Uganda Rwanda Burundi

COUNTRY REPORT

3rd quarter 1996

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Summary

Uganda, Rwanda, Burundi 3rd quarter 1996

August 20, 1996

Uganda Political and economic structures pages 3-4

Outlook: The new government will be expected to deliver on its election promises and address the security situation in the north. The opposition will be sidelined, as it lost parliamentary representation. Real GDP growth will remain strong, but is forecast to slow to 6% in both fiscal 1996/97 and 1997/98. Exports will suffer from the collapse in coffee prices, while imports will be fuelled by growing domestic demand. But transfers will fund much of import growth, although the current-account deficit is expected to widen over the next two years. pages 5-6

Review: Uganda has elected its new parliament, but the election has margi- nalised the opposition. Cecilia Ogwal has support from the grassroots, but not from all the UPC party hierarchy, which may need to redefine its stance. The new cabinet is controversially large and most of the old team have been retained. Yoweri Museveni has called for the elimination of poverty and pledged to rid the country of corruption in high places. Security in the north has deteriorated as rebel activities have increased. Mr Museveni has put Salim Saleh in overall charge in the north. The budget has backed up Mr Museveni’s campaign promises, building on a year of sound economic achievement. Defence, roads and primary education have been given priority, and industrial bottlenecks in land and power supply are to be addressed. VAT has been introduced at 17%. There have been no changes in income tax, while import-tax exemptions have been narrowed. Inflation has been slightly above target. Cash crops have raised farm output, but the prospects for coffee exports remain gloomy. Manufacturing output has continued to recover well. Oil and services have pushed up imports, but a surge in transfers has helped to keep the payments balance in the black. pages 7-19

Rwanda Political and economic structures pages 20-21

Outlook: The security hazard presented by the inflow of Burundian refugees will be a strong incentive for the government not to break the regional sanctions imposed on Burundi. If the killings by the RPA continue, the international community is likely to block the flow of aid money. Coffee production will be slow to recover. pages 22-23

Review: Rwanda has joined the regional initiative on Burundi and imposed sanctions. Evidence suggests that the Rwandan army cooperated with Burundian counterparts to force 15,000 Rwandan refugees to return home. Militias have intensified their attacks, and the RPA has responded with reprisal killings. Genocide legislation has been agreed, paving the way for trials. Kenya has closed the Rwandan embassy in Nairobi, while relations with Zaire have reached a new low. Donors have pledged $627m. Real GDP growth of 25% has

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been registered in 1995. Coffee projections for 1996/97 have been revised downwards, but food production is expected to rise markedly. pages 23-30

Burundi Political and economic structures pages 31-32

Outlook: Economic sanctions imposed on the new regime by the OAU will bite, regardless of whether they have the support of the UN. Getting the warring parties to negotiate will be difficult, and the fighting is likely to intensify. The government will be running out of money shortly. pages 33-34

Review: Major Pierre Buyoya has seized power in a coup which was strongly condemned by the international community. The OAU has imposed tight economic sanctions, which have wrung some concessions from the new regime. The UN has released the findings of its inquiry into the event surrounding the 1993 coup, but has been hesitant to support sanctions. A new government has been appointed, without Frodebu representation. The army and the militias have intensified their fighting and more massacres have oc- curred. Militias have attacked key economic installations and targeted the coffee industry. pages 35-41

Statistical appendices pages 42-46

Editors: Kristina Quattek; Gregory Kronsten All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Uganda 3

Political structure: Uganda

Official name: Republic of Uganda

Form of state: unitary republic

Legal system: based on English common law and the 1995 constitution

National legislature: parliament of Uganda; 276 members, 214 elected by universal suffrage, with the remainder selected by electoral colleges. All serve five years

Last election: May 1996 (presidential); June 1996 (legislative)

Next elections: 2001 (presidential and legislative)

Head of state: president, Yoweri Museveni, confirmed as head of state in the presidential election of May 1996

National government: the president and his appointed cabinet; last reshuffle July 1996

