VZCZCXRO4961
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0951/01 2201624
ZNR UUUUU ZZH
R 081624Z AUG 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 6680
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 04 KINSHASA 000951 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EMIN ELAB EAIR PGOV CG
SUBJECT: DRC JULY MONTHLY ECONOMIC REVIEW 
 
------- 
Summary 
------- 
 
¶1. (U) 
- Hundreds of MIBA (DRC diamond mining parastatal) employees 
requested summer leaves of absence following nine months without 
pay. 
 
- Kinshasa's civil servants are demanding the implementation of the 
GDRC's "Strategic Document of the Organization of Congolese Civil 
Service." 
 
- A July 30 memorandum of understanding between the DRC and Angola 
may lead to the exploration and production of petroleum products in 
areas around their shared offshore and onshore borders. 
 
- The Belgian Government donated Euros 730,000 (USD 540,200) to 
rehabilitate the N'Sanga hydroelectric plant in Bas-Congo province. 
 
 
------- 
Mining 
------- 
 
¶2. (U) The Mining Registry of the Ministry of Mines acquired new 
software to track income from the granting of mining concessions. 
Mining concessions are currently under moratorium awaiting the 
results of the GDRC's Mining Commission review of past mining 
contracts. 
 
¶3. (U) Katanga Mining Company (KMC) has extracted 33,000 tons of 
copper ore since April 2007 and projects 40,000 tons per month by 
August.  The KMC concentrator in Kamoto is online and copper ore 
concentrate is now being delivered.  A production line to process 
copper oxide will be commissioned in August.  The KMC Luilu 
metallurgical plant goes online in September. 
 
¶4. (U) A delegation from British firm Brinkley Mining came to the 
DRC to finalize an agreement with the Congolese Atomic Energy 
Commission (CNEA).  Gerard Holden, Brinkley Chairman, discussed 
uranium mining, currently outlawed in the DRC, with Minister of 
Mines Mr. Martin Kabwelulu.  The previous head of the Regional 
Center for Nuclear Studies in Kinshasa (CREN-K) was fired over 
allegations of trading in uranium contracts. Following the Brinkley 
agreement announcement the Minister of Scientific Research in charge 
of CREN-K was also fired. 
 
----- 
Labor 
----- 
 
¶5. (U) Employees of the tax collection and customs services (OFIDA, 
DGRAD and DGI) struck for eleven days countrywide to demand payment 
of salary in arrears and performance bonuses.  The strike disrupted 
clearance operations at the Kasumbalesa land border crossing into 
Zambia and at the Port of Matadi, which cost the DRC an estimated 15 
billion CF (USD 30 million). 
 
¶6. (U) Prime Minister Gizenga met with the National Committee of 
Unions (Intersyndical) members to discuss labor concerns. 
Intersyndical head Symphorien Dunia told the PM that union members 
(mainly teachers and civil servants) want transportation and lodging 
concessions by next September, revisions in mining and forestry 
concession contracts, participation of the Intersyndical in public 
enterprise restructuring (currently being overseen by the Ministry 
of Portfolio), and a review of teachers' contracts. 
 
¶7. (U) Employees of the Congolese-Chinese Telecommunications Company 
(CCT) went on strike in June to demand salary increases and 
compliance with the DRC Labor Code.  Arbitration by the Labor 
Minister on July 18 resulted in a commitment by CCT to increase the 
total CCT monthly payroll by USD 5,000. 
 
¶8. (U) A civil servant protest march was averted on July 26th 
whenPrime Minister Gizenga set up a consultation mechanism with the 
GDRC before granting the approval to march.  (Note: Labor unrest is 
likely again in September as the school year begins and Parliament 
comes back into session.  End note.) 
 
¶9. (U) Hundreds of MIBA (DRC diamond mining parastatal) employees 
requested summer leaves of absence following nine months of salary 
arrears and no progress on making badly-needed upgrades of MIBA 
equipment. 
 
¶10. (U) Congolese security officers arrested four journalists/union 
 
KINSHASA 00000951  002 OF 004 
 
 
members who were demanding payment of ten months arrears related to 
performance bonuses. The CEO of  Congolese Television and Radio 
(RTNC) accused the journalists, employees of RTNC, of insulting 
President Kabila.  Following their arrest they were transferred from 
the special security services to the police. 
 
