April 13, 2016
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Posted by NCID

Ola Olsson Professor of Development Economics at the University of Gothenburg presented the seminar “Tolling on the River: Trade and Informal Taxation on the Congo” at the University of Navarra.

The Democratic Republic of Congo is one of the poorest countries of the world and has a fragile state still recovering from the Great African War-Second Congo war that officially ended in 2003 and that had over 5 million of causalities.

“We are looking at the Congo River because DRC and its infrastructure is extremely underdeveloped but at the same time is an important part of the transportation in the DRC,” said Ola Olsson. The also Deputy Head of the Economics Department at the University of Gothenburg expressed his beliefve that a more efficient use the Congo River for commerce would boost development and increase food security in the at African region.

In June 2014 President of the DRC, Josephe Kabila and nine of his ministers signed a decree ordering that 38 fees and taxes along the Congo river are to be regarded as illegal, as they were suffocating traffic on the river. After that decree, Ola Olsson and his coauthors (Maria Eriksson Baaz and Peter Martinsson) asked themselves,  the following research questions –the starting point of this research—“What is the magnitude of informal taxation on Congo River after the reform?”

After recording more than 2.000 payments from more than 20 different authorities along the Lukenie and Kasai (tributaries of the Congo River) they concluded that informal taxes make up 14.2% of total costs of each trip down the river, and about is equivalent 14 times the monthly wage of a police officer.

According to this research, each boat operator pays in average $624 USD US$ in these illegal fees per trip. “There is widespread view that these taxes are not only illegal but illegitimate, the operators do not accept them” but operators are still forced to pay if they want to deliver their goods, said Ola Olsson..

In sum, the research shows that the reform has not been effective and many boat operators continue to operate at a loss. “In the ideal situation”, concluded Ola Olsson “you would remove these tolls and introduce corporate taxes based on profits.”

 

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