Main political parties: the National Resistance Movement (NRM) is the ruling authority; the Democratic Party (DP), the Uganda People’s Congress (UPC), the Uganda Patriotic Movement (UPM) and the Conservative Party (CP) are all registered political parties but election candidates stand as independents

President & commander in chief Yoweri Museveni Vice-president & minister of agriculture, animal industry & fisheries Specioza Kazibwe Prime minister Kintu Musoke First deputy prime minister & minister of foreign affairs Eriya Kategaya Second deputy prime minister & minister of tourism & the environment Moses Ali Third deputy prime minister & minister of labour & social services Paul Etiang

Key ministers education & sports Amanya Mushega finance Jehoash Mayanja-Nkangi gender & community development Janet Mukwaya health Crispus Kiyonga information Ruhakana Rugunda internal affairs Tom Butime justice & attorney-general Bart Katureebe lands & urban development Francis Ayume local government Jabeli Bidandi Ssali natural resources Gerald Ssendaula planning & economic development Richard Kaijuka public service Apollo Nsibambi trade & industry Henry Kajura works, transport & communications John Nasasira without portfolio Kirunda Kivejinja

Governor of the Bank of Uganda Charles Nyonyintoho Kikonyogo

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Economic structure: Uganda

Latest available figures

Economic indicators 1991 1992 1993 1994 1995 GDP at factor costa NUSh bn 2,588 3,626 4,036 4,828 5,521 Real GDP growtha % 3.1 8.4 5.3 10.6 8.5 Consumer price inflation % 27.7 54.5 5.1 10.0 6.6 Populationb m 16.7 17.5 18.1 18.7 19.3 Exports foba $ m 172.1 169.3 253.9 577.3 555.3c Imports cifa $ m 450.6 622.4 671.9 1,085.5 1,179.8c Current accounta $ m –131.6 –141.7 –66.9 –164.3 –114.0c Reserves excl gold $ m 58.9 94.4 146.4 321.2 458.9 Total external debt $ m 2,857 3,023 3,131 3,473 n/a External debt-service ratio % 75.5 59.6 68.4 44.0 n/a Coffee exports ’000 tons 125 119 114 194 169 Manufacturing output index 1987=100 178.2 191.2 215.6 260.3 330.7 Exchange rate (av) NUSh:$ 734.0 1,133.8 1,195.0 979.4 968.9

August 16, 1996 NUSh1,062.0:$1

Origins of gross domestic product 1995a % of total Components of gross domestic product 1995a % of total Monetary agriculture 25.4 Private consumption 84.0 Manufacturing 7.2 Government consumption 9.7 Commerce 11.6 Gross fixed capital formation 17.3 Government & community services 17.7 Change in stocks –0.8 Other monetary sectors 13.8 Exports of goods & services 12.0 Non-monetary agriculture 20.2 Imports of goods & services –22.2 Other non-monetary sectors 4.0 GDP at market prices 100.0 GDP at factor cost 100.0

Principal exports 1995 $ m Principal imports 1992 $ m Coffee 384.1 Machinery & transport equipment 169.0 Gold 23.2 Manufactures 114.7 Maize 19.3 Mineral fuels 70.4 Fish & fish products 17.5

Main destinations of exports 1995d % of total Main origins of imports 1995d % of total Spain 22.8 Kenya 26.2 France 14.1 UK 12.1 Germany 13.9 Japan 8.0 Italy 9.5 Germany 8.0 Netherlands 8.3 India 5.5 a Fiscal years starting July 1; all other figures are for calendar years. b National sources. c Provisional. d Based on partners trade returns; subject to a wide margin of error.

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Uganda

Outlook

The new government will On the domestic political scene, the new government can expect a short honey- be expected to deliver on moon period, but the Ugandan people will be expecting the president, Yoweri its promises— Museveni, to translate his thumping electoral mandate into deeds. The promised action against poverty will be eagerly awaited, and people will be hoping that the new crackdown on corruption will be more than mere words. Sizeable allocations in the budget for improvements in education and infrastructure will be a welcome step in the direction of reconstruction and poverty alleviation. The government can expect donor support in its effort, but given the nature of the task, progress is likely to be slow, albeit steady.

