UNCLAS SECTION 01 OF 02 KINSHASA 001542

SIPDIS

SIPDIS

DEPT FOR DRL/IL-LHOST AND AF/RSA-MHARPOLE
DAKAR PASS TO FAA (EXJONES)

E.O. 12958: N/A
TAGS: EFIN ENRG ELAB EAIR EMIN ECON PGOV CG
SUBJECT: DRC SEPTEMBER MONTHLY ECONOMIC REVIEW

REF: A) KINSHASA 1462
B) KINSHASA 1398
C) KINSHASA 1500

Summary
--------------


1. (U) Summary.

- The DRC's main teachers' unions and employees of the OCPT (DRC's
telecommunications parastatal) ended their strikes; employees of the
RVA (DRC's airport operating agency) have scaled back their strike.


- Employees of SNCC (the DRC's railway authority) remain on strike.


- American Seboard/Midema opened a new flour milling production
line at its Matadi facility.

- A South African company has inaugurated operation of its
copper-cobalt tailings concentrator in Katanga.

- Gecamines (a DRC mining parastatal) is in a dispute with two
foreign mining companies over concession rights.

- According to Post's market basket survey, September consumer
prices increased by 7.1 percent, with year-to-date inflation at 14
percent.

- The Congolese Franc (CF) devalued by seven percent in September.
End summary.

Aviation
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2. (U) Spanish-owned Bravo Air Congo, which began operating in the
DRC in August and is an IATA member, took delivery of a DC9 on
September 16, making it the third aircraft in its fleet. The leased
plane has 100 seats, including 12 in business class.


3. (U) Employees of the RVA, the DRC's airport operator, went on
strike in early September, and are now only providing reduced
airport service.

Commercial Activity
--------------


4. (U) Seaboard/Midema launched a flour milling production line at
its Matadi facility, bringing its daily milling capacity to 960
metric tons per day. Seaboard, an American company, owns 51 of the
milling operation, in partnership with the GDRC.


5. (U) Among 175 surveyed countries, the DRC remains the most

difficult in which to do business, according to the World Bank's
(WB) 2006 rankings. In 2005, the DRC was ranked last of 155
countries surveyed.

Energy
--------------


6. (U) Electrical power outages have increased in Kinshasa province,
supposedly due in part to a malfunction of equipment connecting
Kinshasa to the Inga hydroelectric plant.

Finance
--------------


7. (U) Officials from the DRC's Central Bank (BCC), Ministry of
Budget and Presidency attended September's IMF/WB annual meeting in
Singapore.


8. (U) The DRC's Supreme Court upheld the decision of the OCC (the
DRC's export-import control authority) to raise its tax on the value
of goods from 1.5 percent to 3 percent.

Labor
--------------


9. (U) Public school teachers throughout the DRC suspended their
two-week strike on September 18. The main teachers' unions have
said they will relaunch demands for increased salary and benefits

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after the installation of the new government (reftel A).


10. (U) The SNCC (DRC's railway parastatal) strike that began in
July continues (reftel B).


11. (U) Employees of OCPT (the DRC's telecommunications parastatal)
suspended their strike and returned to work in September, but
continue to threaten to walk off the job over non-payment of
salaries.


12. (U) The DRC's Ministry of Public Administration has announced
that this month it will begin paying World Bank-funded severance
packages to civil servants who retired between 1985 and 2003.


13. (U) Employees of MIBA (the DRC's diamond mining parastatal) went
on strike for one day to demand payment of three months of salary
arrears and 33 months' worth of food provisions.

Mining
--------------


14. (U) South African company Kumba Resources and Canadian First
Quantum are in a dispute with Gecamines (the DRC's copper mining
parastatal) over rights to the Kipushi zinc-copper mine in Katanga
(reftel C).


15. (U) The newly-installed copper-cobalt tailings concentrator at
Ruashi mine, near Lubumbashi, Katanga, is running at about 60 to 65
percent of capacity, with full production capacity estimated at
about 70,000 tons per month once work is complete. Metorex, a South
African mining company, has an 80 percent share of Ruashi mine.


16. (U) Several more miners died in mining-related accidents in
September (reftel C).

Consumer Inflation Rate
--------------


17. (U) Post's market-basket survey indicates an inflation rate of
7.1 percent in September, with year-to-date inflation of 14 percent.
The IMF calculates year-to-date inflation at 15.2 percent. The
most significant increases are in school costs and non-food items
such as charcoal, firewood, kerosene, and soap. (Note: The bulk of
annual school fees are paid in September, thereby having a strong
impact on inflation indicators. End note.)

Exchange Rates
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18. (U) The Congolese Franc (CF) devalued by seven percent in
August, from 470 CF/USD to 504 CF/USD, according to the Central
Bank's official exchange rate.

Week ending 9/01 9/08 9/15 9/22 9/30
Central Bank 470 477 487 496 504
Parallel Markets:
Kinshasa 483 483 495 495 510
Lubumbashi 470 470 485 485 490
Mbujimayi 478 478 485 485 505
Kisangani 485 485 485 495 505
Matadi/Boma 465 485 485 495 505
Goma/Bukavu 495 495 495 510 515

MEECE