US embassy cable - 04KINSHASA1802

UNCLAS SECTION 01 OF 03 KINSHASA 001802 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON, EAID, ECPS, EFIN, ELAB, ELTN, EMIN, EPET, CG 
SUBJECT: ECONOMIC REPORT - SEPT 18 THROUGH SEPT 24 
 
1. Summary.  Prices are stable, with no inflation 
reported.  Exchange rates continued to rise, with 
parallel markets trading at FC 400-420 per USD.  The 
Australian firm, Anvil Mining, is seeking joint venture 
opportunities in the DRC.  Banro Corporation plans to 
begin its gold exploration operations soon.  A mine 
collapse in Katanga province killed two artisanal 
miners.  The DRC and Angola signed a memorandum of 
understanding on joint offshore oil exploration. 
Italian truck manufacturer Iveco has resumed sales in 
the DRC.  Civil servants in Mbuji-Mayi demonstrated to 
demand pay increases.  The management committee of the 
Postal and Telecommunications Office (OCPT) was 
replaced per OCPT workers' demands.  Recently renovated 
Regideso pumping facilities in Kisangani were pillaged. 
The World Bank granted the DRC USD 60 million in its 
most recent PMURR disbursement.  End Summary. 
 
MONETARY AND PRICE UPDATE 
 
2. Prices are stable, with no inflation reported. 
Prices have stabilized after fluctuations in demand 
caused by the beginning of the school year.  Monthly 
inflation is -0.9 percent. 
 
3. Exchange rates continue to rise, with the official 
rate remaining above FC 400 per USD.  Parallel rates 
nationwide are now hovering between FC 400-420 per USD. 
Low diamond sector activity, high international oil 
prices, and lump-sum GDRC salary payments are 
contributing to upward pressure on the exchange rate. 
 
MINING 
 
ANVIL MINING SEEKS JOINT VENTURE OPPORTUNITIES 
 
4. International press reported that the Australian 
firm Anvil Mining Ltd. is seeking joint-venture 
opportunities in the DRC with the GDRC and private 
companies.  The company is listed on the Australian 
Stock Exchange. 
 
BANRO PLANS GOLD EXPLORATION 
 
5. Banro Corporation, which holds four concessions on 
the Twangiza-Namoya gold belt, recently received USD 10 
million in financing from private sources to begin 
exploration operations.  According to Banro CEO Peter 
Cowley, the company plans to begin exploration 
immediately and hopes to have at least two mining sites 
in operation by the end of 2004.  Banro holds a 100 
percent interest in its four concessions via a 
renewable 25-year contract. 
 
MINE COLLAPSE KILLS TWO 
 
6. Local press reported that a collapse at the 
Kalukuluku mine in Katanga province killed two 
artisanal miners and injured several others.  (Comment: 
Several recent collapses at mines in Katanga have 
stirred debate on mine safety and the protection of 
artisanal miners.  End Comment.) 
 
PETROLEUM 
 
MEMORANDUM ON PETROLEUM EXPLORATION 
 
7. The governments of the DRC and Angola signed a 
memorandum of understanding on offshore oil exploration 
in the lower Congo basin.  The governments agreed to 
establish a maritime corridor for common exploration in 
which each country will have a 50 percent share. 
 
BANKING 
 
SMALL DENOMINATION BANKNOTES REFUSED 
 
8. Local press reported that merchants in Kamkolobondo 
in Katanga province are refusing to accept FC 5 and FC 
10 notes for payment in commercial transactions.  The 
merchants are claiming that the notes are 
"inappropriate" due to their small value.  Refusal to 
accept the small notes is having a strong effect on the 
local fishing industry, a main source of the town's 
food supply.  The fishing industry conducts a large 
portion of its transactions with FC 5 and FC 10 notes. 
 
TRANSPORTATION 
 
IVECO RESUMES DRC SALES 
 
9. Local press reported that Italian truck 
manufacturing corporation Iveco has relaunched its DRC 
operations after a decade of inactivity.  The company, 
which once sold almost 600 vehicles per year, lost 90 
percent of its assets in the 1991 pillage.  Sales 
recently resumed with orders for 26 new trucks from 
Safricas, Socitrans, Safbois, Afritrans, et al.  Iveco 
maintained a small staff in the DRC after 1991 despite 
their lack of sales.  Customers have cited this as a 
factor in their choice to buy from Iveco.  Afritrans 
director Nazim Rawji stated that "Iveco stayed in the 
DRC through difficult times.  This explains our 
allegiance to the brand." 
LABOR 
CIVIL SERVANTS DEMONSTRATE IN MBUJI-MAYI 
 
10. Local press reported that approximately 1,200 civil 
servants demonstrated in the streets of Mbuji-Mayi to 
demand salary increases commensurate with their 
colleagues in Kinshasa.  According to union 
representatives, the civil servants are planning to 
strike if their demands are not met by the GDRC. 
 
OCPT MANAGEMENT COMMITTEE REPLACED 
 
11. The management committee of the Postal and 
Telecommunications Office (OCPT) has been replaced, per 
an interministerial decree issued by the Minister of 
Post and Telecommunication and the Minister of 
Portfolio.  OCPT workers had been striking for several 
months, and demanded the committee's replacement. 
Workers accused the committee of mismanaging OCPT 
operations and withholding their salaries. 
 
INFRASTRUCTURE 
 
RENOVATED WATER FACILITIES PILLAGED 
 
12. Recently renovated Regideso facilities at Kisangani 
were looted by soldiers from a nearby camp at Lukusa 
and local civilians.  Refurbished equipment had been 
installed at the pumping facility by the ICRC several 
weeks ago. 
 
AID 
 
WORLD BANK GRANTS DRC USD 60 MILLION 
 
13. In its most recent PMURR disbursement, the World 
Bank granted the DRC USD 60 million for projects 
relating to health, education, and food security. 
According to Social Fund (a GDRC body partially 
managing PMURR funds) Manager Finda Koroma, the money 
will be used to create income-generating opportunities 
for Congolese in rural areas. 
 
FRANCE DONATES 5 MILLION EUROS 
 
14. International press reported that France agreed to 
donate 5 million euros in budgetary aid to the GDRC. 
The aid will be used to finance election preparations 
and debt servicing. 
 
15. INFLATION BY CATEGORY  (IN PERCENT) 
 
WEEK ENDING            8/27    9/03    9/10    9/17 
FOOD                   7       0      -3       0 
BEVERAGE               0       0       0       0 
NON-FOOD               0      -1      -2       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       2.6     0      -1       0.1 
MONTHLY INFLATION      1.7     0      -1.1    -0.9 
 
16. EXCHANGE RATE DEVELOPMENTS 
 
                   8/27     9/03     9/10     9/17 
CENTRAL BANK RATE  392.045  396.014  401.688  403.634 
PARALLEL MARKET 
-KINSHASA          390-395  390-395  400-405  400-410 
-LUBUMBASHI        380-390  380-385  400-405  400-405 
-MBUJI MAYI        385-395  385-390  400-405  400-405 
-KISANGANI         380-390  380-390  400-410  410-420 
-GOMA              400-410  400-410  410-415  410-420 
-BUKAVU            400-410  400-410  410-415  410-420 
 
 
MEECE