—but the security The policy emphasis will also return to the problems of the north, now that the problems in the north will election fever has subsided. The northern rebels are responsible for causing return to centre stage unacceptable levels of military expenditure and the problem of instability is diverting government energies from important development problems. Mr Museveni seems set on achieving a crushing military victory, although this is likely to be a chimera, and it would not be surprising if attempts at reconciliation were made. The nature of the rebel movements (especially the Lord’s Resistance Army, LRA), together with the backing they receive from Sudan, will make accommodation difficult. The likelihood is that this problem will rumble on.

The opposition will be Due to the opposition boycott of the legislative elections, the Democratic Party sidelined (DP) of Paul Ssemogerere is not even represented in the new parliament, while the Uganda People’s Congress (UPC) gained a few seats, mostly in the north, as individual candidates defied the boycott. There is now little chance for the DP and UPC to mount a serious opposition challenge outside the legislature. In the absence of effective criticism by the opposition and accountability of the government, there is a danger that the ruling National Resistance Movement (NRM) will consolidate its position in a de facto one-party system.

The economy will GDP can be expected to continue on its path to recovery, although growth continue to grow strongly rates are likely to slow over the next two years. The government’s projection of 7% real growth for fiscal year 1996/97 (July-June) seems reasonable, but only if agriculture can deliver another good year. Most of the growth will be in the monetary sector, with indications that the non-monetary sector, especially agriculture (once the lifeline of the economy, and still representing a significant albeit declining share of the GDP), is growing much more sluggishly. The performance of agriculture will still be the main determinant of economic growth, and this will continue to depend primarily on weather conditions; but

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as other sectors gain in importance (especially industry and tourism) the level of investment will assume a higher profile. At present, the macroeconomic framework is very favourable, with the rate of inflation averaging 7.4% in 1995/96. However, it will be surprising if food prices continue to fall, and thus the trend of inflation is likely to be upwards in 1996/97, although on an annual average basis it will remain well below 10%, given the government’s tight budgeting record.

Transfers will fund Exports did much better than expected in 1995/96, given the fall in world import growth coffee prices. However, the global situation in the medium term will depress coffee sales significantly over the forecast period. Even if other exports continue to expand, they are unlikely to offset the fall in coffee income, and total exports can be expected to fall to about $500m in 1996/97 and to $490m in 1997/98. As the overall growth of the economy will fuel demand, imports (cif) will edge up to reach a forecast $1.3bn in 1997/98. However, the sense of political stability in the aftermath of the elections will ensure the continuing strength of foreign transfers, provided that the authorities maintain an acceptable level of macroeconomic stability. With official aid remaining buoyant and private investment likely to expand, much of the trade imbalance will be covered. Nevertheless, the current-account deficit is forecast to deteriorate to $200m in 1996/97 and $250m in 1997/98.

Forecast summarya ($ m unless otherwise indicated) 1994b 1995b 1996c 1997c Real GDP growth (%) 10.6 8.5 6.0 6.0 Consumer price inflation (%) 6.1 7.4 8.0 7.0 Merchandise exports fob 577d 555d 500 490 of which: coffee 442d 393d 330 300 Merchandise imports cif 1,086d 1,180d 1,250 1,330 Current-account balance –164d –114d –200 –250 Average exchange rate (NUSh:$) 930 1,015e 1,100 1,170

a Fiscal years starting July 1. b Actual. c EIU forecasts. d Provisional. e EIU estimate.

Gross domestic product New Ugandan shilling: real exchange % change, year on year rate (c) 12 1990=100 Uganda (a) 110 10 Africa

100 8

90 6 NUSh:$

4 80 NUSh:DM

2 70 NUSh:¥ 0 1992 93 94 95 96(b) 97(b) 60 (a) Fiscal years starting July 1. (b) EIU forecasts. (c) Nominal exchange rates adjusted for changes in relative consumer prices. Sources: EIU; IMF, International Financial Statistics; World Economic 1990 91 92 93 94 95 Outlook.

