Can Chinese investment in Africa drive economic growth and improve social conditions? A case study of China’s partnership with the Democratic Republic of Congo’s mining industry

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Abstract

This article examines the impact of Chinese investment in the Democratic Republic of the Congo’s (DRC) mining sector, focusing on the SICOMINES partnership, a resources-for-infrastructure deal between China and the DRC. By analysing spillover effects and structural transformation, this study aims to explore how Chinese investments contribute to economic development and upgrade social conditions through technology transfer, skill development, and infrastructure improvements. Utilising a qualitative approach, the research draws on Extractive Industries Transparency Initiative (EITI) reports and government documents to assess the broader economic benefits, such as job creation and economic diversification. The findings reveal both positive impacts and significant challenges, including the persistence of dependency on resource extraction, and governance issues. This study underscores the crucial role of effective government policies and leadership to maximise the benefits of foreign direct investment, drawing parallels with successful models of Chinese investment in other African countries like Ethiopia. The article concludes that while Chinese investment holds the potential to drive sustainable growth in the DRC, achieving long-term benefits depends on strategic governance and policy interventions.

Acknowledgments

We thank Asma Ben El Moudane, Camille Grosseuvre, Vannina Bozzi-Robadey for their proofreading.

INTRODUCTION 

Since the 2000s, Chinese investment in Africa has increased, with around 1.8 billion of dollars invested in 2022 while it was around 75 million of dollars in 2005¹. This massive financial investment of China in Africa raises a lot of questions and concerns.

Some scholars and academics such as Carmody, an argue that China’s involvement in Africa represents a new form of colonialism, a neocolonialism driven by economic interests only that will trap African countries in a debt trap with loans impossible to repay in the long term. As an example, he points out that certain countries, such as Kenya, currently have difficulties in repaying different loans provided by China².

On the other hand, other scholars such as Brautigam and Hwang are seeing there an opportunity for Africans to move away from traditional sponsors. Since decolonisation from the middle to the end of the twentieth century, many African countries sought loans from ‘traditional donors’, meaning the countries part of the Organisation for Economic Co-operation and Development (OECD)³. However, those types of loans came with drawbacks. In fact, it were often conditional loans aligning with Western countries’ economic interests, thus forcing African countries to fit into a certain Western-centric economic model and often prioritising privatisation and liberalisation at the expense of national interests and economy⁴.

Therefore, the question of China’s investment in Africa raises many concerns regarding the outcomes of such foreign engagement. Can it lead to sustainable economic growth in Africa? Can it also allow African countries to upgrade in the global value chain and allow long-term structural transformation? And finally, can it improve the social conditions of the populations and limit the effect of conflicts and human rights issues on the people’s daily life?

In the case of the Democratic Republic of Congo (DRC), a mineral-rich country with one of the poorest economies and most critical human rights situations (armed conflicts, forced labour in the mining sector), the question of Chinese investment can offer an interesting analysis on the impact of China’s partnership in a country undergoing critical economic, developmental and social issues⁵.

This article focuses on analysing the impact of China’s financial and human workforce investment in the mining sector of the DRC by studying firstly the mining deal SICOMINES between Gécamines (a state-owned mining enterprise) and Chinese firms, and its impact on structural transformation and development. Secondly, it will examine how Chinese investments affect human rights in the country, such as child labour or environmental impact. 

To assess this influence, three indicators will be analysed. Firstly, the spillover of China’s investment in terms of jobs created and skills transfers, secondly the impact of Chinese investment in structural transformation and economic diversification, and thirdly the influence of Chinese investment on human rights in the DRC. More precisely, this article will examine the mining deal SICOMINES between Chinese enterprises and the DRC’s government and its spillover effects, meaning the impact of foreign direct investment on different economic sectors of a country⁶.

I – THE IMPORTANCE OF STRUCTURAL GROWTH FOR STRUCTURAL TRANSFORMATION

1. The post-colonial experience of African countries

“The modern nature of economic growth is a process of structural transformation characterised by continuous technological innovation and industrial upgrading”⁷. Since decolonisation, the main struggle of African countries has been to sustain a long term economic growth to develop their country and address the social needs of the population⁸.

After decolonisation in the 1960s, many African countries tried to develop their economy by adopting nationalisation policies and import-substitution industrialisation strategies to replace massive importation of consumer goods with national products. The strategy behind this vision was to develop a self-sufficient economy⁹.

However, due to a lack of infrastructure capacity to support the industrialisation efforts, mismanagement such as corruption of different governance bodies and political personalities, and failure to develop the export sector because of a lack of skilled labour, those strategies fell short of increasing economic growth and development¹⁰.

