Friday, October 28, 2011

The Critical Need for a Social Impact Assessment

How many Congolese children are going to bed hungry tonight because of Dodd-Frank 1502?

This is not a rhetorical question. In fact, we have no meaningful data regarding the extent of the harm caused by DF-1502. What we do know is the following:

1) The economy of eastern Congo was severely damaged by 30 years of kleptocracy under Mobutu and 14 subsequent years of war. As a result, eastern Congo is one of the poorest regions within Congo, itself one of the poorest countries in the world. Most of the economy is informal and subsistence in nature.
2) DF-1502 precipitated a de facto embargo of minerals from eastern Congo. This embargo began on April 1, 2011, after Western electronics companies, under pressure from Western NGOs, ordered major international smelting companies to cease accepting minerals from eastern DRC.
3) There were roughly 400,000 people working as artisanal miners in the Kivus before that date, more people than in any sector but agriculture.
4) Most of those miners supported families, meaning that somewhere between one and two million people depended directly on the mining trade for their livelihood. Mining was the region's major foreign currency earner.
5) Artisanal mining is difficult, dangerous work, but for most miners it is the best alternative within the universe of possibilities available to them.
6) The embargo led to a 75 to 90 percent drop in the export of tin, tantalum, and tungsten.
7) Of these "three Ts," the most important to the region was tin, or cassiterite, which miners are now able to sell at only one half to one third of its pre-DF 1502 value, to the extent that they can sell it at all.
8) The gold trade, to all appearances, has not been affected by DF-1502.
9) We have little understanding of the secondary economic impacts of the embargo. Visitors report visible signs of economic deterioration in Goma compared to the pre-DF period. Bukavu is less visibly distressed, but economic actors from market women to bankers report experiencing an economic downturn.
10) Numerous mining communities sprang up in remote locations in the Kivus. Once the embargo was put in place, these communities were virtually cut off from the outside world. The planes that had provisioned them no longer arrived, as the communities had nothing to sell.

The embargo is the direct, predictable result of actions taken by two Western NGOs: Global Witness and the Enough Project. They both campaigned for DF-1502 and threatened to cause reputational harm to companies that did not cooperate with them. They ignored warnings from credible Congolese mining experts of the problems they might cause, and failed to disclose those warnings in any of their reporting on the subject. Their actions led directly to the passage of DF-1502. As Jim McDermott, one of the provision's congressional sponsors, told a gathering of Enough supporters: "Without your efforts, this would not have happened."

The Enough Project insists that the damage to the miners and the broader economy will be limited in duration and scope. They say that "dislocations are inevitable." Global Witness has yet to admit that DF-1502 has caused any harm to the region's inhabitants. They say that concerns about what they call the "current hiatus" amount to no more than "alarmist talk." The head of the UN's Group of Experts acknowledges that DF-1502 has caused "collateral damage," but claims that it has had a "massive and welcome impact so far"--without specifying who has welcomed it or why.

In contrast, several letters from Congolese mining associations testify to the problems the law has caused local communities:
  •  "We can not give you exactly the number of lives that are lost each day following the cessation of artisanal mining in the DRC and yet even if a child died or who is hungry or do not go to school because his father digger lacked money, this is a tragedy, it is a sad news that should challenge our humanity." --Serge Mulumba, president of the mining cooperative CDMC, in a letter to the SEC.
  • "Please listen attentively to our cries of weeping and anguish. Our families and us will be doomed to death if you do not hear these cries of alarm. Do not wait to rescue us when we will be already in the grave. Act in time to avoid the humanitarian catastrophe that would arise from the consequences of your suspension to purchase our minerals." --Pastor Raymond, in an open letter posted on Fair Jewelry Auction.
  • "What is the refuge of all the Congolese jobless, around 85 % of the population. Is it to make peace or to trouble the peace, when the life is stopped for a population? No job, no life. Please imagine the consequences…" --Heads of three South Kivu mining associations, in a letter to the SEC, begging them to reconsider DF-1502. 
I have asked the Enough Project and Global Witness to use their considerable influence to call for a thorough investigation into the potentially negative consequences of Dodd-Frank. Both refused. I find that dismaying. The possibility that Dodd Frank 1502 has caused serious, measurable harm in eastern Congo is real. It is not merely "alarmist" to say so, nor is it enough to dismiss that harm as an "inevitable dislocation," as if we were discussing  the economic consequences of technological growth. We do not know how much harm has been done or to how many people. Perhaps very little. So much the better. But it is also possible that one or two million of the world's poorest people lost their livelihood, with--in this context--potentially catastrophic consequences. Surely this is worth investigating. To act as though no credible concerns have been raised, as these advocacy groups are doing,  is to behave no differently than those against whom human rights groups typically raise their voices. 

A social impact assessment would enable us to develop a clearer sense of what impact the embargo has had. It would focus on such questions as these:
  • How has the embargo affected the miners, their communities, and the broader economy of the region? If miners have seen their income decline, by how much? What alternate income sources are available to them? What survival strategies did they have in place and have those proven sufficient? Have they been able to make up for their losses, and if so how?  If not, how are they surviving? What are the implications for their health? for their diet and nutrition? for the schooling of their children and for access to health care? for the achievement of such life goals as, for example, saving enough to marry or building a better home? for helping non-immediate family members? Has it caused a heightened risk of mortality? How has it affected relationships within the family? Has it brought stress to family relationships and led to increased friction and conflict? Has it had differential impacts on women, men, children, the aged? What is happening in those communities that are no longer served by incoming planes?   
  • What impact has it had on the comparative strength of various rebel groups, militia, or FARDC units? Which groups have suffered a decline in their profit from the mineral trade, by how much, and how have they responded? To what extent, if at all, have they benefited, by moving into the illegitimate or black market trade? To what extent has the embargo encouraged smuggling and other forms of fraud? To what extent have government tax receipts from the trade diminished, and what impact has that had on governance? 
  • What secondary effects has the embargo caused? Given that the mineral trade was one of the region's primary sources of income and foreign currency, how have those who served the economic needs of mining communities been affected? How important was mining to the regional economy as a whole and how big a loss has the embargo been? Given the dearth of reliable statistics, how can this be measured? Who has been most/least affected? What regions or territories? What impact has the embargo had on sectors such as construction or banking? 
A social impact assessment would enable us to respond to any immediate, emergency needs of the affected populations. It would provide a baseline of information for drawing up longer-term economic development projects and guide decisions about how Dodd-Frank 1502 should be implemented on the ground. It would help us assess the effectiveness of the law and draw lessons for future interventions. 

There are a wide array of American, Western, and Congolese experts who could help plan and conduct the necessary research. A number of leading NGOs such as the British Resource Consulting Group, the American PACT, and the Belgian IPIS have done outstanding work on artisanal mining in eastern Congo and have considerable expertise in the region. Local groups such as BEST, the Pole Institute, the Observatoire Gouvernance et Paix, and Cenadep, have conducted widely respected research on mining, both with international partners and on their own. Other organizations such as Oxfam and the World Bank have substantial in-house experience conducting exactly this sort of research; other experts work in universities or as free-lance consultants. Commissioning a study that would send three or four international experts to work in conjunction with one or more local NGOs would be relatively inexpensive, at about $60,000 or less. In short, conducting a social impact assessment would be useful and cheap. It is also an urgent moral necessity.

1 comment:

  1. Strongly support this idea. GW and others call for environmental and social impact studies before multinationals begin mining. They should support this as well. Mungwa Pierre