In 2007, when China’s Exim Bank unveiled a massive U.S.$6 billion mining deal in the Democratic Republic of the Congo (DRC), it rocked the normally-staid world of international development finance. The agreement, known as Sicomines, was among the first of the huge Chinese infrastructure-for-resources deals that are now commonplace across Africa.
Ten years ago, though, the World Bank and the International Monetary Fund (IMF) were pretty much the only players who threw around that kind of cash in countries like the DRC. So when the Chinese came along with the Sicomines deal, many observers saw it as a direct challenge to the IMF’s once unrivaled dominance of international development finance in places like the Congo.
While a feared Chinese-IMF rivalry did not ultimately materialize, Sicomines did create a lot of problems. The IMF responded defensively, according to new research from China-Congo relations scholar Johanna Malm at Roskilde University in Denmark. Fearing it might be pushed aside by the Chinese, the IMF opted to make it easier for the Congolese government to borrow yet more money, adding to Kinshasa’s already dangerously-high debt load.
Johanna Malm joins Eric and Cobus to discuss Sicomines and why the IMF’s missteps in the Congo produced costly consequences for an already financially-distressed government.
- “China’s ‘Infrastructure for Minerals’ Deal Gets Reality-Check in Congo,” Aaron Ross, Reuters, July 9, 2015
- “China Expands Congo-Copper Control as Western Miners Retreat,” Thomas Wilson, Bloomberg, March 7, 2016