Zambia Zaire

COUNTRY REPORT

4th quarter 1996

The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 40 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group.

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Contents

3 Summary

Zambia 4 Political structure 5 Economic structure 6 Outlook for 1997-98 9 Review 9 The political scene 11 The economy 12 Agriculture 13 Mining and energy 14 Foreign trade and payments

Zaire 16 Political structure 17 Economic structure 18 Outlook for 1997-98 20 Review 20 The political scene 24 The economy 25 Mining 27 Agriculture 27 Transport 27 Foreign trade and payments

29 Quarterly indicators and trade data

List of tables 7 Zambia: forecast summary (domestic) 8 Zambia: forecast summary (external) 29 Quarterly indicators of economic activity

List of figures 8 Zambia: gross domestic product 8 Zambia: Zambian kwacha real exchange rate 20 Zaire: gross domestic product 28 Zaire: imports and exports, 1995

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996

October 29, 1996 Summary

4th quarter 1996

Zambia Outlook for 1997-98: The opposition election boycott means voter turnout will be crucial for legitimacy of the MMD. UNIP will look to mass action to try to unseat the government, and the MMD will become more repressive. The World Bank and the IMF will be under pressure to take a political stand on lending, alongside bilateral donors. Read GDP growth is likely to slow in 1997 but rally slightly in 1998. The kwacha will continue to slide and the current- account will be hit by lower aid inflows.

Review: Presidential and parliamentary elections have been set for November 18, but most opposition parties have said they will boycott the polls. The state’s treason case against eight UNIP members has run into difficulties. The government has again threatened journalists, and said it may sue Dr Kaunda for libel. International reserves have been sustained, at the cost of pressure on the currency, inflation and high interest rates. Money-launderers have shown an interest in Zambia. The maize price has risen, but there may be a fertiliser shortage. Production at ZCCM has fluctuated owing to technical problems and labour unrest. Avmin has started test drilling at Konkola North. The Indeni oil refinery has shut down. Multilateral donors have continued to support Zambia. A bilateral trade agreement with South Africa is unlikely.

Zaire Outlook for 1997-98: Mr Mobutu’s illness intensifies the political confusion, and the fighting in the east is likely to lead to all-out war with Rwanda and possibly Burundi. Everything will depend on the president’s health; he will remain in control for as long as he is physically capable, but the country may well fragment once he leaves the political stage. Civil servants will continue to make a living of their privileges, and privatisation will be another route to personal enrichment.

Review: Mr Mobutu has undergone surgery in Switzerland for prostate cancer, and has stayed in Europe for longer than expected. The census and referendum have been postponed again, and the vice-chairman of the electoral commission has resigned. Mr Tshisekedi has set improbable conditions for his participation in the presidential election. The crisis in eastern Zaire has escalated as Zairean ethnic Tutsis have gained ground against Zairean troops, bringing Zaire to the brink of war with Rwanda and displacing hundreds of thousands of Hutu refugees. Inflation has already outstripped its official forecast for calendar 1996. The central bank has drifted into chaos. Foreign direct investment in the mining sector has risen and Gécamines’ output has increased. Foreign trade appears to have picked up in 1995. Some official French aid has resumed.

Editors: Gill Tudor; Gregory Kronsten All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023

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Zambia

Political structure

Official name Republic of Zambia

Form of state Unitary republic

Legal system Based on the 1996 constitution

National legislature National Assembly; 150 members elected by universal suffrage; all serve a five-year term

National elections October 1991 (presidential and legislative); next elections due on November 18, 1996 (presidential and legislative)

Head of state President elected by universal suffrage for a term of five years

National government The president and his appointed cabinet (last reshuffle in August 1996)

Main political parties The Movement for Multiparty Democracy (MMD) is the ruling party. The former sole political party, the United National Independence Party (UNIP), is now the main opposition party. The other party with seats in parliament is the National Party (NP). Other parties (more than 30 in all) include the Zambian Democratic Congress (ZDC) and the newly created National Lima Party (NLP)

President Frederick Chiluba Vice-president Godfrey Miyanda

Key ministers Agriculture, food & fisheries Suresh Desai Commerce, trade & industry Siamukayumbu Siamujaye Community development & social welfare Paul Kaping’a Defence Ben Mwila Education Alfeyo Hambayi Energy & water Edith Nawakwi Environment William Harrington Finance Ronald Penza Foreign affairs Christen Tembo Health Katele Kalumba Home affairs Chitalu Sampa Information & broadcasting, government spokesman Amusa Mwanamwambwa Labour & social security Newstead Zimba Lands Peter Machungwa Legal affairs Luminzu Shimaponda Local government & housing Bennie Mwiinga Mines & mineral development Keli Walubita Science, technology & vocational training Kabunda Kayongo Tourism Gabriel Maka Transport & communications Dawson Lupunga Without portfolio Michael Sata Works & supply Patrick Kafumukache

Central bank governor Jacob Mwanza

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Economic structure: Zambia

Latest available figures

Economic indicators 1991 1992 1993 1994a 1995a GDP at market prices ZK bn 219.3 568.7 1,140.7 2,318.3b n/a Real GDP growth % –0.4 –0.6 5.1 –5.4 –3.9 Consumer price inflationc % 92.6 197.4 189.0 52.3d 34.1d Population m 8.39 8.64 8.94 9.25 n/a Exports fob $ m 1,172 1,177 1,013 1,075 1,150 Imports fob $ m 752 829 803 845 900 Current account $ m –307 –288 –258 –200 –200 Reserves excl gold $ m 184.6 150.0 192.3 297.0 n/a Total external debt $ bn 7.29 6.96 6.78 6.57d 7.19 External debt-service ratio % 47.3 29.3 34.9 31.3d 25.0 Copper outpute ’000 tons 387 432 392 350 307 Exchange rate (av) ZK:$ 64.64 172.21 452.76 669.37d 857.23d

October 25, 1996 ZK1,270:$1

Origins of gross domestic product 1994b % of total Components of gross domestic product 1994b % of total Agriculture 32 Private consumption 97 Mining 6 Government consumption 10 Manufacturing 22 Gross fixed capital formation 11 Construction 5 Change in stocks –1 Commerce 22 Exports of goods & services 24 Government & other services 13 Imports of goods & services –41 GDP at market prices 100 GDP at market prices 100

Principal exports 1993 $ m Principal imports 1993 $ m Copper 830 Crude oil 144 Cobalt 74 Fertiliser 30 Zinc 3 Electricity 1

Main destinations of exports 1995f % of total Main origins of imports 1995f % of total Japan 18 South Africa 28 Saudi Arabia 13 UK 11 Thailand 13 Zimbabwe 9 India 5 Japan 9 a EIU estimates. b Provisional. c Low-income index, urban areas. d Actual. e ZCCM financial years starting April 1. f Based on partners’ trade returns, subject to a wide margin of error.

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Outlook for 1997-98

Turnout will be crucial The increasingly ironically named Movement for Multiparty Democracy (MMD) for the election will win the general and presidential elections on November 18. In a development unthinkable even a year ago, most Zambians would probably vote for the former president, Kenneth Kaunda, and his United National Independence Party (UNIP) if given the chance, but they will not be. UNIP’s boycott of the elections, because of the rules under which they will be run, will rob the results of legitimacy and focus attention almost exclusively on the turnout. This will be low: only 2.3 million of Zambia’s 4.6 million people who are eligible to vote are registered, and there are said to be technical problems with the registration of up to 500,000 of these. The main question will be how many of the remaining 1.8 million will bother to vote, given that the result is a foregone conclusion. Recognising this, the president, Frederick Chiluba, and the MMD will make a concerted effort to inspire their voters to go to the polls, and UNIP will try equally hard to inspire them not too. UNIP’s task is much the easier, and it will be the more successful.

UNIP will look to mass Dr Kaunda is aware, however, that a low turnout, although weakening the action to unseat the MMD’s claim to a renewed mandate, will not stop the party claiming a second government— term in office. UNIP may well be wondering whether, in these circumstances, it will ever be able to take part in elections again. It therefore seems to be considering a South African-style rolling campaign of mass action to try to unseat the MMD, building popular opposition through a series of demonstrations and rallies, hoping that this will somehow culminate in the downfall of the ruling party. Dr Kaunda says he wants such action to be non-violent, but many of his supporters disagree, and violent confrontations are a distinct possibility, possibly fuelled by agents provocateurs from the MMD. The government has promised on a number of occasions that it is ready for them.

—and the MMD will The MMD will find it much harder to govern in its next term of office. Its become more repressive means of victory will alienate it from civil society, and from large numbers of ordinary Zambians, and it will be left with little choice but to resort to repres- sion, whether overt or covert, to ensure that its will prevails.

The Bretton Woods Bilateral donors will have little influence over this process as most of them have institutions will be under already withdrawn aid in protest at recent political developments, and have pressure to take a stand therefore already played their trump cards. Attention will thus increasingly focus on the World Bank and the IMF, who are still lending large sums of money to Zambia and are the government’s only serious international lifelines. Neither institution will enjoy the inevitable charges that they are bankrolling an increasingly repressive government, but their behaviour will probably depend on how loud and widespread these charges are. Both have good reasons of their own for supporting Zambia. The legitimacy of structural adjustment is under attack worldwide, and they need to be seen to reward those countries that have made the best go of the process, of which Zambia is one. Both institutions fear that suddenly introducing political criteria for lending to Zambia, after the economic ones have been met, will discourage other governments (particularly the less

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democratic ones), which may then judge the pain and hardship wrought by adjustment not to be worth the effort.

Real GDP growth will The EIU has slightly lowered its forecasts for real GDP growth in 1996 and slow next year, but should 1997, to 3.6% and 3% respectively, mainly because the continued series of rally in 1998 plant breakdowns at state-owned Zambia Consolidated Copper Mines (ZCCM), which remains the mainstay of the economy, show no sign of letting up. These breakdowns, which have dented production figures this year and will continue to do so next, occur primarily because of ageing stock. Production problems will be compounded by increasing worker unrest and strikes as privatisation approaches. Everyone who buys ZCCM assets will want to shed manpower, and this will become increasingly obvious to the workforce as time goes on. Copper and cobalt output should pick up in 1998, however, assuming that some pro- gress has been made on privatisation and that new investment has begun to flow in to replace and upgrade elderly plant.

