DRC Takes a Lead in Disclosing Owners of Companies, Enhancing Transparency in Extractive Sector

The Democratic Republic of Congo (DRC) has made significant strides towards transparency by listing the natural persons who ultimately own or control companies operating in its extractive sector. This move is hailed as a major step forward in promoting accountability and good governance.

Revealing Complex Ownership Structures

The 2012 EITI Report reveals the owners of 40 privately held mining and oil companies, shedding light on complex ownership structures that can contribute to corruption, money laundering, and tax evasion. According to Jonas Moberg, Head of the International Secretariat, “the DRC has determined the names of the beneficial owners of companies operating in the country,” as encouraged in the EITI Standard.

Private Companies Under the Spotlight

The report is particularly noteworthy for its inclusion of private companies, which are often shrouded in secrecy. Of the 118 companies reporting to the EITI, 66 are publicly listed on stock exchanges in Australia, Canada, Hong Kong, and the United States, while 52 are privately held. While 40 private companies disclosed their beneficial ownership, 12 failed to do so.

The Extractive Sector’s Contribution to the DRC Economy

The report highlights the significant contribution of the extractive sector to the DRC’s economy. In 2012, oil, gas, and mining accounted for:

99% of total Congolese exports
64% of the government budget
24% of formal employment
13% of GDP

Reported revenues increased by 12% to US $1.5 billion in 2012, driven primarily by an increase in production in the mining sector.

Challenges Ahead

Despite this progress, mineral smuggling remains a significant challenge for the DRC’s extractive sector. Lost revenues due to mineral smuggling were estimated at US $8 million per year for gold alone, and artisanal mining continues to pose a major obstacle.

The report also provides insight into the social projects funded by oil, gas, and mining companies. According to the EITI Report, these companies paid approximately US $28 million (2% of total reported revenue) to fund social projects directly benefiting local communities. These initiatives range from small credit programs for farmers to building and maintaining schools and local health centers.

Conclusion

The DRC’s commitment to transparency is a significant step forward in promoting accountability and good governance in the extractive sector. As the country continues to work towards addressing challenges such as mineral smuggling, the EITI Report serves as a valuable tool for stakeholders seeking to understand the complex ownership structures and revenue flows within the sector.