DRC: Albert Yuma rails against “tax harassment” and “foreign interference”
A poisonous business environment, gloomy and opaque, fiscal harassment… These were some of the words used by Albert Yuma, the president of the Congo Business Federation (FEC), in his acerbic attack on government policy. He also railed against "foreign interference" in mining issues.
“No government should ever promise what it is not sure to deliver. It is a question of credibility and accountability of public action to the governed,” he said.
Yuma is currently at the centre of a judicial investigation opened by the Kinshasa public prosecutor’s office into Gécamines’ debt of 128 million euro ($143 million). He is president of the company, but on 29 February, during a traditional ceremony for the employers’ organisation at the Pullman Hotel, it was in his capacity as president of the Federation of Enterprises of Congo (FEC) that he slammed his fist on the table, denouncing government policy.
A close associate of Joseph Kabila — who tried to impose him on the premiership in April 2019 — he called on the new government to initiate major reforms to improve the business climate and establish an efficient tax system in the DRC. Reforms that would allow the state, he said, to boost investment and public revenue.
His call comes a few days after the end of the IMF interim programme evaluation mission, whose report reflects similar concerns.
Economic growth in decline
The latest statistics published by the Central Bank of Congo indicate that economic growth in the DRC declined in 2019 compared to 2018, dropping to 4.6% from 5.8%.
“Although this growth rate is higher than the average for sub-Saharan countries, the DRC’s economic growth remains fragile and not very inclusive because it is driven by the mining sector, which is highly capital-intensive but provides few jobs,” said Yuma.
To demonstrate the negative impact of this fragility, the Chairman of the FEC referred to the latest UNDP Human Development Report of 2019, which ranks the DRC at 179 with an HDI of 0.459.
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“This position is down three places compared to 2018. Not surprisingly, we continue to stagnate, even regress, in the bottom group of countries with the lowest human development,” he said.
This is not his most severe outburst on the subject. During similar ceremony of the FEC, in January 2014, he questioned the official growth figures and deplored the persistence of underemployment and poverty, and severely criticized the economic policy of Augustin Matata Ponyo, then Prime Minister.
A business climate that “discourages any desire to engage”
The 2020 budget law provides for the collection of approximately 203 taxes to be paid into the State coffers. According to Albert Yuma, “the business environment remains largely poisonous, gloomy and not very transparent, dominated by corruption, fiscal harassment, legal and judicial insecurity as well as by operating costs that are so high that they discourage any desire to engage in entrepreneurial activity”.
No consultation in public decision-making
“The State’s capacity to intervene has deteriorated due to initiatives taken without any consultation, and while some of them have had some merit, they are ultimately frustrating because they cannot be implemented financially,” he lamented.
The employees boss has revisited the cash flow plan published in early February, which reduces current revenues to about $2 million (1.79 m euro), against a forecast of more than $7 million dollars (6.27 m euro) in the finance law.
“We observed with regret, but with the feeling that it could not be otherwise, the implicit reduction in the state budget,” he said, recalling that he had “expressed doubts” during the adoption of this budget “on the country’s ability to sustain such spending with revenues that we considered unrealistic and … unrelated to our ability to contribute”.
Support for the government on mining contracting
On the mining issue, however, the Congolese boss hoped for firmness from Kinshasa after ambassadors from 19 countries and the European Union delegation called on the government on 21 February for a six-month moratorium on the application of the law on subcontracting [requiring the exclusive use of local companies] and for a dialogue to iron out “misunderstandings”.
“I’m saying very clearly here, it’s unacceptable for foreign embassies to interfere in internal public policy,” thundered Yuma, who sees the law as a “lever for the emergence of local businesses” and future investment.
“It is obvious that today, the economic fabric is not able to absorb 100% of the demand for subcontracting,” he acknowledged. “But it is equally clear that if nothing is done, it will be difficult to find local players who can invest in the long term without having the guarantee of being able to count on future contracts.”
Albert Yuma also expressed his “concern” about the IMF’s future proposals for the mining sector, accusing the organization’s official reports of “plagiarizing almost entirely the conclusions of certain NGOs”.
“Either the IMF has no vision for the mining industry, which is troubling, or the dice are already stacked against the interests represented by these NGOs, which I consider contrary to those of the Congo and its sovereignty,” he added.