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http://www.mg.co.za/mg/news/98oct2/19oc-congo.html
DR-Congo's economy heads from
bad to worse
As war continues to ravage the Democratic Republic of Congo, the economy founders with the virtual collapse of the transport system and the crash of the currency. By MICHEL CARIOU, in Kinshasa
HE ravaged economy of Democratic Republic of Congo is headed from bad to worse with a costly war effort against rebels in the east, the virtual collapse of the transport system and the crash of the currency.
"The outlook is bleak. No improvement is likely in the medium term," the owner of a transport business here said.
His company, like others in the DRC capital, has had to lay off workers because of the economic slowdown since the Tutsi-led rebellion broke out on August 2.
"Imports of goods and foodstuffs are slowing down, which is a sign that the economy is failing," another businessman said.
The economy, already suffering before the rebellion was launched against DRC President Laurent Kabila, now faces a further battering as a result of the devastation -- and expenses -- of war.
The first casualty has been the national currency, the Congolese franc (FC), which was launched in July to replace the hated new Zaire, the currency associated with hyperinflation under the ruinous regime of the dictator Mobutu Sese Seko, whom Kabila ousted in May 1997.
The DRC's central bank has undertaken complex monetary reforms in which the FC is to circulate concurrently with both new and old Zaires for a year ahead of monetary reunification as an essential step in economic recovery from Mobutu's 32 years of kleptocratic rule.
Financial jitters provoked by the
rebellion, especially during August when
rebels held the key southwestern supply
port of Matadi, caused the FC to
plummet.
"Everyone wants dollars, at any price,"
one Kinshasa resident said.
The FC has lost half its value against the
dollar since July, trading Wednesday at
around 2.8 FC to the dollar, but with
wild vacillations from one day to the
next, depending on the latest rumors.
The weakening currency, a crumbling
transportation system and the loss of an eastern swathe of the country to the
rebels have caused the prices of basic goods to soar, making daily life ever
more difficult for the average citizen.
With the start of the school year in early October, many parents faced the additional hardship of having to pay their children's school fees.
Transport for Kinshasa's five million residents has become difficult with chronic fuel shortages as the government and oil companies are mired in a standoff over prices.
The oil companies want to hike fuel prices to compensate for the weak currency, while the government wants to ward off a new round of price hikes that would result from increased fuel prices.
The government has promised to consider the companies' demands but asked them to participate in the "war effort."
Meanwhile, the state is bringing in very little in the way of revenue.
The budget forecast of some 700 million dollars in 1998, to be raised largely from the lucrative mineral sector, did not take into account the costs of financing the war.
National defense statistics are kept secret, but the costs are thought to be substantial.
Most Kinshasa residents blame the rebels for their problems, a sentiment the government turns to its advantage.
In a statement published this week the government called on citizens to "remain united behind the head of state ... in the face of inevitable sacrifices and the shocking suffering brought about by this injust war." -- Agence France Press, October 19, 1998.