Prospects for agriculture are clearly dependent on the vagaries of the weather, but production has rebounded this year with the return of reasonable rains. Nevertheless, production growth will be hampered by the impoverishment of many farmers, particularly those growing maize, because of a period of low prices earlier this year. This will affect planting, and thus next year’s crop. 1998 should be a little better, primarily because of increased productivity and profit- ability of non-maize crops such as sugar, tobacco, cotton, vegetables and flowers.

Zambia: forecast summary (domestic) (% change, year on year) 1995a 1996b 1997b 1998b Real GDP –3.9 3.6 3.0 3.5 of which: agriculture –10.0 14.0 5.0 5.6 mining –4.0 1.5 3.5 4.4 manufacturing –3.0 1.5 3.0 3.5 Average consumer prices 34c 45 30 30

a EIU estimates. b EIU forecasts. c Actual.

The kwacha will continue Consumer price inflation is expected to average 45% in 1996, but should to slide— decelerate slightly next year as government spending is reined in after the elections. The inflation rate is nevertheless likely to remain fairly high in 1997 and 1998, primarily because of the continued depreciation of the kwacha. Although the currency has remained surprisingly stable since July, at around ZK1,270:$1, it is likely to resume its downward slide before the end of the year. As long as multilateral donors maintain their concern with Zambia’s international reserves, the Bank of Zambia (BoZ, the central bank) will strive to maintain them by buying foreign currency, and this will act as a permanent depressant on the kwacha’s value.

—and the current account Copper exports are likely to remain fairly static throughout 1997, but have a will suffer from lower aid good chance of improving in 1998, thanks to increasingly strong US and Asian inflows demand. Increasing amounts of Zambia’s copper are going to emergent Asian countries such as India, Malaysia, Pakistan, the Philippines and Thailand, and they show every sign of needing more of it over the medium term. Export

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earnings are thus forecast to remain fairly stable in 1997, rising to $1.1bn in 1998 as higher copper output offsets a continuing decline in world prices. Imports will also increase slightly in 1998, boosted by higher real GDP growth, but the trade surplus should rise nevertheless, to about $180m. However, the strongest impact on the current-account balance is likely to come from shifts in inflows of bilateral grant aid during the forecast period. Net inflows are expected to be lower in 1997 than previously forecast, as Western governments now look likely to sustain their aid cuts for a longer period after the elections. By 1998 relations with bilateral donors will probably have improved, however, as memories of the electoral process fade with time. We expect the current-account deficit to mount to around $330m in 1997, falling back to $280m in 1998 under the combined impact of higher grant aid and an improved trade surplus.

Zambia: forecast summary (external) ($ m unless otherwise indicated) 1995a 1996b 1997b 1998b Merchandise exports fob 1,150 1,010 1,040 1,120 of which: copper 957 800 800 950 Merchandise imports fob900 890 900 940 Current-account balance –200 –295 –330 –280 Average exchange rate (Zk:$) 857c 1,205 1,400 1,620

a EIU estimates. b EIU forecasts. c Actual.

Zambia: gross domestic product Zambia: Zambian kwacha real exchange % real change, year on year rate (c) 6 1990=100 110 4

2 100 ZK:$ n/a 0 90 Zambia -2 Africa ZK:DM 80 -4

-6 1994 95(a) 96(b) 97(b) 98(b) 70 ZK:¥ (a) Estimates. (b) Forecasts. (c) Nominal exchange rates adjusted for changes in relative consumer prices. Sources: EIU; IMF, International Financial Statistics; World Economic Outlook. 1990 91 92 93 94 95(a) 96(b) 97(b) 98(b)

Private bus transport will The burgeoning of private transport in Zambia has been hailed as an improve- deteriorate ment on the dire days of the former transport parastatal, UBZ, when commuters were forced to wait for hours for dilapidated buses that were barely able to reach their destination. Now buses and minibus taxis are plentiful and cheap, and Lusaka commuters rarely have to wait for more than a few minutes for a ride. There are signs, however, that this golden era is coming to an end and that commuters will have to endure more expensive, less reliable and more infre- quent services in the future. The reason is the wildly escalating price of spare parts, which puts them beyond the reach of most private operators, whose fleets are steadily deteriorating under the weight of their passengers and the poor state

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of Zambian roads. Parts from vehicles hijacked in South Africa are readily available in Lusaka, but these are neither plentiful nor cheap enough to meet demand, and some operators are being forced out of business. Thus the endless bus queue, which for many was living proof of the bankruptcy of Dr Kaunda’s rule, may yet return to plague the Zambian commuter.

Review

The political scene

The election date is set for In what promises to be an echo of Zimbabwe’s presidential election of March November 18 this year, Zambians will go to the polls on November 18 to elect a president and members of parliament, with the ruling party and its incumbent president the only serious contenders. Elections were due to be held before October 31, when the Movement for Multiparty Democracy (MMD)’s five-year term expires. How- ever, because of rules introduced under Zambia’s controversial new constitution, the MMD considers itself to have a right to rule up to three months after this point. Speculation was rife that it would take advantage of this by holding elections at the limit of this period, in December. However, at a rally in Kabwe on October 19 the president, Frederick Chiluba, instead announced the November election date. The rally itself degenerated into a riot from which Mr Chiluba was hastily whisked away, after he announced a man who was deeply unpopular with the crowd as the MMD’s candidate for the constituency.

The independent newspaper The Post alleged that the election date was delayed beyond October 31 to give Zambia’s intelligence services time to collect the names of known opposition supporters from the electoral rolls, and to either doctor or remove substantial numbers of them, on the orders of the MMD. The report is unproven, and is likely to remain so. Even if true, however, an election boycott by the main opposition United National Independence Party (UNIP) and at least six other parties renders such efforts unnecessary.

Most opposition parties UNIP’s leader, the former president, Kenneth Kaunda, announced his party’s will boycott the polls— boycott of the elections on October 23, and most other parties followed his lead over the next two days. Dr Kaunda cited two reasons for the boycott. The first is the electoral register, which has been expensively compiled by an Israeli firm. It contains the names of 2.3 million of the estimated 4.6 million people eligible to vote in Zambia, 300,000 fewer than the previous register it was supposed to improve upon. Of the 2.3 million, an estimated 500,000 names will be removed because of errors in the compilation process. Opposition parties have demanded for some months that the exercise be scrapped, and that national identity cards be used by voters instead, but the government has stood firm on the issue. The second and principal reason for the boycott is the new constitution (3rd quarter 1996, page 8), which bans Dr Kaunda from standing because his parents are not Zambian, and because he has served two terms of office already; it also bans his running mate, Inyambo Yata, from standing as vice-president because he is a traditional chief.

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—as the government There has been sustained opposition from a variety of national and inter- refuses to compromise national sources to these clauses in the new constitution since they were first over the rules mooted last year, but none has had any effect. The South African president, Nelson Mandela, met Mr Chiluba in August and persuaded him at least to talk to opposition leaders about their concerns. Mr Chiluba subsequently met Dr Kaunda and other opposition leaders. As a result of this, and the cogent analysis and recommendations of the Commonwealth human rights team which visited Zambia in late August, the MMD did make some concessions over the election. In mid-September an electoral commission, termed “independent” by the government, took over the task of organising the polls from the office of the vice-president, and the notice required by the police from political parties and other organisations wishing to hold demonstrations was reduced from 14 to seven days. However, the government again refused to make any concessions on the two major sticking points, and Dr Kaunda ruled out further talks, describing them as pointless. The one positive result for the government was the commitment of the minor Zambia Democratic Congress (ZDC) to participate in the elections.

The Black Mamba The state’s case against the eight senior UNIP members accused of treason and prosecution is in trouble murder (3rd quarter 1996, page 9) is foundering. The eight were alleged to have been the ringleaders of the so-called Black Mamba group, which claimed responsibility for a spate of bombings earlier in the year. The state dropped charges against two of the accused on September 10, Dr Kaunda’s press aide, Muhabi Lungu, and a former minister, Rabbison Chongo. No substantial evidence to link the remaining six, who include Mr Yata, to the bombing has yet been produced by the prosecution, and defence cross-examination has sug- gested at times that the government knows more about this case than it is currently letting on. This has fuelled the suspicion of many that the government actually orchestrated the bombings, although no proof has emerged to back up this theory.

The government threatens The editor of The Post, Fred M’membe, is under threat of arrest once more, for a newspaper editor again— allegedly illegal articles about the government. (Mr M’membe was detained in March for alleged contempt of parliament; 2nd quarter 1996, page 8.) The timing of the latest threat was remarkable, as it was made by the information minister, Amusa Mwanamwambwa, while Mr M’membe was attending the Commonwealth Press Union (CPU) biennial conference in South Africa in mid- October. It presented an unmissable gift to the international assembly of journalists, editors and publishers, enabling them all to rally to the cause of press freedom through their support of Mr M’membe. The result for the government was terrible and wholly avoidable publicity all over the Commonwealth.

—and waves its fist at Another threat likely to rebound against the government is one made in early Dr Kaunda September by Mr Chiluba, who warned he might lay charges of libel and defa- mation of character against Dr Kaunda. Mr Chiluba accused Dr Kaunda of being the source of a story that appeared in a German newspaper, which alleged that his wife, Vera Chiluba, was connected with the drugs trade. Dr Kaunda has publicly wished Mr Chiluba luck with the case.

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A new party is born The former MMD agriculture minister, Guy Scott, and the president of the Zambia National Farmers’ Union (ZNFU), Ben Kapita, formed the National Lima Party (NLP) in mid-August. They claim not to be interested in the presidency, but solely in ensuring that farmers are properly represented in parliament. They are likely to secure the support of commercial farmers with ease, but success among small-scale farmers will be a formidable challenge.

