Lessons from the Congo's Sicomines Agreement

The risks and rewards of Resource-for-Infrastructure deals: Lessons from the Congo's Sicomines Agreement
David Landry
CARI Policy Brief, n°22, 2018

These papers by David G. Landry explore the Sicomines agreement and highlight the role risk has played from its inception a decade ago until now. This case reveals how, while simple on the surface, Resource-for-Infrastructure (RFI) deals carry significant risks for their signatories because of the long time horizon through which they operate. This has led the Sicomines agreement to experience many hurdles, both on the infrastructure delivery and resource extraction fronts. RFI deals generate upfront infrastructure investments to be repaid via future resource extraction. However, much can change in between. These papers employ financial modeling techniques to highlight the pitfalls of attempting to identify a “winner” in such ventures until they reach their conclusion. As these papers demonstrate through the Sicomines case, the expected benefits of RFI deals can change swiftly and unpredictably.

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