VZCZCXRO4362
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #1341/01 3391542
ZNR UUUUU ZZH
R 051542Z DEC 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 7202
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 05 KINSHASA 001341 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EMIN ELAB EAIR PGOV CG
SUBJECT: DRC NOVEMBER ECONOMIC REVIEW 
 
¶1. (SBU) Summary 
 
Agriculture 
- Palm Oil Imports Flow Again, Local Industry Resumes Production of 
Margarine, Soap 
 
Forestry 
- NGO Encourages GDRC to Complete Logging Concession Conversion 
Process 
 
Infrastructure 
- Kinshasa Roads Bad, Getting Worse, Parliament Investigates 
- New Forklifts May Help Solve Matadi Container Problems 
 
Investment 
- Portuguese Delegation Seeks DRC Business Opportunities 
- Rothschild Bank May Open Branch in Kinshasa 
- South African Company Looks to Invest in DRC 
 
Labor 
- Inter-Union's Threat to Strike is Dismissed by the Independent 
Unions 
- University Professors Strike 
- Civil Servants End Walkout, Receive Salary Increase and Equal Pay 
Across Country 
- Transportation Employees Strike 
 
Mining 
- Cassiterite Trade in North Kivu Province 
- Belgian Government Funds Carter Center 
- African Development Bank Approves EUR 100 Million 
- Katanga Mining Company and Nikanor to Merge 
- Radioactive Material Dumped, Arrests Made 
- GDRC Demands Conversion of Exploration Permits 
 
Petroleum 
- Gasoline Price Increases Nearly 16 Percent for Month 
- Brazil/DRC Plan Cooperation on Oil Exploration 
 
Public Finance 
- The GDRC pays internal creditors USD 29 million 
- World Bank grants DRC USD 3 Million 
 
Miscellaneous 
- Corporate Council on Africa (CCA) U.S.-Africa Business Summit, 
November 14 - 16 
- European Union Emergency Funding: EUR 45 Million 
- World Bank Delegation Reviews DRC Urban and Socioeconomic Program 
- Preliminary 2008 Draft Budget Announced by Ministry 
- Cellular Phone Companies Fined 
- Congolese Customs Office Under Scrutiny 
 
Monthly Inflation and Exchange Rates 
 
End Summary. 
 
 
Agriculture 
----------- 
 
¶2. (U) MARSAVCO, the largest edible oils, soap, and cosmetic 
manufacturer in the DRC, resumed production this week following a 
month of severe shortage of imported palm oil due to problems at the 
Port of Matadi. (Note: DRC was still a palm oil exporter in the 
early 1980s, peaking at over 400,000 MT, but now is a net importer 
from Malaysia and Indonesia, unable to supply even its own domestic 
industry despite vast plantations along the Congo River.  End 
note.) 
 
Forestry 
-------- 
 
¶3. (U) The NGO "Natural Resources Network" (NRN) recommends that the 
GDRC convert forestry certificates into forestry concession 
contracts, in accordance with the presidential decree of 2005. A 
team created by the Ministry of the Environment is working with the 
World Bank to accomplish this task. According to NRN, this 
conversion process should help solve the problem of illegal logging 
in many regions of the DRC. 
 
Infrastructure 
-------------- 
 
¶4. (U) Roads in Kinshasa remain bad months after elections and 
despite GDRC promises to improve infrastructure.  Heavy rains in 
late October and early November have made the roads even worse and 
 
KINSHASA 00001341  002 OF 005 
 
 
questions have been raised about recent work done under World Bank 
contracts. Parliament will conduct an investigation. 
 
¶5. (U) ONATRA (The National Transportation Office) unveiled 36 newly 
acquired 4-ton forklifts at the Port of Matadi, purchased by the 
GDRC for USD 14 million.  It is hoped that these will help to 
alleviate the backlog of containers at the port and speed up the 
entire clearance process, as well as help to improve ONATRA's 
financial returns. 
 
