What’s Wrong with Dodd-Frank’s Conflict Minerals Provision?

January 05, 2012

Hidden within the 2,300+ page Dodd-Frank Wall Street Reform and Consumer Protection Act (large PDF) are two sections aimed squarely at Africa. Section 1504 requires companies listed on US stock markets to disclose payments to foreign governments. This has been widely hailed, including by CGD, as an important step for encouraging transparency and a sensible complement to efforts like EITI.

Section 1502 is another story. That provision requires publicly traded companies to report to the SEC whether they source conflict minerals from one specific country: the Democratic Republic of Congo (DRC). The premise is that mining income must fuel violence in DRC so why not just cut off that money and thus end the killings. Easy, right?Not so fast. For starters, industry is claiming (probably rightly, but hard to know for sure) that it’s impossible to implement as written. More compelling is the range of local NGOs, Congolese writers, and pundits who believe that 1502 may be well-intentioned but is going about it all wrong.To help sort all this out, CGD commissioned a paper from one of the most cogent voices in this debate, Laura Seay, assistant professor of political science at Morehouse College known in the blogosphere by her nom de guerre, Texas in Africa. In the paper, Seay argues:
Nicknamed “Obama’s Law” by the Congolese, section 1502 has created a de facto ban on Congolese mineral exports, put anywhere from tens of thousands up to 2 million Congolese miners out of work in the eastern Congo, and, despite ending most of the trade in Congolese conflict minerals, done little to improve the security situation or the daily lives of most Congolese….I trace the development of section 1502 with respect to the pursuit of a conflict minerals-based strategy by U.S. advocates, examine the effects of the legislation, and recommend new courses of action to move forward in a way that both promotes accountability and transparency and allows Congolese artisanal miners to earn a living.
Full paper is now available here. EU, OECD and others considering similar legislative efforts, take note.Finally, to Enough or other advocates for 1502: CGD will happily host a debate. Anyone game?


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.