July 6, 2018 / 11:44 AM / 15 days ago

Congo faces $20 mln arbitration claim over failed farming project

DAKAR, July 5 (Reuters) - A South African company said on Friday that it had filed for arbitration against Democratic Republic of Congo’s government, seeking to recover nearly $20 million it says it is owed from a failed agriculture project.

Africom Commodities Pty Ltd, a private company based in Potchefstroom, South Africa, was contracted by the government in 2014 to manage the 800-square-kilometre Bukanga Lonzo agriculture project in western Congo.

The project was meant to be the first of 22 agro-industrial parks in Congo. The government said the parks would solve food shortages in Congo and be a model for other African countries looking to fight hunger and reduce hefty food import bills.

But Africom left Bukanga Lonzo in July 2017, saying it had not been paid by the government in nearly a year. Production of maize and other crops has now ground to a halt as the government tries to revive the project.

Africom filed for arbitration on Thursday with the International Court of Arbitration in Paris, its CEO Christo Grobler told Reuters. The company is seeking $19.79 million in outstanding payments, he said.

“We are seeking for the government to rectify all their outstanding amounts,” Grobler said in a text message.

Congo’s portfolio minister, who is responsible for overseeing Bukanga Lonzo, did not immediately respond to a request for comment. The arbitration court said it does not comment on cases.

African governments and donors have vowed to press on with similar industrial-scale agricultural initiatives despite Bukanga Lonzo’s collapse.

The African Development Bank, which provided about $1 million for Bukanga Lonzo’s feasibility study and had called it a model project, said it committed nearly $120 million last year to a project in Ivory Coast and will consider funding for three others this years. (Reporting By Aaron Ross; Editing by Kirsten Donovan)

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