CONGO NYT 1/9 OK.qxd 22/2/06 21:45 Página 1 INSIDER VIEW ... · cording to Sherazad Chida of the...

Democratic Republic of

CongoSPECIAL ADVERTISING SUPPLEMENT TO THE NEW YORK TIMES

WHEN itcomes to po-tential, the De-mocratic Re-

public of Congo (DRC) is hard toequal. At around 905,000 squaremiles, the country is bigger thanWestern Europe, and has an abun-dance of natural resources. Apartfrom containing 50 percent of Africa’sforests, the DRC is home to one ofthe world’s mightiest river systems,which could, if adequately exploit-ed, provide hydroelectric powerthroughout the entire continent. His-torically, petroleum extractionand mining of copper,cobalt, diamonds, gold,zinc and other basemetals have account-ed for about 75 per-cent of total export rev-enues and 25 percent ofthe country’s GDP.

The sub-soil is rich in min-erals too, particularly cobalt andcopper. Although 90 percent of itsoutput is industrial-quality, the DRCis the world’s third-largest diamondproducer by volume. In 2003, di-amonds accounted for 70 percentof total export revenues. Substantialgold deposits and 80 percent ofthe world’s reserves of columbite-tantalite (coltan), a substance usedin high-tech appliances such ascell phones, round off the country’smineral wealth.

But these riches have played asignificant part in the conflicts whichhave rocked the country for the pastyears and from which it is only nowbeginning to emerge. Thirty years ofdictatorship following independencein 1960 left the country, then calledZaire, in economic turmoil. LaurentKabila, backed by Rwandan andUgandan military forces, took pow-er in May 1997. War, however, con-tinued with the armies of neighbor-ing nations fighting each other overborders, ethnic problems, and ac-cess to mines.

When Laurent Kabila wasassassinated in January

2001, his son and for-mer chief of staffJoseph Kabila tookover. He now heads amulti-party transition

government prior to thecountry’s first democratic

elections, re-scheduled for be-fore the end of June 2006. With helpfrom international financial institu-tions, President Kabila has madeprogress in establishing peace andstabilizing the economic situation,creating the conditions for sustainedeconomic growth. The rewards forpeace are tangible: a vast market of60 million people, untold resourcesand, given its strategic position atthe very heart of Africa, the poten-tial to become the continent’s polit-ical center of gravity.

FA C T S &FIGURES

POPULATION60 million (2005 est.)

CAPITALKinshasa

AREA905,568 sq miles

INDEPENDENCE30 June 1960 (from Belgium)

CONSTITUTIONA new constitution wasadopted 17 July 2003

CURRENCYCongolese franc (CDF)

GDP $46.27 billion (2005 est.)

GDP per capita$800 (2005 est.)

GDP real growthrate

6.5% (2005 est.)

INDUSTRIESMining, mineral

processing, consumerproducts, cement

NATURALRESOURCES

Cobalt, copper, niobium,tantalum, petroleum,

gold, silver, zinc,manganese, tin, uranium,coal, hydropower, timber,

industrial and gemdiamonds

SOURCE: CIA - The World Factbook

HISTORIC PEACE AGREEMENTS AND FAR-REACHING RE-FORMS, INCLUDING NEW CODES OF PRACTICE IN FORESTRY,INVESTMENT AND MINING, ARE GEARING A NATION EN-DOWED WITH VAST RESOURCES OF RAW MATERIALS TOBECOME THE POTENT ENGINE OF CENTRAL AFRICA

INSIDER VIEW

THIS ADVERTISING SUPPLEMENT IS PRODUCED BY SUMMIT COMMUNICATIONS AND DID NOT INVOLVE THE REPORTING OR EDITORIAL STAFF OF THE NEW YORK TIMES


WEDNESDAY, MARCH 15, 2006

This year’s democratric elections will be the first since 1960.

Dem. Rep.of Congo

You signed a historic peace ac-cord in April 2003 under whichyou remain as head of state dur-ing a transition period of two tothree years. After this, the coun-try’s first democratic electionssince 1960 will be held. What fur-ther challenges lie ahead?

Joseph Kabila: We need helpwith the funding of the elections,and we are looking to the interna-tional community for this. The nextbig challenges will be to ensurepeace and security after the elec-tions, to maintain political and eco-nomic stability, and make sure thatdevelopment becomes a reality.

The DRC is one of the largestcountries in Africa and has hugeeconomic and natural resources.What are you looking for in po-tential investors and what is be-ing done to attract them?

The DRC could be one of therichest countries in Africa but itneeds expertise, finance, technol-ogy and know-how. We are mak-ing the country more attractive forinvestors. In 2002 we adopted an

investment code to cut the red tapeand the bureaucracy that sur-rounded the creation of companiesand to make it easier for foreigncompanies moving here. We alsohave a one-stop shop, the Nation-al Agency for the Promotion of In-vestments (ANAPI).

What sectors hold the most po-tential and where do your prior-ities for reconstruction lie?

Mining has been one of theDRC’s stronger sectors, but weneed investment, technology andlong-term experience. For this we’relooking to the U.S., Australia, Cana-da and South Africa. There is defi-

nitely potential and we have to ex-ploit it. Agriculture represents around50 percent of gross domestic prod-uct (GDP), but the problem is thatthis is not mechanized. We need in-vestment and expertise in order toraise the country’s output. We alsohave potential in oil and petroleum.Our current production is 30,000barrels per day (bpd) from the off-shore terminals, but with time weaim to increase production to100,000 bpd and more.

However, no economic sectorcan be successful without solid in-frastructure. Under the current WorldBank program we are rebuildingwhat has been destroyed by over40 years of neglect. This is our mainpriority and 60 percent of every-thing we have received has goneinto reconstructing roads, bridgesand other infrastructure.

How do you see the future of theDRC?

Our country is potentially the en-gine of Africa. After the elections,there is nothing to stop Congo fromtaking off.

TheDRC holds

vast potential: amarket of 60 millionpeople and land rich

in natural re-sources

“The DRC could be one ofthe richest countries in Africa”

Peace opens the way to recovery

AN ONLINE VERSION OF THIS REPORT IS

AVAILABLE ATwww.summitreports.com/

congo

Congo

PRESIDENT JOSEPHKABILA IS RESTORINGPEACE, DEMOCRACY

AND STABILITY TO THECOUNTRY AND CUTTING

BUREAUCRACY TOMAKE IT ONCE AGAIN

ATTRACTIVE FORFOREIGN INVESTORS

CONGO NYT 1/9 OK.qxd 22/2/06 21:45 Página 1

SPECIAL ADVERTISING SUPPLEMENT SPECIAL ADVERTISING SUPPLEMENT

2



Congo

Voters overwhelmingly approved the new constitution by 84.31%.

DESPITE its image ofcivil strife, the DRC hasbeen struggling just ashard for peace. Sincethe war began in Au-gust 1998, no less thanfive peace accordshave been signed. Thefinal agreement, signedin Sun City in April2003, established atransitional Govern-ment of National Unitycomposed of repre-sentatives of the exist-ing DRC governmentand rebel groups.

There are two keyissues at stake: one isholding the country’sfirst democratic elec-tions since the early six-ties; the other is gettingthe foreign armed mili-tias to go home. Voterregistration was the firststep, and elections areon track to be held bythe mid-June deadline.Last December, 15 mil-lion out of the country’s 25 millionregistered voters participated in areferendum and approved by84.31% the introduction of thenew constitution, in free, fair andtransparent elections. Furthermore,the DRC entered a historic phaseon February 18 with the adoptionof its new constitution and nationalsymbols. This paves the way forthe first democratic elections formore than four decades.

However, security remains aproblem, particularly in the east-ern provinces where armed groupsare still at large. “Our mission is torestore the State Authority in allthe provinces and to set up an in-tegrated and unified army in order

to solve security is-sues,” says OlivierKamitatu, President ofthe National Assembly.In 1999, the U.N. Se-curity Council estab-lished an observer mis-sion (MONUC) to helpimplement the 1999Lusaka ceasefireagreement, and also todisarm the warring fac-tions and repatriatecombatants. This wasfollowed by the Preto-ria peace agreement inDecember 2002.