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Review

The political scene

Uganda elects its new Elections for the first parliament under Uganda’s new constitution were held parliament on June 27 and the first session opened on July 8. According to reports, the elections took place in a peaceful atmosphere, and the various teams of foreign observers expressed their satisfaction with the transparency of the process, although the results were nullified in two constituencies because of irregularities. The new legislature comprises 276 members, of whom 214 were elected by universal adult suffrage and the remainder by electoral colleges (39 from women’s groups, ten from the army, five from the physically handicapped, five from among the 18-30 age groups, and three from the trade unions). According to the interim electoral commission, the turnout nationally was about 60%. However, this figure masks considerable regional variations: in the capital, Kampala, the turnout was only 29%, compared with 88% in the regions.

The opposition boycott One reason for the relatively low turnout (compared with 72.6% in the pres- reduces the turnout idential election in May) was almost certainly the boycott of the elections by the Inter Political Forces Cooperation (IPFC), the opposition grouping led by Paul Ssemogerere. The boycott was imposed as a gesture against alleged ballot-rigging by the supporters of the president, Yoweri Museveni, during the presidential election (2nd quarter 1996, page 7), although the desire to avoid a second humiliation at the polls was probably a factor of at least equal importance. The boycott meant that the vast majority of the candidates were supporters of Mr Museveni and his National Resistance Movement (NRM), and significant numbers of people will have decided that there was no point in voting. Ten candidates (including the prime minister, Kintu Musoke) were returned to parliament unopposed. In the event, about 20 seats were won by opposition candidates who defied the boycott, mainly representing constituencies in the north which voted against Mr Museveni in the presidential election. Most of these are members of the Uganda People’s Congress (UPC) and include Cecilia Ogwal in Lira. Mrs Ogwal had been sacked by the exiled party leader, Milton Obote, from her post as assistant secretary-general of the UPC for her decision to stand in the elections against Mr Obote’s wishes (see below). Her victory reflects her strong personal following in Lira and is significant in that it represents an anti-Museveni and anti-Obote feeling in the region. The presence of Mrs Ogwal in parliament provides an opportunity for Mr Museveni to make a gesture towards the inhabitants of the north who believe that the regime does not take sufficient concern over their welfare.

The DP commits political The Democratic Party (DP), led by Paul Ssemogerere, appears to have been suicide— effectively wiped out as a significant political force in Uganda. With party activities still officially banned, the DP has no representation at all in the only political forum in the country. It is hard to see what the electoral boycott by the DP has achieved except the weakening of parliament as a real debating chamber. The government will not be entirely without its critics in the new parliament; but they are thin on the ground, and parliament as a whole is

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overwhelmingly on the president’s side. The electoral boycott has done a dis- service to the country, and there is a danger that Uganda will find itself, de facto, in a one-party system partly through the default of the very parties which fought so hard in the constitutional debate to prevent that happening and with a parliament whose constitutional powers to challenge the president will lie unused.

—and the UPC looks for The future of the UPC is also very uncertain; but, unlike the DP, it does have a new political direction small group of its members elected to the parliament (despite its leadership’s support for the boycott). Top UPC officials paid a visit to Mr Obote in Lusaka, Zambia, recently with a view to redefining the political direction of the party in the aftermath of its failure to win support for the opposition in the presidential election. A major aspect of the UPC’s problem is the future of the party leadership. Mr Obote has led the party from exile in Zambia since his downfall in 1985, and his spectre is thought to have counted heavily against the opposition alliance in the presidential election. He has seemed increasingly out of touch with the grassroots in Uganda, and it has become clear that the UPC badly needs a leader inside the country. At one time the succession seemed to rest with Kefa Sempangi, who was thought to have done a good job for the UPC in the TV debates on the new constitution, but he defected to the NRM earlier this year. The party preference is for an intellectual with a clean human rights record. Two names have been suggested—Darlington Sakwa, a Kampala businessman, and Yona Kanyomozi, a former minister under Mr Obote—but neither stood as a candidate in the legislative poll, because of the boycott.

