Copper-Rich Congo Province Sees More Cash After Rebel Defeat – by Michael J. Kavanagh (Bloomberg News – November 18, 2013)

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The Democratic Republic of Congo’s provincial governments expect a windfall of reconstruction and development funds after an insurgency by M23 rebels ended, said Moise Katumbi, governor of the copper-rich Katanga province.

Congo’s government diverted cash meant for the provinces to pay for its fight against the M23 insurgents in the east of the country, Katumbi, 48, said in an interview in Lubumbashi, Katanga’s capital. The rebels ended their 20-month rebellion on Nov. 5 after Congo’s army seized key positions, including the rebel stronghold of Bunagana.

“Our budget for reconstruction has been blocked by the central government because of the war,” Katumbi said on Nov. 11. “Without this war, there will be more money.” Congo’s provinces have complained that the central government in Kinshasa keeps too much of their revenue. The state is required by law to send 40 percent of a province’s revenue back to the provincial government in a process called retrocession.

Last year, when M23 began its rebellion, the government provided only 43 percent of $1.06 billion it budgeted for retrocession to Congo’s 11 provinces, according to documents on the Budget Ministry’s website. It spent about $330 million on national defense, compared with the $310 million the department was allocated, the documents show.

In the nine months through Sept. 30, the central government disbursed only about 16 percent of the more than $440 million budgeted for Katanga for 2013, according to provisional Budget Ministry data.

Copper Mining

Katanga is home to almost all of Congo’s copper and cobalt production, the main source of the country’s mining income, which accounted for more than 15 percent of Congo’s economy in 2012, according to the International Monetary Fund. Miners including Freeport-McMoRan Copper & Gold Inc. (FCX) and Glencore Xstrata Plc (GLEN) have projects in the province.

An increase in revenue for Katanga will allow the provincial government to fix its transport, electricity, and water infrastructure, which are dilapidated after decades of mismanagement and conflict, Katumbi said. Faster development will also help address growing resentment among some Katangans, who have increasingly turned to separatist armed groups in the face of few job prospects, he said.

“When there’s misery, people say: ‘Ah, if we were autonomous we’d have more money,’” Katumbi said. “I think the day when we’re self-sufficient with food, when we’ve realized the promise of elections, I think this problem will end.”

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