There is another minor Mr Chiluba reshuffled his cabinet on August 28 to fill the gap left by the reshuffle sacking of the legal affairs minister, Remmy Mushota, for corruption in July (3rd quarter 1996, page 9). The former lands minister, Luminzu Shimaponda, has taken Mr Mushota’s place, and his post has been filled by the former deputy foreign minister, Peter Machungwa.

The economy

International reserves The government has been determined to sustain Zambia’s net international have been sustained— reserves in recent months, to ensure continued multilateral donor support (see Foreign trade and payments). Cuts in bilateral aid meant that reserves fell by $23m to $135m in April, but a disbursement of $30m from the World Bank in June ensured that its own benchmarks for the level of Zambian reserves were met that month. A report published by Standard Chartered Bank in early October claimed that reserves were down to just three weeks’ import cover, as opposed to the three months required by multilateral donors. The Bank of Zambia (BoZ, the central bank) promptly denied this, claiming to have between one month and six weeks’ cover. Certainly the BoZ has been busy selling kwacha and buying foreign currency to build up its reserves; since the World Bank has approved continued lending, the strategy appears to have worked, at least for the time being.

—but at high cost to the However, a major side-effect of this action has been to put continued pressure economy on the value of the kwacha. The currency has fallen from ZK966:$1 at the end of 1995 to about ZK1,270:$1 in late October 1996, and the EIU now expects the exchange rate to reach ZK1,300:$1 by the end of the year. The effects of the continuing devaluation are legion, including persistently high inflation, which is likely to average around 45% in 1996. This in turn has helped keep interest rates high, as the BoZ has been determined to keep them roughly in line with inflation. Depreciation of the kwacha is also damaging the Lusaka Stock Exchange (LuSE)’s chances of really taking off. Whatever the merits of the companies listed on the exchange, buying their shares on the LuSE means investing in kwacha. None of the companies’ growth rates are strong enough to counteract the loss-making implications of this move, so it is unsurprising that few international investors are showing any interest, and trade on the exchange has been extremely listless of late.

Inflation damages Inflation is hurting every business, but particularly the many companies who creditors of ZCCM and the are the unwilling creditors of the government and the state mining giant, government Zambia Consolidated Copper Mines (ZCCM). In what is construed by many businesses as a deliberate attempt by these debtors to reduce the value of their

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debts, both regularly delay settlement by 12 months or more, by which time the real worth of the sum owed has virtually halved.

Taxes are collected Such arguments carry little weight with the Zambia Revenue Authority (ZRA), regardless which has earned a reputation for dogged inflexibility in its demands for timely value-added tax (VAT) and company tax returns. As well as criticising the ZRA for its lack of consideration for companies owed large sums by the government and ZCCM, business has also protested at its alleged lack of interest in widening the tax base to include at least part of the informal sector, instead of concentrating solely on easy formal-sector targets.

Money-launderers like Zambia offers mixed blessings for money-launderers. On the one hand, it has Zambia— perhaps the most deregulated banking system in southern Africa, with no ques- tions asked for most transactions, however large. In addition, elements of the civil service and government have often been prepared either to turn a blind eye or actively participate in scams, thus reducing the chances of launderers getting caught. On the other hand, the ever-depreciating kwacha diminishes any profits that are converted into the currency, which means that the money must be “washed” and moved on as soon as possible if it is to retain its value. In general though, the advantages outweigh the disadvantages, particularly when the fast-expanding market for substances related to money-laundering in the region, such as cocaine, are taken into account. The problem was acknowledged in September by the national drugs squad, the Zambia Drug Enforcement Commission, which said laundering had reached alarming proportions. This concern has not prompted any noticeable new legislative efforts by the government, however.

—as, curiously, do Russian Perhaps coincidental is the flurry of new banks from the former Soviet Union banks that have opened in Zambia recently. They include: Baikal-Africa bank, from Izhevsk in the Udmurt Republic; Alpha-bank; Promstroibank; the Stolichny Savings Bank; Inkombank; Uneximbank; Tokobank; Eurofinance; and, to com- plete the picture, the VneshtorGell hunting and sporting world bank. Russia does so little trade with Zambia that it barely registers on international statisti- cal tables, and the Russian banks cannot be there to fill a gap in the market, as Zambia is already one of the most overbanked countries in the world. It is entirely possible that the arrival of these banks may herald a healthy dose of Russian investment in the Zambian economy, but it is too early to tell.

Agriculture

The maize price rises— As usual, the price of maize rose as the season drew to a close. From ZK8,000 ($6.30) per sack in Lusaka in late July, it rose to ZK12,500 by September 6. However, this was only of benefit to commercial farmers and those with small- holdings who felt able to hold on to their harvest until September. Thousands of small farmers sold all or most of their stock earlier in the season, at the worst possible time for prices, simply in order to meet the daily cost of living. They have not been able to pay back their agricultural loans, and will not have credit available to them to buy seed for the next season. Nonetheless, they ended up better off than many whose crop went to waste because of inadequate supplies

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of grain bags this year. Farmers have been blaming two merchant banks, SGS and Cavmont, which were contracted by the government to buy the maize for Zambia’s strategic reserves. Never previously known for their grain purchasing expertise, the banks were swift to blame the government, for its poor administration of the scheme. Whoever is to blame, it is not yet clear whether anyone will take responsibility for the farmers who have been let down, or whether their losses will simply be ascribed to “market forces”.

The statutory ban on maize exports was lifted on May 1, but maize farmers reported being refused export licences while the price was at its lowest, during July and August. Although frustrating for the farmers, who were denied the opportunity to make even a little bit of money on their crop, it helped keep prices low for consumers, and thus avert the anger of the urban poor. Before an election, such considerations assume more political importance than a free market in maize.

—but a possible fertiliser In mid-August the Zambia National Farmers Union (ZNFU) expressed concern shortage looms about what it regards as an impending fertiliser shortage. It claimed that the government had not yet paid its debts for fertiliser purchases made last year, and that it would be refused credit for next year’s requirements. It is more likely that the government will get credit from somewhere, but that it will be expensive and too little. The ZNFU’s prediction that less will be available from donors is almost certain to be fulfilled.

The sugar industry is Investments made by the Commonwealth Development Corporation (CDC) expanding and the UK-based Tate & Lyle in the Zambian sugar industry (2nd quarter 1996, page 13) are starting to pay off. This year’s harvest was around 150,000 tons, but the industry confidently predicts a harvest of 164,000 tons in 1997, an increase of 9%. Exports in 1996 are put at 69,800 tons, but are forecast to increase by 6% to 74,000 tons in 1997.

Mining and energy

Copper prices are low, but International copper prices remain depressed, reflecting market unease that improving neither the full picture of copper positions held by the giant Japanese trading house, Sumitomo, nor those of its partners in market manipulation have yet emerged. Copper fundamentals are beginning to look more encouraging, however, as some new mining projects worldwide have been postponed because of low prices, thus altering predictions for future supply, and because demand is building, particularly in the US economy. After the Sumitomo scandal broke in May, the copper price fell from $1/lb to 74 cents/lb, but climbed back to 90 cents/lb by October. Operating costs of the state mining giant, Zambia Consolidated Copper Mines (ZCCM), currently range between 80 cents/lb and 90 cents/lb.

ZCCM’s production Copper production at ZCCM improved in the second quarter of 1996, lifting the fluctuates— total for the first half of the year to 190,000 tons from only 82,500 tons in the first quarter. This is lower, however, than for the same period last year, which was the most disastrous on record. Production fell in the third quarter, with July

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 14 Zambia

and August figures of only 25,000 tons each. ZCCM ascribed the drop to a fire at the Mufulirwa smelter. Cobalt production tumbled in July to 259 tons, from 457 tons in June, because of the shutdown of the Chambisi plant. Production rose again in August, however, to 441 tons.

—and the workers are In the face of widespread expectations that the privatisation timetable set for worried about ZCCM will not be met (3rd quarter 1996, page 12), the government has insisted privatisation that everything is on track. On October 23 the finance minister, Ronald Penza, revealed that 21 companies from all over the world were interested in ZCCM’s assets, and that the selection process should be completed by March 1997. Workers are nervous about developments, despite reassurances on the campaign trail from politicians of the ruling Movement for Multiparty Democracy (MMD), including the president, Frederick Chiluba. Discontent erupted in late October when around 100 miners went on strike for three days at Nchanga over bonuses, and destroyed part of the underground lighting system. ZCCM management called in the police, and subsequently sacked the miners. It estimated lost production of 780 tons.

Avmin is test drilling at After winning exclusive rights to mine Konkola North in July (3rd quarter Konkola North 1996, page 12), the South African Anglovaal’s local mining subsidiary, Avmin, has lost no time in exploring its acquisition further, and has begun test drilling. Avmin is upbeat about prospects in Zambia, and is one of the companies interested in the other ZCCM assets up for sale. Meanwhile, the seemingly interminable negotiations by South Africa’s Anglo American Corporation for Konkola Deep have dragged on. The withdrawal of a major consortium partner, Australia’s Western Mining Corporation (WMC), in July was a big set-back to the bid, but there is now talk of Canada’s Falconbridge taking its place. Anglo American appears content to allow the election and its fallout to take its course, giving it more time to find a company to join its consortium with Gencor.

The Indeni refinery is The Indeni oil refinery was finally shut down in mid-October. It had been shut down closed temporarily several times this year, supposedly for routine maintenance. The problems at the refinery have been caused by a combination of ageing equipment and overly sandy oil retrieved from Kuwait after the Gulf war and sold cheaply to Zambia.

Foreign trade and payments

Despite bilateral aid cuts, As expected, a split has developed between bilateral and multilateral donors to multilateral donors still Zambia over continued funding in the face of political controversy. The support Zambia— government’s political management has appeared designed to alienate and irritate bilateral donors throughout 1996, and they have duly responded, mostly by cutting balance-of-payments support. At least $100m has been with- held. However, both the World Bank and the IMF pride themselves on the primary role that economic criteria play in deciding their lending policies. Not all of Zambia’s statistics are where they would like them to be, particularly for inflation and civil service salaries, but the Bank regards aspects of Zambia’s economic policy, and particularly its privatisation programme, as exemplary, and wishes to reward the government pour encourager les autres.