As of August lastyear, MONUC hadrepatriated more than12,000 people, most-ly Rwandans. Ac-cording to SherazadChida of the DDRRR(Disarmament, Demo-bilization, Repatriation,Resettlement, Reinte-gration) program ofMONUC, even thoughthe young soldiers feel

like going home, around 40,000remained to be repatriated (withestimations of over 10,000 soldiersand about 30,000 relatives).

The DRC’s strategic positionand huge natural wealth mean thatpeace here will have profound im-plications on the rest of the conti-nent, and commitment levels fromthe international community arehigh. “This is the largest peace-keeping mission in the world,” saysWilliam Lacy Swing, Special Rep-resentative of the U.N. SecretaryGeneral. “The country is enjoyingthe greatest international supportsince independence. We have in-vested almost $4 billion and havemore than 18,000 people here.”

IN 2001, Joseph Kabila took on aneconomy crippled by massive trea-sury deficits and hyperinflation: aresult of the unstable socio-politi-cal climate and continued armedconflict in the DRC over the previ-ous ten years. The national cur-rency, the Congolese franc (CDF),was depreciating rapidly and pover-ty was endemic. But muchprogress has been made ina relatively short time. ThePresident’s first mea-sure was to allow thefree circulation of for-eign currencies. Hissecond was to movefrom a fixed and over-valued exchange rate toa free and floating exchangeregime.

“The first program we put inplace went so well that the Inter-national Monetary Fund (IMF) andthe World Bank decided to assistus,” says André-Philippe Futa, for-mer Minister of Finance, recentlyreplaced by Marco Banguli. “Wemanaged to stabilize the macro-economic framework, particularlyinflation which fell from 500 percentin 2000 to less than 10 percent in2004. The exchange rate was sta-bilized for a long time at aroundCDF240 to the dollar.”

Inflation continued to fall sharplyfrom 135 percent at the end of2001 to 16 percent only a year lat-er. In June 2002, the Kabila gov-ernment agreed to a three-yearpoverty reduction and growth fa-

cility (PRGF) with the IMF. This pro-gram has provided around $850million in assistance to the gov-ernment to support macroeco-nomic stabilization, economicgrowth and poverty reduction.

“We managed to stabilize infla-tion up to December 2004. Re-cent turbulences are partly due tosome unforeseeable military ex-

penditure needed to deal withinsurgents in the east,”

says Mr. Futa, but alsosome excessive Con-golese franc injectioninto the country’seconomy had a direct

effect on the currencyrate.” The current transi-

tional government has sinceadopted budgetary restrictions un-der IMF pressure to deal with thisproblem.

The main macroeconomic tar-gets are to raise average annual re-al GDP growth, keep annual infla-tion down, and to increase foreignreserves. In 2002, for the first time

in 13 years, eco-nomic growth waspositive.

“The rate ofgrowth went upfrom 3.5 percent in2002, to 5.7 per-cent in 2003 and6.8 percent in 2004.This is higher thanthe demographicrate, which is 3 per-cent,” says Jean-Claude Masangu,Governor of thecentral bank. Estimates put GDPat 6.5 percent for 2005. Still, thisrate has to be put into perspective,since the economy is starting fromscratch. “We hope to have a growthrate of more than ten percent with-in ten years, which I think we canachieve with the support of inter-national patrons and donor insti-tutions,” says Mr. Masangu.

The authority of the cen-tral bank, vital for econom-ic growth, has been estab-lished thanks to continuousauditing over the past fiveyears and a drive to restorediscipline, backed by a Ju-ly 2004 law against money-laundering and the financ-ing of terrorism.

As far as international in-stitutions are concerned, thegovernment has made im-portant progress on certaincrucial criteria. “The transi-

tion government has laid the foun-dations for growth. We have pro-vided new codes for forestry, min-ing and investment. We have re-organized our entire fiscal system,including customs and adminis-tration, and prepared the groundfor economic investors and the pri-vate sector,” says Mr. Futa.

OLIVIERKAMITATUPresident of theNationalAssembly

JEAN-CLAUDEMASANGUGovernor of theCentral Bank ofCongo

WILLIAM LACYSWINGSpecial Repre-sentative of theU.N. SecretaryGeneral

Momentous timesof peace andopen electionsTOGETHER WITH THE LARGEST U.N. PEACE-KEEPINGMISSION, THE DRC PREPARES ITS FIRST DEMOCRATICPRESIDENTIAL ELECTIONS FOR MORE THAN 40 YEARS

ECONOMYA clear break from the pastAN ENTIRELY REORGANIZED FISCAL SYSTEM, NEWCODES OF PRACTICE AND RENEWED CENTRAL BANKCREDIBILITY MARK SIGNIFICANT PROGRESS

GDProse from

3.5% to 6.8% inonly 3 years and

plans aim to reach10% within a

decade

International community backs road to recoveryIN A POST-CONFLICT economy,the first source of growth is fund-ing by donors. When JosephKabila took over the presidencyin January 2001, he had the ini-tiative to bring in assistance evenbefore the war ended. Among hisfirst acts he approached both theWorld Bank (WB) and theInternational Monetary Fund (IMF)asking them for help to improveCongo’s economic situation andbuild up a donor coalition. A jointobservation mission was set up.

“What we found in 2001 wasa country divided and at war.Infrastructures were non-existent,health and education indicatorswere appalling, there was a $14billion debt and the inflation ratereached 500 percent,” says OnnoRühl, former World Bank repre-sentative to the DRC. In an un-

precedented move, the WB andthe IMF decided to act before thepeace agreement had been made.Aside from the fact that Congo hadno internal platform for growth,informal talks with the then rebelleaders had led to the conclusionthat all parties shared the same

basic economic approach. By the time peace was signed

in 2003, Congo had a remark-ably strong donor coalition be-hind it. The total internationalpledge so far is around $5-6 bil-lion. Assistance has focused pri-marily on stabilizing the economy

and obtaining access to the high-ly indebted poor countries (HIPC)initiative. The national budget hasbeen restructured in order to at-tain some stronger financial man-agement. Corruption has beentackled and financial assistancehas been provided for the up-coming elections. A head startwas made on infrastructure re-construction with a joint WB andEU project to repair the road fromKinshasa to the port of Matadi.

Besides the continuous effortsto be done, donor institutions re-main satisfied with the country’sprogress. The fifth IMF review ofthe DRC’s performance under an$852.1 million Poverty Reductionand Growth Facility (PRGF)arrangement was completed suc-cessfully last year, enabling furtherassistance to be given.Presidents Kabila and Bush meeting in 2003 to discuss support

The central bank inKinshasa hasrestored credibilityand transparency tothe nation’s bankingsector.


ACCORDING to ANAPI,there are several good rea-sons to invest in the DRC.The most obvious are thecountry’s geographical po-sition and huge population,combining to create poten-tially vast market opportuni-ties. The country’s varied andabundant natural resources,including the energypotential to powermost of Africa,are another. La-bor is plentifuland cheap, the

economy is expanding, and the newgovernment’s economic policies arelaying the foundations for a secure andpromising business sector. ANAPI itself existsto provide assistance in all aspects of the invest-ment process.

Professor Mathias Buabua Wa Kayembe, Man-aging Director of ANAPI, answered some ques-tions about the organization and its work.

What measures are in place to give potentialinvestors confidence in the DRC?Professor Buabua: First of all, you have the ju-

ridical provisions that have been put in place, thenew mining code and the investment code for ex-ample. These codes have been made to guaran-

and recognize the principle of free trade. More-over, Congo is a member of the Multilateral In-vestment Guarantee Agency (MIGA), a World Bankagency that protects investors against political, non-commercial risks. But another sure guarantee iseconomic stability, which is being established.

President Kabila has faith in economic liber-alism and a market economy. We are

starting to project an image of a coun-try working seriously to make up for losttime on the economic front.

What is ANAPI doing to attract in-vestment from abroad, particularly

the U.S.?We have created a one-stop shop for the

administrative processes, helping businesses toset up in a week to ten days. We also have awebsite and we are traveling a lot. We are plan-ning to go to the U.S., as it is one of our tar-geted countries. In addition, we hold confer-ences and meetings with chambers of com-merce, embassies and business consultants.However, our main strategy is to work locally toimprove the business environment here, then toprovide information to foreign partners in orderto attract them to our country.

What economic sectors provide the most op-portunities for potential investors?