After the failure of those strategies, diverse international institutions, such as the World Bank or the International Monetary Fund, pushed African countries to adopt different policies under what were called “Structural Adjustment Programs”. Those programs, aimed to help African countries to pay back the debt they accumulated after the failures of nationalisation policies, were not development-oriented, nor aimed at providing African countries with the necessary support to develop capital for their economy ¹¹. The outcomes of such policies were the massive privatisation of enterprises, which affected the state’s capacity to mobilise internal resources for structural transformation.

Furthermore, the liberalisation of trade tax, influenced by the Washington Consensus, negatively impacted African countries as a lot of them relied on trade tax and did not have the time to develop other institutions to collect another form of tax¹². However, tax is an essential tool for the economy of a country as it allows the collection of vast information about the economy such as income level, employment data, regional economic activity or investment and savings trends which can help to plan effective policies.

2. Domestic resources mobilisation

One of the main challenges of African countries is to find an effective manner of financing their development. Chang (2010), explains how modern industrialised countries historically developed protectionism policies and massive state intervention to control the economy¹³. This is the case in China, which developed mainly by providing protection to different enterprises that were essential for economic development, for example in the manufacturing sector¹⁴. In 1978, China adopted a modernisation plan, which led the country from being a poor agrarian economy to being one of the most important economies in the world. They did so by not following the neoliberal recommendations provided by the Washington Consensus, established by international and United States financial institutions. The Chinese government decided to have a strong state presence in the process of development and adopted different industrial policies to favour foreign investment, using their rural labour force to attract foreign manufacturing enterprises¹⁵. This strategy allowed the transfer of skills and knowledge, but also increased benefits, which helped 800 million people out of poverty ¹⁶.

Industrial policies are essential for economic growth and structural transformation. Industrial policies refer to sectoral policies designed to promote the advance of particular sectors or even particular firms, especially to enter export markets. It includes providing infrastructure, access to credit, and skilled labour, as well as negotiating preferential trade agreements¹⁷. Structural transformation refers to the process of moving resources (capital and labour) from low-productive activities to more productive ones. Whitfield defined it as “moving the economy away from being a set of assets processed by unskilled labour to an economy based on knowledge-based asset process by skilled labour”¹⁸. In other words, it is about using resources to upgrade different industries.

Such a process has been described by many authors as an ultimate path for development and economic growth. In his model, the economist Sir Arthur Lewis explained how industrialisation and economic growth can appear only when labour and capital is being moved from agrarian non-valued industries (refers to industry that does not lead to important profits due to a high cost of workforce and low production) to more valued industries, including manufacturing¹⁹. Indeed, in the 1960s-1970s, agriculture was seen as a non-productive sector due to its low entry barrier leading to low profits. However, manufacturing was seen as more productive due to the high entry barrier (technological advancements) leading to increasing profits²⁰.

Adopting such industrial policies required an important presence of the state in guiding the economy in a way that is favourable for national interests and economic growth. However, due to colonial legacies, African states’ capacity has been weakened as well as institutions. Therefore, mobilising resources for international interests such as labour surplus, taxation, or enterprise profits as a process of economic growth is a real challenge.

Domestic resource mobilisation refers to the mobilisation of internal resources (tax, enterprise benefits, rents, or labour surplus) instead of relying on external funding (loan, aid, foreign direct investment)²¹. Domestic resource mobilisation allows a state to effectively allocate resources for the interest of the country, and adopt industrial policies that will allow long-term growth and development.

The modern challenge of African countries is to mobilise their own resources to finance their own development and allow structural transformation. The capacity of African states to guide the economy by adopting different industrial policies is crucial for economic growth. Indeed, it is a process that can be supported by external investment, as has been the case for China’s and other Asian countries’ development. Such investment can provide the skills and knowledge necessary for structural transformation. However, it can also lead to dependency on foreign direct investment and prevent growth and development.

II – AN OVERVIEW OF CHINA’S INVESTMENT IN THE DRC MINING INDUSTRY

1. The importance of Chinese investment in Africa

The mining industry has long been seen as a major sector to achieve structural transformation in resource-rich developing countries. This transformation is often driven by important foreign and national investments in the mining sector, which can lead to broader economic development through various means, including spillover effects, job creation, and infrastructure development²².

Spillover effects are one of the critical mechanisms through which the mining industry can contribute to structural transformation. It includes technology transfer, skills development, and the creation of various industries that support mining operations. Studies by Fu²³ suggest that foreign direct investment (FDI) in mining can lead to significant spillovers if it is accompanied by effective state’s management. However, the extent of these benefits depends mainly on the strength of local institutions and regulatory frameworks, as highlighted by Kaplinsky²⁴.