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It consequently decided in mid-August to approve a $90m two-year “economic and social adjustment facility” to Zambia. Major board members in the Bank, particularly the UK and the USA, were outraged, and made their disapproval of the Bank’s management unusually public. The compromise was to wait for September’s figures on the economy, particular those for the country’s net international reserves (see The economy). These were deemed satisfactory, and the first tranche of $45m was released on October 17. The IMF suspended negotiations with Zambia in late July at the request of its board members, but has also professed greater interest in Zambia’s economic position than its politics. It too was moderately impressed by the September figures.

—while the government The finance minister, Ronald Penza, has taken several opportunities to highlight exploits the differences the split between multilateral and bilateral donors over Zambia. Mr Penza has between them frequently congratulated the World Bank for its policy of non-interference and for keeping its promises to reward Zambia for structural adjustment, and has condemned bilateral donors for not doing likewise. The government’s stubbornness over the electoral regulations makes it increasingly unlikely that constitutional issues surrounding candidacy rules will fade from bilateral donors’ memories after the polls and that they will swiftly resume their support. It appears more probable that Zambia has, perhaps irretrievably, lost its position as a major bilateral aid recipient. Its combination of a brave experiment in multiparty democracy and free-market economics have made it an attractive destination for internationally shrinking aid flows since the Movement for Multiparty Democracy (MMD)’s victory in 1991, but with the multiparty element obscured, its attraction has waned considerably.

A bilateral trade Zambia’s tetchy relations with South Africa have been caused partly by strong agreement with South historical links between the new South African government and Zambia’s for- Africa is unlikely mer president, Kenneth Kaunda, but more by the inequitable trade relationship between the two countries. South Africa is by far Zambia’s biggest source of imports; according to the IMF’s Direction of Trade Statistics Yearbook (DOTS), Zambia imported goods worth $193m from South Africa in 1995, but exported only $19m in return. As well as the obvious reason that South Africa has more to offer Zambia in merchandise than Zambia does South Africa, there is the vexed issue of South African import tariffs. Zambia has relatively low tariffs on imported goods, in keeping with donor requirements, but South Africa maintains punitively high tariffs and effectively subsidises exports in a number of key sectors.

The South African government has acknowledged that the current situation is unfair, and is in the process of cutting tariffs and export subsidies in line with the rules of the World Trade Organization (WTO). However, it argues that bilateral agreements to remedy the situation quickly are against the spirit of the WTO, and has called instead for a regional solution through the Southern African Development Community (SADC), perhaps happy in the knowledge that this will be a long time coming. Zimbabwe, whose textile industry has virtually collapsed because of South African imports, nevertheless managed to thrash out a bilateral agreement with South Africa in mid-July. Zambia has since attempted to do the same, but South Africa has hardened its position on the need for a regional agreement, and is unlikely to sign a bilateral deal with Lusaka.

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 16 Zaire

Zaire

Political structure

Official name République du Zaire

Form of state Unitary republic

Legal system A transitional constitution was approved by representatives of the major political factions in September 1993 and its tenure was extended for two years in July 1995

National legislature The Sovereign National Conference handed over legislative power to an Haut conseil de la république (HCR) in December 1992. This body was combined with the Conseil législatif to form the HCR-Parlement de transition (HCR-PT) in January 1994

National elections July 1984 (presidential); September 1987 (legislative); next elections due in May 1997 (presidential and legislative)

Head of state President, nominated by the Mouvement populaire pour le renouveau (MPR) congress and elected (unopposed) by universal suffrage; Mobutu Sese Seko has held this post since November 1965; the transitional charter reduced the powers of the president

National government The prime minister, elected by the HCR-PT, and the 46-member Conseil exécutif (cabinet; appointed July 1995, reshuffled February 1996)

Main political parties The MPR was the sole legal party, but legislation passed in December 1990 opened the door for the registration of political parties under an evolving multiparty system. More than 450 have been registered, including the MPR, Parti démocrate et social-chrétien (PDSC), Parti socialiste africain (PSA), Union des fédéralistes et des républicains indépendants (UFERI) and Union pour la démocratie et le progrès social (UDPS). Those opposed to Mr Mobutu are grouped together in the Union sacrée de l’opposition radicale et alliées et société civile (USORAS)

Prime minister Kengo wa Dondo

Deputy prime ministers With defence portfolio Admiral Mavua Mudima With interior portfolio Gérard Kamanda wa Kamanda With foreign affairs portfolio Titwa Tumansi With mining portfolio Mutombo Bakafwa Nsenda

Key ministers Agriculture Astride Tshikung Nawej Budget Idambuito Bakato Civil service Tshasa Vangisi Vavi Economy & industry Marco Banguli Nsambwe Energy Mpetshi Ilonga Finance Gilbert Kiwama Kia Kiziki Foreign trade Kasongo Muidinge Maluila Information & press Boguo Makeli Labour Omba Pene Djunga Posts & telecommunications Gfuza Ginday Public works Alexis Thambwe Mwamba Transport & communications Mwando Nsimba

Central bank governor Patrice Djamboleka Okitongono (suspended)

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Economic structure: Zaire

Latest available figures

Economic indicators 1991 1992 1993 1994 1995a GDP at market prices NZ mb 47.2 1,765.5 36,820.9a 1,835,000.0 11,779,000.0 Real GDP growth % –12.3 –10.4 –12.6 –7.4c –0.6c Consumer price inflation % 2,155 4,129 1,890 23,770 542d Population m 36.7 39.9 41.2 42.6 43.9 Exports fobe $ m 1,500a 1,219 1,147 1,028 1,150 Imports fobe $ m 1,200a 914 616 581 630 Current account $ m –850a –763 –398 –350 –520 Reserves excl gold $ m 182.9 156.7 46.2 120.7 154.6f Total external debt $ m 10,826 10,968 11,280 12,336 13,000 External debt-service ratio % 10.1a 3.0a 1.0a 1.0a 1.5 Copper production ’000 tons 276.1 147.3 48.3 33.6 35.0 Cobalt production ’000 tons 8.8 6.6 2.2 3.3 4.1 Diamond production m carats 18.3 13.3 15.2 16.2 20.0 Exchange rate (av)g Z:$ 15,587.0 0.2 2.5 1,194.1 7,024.0

October 25, 1996 NZ83,764:$1

Origins of gross domestic product 1989 % of total Components of gross domestic product 1992 % of total Agriculture 30.2 Private consumption 68.8 Industry 33.5 Public consumption 21.7 Manufacturing 11.2 Gross fixed capital formation 7.1 Services 36.3 Change in stocks –0.2 GDP at market prices 100.0 Exports of goods & services 21.6 Imports of goods & services –19.0 GDP at market prices 100.0

Principal exports 1994 $ m Principal imports 1994 $ m Diamonds 451 Consumer goods 232 Coffee 247 Capital goods 116 Copper & cobalt (Gécamines) 184 Raw materials 93 Energy products 85

Main destinations of exports 1995h % of total Main origins of imports 1995h % of total Belgium-Luxembourg 37 Belgium-Luxembourg 15 USA 17 South Africa 11 Italy 10 Hong Kong 8 South Africa 8 USA 7 a EIU estimates. b Nouveaux zaire (NZ) from 1993 (see below). c Official estimate. d Actual. e Balance-of-payments basis. f End-October, actual. g New currency, NZ, introduced in October 1993 at a parity of NZ1:Z3m; for comparison the rate shown refers to the new currency from 1992. h Based on partners’ trade returns, subject to a wide margin of error.

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 18 Zaire

Outlook for 1997-98

Mr Mobutu’s illness The news that the president, Mobutu Sese Seko, underwent surgery for prostate intensifies the political cancer in August has left Zairean politics even more paralysed by confusion and confusion— inertia. The transitional legislature, the Haut conseil de la république-Parlement de transition (HCR-PT), is in a protracted deadlock over what constitutional draft to submit to referendum. The National Election Commission is painfully slow to organise voting, not least for lack of the promised government funding, and its vice-chairman has resigned. The government has all but abandoned the country’s economic management, apart from drumming up foreign investors to exploit Shaba’s mineral resources (an activity which has more direct individual rewards for ministers than fiscal or monetary policy). The former hardline opposition to Mr Mobutu, the Union sacrée de l’opposition radicale et alliés et société civile (USORAS), has made itself entirely ineffectual by splitting into three factions behind Etienne Tshisekedi, Frédéric Kibassa Maliba and the prime minister, Kengo wa Dondo, and Mr Mobutu himself may not be recovering from cancer surgery as swiftly as his supporters would like.

—as the fighting in the The government’s apparent inability to halt the sudden advance of ethnic Tutsi east reaches crisis militias in the east of the country shows how far the affairs of state have been proportions allowed to drift in Mr Mobutu’s absence, even though he will certainly have been pulling some political strings from his sick-bed. Huge swathes of Zaire remain essentially beyond what would in most other countries be considered normal state control, but the president has always managed to maintain broad national authority by the astute use of compliant local officials and/or the timely dispatch of relatively well-trained and well-fed troops from the Division spéciale présidentielle, the presidential guard. (Even the relative economic independence of Kasaï has ultimately been contained within the political bounda- ries of Zaire.) The Tutsi backlash against Hutu attacks in eastern Zaire has taken on an international dimension, with Zaire accusing the Rwandan and Burundian governments of supporting the ethnic Tutsi rebels, and the risk of all-out international war in the region is looming large.

Everything depends on Some observers suggest that the chaos in Kivu may prove to be the final nail in the president’s health— the coffin of Zaire as a unitary state. It is more likely, however, to prove a symptom rather than the ultimate cause of national disintegration. Although Mr Mobutu will almost certainly hold the country together for as long as he is politically active, its subsequent fragmentation, peaceful or (more probably) otherwise, appears increasingly likely. Despite near-universal claims to the con- trary, the elections will probably not take place on time in May 1997, and in Kivu they will be almost impossible to hold. In any case, they may become irrelevant as the transition to some semblance of multiparty democracy now hangs largely on Mr Mobutu’s health.

