Cablegate: Economic Report - Sept 18 Through Sept 24

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 KINSHASA 001802

SIPDIS

E.O. 12958: N/A
TAGS: ECON EAID ECPS EFIN ELAB ELTN EMIN EPET CG
SUBJECT: ECONOMIC REPORT - SEPT 18 THROUGH SEPT 24

1. Summary. Prices are stable, with no inflation
reported. Exchange rates continued to rise, with
parallel markets trading at FC 400-420 per USD. The
Australian firm, Anvil Mining, is seeking joint venture
opportunities in the DRC. Banro Corporation plans to
begin its gold exploration operations soon. A mine
collapse in Katanga province killed two artisanal
miners. The DRC and Angola signed a memorandum of
understanding on joint offshore oil exploration.
Italian truck manufacturer Iveco has resumed sales in
the DRC. Civil servants in Mbuji-Mayi demonstrated to
demand pay increases. The management committee of the
Postal and Telecommunications Office (OCPT) was
replaced per OCPT workers' demands. Recently renovated
Regideso pumping facilities in Kisangani were pillaged.
The World Bank granted the DRC USD 60 million in its
most recent PMURR disbursement. End Summary.

MONETARY AND PRICE UPDATE

2. Prices are stable, with no inflation reported.
Prices have stabilized after fluctuations in demand
caused by the beginning of the school year. Monthly
inflation is -0.9 percent.

3. Exchange rates continue to rise, with the official
rate remaining above FC 400 per USD. Parallel rates
nationwide are now hovering between FC 400-420 per USD.
Low diamond sector activity, high international oil
prices, and lump-sum GDRC salary payments are
contributing to upward pressure on the exchange rate.

MINING

ANVIL MINING SEEKS JOINT VENTURE OPPORTUNITIES

4. International press reported that the Australian
firm Anvil Mining Ltd. is seeking joint-venture
opportunities in the DRC with the GDRC and private
companies. The company is listed on the Australian
Stock Exchange.

BANRO PLANS GOLD EXPLORATION

5. Banro Corporation, which holds four concessions on
the Twangiza-Namoya gold belt, recently received USD 10
million in financing from private sources to begin
exploration operations. According to Banro CEO Peter
Cowley, the company plans to begin exploration
immediately and hopes to have at least two mining sites
in operation by the end of 2004. Banro holds a 100
percent interest in its four concessions via a
renewable 25-year contract.

MINE COLLAPSE KILLS TWO

6. Local press reported that a collapse at the
Kalukuluku mine in Katanga province killed two
artisanal miners and injured several others. (Comment:
Several recent collapses at mines in Katanga have
stirred debate on mine safety and the protection of
artisanal miners. End Comment.)

PETROLEUM

MEMORANDUM ON PETROLEUM EXPLORATION

7. The governments of the DRC and Angola signed a
memorandum of understanding on offshore oil exploration
in the lower Congo basin. The governments agreed to
establish a maritime corridor for common exploration in
which each country will have a 50 percent share.

BANKING

SMALL DENOMINATION BANKNOTES REFUSED

8. Local press reported that merchants in Kamkolobondo
in Katanga province are refusing to accept FC 5 and FC
10 notes for payment in commercial transactions. The
merchants are claiming that the notes are
"inappropriate" due to their small value. Refusal to
accept the small notes is having a strong effect on the
local fishing industry, a main source of the town's
food supply. The fishing industry conducts a large
portion of its transactions with FC 5 and FC 10 notes.

TRANSPORTATION

IVECO RESUMES DRC SALES

9. Local press reported that Italian truck
manufacturing corporation Iveco has relaunched its DRC
operations after a decade of inactivity. The company,
which once sold almost 600 vehicles per year, lost 90
percent of its assets in the 1991 pillage. Sales
recently resumed with orders for 26 new trucks from
Safricas, Socitrans, Safbois, Afritrans, et al. Iveco
maintained a small staff in the DRC after 1991 despite
their lack of sales. Customers have cited this as a
factor in their choice to buy from Iveco. Afritrans
director Nazim Rawji stated that "Iveco stayed in the
DRC through difficult times. This explains our
allegiance to the brand."
LABOR
CIVIL SERVANTS DEMONSTRATE IN MBUJI-MAYI

10. Local press reported that approximately 1,200 civil
servants demonstrated in the streets of Mbuji-Mayi to
demand salary increases commensurate with their
colleagues in Kinshasa. According to union
representatives, the civil servants are planning to
strike if their demands are not met by the GDRC.

OCPT MANAGEMENT COMMITTEE REPLACED

11. The management committee of the Postal and
Telecommunications Office (OCPT) has been replaced, per
an interministerial decree issued by the Minister of
Post and Telecommunication and the Minister of
Portfolio. OCPT workers had been striking for several
months, and demanded the committee's replacement.
Workers accused the committee of mismanaging OCPT
operations and withholding their salaries.

INFRASTRUCTURE

RENOVATED WATER FACILITIES PILLAGED

12. Recently renovated Regideso facilities at Kisangani
were looted by soldiers from a nearby camp at Lukusa
and local civilians. Refurbished equipment had been
installed at the pumping facility by the ICRC several
weeks ago.

AID

WORLD BANK GRANTS DRC USD 60 MILLION

13. In its most recent PMURR disbursement, the World
Bank granted the DRC USD 60 million for projects
relating to health, education, and food security.
According to Social Fund (a GDRC body partially
managing PMURR funds) Manager Finda Koroma, the money
will be used to create income-generating opportunities
for Congolese in rural areas.

FRANCE DONATES 5 MILLION EUROS

14. International press reported that France agreed to
donate 5 million euros in budgetary aid to the GDRC.
The aid will be used to finance election preparations
and debt servicing.

15. INFLATION BY CATEGORY (IN PERCENT)

WEEK ENDING 8/27 9/03 9/10 9/17
FOOD 7 0 -3 0
BEVERAGE 0 0 0 0
NON-FOOD 0 -1 -2 0
CLOTHING 0 0 0 0
RENT 0 0 0 0
TRANSPORT 0 0 0 0
SCHOOL COSTS 0 0 0 0
UTILITIES 0 0 0 0
COMBINED FIGURES
WEEKLY INFLATION 2.6 0 -1 0.1
MONTHLY INFLATION 1.7 0 -1.1 -0.9

16. EXCHANGE RATE DEVELOPMENTS

8/27 9/03 9/10 9/17
CENTRAL BANK RATE 392.045 396.014 401.688 403.634
PARALLEL MARKET
-KINSHASA 390-395 390-395 400-405 400-410
-LUBUMBASHI 380-390 380-385 400-405 400-405
-MBUJI MAYI 385-395 385-390 400-405 400-405
-KISANGANI 380-390 380-390 400-410 410-420
-GOMA 400-410 400-410 410-415 410-420
-BUKAVU 400-410 400-410 410-415 410-420

MEECE

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