ECONOMIC REPORT - AUG 13 THROUGH AUG 20

UNCLAS SECTION 01 OF 02 KINSHASA 001562

SIPDIS

E.O. 12958: N/A
TAGS: EAID ECIN ECON EFIN ELTN EMIN EPET EWWT PGOV PREL CG
SUBJECT: ECONOMIC REPORT - AUG 13 THROUGH AUG 20

SUMMARY


1. Food prices have decreased due to the reopening of
the Mai-Ndombe bridge. Exchange rates remain stable,
but the FC is trading at a slightly higher value on the
Kinshasa parallel market than official rates. The
DRC's National Assembly created a commission to
investigate Gecamines' mining and contracting
practices. Cohydro opened a new gas station in
Kinshasa. Barge traffic resumed on a critical stretch
of the Congo River between Ubundu and Kindu. Contracts
have been awarded for a World Bank IDA funded USD 100
million project to repair National Routes No. 2 and No.

4. The Great Lakes States have signed an agreement
laying the groundwork for a transit network linking the
DRC, Kenya, Rwanda, Uganda, and Burundi. MONUC plans
to transport 1,000 tons of humanitarian assistance by
rail between Ubundu and Kisangani over the next six
months.

MONETARY AND PRICE UPDATE


2. Food prices dipped slightly due to the completion of
repairs to the Mai-Ndombe bridge on National Route No.
1 from Bandundu province to Kinshasa. Overall, prices
have decreased 0.8 percent this month.


3. Exchange rates remain stable, but the FC is trading
at a slightly higher value on the Kinshasa parallel
market than official rates. (Comment. The difference
between the parallel market and bank rate values is
approximately FC 5. This equates to only a few cents.
Post does not believe the disparity to be significant,
but will continue to monitor exchange rates closely.
End Comment.) Exchange rates in eastern DRC remain
slightly elevated due to continuing tensions.

MINING

GDRC CREATES COMMISSION TO INVESTIGATE GECAMINES


4. The National Assembly of the DRC has formed a
commission to investigate the mining and contracting
practices of state-owned Gecamines. The commission was
called for by MP Mayombe Mbuyoko, and is composed of
nine MPs. The commission's investigation will last
fifteen days, after which a report will be produced.

PETROLEUM


5. Vice President Yerodia Ndombasi commemorated the
opening of a new gas station in Kinsuka, Kinshasa. The
station was built by the parastatal Cohydro and has a
50 cubic meter storage capacity. This most recent
opening follows the inauguration of new Cohydro
stations in Kisangani (Orientale province),Mbuji-Mayi
(Kasai Oriental province),and Mbandaka (Equateur
privince).

TRANSPORTATION

UBUNDU-KINDU RIVER TRAFFIC RESUMES


6. Barge traffic on the Congo River between Ubundu,
Orientale province, and Kindu, Maniema province, has
resumed after six years of inactivity. The 350km
stretch of river had been a primary regional trade and
transportation route, but was closed during the civil
war. Office des Routes has donated a small barge to a
local NGO, Solidarite Ville-Campagne, for three months
in the hope of rekindling river commerce between Ubundu
and Kindu. (Comment. River commerce along this route
is particularly important because it fills a gap in the
SNCC rail line between Kisangani, Orientale province,
and southern and eastern DRC. End Comment.)

USD 100 MILLION AWARDED FOR REPAIR OF ROADS


7. BCECO Director-General Mr. Matata Ponyo announced
that contracts worth USD 100 million have been awarded
to four companies for the rehabilitation of National
Routes No. 2 and No. 4. The project was funded by the
World Bank's IDA. National Route No. 2 will be
repaired between Mbuji-Mayi and Kasongo (524km) and
between Bukavu and Kasongo (496km). National Route No.
4 will be repaired between Kisangani and Niania (341mk)
and between Niania and Beni (410km). BCECO estimates
that the project will take two months to complete.
(Comment. Two months is optimistic at best.
Logistical difficulties and continuing instability will
likely cause serious delays. End Comment.)

GREAT LAKES STATES SIGN TRANSIT AGREEMENT


8. International press reports that representatives
from Kenya, Uganda, Rwanda, Burundi, and the DRC have
signed the Northern Corridor Transit Agreement. The
agreement outlines plans to link the five states by
rail and waterway from the Kenyan port of Mombassa to
the western coast of the DRC. The transit network will
utilize existing rail routes in Kenya and Uganda, and
will require the construction of a new line from
Kasese, Uganda to Kisangani, DRC. The signing of the
agreement paves the way for feasibility and design
studies.

HEALTH

RESURGENCE OF EPIDEMICS


9. The WHO reported significant increases in
communicable disease infection rates in several DRC
provinces. Nord-Kivu and Sud-Kivu provinces reported
5,511 cases of cholera with 147 fatalities. Kasai
Oriental and Equateur provinces reported 11,000 cases
of meningitis with 1,357 fatalities. Ituri province
reported 80 cases of plague with 4 fatalities. Several
cases of viral hemorrhagic fever were reported in Kasai
Oriental, Bandundu, and Sud-Kivu provinces. The WHO
attributes the recent rise in infection to the lack of
access to clean drinking water, food, shelter, and
medical facilities prevailing in the conflict-prone
eastern DRC.

AID


10. MONUC plans to transport approximately 1,000 tons
of humanitarian assistance by rail between Kisangani
and Ubundu, Orientale province, to support the local
population and improve access to the province for
various aid organizations. The WFP, OCHA, and SNCC
(DRC railroad parastatal) will participate in the six-
month project.


11. INFLATION BY CATEGORY (IN PERCENT)

WEEK ENDING 7/23 7/30 8/6 8/13
FOOD -2 2 -1 -2
BEVERAGE 0 0 0 0
NON-FOOD 8 0 0 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 -0.6 0.9 -0.2 -0.6
MONTHLY INFLATION 0.4 1.2 -0.2 -0.8


12. EXCHANGE RATE DEVELOPMENTS

7/23 7/30 8/6 8/13
CENTRAL BANK RATE 388.1864 389.1094 389.1157 390.1757
PARALLEL MARKET
-KINSHASA 388-398 385-390 385-390 385-390
-LUBUMBASHI 385-395 380-385 380-385 380-385
-MBUJI MAYI 380-385 380-385 380-385 385-390
-KISANGANI 400-410 400-410 375-385 375-385
-GOMA 400-410 400-410 400-410 400-410
-BUKAVU 400-410 400-410 400-410 400-410

MEECE