¶11. (U) On July 23, Congolese Airways Authority (RVA) employees 
demonstrated in front of the Ministry of Portfolio against 
privatization of the RVA, a public enterprise, and demanded payment 
of three months salary arrears. 
 
¶12. (U) Congolese employees of expatriate shops (Indian, Lebanese, 
etc) demonstrated on July 2 to demand lunch breaks and respect for 
legal work schedules.  This is the second time in as many years that 
shop workers have expressed their discontent with working conditions 
and salaries in what is a non-union setting. 
 
¶13. (U) The Minister of Education for Primary and Secondary Schools 
declared that so-called "motivation fees" paid by parents to 
teachers at Congolese public schools will be banned in the coming 
school year.  The GDRC, however, has not made any provisions to 
increase teachers' salaries.  Teachers are already threatening to 
strike when school starts in September. 
 
¶14. (U) Kinshasa's civil servants are demanding the implementation 
of the GDRC's "Strategic Document of the Organization of Congolese 
Civil Service." The document, which covers 2007 through 2011, was 
amended earlier in the year by experts of the Ministry of Civil 
Service who are in charge of monitoring civil service reforms. 
 
--------------- 
River Transport 
--------------- 
 
¶15. (U) Lack of signaling on the Congo River between Mbandaka and 
Kisangani (upriver from Kinshasa) has given local fishermen a means 
of earning between USD 10 to 20 per day. The fishermen are helping 
public and privately owned boats find the channels necessary to 
navigate the ever-changing waterways. 
 
------ 
Energy 
------ 
 
¶16. (U) Sam O'Brien Kumi, the World Bank head of electricity market 
projects, was in the DRC July 29 to 30.  At a press conference on 
July 30, Mr. Kumi said that he was here to restart suspended DRC 
projects, including a USD 178 million program that had been 
suspended due to recent political instability.  Kumi said that 
project will restart in November 2007 and will increase electricity 
production of the Inga I hydroelectric plant from 300 MW to 500 MW. 
This power plant feeds a power line from Inga (Bas-Congo) to 
Kasumbalesa (Katanga province), some 1500 kilometers away on the 
Zambian border in the "copper belt."  The project will increase 
electricity sales to the regional electricity market in SADC 
countries while helping the DRC respond to the mining industry needs 
for energy in Katanga.  (Note: Copper processing, expected to 
increase greatly over the coming years, requires large amounts of 
electricity.  End note.) 
 
-------------- 
Public Finance 
-------------- 
 
¶17. (U) President Kabila signed the DRC's 2007 budget into law on 
July 7. This "balanced" budget is for nearly USD 2.5 billion, up 
from just under USD 2.0 billion in 2006.  Based upon the DRC's 
Poverty Reduction Strategy Paper (PRSP) the budget projects a GDP 
growth rate of 12 percent, an inflation rate of 8.8 percent, and an 
average exchange rate of 560 CF/USD. GDP was estimated to amount to 
USD 5 billion, or less than USD 100 per capita. 
 
¶18. (U) The Ministry of Budget has implemented new software designed 
to facilitate salary payments to civil servants and reduce 
opportunities for corruption.  The software, funded by France and 
the European Union, will cover most of the 47,761 government 
employees working in Kinshasa. 
 
¶19. (U) African Development Bank President (ADB), Donald Kaberuka, a 
Rwandan, came to Kinshasa to inaugurate the regional ADB office for 
the Democratic Republic of Congo and Congo Brazzavilee.  Kaberuka 
said that the new office demonstrates ADB's willingness to work with 
client states and project beneficiaries, and to harmonize its 
actions with development partners. 
 
¶20. (U) The Congolese Central Bank (BCC) has issued a tender to hire 
 
KINSHASA 00000951  003 OF 004 
 
 
an auditor to review its financial statements from 2007 to 2009. 
Meanwhile, the BCC has decreased its interest rates for short-term 
money market loans from 30 percent to 22.5 percent.  (Note: BCC 
statistics indicate that current foreign exchange reserves are still 
quite low, at the equivalent of three weeks of foreign exchange 
spending.  End note.) 
 