Investment 
---------- 
 
¶6. (U) A Portuguese trade delegation met in November with the 
Ministries of Trade, Industry, Finance, Energy, and 
Telecommunications.  Portuguese investors are exploring 
opportunities for reinvestment in the DRC after the looting of 1990 
and 1993 drove many Portuguese businesses out of the country. 
 
¶7. (U) Rothschild Bank, a Swiss bank that specializes in investment 
and corporate banking, is negotiating with authorities in the DRC to 
open a branch in Kinshasa.  Rothschild currently has offices in only 
two other African countries, South Africa and Zimbabwe. 
 
¶8. (U) South African (SA) company Ingram Adcock is assessing the 
market for dialysis equipment in the DRC. A South African trade 
delegation met with the director of ANAPI (National Agency for 
Investment Promotion) to explore the benefits of the GDRC Investment 
Code. 
 
Labor 
----- 
 
¶9. (U) Unions representing DRC civil servants ended their strike 
after signing a salary agreement with the GDRC on November 14. 
According to the agreement, the GDRC will increase salaries for all 
civil servants (with lowest paid workers receiving USD 60/month) 
throughout the DRC beginning December. 
 
¶10. (U) University professors throughout DRC have begun striking 
this month in a job action that has spread from Kinshasa to the rest 
of the nation. Professors are requesting increased salaries of up to 
USD 4,000/month and a tenure status different from civil servants. 
 
¶11. (U) Independent civil service unions have dismissed calls for a 
strike by the syndicate of unions, accusing the syndicate of 
blackmailing the GDRC.  The independent unions believe the syndicate 
has no reason to strike since it has already accepted a negotiated 
2008 salary scale. 
 
¶12. (U) Employees in the transportation sector are either striking 
or threatening to strike.  CMDC (Compagnie Maritime du Congo, the 
national maritime company), is closed due to a strike, while ONATRA 
(Office National de Transport) employees are threatening to strike 
and if this occurs there is a risk that the Port of Matadi would 
close to all import-export traffic.  Employees of Hewa Bora, an 
international airline that flies to Belgium and South Africa, are 
also on strike, causing aircraft to be grounded. 
 
Mining 
------ 
 
¶13. (SBU) Reliable sources in Goma report that LET 410 aircraft, 
capable of carrying one metric ton (MT, 2200 lbs) of cargo per 
flight, fly cassiterite (tin ore currently valued at close to 
$10K/ton) from Walikale to Goma dozens of times/day.  This could 
amount to nearly $500K/day on good days.  In addition to 
cassiterite, the Walikale mines of western North Kivu province also 
produce gold, coltan, and wolframite (tungsten ore, also now valued 
at nearly $10K/ton).  Villagers between Walikale and Goma report 
regular overland truck transport of mineral ores, but the onset of 
the rainy season and the worsening condition of roads, especially 
around Masisi, has reduced this traffic of late. 
 
¶14. (U) The Belgian government will provide EUR 150,000 (about USD 
225,000) to the Carter Center so they can provide legal advice to 
the GDRC Mining Commission that is reviewing mining contracts signed 
between the GDRC and its copper/cobalt parastatal, GECAMINES.  Based 
upon the findings of the commission, the GDRC will seek to 
renegotiate some of the 60-70 contracts under review and will 
require legal assistance for that process. 
 
¶15. (U) The African Development Bank (ADB) approved a loan of EUR 
100 million to Tenke Fungurume Mining SARL (TFM, a project of the 
U.S. copper mining company Freeport McMoRan International) to 
partially finance their copper mining project in the Katanga 
 
KINSHASA 00001341  003 OF 005 
 
 
Province of southern DRC.  The project will mine copper oxide ore 
(such as malachite) in Tenke, and process it in a conventional 
hydrometallurgical plant to extract copper and cobalt.  The company 
expects to produce 115,000 tons of nearly pure copper, and 10,000 
tons of cobalt metal per year.  In addition to its mining activities 
TFM will implement infrastructure projects in the area, including 
roads and hydroelectric power. 
 
