Congo looks to coops and credit scheme to finance mine workers' equity stakes

A draft decree, seen on Tuesday by, showed that the Democratic Republic of Congo is considering a scheme to?help mining workers acquire mandatory stakes within the companies for which they work through worker cooperatives or company-financed credits.

The authorities in the top cobalt producer and second largest copper producer of the world are preparing regulations to enforce a new law that requires miners to set aside 10% of their equity to Congolese nationals, including 5% to their employees.

The Congo introduced this rule in 2018 but to date, no company has complied. The government demanded that multinationals, including Glencore, Ivanhoe, and China's CMOC, show proof of compliance by the end of July, or face sanctions.

African countries seek a greater share of their mineral wealth as commodities prices rise.

Worker cooperatives and interest-free credit

According to the decree, drafted by Congo’s Mines Ministry, companies will be required to sell their shares on credit at no interest.

Workers' stakes will be held by cooperatives. A separate 5% equity is reserved for other Congolese citizens, who can hold shares directly via Congolese owned companies or through public social security institutions.

An executive in the mining industry told reporters on Monday that workers were given a draft decree to review and provide input.

According to the draft of the decree, the workers who are part of the credit-backed system will be able to repay their debts by withholding up to 80% from their annual dividends.

The decree also states that companies will not be able to dilute the 10% equity of Congolese nationals regardless of capital increases.

The Congo's Mines Ministry and Chamber of Mines have not responded to comments immediately.

The success of the 5% worker equity requirement will depend on the final structure of financing arrangements, according to labour?groups.

After discussions with the Mines Ministry, Juresse Lokosha of the Union for Social Peace said that access to shares would 'not be automatic' for all workers, but rather 'would depend on their capacity to mobilize financing, either privately or via a company backed credit scheme.

He added that authorities are encouraging the creation of pooled structures in order to lower entry barriers. (Reporting and editing by Ange Adihe Kalongo, Maxwell Akalaare Adombila, and Ashitha Shivprasad)

(source: Reuters)