If the president recovers, he will make sure that he holds and wins prompt elections while the opposition is in disarray. A couple of years ago Mr Tshisekedi would have been a favourite for the presidency, but his mis- placed stubbornness, tactical mistakes and naive self-righteousness have cost him much support and credibility outside his Luba ethnic group. No potential

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candidate is credible nationwide except for the former chairman of the national conference and HCR-PT, Archbishop Monsengwo Pasinya, who for the time being has returned to his flock in Kisangani. The archbishop may be the only person capable of reconciling Zaireans and preventing the spread of political violence, but although he may not lack the ambition to seek political power, he is unlikely to be given much chance of gaining it in fair polling.

—and a future without Mr Mobutu is extremely unlikely to retire voluntarily, and his departure from Mr Mobutu would be the political scene will almost certainly be brought about only by his death or uncertain serious physical incapacitation. In theory, at least, all the institutions for a democratic transition are in place. In reality, the chances of a smooth handover to a democratically elected leader look slim. Despite its claims of allegiance to the transition process, the military remains a major question mark. The gener- als who are chiefs-of-staff are among those who have profited most from the Mobutu years, and they may well take swift action to keep the Mobutu system running without its founder. The army itself is divided, however, and bitter fighting over the spoils of power is quite likely. In addition, a violent popular reaction to continued military rule cannot be excluded. Feelings are already running high, as witnessed by the burning and ransacking of a Kinshasa police station after an officer killed a taxi driver who had refused to give him a free ride. In such circumstances, the centre would be unlikely to hold; politicians and local army commanders would carve out fiefdoms for themselves and the separatist pressures which have long simmered in areas such as Shaba and Kasaï would explode into outright secession.

Civil servants make a Whereas public administration has all but collapsed throughout the country, living of their privileges— many civil servants are taking it upon themselves to fulfill some functions of public order, and to charge “customers” for it. At Kinshasa’s Ndjili airport, for example, it costs about $500 to have a customs agent, policeman or other official bypass all customs and security clearances and lead the passenger out of the terminal in about 15 minutes. Thus state agents offer their private services to overcome the constraints of the state, of which they themselves are the representatives. This should come as no surprise since many of these agents have not received a salary in months, and some have not been paid for one or two years. Poverty and state decay promote lawlessness and the diversion of authority for personal gain. The incident of the taxi driver shot by a policeman and the resulting mob attack on the police is telling, offering a clear illustration of three aspects of life in Zaire today: how completely unbridled the security forces are; how indigent the agents of the state have become; and how angry the civilian population is at official abuse and violence.

—and Zaire’s productive The Kengo government, while having little substance, is at least busy getting assets are auctioned off at investors back to Zaire. Having found the privatisation of the mining giant bargain prices Gécamines too politically sensitive and too exposed to the wary probing of the World Bank, the government has undertaken over the past year to enter into several joint ventures for the exploitation of Zaire’s mineral resources. Whereas it is sound economic policy for a country to court foreign investors to make up for a deficiency in domestic saving, there are concerns that the Kengo government is selling off the country’s resources at bargain-basement prices. The fact

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 20 Zaire

Zaire: gross domestic product is that given the current risks, few foreign investors could be induced to move % real change, year on year into Zaire without a substantial discount. The question is whether the Zairean 4 government is unduly rushing ahead with these joint ventures when they 2 could command more sizeable foreign commitments after the transition pe- 0 riod, once the political and social environments are (supposedly) more stable -2 and property rights better guaranteed. The answer probably lies in the nature -4 of political power in Zaire, as a temporary avenue for personal enrichment -6 which can be suddenly revoked and needs to be used promptly while it lasts. -8 Zaire -10 Africa -12 Review -14 1991 92 93 94(a) 95(a) (a) Official estimates. Sources: EIU; IMF, World Economic Outlook. The political scene

Mr Mobutu undergoes The president, Mobutu Sese Seko, underwent surgery for prostate cancer at surgery for prostate Lausanne university hospital in Switzerland on August 22. Rumours spread cancer— following the news of the operation, the most recurrent of which stressed that he was not recovering well and that his overall short-term prognosis was poor. Some went as far as suggesting that the president was hurriedly grooming his son, Zanga, to succeed him. No evidence has emerged to substantiate or dis- prove these claims, although a presidential spokesperson acknowledged on September 7 that the president was still convalescing and that he was “not the fully fit Mobutu we would like to see”. Prostate surgery is not uncommon among middle-aged and elderly men (the president is 66), and when treated in time it usually leads to a full recovery. Yet as of late October the president was still in Switzerland; he had to extend his visa, which had originally been valid only until September 10, and there were rumours of a second operation and ongoing chemotherapy treatment. The Zairean newspaper Palmares was suspended for “spreading false news” after announcing on September 18 that Mr Mobutu was to have surgery for throat cancer.

—and the army finds it The news of Mr Mobutu’s ill health has further confused the Zairean political necessary to reaffirm its scene. Should he become incapable of ruling, the transition to what is supposed loyalty to be multiparty democracy would take on a substance it has so far lacked. Nevertheless, those who have benefited from the Mobutu system may want to keep it working after its founder has gone, and there have been mixed messages from the military. Following rumours of an imminent coup, on September 10 the high command of the Zairean armed forces reaffirmed its fidelity to the head of state and its commitment to the country’s institutions, namely the transitional authorities and the democratisation process. The fact that the army found it necessary to do so was perceived as an ominous sign by many observers.

The census and The population census and constitutional referendum, scheduled for November constitutional referendum and December 1996 respectively, were postponed in July for “technical reasons” are postponed— and are now to be held in January and February 1997 (see below). This is the second such postponement to date. The pro-Mobutu president of the National Elections Commission (CNE), Bayona Ba Meya, declared the new timing would not affect the deadline of July 9, 1997, for the elections themselves.

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—and the vice-chairman The work of the CNE, already hampered by its lack of budgetary support from of the Election the government, may slow down even further following the resignation on Commission resigns— September 3 of its vice-chairman, George Nzongola Ntalaja. Mr Nzongola, a member of the Union sacré de l’opposition radicale et alliés et société civile (USORAS) and a professor on leave from the African Studies Center at Howard University in Washington DC, resigned in protest against what he labelled “the obstacles created by the Zairean political class in order to prevent the elections from taking place on schedule”. The commission counts 44 members, evenly split between the pro-Mobutu Forces politiques du conclave (FPC) and USORAS. Mr Nzongola also declared that holding elections by July 1997 would be nearly impossible. He was particularly critical of the haut conseil de la république- Parlement de Transition (HCR-PT), to which he belongs, and which is working at a very slow pace. By the time Mr Nzongola resigned it had not even convened the extraordinary session called for in late July, to adopt legislation for the organisation of the constitutional referendum, much less approved the constitutional draft itself. Mr Nzongola is not alone in criticising his colleagues. Observers frequently suggest that many HCR-PT delegates are too happy with their monthly indemnities to work themselves out of the job. Mr Nzongola also accused the state of excessive parsimony in its funding of the CNE, blaming it on the government’s “lack of sincere support for the election process”.

—while disagreements A number of days before Mr Nzongola’s resignation, the Front commun surface about the draft des nationalistes (FCN), a party which belongs to USORAS and of which the constitution— deputy prime minister for the interior, Gérard Kamanda wa Kamanda, is a member, declared itself favourable to the constitution drafted by the National Sovereign Conference (CNS) in 1991 and 1992, as opposed to the text submit- ted by the CNE, which is a compromise with the president’s proposals. This divergence within the government reflects a split in the HCR-PT over which text to submit to the referendum, which has paralysed it since late July and is responsible for its failure to meet in extraordinary session to finalise the legal documents on the referendum. As a result, the referendum has been postponed until February 1997. In August groups associated with the Catholic Church also voiced their support for the original CNS constitutional draft; this differs from the current draft partly in that it grants the president less power and articulates a more federal state structure.

—and the UN puts its According to the Zairean government the UN has agreed, at the government’s electoral assistance on request, to send a team to Zaire to help prepare the elections. The team’s hold mandate is to help the CNE to set up the juridical, administrative and material infrastructure for the elections. However, the UN specified that the HCR-PT must have approved both the constitutional draft and legislation relative to the organisation of the referendum before its institutional and financial support can be granted. The USA appears to be more lenient than the UN on this point. Following an evaluation trip to Zaire in May and June 1996 by the US National Endowment for Democracy, a delegation from the Washington-based National Democratic Institute (NDI), a think-tank linked to the Democratic Party and, hence, to the White House, visited Zaire on an appraisal mission in September and October 1996. The NDI may later be associated with the organisations and monitoring of Zaire’s elections.

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 22 Zaire

Civil society remains in Despite their requests, the non-governmental organisations (NGOs) which form the wings of the electoral the backbone of Zaire’s civil society were not included in the CNE. Nevertheless, process the NGOs are organising a transition of their own, at the margins of the political process. A National Council of NGOs was formed in early 1996 to coordinate civic education activities in preparation for the elections, although these remain limited to Kinshasa and other urban areas. Several NGOs have also set up their own Electoral Commission, which is, of course, not officially recognised. At some point the government will have to recognise a role for civil society; the help of intermediary institutions will be needed for the census, where some 90,000 supervisors might be required, and for the elections, which will call for some 200,000 polling station agents. Churches are one option, as they have tended to remain the only functional organisations operating nationwide.

Mr Tshisekedi contests the Despite the division of his party, the Union pour la démocratie et le progrès legality of the social (UDPS) between himself and Frédéric Kibassa Maliba (3rd quarter 1996, government— page 19), Etienne Tshisekedi does not despair of one day regaining the prime ministership from which he has several times been dismissed by Mr Mobutu. The Tshisekedi wing of the UDPS tried to organise a protest march in Kinshasa on July 5 to demand the resignation of the “unlawful” government of the current prime minister, Kengo wa Dondo; in an unmistakable sign of Mr Tshisekedi’s marginalisation, however, the march had to be cancelled for lack of participants (although UDPS militants in Paris claimed that the security forces prevented the march and arrested 12 would-be demonstrators). Some 3,000 UDPS supporters did turn up for another march, organised on July 26 in Kinshasa, from which Mr Tshisekedi himself was absent. Mr Tshisekedi was also rebuffed in August by the Supreme Court, which his party had asked to cancel the ordinances of the Kengo government; the court declared itself in- competent to judge the legality of the government and its actions.