¶16. (U) The Minister of Mines, Martin Kabwelulu, announced that 
Katanga Mining Company (KMC) and Nikanor have merged.  The new 
company will keep the name of Katanga Mining, and will be Africa's 
largest producer of copper and the world's largest producer of 
cobalt by 2011.  Assets for the new company will exceed USD 3.3 
billion. 
 
¶17. (U) Authorities in Katanga province arrested seven members of a 
team assigned to dispose of seized radioactive material.  Seventeen 
to nineteen tons of copper/cobalt ore found to have radioactivity 
levels far in excess of legal limits had been confiscated in Likasi 
(Katanga province).  The ore was slated to be sealed in the 
non-operational uranium mine at Shinkolobwe, but the transportation 
crew dumped roughly four tons of the ore into the Mura River, six 
miles south of Likasi.  The remaining thirteen to fifteen tons of 
radioactive ore is still missing.  Didace Pembe, Minister of the 
Environment, announced the arrests and the beginning of the 
subsequent environmental clean-up.  (see Kinshasa 1291) 
 
¶18. (U) Summoned before the Senate on November 19 and 21, Minister 
of Mines Martin Kabwelulu stated that some mining operators should 
convert their exploration permits into exploitation permits, as 
required by DRC law.  He said also that the GDRC is working on a 
process with German and U.S. companies to certify certain minerals, 
such as coltan, as in the Kimberley process in order to avoid fraud. 
 The Minister also indicated that coltan in Kanyama, Katanga 
province is being illegally mined. 
 
Petroleum 
--------- 
 
¶19. (U) The Ministry of Economy announced 8 percent and 5 percent 
increases in the price of gasoline on November 2 and November 18 
respectively due to recent increases in international oil prices. 
For the western Congo (Kinshasa included), the price for one liter 
of gas rose from CF 535 (USD 1.07) to CF 580 (USD 1.16) and then 
from CF 580 (USD 1.16) AND CF 610 (USD 1.60). This nearly 16 percent 
price hike is equivalent to a nearly thirty cent per gallon increase 
overnight, and has resulted in a rise of more than 25 percent in the 
cost of public transportation. The increase is expected to 
contribute to high end-of-year inflation, beginning with the 
transportation sector. 
 
¶20. (U) Minister of Energy Lambert Mende Omalanga and a team of 
Congolese hydrocarbon experts visited Brazil recently to discuss a 
feasibility project for petroleum exploration in DRC's central basin 
(mainly northwestern Equateur province).  Brazil is planning to use 
its national petroleum company for the exploration phase.  High 
Resolution Technology Petroleum, a Brazilian laboratory, will 
evaluate the data for potential petroleum reserves in the basin. 
The DRC delegation also discussed Brazil's plans for transforming 
food waste into biofuels. 
 
Public Finance 
-------------- 
 
¶21. (U) The World Bank (WB) has agreed to provide the GDRC USD 29 
million to help pay its interior debt. In 2004, the WB granted the 
GDRC USD 90 million, which allowed the country to pay USD 42.5 
million of interior debt and use USD 47.5 million to pay for the 
retirement of civil servants. 
 
¶22. (U) The World Bank, in an effort to promote the private sector 
economy in Africa, granted the DRC USD 3 million to help stimulate 
its economy. The fund will help Congolese businesses meet the GDRC 
requirements of paying deposits and export fees. (Note: The GDRC 
exacts large fees and duties on its own exports, making it difficult 
for small-scale and non-profit exporters to get their goods out of 
the country, even when attempting to utilize AGOA benefits for 
exports into the U.S.) 
 