¶21. (U) The GRDC has made available a USD 30 monthly scholarship. 
Starting July 9 the scholarship will be available to 50,000 
Congolese students who are in their last year of public university. 
Only those students who are up-to-date on tuition will benefit from 
this support. 
 
--------- 
Petroleum 
--------- 
 
¶22. (U) The Minister of Economy announced a gasoline price decrease 
for Kinshasa on July 12, from 550 CF/liter (USD 4.18/gallon) down to 
535 CF/liter (USD 4.07/gallon). 
 
¶23. (U) A July 30 memorandum of understanding between the DRC and 
Angola may lead to the exploration and production of petroleum 
products in areas around their shared offshore and onshore borders. 
Revenues would be divided equally between the two countries. 
 
-------- 
Aviation 
-------- 
 
¶24. (U) The Minister of Economy reduced the cost of jet fuel from 
578 CF/liter (USD 4.39/gallon) to 483 CF/liter (USD 3.67/gallon) 
(West) from 749 CF/liter (USD 8.53/gallon) to 626 CF/liter (USD 
4.76/gallon) (East); and from 800CF/liter (USD 6.08/gallon) to 668 
CF/liter (USD 5.08/gallon. 
 
¶25. (U) The DRC organized its High Council for Civil Aviation on 
July 25.  The meeting and organization was designed to find 
solutions to the currently unsafe and insecure condition of 
Congolese airspace.  Other issues included the reduction of 
technical risks, the lack of training for those maintaining Russian 
made aircraft, the anarchic granting of operating licenses, the 
irregular importation of aircraft, the unauthorized construction of 
flight infrastructure, and the lack of qualifications for some civil 
aeronautics personnel. 
 
----------- 
Cooperation 
----------- 
 
¶26. (U) The President of the African Development Bank (ADB) and the 
Congolese Minister of Finance signed two project agreements.  The 
first, for USD 105 million, will provide safe water in Kasangulu, 
Lisala, and Tshikapa. The second provides USD 127 million for the 
social reintegration of Congolese combatants. 
 
¶27. (U) The World Bank has given Euros 1.2 million (USD 892,000) to 
the Congolese River Transport Authority (RVF) to rehabilitate the 
"Congo," a dredging boat. 
 
¶28. (U) The Government of Belgium donated Euros 730,000 (USD 
540,200) to rehabilitate the N'Sanga hydroelectric plant in 
Bas-Congo province.  At full capacity the dam will produce 45,000 MW 
of electricity.  Currently only 6.5 percent of DRC families have 
electricity at home. 
 
 
------------------------- 
Telecommunications Sector 
------------------------- 
 
¶29. (U) During a recent trip to China, the Minister of 
Telecommunications signed a partnership contract with the China 
International Telecommunication Construction Corporation (CITCC), 
Alcatel, Shangai Bell, Huawei, and ZTE.  These companies will now be 
able to partner with the Congolese Telecommunications Authority. 
 
------------------------------ 
Public Enterprises Restructure 
------------------------------ 
 
¶30. (U) The Ministry of Portfolio has launched the hiring process 
for new heads of state enterprises through the World Bank-funded 
Committee for the Reform of State Enterprises (COPIREP).  An 
applicant pool of over 5000 has been reduced to approximately 250 
candidates for 78 available positions available (three top jobs at 
 
KINSHASA 00000951  004 OF 004 
 
 
the 26 Congolese parastatals.) 
 
-------------- 
Inflation Rate 
-------------- 
 
¶31. (U) The Congolese economy continued its deflationary trend. 
Post's market basket survey indicates a deflation rate of -1.2 for 
the month of July.  The year-to-date inflation now stands at 16 
percent.  The deflation is likely due to the stable exchange rate 
and money mass in circulation.  GDRC overspending and consequent 
reliance on bank financing has been brought under control by the new 
government, i.e., the Ministers of Finance, Budget and the BCC 
Governor. 
 
Exchange Rates: 
 
Week ending   6/28  7/12  7/31 
 
CENTRAL BANK RATES  492  496  493 
 
PARALLEL MARKETS: 
KINSHASA    490  490  490 
LUBUMBASHI   490  490  490 
MBUJIMAYI    495  490  485 
KISANGANI    495  495  490 
GOMA     500  500  495 
BUKAVU    500  500  495 
 
 
MEECE