IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v58y2018icp165-174.html
   My bibliography  Save this article

The risks and rewards of resource-for-infrastructure deals: Lessons from the Congo's Sicomines agreement

Author

Listed:
  • Landry, David

Abstract

Resource-for-infrastructure (RFI) deals generate upfront infrastructure investments that are to be repaid via future resource extraction revenues. However, much can change in the meantime. This paper explores the Democratic Republic of Congo's Sicomines agreement, a critical RFI case that has proven to be highly contentious, and highlights the role played by risk from its inception a decade ago until now. Drawing on the Sicomines agreement, this paper employs financial modeling techniques to highlight the pitfalls of attempting to identify winners in RFI deals before they reach their conclusion. As this paper demonstrates, the expected benefits of RFI deals can change swiftly and unpredictably. In fact, the model presented in this paper estimates that Sicomines’ NPV has dropped from USD 10 billion to minus USD 150 million since its inception.

Suggested Citation

  • Landry, David, 2018. "The risks and rewards of resource-for-infrastructure deals: Lessons from the Congo's Sicomines agreement," Resources Policy, Elsevier, vol. 58(C), pages 165-174.
    • Handle: RePEc:eee:jrpoli:v:58:y:2018:i:c:p:165-174
    DOI: 10.1016/j.resourpol.2018.04.014
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420718300515
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resourpol.2018.04.014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brautigam, Deborah, 2011. "The Dragon's Gift: The Real Story of China in Africa," OUP Catalogue, Oxford University Press, number 9780199606290.
    2. Johanna Jansson, 2013. "The Sicomines agreement revisited: prudent Chinese banks and risk-taking Chinese companies," Review of African Political Economy, Taylor & Francis Journals, vol. 40(135), pages 152-162, March.
    3. Stephanie Matti, 2010. "Resources and Rent Seeking in the Democratic Republic of the Congo," Third World Quarterly, Taylor & Francis Journals, vol. 31(3), pages 401-413.
    4. Malancha Chakrabarty, 2016. "Growth of Chinese trade and investment flows in DR Congo – blessing or curse?," Review of African Political Economy, Taylor & Francis Journals, vol. 43(147), pages 116-130, January.
    5. Havard Halland & John Beardsworth & Bryan Land & James Schmidt, 2014. "Resource Financed Infrastructure : A Discussion on a New Form of Infrastructure Financing [Infrastructures financées par des ressources naturelles : Examen d'un nouveau mode de financement des infr," World Bank Publications - Books, The World Bank Group, number 18554.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastian Purwins, 2023. "Same Same, but Different: Ghana’s Sinohydro Deal as Evolved ‘Angola Model’?," Insight on Africa, , vol. 15(1), pages 46-70, January.
    2. Tom Ogwang & Frank Vanclay, 2021. "Resource-Financed Infrastructure: Thoughts on Four Chinese-Financed Projects in Uganda," Sustainability, MDPI, vol. 13(6), pages 1-22, March.
    3. Bridget Tawiah Badu Eshun & Albert P.C. Chan, 2021. "An Evaluation of Project Risk Dynamics in Sino-Africa Public Infrastructure Delivery; A Causal Loop and Interpretive Structural Modelling Approach (ISM-CLD)," Sustainability, MDPI, vol. 13(19), pages 1-24, September.
    4. Mihalyi,David & Hwang,Jyhjong & Rivetti,Diego & Cust,James Frederick, 2022. "Resource-Backed Loans in Sub-Saharan Africa," Policy Research Working Paper Series 9923, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Jiajun & Ru, Xinshun & Song, Pengcheng, 2021. "Can a new model of infrastructure financing mitigate credit rationing in poorly governed countries?," Economic Modelling, Elsevier, vol. 95(C), pages 111-120.
    2. Kristen Jones, 2024. "Colombia's role in great power competition," Global Policy, London School of Economics and Political Science, vol. 15(S3), pages 120-129, June.