With the rise of countries such as China thereis a crisis of raw materials around the world, andwe have huge energy and mining potential. In thetelecommunications sector, we have 60 millionpeople and close to 2 million of these have ac-cess to phones. There are no fixed lines at pre-sent, which means there is much scope for ex-pansion. Our soil is fertile and suitable for organ-ic cultivation. We are surrounded by desert coun-tries and we could easily become the breadbas-ket of Africa. Basically, opportunities exist acrossthe entire economy, and we are here to help.


4



Investment and opportunitymade open and easyIN 2002 THE DRC GOVERNMENT ADOPTED A NEW INVESTMENT CODE AIMED ATMAKING INVESTMENT EASIER BY CUTTING BACK ON BUREAUCRATIC RED TAPEAND CREATING A MORE LIBERAL ECONOMIC ENVIRONMENT. AT THE SAME TIME,THE NATIONAL INVESTMENT PROMOTION AGENCY (ANAPI) WAS CREATED TOPROMOTE AND CHANNEL POTENTIAL INVESTMENTS.

ANAPI is working both locally and globally toprovide information and boost enterprise.

Withits one-stopshop appeal,

ANAPI is helpingbusinesses to set

up in less thanten days

Investment code highlightsTHE NEW INVESTMENT CODE:

● treats all investors equally, both nationaland foreign ● guarantees property rights ● grants freedom to remit revenues anddividends abroad● safeguards investments from thepossibility of nationalization or expropriation● provides tax incentives for newinvestments of public utility● simplifies and speeds up the investmentprocess● provides for the training of staff to fulfiltechnical and specialized functions in thenew investment environment● aims to computerize all customsprocedures to reduce import and exporttimes

ANAPI’S MISSIONS ARE TO:

● research and promote national and foreigninvestments● agree investment projects under theinvestment code, subject to particular lawssuch as the mining or banking laws● provide a range of services to investorsunder a one-stop shop system, includingobtaining permits, providing project analysisand offering technical advice● eliminate any barriers and bureaucraticobstacles to the creation, extension andmodernization of businesses● make information available on rules andregulations relating to tax and other issueson investments● create a database on the potential andopportunities for investment in the DRC

FINANCEEstablishing credibilityand building confidence

THE UNIFIED Congolese franc(CDF) was introduced in 1998during the government of Lau-rent Kabila. Initially set at CDF 75to the dollar, the currency expe-rienced problems with the out-break of war and subsequent lossof reserves. Liberalization of theexchange rate by Joseph Kabilain 2001 caused an immediate andstrong devaluation of the nation-al currency. By the following year,the rate had stabilized and re-mained relatively so until the be-ginning of 2005 when unforeseengovernment expenditures aroserelating to further conflict in theeast of the country and the rateplummeted once more.

“Such important variations arenot appreciated either by busi-nessmen, the government, or theWorld Bank,” says Jean-ClaudeMasangu, Governor of the Con-golese Central Bank (BCC). Mon-etary and budgetary measureswere taken in February 2005 tocorrect the currency’s volatility.Following guidance from theWorld Bank (WB), the govern-ment cut all unnecessary budgetexpenditure and the BCC stoppedissuing notes. These policiesachieved their interim objective,which was to improve the ex-

change rate of the franc. “SinceApril the country has been enter-ing a fresh period of stability, whichwill allow us to recuperate thegrowth we experienced from 2001to 2004,” says Mr. Masangu.

Ultimately, any central bankneeds to establish its credibility.The BCC has achieved this bysuccessfully performing its twomain responsibilities: introducingmonetary reform and enlistingsupport for its efforts from for-eign partners, namely the WB andthe IMF. In addition, a law is be-ing elaborated to establish thebank’s independence.

The BCC has also published astrategy program outlining theproblems facing the banking andfinancial sectors. This strategicdevelopment plan, scaled from

2004 to 2010, will consolidatemonetary policy, improve the cen-tral bank’s management system,reinforce supervision of financialintermediaries and improve thepayments system.

A legal framework will regulatebanking operations, and the sys-tem will be modernized. “Our chal-lenge is to establish a solid bank-ing system,” says the BCC gov-ernor. “We now have nine banks,which is insufficient if you con-sider the size of our country - atpresent more than 80 percent ofthe monetary mass is outside theofficial channel. We need to in-troduce internal savings and thisimplies developing microfinancialinstitutions and collective creditownership,” he adds.

The Ministry of Finance is work-ing closely with the BCC in all as-pects of the banking and finan-cial reform. “We encourage theidea of getting our own bankingsector,” says André-Philippe Fu-ta, the former Minister of Finance.“We experienced a period duringwhich there were no banks func-tioning, so we decided to liquidatethree of them. But we wish tobring more banks into the DRC.In order for them to come, weneed to create a macroeconom-ic framework which gives confi-dence; in other words, a Con-golese currency that is stableenough to build a bank on.” Asthe ex-minister further explains,“If the domestic private sectorcan be made to trust the system,foreign investment will follow.”

A FRESH PERIOD OF STA-BILITY IS EVIDENT AFTERFAR-REACHING MONETARYREFORMS AND ENLISTINGGLOBAL SUPPORT PRO-DUCE POSITIVE RESULTS

A growing banking system is being worked on to spur investment, savings and business initiatives.

Head office of the BanqueCommerciale du Congo (BCDC),the oldest bank in the DRC.

Prof. MATHIASBUABUA WAKAYEMBEManagingDirector ofANAPI


tee the protection of ownership rights by the state,

Congo

ONE of the main challenges facedby the country’s central bank, inconjunction with its internationalpartners such as the World Bankand the African Development Bank,is the recovery of people’s trust inthe system and to keep the wheelsof the economy rolling. Past yearsof conflict, political uncertainty, de-struction of infrastructure, lack ofdata, and above all endemicpoverty have resulted in ahigh percentage – up to95 percent accordingto some sources – offinancial and com-mercial transactionsin the DRC taking placeon an informal basis.

The banking sector inparticular needs to work hard toregain its position in the country butreforms are taking place with en-couraging signs in the sector withthe arrival of foreign investors suchas Citibank, Stanbic and Rawbank.Traditionally dominated by the co-operative movement, the numberof these agencies had dwindled

by the late 80s due to various rea-sons, including the freezing andloss of their investments into gov-ernment bonds (decreed by thecentral bank in 1992 and never re-paid). The formal banking sectorwas composed of under-capitalizedyet over-liquid banks operating ina very tight market, with a low in-termediation ratio of 14 percentand limited adherence to the

BCC’s regulations.The importance of a

solid banking system inthe country has by nomeans been over-looked by the gov-

ernment. A law for co-operatives was passed

in 2002 and a banking lawhas been established that defines

the legal status and obligations ofall financial intermediaries. Plans formodernization for the future alsoinclude the introduction of auto-mated teller machines. The BCCconducts its activities in the bank-ing sector with other African cen-tral banks, particularly members of

the Southern African DevelopmentCommunity (SADC), and is takingpart in the project for the normal-ization and standardization of pay-ment terms within the SouthernAfrican region. With these renewed

dynamics, the banking sector islooking to a positive future.

One of the country’s oldestand most prestigious banks,which has maintained its position

throughout the years, is theBanque Commerciale du Con-go (BCDC). Providing both per-sonal and corporate banking ser-vices, the BCDC, as well as theBanque Internationale pour

A new energy and optimism in the banking sector

Ideal for microfinance initiatives In many ways, the DRC has theperfect conditions for theintroduction of local microfinanceinitiatives (MFI). Its Governmentof National Unity brings togetherofficials from previousgovernments, rebel groups, andrepresentatives from civil society,and is consolidating behind thenotions of peace, progress andeconomic stability. After a decade-long recession, the country isexperiencing modest economicgrowth and inflation has beenbrought under control. A start on

financial liberalization has helpedto bring in international financialintermediaries such as theFoundation for InternationalCommunity Assistance (FINCA),so paving the way for increasedprovision of financial services tothe Congolese population.

In an environment operatedlargely by the informal economyand where the public’s trust infinancial intermediaries isextremely low, there is a pressingneed to start money circulating.The Trust Merchant Bank, which

opened for business in Januarylast year, was created in orderto satisfy the demand for smallcredits among the Congolesepeople. “I thought that this wasthe only formula that couldcontribute to raising our countryout of poverty,” says RobertoLevi, the bank’s CEO. While heis aware of the high risks involvedin setting up an MFI, Mr. Levicombined this part of the bank’sactivities with a conventionalbanking department, and aftera year is able to say that theenterprise is successful.