—and sets conditions for The Tshisekedi wing of the UDPS announced in August that it would not his electoral participate in the 1997 elections unless two key conditions were met: the participation— reinstatement of Mr Tshisekedi as prime minister and the transfer of control over the security forces to the government. As the first condition is totally unrealistic and the second unlikely, it appeared by late October that Mr Tshisekedi’s faction of the UDPS would stay out of the elections, barring further splits and schisms.

—while a fortified Nguza The veteran Shaba politician Nguza Karl-i-Bond, who suffered a stroke in 1995, returns to political has apparently recovered sufficiently to make a political comeback. In July he leadership officially became the leader of the FPC, replacing Mandungu Bula Nyati, whose frequent criticisms of Mr Kengo had driven a wedge between the FPC and the government.

Relations with Belgium Mr Kengo went to Brussels in August at the invitation of the Belgian govern- are nearing ment, making the first official visit to the country by a Zairean premier since normalisation— 1991, when Belgium suspended its aid to Zaire. At a joint press conference with Mr Kengo the Belgian prime minister, Jean-Luc Dehaene, confirmed that relations between the two countries had entered a normalisation process. Official bilateral cooperation was not resumed, however, with Belgium still awaiting

further democratisation. Nevertheless, the Belgian government announced that it would grant BFr640m ($20m) to Belgian and Zairean NGOs in Zaire before the end of 1996, four times more than earlier indicated. The two prime ministers agreed that these disbursements would be subject to regular consultation, a compromise on the part of the Zairean government, which had earlier threatened to force Belgian NGOs to obtain special authorisations to work in Zaire.

—and the USA voices faith According to the US State Department, the Washington government believes in the future of Zairean that it is possible to arrange democratic elections in Zaire which could lead to democracy a long-term democratic culture. The State Department has been duplicating the work of the CNE and the HCR-PT by conducting assessments in the first half of 1996 to find the most appropriate system for the forthcoming elections. It is believed that the US authorities currently favour a mixed system of pro- portional and majority representation, to take account of different population densities in cities and rural areas.

Refugees prevent the On September 1 the Office of the UN High Commissioner for Refugees (UNHCR) UNHCR from holding a and the World Food Programme (WFP) began a new census of Rwandan refugees census in Zaire. A first census took place in February 1995. Although the two agencies undertook the latest exercise for planning and budgetary reasons, many of the Hutu refugees feared the results would be used for forced repatriation and to communicate their identities to the Tutsi-dominated government in Kigali. Violence quickly erupted in the camps as the census began, and its administrative offices were destroyed the first day. The UNHCR suspended the census for a week to hold discussions with camp leaders, and reduced service in the camps to a minimum of food and water.

Meanwhile, the return of Pierre Buyoya, a Tutsi, to Burundi’s presidency in a coup on July 25 led to renewed clashes with Hutu guerrillas in the Burundian countryside and a fresh inflow of refugees into Zaire. In August the UNHCR opened a new camp in Uvira province, which can host 100,000 refugees.

The government and the Probably in order to reinforce the Zaire-based Hutu opposition to the two army try to cleanse Kivu Tutsi-dominated governments in Rwanda and Burundi, the Zairean army has of baTutsi— lent a helping hand to Hutu militiamen fighting Zaireans of Tutsi origin in Kivu (3rd quarter 1996, page 22). From August the army turned the hills surrounding the border town of Uvira into a military zone, where it fought not only with baTutsi displaced from further north by mainly Hutu attacks, but also with local ethnic baTutsi, known as Banyamulenge, who have lived in South Kivu for generations. The Banyamulenge have also come under attack from militias formed by members of other indigenous ethnic groups, such as the Hunde, who have long resented their relative prosperity. The Zairean government disputes the citizenship of all the baTutsi in eastern Zaire, claiming that most of them do not fulfil requirements of parentage, even though many families have been in the country for decades or even centuries. Some 15,000 Zairean baTutsi have escaped to Rwanda, where they live in camps by the border; thus Zairean refugees in Rwanda and Rwandan refugees in Zaire exist within a few miles of each other.

—provoking a fierce By now, however, the Tutsi fighters were no longer prepared to accept the backlash— onslaught passively. Remembering the genocide of baTutsi in Rwanda in 1994, they fought back against the army and ethnic militias with surprising vigour and effectiveness. The mounting violence was fuelled in early October by a declaration by the deputy governor of South Kivu that the Banyamulenge were bent on destabilising Zaire and would be given a week to leave the country. The official was subsequently suspended, but his statement was taken by ethnic baTutsi as a declaration of war.

—a fresh refugee crisis— Tutsi fighters made startling military advances against Zaire’s poorly trained, ill-disciplined and largely unpaid army, targeting key towns and the refugee camps which have harboured Hutu militias. An estimated 500,000 Hutu refugees fled at their approach; rather than returning to an uncertain future in Rwanda, most moved deeper into Zaire. By the end of October Tutsi militias were threatening Bukavu, and aid agencies were warning of a vast new humani- tarian crisis. Retreating soldiers put more energy into wholesale looting and intimidation than military activity, and there were reports that ethnic baTutsi in army-held areas were disappearing. The refugees were reported to have only a few days’ food left, but the UN was forced to call off an emergency food airlift to Bukavu in late October, and evacuated its few remaining staff from the town.

—and a further slump in The effectiveness of the Tutsi military advance raised strong suspicions that relations with Rwanda they had the direct backing of the Rwandan and Burundian governments. and Burundi Despite a two-day trip by Mr Kengo to Rwanda in August, during which the two countries agreed to repatriate all refugees before the Zairean elections, scheduled for May 1997, and promised not to provide a platform to each other’s dissidents, diplomatic relations continued to deteriorate.

On September 13 Zaire accused Rwanda and Burundi of fomenting trouble in the Uvira region by supporting the Tutsi guerrillas, and claimed that some 3,000 Zairean baTutsi were enrolled by the Rwandan Patriotic Army and trained to destabilise eastern Zaire. Mortar shots were heard on September 23 at the border with Rwanda, with Kinshasa and Kigali blaming each other for the attack. By October Mr Kengo was accusing Rwanda of invading Zairean territory, amid unconfirmed, anecdotal reports that Rwandan, Burundian, Ugandan and even Ethiopian soldiers had been spotted fighting alongside the baTutsi inside Zaire. Rwanda denied the charge outright, saying that the success of the Tutsi militiamen was due largely to the hopelessness of the Zairean army. In late October fears of a formally declared war between Zaire and its eastern neigh- bours were running high, with Belgium, the former colonial power in all three countries, announcing that it would try to mediate between the governments.

The economy

Inflation outstrips its Beginning with a serious inflationary slip in January, consumer prices in 1996 forecast within a few Kinshasa have continued to escalate. Month-on-month inflation amounted to months 34.8% in January before slowing slightly to 14.8% in February, 14.9% in March, 18.5% in April and 8.7% in May. As a result, prices had already risen by 129% in the first five months of 1996, outstripping the forecast carried in the budget of

100% for the entire year. On the current trend, the total rise in consumer prices in 1996 would amount to well over 600%, a deterioration over the 542% seen in 1995. The continuation of triple-digit inflation betrays the failure of the prime minister, Kengo wa Dondo, to keep a tight grip on monetary policy this year, and his valiant efforts of 1995 are now but a memory. Despite the fact that civil servants’ salaries go unpaid, and credit to the government (no longer reported by the Banque du Zaire, the central bank, since mid-1995) has apparently been curtailed, Mr Kengo seems to have been unable to quash the growth in money supply, mainly fed by the illegal traffic of diamonds.

The Swiss remind The presence of the president, Mobutu Sese Seko, in Switzerland (see The Mr Mobutu of his debts political scene) has given the Swiss parliament an opportunity to raise with him the issue of an alleged sum of Swfr10m ($8m) in debt arrears accumulated by Zaire in Switzerland. The arrears cover the rent for the Zairean mission to the UN in Geneva and its representation in Berne, but are also reported to include Mr Mobutu’s personal expenses on restaurants, caterers, maintenance work on his house in Savigny and the like.

The Banque du Zaire is in After years during which the Banque du Zaire was nothing but an appendage to trouble yet again Mr Mobutu’s private finances, Mr Kengo managed to instil it with a semblance of autonomy in 1995 by wresting the power to nominate its governor away from the president. However, the suspension in May of the governor, Patrice Djamboleka Okitongono, a trusted ally of Mr Kengo, has pushed the central bank further into the mire in which it was already sinking. No data on the bank’s reserves, for example, have been published since October 1995, and no update on the exchange rate has been forthcoming since February 1996. The US embassy seems to be the only body which still publishes a monthly update of the consumer price index.

Mining

Foreign direct investment Actual and forthcoming foreign direct investment (FDI) in Shaba’s mining in mining rises— operations is growing steadily each quarter, and is expected to provide consid- erable relief to the balance of payments (and possibly facilitate debt servicing) by the end of the year. Indeed, it appears that, deprived for political reasons of the possibility of privatisation, the state mining giant, Gécamines, is entering into an increasing number of joint ventures with foreign concerns, mostly from North America and South Africa, to resume or undertake the exploitation of abandoned and new mines. In order to encourage European investors to follow suit, the Zairean government held a round-table with investors in Belgium in September (organised by the Belgian trust company Benelux Paribas Copeba) under the theme: “Is it the right time to invest in Zaire?” The main ongoing deals currently include the following.

• In mid-1995 Belgium’s Union Minière entered a two-year joint venture with Gécamines to develop the Kasombo cobalt mine, which is expected to produce 3,000 tons over the contract period, 30-40% of which go to Union Minière. Although no specific output data has apparently been released on this initia- tive, it may have accounted (together with the processing of waste), for Zaire’s

increased cobalt output of 4,100 tons in 1995, compared with 3,300 tons in 1994, and for the increase already apparent in the first half of 1996 (see below).