Chinese investment in Africa has increased over the past two decades, due to China’s demand for natural resources and African countries’ need for infrastructure development. Brautigam (2016)²⁵ and Power, Mohan, and Tan-Mullins (2009)²⁶ have documented the mutual benefits and complexities of Sino-African economic relations. These investments are often structured through resource-for-infrastructure deals, such as the SICOMINES partnership in the DRC. While such investments can provide critical infrastructure and drive economic growth, Carmody (2011) argues that they may also reinforce dependency on resource extraction rather than fostering diversified industrial growth²⁷.

Job creation is a direct benefit of investment in the mining sector and is crucial for economic development²⁸. In the DRC, the SICOMINES partnership is expected to generate important employment opportunities. However, scholars like Lee (2017)²⁹ argue that the quality and sustainability of these jobs are often questionable, with concerns about poor working conditions and the predominance of low-skilled positions that do not enhance the workers’ skills.

Economic diversification is essential for reducing dependency on a single sector and leading economic resilience of a country. Resource-rich countries often struggle with achieving diversification, as illustrated by Auty (1993)³⁰ and Gelb (2010)³¹. The SICOMINES partnership has the ambition to support diversification through infrastructure development, which can also facilitate growth in other sectors. However, critics argue that a continued focus on mining may maintain the DRC’s reliance on natural resources, limiting spillovers to other sectors, as argued by Collier. Effective diversification requires well-informed and comprehensive policies and investments in various industries³².

Infrastructure development is a significant aspect of Chinese FDI in Africa. Foster and Briceño-Garmendia (2010) note that infrastructure deficits are a major constraint to economic growth in many African countries³³. Chinese investments have helped address these deficits through different large-scale projects. In the DRC, the SICOMINES partnership has led to the construction of roads, schools, and hospitals, which are expected to have important development benefits, facilitating connectivity between different regions, and improving access to services and social care as argued by Chasse (2018)³⁴. However, there are concerns about debt repayment and the long-term benefits to the local population³⁵.

Governance and policy environment play critical roles in maximising the benefits of FDI. Strong institutions are necessary to effectively direct such investment and ensure positive development outcomes, as argued by Acemoğlu and Robinson³⁶. In the DRC, weak governance and corruption have been significant barriers to the effective utilisation of FDI as explained by Matti (2010)³⁷. The success of the SICOMINES partnership depends on the DRC government’s ability to implement policies that ensure transparency, accountability, and equitable distribution of benefits. Besada and Martin (2013) highlight the importance of regulatory frameworks that can manage resource revenues and reinvest them into sustainable development initiatives³⁸.

Long-term growth and sustainability are key outcomes that FDI should ideally support. Sachs and Warner (1995) discuss the “resource curse”, a phenomenon where resource-rich countries fail to achieve effective growth despite an important amount of resources due to mismanagement of resource revenues and partnerships³⁹. The SICOMINES partnership could address this curse by investing in critical infrastructure and allowing the diversification of mineral revenues. However, achieving sustainable growth requires effective governance, diversified investments, and strong institutions, as noted by Auty⁴⁰  and Ross⁴¹. The DRC’s challenge is to leverage Chinese investment for long-term development, and avoid negative effects associated with resource dependency.

In conclusion, while Chinese investment in the DRC’s mining sector through the SICOMINES partnership holds significant potential for driving structural transformation, its success depends on effective governance, infrastructure development, and economic diversification. These factors are crucial for ensuring that such investments lead to long term development and economic growth.

2. The case against mining curse

The “resource curse” phenomenon refers to the paradox where countries with abundant resources, such as minerals and oil, experience slower economic growth and worse development outcomes than countries with fewer natural resources. This phenomenon is often attributed to factors such as economic volatility, corruption, and a lack of investment of minerals benefits in other sectors to ensure diversification⁴². “Dutch disease” is an economic phenomenon in which the increase in revenues from natural resources devalues a nation’s currency, making its other exports less competitive and potentially leading to a decline of other sectors⁴³.

Scholars have debated the role of FDI, particularly from China, in helping resource-rich countries like the DRC in avoiding the resource curse and Dutch disease.

Brautigam and Power (2016) highlight the potential benefits of Chinese investment in Africa. They note that resource-for-infrastructure deals, such as the SICOMINES partnership, can provide the much-needed infrastructure that supports development for the local population⁴⁴. By investing in infrastructure, China can help mitigate the resource curse by creating a foundation for broader economic development beyond the mining sector.