The one UPC member to have demonstrated her grass-roots support by her election is Mrs Ogwal, but she did so by defying the leadership and getting sacked for her pains. The party is now split, and Mr Obote appointed James Rwanyarare as chairman of the party’s presidential policy commission in her place. However, if Mrs Ogwal and the other elected UPC deputies decide to act as a parliamentary pressure group for the benefit of their constituents in the north, Mr Obote could be gradually sidelined. Yet the old party hierarchy still maintains control of the funds and the organisation, and it remains to be seen whether Mrs Ogwal’s push for the leadership will succeed. A number of attempts are being made by moderates within the UPC to resolve the dispute, including one by a group which wishes to see Mr Obote replaced, but not by Mrs Ogwal.

The new cabinet is Mr Museveni named his new cabinet on July 6, having previously received the controversially large— approval of his choice by a committee of 51 MPs, as is now required under the new constitution. However, with the new parliament consisting almost entirely of his supporters, securing the MPs’ support was never going to be a problem. The cabinet as announced consists of 21 ministers (including the president)— but the parliament has already given its approval for a change in the constitution to allow an increase to 25—and 32 junior ministers. According to reports, there has been intense lobbying for the remaining ministerial posts by all the various interest groups represented in the new parliament. Some people have objected to the way the provisions of the new constitution have been so quickly altered at the behest of the president and say that this does not augur well for the respect of the constitution in the future. The president wants to have a bigger government team in order to establish a sound regional equilibrium

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(although the majority of the ministers still come from the west of Uganda) and maintains that there will be no resulting call on external financing. However, international donors, in particular the World Bank, are likely to be unhappy about the increase, having previously pressed for a reduction in the number of ministries in order to cut government expenditure.

—and most of the old The membership of the new team shows few changes from the previous cabi- team are retained net, but there has been an extensive reshuffle of portfolios. The full list includes 15 representatives of the previous government, with four retaining their old responsibilities: Moses Ali (tourism and the environment), Jehoash Mayanja-Nkangi (finance), Amanya Mushega (education and sports) and Bidandi Ssali (local government). Local observers expressed surprise at some of the otherwise wide-ranging changes to the government composition. These include the switch of Ruhakana Rugunda from foreign affairs (which went to Mr Museveni’s old friend Eriya Kategaya) to the information ministry. In a break from the past, Mr Museveni has excluded non-NRM members from his government. James Makumbi, Joseph Ekemu and Stephen Hebrot have all lost their cabinet posts, together with Eric Adriko, who assumed personal responsibility for Mr Museveni’s poor showing in West Nile, resigned from the previous cabinet, and did not stand in the parliamentary elections. There are five new names on the cabinet list: Apollo Nsibambi, Janet Mukwaya, Bart Katureebe, Francis Ayume and Gerald Ssendaula. Furthermore, the structure of the government was altered and a new Ministry of Planning and Economic Development (under Richard Kaijuka) has been hived off from the Ministry of Finance (still under Mr Mayanja-Nkangi).

Mrs Kazibwe stays as Mr Museveni confounded the rumour-mongers by retaining Specioza Kazibwe vice-president— as the country’s vice-president, an appointment which received the unani- mous approval of the new parliament. Mrs Kazibwe relinquishes her previous responsibilities for gender and community development, and takes on the higher-profile at the Ministry of Agriculture, Animal Industry and Fisheries. To her advantage, she is seen to represent women and comes from Busoga (which voted overwhelmingly for Mr Museveni in the presidential election). She is also a Roman Catholic and therefore helps to provide religious balance in the cabinet, although she does not identify strongly with the mainstream Catholic political ethos and would not have been the Catholics’ own choice. In recent months, she has also been seen as something of a liability through her alien- ation of the Muslim population (1st quarter 1996, page 12). In general, she is thought to be lacking in leadership qualities and ambition and therefore no threat to the president.

