DRC: Rawbank considers lending to artisanal miners, denies gold involvement

By David Whitehouse
Posted on Thursday, 8 December 2022 06:00

A Rawbank branch in Bukavu in eastern DRC. Photo supplied.

Rawbank, the largest domestic bank in the Democratic Republic of Congo, is considering lending to artisanal and small-scale miners (ASMs), CEO Mustafa Rawji tells The Africa Report.

Better ASM certification has made it possible to countenance such a move, though the bank is at a “very early stage in its thought process,” Rawji says on the sidelines of the Africa Financial Industry Summit (AFIS) in Lomé, Togo.

Research from Global Witness in April claimed that companies such as Apple, Tesla and Intel may be sourcing minerals from artisanal DRC mines which use child workers. Yet the scale of artisanal mining means that it can’t be wished away. Some Western corporates have acknowledged that turning elsewhere for minerals would in many cases leave DRC ASMs with no income or way to survive. Initiatives such as Cobalt for Development set up in 2019 by BMW, BASF, Samsung SDI, and Samsung Electronics aim to foster a safer and more formalised sector.

ASMs now have “much better understanding” of what is and what is not allowed in supply chains, and grasp that young children cannot be used for mining, Rawji says. Certification processes on mineral origins, while not perfect, are greatly improved, he says. “There has been tremendous progress over the last four to seven years,” with Blockchain-based source validation likely to mean further progress over the next five years.

Militia control of mines in the southern Katanga province has been ended, Rawji says, and the south of the country is “pretty clear.” But the role of armed militias in the eastern DRC is a “huge concern” for the bank. Rawbank needs to be able to see who controls the production and trade of mined minerals, as well as soft commodities like coffee and cocoa, he says.

  • The DRC’s militias are primarily interested in gold as the most valuable mineral. The United Nations says that conflict gold provides the largest source of revenue to armed groups in the country’s east.
  • Rawbank finances industrial gold miners. But contrary to press reports, Rawji says, the bank plays no part in financing informal gold mining.
  • The fact that the claim has been made “bothers me,” he says. “It’s completely off the agenda.”

Equity Bank co-operation

Rawbank was set up by the Rawji family in 2002. Mustafa Rawji argues that the perception of the DRC as an exporter of mineral ores and an importer of refined products lags behind the reality. Among businesses owned by the Rawji family is Proton, which produces copper wiring and cables for electricity transmission. Proton was set up in 2021 and the business is “moving well,”  Rawji says. The Kinshasa-based business needs to get closer to its customers. “Once it reaches capacity, it must expand.”

The DRC joined the East African Community (EAC) in July. The country’s eastern provinces are likely to see the biggest impact, with the logistics of integrating the western DRC into a single market too difficult to master, Rawji says. In terms of market access, he says, the DRC has a lot more to offer the east Africa region than to gain from it. “Implementation will take some time.”

The EAC may encourage more of the region’s banks to follow the lead of Kenya’s Equity Bank and venture into the DRC. Rawji sees Equity Bank’s presence as a “super exciting” development. The two banks already co-operate informally in areas such as project finance, and more formal co-operation is possible with Equity or other banks in the future, Rawji says.

Rawji would welcome more banking entrants in the DRC, which would help to reduce the country’s “knowledge gap” in financial services.

  • While the number of domestic banks has been increasing, balance sheets are not as deep as those in South Africa, he says.
  • A strong legal framework to encourage people in the DRC to save will be key in driving balance sheet growth, he adds.
  • He wants more banking partnerships which use technology. There’s a need for more product innovation for those at the “bottom of the pyramid” in areas such as mobile lending, wallets and micro-loans, he says.
  • “The pie gets bigger due to strong participants” in the country’s financial-services industry.

One area where Rawji sees potential for growth is in corporate commercial paper.

  • In November, Rawbank became the DRC’s first bank to arrange the sale of negotiable debt securities for a client. The $10m of securities were oversubscribed. Rawji is “very confident” that the sale is the first of more to come.

Bottom line

A move by the DRC’s biggest bank to finance ASM would have the merit of focusing greater international attention on the country’s mineral supply chains.

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