East-West Debt july 2004 news, Emerging Markets update : CONGO
Congo: Kabila is promised
more help
Congolese President Joseph
Kabila has ended a four-nation
European tour with promises of
debt cancellation, the training of
his new unified army and police;
and help with the organization
of multiparty elections at the
end of a two-year transitional
government of national unity.
In France, where he began
his visit last February, Kabila
met potential French investors
with whom he had a working
lunch. The French embassy
press attaché in Kinshasa, said:
“This should soon be translated
into some concrete action, but
the investors are waiting for
requisite legislation before they
invest in the country.”
Kabila also met French
government officials who reiterated
their desire to help the
vast country (roughly the size of
Western Europe) through its
transition to democracy. President
Jacques Chirac has,
among other promises, cancelled
Congo’s Euro 620 million
debt to France, if the transition
process goes according to plan.
On top of that, French Cooperation
Minister Pierre-Andre
Wiltzer announced US$ 64 million
in bilateral aid. This grant
will be disbursed over two years.
Last year, France cancelled a
US$ 1.28 billion debt Congo
owed it through the Paris Club.
President Kabila has over the
past years been urging foreign
investors to look again at his
country, which was ripped apart
by a vicious war. He took power
in 2001, following the assassination
of his father Laurent.
So far, the international community
has pledged US$ 2,5 billion
in financial assistance.
According to a big mining firm,
which has agreed tot put US$
300 million in, the investment
climate is improving. In general,
western investors are confident
that President Kabila would succeed
in putting the country back
together again. Several things
have improved since Joseph
Kabila became President which
has encouraged increased
investment. “First of all the war
has finished, secondly the new
transitional government has
been put in place, and they have
brought in a new mining code
which provides a new fiscal and
legal structure”, one source said.
When President Kabila came
to power in 2001, inflation was
running at about 300 %, whereas
last year it had fallen to 12 %.
Also the exchange control
regime has changed which gives
a much greater facility for investors
to get a return.
There is still fighting in the
east of the country and there are
reports of active armed groups,
but this has to be put in perspective.
“The interior region where
all these horrific abuses of
human rights are taking place is
about the same distance from
our operations as Moscow is
from London”, a European
investor says. “Physical security
in the country is not an issue - of
greater importance is political
and financial stability, and that
has improved.”
Kabila’s European tour
brought him after France to
Germany, the United Kingdom
and Belgium. In London, Kabila
received British assurances of
US$ 38 million in annual budgetary
support. Britain has already
channelled at least another US$
100 million in aid to the country
through the World Bank.
In addition, European
Commission President Romano
Prodi told Kabila that he would
accelerate the disbursement of
US$ 6.4 million promised to
train Congo’s new unified police
force.
A unit of this new police,
made up of former belligerents,
will be responsible for protecting
institutions of the transitional
government, replacing the
700 UN troops engaged in this
task since the installation of the
government in June 2003.
France is also to provide 12
instructors to train the anti-riot
police.
Meanwhile, Belgium, the
Congo’s former colonial power,
is to train the new unified army.
In January, Brussels sent 190
military instructors to the eastern
city of Kisangani, to begin
training the Congo’s first unified
army brigade.
The question remains what
will happen to the enormous
debt burden of Congo. Already
two years ago, during the first
visit of Joseph Kabila to Europe,
possible investors expressed
their lack of confidence for new
investment as long as the old
debts were not honoured. Yet,
this problem has been addressed
during the latest visit again
without any real outcome but a
promise from the president to
give the matter his attention.
Although improving, the
administration is still to be considered
as one of the most corrupt
systems in the world and
nobody gets something done
without paying off some officials.
The same goes for amicable
settlements of outstanding
debts, a lot of mouths have to be
fed before a result can be obtained.
As a Belgian company with
outstanding and everlasting contacts
in Kinshasa, East-West
Debt can limit these inconveniences
to a minimum and work
out a profitable deal anyway.
Moreover, as one of the only in
the world we are capable of forcing
payment from Congolese
entities the legal way. Therefore,
do not hesitate to contact us
if you would have outstanding
DRC claims.
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