Turning a Problem Business Model Positive: Coltan, Congo and the Continent of Africa
Lauri Edwina Elliott
May 10, 2009
There is strengthening advocacy and policy against the problem of key minerals, such as coltan and gold, being used to fuel conflict in the eastern region of the Democratic Republic of Congo (DRC). The problem is not new. In fact, it has been the history of the DRC with the outside world from the very beginning. The reason also is no different than when Europeans first arrived, starting with King Leopold II of Belgium, in the first scramble for Africa in the 1800s.
In this "second scramble for Africa," the actors and context may be different but the reason for much of this is simple. The DRC is rich, naturally speaking. It boasts deposits of over 140 minerals known to man. The land is rich with virgin agricultural land and forests. In fact, the second largest rain forest in the world runs through it. If you visit areas like Bukavu in South Kivu, where the United Nations has a key installation, you will see soil so black and rich it would make western farmers drool. It has some of the best land to grow a large variety of crops, even for organic farming. This says nothing of the ability to have two to four crop cycles a year because of the climate.
Also, there is an abundance of water. There is so much water flowing through the Congo River that it can create enough electrical supply for the entire continent of Africa. In essence, the DRC has a lot of what Africa and the world demands – potential food crops, water, precious metals and minerals.
While not every conflict situation arose from the richness of the DRC, many transformed into a means to do business that exploits, enslaves, impoverishes, kills and destroys people. However, these types of businesses operate not only inside, but also outside, conflict zones in the DRC. Take for example a non-conflict zone in the Maniema province. Foreigners fly into the Kabambare territory to collect resources from locals. Next to the local airport, with no landing strip, you will discover a small rural, or bush, area with a mix of people – villagers, artisanal miners and DRC military living as an informal community. Yet, you can see no visible signs of business being transacted that improves or develops sustainable livelihoods. People still live in huts with no electricity next to a river full of water. The water is unclean, which leads to illness.
You can tell the lack of regard foreign traders have for the locals because often instead of trading money they trade in other things like cloth. It´s all about what they can get, not fair equitable trade. This picture is a mild scenario of what happens in the Congo.
These scenarios are why we continually hear about the dire plight of the people, particularly women and children, in the DRC. This is a problem business model, fueled by free market demand and structures which result in huge economic inequity and exploitation.
The cry of advocates for the vulnerable is starting to yield greater results. The United Nations issued a report entitled "The Final Report of the Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Democratic Republic of Congo" in 2002. Also, a bill was recently introduced to the U.S. Congress entitled "Congo Conflict Minerals Act of 2009." The goal is to promote transparency and accountability, as well as improve the ethics within the sector. There are other initiatives also continually mounting pressure.
While world and U.S. policy should definitely help shape proper engagement between countries and foreign businesses to reduce exploitation, the advocacy is also leading to companies not purchasing minerals from the DRC. So, instead of illegal trade there is no trade. This is not a better solution for the DRC, or the world for that matter. The vulnerable in the DRC will still suffer and be exploited. Consumers will pay higher prices for products using the minerals because of limited supply through a few global competitors. There needs to be a legal, ethical, inclusive business solution to the problem.
There are many excellent examples of good, ethical businesses in the DRC. There are many businesses that see being good neighbors as being good business. But, there needs to be more inclusive businesses in the mineral sectors. One way to achieve this is competitive clusters.
Michael Porter, guru of competitive clusters, says that competitive clusters are important to regional economic development. A competitive cluster develops within a geographic region where it can amass enough resources and competence to reach a significant level of capacity compared to others. The significant level of capacity begins to give the competitive cluster a significant position in the market, which should eventually lead to a sustainable advantage or supremacy over other places and competitors. So, why not develop competitive clusters in the DRC around the "conflict" minerals?
There is no doubt that the DRC can amass the natural resources for a coltan competitive cluster. The DRC possesses at least one-third of the known, global deposits of coltan. Because of significant deposits, the trade of coltan, legal or illegal, in the DRC is making an impact even now. For example, Talisan of Australia, a leading competitor in a segment of the coltan industry, recently closed its tantalum facilities due to the outflow of coltan to the world markets from the DRC and central Africa.
If the current "problem" business model for coltan in DRC can make such an impact, think what a positive and more significant impact a coltan competitive cluster can make. Think of the impact on the entire value network of people and communities in the DRC, artisanal miners, mining companies, commodity brokers, processing and manufacturing companies, electronics manufacturers, governments and consumers.
