THE ROLE AND IMPACT OF INSTITUTIONS CURSE IN PERPETUATING THE RESOURCE CURSE

When oil, natural gas, or similar natural resources are discovered the expectation is that their exploitation will dramatically and materially benefit the population of the host country. Notwithstanding this, developing nations frequently experience either (or both) increased corruption (through predatory rent-seeking) or paradoxically slower economic growth after the resources are discovered. This anomaly is often described as the Resource Curse.

While studies have shown that there are various drivers behind the Resource Curse, it tends to arise more frequently in countries that have institutions that either facilitate or encourage rent-seeking, as indicated in the case study of Nigeria below. The rent-seeking behaviour, in turn, tends to compete with productive activity and drains the countries’ economic vitality. Weak institutions and associated illicit conduct is commonly referred to as the “Institutions Curse”.

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WHAT COMMODITIES ARE SHOWING MORE RESILIENCE FROM COVID-19 AND WHY?

Olivier Binyingo, a director in the Johannesburg office of Herbert Smith Freehills South Africa LLP who has built particular experience in the Democratic Republic of Congo, will be participating in a virtual panel discussion to be organised by DRC Mining Week on 18 June which will discuss “What commodities are showing more resilience from COVID-19 and why? “.

To register for this digital event, please visit the DRC Mining Week website here.

“RESOURCE NATIONALISM IS BOTH CYCLICAL AND CONTAGIOUS”

Author: OLIVIER BINYINGO 

Interview with Olivier Binyingo, Director, Herbert Smith Freehills LLP, SA. At the upcoming DRC Mining Week in Lubumbashi from 17-19 June 2020, Mr Binyingo will address the conference on “An asserted Rule-of-law for a conducive investment climate” which will be followed by a panel discussion. The company is also a bronze sponsor at the event.

Let’s start with some background on Herbert Smith Freehills – there is a proud history there.

HSF is one of the world’s leading professional services businesses, bringing together the best people across our global network of offices, including Johannesburg, to meet all of our clients’ legal services needs globally.

We have a solid understanding of the African market derived from a deep track record acting on matters in Africa for over 40 years across all practice groups and industry sectors.

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HEIGHTENED RISK? RESOURCE NATIONALISM ON THE RISE IN SUB-SAHARAN AFRICA

Author: Peter Leon,Co-Chair of Africa Practice Group  

The seemingly increasing trend towards nationalist thinking, combined with and likely driven by growing economic inequality, has resulted in several changes in mining and tax legislation in sub-Saharan Africa countries.

Herbert Smith Freehills Africa Group co-chair and partner Peter Leon says the recent and significant changes to mining regulations in various African States have caused concern that a “regional trend of resource nationalism may be emerging”.

White & Case partner Rebecca Campbell notes that her firm’s yearly mining survey of 2018 found that about 45.1% of respondents believe that the heightened risk of resource nationalism across Africa makes it difficult to justify investment. However, with about 42% saying that the risk was manageable and about 13% believing the potential returns outweighed the risks, investor sentiment towards African mining jurisdictions has not completely soured.

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THE DEMOCRATIC REPUBLIC OF CONGO’S REVISED MINING CODE

Authors: Peter Leon, Bertrand Montembault and Paul Morton

INTRODUCTION 

On 9 March 2018, President Joseph Kabila signed into law significant changes to the Democratic Republic of Congo’s (“DRC”) mining code (the “Revised Code”).1 The Revised Code, which amends the 2002 Mining Code2 (the “2002 Mining Code”), was adopted by both houses of Parliament on 27 January 2018 and came into force upon publication in the Official Journal on 28 March 2018. This note provides an overview of some of the key changes introduced by the Revised Code.

The promulgation of the Revised Code follows months of uncertainty during which the proposed legislation faced significant criticism from a number of the largest mining companies operating in the country. However, buoyed by a more optimistic outlook for the mining sector globally, the Revised Code was approved by the President without any material changes, despite last-minute lobbying by the mining industry.

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