    3. Samuel Brazys, 2023. "Axel Dreher, Andreas Fuchs, Bradley Parks, Austin Strange and Michael J. Tierney. 2022. Banking on Beijing: The Aims and Impacts of China’s Overseas Development Program. (Cambridge: Cambridge Universi," The Review of International Organizations, Springer, vol. 18(1), pages 227-231, January.
    4. Benjamin Rubbers, 2020. "Mining Boom, Labour Market Segmentation and Social Inequality in the Congolese Copperbelt," Development and Change, International Institute of Social Studies, vol. 51(6), pages 1555-1578, November.
    5. William G. Martin & Ravi Arvind Palat, 2014. "Asian Land Acquisitions in Africa: Beyond the ‘New Bandung’ or a ‘New Colonialism’?," Agrarian South: Journal of Political Economy, Centre for Agrarian Research and Education for South, vol. 3(1), pages 125-150, April.
    6. Hoeffler, Anke & Sterck, Olivier, 2022. "Is Chinese aid different?," World Development, Elsevier, vol. 156(C).
    7. Sebastian Purwins, 2023. "Same Same, but Different: Ghana’s Sinohydro Deal as Evolved ‘Angola Model’?," Insight on Africa, , vol. 15(1), pages 46-70, January.
    8. Mihalyi,David & Hwang,Jyhjong & Rivetti,Diego & Cust,James Frederick, 2022. "Resource-Backed Loans in Sub-Saharan Africa," Policy Research Working Paper Series 9923, The World Bank.
    9. Jean-Pascal Nganou & Juste Some & Guy Tchuente, 2016. "Government Spending Multipliers in Natural Resource-Rich Developing Countries," Studies in Economics 1609, School of Economics, University of Kent.
    10. Anthony J. Venables, 2016. "Using Natural Resources for Development: Why Has It Proven So Difficult?," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 161-184, Winter.
    11. Israel Nyaburi Nyadera & Billy Agwanda & Michael Otieno Kisaka, 2020. "Beyond the Yuan: Rethinking China’s Attractiveness to Africa," China Report, , vol. 56(4), pages 429-446, November.
    12. Han, Xia & Lukoianove, Tatiana & Zhao, Shasha & Liu, Xiaohui, 2024. "International relations in international business research: A review and research agenda," Journal of Business Research, Elsevier, vol. 174(C).
    13. Kramarz, Teresa & Mason, Michael & Partzsch, Lena, 2023. "Proxy-led accountability for natural resource extraction in rentier states," LSE Research Online Documents on Economics 113757, London School of Economics and Political Science, LSE Library.
    14. Jun Rentschler & Morgan Bazilian, 2017. "Policy Monitor—Principles for Designing Effective Fossil Fuel Subsidy Reforms," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 138-155.
    15. Munjal, Surender & Varma, Sumati & Bhatnagar, Ankur, 2022. "A comparative analysis of Indian and Chinese FDI into Africa: The role of governance and alliances," Journal of Business Research, Elsevier, vol. 149(C), pages 1018-1033.
    16. Vincent Tawiah & Raymond Ayivor & Babajide Michael Oyewo, 2024. "Who cares about corruption in Africa? China or the USA?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 2647-2664, July.
    17. Christian Milelli & Alice Nicole Sindzingre, 2013. "Chinese Outward Foreign Direct Investment in Developed and Developing Countries: Converging Characteristics?," Working Papers hal-04141177, HAL.
    18. Richard Q. Turcsányi, 2020. "China and the Frustrated Region: Central and Eastern Europe’s Repeating Troubles with Great Powers," China Report, , vol. 56(1), pages 60-77, February.
    19. Olasehinde, Toba Stephen & Jin, Ye & Qiao, Fangbin & Mao, Shiping, 2023. "Marginal returns on Chinese agricultural technology transfer in Nigeria: Who benefits more?," China Economic Review, Elsevier, vol. 78(C).
    20. Abreham Adera, 2024. "Chinese Aid Projects and Local Tax Attitudes: Evidence from Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(1), pages 102-134, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:58:y:2018:i:c:p:165-174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30467 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.