The Chinese government is planning to invest $9bn in infrastructure in the Democratic Republic of Congo, in return for the opportunity to mine copper and cobalt (and reap the profits). Money will be invested in roads, railway, hospitals and universities, and work on the first projects has already started.
This BBC Newsnight documentary which you can watch online explains more about the deal, which looks like it could be an innovative solution to a state with problems typical of many African countries. In particular, DR Congo’s infrastructure is seriously under-developed due to lack of investment. The terms stipulate that for every Chinese worker the venture must employ 4 locals, and that 1% of the investment will be spent on technology transfer and education of Congolese staff.
However some human rights groups are worried that the full details of the agreement have not been published. With the return from the mine estimated at around $72bn, of which two-thirds will go to China, there has also been some criticism that the returns are exploitative compared to the investment. The context is clearly different, but this funding agreement has many similarities with venture capital. In that case, the magnitude of the returns does not look so unusual.
About the authorLucy