—but only, perhaps, as a According to local opinion, Mrs Kazibwe was a compromise choice. There was a compromise choice group within the movement pushing hard for Mr Ssali, who thought he was in line for the job as a reward for running Mr Museveni’s campaign for the presidency. He is said to believe that the presidency should pass to the Baganda when Mr Museveni finally retires and sees himself as the main contender for the leadership. However, he crossed some of the old NRM hierarchy (mostly from western Uganda) by sidelining them during the presidential campaign and thus lacks support from that quarter. Another candidate for the vice-presidency is

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thought to have been James Wapakhabulo, who did a good job for the president as chairman of the Constituent Assembly (CA) and was promoted to the previous cabinet. However, Mr Wapakhabulo was proposed as speaker of the new parliament and Mr Museveni reportedly made no attempt to prevent his election. Some people have suggested that as vice-president Mr Wapakhabulo would have overshadowed the president in the articulation of policy. He was also opposed by a section of westerners within the NRM. The retention of Mr Musoke as prime minister may be interpreted as a reward for the Baganda. He is thought to have no further political ambition, and is not seen as a threat by those close to the president and waiting for his chair to fall vacant.

Government changes Various explanations have been advanced for the sacking of ministers from the reflect pressures on the previous government. They may owe their fate to the lack of electoral support president— for Mr Museveni in their home regions, to their failure to win convincingly in the parliamentary polls, or to the problems of achieving ethnic and religious balance in the government. These is also the theory that the president took the opportunity to clear out a number of underperformers. Among the junior ministers to lose their jobs was David Pulkol, in charge of Karamoja affairs, whose appointment was applauded by local people in 1994. He is replaced by Peter Lokeris. It is easier to explain the departure of Betty Bigombe, minister resident in the north. Mrs Bigombe had to take a lot of the flak for the government’s huge unpopularity in the north and, as it happened, stood in one of the constituencies where the initial result was nullified because of irregularities. Mrs Bigombe subsequently withdrew her candidacy, making it easier for the president to make a fresh initiative in the troubled region by giving her job to Owiny Dollo.

—with rewards given for Among the new faces in the cabinet, Mr Nsibambi (public service) is an aca- political support demic who was formerly director of the Makerere Institute of Social Research. His promotion is one of several obtained by pro-NRM Baganda monarchists; another is Semakula Kiwanuka, who was appointed to be ambassador to the USA. Catherine Mavengina (minister of state for public service) is a women’s activist and a close friend of the president’s wife. Colonel William Omaria, as minister of state for internal affairs, now holds the same position under Mr Museveni that he held under Mr Obote, an appointment which has caused a number of raised eyebrows. Together with Colonel J Odongo (minister of state for defence), Mr Omaria comes from Teso, and these two appointments will offset the loss of a cabinet minister, Joseph Ekemu, in a region which voted more heavily for Mr Museveni in the presidential election than had been expected.

Mr Museveni calls for the In his address at the opening of the new parliament, Mr Museveni appealed to elimination of poverty— MPs to maintain close contacts with the population and work for the elimination of poverty from their constituencies. The president wants to see poverty eliminated from all areas of the country by the end of the lifetime of the parliament, and insists that this is a real possibility. In a comprehensive survey of the past achievements and future plans of the NRM, the president said that the mission of his new government was to modernise the country. The most important elements of the programme would be to modernise agriculture and

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provide land for industrial development. The most difficult problem would lie with the small-farm sector (three acres or less), where farmers would receive help and guidance in order to increase their output and raise their incomes. He stressed that rural families needed help just as much as urban households and emphasised the importance of developing the road network to link farmers with markets. On the question of industrial development, Mr Museveni assured MPs that the government owned enough land and that there would be no expropriation of private property. He said that the government would work with the authorities in Kenya and Tanzania to create a unified tax system throughout the East African subregion and assured industrialists that tax dis- crepancies would be resolved harmoniously. He also emphasised the importance of education as a central part of the government’s programme, saying that the main objective would be to enable every child to go to school. The government intends to concentrate educational funds on teachers’ salaries, books and equipment.

