Cablegate: Kabila Lists Ways Toward Economic Growth

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RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #1850/01 3461027
ZNR UUUUU ZZH
R 121027Z DEC 06
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 5296
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SADCC
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 KINSHASA 001850

SIPDIS

SENSITIVE
SIPDIS

TREASURY FOR OWHYCHE-SHAW

E.O. 12958: N/A
TAGS: ECON PGOV KCOR CG
SUBJECT: Kabila Lists Ways Toward Economic Growth

1. (U) Summary. In his inaugural address and in a list of "100
Proposals for the Reconstruction of the DRC" released the following
day, President Joseph Kabila made a call to action and gave some
idea of his priorities for promoting Congolese economic growth. End
summary.

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The Inaugural Address
---------------------

2. (U) In his inaugural address, Kabila said his role is to support
a profound change of mentality" in the country. He said that repair
work must start in the areas of infrastructure and communications,
notably on roads, railroads, ports, airports, large-scale
agricultural projects, educational reform, access to potable water
and electricity, health care, and housing.

3. (U) Kabila tied some of his inaugural speech themes together when
he noted that "good governance...is absolutely essential to
obtaining durable development, sustained economic growth, and the
eradication of poverty." He said that the fight against corruption
would be one of his first priorities, along with reform of the
Congolese judicial system.

4. (U) He described as "incredible" the depths to which the
Congolese socioeconomic situation had sunk, and said his government
would work hard to correct the macroeconomic, monetary and financial
frameworks. He said the economic boost ("relance de l'economie")
awaited by the Congolese people would be measurable not by
government statistics, but by job creation and the contents of
market baskets. He pledged to partner with the international
community to advance development priorities.

5. (U) Kabila promised tough action a second time towards the end of
his speech, when he reiterated that impunity would no longer be
tolerated at any level in the DRC.

--------------------------------------------- ------
Kabila's 100 Proposals for the Reconstruction of the Congo
--------------------------------------------- ------

6. (U) Kabila's main themes during his inaugural speech were fleshed
out with the December 7 publication in the media of his "100
Proposals" for the reconstruction of the Congo, nearly half of them
in the category of kick-starting the economy. Some of his "big
picture" proposals include:

-- Stabilize the macroeconomic framework to improve economic
activity, investment and growth.

-- Re-establish a formal IMF program (PRGF).

--Strictly control the budget through close attention to GDRC
spending and increase state revenues through performance criteria
for government collection agencies.

--Develop and utilize the DRC's natural resources in a rational
fashion.

--Promote private initiatives (including support for local
enterprises), protect private property and the physical and judicial
security of businesses, reduce administrative
procedures/bureaucracy, strictly apply the Investment Code to reduce
business start-up costs, support the Office of Small and Medium
Congolese Enterprises, restructure internal debt, put in place a
Socio-Economic Council, and increase public investment in rural
areas.

-----------------------------------
Sectoral Policy for Economic Growth
-----------------------------------

7. (U) In the section entitled "Sectoral Policy," Kabila outlined
his approaches to:

-- Infrastructure: repair national roads, bridges, and ferries;
construct main roads between principal cities; rehabilitate river
ports and channels; support ONATRA (national transportation office;
mostly dealing with riverboat operation) and SNCC (national railroad
company); repair public facilities such as hospitals and schools;
improve the operations of the Congolese Office of Post and
Telecommunications (OCPT); diversify domestic financing for public
infrastructure, transport and communication; and modernize Ndjili

KINSHASA 00001850 002 OF 002

International Airport (Kinshasa) and the airports of Lubumbashi
(Katanga), Kisangani (Orientale), Mbuji-Mayi (Kasai Oriental),
Kananga (Western Kasai) and Goma (North Kivu).

-- Energy and Water: diversify energy sources; increase energy
production to supply the entire nation with power; promote and
extend petroleum production onshore and offshore using private
investment; rehabilitate Inga Dam turbines and other large
hydroelectric projects; increase electricity service to rural areas;
develop electricity distribution networks using public/private
partnerships; increase access to potable water, especially in rural
areas; improve the quality of service provision by state-run
electricity and water companies; and encourage private investment in
the water and electricity sectors.

-- Mining: provide titles according to the Mining Code in a
transparent manner while making sure that private companies adhere
to agreements; intensify efforts to combat fraud and the plunder of
DRC natural resources.

-- Agriculture: provide assistance to farms destroyed during and
after the war; provide access to agricultural credit and create
agricultural cooperatives for production and marketing; promote
local production of tools and of supplies such as improved seed;
improve access to fertilizer and pesticides; improve animal
husbandry and fish farming; modernize animal health services,
agricultural research, and markets for agricultural production;
increase investment in small agriculture and associated
infrastructure and small and medium-sized enterprises; and develop
agro-industries and integrated rural development projects.

-- Industry: promote Congolese industry to transform local raw
materials and produce construction materials, agricultural inputs,
and chemicals; promulgate and implement a law on restructuring
public enterprises.

-- International Economic Relations and Trade: join international
economic organizations and participate actively in regional and
sub-regional economic initiatives; facilitate Congolese economic
operators entry into international business.

8. (SBU) Comment. Kabila has laid out a very ambitious plan for the
reconstruction of the DRC, especially considering that the outgoing
transition government was unable to stay within its reduced budget
for 2006, that there is no budget yet for 2007, and that the
prospects for substantial short-term budget assistance to the DRC
next year do not look good. The Kabila government may have to
content itself with the "big picture" items (such as getting the IMF
economic program renegotiated and in place by end March 2007) before
it can even begin to worry about providing assistance in some of the
economic sectors noted above. Kabila is, however, keenly aware of
the political pressures of the very high expectations of the
Congolese people to see post-election results quickly. Although the
Kabila proposals track closely with the DRC Poverty Reduction
Strategy Paper (PRSP) filed nearly six months ago with the IMF and
World Bank, the new government will be hard-pressed to accomplish
all the PRSP objectives for 2007. Kabila and his government will
certainly have to prioritize those areas where they can show some
concrete results by doing the most good with the least expense. End
comment.

Meece

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