Chasse (2018) points out that infrastructure improvements, such as roads, schools, and hospitals built through Chinese investment can enhance overall productivity and improve the quality of life for local communities⁴⁵. These developments can contribute to attracting further investment in various sectors, promoting economic diversification, and reducing dependency on mining revenues.

Auty (1993)⁴⁶ and Gelb (2010)⁴⁷ argue that economic diversification is a necessary process to adverse the effect of the mining curse. They suggest that investments in infrastructure and other sectors can create spillover effects, meaning leading to the growth of other sectors such as manufacturing, services, or agriculture. Chinese investment in the DRC can, by building infrastructure and creating jobs, provide the necessary conditions for such diversification, helping the country develop a more resilient and varied economy.

Fu (2008)⁴⁸ emphasises the importance of technology transfer and skill development as spillover benefits of FDI. Chinese mining companies in the DRC can contribute to local capacity building by introducing new technologies and practices to local workers. This can enhance productivity and innovation in the local economy, supporting long-term growth and mitigating the negative effects of Dutch disease.

Nonetheless, Carmody (2011) cautions that while Chinese investment has the potential to drive structural transformation, it must be managed effectively by the government and different public and private institutions to avoid reinforcing dependency on resource extraction⁴⁹. Effective governance and regulatory frameworks are essential to ensure that the benefits of such investments are maximised and equitably distributed. Acemoğlu and Robinson (2012) highlight the important role of strong institutions in achieving sustainable development. They argue that good governance can help channel resource revenues into productive investments in a way that is favourable to national interests⁵⁰.

Finally, Ross (2012)⁵¹ and Auty (2001)⁵² discuss the need for comprehensive policies that promote economic diversification and sustainable growth. They suggest that the DRC government must implement policies that support sectors beyond mining, such as agriculture, manufacturing, and services. By leveraging Chinese investment for broader development goals, the DRC can build a more diversified and resilient economy, reducing its vulnerability to the resource curse and Dutch disease.

In conclusion, while Chinese investment in the DRC’s mining sector holds significant potential to drive structural transformation and economic diversification, it requires effective management, strong governance, and comprehensive policies to do so. By addressing these factors, the DRC can leverage Chinese FDI to mitigate the resource curse and Dutch disease, fostering sustainable and inclusive economic growth.

3. The limits of Chinese investment

While Chinese investment in the DRC’s mining sector can bring, and has brought, significant infrastructure development and economic opportunities, several scholars highlight important limitations and criticisms. A critical concern is that such investments may not effectively reduce the DRC’s dependency on mineral extraction, potentially perpetuating the resource curse.

In this sense, Carmody (2011) argues that Chinese investments may reinforce rather than alleviate the DRC’s reliance on mining in certain situations⁵³. Resource-for-infrastructure deals, like the SICOMINES partnership, can increase the country’s dependence on mineral exports. This dependency makes the DRC vulnerable to fluctuations in global commodity prices, which can lead to economic instability and hinder long-term economic growth and sustainable development.

For Collier (2010), while infrastructure development can present positive outcomes, it is insufficient on its own to drive broad-based economic growth⁵⁴. Effective economic diversification requires more than just physical infrastructure; it demands significant investments in education, healthcare, and other sectors that foster human capital development. The whole challenge of Chinese investment is to prioritise deeper needs comprehensively over immediate economic gains through infrastructure projects. 

Furthermore, Taylor (2015) points out that the expected technology transfer and skills development from Chinese investments often remain limited⁵⁵. The DRC’s weak local institutions’ capabilities can result in minimal local capacity building to effectively benefit from Chinese investment. Chinese companies frequently bring their own labour and technologies, which reduces opportunities for local employment and knowledge transfer, perpetuating a cycle of dependency.

Lee highlights issues related to the quality and sustainability of jobs created through Chinese  investments⁵⁶. Regarding the jobs offered by Chinese companies aiming to benefit local communities, those are low-skilled jobs and do not contribute significantly to the development of a skilled local workforce. Poor working conditions and limited career advancement opportunities further diminish the potential long-term benefits of such job creation.

Brautigam and Hwang (2016) raise concerns about the debt sustainability associated with Chinese loans tied to these investments⁵⁷. While infrastructure projects can drive immediate economic benefits, they often come with substantial financial obligations that the DRC may struggle to meet. This can lead to a cycle of debt that undermines the economic gains from these projects, posing significant risks to the country’s financial stability.