What might seem absurdlylow amounts to someone fromEurope or the U.S. are oftenenough to get a small businessor cottage industry up andrunning. The Trust MerchantBank lends between $50 and$200, mostly to women, andenjoys a repayment rate ofaround 100 percent. “Weencourage our customers tosave money on a regular basis,”says Mr. Levi. “After the first cyclewe can increase the loans. Wewant our customers to becomemicro-entrepreneurs,” he adds.

In a context of political,economic and social recovery,the development of themicrofinance sector takes time,and success depends on long-term commitment. “Anyinstitution can come andsucceed here if they decide tocooperate with the local people,”says Mr. Levi.


5


THE IMPORTANCE OF A SOLID BANKING SECTOR HASFAR FROM BEEN OVERLOOKED BY THE GOVERNMENT,WITH REFORMS PRODUCING ENCOURAGING SIGNS

Loans of between $50 and $200 enable local entrepreneurs,mostly women, to get started and aid in the DRC’s recovery.

Thecentral bank is

a member of theproject to standard-ize payments in the

southern Africanregion


Congol’Afrique au Congo (BIAC),

have continued to in-vest despite the

crises, introduc-ing technologi-cal advancessuch as asatellite com-municationssystem andinternet bank-ing. BCDC in-

cludes amongits cl ients the

Central Coordina-tion Office (BCECO),

which works with theWorld Bank to manage for-

eign donor funds. A newcomer to the banking

scene, the Trust Merchant Bankopened in January 2005 in Lubum-bashi and provides microfinancingas well as traditional banking ser-vices. According to Robert Levi, thebank’s CEO, Congolese busi-nessmen are only now starting todeal with banks rather than keeptheir savings under the mattress.The process is a mutual education,and the traditional negative rela-tionship between people andbanks is being overturned.

Banks areworking hard toregain people’strust andencouraging theuse of theirservices for bothsavings andenterprise.



6



Congo

ENERGY

IN BRIEF

Making DRC the powerhouse of Africa

A force to bereckoned withThe Inga hydro site is the mostpowerful in the world,comparable with Three Gorgesin China. It is an essentialsource of energy in Central andSouthern Africa, and providespower to Kinshasa and otherparts of western DRC.Supplying nearly one-third ofthe electricity consumed byneighboring Republic of Congo,Inga also exports power toZambia, Zimbabwe and SouthAfrica. A power mega-projectforesees increasing energyproduction at Inga byrehabilitating plants I and II at anestimated cost of $550m,building a third plant at thesame Nkokolo Valley site, andcreating a fourth, biggergenerating plant, Grand Inga, atan estimated cost of $50bn andan output of 39,000MW.

RegionaldevelopmentInga Falls on the Congo Riverhas a potential generatingcapacity that equals that of allSouthern African countries puttogether. With its huge potentialfor producing hydroelectricpower, the DRC has a key role toplay in regional development. Asa member of the SouthernAfrican Power Pool (SAPP), thecountry is taking part in theSouthern African Power MarketProject. In light of Africa’sgrowing energy needs, thisproject will create favorableconditions for increasedinvestment in the power sector.Financed primarily by the WorldBank, it should run until 2009.The DRC will benefit from thestrengthening of existingelectricity transmission networksand the construction of a high-tension line to increase thetransmission capacity from theInga facility to the SAPP.

Regideso aims to make clean drinking water accessible to all IT SEEMS ironic that a countryso rich in water resources shouldnot be able to supply all itscitizens with clean water. TheDRC’s river network stretchesacross the whole country, andeven the smallest villages andmost remote areas are not farfrom a source. But at the momentonly around 46 percent ofthe population hasaccess to cleanwater, according tothe UNDP in 2002.

Regideso is thecompany in chargeof the treatment,distribution andmarketing of water in theDRC. A state-owned monopoly,it saw spectacular growth in the80s partly because of the rapidurbanization of the population,and partly thanks to externalinvestment resulting from theInternational Decade of CleanDrinking Water, set up from 1981to 1990. By the 90s, Regidesowas operating 94 watertreatment and distribution

centers.The years of conflict since

1996 have taken their toll on thecompany and its installations,and it is only now beginning tore-establish normal managementand administration practices. In2004 the firm produced its firstfinancial statement in seven

years. War damage meansthat only 55 of the 94

water treatment plantsare still functioning,and investment isneeded if productionand distribution are

to return to normallevels.

The company is aided bythe World Bank, the EU and theAfrican Development Bank(ADB). Total proposedexpenditure for rehabilitation anddevelopment projects has risento $620m, and although donorsand investors together haveagreed to provide this, the moneymay not be forthcoming untilafter the elections this year.

The priority is to reactivate the

larger centers that weredestroyed or damaged duringthe war, in order to ensure aminimum production andincrease supply rates from 60 to90 percent. Improvement workswill start in Kinshasa and otherlarge cities because investmenthere can be recovered moreeasily, freeing up capital to investin more out-of-the-way areas.Only in about five years’ timecan the company begin to thinkof opening new centers. In thelong term, it may be possible toexport water to other countries.

Rapidly swelling urbanpopulations provide Regidesowith its biggest challenge.Kinshasa, for example, now hasan estimated 7.5 millioninhabitants, while the networkonly has the capacity to supplywater to half of them. Thecompany aims to provide a moreevenly distributed supply,ensuring that everyone has atleast some access to water,making a significant stride inhealth and social terms.

IN ADDITIONto significant, as yet un-developed oil reserves (with 6 per-cent of Africa’s total oil reserves), theDRC has one of the greatest sourcesof natural energy in the world: theCongo River. Second in size only tothe Amazon River, the Congo has thepotential of supplying hydroelectricpower not only for its own country’sneeds and those of the region, butalso via power highways north, south,east and west to the farthest cornersof the continent and even beyond toEurope.

However, even though the DRChas 60 percent of Africa’s hydro-electric potential, only 7 percent ofthe country’s population has accessto electricity. It will require massive de-velopment and financial support tomake sure that within 20 years thecountry “will be supplying reliablepower internally and externallythroughout Africa at low cost and tothe satisfaction of customers,” asper the vision of Vika di Panzu, CEOof the national electricity company So-ciété Nationale d’Electricité (SNEL).

With a hydropower potential of100,000MW - and 44,000MW aloneat a single site on the Inga river -most of the energy production isconcentrated at the Inga hydroelec-tric facility in the southwest of thecountry, about 150 miles from Kin-shasa.

Mr. di Panzu explainedthat Inga is the largest sin-gle hydropower initiativein the world, with the po-tential to reach50,000MW of electricity.Today, Inga currently con-sists of two stations: In-ga I (six turbines of 52MWeach) and Inga II (eightturbines of 178MW each),for a total potential of 1774MW. Dueto years of low demand and lowmaintenance budgets, Inga I and IIcurrently produce only about 700MW.This total is only 2.5 percent of its ac-tual capacity, with only one turbineworking at the moment.

Plans to rehabilitate the stationshave existed for a while. Inga I was

commissioned in 1972 and Inga II in1980; equipment is out of date andrun down. In terms of obstacles,most of them are related to financialconstraints, and Mr. di Panzu be-lieves the solution to redevelopingthe site and increasing production isto negotiate with donors or to cre-ate public-private partnerships.

In June last year, SNEL signed a$9 million agreement with Canadianfirm MagEnergy for the refurbish-ment of at least one turbine current-

ly installed at Inga II. Firstenergy revenues are ex-pected by the end of2006 and all four turbinesshould be in full produc-tion by 2009. Minister ofEnergy Salomon Bana-muhere said, “This reha-bilitation agreementmarks a crucial step inthe expansion of our en-ergy production to meet

the growing needs of the DRC andthose of the Southern and CentralAfrican region.” SNEL CEO Mr. diPanzu added, “We are very pleasedthat after many years of discussionswe can now plan on the successfulrehabilitation of our country’s mostimportant energy installation.”

