VZCZCXRO8016
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #1250/01 3091236
ZNR UUUUU ZZH
R 051236Z NOV 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 7085
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 001250 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EMIN ELAB EAIR PGOV CG
SUBJECT: DRC OCTOBER ECONOMIC REVIEW 
 
(U) 1. Summary 
 
- Minister of Transportation Fired 
- SN Brussels Joins with Hewa Bora to Create New Airline 
- Fire Extinguishers for Airport Authority 
- IMF Team in Kinshasa 
- Central Bank of DRC Sells Off Property 
- Cement Shortage Continues 
- Problems at Inga Dams 
- USTDA and SNEL Sign Grant Agreement for Hydroelectric Plant 
Pre-Feasibility Study 
- BHP Billiton Funds Construction of Inga III Dam 
- Transmission Cables Purchased for Kinshasa and Bas-Congo 
- Ebola Outbreak Appears to Have Ended 
- Teacher's Strike Ends 
- Gcamines Employees Demonstrate 
- Civil Servants Threaten to Strike 
- Civil Servants Demonstrate in Kasai-Oriental 
- Civil Servants Demonstrate in Lubumbashi 
- Mining Review Lacks Transparency 
- Civil Society Request Review of Mining Contract 
- Diamond Industry Faces Challenges 
- De Beers to Spend USD 31 million in DRC 
- Banro Congo Opens Offices in South Kivu and Maniema 
- Minister of Mines Vows to Help Investors 
- Pygmy Groups Complain About Harm to DRC Forests 
- European Development Fund Keeps Water Clean 
- Portfolio Minister Defends Public Enterprise Laws 
- Monthly Inflation Rate 
 
 
Aviation 
-------- 
 
(U) Minister of Transportation Fired 
 
The GDRC Minister of Transportation, Remy Henri Kuseyo Gatanga, was 
fired following the crash of an Antonov 26 during take off in 
Kinshasa on October 4.  Kuseyo tried in September to ground all 
Antonov aircraft operating in the DRC, but withdrew a proposed 
blanket ban after State Minister Nkulu Kilombo intervened on behalf 
of the Presidency.  Nkulu survived an attempt by opposition members 
of Parliament to turn him out of office following the crash. 
 
(U) SN Brussels Joins with Hewa Bora to Create New Airline. 
 
SN Brussels airline has changed its name to "Brussels Airlines" and 
will offer daily non-stop flights between Kinshasa and Brussels. 
The airline has also joined with the DRC airline Hewa Bora (HBA) to 
create a new airline, AirDC.  HBA has a 51% stake in AirDC, and the 
new airline has a fleet of 6 aircraft: four British Aerospace (BAE) 
146s and two Boeing 737-800s.  The BAE 146s, like the widely used 
Antonovs, are adept at landing on the short, rough runways found in 
the DRC.  The 737-800s will offer regional flights to Angola, 
Nigeria, South Africa, Kenya, Rwanda, and Burundi. 
 
(U) Fire Extinguishers for Airport Authority 
 
The Rgie des Voies Ariennes (RVA), DRC's Airport Authority, 
provided USD 6,500 for five mobile fire extinguisher materials at 
the Goma airport.  Two will be powered by electricity, two will be 
foam-based, and one will use carbon gas.  According to Thomas Oleko, 
an engineer who works for RVA, the new acquisitions are adequate for 
only half of the typical accidents.  Larger incidents require trucks 
and other equipment that the Goma airport does not have. 
 
 
Budget and Finance 
------------------ 
 
(U) IMF Team in Kinshasa 
 
An IMF team from Washington, led by Africa Regional Office Director 
Brian Ames, was in Kinshasa for two weeks to meet with GDRC 
officials, international partners and donor countries.  They 
evaluated the state of the Congolese economy and its financial 
situation.  The team predicted an increase in DRC's growth rate from 
5% to 6%, but cautioned the GDRC against the macroeconomic effects 
of China's USD 5 billion investment. 
 
(U) Central Bank of DRC Sells Off Property 
 
The Central Bank of the DRC (Banque Centrale du Congo - BCC) will 
sell off approximately 50 residential and commercial properties. 
This follows the announcement of its Strategic Development Plan and 
National Financial System published on July 15, 2006.  A contact at 
 
KINSHASA 00001250  002 OF 004 
 
 
BCC reported that this move follows recommendations made by the 
IMF. 
 
Commercial 
---------- 
 
(U) Cement Shortage Continues 
 
Due to a severe shortage, the GDRC has agreed to ease restrictions 
on importing gray cement.  Two companies in the Kinshasa/Bas-Congo 
region produce approximately 520 thousand tons of gray cement per 
year, well below the demand of three million tons. 
 