Acemoğlu and Robinson (2012) stress the importance of strong institutions in leveraging foreign investments for sustainable development⁵⁸. In the DRC, pervasive corruption and weak governance have historically impeded the effective use of resource revenues. Without significant improvements in governance, the benefits of Chinese investment are likely to be unevenly distributed, exacerbating existing inequalities and undermining social and economic progress.

In summary, while Chinese investment in the DRC’s mining sector presents opportunities for economic development, it also comes with limitations and risks affecting such investment’s potential. These investments alone are unlikely to move the DRC away from its dependency on mineral extraction and may, in some cases, reinforce this dependency. Addressing these challenges requires an approach that includes strong governance, strategic investment in human capital, and comprehensive economic diversification policies.

III – METHODOLOGY

This article employs a qualitative analysis to evaluate the impact of the SICOMINES partnership on the DRC’s development and structural transformation. The analysis focuses on two primary factors: spillover effects and structural transformation. Data are collected from various secondary sources, including Extractive Industries Transparency Initiative (EITI) reports, government documents, and other relevant publications. The following sections outline the specific methods used to gather and interpret these pieces of information.

Data Collection

Spillover Effects:

To assess spillover effects, the study will gather data from:

1. EITI Reports: These reports provide data on the revenue flows from the mining sector, which can be used to analyse how revenues are distributed and whether they contribute to broader economic development.
2. Government Reports: These documents include information on policies and programs aimed at maximising the benefits of foreign direct investment, including those from the SICOMINES partnership. They will be used to evaluate the effectiveness of these initiatives in promoting technology transfer and skill development.

Structural Transformation:

For analysing structural transformation, the study will focus on:

1. Infrastructure Development Reports: Data from government and independent evaluations of infrastructure projects funded by the SICOMINES partnership are analysed. These documents provide insights into the extent and impact of infrastructure improvements on economic activities beyond mining.
2. Economic and Sectoral Analyses: Reports and studies mentioning changes in the DRC’s economic structure, such as shifts in employment patterns and growth in non-mining sectors, are analysed to assess whether the investments have facilitated economic diversification in the DRC.

Data Analysis

Spillover Effects:

1. Technology Transfer and Skills Development: The study examines references to technology transfer initiatives and training programs mentioned in the EITI and government reports. The presence and scope of such programs will be noted, and their reported outcomes will be analysed to determine the extent to which they have contributed to local capacity building.
2. Local Economic Impact: The analysis looks for mentions of local procurement policies, support for small and medium-sized enterprises (SMEs), and other measures aimed at improving local economic participation. The effectiveness of these measures is evaluated based on reported outcomes and expert assessments in the literature.

Structural Transformation:

1. Infrastructure Impact: The study reviews reports on infrastructure projects funded by SICOMINES, focusing on their implementation and operational status. Key indicators include the extent of road and rail networks built, access to electricity, and the development of educational and healthcare facilities. The article interprets how these projects have contributed to economic activities beyond mining, such as facilitating trade, improving access to markets, and enhancing human capital.
2. Economic Diversification: The study analyses data on economic changes in the DRC, with particular attention to growth in sectors such as agriculture, manufacturing, and services. This includes examining shifts in employment patterns and GDP contributions from various sectors. The aim is to assess whether there is evidence of reduced dependency on mining and an increase in economic activities in other sectors.

Interpretation of Findings

The findings from the qualitative analysis will be interpreted to evaluate the impact of SICOMINES on the DRC’s development and structural transformation. The interpretation will focus on:

1. Evaluating the effectiveness of SICOMINES in promoting technology transfer, skill development, and local economic participation through the observed spillover effects.
2. Assessing the extent to which infrastructure development has facilitated broader economic activities and contributed to economic diversification, thereby driving structural transformation.

By systematically analysing these aspects, the article aims to provide a comprehensive understanding of the impact of the SICOMINES partnership on the DRC’s development trajectory and offer insights into the broader implications and perspectives of Chinese investment in resource-rich countries.

IV – THE ECONOMIC OPPORTUNITY OF CHINA’S INVESTMENT: SPILLOVER AND STRUCTURAL TRANSFORMATION

1. Impact of Chinese Investment on Spillover Effects

The study of spillover effects from Chinese investment in the DRC, particularly through the SICOMINES partnership, reveals a complex mix of outcomes in technology transfer, skill development, and local economic participation. This section uses data from EITI reports and various government documents.

Technology Transfer and Skills Development

EITI reports indicate that the SICOMINES partnership has initiated several technology transfer programs aimed at enhancing the technical capabilities of local workers⁵⁹. These initiatives include on-the-job training programs and specialised courses delivered by Chinese engineers and technicians. According to the 2022 EITI report, approximately 1,200 local workers have received training in various mining-related skills, including equipment operation, maintenance, and safety protocols⁶⁰. These training programs aim to build local expertise and ensure that the workforce can use advanced mining technologies.