Plans are also under way for the

development of Inga III (3,500MW)and an initial stage of a fourth plantGrand Inga (29,000MW). The Ingasite can be expanded at relativelylow cost and without any significantenvironmental impact due to con-sistently high water volumes and therun-of-river type of installation. Whilethe plant currently supplies power toKolwezi and Brazzaville in the DRC,Angola, Zambia, Zimbabwe andSouth Africa, the successful com-pletion of Inga III to its full capacitycould potentially see pollutant-freepower supplied to Western Africa asfar as Nigeria, North Africa and thewhole of Southern Africa. This wouldgenerate capacity for the creation ofa new regional electricity exportscheme, the Western Power Corri-dor (Westcor). Furthermore, theGrand Inga scheme would be thelargest generating facility in Africa at39,000MW.

SNEL’s main aims are to providereliable and affordable energy to itscustomers. At the moment, the state

company faces the challenge of up-dating its equipment, both at theconsumer end (only 10 percent ofcustomers have access to meters)and at the production level (new high-tension lines are needed to meet ris-ing demand in the capital alone).

Other issues, such as non-pay-ment of debts and the theft of elec-tricity, are pressing for the company,which is in real need of better-man-aged operations. “I found the com-pany was in a very bad position andimmediately set up a commission todevelop a rescue and recovery plan,”says CEO Vika di Panzu. “But thereis also a true need for technologytransfer. We need foreign experts towork with us and we are developingpartnerships.”

Over the next five years the com-pany will continue to be reformed,separating the production and dis-tribution segments to improve man-agement and raise productivity, andalso look at increasing exports andgenerating profits.

UNTOLD POSSIBILITIES IN HYDROELECTRIC POWERGENERATION THANKS TO THE MIGHTY CONGO RIVERAND VAST AS YET UNTAPPED OIL RESERVES ARE WAIT-ING TO BE EXPLOITED

The Inga hydroelectricpower facility is

already one of thebiggest sources of

energy in Africa, yetrunning at only 2.5%

of its real capacity.

From its headquarters in Kinshasa, Regideso’s strategy is toreopen its war-damaged water treatment plants.

VIKA DI PANZUCEO of SNEL

Therepair of vital

infrastructure willmake an essentialimprovement tohealth and social

conditions

SN

EL


THE DRC has always relied onminerals for the bulk of its exportrevenues. “The mining sector is ofthe utmost importance to the coun-try’s economic recovery,” says In-gele Ifoto, Minister of Mines. Cer-tainly, renewed activity in the min-ing sector could help to boost GDPgrowth. But first the sector itselfneeds to be given a jump-start, andsignificant reforms are already lead-ing to positive changes.

A new mining code, issued in2002 with World Bank backing,means to create a transparent andequitable set of rules for mineralsinvestment, covering the prospect-ing, exploration, exploitation, pro-cessing, transportation and sale ofminerals as well as setting clearguidelines on financing proceduresand taxation. “We now have a sin-gle office where all payments canbe made and licenses can beobtained,” says the min-ister. In referenceto the reopen-ing of the min-ing registry( C A M I ) ,whose mis-sion is torecord miningrights, in-

cluding grants, transfers and can-cellations, and stimulate invest-ment in the sector.

“The fact that we are function-ing at all today is mainly thanks toprivate investors,” says the minis-ter. Undoubtedly, therecent years of conflictand political instabilityhave kept many away.Mr. Ifoto estimates that$1.5 billion needs tobe injected into thesector, partly to reno-vate out-of-date equip-ment, but also to pro-vide local technical andprofessional training.Also pressing is an up-to-date ge-ological survey of the country. Thereis a real need to assess the po-tential of the mining resources.Current knowledge is limited be-cause of outdated exploration da-ta that was left by the Belgians inthe sixties. But with the use ofmodern technology, there couldbe some great improvements.

The mining code, coupledwith improved political stability,is beginning to attract miningcompanies back to a countryrich in copper, cobalt, zinc,

uranium, tin and iron re-

serves, not to mention gold anddiamonds.

Anvil Mining, a copper and sil-ver producer, is one of them. Theyoperate the Dikulushi Mine, whichis the first mining project in theDRC to receive political risk insur-ance cover from the MultilateralInvestment Guarantee Agency (MI-GA), a member of the World Bank

Group. The group’s pos-itive results are a goodsign for prospective in-vestors.

Same thing forComisa/First Quantum, aCanadian copper-min-ing company that hasseen its initial $7m in-vestment in the DRC in-crease to $30m, and iscontinuing exploration

activities. According to CEO MattPascal, the new mining code hasbeen a vast improvement. In hisopinion, the more investors cometo the DRC, the better the regionwill be for future investment.

The new code has also provid-ed Adastra Minerals with a prop-er legal framework to negotiatefrom, allowing a new deal to bestruck with Gecamines, the state-owned mining company, and thegovernment. So far the firm has in-vested around $40m, and aims toinvest half as much again in theshort term.

The new legislation takes intoaccount the potential harm thatmining can do to the environ-ment. Each applicant must proveto the relevant authorities thatthey have an adequate environ-mental rehabilitation plan. But be-yond all the efforts, James Tid-marsh, a Swiss-based lawyer rep-resenting several mining projectsin the DRC, strikes through aword of caution. He says thatsimply adopting a new law mod-eled on an international templateis not enough. “Continued effortwill be required over many yearsto implement the new rules. Men-talities need to change and thatwill take time. Courthouses needto be built; civil servants andjudges trained.” But he recog-nizes that the process has begunand that in the years since itsadoption, the mining code hasdramatically stabilized the regu-latory environment.

A TERRITORYof close to 192,000square miles, Katanga is almostthe size of France and representsmore than 20 percent of the na-tional territory. With its vast de-posits of copper, cobalt, tin, ra-dium, uranium, and diamonds,Katanga province in the southeastis the richest in the DRC, and oneof the most economically dynamic.Katanga borders Angola to thesouthwest and Zambia to thesoutheast, with Lake Tanganyikaseparating it from Tanzania to theeast. Lubumbashi, its capital city,was named “Capital of Hope” byUnesco. In addition to its subsoilriches, the province contains thefertile Katanga Plateau wherefarming and ranching are carried

out as well as significant fishingactivities.

Today, besides the separatismmovements of the past, theprovince is fully part of the DRC’sfuture, and even more so as itsmining resources are meant toboost the economic relaunch ofthe country. The copper belt re-gion staged a number of projectsin 2005 that make the region sec-ond to the DRC’s capital in termsof new projects. Better still, theprovince together with neighbor-ing Zambia, is booming thanks tothe soaring prices of copper onthe world market.

Signs of better times are un-missable in the region. Longstretches of trucks filled with

SIGNIFICANT REFORMS WITH A NEW CODE AND CLEARGUIDELINES ARE ALREADY LEADING TO POSITIVE CHANGESAND ATTRACTING AMBITIOUS PRIVATE VENTURES

KATANGA IS THE ‘STATE WITHIN A STATE’ AND THERICHEST AND MOST ECONOMICALLY DYNAMICPROVINCE IN THE COUNTRY

An up-to-dategeological survey ofthe DRC wouldpinpoint its vastresources ofunearthed riches.

TheMinistry ofMines inKinshasais makingprogresswithsweepingchanges.

INGELE IFOTOMinister of Mines

Reinventing thecopper belt ascatalyst ofdevelopment

Katanga: time to grow againGOVERNOR NGOY has a visionfor 2010: to establish peace andstart attracting more investors tothe province. Provided there ispeace, in five years Katanga shouldbe able to regain its position as theDRC’s economic engine.

The DRC is often referred to asa geological scandal. What areKatanga’s resources?Dr. Kisula Ngoy: With regard toexploited resources, Katanga pro-duces copper, cobalt, tin, man-ganese, cassiterite and coltan.Back in the colonial period, Bel-gium discovered that the copperdeposits spread over an 800kmarea from Sakania to the centerof the province, but these are asyet not exploited. Some miner-als such as coltan are specific toKatanga. Diamonds were dis-covered in the west of the

province after prospecting, andin the north we have gold, ex-ploited only by small-scale pro-duction operations, as we haveno investors as yet. Our major

priority at the moment is to or-ganize a geological survey that willallow us to map Katanga’s re-sources. The maps we are cur-rently relying on date from thecolonial period, at the latest fromindependence in 1960.

What advantages has the newmining code brought?

One of the main advantagesfor investors is the possibility torecover their capital outlay whileexploiting. Investors include AnvilMining in the east, and First Quan-tum-owned Compagnie Minierede Sakania (COMISA) in thesouth-east.

The mining code will also allowthe province to obtain funds whichcontribute to raising the living stan-dards of the local population. Thiswas not the case previously, as Kin-shasa collected all royalties.