• In July 1996 the owner of Canada’s Consolidated Eurocan Ventures, Adolf Lundin, won the tender to develop the Tenke Fungurume copper/cobalt deposit. Although the formal agreement has yet to be confirmed by the Zairean government, Mr Lundin has met Mr Mobutu (probably the most reliable guarantee for investments and property rights in Zaire), who has confirmed his support for the project. The deposit contains 222m tons of proven reserves (1bn tons of estimated reserves), grading 0.33% cobalt and 4.42% copper. A initial payment of $50m is payable upon signing the agreement, with a further $40m on completion of the feasibility study within two years, and a final $160m on starting commercial production, probably within six years. A ten- year tax-free period is expected.

• Another Canadian company, International Panorama Resource Corporation, also has a joint venture with Gécamines, to process copper/cobalt tailings at the Kambove and Kakanda concentrators. This is conditional on the conclusions of a government study of the recovery options, which should be completed by mid-1997. In addition, $45m must be raised in a combination of debt and equity. The Canadian company is expected to have a 51% interest, with Gécamines holding the remainder. The tailings are estimated to contain 61m tons of material, with 0.98% copper and 0.19% cobalt.

• A US gold-mining company, Barrick Gold Corporation, has a $350m agreement with the Mines d’Or du Kilo-Moto (Okimo) for exploration and project development in Haut-Zaire. The initial agreement, which dates back to February, was confirmed by the government in September. The first phase, which is about to start, should see investments of $47m, according to the Paris-based newsletter Africa Energy and Mining. $24m of this will go towards the rehabilitation of infrastructure at Bunia airport, Doko airport and some roads inside the concession area, with the rest funding exploration (drilling on the Doko site followed by aeromagnetic surveys in 1997). Total deposits are estimated at more than 100 tons of gold.

• Anglo American Corporation of South Africa is present in zinc mining at Kipushi (3rd quarter 1996, page 24), metal processing in Kolwezi and mineral exploration elsewhere in Shaba. Anglo American operates in Zaire in a 50:50 joint venture with the Arkansas-based American Mineral Fields, which reports that the South African company will invest $100m.

—as does Gécamines’ Gécamines’ output recorded significant and even surprising improvements in output the first half of 1996 over the same period in 1995 in all minerals. Copper production increased from 12,839 tons to 16,371 tons; cobalt from 1,908 tons to 3,089 tons; and zinc from 1,084 tons to 2,070 tons. However, because of depressed copper prices following the Sumitomo trading scandal on the London Metal Exchange, mineral revenue was estimated to be 23.8% down compared with the first half of 1995, despite the surge in output. In addition, workers at Gécamines’ production centres of Kolwezi and Likasi, which account for 80% of the company’s reserves, went on strike in mid-August, paralysing operations and threatening improvements in production figures for 1996 as a whole.

Agriculture

Coffee output receives a Despite a forecast by the US Department of Agriculture (USDA) that coffee conservative forecast output would amount to 1.2m 60-kg bags in 1996/97, the latest report by the industry analyst F O Licht forecast output of only 1m bags. It also reported output of 950,000 bags in 1995/96, compared with the USDA’s estimate of 1m bags. No increase beyond 1m bags was anticipated for the 1997/98 season.

The ICO studies a coffee The International Coffee Organisation (ICO) has continued to study the nature disease and effects of trichomycosis, a disease that affects coffee bushes and of which a particularly virulent strain appeared in Zaire in 1995. The disease, which is also appearing in Uganda, is caused by a fungus. Although it spreads slowly, it is carried by air, which makes it difficult to control. The disease kills infected coffee bushes in the space of four to seven days.

Transport

A DC-3 plane crashes in Aeroplane crashes in Zaire follow each other with alarming regularity. The South Kivu— latest mishap involved a DC-3, an aircraft no longer used in most developed countries, which crashed in the region of Maniema in South Kivu. Of the five passengers, three died. The plane, which was owned by one of Zaire’s myriad of unregulated private transport companies, was on its way to Bukavu.

—and Russian pilots are The Russian pilots of the Antonov 32 which crashed in a crowded market in jailed for the Ndolo January after taking off from Kinshasa’s Ndolo airport, killing over 300 people, market disaster were sentenced in August to two years’ imprisonment, as requested by the prosecutor. The Russian government has asked for a reduction of the sentence, or for permission for the men to serve it in Russia. The court also ordered African-Air, the carrier, and Scibe-Airlift, under whose licence it operated, to pay some $1.4m in damages to the victims’ families.

Foreign trade and payments

Foreign trade appears to According to the IMF’s Direction of Trade Statistics Yearbook (DOTS), based on have picked up in 1995 trading partners’ returns, Zaire’s exports amounted to $1.47bn in 1995, up from $1.14bn in 1994; imports totalled $1,26bn, up from $975m in 1994. Thus the trade balance recorded a surplus of $211m, also an increase over the 1994 surplus of $163m. Trade figures collected by these means usually amount to more than twice the amount reported by the Banque du Zaire (the central bank) and used by the IMF in its monthly International Financial Statistics. Smuggling and overbilling are rampant and do not show up in Zaire’s books, yet are considered by the recipient country to be imports from Zaire. Zaire still sends about 86% of its exports (mostly copper, cobalt, diamonds and coffee) to industrial countries, mainly Belgium, the USA and Italy. Among countries classified by the IMF as “developing”, South Africa takes the bulk of Zaire’s exports with 8.3% of the total. South African imports from Zaire have risen from $80m in 1993 to $100m in 1994 and $122m in 1995, according to DOTS. A similar trend appears to have emerged with South African exports to Zaire,

which climbed in DOTS data from $31m in 1992 to $133m in 1995. Together with rising direct investments by South African concerns in Zaire, these figures illustrate the increased economic integration of the two countries. The other major sources of Zairean imports are Belgium, Hong Kong and the USA.

French cooperation is Following the resumption of bilateral aid between France and Zaire (3rd quarter re-established 1996, page 27), the French cooperation minister, Jacques Godfrain, paid an official visit to Zaire in July, the first such trip by a French minister since the French ambassador was killed in 1993 in fighting between factions of the Zairean army in Kinshasa. France’s new aid policy entitles it to monitor the disbursement of all its credits and grants to ensure their proper use.

Zaire: exports and imports % of total

Exports Imports

Belgium-Luxembourg 37 USA 7 Belgium-Luxembourg 15 Hong KongItaly 8

South Africa 11 Other 28

USA 17

Other 59 Italy 10 South Africa 8

Source: IMF, Direction of Trade Statistics Yearbook.

Mr Godfrain also announced that a delegation of French industrialists would visit Zaire in November to identify investment opportunities and obtain Mr Mobutu’s guarantee on the security of their investments. This was decided before Mr Mobutu was admitted to hospital in August, and the fate of the trip (as well as that of the security of investments) now hinges on Mr Mobutu’s health. Some aid is still bypassing the Zairean state; in June the French cooperation ministry approved a FFr5.5m ($1m) grant to back grass-roots initiatives to overhaul the social infrastructure of the densely populated Kimbanseke district of Kinshasa, and to coordinate local action on community projects.

The EU facilitates In July the EU granted 55 tons of chemicals to Kinshasa’s water utility, drinking water for Régideso, to guarantee drinking water for the capital until September. EU- Kinshasa— financed work also began on the rehabilitation of three roads in Kivu province, but this is certain to have been disrupted by fighting in the region (see The political scene). In addition, the EU has disbursed Ecu145,000 ($183,000) to control and treat the cholera epidemic (3rd quarter 1996, page 26).

—and China grants $2.5m China made a Rmb30m ($3.6m) grant to Zaire in September but the two countries for unspecified purposes have still to decide how the funds will be used. Agreements were also signed on agricultural cooperation and copper waste processing in Shaba.

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 Quarterly indicators and trade data 29

Quarterly indicators and trade data

Zambia: quarterly indicators of economic activity

1994 1995 1996 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr Production: mining Qtrly totals Copper in concentrates ’000 tons 97.6 91.9 95.2 81.8 89.9 85.6 86.2 86.0 88.3 60.9a Prices Monthly av Consumer prices: 1990=100 2,486 2,583 2,713 3,052 3,173 3,399 3,902 n/a n/a n/a change year on year % 64.1 30.4 32.5 32.6 27.6 31.6 43.8 n/a n/a n/a Copper: LME, $ cents/lb 96.6 111.3 126.0 133.0 130.9 136.5 131.7 116.6 112.4 90.7b Money End-Qtr M1, seasonally adj: ZK bn 120.1 84.4 128.6 153.6 196.7 210.0 207.8 226.3 224.7c n/a change year on year % n/a n/a 44.8 36.4 63.8 148.8 61.6 47.3 n/a n/a Foreign traded Annual totals Exports fob $ m ( 758 ) ( 1,129 ) ( n/a ) Imports fob “ ( 455 ) ( 678 ) ( n/a ) Exchange reserves End-Qtr Bank of Zambia: foreign exchange $ m 237.8e n/a n/a n/a n/a n/a n/a n/a n/a n/a Commercial banks assets “ 67.0 63.1 84.3 113.6 110.9 107.2 116.5 140.6 207.3 179.7f Exchange rate Market rate ZK:$ 1,000.0 1,000.0 666.7 769.2 909.1 909.1 1,000.0 1,250.0 1,250.0 1,250.0g

Note. Annual figures of most of the series shown above will be found in the Country Profile. a Total for July-August. b Average for July-August. c End-April. d DOTS estimate. e End- May. f End-July. g End-August.

