Mining Revenues and Institutional Weakness: The Political Economy of the DRC’s 0.3% Community Development Fund

Ngunza Maniata, Kevin and Mukadi Mukandila, Caleb Bonyi (2025): Mining Revenues and Institutional Weakness: The Political Economy of the DRC’s 0.3% Community Development Fund.

Abstract

This paper analyzes the Democratic Republic of the Congo’s (DRC) legal requirement that mining companies allocate 0.3 percent of annual turnover to local community development. Drawing on the 2025 audit of forty-four community development funds by the Court of Auditors, the study reveals systematic underreporting of revenues, delayed or missing payments, weak financial management, and the absence of sanctions between 2018 and 2023. Using institutional economics and principal–agent theory, it shows how asymmetric information, misaligned incentives, and political interference undermine the system’s effectiveness. Comparative evidence from Peru’s canon minero and Ghana’s Mineral Development Fund demonstrates that success depends less on legal design than on credible verification, coordination, and community oversight. The paper proposes reforms to strengthen enforcement, transparency, and accountability in the DRC’s mining governance framework.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mining Governance, Resource Revenue Sharing, Community Development Funds, Institutional Capacity, Principal–Agent Theory, Political Economy of Regulation, Transparency
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q32 - Exhaustible Resources and Economic Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q38 - Government Policy

References

Acemoglu, Daron, and James A. Robinson. 2012. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Business. https://www.penguinrandomhouse.com/books/316292/why-nations-fail-by-daron-acemoglu-and-james-a-robinson/

Arora, D., A. Bohlken, and A. Bullen. 2015. Subnational Natural Resource Revenue Sharing in Developing Countries: Principles and Policy Options. International Public Policy Association Working Paper 1(2).

Bebbington, Anthony, Luis Hinojosa, Denise Humphreys Bebbington, Maria Luisa Burneo, and Ximena Warnaars. 2008. “Contention and Ambiguity: Mining and the Possibilities of Development.” Development and Change 39 (6): 887–914. https://doi.org/10.1111/j.1467-7660.2008.00517.x

Bezzola, N., K. Jenkins, and J. P. Leroy. 2022. “Corporate Social Responsibility and Extractivism: Paradoxes of Governance in Latin America.” World Development 159: 106063. https://doi.org/10.1016/j.worlddev.2022.106063

Collier, Paul. 2010. The Plundered Planet: Why We Must—and How We Can—Manage Nature for Global Prosperity. Oxford: Oxford University Press. https://global.oup.com/academic/product/the-plundered-planet-9780195395259

Cour de Comptes. 2025. Rapport d’audit de la gestion de la dotation de 0,3 % minimum du chiffre d’affaires pour contribution aux projets de développement communautaire dans le secteur minier, exercices 2018–2023. Kinshasa: République Démocratique du Congo.

Kaufmann, Daniel, and Magdy Martínez-Solimán. 2016. Natural Resource Revenue Sharing. UNDP and Local2030 Knowledge Hub. https://local2030.org/story/view/141

Kurniawan, E., I. Gunawan, and N. Rachman. 2022. “The Social License to Operate and Governance of Mining Impacts in Developing Economies.” The Extractive Industries and Society 9 (1): 101–118. https://doi.org/10.1016/j.exis.2021.10.003

Mehlum, Halvor, Karl Moene, and Ragnar Torvik. 2006. “Institutions and the Resource Curse.” The Economic Journal 116 (508): 1–20. https://doi.org/10.1111/j.1468-0297.2006.01045.x

North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. https://doi.org/10.1017/CBO9780511808678

Ostrom, Elinor. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press. https://doi.org/10.1017/CBO9780511807763

Oxfam. 2016. The Weak Link: The Role of Local Institutions in Peru’s Canon Minero. Oxford: Oxfam International. https://policy-practice.oxfam.org/resources/the-weak-link-the-role-of-local-institutions-in-perus-canon-minero-620048/

Ross, Michael L. 2012. The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. Princeton: Princeton University Press. https://doi.org/10.1515/9781400841929

Sovacool, Benjamin K. 2010. “The Political Economy of Energy Poverty: A Review of Key Challenges.” Energy for Sustainable Development 14 (3): 204–212. https://doi.org/10.1016/j.esd.2010.06.006

Terra, S. 2018. District Mineral Foundations: Benefit Sharing in the Mining Sector. New Delhi: The Energy and Resources Institute (TERI). https://www.teriin.org/

Williamson, Oliver E. 2000. “The New Institutional Economics: Taking Stock, Looking Ahead.” Journal of Economic Literature 38 (3): 595–613. https://doi.org/10.1257/jel.38.3.595