How do you see Katanga’s eco-nomic development over thenext few years?

For the time being, Katangaprovince must rely on revenuesfrom mining activities in order todevelop its economy. But we donot want to neglect agriculture, asa reinvigorated sector would doa lot to improve living standards.If we can attract more mining in-vestment we will also invest infarming.

Also, we need to organize thecountry’s structures, givingprovinces more responsibility forlocal matters. If all revenues werecollected locally and we could ad-ministrate expenditures, it wouldbe an improvement. A decen-tralized system would mean wecould manage our own economy,giving more control and ensuringa more efficient management.

URBAIN KISULA NGOYGovernor of the Province of Katanga


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Congo

MININGA wealth of minerals liein the heart of Africa

CONGO nyt 10/16 OK.qxd 22/2/06 21:52 Página 2

THE HISTORY of Katanga provinceis irrevocably linked with that of whatused to be one of the world’s ma-jor copper mining operations,Gecamines. Under Belgian colonialrule, extensive copper and cobaltdeposits were discovered here, andthe Belgians wasted no time in set-ting up what was then the UpperKatanga Mining Union. Productionwent on apace and revenues weresubstantial. “Part of Belgium wasbuilt with money from the Congo,”

says Nzenga Kongolo, the formerCEO of Gecamines. “It is a matterof pride for us.”

A few years after independencewas obtained in 1960, the companywas nationalized, renamed Généraledes Carrières et des Mines, andstarted producing even more. Bythe 80s, it was reaching annual pro-duction levels of almost 500,000tonnes of copper and 17,000tonnes of cobalt, making it the fifth-largest copper producer in the

world. At the height of its operations,Gecamines was the sole instigatorof social development in the region,opening schools, hospitals and can-teens to care for the workers andtheir families.

Unfortunately, the production wasnot used rationally to develop themining industry. Towards the end ofMobutu’s regime, he alone man-aged all the company’s funds, mis-using them for other purposes. Inaddition, production equipment wasnot renovated and fell into disrepair.Today, Gecamines is producing atless than 10% of its capacity, andinstallations have not been proper-ly maintained for over 15 years.

But the reserves are still there.Gecamines has calculated that theycan continue to extract copper forat least the next 50 years with cer-titude, possibly for the next 75 or100. Much of current production issurface mining, and the potentialfor the subsoil could be even big-ger, needing only an updated sur-vey and exploitation campaign.

Although Gecamines turned tothe private sector in 1995, the coun-try’s civil war put many projects onhold. The advent of new legislationin 2002 and the establishment of atransitional government in 2003opened the way for Gecamines tostart negotiating with foreign miningcompanies to establish partnershipsand joint ventures. The company


11

A PROUD HISTORY AND AN ENTERPRISING FUTURE,GECAMINES HAS SEVERAL MAJOR PROJECTS ON THEGO AND IS LOOKING FOR FURTHER PARTNERS

Investment, especially in mining as it is the biggest sector, would get the wheels of the economyrolling and raise employment opportunities for the Congolese people.

There are several joint-venture projects with privateinvestors in progress.

National mining giant offerscapacity for expansion

Continued on page 12

minerals line up to cross the bor-der at Kasumbalesa every day. Inthe city center, the number of newcars is increasing every month; vil-las are being renovated in the resi-dential area, while infrastructure pro-jects are sprouting up in the outskirts.

Katanga has not emerged un-scathed from the DRC’s more wide-spread civil conflicts. During Laurent

Kabila’s time as president, localgroups were armed to defend them-selves from invasive forces. Knownas the Mai-Mai, some of thesegroups are now resisting the na-tional demobilization process, caus-ing outbreaks of fighting particular-ly in the northeast of the province.

Production of copper and cobaltplummeted from the mid-80s on-

wards due to decades of mis-management. Nevertheless, min-ing activities are ongoing, and for-eign companies are acting on theprovince’s potential. GovernorKisula Ngoy hopes that the WorldBank supported restructuring ofthe country’s major mining outfit,Gecamines, will help reinvigoratethe local economy.

11


has several major projects on thego. One of them is the Kasomboproject with George Forrest Inter-national, and that has been fol-lowed by the Kamoto joint agree-ment signed in August2005. Another is TenkeFungurume, which isconsidered to be one ofthe world’s largest un-developed copper de-posits with the potentialto reach annual produc-tion of 400,000 tonnes.This is jointly owned withTenke Mining and U.S.giant Phelps Dodge. An-other project is DCP, op-erated with GEC Group,and KMT is a project theyhave negotiated with ADASTRA.Gecamines also has several othersignificant projects in progress.

Mr. Kongolo, the former CEO,is careful to stress that privatecompanies should not be ex-

pected to provide so-cial infrastructures.This, he says, is a jobfor the government.Thanks to the newmining code, the stateshould be able to re-ly on income from du-ties paid by privatemining companies.This in turn should al-low them to make im-provements, thus at-tracting ever more in-vestment. “If it devel-

ops the mining industry, a well-organized state will have suffi-cient financial means,” he says.

“What is important is to suc-ceed in giving value to the DRC’snatural reserves. Public-private

partnerships could bring in newtechnology and give value to astructured economic develop-ment, rigorously controlled by thestate within a fiscal frameworkthat is organized and stable.”

“We confirm that we have im-portant mineral resources but thatwe have problems of financingand management. If we work to-gether with American or other in-vestors, we will surely succeed.”Mr. Kongolo is convinced thatthe presence of large multina-tional companies in Katangawould be a guarantee of the sus-tainability of the peace process,helping to enable economic de-velopment and reduce povertyeven while they continue to makea profit.


12



Congo

NOT JUST A NORMAL HOTEL

Located in a residential area overlooking the RiverCongo, the Grand Hotel Kinshasa is for guests whodemand the very best services, selected from thefinest choice available from around the world. The onlyfive-star hotel in the country offering a wide range of first-class facilities plus culinary excellence, theGrand Hotel provides the ultimate hotel experience.

Av. Batetela, B.P. 9535, Kinshasa, Democratic Republic of CongoTel:+243 818110003 or 8946660/1/2/3

Fax:+243 8841500, 8801625, 812616009 or 812616011, Email:[email protected] or [email protected], www.grandhotelkinshasa.com

National mininggiant offerscapacity forexpansion

Copper extraction could continue for at least another 50 years.

GE

CA

MIN

ES

NZENGAKONGOLOFormer CEO ofGecamines

Continued from page 11

Leading by example toincrease economic activity

THE FORREST GROUP was orig-inally founded in 1922 as a trans-port company in Katanga province.By 1933 it had started extractingminerals, in particular copper, man-ganese and gold, and in the early50s it embarked on several civil en-gineering projects such asKolwezi airport. It is oneof a rare breed of com-panies that continuesto create employmentin the country. Direct-ly or indirectly, GeorgeForrest International S.A.provides jobs for around10,000 people in the countryand new investments in the pipelinecould easily double this figure. Thecompany’s activities in the DRC arestill mainly centered in Katanga.

In 1986, George Forrest tookcontrol of the company. “I cameback to mining, producing five mil-lion cubic meters a year until the po-litical situation forced us to stop. Itwas not until 1994-1995 that wewere able to sign our first contract

with state company Gecamines tostart extracting cobalt from the Ko-sombo quarry,” says Mr. Forrest.Since the new mining code was in-troduced and the transitional gov-ernment was established, the com-pany has continued to invest in var-

ious extractive projects.“We work with Amer-

ican partner OM Group,the world’s leadingcobalt firm, andGecamines on the STLcoke oven project,

which exploits slagheaprejections from the

Gecamines site in Lubum-

bashi. Today, that factory is pro-ducing 3,000 tonnes of cobalt ayear.” Another joint project with Chi-na and OM Group in Kinsenda in-volves building a high technology$60m factory for the production ofcobalt and copper salts.

“Now we are focused on theMinière Musoshi Kinsenda (MMK)project near the Zambian border,where we have invested around$42m and where we expect to ex-tract around 50,000 tonnes of cop-per annually,” says the companypresident. In a recent transaction,Copper Resources Corporation(CRC) entered into a Memorandumof Understanding to acquire 75 per-cent of MMK. In exchange for the75 percent shareholding, CRC willissue more than 18.5 million newshares so that the Forrest Group

will become CRC’s largestshareholder.