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 30 Quarterly indicators and trade data

Zaire: quarterly indicators of economic activity

1994 1995 1996 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr Mining: production Annual totals Copper in concentrates ’000 tons ( 30.0 ) ( 30.0 ) ( 20.0a ) Zinc “ ( 0.6 ) ( 0.8 ) ( 0.8a ) Agriculture: –production Annual totals Coffee ’000 tons ( 80b ) ( 80b ) ( n/a ) Prices Monthly av Consumer prices, Kinshasa: 1990=0.01 11,739 54,155 119,833 161,800 207,130 297,532 553,198 988,817 1,395,810c n/a change year on year % 22,475 73,082 19,043 3,682 1,664 549 362 511 n/a n/a Wholesale prices: coffee: USA USA cents/lb 94.0 170.1 152.0 138.3 139.0 122.9 107.2 94.7 90.0 79.2d copper: LME, $ “ 96.6 111.3 126.0 133.0 130.9 136.5 131.7 116.6 112.4 90.7d Money End-Qtr M1, seasonally adj: new Z bn 72 193 376 428 695 1,193 1,525e n/a n/a n/a change year on year % 7,158 13,047 5,702 1,938 865 518 n/a n/a n/a n/a Foreign trade Qtrly totals Exports fob $ m 65 131 144 132 105 90 95f n/a n/a n/a Imports cif “ 76 96 135 105 113 73 72f n/a n/a n/a Exchange holdings End-Qtr Bank of Zaire: goldg $ m 6.3 8.1 8.1 8.0 8.1 8.1 8.1 8.4h n/a n/a foreign exchange “ 148.9 146.7 120.7 143.8 148.0 145.1 152.1e n/a n/a n/a Deposit money banks: assets ” 56.7 73.5 81.2 84.2 80.2 81.8 79.1i n/a n/a n/a Exchange rate Market rate new Z:$ 520 2,150 3,250 3,600 5,550 9,200 14,831 28,404j 38,703j 65,127j

Note. Annual figures of most of the series shown above will be found in the Country Profile. a Estimate for January-August. b Estimate. c Average for April-May. d Average for July-august. e End-October. f Total for October-November. g End-quarter holdings at quarter’s average of London daily price less 25%. h End-February. i End-November. j Source: FT.

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 Quarterly indicators and trade data 31

Zambia: foreign trade (ZK m) Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Imports cif 1985 1986 1987 1988 1989 1990 1991 Cereals 43 75 13 130 171 176 n/a Other food, drink & tobacco 38 54 219 93 143 430 n/a Crude materials 32 71 123 100 155 760 n/a Petroleum & products 459 111 806 828 2,219 5,209 n/a Chemicals 317 411 1,171 1,180 1,274 4,335 n/a Rubber manufactures 53 118 198 156 181 579 n/a Paper & manufactures 33 54 90 124 180 493 n/a Textile manufactures 59 107 194 163 263 1,212 n/a Iron & steel 76 152 217 263 451 1,303 n/a Other metals & manufactures 93 245 263 266 450 1,403 n/a Machinery 517 1,276 1,817 1,838 2,467 7,999 n/a Road vehicles 276 548 1,066 1,150 1,443 4,501 n/a Other transport 21 57 55 257 548 3,724 n/a Scientific instruments etc 24 74 109 120 164 598 n/a Total incl others 2,133 4,448 6,627 6,898 12,601 36,554 51,624

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Domestic exports fob 1985 1986 1987 1988 1989 1990 1991 Tobacco 2 4 17 29 24 125 256 Cobalt 24 385 466 598 1,101 2,544 7,289 Copper 1,286 4,429 6,845 8,340 16,353 33,734 52,539 Lead 7 16 20 19 9 1 5 Zinc 53 99 131 162 302 438 429 Total incl others 1,502 5,348 8,032 9,720 18,336 39,037 67,583 Re-exports 6 19 27 66 98 107 85

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 32 Quarterly indicators and trade data

Zambia: direction of trade ($ m) Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec 1988 1989 1990 1991 1992 1993 1994 1995a Imports fob South Africa 158 271 206 165 224 303 157 193 UK 19 259 197 149 98 75 73 81 Zimbabwe 3575574455475264 Japan 84 107 81 76 38 30 28 60 USA 212 68 124 57 72 20 11 49 Germanyb 53 187 142 34 31 33 21 23 India 35 30 23 35 24 9 19 23 France 31 16 12 7 15 10 8 21 China 543144320 Total incl others 880 1,275 1,218 811 837 702 455 678 Exports fob Japan 194 222 168 204 152 105 105 201 Saudi Arabia 48 38 29 29 83 69 83 146 Thailand 28 n/a 37 34 39 54 72 133 India 56 44 33 122 21 45 56 69 Singapore n/a n/a 10 45 86 43 17 59 Belgium-Luxembourg 32 48 31 140 45 66 47 57 Malaysia 22 27 21 30 61 53 57 54 France 51 97 74 108 48 82 38 51 Zaire 5 10 8 3 5 10 33 40 Total incl others 871 663 544 1,076 752 904 758 1,129 a DOTs estimate. b Includes former East Germany from July 1990.

Zambia: refined copper exports (tons) Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Aug 1991 1992 1993 1994 1995 1996 Japan 125,939 94,857 85,334 55,445 52,647 37,937 Thailand 28,946 37,361 49,030 62,637 40,933 31,537 Malaysia 21,036 33,324 30,230 31,369 21,092 18,717 India 14,280 19,149 21,186 20,209 22,872 17,543 Belgium 31,120 26,156 49,167 29,939 22,500 12,986 USA 0 0 760 2,000 27,779 6,139 France 49,176 52,612 49,990 18,896 11,243 3,601 Greece 7,686 7,876 6,871 3,524 374 2,936 Indonesia 9,078 5,040 3,499 5,146 7,676 2,166 South Korea 0 0 0 4,096 800 410 Italy 10,989 15,850 5,041 3,024 2,098 400 Total incl others 382,326 411,892 436,522 360,657 268,953 157,307

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 Quarterly indicators and trade data 33

Zambia: UK trade (£ ’000) Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Jul Jan-Jul 1992 1993 1994 1995 1995 1996 UK exports fob Food, drink & tobacco 644 883 448 554 313 285 Chemicals 7,012 8,913 4,972 3,880 2,491 1,670 Rubber manufactures 353 201 163 80 60 84 Paper & manufactures 745 448 357 156 118 192 Textile yarn, cloth & manufactures 548 257 329 780 669 134 Non-metallic mineral manufactures 1,787 1,687 624 1,361 447 354 Iron & steel 2,174 818 390 299 50 243 Metal manufactures 1,337 2,582 499 466 237 626 Machinery incl electric 33,528 39,487 21,794 23,680 14,465 16,180 Transport equipment 9,035 7,076 4,533 5,465 3,582 3,707 Clothing & footwear 970 466 1,620 1,174 765 872 Scientific instruments etc 2,812 4,502 3,234 6,687 5,072 1,369 Total incl others 65,127 73,548 44,523 49,819 30,845 29,332 UK imports cif Fruit & vegetables 1,604 1,300 1,167 1,824 950 2,085 Textile yarn, cloth & manufactures 3,109 3,143 3,767 7,459 4,145 3,956 Non-ferrous metals 909 6,406 6,737 8,425 4,159 3,958 Machinery & transport equipment 783 451 308 350 81 75 Total incl others 7,279 12,056 13,038 19,460 10,318 11,528

Zambia: Japanese trade (¥ m) Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Aug Jan-Aug Japanese imports cif 1992 1993 1994 1995 1995 1996 Copper cathodes 25,136 20,668 11,455 15,764 12,125 10,131 Total incl others 31,532 23,562 17,896 20,261 14,995 14,273

EIU Country Report 4th quarter 1996 © The Economist Intelligence Unit Limited 1996 34 Quarterly indicators and trade data

Zaire: trade with major partnersa ($ ’000; monthly averages) Belg-Lux USAb Germany France UK Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Jul Jan-Jul 1993 1994 1994 1995 1994 1995 1994 1995 1995 1996 Exports to Zaire fob Food, drink & tobacco 1,648 1,926 869 2,567 145 288 824 1,396 287 90 Mineral fuels 28 44 10 14 8 25 19 162 133 162 Chemicals 1,120 1,330 184 193 367 578 518 520 272 397 Rubber manufactures 152 115 2 2 56 78 35 17 13 27 Textile yarn, cloth & mnfrs 388 533 164 126 13 36 33 42 4 1 Non-metallic mineral mnfrs 586 674 0 31 8 49 37 77 13 15 Base metals 112 187 165 315 53 172 51 60 60 58 Metal manufactures 296 260 32 36 156 138 54 56 28 29 Machinery incl electric 2,584 2,499 768 1,506 870 805 404 797 438 309 Transport equipment 1,997 2,254 162 88 1,494 1,203 246 279 401 284 Clothing, footwear & handbags 181 218 81 116 5 6 101 92 4 3 Scientific instruments etc 200 258 44 64 23 41 52 68 17 9 Total incl others 10,491 11,695 3,285 6,401 5,569 5,770 2,617 4,014 2,037 2,071 Imports from Zaire cif Coffee, cocoa, tea & spices 204 226 18 108 468 1,336 1,045 2,293 143 84 Animal feeding stuffs 0 0 80 188 0 0 0 0 0 0 Crude rubber 12 17 0 0 53 175 0 5 43 161 Wood & cork 144 345 4 21 609 748 723 612 572 811 Crude minerals & fertilisers 0 5 728 562 137 75 0 1 0 2 Metal ores & scrap 16 1 15 238 28 109 0 0 0 23 Petroleum & products 0 0 9,649 11,354 0 0 0 0 0 0 Chemicals 13 19 1,005 119 103 72 28 5 0 0 Non-metallic mineral mnfrs 29,172 52,166 2,704 6,885 3 11 0 0 0 804 Non-ferrous metalsc 3,676 608 1,887 3,049 699 1,647 934 359 488 169 Machinery & transport eqpt 94 82 59 1 49 30 0 0 65 22 Total incl others 34,847 54,357 16,492 22,787 3,016 5,431 2,910 3,490 1,523 2,302 a Figures from partners’ trade accounts. b US exports to Zaire averaged $6.2m and $7.2m per month for the period January-August 1995 and 1996. US imports from Zaire averaged $21.9m and $22.7m per month for the period January-August 1995 and 1996. c Mainly copper and zinc.