Cablegate: Drc July Monthly Economic Review
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DE RUEHKI #1261/01 2220933
ZNR UUUUU ZZH
R 100933Z AUG 06
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 4566
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 02 KINSHASA 001261
DEPT FOR DRL/IL-LHOST AND AF/RSA-MHARPOLE
TAGS: ECON EFIN ENRG ELAB EAIR EMIN ETRD PGOV CG
SUBJECT: DRC JULY MONTHLY ECONOMIC REVIEW
1. (U) Summary.
- The DRC banking sector is slowly increasing services, with the
first ATM, Master Card and mobile phone banking capabilities
becoming available in July.
- The Energy Vice Minister ordered an audit of Cohydro, the DRC's
- National railway employees are on strike to demand payment of
nearly two years' salary arrears.
- Interest in the Katangan mining sector continues to increase.
South African Kumba Resources is in discussions with Gecamines, the
Congolese mining parastatal, to relaunch a zinc/lead/silver mine.
An Israeli-owned company, Nikanor, has raised millions of dollars of
capital to develop its copper and cobalt mining projects.
- The IMF announced the launched of its informal Staff Monitored
Program (SMP) with the DRC.
- The GDRC submitted its Poverty Reduction Strategy Plan to the IMF
and World Bank and produced a revised 2006 budget, which contains a
- According to Post's market basket survey, June consumer prices
increased by 2 percent. End summary.
2. (U) July 31, the Director of the DRC's Civil Aviation Authority
granted Northwest Airlines a code-share with Air France flights
between Kinshasa and Paris, effective in September.
3. (U) The ProCredit Bank, a German-run financial institution that
operates in the DRC and in 18 other developing markets, has
installed the first ATM machine in Kinshasa at its bank here.
4. (U) In Kinshasa, Rawbank, a Congo-based commercial bank, launched
a Master Card for its clients' use. Rawbank is the first financial
institution in the DRC to offer this service; however, few merchants
accept payment via credit card in the DRC.
5. (U) Cellular service provider Vodacom launched a new service
called TOP-UP in cooperation with Celpay, a company which Celtel,
Vodacom's chief competitor in the DRC, spun off in 2005. This
service allows users with Internet access, a 64K SIM card and a bank
account, to pay bills and withdraw cash from participating
businesses. Celpay currently has agreements to extend this service
to the clients of three commercial banks in the DRC.
6. (U) The Vice Minister of Energy (member of the political
opposition party FCI) requested that the Cour des Comptes, the DRC's
audit body, examine Cohydro, the DRC's petroleum parastatal. The
audit is allegedly in response to mismanagement by Cohydro's
management, including its CEO who is a member of another political
7. (U) SNCC (the DRC's national railroad company) employees at Ilebo
Port on the Kasai River in Western Kasai went on strike to claim 22
months of salary arrears, and subsequently all SNCC employees
followed suit. Ilebo is a key transit point in the interior for food
and consumer goods; the strike has therefore resulted in increased
consumer prices because of reduced supplies.
8. (U) According to contacts in the mining sector, Gecamines (a
Congolese mining parastatal) is negotiating with Kumba Resources to
relaunch joint-venture operations at Kipushi, a zinc/lead/silver
mine in Katanga province. Anglo American, a British-South African
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diversified mining company, is Kumba's majority shareholder. The
project's other partner, First Quantum, is listed on the Toronto
Stock Exchange and on London's AIM.
9. (U) Nikanor, Israeli investor Dan Gertler's holding company, has
raised several hundred million dollars following its public tender
on the London Stock Exchange's Alternative Investment Market (AIM).
Media reports say that this tender is AIM's largest to date.
Nikanor says that it will use the capital to develop its
copper/cobalt mining projects in Katanga in joint-venture with
Public Finance and Taxation
10. (U) The International Monetary Fund (IMF) confirmed the
establishment of an informal "Staff Monitored Program" (SMP) with
the DRC following the March 31 lapse of the formal IMF Poverty
Reduction and Growth Facility (PRGF) program. The SMP will run at
least through the end of 2006, requiring of the DRC the same
conditions of structural reform and macroeconomic stability as under
the PRGF. The IMF expects to send a team to the DRC to evaluate
progress under the SMP in October and again at year's end or in
11. (U) The Congolese Minister of Planning, Delly Sesanga, announced
in mid-July the GDRC's approval and adoption of its Poverty
Reduction Strategy Paper (PRSP), following an extended round of
consultations with donor country, civil society, and multilateral
lending institution representatives. The GDRC presented the
document to the IMF and World Bank as the DRC's social and economic
development roadmap for 2007-2011.
12. (U) The Ministries of Finance and Budget recently unveiled the
DRC's revised 2006 budget. The new budget reflects a deficit of USD
70 million. This is due primary to the loss of an estimated USD 40
million of Central Bank foreign exchange reserves' support and USD
180 million of foreign budget assistance, as the result of the
unsuccessful conclusion of the IMF PRGF program. The GDRC trimmed
the overall budget by some $30 million (from $2.1 billion to $2.07
billion), increased estimated government revenues from 43% to 47% of
the overall budget and decreased projected government spending. All
external debt payments have been slashed from the budget, despite
the fact that Paris Club members suspended debt forgiveness
following the collapse of the IMF program. The Ministries of Budget
(www.minsteredubudget.cd) and Finance (www.minfinrdc.cd) have begun
posting budget information on their websites.
CONSUMER INFLATION RATE
13. (U) Post's market-basket survey indicates an inflation rate of 2
percent in July, due primarily to increases in the cost of maize and
manioc, the staple foods of the DRC.
14. (U) Week ending 7/07 7/14 7/21 7/27
CENTRAL BANK RATES: 449 456 458 458
KINSHASA 455 465 479 470
LUBUMBASHI 450 450 450 450
MBUJIMAYI 455 460 460 465
KISANGANI 450 460 460 N/A
MATADI/BOMA 450 460 460 N/A
GOMA/BUKAVU 460 465 470 N/A