THE ONLY commercial diamondproducer in the DRC is the Bak-wanga Mining Company (MIBA),a joint venture operation betweenBelgian company Sibeka and theDRC government, which holds an80 percent stake. De Beers, ashareholder in Sibeka, marketsaround 30 percent of the coun-try’s diamonds.

For years, MIBA only exploited40km3 of its total 78,000km3 con-cessions. Exploitation has recent-ly spread to 940km3 and the com-pany has decided to release someportion of its remaining concessionsto private financial and technicalpartners, including DeBeers, Al-rosa, DHP and DGI/Emaxon in or-der to boost the economy.

MIBA was at one time world’sbiggest diamond manufacturer,producing 18 million carats. By1995, output had dropped toaround 4.3 million carats. Pro-duction is picking up once again,

and the break-even point of eightmillion carats should be exceed-ed by the end of this year.

Although the DRC is Africa’slargest diamond producer, mostof the country’s diamonds are pro-duced by the informal sector. “We

deplore this type of small-scaleproduction because of its lack oforganization and the fact that it in-volves children,” says Gustave Lu-abeya, CEO of MIBA. It is esti-mated that the treasury loses about$450m a year due to smuggling.

To counteract the illegal trade,all diamonds exported by the DRCas of April 2002 have to be sub-mitted to certification by the Cen-tre for Evaluation, Expert Analysisand Certification of Precious Min-erals (CEEC).

The DRC is also a member ofthe Kimberley Certification Process.“The Kimberley certificate is a sub-stantial contribution in securingcommercialization. These certifi-cates have brought around $700m- $800m to the state. In addition,the process contributes to our in-ternal transparency,” says Mr. Lu-abeya. “If we are to obtain inter-national credibility, a legally secureframework is a necessity.”

GEORGE FORREST INTERNATIONAL S.A. HIGHLIGHTSTHE REAL ECONOMIC AND SOCIAL POTENTIAL INVARIOUS SECTORS, THE COUNTRY AND ITS PEOPLE

Withan extensive

river network andfertile soil, agribusi-

ness investmentwould reap great

rewards

The restructured marketopens up opportunities inlarge-scale production.

Diamond opportunities as certificationand new legislation shape the market

Currently providing jobsfor 10,000 people in the

country, this numbercould easily double

from new investments in the pipeline .



13



Congo

ONE of the inevitableby-products of civilstrife is the disrepairand destruction of lo-cal infrastructure, andthe DRC is no excep-tion to this rule. Asthey stand today,Congo’s roads, rail-ways, and airport net-work are in need of ex-tensive restoration inorder to meet devel-opment requirements.

The country is vastand relies on six forms of trans-portation: air, rail, road, river,lake and sea. Funding restric-t ions preclude deal ing witheverything at once, so five re-habilitation projects have beengiven priority by the Ministry ofTransport and Communications:N’djili and Lubumbashi Interna-tional Airports, Matadi sea port,public transport, and the coun-

try’s railway companySNCC.

Among other dealsto date, the ministryhas negotiated withforeign investor com-panies for the resur-facing of runways atboth N’dj i l i andLubumbashi airports.In April last year, Con-go signed an agree-ment with the Belgianauthorities for coop-eration between the

ports of Antwerp and Matadi,and also Brussels and Kinshasa.With one million euros being putup by the Belgian DevelopmentCorporation, the port facilitiescan be restored. The ministry isalso considering opening SNCCup to pr ivate partners as ameans of reviving the company.

SITUATED on the banks of theCongo River, the DRC’s capitalKinshasa is one of Africa’s mostdynamic and culturally active cities.It has a population of seven and ahalf million, making it the samesize as Johannesburg. Originallyfounded as a trading post in 1881,it flourished with the construction

of a railway and became the coun-try’s capital in 1920.

Like any major city, Kinshasa of-fers a variety of aspects: upmar-ket residential areas contrast withmore bustling central urban zones,where thriving communities of mu-sicians and artists make for a world-famous nightlife. In addition, the city

has two universities and is hometo the country’s government. It isalso the DRC’s main industrial cen-ter, processing many of the raw ma-terials brought from the interior.

This confluence of energiesmeans Kinshasa is, in the contextof the country’s peace process,leaps ahead of the more remoteparts of the country. Infrastructureis being repaired on amajor scale and thepresence of residentforeigners is promot-ing a rapid economicrecovery.

One institutionwhich has maintainedits status through goodtimes and bad is theGrand Hotel Kinshasa(GHK). Jointly ownedby the state and the In-terContinental Hotelchain, it used to be theInterContinental Kinshasa. With its422 rooms, conference and ban-queting facilities, leisure complex-es and shopping center, the hotelis the obvious choice for nationaland foreign businessmen. It alsofeatures a master automatic gen-erator that protects against un-controlled power-cuts.

“The hotel plays an importantrole in making people feel secure.We provide them with good ser-vices and, when they go back,they have the feeling of being welllooked after, of being safe,” saysMundabi Fal Bob, the hotel’s Gen-eral Director. Starting out as a wait-er in 1971, he has worked at thehotel for 34 years and is commit-

ted to the hotel andwhat it represents forthe country.

His experience as amanager and busi-nessman makes himfully aware of the coun-try’s weaknesses whenit comes to attractinginvestment. “The worstis red tape. If we canput an end to it and al-low people to run theircompanies to make aprofit, and at the same

time help to develop the country,things will work,” he says.

In particular, he recalls the pos-itive input of U.S. firms in the 70s.“American businessmen con-tributed a lot to the developmentof our country, setting up compa-nies and creating jobs, and wethink they could do so once again.”

THE SHEER GEOGRAPHICAL EXPANSE OF THE DRCMEANS GOOD INFRASTRUCTURE AND TRANSPORT AREVITAL FOR ECONOMIC AND SOCIAL RECOVERY

project in Kamoto represents aninvestment of over $300 million,which we are entering into withCanadian firm Kinross,” he con-tinues. As well as reopening theexisting underground mine theproject will start a surface mineand a refinery.

“We are proud of all our pro-jects, because each time hasbeen a challenge. Every projectrequires the latest technology andexpertise. In addition, every in-dustrial project has been ac-companied by a social projectsuch as schools, hospitals andcommunity clinics. That is part ofthe contract as far as we are con-cerned, and it is a principle wegive a lot of importance to. Justas we want our schools and hos-pitals to be open notjust to our workers butalso to the rest of thepopulation.

“Every new projectinvolves around 700people directly or in-directly. The invest-ments are complicat-ed; our strength liesin the fact that wehave been working inthe country for a longtime. We reinvest inthe DRC and havefaith in its future. I see Congo asmy home, which motivates me tocontinue. Today the context isvery difficult and working becomesmore of a challenge. But it is ex-citing, especially when you suc-ceed. The risks are high, it is true,but they are balanced by goodachievements – the fact that weare creating jobs, that I can seesmiles on the faces of the em-ployees.”

As well as mining, ForrestGroup has interests in agricul-ture. “The country has great po-tential for agriculture, thanks to theextensive river network and thefertile soil. Agriculture needs to beencouraged,” states the president.

George Forrest is banking on

additional investors coming tothe DRC. “Big companies havea correspondingly big role to playin encouraging the country’s de-velopment. OM Group, for in-stance, is consolidating its po-sition here by creating added-val-ue produce and exporting directmarketable products,” he says.

More investors would createmore jobs and lead to increasedeconomic activity. This in turnwould translate into increasedrevenues for the state meaningless corruption and misman-agement. It would also result ingreater re-investment in theeconomy. Infrastructure renewalis vital. Projects such as roadreconstruction supported bythe World Bank are key to im-

proving the existingsituation.

“The country iscoming from years ofpolitical instability, andalthough much hasbeen done to re-es-tablish communica-tions and infrastruc-ture, there is still a lotto do. Most of theworld’s stockpile ofraw materials is to befound in Africa: a greatquantity of oil, miner-

als and even agricultural pro-duce. I strongly believe that thereare great economic perspec-tives in Africa, particularly herein Congo.

“The fact that investors arehere is positive, but it does de-pend very much on the type ofinvestor. We need people andcompanies who are here to dotheir job properly and earn the re-spect of the population, not peo-ple who are looking to hit thejackpot and disappear. I want in-vestors to keep coming, but Iwant them to be fully committedto the people and the country, asthis is the only way to developproper projects here,” states thefirm’s chief executive.