Miscellaneous 
------------- 
 
¶23. (U) Econ counselor participated in the CCA summit in Cape Town, 
attended by USG agencies (MCC, OPIC, USTDA, USTR, etc.), African 
Heads of State (Namibia, Uganda) and U.S. Ambassadors to African 
countries (Burundi, Madagascar, Zambia).  Plenary sessions looked at 
 
KINSHASA 00001341  004 OF 005 
 
 
U.S. Investment and Financing in Africa, U.S-China relations in 
Africa, and U.S.-Africa Energy Cooperation.  Workshops attended by 
Econcouns included Agribusiness Development, Public-Private 
Partnerships, Renewable Energy, and Aid for Trade.  (Greg Groth) 
 
¶24. (U) EUR 45 million, the remainder of a total EUR 533 million 
package provided to the GDRC in 2007 to address emergency needs, 
will be utilized as follows: 
-- Kinshasa Sanitation Project: EUR 22 million 
-- Civil Aviation Agency Support Project: EUR 5 
-  million 
-- National Police Reform Support: EUR 5 million 
-- Land Preserves Support: EUR 4 million 
-- National Independent Electoral Commission Support: EUR 3 million 
-- Technical Assistance: EUR 5.7 million 
 
¶25. (U) A World Bank (WB) delegation met with GDRC officials in late 
October while reviewing the WB PURUS project (Emergency Program for 
Urban and Socioeconomic Rehabilitation).  PURUS includes a variety 
of infrastructural and social programs (including school projects). 
A progress report regarding GDRC public expenditures will follow. 
 
¶26. (U) During the November 12 extraordinary meeting of the DRC 
Council of Ministers, a first draft of the 2008 budget was unveiled 
by the Budget Minister. At USD 3.34 billion, it exceeds the 2007 
budget by nearly one billion dollars, and includes funding for the 
decentralization process, scheduled to begin in early 2008. 
 
¶27. (U) Following a meeting of experts from the GDRC tax collection 
agency (DGRAD) and the Ministry of Finance, two DRC-based 
telecommunication companies, CELTEL and SAIT, have been fined USD 
14,750,000 and USD 17,428,500 respectively, with payment due to the 
GDRC treasury by November 3.  The two companies are accused of 
modifying their licenses and/or transferring shares without prior 
authorization by the Minister of Telecommunications. 
 
¶28. (U) The GDRC Court of Accounts (a watchdog agency) has given the 
Congolese Duty and Customs Office (OFIDA) until November 10 to 
justify its low level of collections in fiscal years 2005 and 2006. 
Although OFIDA reported slightly higher than projected amounts for 
these years, the Court estimates that at least USD 45 million of 
state revenues were not reported during those two years. (Note:  It 
is generally acknowledged that state revenue collection agencies, 
which are self-financed from the proceeds collected, do not 
effectively collect or deposit mandated taxes, duties and fees.  End 
note.) 
 
Monthly Inflation and Exchange Rates 
------------------------------------ 
 
¶29. (U) The DRC economy is showing an increasingly inflationary 
trend. After a period of creeping inflation, post's market basket 
survey indicates an inflation rate of 4.2 percent for November. 
This November inflation is due almost entirely to a nearly 16 
percent fuel price increase (gasoline rose from USD 4.07/gallon at 
the beginning of the month to USD 4.64/gallon by the end of the 
month) that in turn increased public transportation costs. Taxi-bus 
rides rose from 150 CF/trip (about 30 cents) to 200 CF/trip (40 
cents).  Large buses increased fares from 200 CF (40 cents) to 300 
CF (60 cents).  Taxi rides went from 350 CF (70 cents) to 400 CF (80 
cents).  The Economic Section is now retooling its market basket 
survey to reflect current realities, since the current survey is 
based upon assumptions made in December 2000 (our base year) that 
are now no longer completely valid. 
 
 
¶30. (U) Exchange Rates: Rates have remained very stable despite a 
spike in inflation for the month of November.  Exchange rates may 
move slightly in December as holiday spending puts more money into 
circulation and exerts more inflationary pressure on the economy. 
 
Week ending:    9/25  10/30   11/30 
 
Central Bank Rates:   498  498      498 
 
 
Parallel Markets: 
 
Kinshasa     495  500      495 
 
Lubumbashi        495  495      490 
 
Mbujimayi     505  505      495 
 
Kisangani     505  505      500 
 
 
KINSHASA 00001341  005 OF 005 
 
 
Goma      500  500      500 
 
Bukavu     500  500      500 
 
 
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