Wednesday, 11 February 2015

Splitting revenue to keep the DRC stable

There's a report here on the distribution of wealth between the DRC central authorities and Katanga province, in the South East of the country.  Katanga is the origin of much of the country's mineral wealth, and was historically secessionist.

The exact division of wealth between Katanga and the centre presents a challenge to the government.  It seems likely that the centre will want to maintain as much wealth for itself as possible, for reasons including power and equity between citizens.  On the other hand, if insufficient funds are returned to Katanga, there is the risk that the region will experience economic disruption and civic disturbance.  An initial economic approach would be to maximise the central funds - the government keeps revenue so its value minus losses is the highest possible.  But this wouldn't necessarily be acting in the best interests of the country,  because Katanga might make very little money.  I don't know what the best approach is.

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