However, the effectiveness of these programs is limited. A significant part of advanced technical roles remains occupied by Chinese expatriates. The 2021 EITI report indicates that despite training efforts, local workers often do not advance to higher-skilled positions due to different factors such as language barriers, insufficient educational backgrounds, and limited opportunities for career progression⁶¹. The 2021 report from the Ministry of Mines highlights that the high turnover rate among trained local employees is a significant issue⁶². This turnover is attributed to limited career advancement opportunities and suboptimal working conditions, which discourage long-term skill development and retention.

Moreover, the rate of technology transfer is not as extensive as initially anticipated⁶³. While local workers gain basic operational skills, more sophisticated knowledge, particularly in areas such as mining engineering, geological surveys and advanced machinery maintenance, remains predominantly held by Chinese experts. This limited transfer of high-level technical knowledge affects the development of a skilled local workforce capable of independently managing complex mining operations.

Local Economic Impact

The impact of SICOMINES on local economic participation is multifaceted, with both promising developments and significant challenges. EITI reports from 2020 and 2021⁶⁴ mention efforts by the Chinese-Congolese partnership to implement local procurement policies and support small and SMEs. These policies are intended to integrate local businesses into the supply chain, providing them with opportunities to supply goods and services to the mining operation. For instance, local firms have been contracted to provide catering, transportation, and basic supplies.

Despite these efforts, the extent of local economic integration remains limited. The EITI reports reveal that while there has been an increase in the number of local contracts awarded, these are predominantly for low-value goods and services⁶⁵. High-value contracts, which could significantly boost local economic growth and capacity, continue to be awarded primarily to Chinese firms. Local suppliers face numerous challenges, including meeting high-level quality standards, competitive pricing pressures, and the volume requirements set by SICOMINES.

In that sense, the 2022 Annual Economic Review’s government report notes that although there has been a positive trend in local procurement, the scale and scope are insufficient to drive substantial economic change⁶⁶. Local SMEs often lack the capacity and resources to compete with well-established Chinese firms, leading to the most lucrative opportunities remaining out of reach for local businesses. This dynamic limits the broader economic spillover benefits that could arise from more substantial local procurement practices.

Furthermore, the government’s regulatory and institutional frameworks are identified as significant barriers to maximising the benefits of spillover effects. Weak governance, corruption, and bureaucratic inefficiencies hamper efforts to enforce local content requirements and support the growth of local enterprises⁶⁷. Without robust institutional support and effective policies, the potential for Chinese investments to catalyse local economic development remains limited.

Overall Spillover Assessment

The spillover effects of Chinese investment through SICOMINES present a mixed picture. There are clear initiatives aimed at technology transfer and local procurement, which have yielded some benefits in terms of skill development and economic participation. However, the full potential of these spillover effects is hampered by several challenges, including limited opportunities for advanced skill acquisition, high employee turnover, and barriers faced by local businesses in accessing higher-value contracts.

Addressing these challenges requires a multifaceted approach. Improved training programs that go beyond basic operational skills and focus on advanced technical and managerial capabilities are essential. Additionally, stronger institutional frameworks and governance reforms are needed to support local businesses and ensure that they can compete effectively for high-value contracts. By adopting targeted policies and strategies, the DRC can enhance the effectiveness of spillover benefits from Chinese investments and promote sustainable economic development.

2. Impact of Chinese investment on structural transformation

The analysis of Chinese investment in the DRC, especially through the SICOMINES partnership, reveals considerable progress in infrastructure development and a nuanced impact on economic diversification. This section delves into these dimensions using data from various reports, including those from the Ministry of Infrastructure and the World Bank.

Infrastructure Development

Chinese investment has significantly contributed to the development of the DRC’s infrastructure. According to the 2022 Infrastructure Development Report by the Ministry of Infrastructure, Chinese-funded projects have led to the construction and rehabilitation of over 3,000 kilometres of roads, numerous bridges, and several key power plants⁶⁸. These projects are primarily aimed at enhancing connectivity between mining areas and major urban centres, thereby reducing transportation costs and improving market access for goods and services.

One notable project is the Kinshasa-Matadi road, which has drastically reduced travel time between the capital and the country’s largest port⁶⁹. Additionally, investments in hydroelectric power plants, such as the construction of the Busanga Hydropower Station, have increased the availability of electricity in mining regions and surrounding communities⁷⁰. These developments are critical for supporting both industrial activities and improving the quality of life for local populations.