The issue is not so much whether a competitive cluster will make a difference or can one be developed around coltan. The focus now needs to be on how to design the cluster so that those within the value network benefit, how to amass the necessary competence and who should and will do it. Let the fruit of advocacy now become action in the form of a positive business model, benefiting many.
In this "second scramble for Africa," the actors and context may be different but the reason for much of this is simple. The DRC is rich, naturally speaking. It boasts deposits of over 140 minerals known to man. The land is rich with virgin agricultural land and forests. In fact, the second largest rain forest in the world runs through it. If you visit areas like Bukavu in South Kivu, where the United Nations has a key installation, you will see soil so black and rich it would make western farmers drool. It has some of the best land to grow a large variety of crops, even for organic farming. This says nothing of the ability to have two to four crop cycles a year because of the climate.
Also, there is an abundance of water. There is so much water flowing through the Congo River that it can create enough electrical supply for the entire continent of Africa. In essence, the DRC has a lot of what Africa and the world demands – potential food crops, water, precious metals and minerals.
While not every conflict situation arose from the richness of the DRC, many transformed into a means to do business that exploits, enslaves, impoverishes, kills and destroys people. However, these types of businesses operate not only inside, but also outside, conflict zones in the DRC. Take for example a non-conflict zone in the Maniema province. Foreigners fly into the Kabambare territory to collect resources from locals. Next to the local airport, with no landing strip, you will discover a small rural, or bush, area with a mix of people – villagers, artisanal miners and DRC military living as an informal community. Yet, you can see no visible signs of business being transacted that improves or develops sustainable livelihoods. People still live in huts with no electricity next to a river full of water. The water is unclean, which leads to illness.
You can tell the lack of regard foreign traders have for the locals because often instead of trading money they trade in other things like cloth. It´s all about what they can get, not fair equitable trade. This picture is a mild scenario of what happens in the Congo.
These scenarios are why we continually hear about the dire plight of the people, particularly women and children, in the DRC. This is a problem business model, fueled by free market demand and structures which result in huge economic inequity and exploitation.
The cry of advocates for the vulnerable is starting to yield greater results. The United Nations issued a report entitled "The Final Report of the Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Democratic Republic of Congo" in 2002. Also, a bill was recently introduced to the U.S. Congress entitled "Congo Conflict Minerals Act of 2009." The goal is to promote transparency and accountability, as well as improve the ethics within the sector. There are other initiatives also continually mounting pressure.
While world and U.S. policy should definitely help shape proper engagement between countries and foreign businesses to reduce exploitation, the advocacy is also leading to companies not purchasing minerals from the DRC. So, instead of illegal trade there is no trade. This is not a better solution for the DRC, or the world for that matter. The vulnerable in the DRC will still suffer and be exploited. Consumers will pay higher prices for products using the minerals because of limited supply through a few global competitors. There needs to be a legal, ethical, inclusive business solution to the problem.
There are many excellent examples of good, ethical businesses in the DRC. There are many businesses that see being good neighbors as being good business. But, there needs to be more inclusive businesses in the mineral sectors. One way to achieve this is competitive clusters.
Michael Porter, guru of competitive clusters, says that competitive clusters are important to regional economic development. A competitive cluster develops within a geographic region where it can amass enough resources and competence to reach a significant level of capacity compared to others. The significant level of capacity begins to give the competitive cluster a significant position in the market, which should eventually lead to a sustainable advantage or supremacy over other places and competitors. So, why not develop competitive clusters in the DRC around the "conflict" minerals?
There is no doubt that the DRC can amass the natural resources for a coltan competitive cluster. The DRC possesses at least one-third of the known, global deposits of coltan. Because of significant deposits, the trade of coltan, legal or illegal, in the DRC is making an impact even now. For example, Talisan of Australia, a leading competitor in a segment of the coltan industry, recently closed its tantalum facilities due to the outflow of coltan to the world markets from the DRC and central Africa.
If the current "problem" business model for coltan in DRC can make such an impact, think what a positive and more significant impact a coltan competitive cluster can make. Think of the impact on the entire value network of people and communities in the DRC, artisanal miners, mining companies, commodity brokers, processing and manufacturing companies, electronics manufacturers, governments and consumers.
The issue is not so much whether a competitive cluster will make a difference or can one be developed around coltan. The focus now needs to be on how to design the cluster so that those within the value network benefit, how to amass the necessary competence and who should and will do it. Let the fruit of advocacy now become action in the form of a positive business model, benefiting many.
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