to international markets.
At the same time, IMPACT is implementing the Sa Sécurité project (https://apo-opa.info/3lnNHkZ) in the artisanal cobalt mining sector. This project looks at how child labour can be reduced by increasing the livelihoods of women in artisanal cobalt mining communities. IMPACT has also supported the development of the Management Framework of Environmental, Social and Governance Requirements for the Artisanal and Small-scale Cobalt Sector (https://apo-opa.info/3ZZ4tWu), which is articulated as a set of progressive expectations for the responsible sourcing of artisanal cobalt from the DRC. To this end, IMPACT conducted national consultations and facilitated workshops to feedback the updated requirements.
The Mapping the Costs project is made possible by financial support from the European Union. Complementary activities to this project are supported by Microsoft.
Read more about the project here: https://apo-opa.info/406zHey
Distributed by APO Group for IMPACT.
Press contact: In DRC: Felicien Mbikayi, Governance Advisor, IMPACT, +243-815-071-370 / +243-993-732-004, fmbikayi@impacttransform.org
In Canada: Zuzia Danielski, Director of Communications, IMPACT, zdanielski@impacttransform.org
About IMPACT: IMPACT is transforming the management of natural resources in areas where security and human rights are at risk. We analyze and design approaches to natural resource management with a triple focus on security, development and equity. As an independent, not-for-profit organisation, IMPACT works with local partners to achieve sustainable change. www.ImpactTransform.org
About the Human Rights Defence Action (ADDH): The Human Rights Defence Action (ADDH) is a Congolese non-profit organisation based in Kolwezi. ADDH focuses on supporting transparency in the natural resource sector in Kolwezi and surrounding communities.
SOURCE IMPACT
