CUSTOMS BUREAU LEADS NEW LABOR UNREST

UNCLAS SECTION 01 OF 02 KINSHASA 001875

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ELAB ECON ETRD EWWT PGOV CG
SUBJECT: CUSTOMS BUREAU LEADS NEW LABOR UNREST

REF: KINSHASA 1474


1. (U) Summary. Office des Douanes et Accises (Ofida -
Customs Agency) re-initiated a nationwide strike on Monday,
Oct 4. This strike is the third in 2004 by Ofida, whose
employees are demanding increased salaries before returning
to work. Ofida is attempting to bring other agencies under
the control of the Ministry of Finance into the strike.
Continued and growing labor unrest is possible. End Summary.


2. (U) Ofida began its third strike of 2004 on Monday, Oct 4.
The strike is being conducted nationwide and has paralysed
the ports of Matadi and Boma and the border crossing at
Kasumbalesa (Katanga Province),and the customs office at
Kinshasa airport. Matadi and Kasumbalesa are the primary
ports of entry for imported goods entering the DRC.
Meanwhile, the main border crossings in the Eastern DRC
remain open, although workers there support the strike in
principle. Ofida workers are demanding salaries to be
increased to USD 200 for the lowest paid worker (e.g.
sanitation, doorman, etc.) graded upwards at a 10 percent
increase per level. The GDRC refused to budge past FC 10,000
(USD 25) per month for the lowest salary in February and
March salary negotiations (reftel). (Note: Conversions are
done at USD 1 to FC 400, the prevailing rate for September.
End Note.)


3. (U) Radio Okapi (Monuc Radio) has reported that the Ofida
Provincial Director for Bas-Congo estimates that the loss of
earnings per day is FC 120 million (USD 300,000). Meanwhile,
approximately 10 ships are waiting to unload their cargo at
Matadi. Each day the shipping companies incur additional fees
of USD 40,000 to USD 50,000 while waiting for Ofida to end
the strike and return to work.


4. (U) Two export-import firms have confirmed that nothing is
passing through either Kasumbalesa or Matadi. Not even
"minimum service" is being provided. The "Guichet Unique"
(one-stop processing) systems in Matadi and Kinshasa are
closed. Trucks are backing up at Kasumbalesa and Sakania in
Katanga Province. There is no gasoline available in either
Lubumbashi or Mbuji Mayi (which is supplied by Lubumbashi).
Futhermore, the strike will put most export-import firms
behind at least two weeks in shipping and sales. One firm
stated that it has cancelled all orders for the next few
weeks until the situation is resolved. Lubumbashi sources
have noted that the exchange rate is slowly rising due to a
lack of dollars on the market as firms pay extended fees. At
Matadi, one export-import source reports that ONATRA (the
National Office of Transportation, i.e. port authority) is
being very flexible in the payment of additional port fees
(e.g. allowing partial payment or payment cancellations) due
to the strike conditions being out of the control of shipping
and export-import firms.


5. (SBU) Ofida workers and the Intersyndical de Kinshasa (a
broad collection of civil servant unions) are threatening to
push other revenue generating services into a general strike
in 72 hours if their demands are not met. These services
would include DGRAD and DGI (both of which are tax services),
and possibly others which are under the control of the
Ministry of Finance. The workers and unions have also voiced
concerns regarding ongoing investigations into high level
officials in DGRAD and the Ministry of Finance for
mismanagement and corruption. Business sources claim that the
government initially told them on Monday that the strike
would not be serious and would only last one or two days.
However, they now believe that it will take at least until
Monday, Oct 11, for the GDRC and the unions to reach a
solution.


6. (SBU) Comment. The ongoing labor difficulties pose several
problems for the GDRC. First, most basic consumer products,
such as soaps and detergents and processed foods, and all
manufactured goods are imported. The paralysis at Matadi and
Kasumbalesa halts all imports. Second, the loss of tax and
customs revenue over a long period of time would adversely
effect the government's ability to plan a budget within the
confines of the IMF/World Bank programs. Third, serious
problems at the Port of Matadi will threaten the completion
of International Maritime Organization (IMO) mandated
improvements. The IMO granted the GDRC a six-month extension
(until December 2004) to complete improvements and comply
with International Ship and Port Facility Security (ISPS)
Code. If it does not comply with IMO regulations, it will be
decertified and insurance rates for ships entering Matadi
will skyrocket.


7. (U) It appears unlikely that the GDRC will meet Ofida's
demands. It has previously refused to go above FC 10,000
because doing so would get the DRC off track with the
IMF/World Bank. Previous solutions involved paying a portion
of back wages (reftel). If the strike continues for any
lenght of time, and if other services under the Ministry of
Finance join in, the efffects could put a damper on the
steady economic growth the country has achieved over the past
three years. End Comment.
MEECE