Energy 
------ 
 
U) Problems at Inga Hydroelectric Dams 
 
Yengo Massampu, head of DRC's Socit Nationale d'Electricit 
(SNEL), warned of potential blackouts in Kinshasa due to problems at 
the Inga hydroelectric dams.  Only one of six turbines at Inga I and 
two of eight at Inga II are currently operating.  Due to demand on 
the system, the working turbines are in danger of failure.  A World 
Bank-funded company working to rehabilitate Inga I recently 
suspended operations.  Kinshasa has been experiencing extended 
outages and, according to Yengo, there will be more power failures 
if nothing is done to improve the situation. 
 
(U) USTDA and SNEL Sign Grant Agreement for Hydroelectric Plant 
Pre-Feasibility Study 
 
USTDA and SNEL signed a $553,534 grant agreement on September 28 to 
fund a feasibility study of Nzilo II, a new hydroelectric power 
plant near Kolwezi in Katanga province's copper belt.  The study 
will be conducted by a U.S. contractor chosen by the GDRC/SNEL, and 
will hopefully lead to the eventual financing and completion of the 
Nzilo II project, located on the Lualaba River between the existing 
power plants of Nseke and Nzilo 1, and will provide electricity to 
mining companies operating in the area. 
 
(U) BHP Billiton Funds Construction of Inga III Dam 
 
(U) Mining company BHP Billiton signed a USD 20 million agreement 
with the DRC to fund construction of the Inga III dam in the 
Bas-Congo province.  BHP Billiton has also agreed to investigate the 
feasibility of developing an aluminum smelter using energy from the 
dam.   Estimated to cost USD 3 billion, the smelter would produce 
800,000 tons of aluminum annually and would require 2,000 MW of 
electricity. 
 
(U) Transmission Cables Purchased for Kinshasa and Bas-Congo 
 
(U) The SNEL (Socit Nationale d'Electricit) recently purchased 
electrical transmission cable for use in Kinshasa and three other 
cities of the Bas-Congo province.  Two companies, Montreal and 
Ficthtner, provided the cables through the "Bureau de Coordination 
des Marches des Infrastructures"(BCMI), a part of the World Bank. 
The total cost is estimated at USD 14 million. 
 
 
ESTH 
---- 
 
(U) Ebola Outbreak Appears to Have Ended 
 
Mdecins Sans Frontihres (MSF) reports that the Ebola outbreak in 
the Western Kasai province appears to have ended.  A total of 25 
Ebola cases have been recorded since September 11th, but no new 
cases have been reported for over 21 days (the usual incubation 
period of Ebola).  MSF said the official end to the outbreak could 
not be declared until a second period of 21 days (through 
mid-November) passes without any new cases. 
 
 
Labor 
----- 
 
(U) Teacher's Strike Ends 
 
Teacher's unions' SYNECAT and SYECO announced that the nationwide 
public school teachers' strike is over. The government has agreed to 
give all civil servants, including teachers, a 26 percent salary 
increase. This would bring teachers starting salaries up to 
approximately USD 88 per month. At the same time, the government 
agreed to pay teachers the same salaries across the country. Union 
managements said they believe that the salary increase will be 
 
KINSHASA 00001250  003 OF 004 
 
 
accepted by members. 
 
(U) Gcamines Employees Demonstrate 
 
Employees of Gcamines, the state copper and cobalt company, 
demonstrated in Kolwezi, Katanga Province, to demand a salary 
increase.  The employees have asked Gcamines' joint venture 
partners to grant Gcamines a loan against future dividends to help 
pay for the increased salaries. 
 
 
(U) Civil Servants Threaten to Strike 
 
Congolese civil servants are threatening to strike by November 5 if 
they are not given a salary increase.  In July 2007, over FC 5 
billion ($10 million) was added to the payroll for salary increases, 
but the civil servants' union has requested that the GDRC add 
another FC 5 billion to the payroll to meet the interim salary 
schedule promised by the government.  (Note: The salary for 
Congolese civil servants ranges from FC 35,000/month (USD 70) to FC 
91,000/month (USD 182) for the highest level civil servant in each 
ministry.) 
 
(U) Civil Servants Demonstrate in Kasai-Oriental 
 
Civil servants in Mbuji-Mayi demonstrated on October 8 to demand 
payment for September salaries.  The Minister of Finance recently 
asked the Central Bank to freeze payments, and the civil servants 
have threatened to go on strike in response. 
 
(U) Civil Servants Demonstrate in Lubumbashi 
 
Civil servants in Lubumbashi also demonstrated on October 9 to 
demand payment of September salaries.  Martin Kabwelulu, the 
Minister of Mines, ordered payments to be suspended prior to the 
arrival of the Mining Review Commission from Kinshasa.  Moise 
Katumbi, the Governor of Katanga province, calmed the situation by 
authorizing the payment of salaries. 
 