The National Bureau of Economic Research (NBER)’s Working Paper on Infrastructure Investment and Economic Growth (2018) supports these findings by emphasising the positive impact of infrastructure on economic performance⁷¹. The report highlights that improved infrastructure can lead to increased productivity, attract further investment, and spur economic activity. In the DRC, these investments are seen as foundational steps towards long-term economic development and structural transformation.

Economic Diversification

While infrastructure development is evident, the impact on economic diversification presents a more complex picture. Economic diversification is essential for reducing dependency on the mining sector and fostering sustainable economic growth. Gelb’s study on Economic Diversification in Resource-Rich Countries (2010) underscores the necessity of diversifying economic activities to mitigate the risks associated with resource dependency⁷².

The World Bank’s Africa’s Pulse report published in 2017 elaborates on the challenges faced by resource-rich countries like the DRC in achieving economic diversification⁷³. The report notes that while infrastructure improvements provide a necessary framework for diversification, these alone are insufficient. The DRC needs to implement policies that encourage investment in non-mining sectors such as agriculture, manufacturing, and services.

EITI reports and government documents reveal that while there have been some attempts to stimulate other sectors, these efforts have not yet achieved substantial diversification. For instance, initiatives to promote agricultural development and local manufacturing have been hampered by inadequate funding, lack of expertise, and regulatory barriers⁷⁴. The 2022 Annual Economic Review by the Ministry of Mines highlights that the mining sector still dominates the economy, contributing over 70% of export revenues and a significant portion of GDP⁷⁵.

However, there are promising signs. Improved infrastructure has facilitated better market access for agricultural products and reduced costs for local businesses. For example, farmers in the Katanga region have benefited from better road networks, enabling them to transport more efficiently their produce to markets⁷⁶. Additionally, there have been modest increases in local manufacturing activities related to mining, such as the production of mining equipment and the processing of minerals⁷⁷.

Overall Assessment

Chinese investment through the SICOMINES partnership has undoubtedly driven significant infrastructure development in the DRC, laying the groundwork for potential economic diversification and structural transformation. However, the transition towards a more diversified economy requires addressing various institutional and policy-related challenges. Enhanced infrastructure has created opportunities for diversification, but these need to be complemented by targeted policies that promote investment in non-resource sectors, improve regulatory frameworks, and foster innovation and entrepreneurship.

To fully realise the benefits of Chinese investment, the DRC must focus on creating an enabling environment for diverse economic activities. This includes investing in human capital, supporting local businesses, and ensuring that infrastructure projects are sustainable and beneficial to broader economic goals. By leveraging infrastructure investments and implementing comprehensive diversification strategies, the DRC can move towards sustainable economic development and structural transformation.

V – THE HUMAN RIGHTS COST

The significant influx of Chinese investment in the DRC, particularly through the SICOMINES partnership, has not only brought about infrastructural and economic changes but has also raised concerns regarding human rights and social costs for the local population. This section examines these aspects, drawing on various reports and academic works.

1. Human Rights Concerns

Several reports have highlighted human rights issues linked to Chinese mining operations in the DRC. A notable concern is the working conditions in Chinese-operated mines. According to a Human Rights Watch report published in 2013, there have been instances of labour rights violations, including poor working conditions, low wages, and inadequate safety measures⁷⁸. Workers in these mines often face long hours, insufficient protective equipment, and a lack of proper training, which can lead to severe accidents and health issues.

Moreover, the EITI 2022 report indicates that some Chinese mining companies have been implicated in land disputes, often displacing local communities without adequate compensation or consultation⁷⁹. These forced displacements disrupt local livelihoods and contribute to social unrest. The displacement of communities for mining activities often leads to loss of homes, agricultural land, and access to clean water, further exacerbating poverty and inequality.

Amnesty International’s 2016 report underscores the human rights abuses in the supply chain of minerals sourced from the DRC. The report highlights child labour and exploitation in mines linked to Chinese companies, where children as young as seven years old work in hazardous conditions for meagre wages. These children are often forced to abandon their education, perpetuating a cycle of poverty and limiting their future opportunities⁸⁰.

Additionally, a study by Global Witness in 2019 shed light on the environmental degradation caused by mining activities. The research revealed that Chinese mining operations have led to significant deforestation and pollution of water sources, affecting both the ecosystem and the health of local communities. Toxic waste from mining operations has been found to contaminate rivers and soil, leading to health problems such as respiratory issues and skin diseases among the local population⁸¹. 

