DRC SEPTEMBER MONTHLY ECONOMIC REVIEW

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 -------------- ¶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 KINSHASA 00001542 002 OF 002 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 -------------- ¶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