 
Mining 
------ 
 
(U) Mining Review Lacks Transparency 
 
According to international NGO Global Witness (GW), the GDRC Mining 
Commission contract review process lacks transparency.  GW says that 
civil society is poorly represented and that the process appears to 
be subject to interference by the GDRC.  GW believes the Mining 
Commission's recommendations may not adequately reflect the impact 
on social, environmental and human rights. 
 
U) Civil Society Request Review of Mining Contract 
 
The civil society in Ituri published a memorandum requesting a 
review by the GDRC of AngloGold Ashanti Kilo's (AGK) mining 
contract.  The civil society accused the AGK of ignoring a clause in 
the contract that stipulates building a dam in Budana. 
 
(U) Diamond Industry Faces Challenges 
 
The DRC 2007 Annual Review estimates 700,000 diggers earning between 
USD 30 to 50 per week in the artisanal diamond mining sector.  In 
2006, the DRC officially exported 30.2 million carats (valued at USD 
679 million), 90% of which came from artisanal mines.  A new NGO 
report claims that most of the production from the Orientale and 
Equateur provinces is smuggled out of the country via Uganda and the 
Central African Republic.  Illegal smugglers avoid the 3.75% DRC tax 
that is desperately needed to build the country's schools, 
hospitals, and infrastructure. 
 
(U) De Beers to Spend USD 31 million in DRC 
 
De Beers plans to spend USD 31.4 million to explore new mining areas 
in the DRC.  They have spent over USD 57 million since 1974, mainly 
on projects in the Kasai provinces.  Most projects involve option 
agreements with Congolese exploration companies, including the state 
diamond mining company, MIBA (Minieres Bakwanga). 
 
(U) Banro Congo Opens Offices in South Kivu and Maniema 
 
Banro Congo Mining, a subsidiary of Canadian Banro Corporation, 
finished its gold exploration phase in the provinces of South Kivu 
and Maniema.  The company is now engaged in the exploitation phase 
and has opened offices in Twangiza, Lugushwa (South Kivu), and 
Namoya (Maniema). 
 
KINSHASA 00001250  004 OF 004 
 
 
 
(U) Minister of Mines Vows to Help Investors 
 
The DRC Minister of Mines, Martin Kabwelulu, announced at the Mining 
Forum (FOR MINES) that in order to help investors he will meet with 
the heads of mining companies on the last Saturday of each month. 
The Minister also announced that he will meet with the DRC 
Parliament once a month to talk about problems in the mining 
sector. 
 
 
Natural Resources 
----------------- 
 
(U) Pygmy Groups Complain About Harm to DRC Forests 
 
An internal investigation by senior bank staff and outside experts 
claims that the World Bank misled DRC about the value of its 
tropical forests, and encouraged foreign logging of the world's 
second largest forest. The investigation follows complaints in 2002 
by an alliance of 12 Pygmy groups who claimed that irreversible 
damage has been done to the DRC forests, putting them in potential 
harm. 
 
(U) European Development Fund Keeps Water Clean 
 
For the next ten months the European Development Fund (EDF) will 
donate chemicals and equipment to purify drinking water in the DRC. 
Equipment will include pumps and spare parts necessary to keep the 
existing distribution system operating.  The total donation is 
estimated at Euros 137 million. 
 
 
Public Enterprises 
------------------ 
 
(U) Portfolio Minister Defends Public Enterprise Laws 
 
The Minister of Portfolio, Jeanine Mabunda, successfully defended 
draft laws to restructure the public enterprise system.  Introduced 
to Parliament in August 2007, the laws intend to open doors to 
privatization and to disengage the GDRC from work in the public 
enterprise. 
 
 
Inflation and Exchange Rates 
---------------------------- 
 
(U) Monthly Inflation Rate Increase 
 
The DRC economy continues an inflationary trend.  Post market survey 
shows an inflation rate of 3.9 percent for the month of October. 
The year-to-date inflation now stands at 24 percent.  The inflation 
is likely due to an increase of education fees and scarcity of 
non-food items, such as charcoal and firewood, which are hard to 
find during the ongoing rainy season. 
 
 
Week ending:   8/31  9/25   10/30 
 
Central Bank Rates:  495  498   498 
 
 
Parallel Markets: 
 
Kinshasa    490  495   500 
 
Lubumbashi   490  495   495 
 
Mbujimayi    500  505   505 
 
Kisangani    500  505   505 
 
Goma     500  500   500 
 
Bukavu    500  500   500