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Viewing cable 06KINSHASA1373, INCREASING ECONOMIC PROBLEMS IN THE KASAIS

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Reference ID Created Released Classification Origin
06KINSHASA1373 2006-08-30 14:05 2011-08-25 00:00 UNCLASSIFIED Embassy Kinshasa
VZCZCXRO1194
RR RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #1373 2421405
ZNR UUUUU ZZH
R 301405Z AUG 06
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC 4702
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEAIIA/CIA WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS KINSHASA 001373 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EMIN ELTN PGOV ELAB CG
SUBJECT: INCREASING ECONOMIC PROBLEMS IN THE KASAIS 
 
REF: KINSHASA 1261 
 
1. (U) Summary. Eastern and Western Kasai have been experiencing 
increasing economic difficulties, seemingly due primarily to labor 
strife, the diamond parastatal's ongoing problems, and seasonal 
effects.  Both Kasais have experienced shortages of produce, goods 
and petroleum products, with consequent sharp price increases. End 
summary. 
 
2. (U) Dry season price increases are usual in the Kasais, when 
agricultural output, and therefore supply, decreases.  However, the 
SNCC (DRC's national railway service) strike, which began in July, 
has exacerbated the shortage because the railway carries petroleum 
and essential goods to the Kasais from Lubumbashi, Katanga province 
(reftel).  According to the president of the FEC chapter in 
Mbuji-Mayi, some products are even sitting unloaded at train 
stations because of the SNCC strike. (Note: The president of the 
Chamber of Commerce (FEC) chapter in Mbuji-Mayi said that the SNCC 
strike is causing the same problems in Maniema province and the 
northern part of Katanga province. End note.) 
 
3. (U) The prices of some food items and other basics, including 
manioc, maize and cement, have tripled and even quadrupled. 
Petroleum prices have doubled, although Mbuji-Mayi is reportedly 
harder hit, because it is more reliant on other towns, including 
Mwene-Ditu, Ngandajika and Kananga, for food products and other 
consumer goods.  Petrol for vehicles is 1000 Congolese Francs (CF) 
per liter in Kananga, Western Kasai, and 1200 CF per liter in 
Mbuji-Mayi, Eastern Kasai, while the fixed national price is 490 CF 
per liter. 
 
4. (U) In addition, the region's largest single employer appears to 
be having increasing financial difficulties that may be impacting 
the overall economic situation, an analysis with which the Congolese 
Central Bank (BCC) director in Kananga agrees.  MIBA, the DRC's 
diamond mining parastatal, has not paid its 6000 employees for 
nearly five months.  Further, MIBA's official 2006 production and 
export has decreased over 2005 levels. The CEEC (the DRC's diamond 
evaluating and export authority), reported that MIBA produced 
572,876 carats (industrial and gem quality), at an average per carat 
value of USD 13.34, versus June 2005 730,162 carats at USD 15.05 per 
carat.  More importantly, MIBA's export quantity appears to have 
decreased over 2005 levels.  The Econ Section has received reports 
that artisanal diamond mining has also decreased around Mbuji-Mayi. 
(Note: The BCC director in Kananga told EconOff that despite 
sustained production in Tshikapa, a major alluvial diamond mining 
center in Western Kasai, its economy is tied almost solely to 
Kinshasa and has little impact on the province. End note.) 
 
5. (U) Although until now the exchange rate in the Kasais has 
generally remained in step with national averages, it is showing 
slight signs of greater devaluation in Eastern Kasai. On August 29, 
the Congolese Central Bank's exchange rate was 467 CF/USD, while in 
Mbuji-Mayi it was USD 478. However, the Kananga BCC director said 
that exchange rates in the Kasais have been increasingly in line 
with national averages and have reacted less to local factors.