GEORGE A.FORRESTPresident ofGeorge ForrestInternational S.A.

MUDABI FALBOBGeneral DirectorGrand HotelKinshasa

Each industrial venture of George Forrest International S.A.has been accompanied by a social improvement project.

The Grand Hotel Kinshasa has earned itself a reputation ofproviding unfaltering quality service and accommodation.

The DRC’s roads, railways and airport networks are in need ofextensive restoration.

Grand Hotel Kinshasa: a constant oasis

TRANSPORTRebuilding the fabric connectingthe economy with its future

Continued on page 14

HEVA MWAKASAMinister ofTransport andCommunications



14



CongoExternal financial help is al-

so being made available. In De-cember 2003 a group of donorcountries and organizations, in-cluding the African Develop-ment Bank and the BrettonWoods agencies, agreed to pro-vide $4 billion to be used in re-covery projects between 2004and 2006. The World Bank (WB)together with the EU instigateda project to repair the road fromKinshasa to the port of Matadi(about 350km), as well as thecurrent rehabilitation programthat has started on the Kolwezi- Lubumbashi portion in the min-ing region. An obvious winnerin terms of economic im-pact. Other projectsare contained with-in the WB’s emer-gency multi-sectorrehabil i tat ion andreconstruction pro-gram (PMUR).

In November 2005,with the aid of the WB, theDRC government launched acomprehensive program foreconomic and social revival. Amultimodal transport project(MTP) has been created for thetransportation sector to extendover f ive years f rom 2007through 2011. The govern-ment’s main objective is to con-sol idate the reuni f icat ionprocess by rebuilding three ofthe country’s key trade andtransport corridors. Existingstate-owned companies will un-dergo restructuring and, wherepossible, partnerships with pri-vate companies will be estab-

lished. Also pressing is the needto reduce the country’s presenttransport costs, the highest inAfrica. The MTP will be the firsttransport project in DRC sincethe end of the civil war, at an ex-pected cost of $200m spreadacross all transportation sub-sectors.

U.N. body MONUC Aviationis providing Congolese air-traf-fic control officers with special-ized training to bring their skillsup to international standards.There is also a domestic plan tomodernize the DRC’s infra-structure by equipping the mainairports with the ‘very smallaperture terminal’ (VSAT) net-work, which will be connected

to the Southern AfricanDevelopment Commu-

nity (SADC) system,helping to enhanceregional coopera-tion.

The DRC doesnot have a national

airline, but other com-panies link the country to Eu-

rope and other African nations.The main international airportis located in Kinshasa with oth-ers in Lubumbashi, Kisangani,Goma and Gbado-lite. Thesecenters are serviced by Westand East African carriers, aswell as Air France. Kenya Air-ways is the latest airline to flydirect to the DRC. Its Nairobi-Lubumbashi route, opened inFebruary 2005, has provedhighly popular. “The miningzone of Lubumbashi and thesurrounding provinces consti-tute an economic center,” saysCountry Manager Jean Uku.

Continued from page 13

Link-ing the coun-

try’s key trade andtransport corridorsis vital for stable

economicgrowth

Connecting people across vast areaswithout fixed lines or electricity in place

Bonobos: protecting our closestrelatives on the brink of extinction

SINCE the DRC’s telecommuni-cations sector was liberalized,growth has been phenomenal,going from fewer than 200,000subscribers in 2001 to around2.5 million today. Cellphone com-panies have created two networksthat cover the whole country, evenwhere there is no electricity.

In 2003 the government set upa regulatory body, ARPTC, to im-plement the new statutory andregulatory laws. “We aim to en-sure the effectiveness of compe-tition, provide guarantees for in-vestors and ensure universal ac-cess,” says Louis Kaziba Muloko,President of ARPTC.

The two main private opera-tors are Celtel and Vodacom. Athird company, SAIT, operates ona smaller scale and there are al-so a few companies working inspecific areas.

Both Celtel and Vodacom havecommitted to investing in thecountry in infrastructure, equip-ment and human resources.Working in a vast area with no fixedlines in place, the companies have

brought telephone communica-tion to the Congolese for the firsttime, helping to improve stan-dards of living and increasing sta-bility. They provide employment,both directly and indirectly, and areinvolved in training people to be-come the next generation of em-ployees. Furthermore, their taxcontributions are a significantsource of income for the gov-ernment. In addition, the firmsjuxtapose their business objectiveswith a sense of social responsi-bility, helping to fund charitable

endeavors. With high levels of poverty, they

have made telephone servicesaccessible by setting up low-rateprepaid services – at presentaround 98% of customers areprepaid. Prospects for growth arehigh, given the country’s increasedstability and continued econom-ic development.

One of ARPTC’s priorities is toprovide up-to-date statistics. “Weare working with the Central Bankto set up a modern informationsystem,” says Mr. Muloko.

COVERING an area of around500,000 square miles, the rain-forests of the DRC’s Congo Basinare the second largest in the world,and some of the globe’s last re-maining areas of primeval forest-ed lands. These tropical forestssupport rare and endangeredspecies such as gorillas, chim-panzees, bonobos, white rhinos,okapi, and the Congo peacock. Anestimated 35 million people live inand around them.

In 2001, the DRC was singledout by the U.N. Environment Pro-gramme (UNEP) as one of 15countries where international efforts

at forest conservation should befocused. UNEP is also behind thegreat apes survival project(GRASP), which held its first coun-cil meeting in Kinshasa in Sep-tember 2005. GRASP aims to raisethe global profile of the plight fac-ing the great apes and their habi-tat, as well as taking steps to pro-tect them.

A comprehensive new forestrycode was adopted in August 2002,supported by the World Bank andthe U.N. Food and Agriculture Or-ganization (FAO). Both agenciesare involved in preparing a nationalforest zoning plan, which will de-

fine areas for logging, conserva-tion and community use, puttingan end to illegal timber extraction.Other measures to be taken in-clude a moratorium on the con-cessions of land and the recoveryof around 25 million hectares of un-lawful concessions.

The bank and the FAO are al-so supporting the development ofa series of new laws that will helpto implement the code, includinga law on nature conservation, a vi-tal tool for the sustainable devel-opment of the country’s forest re-serves. “The exploitation of forestsmust go hand-in-hand with the

protection of the forest environ-ment,” says Joseph Kabila, thecountry’s president.

Coupled with increased politi-cal stability, the existence of theseforests and the rare wildlife providesthe opportunity to develop a strongeco-tourism sector in the future.

ONLY to be found in the DRC,the bonobos, or pygmy chim-panzees, are one of hu-mankind’s closest relatives andare facing extinction becauseof habitat encroachment andthe bush-meat trade.

Daughter of a veterinarydoctor and avid conservation-ist, Claudine Andre is the head– and heart – behind the LolaYa Bonobo sanctuary. Whenconflict broke out in the early90s, she took on the care ofKinshasa Zoo animals, enlist-ing help from local firms to pro-vide food and shelter. Her firstbonobo orphan was brought inwith little hope for its survival,but Ms. Andre discovered thatthe key ingredient needed wasaffection. Since then, she andher team of trained workershave rescued many more or-phaned apes, and her sheltercurrently houses 38.

In the future, she hopes toopen a reserve which will al-so function as an eco-tourismproject. The Ministry of the

Environment, to which she isgrateful for support in imple-menting the bonobo trade

ban, is providing her with land,but she must rely on donorsfor finance.

The two main cellphone operators have made telephonecommunication possible throughout the whole country.

Conservation programs are cost effective, accomplishing agreat deal with very little, but more contributions are needed.

TOURISMRespecting the hand that feeds

The DRC’s rainforests are home toaround 35 million people and

suppport some of the rarest wildlifespecies in the world.

COUNTRY STAFFEditorial Director:Christelle ThomasResearch Director:

Philippe van Maldeghem


The Democratic Republic of Congo is calling time on conflict as it prepares for its first general elections in over forty years. Resolute on bringing a peaceful conclusion to past confrontations, it is making steady progress in its transition to

democracy and stability. Backed by the United Nations, European Union, NGOs and other African Nations, the Congolese people are committed to driving

DRC to the peaceful organization of the elections in 2006 and a future of continuity and progression.

The Democratic Republic of Congowww.anapi.org,

www.presidentrdc.cd


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