In summary, while the SICOMINES partnership and Chinese investment have spurred economic development and infrastructural growth in the DRC, these benefits have come with considerable human rights costs. Addressing these concerns requires robust regulatory frameworks, better enforcement of labour and environmental laws, and meaningful engagement with affected communities to ensure that development does not come at the expense of human rights and social justice.

2. Social Costs

The social costs of Chinese investment extend beyond human rights concerns to broader socio-economic impacts. The rapid development of infrastructure, while beneficial in many respects, has also led to unintended consequences for local populations. The construction of roads and other infrastructure projects has sometimes resulted in environmental degradation, including deforestation and water pollution, which adversely affect local communities who rely on these natural resources for their livelihoods⁸².

Furthermore, the influx of Chinese workers for these projects has sometimes led to tensions with local populations. According to the Ministry of Mines’ Annual Economic Review , there have been incidents of social conflict between Chinese workers and local communities, fuelled by cultural misunderstandings and competition for jobs. These tensions can undermine social cohesion and lead to conflict, negatively impacting the overall social fabric of affected regions⁸³.

3. Addressing Human Rights and Social Costs

Addressing these human rights and social costs requires a multifaceted approach. The DRC government, along with international organisations and civil society, must enforce stringent regulations to protect workers’ rights and ensure fair compensation for displaced communities. Strengthening the capacity of local institutions to monitor and regulate mining activities is crucial for safeguarding human rights.

Additionally, fostering greater community engagement and consultation can help mitigate the social costs of infrastructure projects. Ensuring that local populations have a voice in the decision-making processes regarding mining projects can lead to more equitable and sustainable outcomes. Promoting transparency and accountability in mining operations, as emphasised by the EITI reports, is essential for addressing these challenges and ensuring that the benefits of Chinese investment are equitably distributed among the DRC’s population.

VI – CONCLUDING REMARKS

This article has explored the impact of Chinese investment on the DRC’s mining industry, focusing on the SICOMINES partnership. By analysing spillover effects and structural transformation, we assessed how these investments can contribute to the DRC’s economic development. The research drew on qualitative analysis of EITI and government reports to evaluate the impacts on technology transfer, job creation, economic diversification, and infrastructure development.

Chinese investment in the DRC, particularly through resource-for-infrastructure deals like SICOMINES, has the potential to drive significant economic benefits. These investments have led to substantial infrastructure development, including roads, schools, and hospitals, which are crucial for broader economic activities and improving living standards. Additionally, they offer opportunities for technology transfer and skills development, which are essential for enhancing local capacity and productivity.

However, this article also highlights the challenges and limitations associated with Chinese investment in the DRC. Concerns about human rights, social costs, and the perpetuation of dependency on mineral extraction were examined. Reports from EITI and other sources indicate that without proper management, these investments may reinforce existing economic vulnerabilities and lead to environmental degradation and social conflicts.

The critical role of government leadership and involvement cannot be overstated. For the DRC to maximise the benefits of Chinese investment, it is essential that the government actively guides these partnerships to ensure they align with national development goals. Drawing lessons from Ethiopia, where Chinese investment has been a success story, underscores the importance of strategic government intervention. In Ethiopia, the government’s effective policies and control over basic economic frameworks have steered Chinese investments towards promoting economic diversification and growth.

The Ethiopian model shows that with strong governance, transparency, and accountability, Chinese investment can be channelled to support industrialisation and broader economic resilience. The government’s role in negotiating favourable terms, ensuring fair compensation for local communities, and enforcing labour standards is crucial for sustainable development. This requires a balance of welcoming foreign investment while maintaining stringent oversight and aligning projects with long-term national interests.

For the DRC, achieving similar success depends on several factors. First, there must be a commitment to strengthening institutional capacities to manage and regulate foreign investments effectively. This includes enhancing the transparency of contracts and ensuring that revenues from mining are reinvested in ways that promote sustainable development. Second, policies must be in place to protect local communities from displacement and environmental harm, ensuring that the social costs of mining activities are minimised.

Ultimately, the potential of Chinese investment to drive structural transformation in the DRC depends on the government’s autonomy and political will. The government must make deliberate choices to leverage these investments for national benefit, fostering an environment where economic diversification and sustainable growth are prioritised. By adopting a proactive and strategic approach, the DRC can turn the challenges of foreign investment into opportunities for long-term prosperity.

 

To quote the article:

TOURE, A. (2025). Can Chinese investment in Africa drive economic growth and improve social conditions? A case study of China’s partnership with the Democratic Republic of Congo’s mining industry. Generation for Rights Over the World. growthinktank.org. [online] March 2025.