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Zambia Democratic Republic of Congo COUNTRY REPORT Zambia Democratic Republic of Congo 1st quarter 1998 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 50 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. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent Street The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.171) 830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.171) 499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 e-mail: [email protected] e-mail: [email protected] e-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic Publishing New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Moya Veitch Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 This publication is available on the following electronic and other media: Online databases CD-ROM Microfilm FT Profile (UK) Knight-Ridder Information World Microfilms Publications (UK) Tel: (44.171) 825 8000 Inc (US) Tel: (44.171) 266 2202 DIALOG (US) SilverPlatter (US) Tel: (1.415) 254 7000 LEXIS-NEXIS (US) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.171) 930 6900 Copyright © 1998 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1369-4839 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 3 Summary Zambia 5 Political structure 6 Economic structure 7 Outlook for 1998-99 10 Review 10 The political scene 14 The economy 16 Mining and energy 18 Agriculture 18 Banking 19 Foreign trade and payments Democratic Republic of Congo 21 Political structure 22 Economic structure 23 Outlook for 1998-99 24 Review 24 The political scene 29 The economy 38 Health 39 Quarterly indicators and trade data List of tables 8 Zambia: forecast summary (domestic) 9 Zambia: forecast summary (external) 16 Zambia: budget forecasts, 1998 25 DRC: executive committee of the AFDL (appointed Nov 12th 1997) 30 DRC: inflation, 1997 30 DRC: exchange rates, 1997 31 DRC: financing plan for emergency stabilisation and recovery programme (1998-99) 33 DRC: expected medium-term annual receipts from mining exports 39 Zambia: quarterly indicators of economic activity EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 2 40 DRC: quarterly indicators of economic activity 41 Zambia: foreign trade 42 Zambia: direction of trade 42 Zambia: refined copper exports 43 Zambia: UK trade 43 Zambia: Japanese trade 44 DRC: trade with major partners List of figures 9 Zambia: Gross domestic product 9 Zambia: kwacha real exchange rate 24 DRC: gross domestic product EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 3 February 10th 1998 Summary 1st quarter 1998 Zambia Outlook for 1998-99: The government’s uneasy relations with the domestic opposition and international donors will continue as long as the former pres- ident, Kenneth Kaunda, remains under house arrest, especially because the government’s case against Mr Kaunda and other detained opposition leaders appears weak and largely unfounded. Further coup attempts are unlikely; how- ever, large-scale civil service redundancies will not improve the government’s standing. Yet its hands are tied on this issue. Amid doubts over Zambia’s soiled governance record, the World Bank and the IMF will be watching progress on civil service reform closely and the government will have little choice but to proceed if aid inflows are to continue. Multilateral institutions’ willingness to disburse funds in spite of Mr Kaunda’s detention will be bolstered by Zambia’s positive economic performance. Average real GDP growth of 4.5% is forecast for 1998, as fiscal and monetary policy remains tight and the privatisation of Zambia Consolidated Copper Mines (ZCCM) proceeds. The beleaguered manu- facturing sector should see some relief with the domestic relaxation of tariffs on vital inputs and South African promises to increase Zambian access to its mar- kets. Inflation is forecast to decline to an annual average rate of 18% although the impact of El Niño remains uncertain and food prices could rise if there is a drought, or if current flooding continues. The government’s optimistic goal of reducing current poverty levels of 70% to 50% by 2000 on the back of projected economic growth alone is unlikely to be successful, and tensions between donor demands on the one hand and the population’s needs on the other are sure to make this a challenging year for Zambia’s politicians. Review: Mr Kaunda, along with other opposition leaders, was accused of col- lusion in the coup attempt of October 28th 1997 and was placed under house arrest. None of the accused has yet been formally charged. The cabinet was reshuffled in December. In late November the government announced a wage freeze to help finance its public-sector reform programme, much to the dismay of trade unions which have denounced the freeze and planned redundancies. The finance minister’s budget for 1998 assumes higher donor financing. Year- on-year inflation fell to a 1997 low of 18.5% in December. Several recent ZCCM privatisation initiatives have been unsuccessful. The Food Reserve Agency has come under fire for undermining domestic maize sales with large-scale imports. Democratic Republic of Outlook for 1998-99: Political and economic prospects are bleak. The regime Congo will become increasingly oppressive, yet plagued by factional splits. Fighting in the eastern DRC will continue to sap the government’s credibility and divert scarce military resources. The economic stabilisation and recovery programme appears sensible, but the government will have a hard time securing external financing while concerns over governance persist. No matter what the final outcome of the dispute with American Mineral Fields (AMF), the government’s abrogation of its contract will put off international investors, who will now think twice about relying on government commitments. EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 4 Review: A major cabinet reshuffle has further sidelined the Tutsi faction, in favour of President Kabila’s Katangese supporters. The government presented its Economic Stabilisation and Reconstruction Programme at the Friends of Congo conference in December, yet it failed to secure significant external financing. Fighting in the eastern part of the country between government troops and various militia groups has escalated, while the UN commission of enquiry into massacres in the region was once again stalled. A coup attempt was foiled but rumours abound that anti-Kabila forces have begun to crop up. Average inflation and the exchange rate have been stabilised. The government has cancelled AMF’s contract for the Kolwezi mine. Editor: Stephanie Wolters All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 1st quarter 1998 © The Economist Intelligence Unit Limited 1998 Zambia 5 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 November 1996 (presidential and legislative); next elections due in 2001 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 December 1997) Main political parties The Movement for Multiparty Democracy (MMD) is the ruling party, with a huge parliamentary majority. The National Party (NP), Zambia Democratic Congress (ZDC) and Agenda for Zambia (AZ) also have seats in parliament. The former sole party, the United National Independence Party (UNIP), and several other opposition groups boycotted the 1996 elections and have no seats. There are over 30 parties in all President Frederick Chiluba Vice-president Christen Tembo Key ministers Agriculture & fisheries Edith Nawakwi Commerce, trade & industry Enoch Kavindele Communications & transport Dawson Lupunga Community development & social welfare Samuel Miyanda Defence Chitalu Sampa Education Godfrey Miyanda Energy & water Ben Mwila Environment Alfeyo Hambayi
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