—and pledges to rid the In his address, Mr Museveni also stated his determination to defeat corruption, country of corruption in especially within government itself. The existence of high-level corruption was high places a serious criticism levelled against the previous NRM government, and the local press has been urging the president to crack down on it, now that his personal mandate is so strong that he does not owe any individual favours. Mr Museveni drew applause from his audience of MPs when he commended the auditor-general for his work against corruption and said that he had given orders to the permanent secretaries in the civil service to denounce their ministers if they tried to use their position in the government to divert public funds for private purposes. However, a number of ministers whose actions have brought accusations of corruption in the past have nevertheless found seats on the new cabinet.

Security in the north Rebel activities in the north continue to interrupt normal life, and the number deteriorates as rebel of incidents has increased since Mr Museveni won his election victory in May. activities increase The death toll among soldiers and civilians continues to rise. Sometimes the engagements between the army and the rebels amount to pitched battles, and in early June, during an encounter with the pro-Idi Amin West Nile Bank Front (WNBF) rebels in the Uganda-Sudan-Zaire border region, the Ugandan army was drawn into an artillery exchange with the Sudanese army—a reminder of the continued hostilities between Kampala and Khartoum. In July a force of rebels of the Lord’s Resistance Army (LRA) estimated at 500-600 entered Uganda north of Kitgum and launched an attack on a Sudanese refugee camp, killing about 100 refugees and causing thousands to flee. Most of the incidents are small-scale, typically involving ambushes and placing mines along the roads of the region. However, the feeling of insecurity in the north has deepened.

The Roman Catholic The authorities have tried to reassure the local population, without much church attempts to success, that they will eventually win the struggle against the rebels, and mediate Mr Museveni said that he will, if necessary, put a permanent garrison in every subcounty. The region is saturated with troops, and an estimated 10,000 additional men have recently been added to the existing strength of 20,000, together with new weaponry, including helicopters. However, many people

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think that the army will be unable to achieve a military victory and that there will have to be a political solution eventually. A fresh initiative has been taken by the Catholic church, which has sent three bishops to the north to sound out the possibilities for negotiation and conciliation. The church believes that it has a special role, because most of the people in the region are Catholics, and it is increasingly concerned about the disruption of church activities.

Salim Saleh is put in Mr Museveni has been ambivalent on the issue of negotiations with the rebels, overall charge in the north and the signals coming from the rebel camps have not been encouraging. A visit to Acholi elders by Mr Musoke became something of a public relations disaster, when he suggested that the responsibility for dealing with the rebel problem rested with the local population. In a move thought to be very significant, the president has put his half-brother, Major-General Salim Saleh, in overall charge of the military situation in the north. Mr Saleh has emerged from semi- retirement, caused by illness, and is said to be fit and active again. One of the benefits of this appointment is likely to be an improvement in army morale, as Mr Saleh is a popular and charismatic choice with all ranks, although some people in the upper ranks of the army were not pleased that Mr Museveni’s brother was brought in over their heads.

There have been reports of serious discontent among some army units, especially those recruited from among the central and eastern tribes, such as the Baganda and Teso, because they believed that they were getting more than their fair share of exposure to the rebels. Mr Saleh has the reputation of possess- ing a more moderate attitude towards the rebels than some of his fellow senior officers, and he maintains that the possibility of negotiations should not be overlooked. He is also aware that there is an important economic context to the problem of the north and that rural development projects should be stepped up. However, reports emerged in early August of fighting between the LRA and government forces intensifying, claiming over 300 lives.

Dissatisfaction is keenly Whether the two rebel groups (the LRA and WNBF) will prove to be amenable to felt by northern people— a negotiated solution is doubtful. It is particularly unlikely in the case of the LRA, given the nature of its religious extremism and deep involvement with the Sudanese authorities. What cannot be denied, however, is that its resistance finds an echo in the strongly felt grievances of a large proportion of the local people. For the Acholi and Langi population of the north-east, the dissatisfaction dates from the loss of regional political clout with the fall of Mr Obote in 1985 and the establishment of a southern hegemony under Mr Museveni. While the rest of Uganda, especially the south, has recovered well under Mr Museveni, the north has not. The government can argue, with some justification, that the reason for this lies in the continuing insecurity, but local people believe that the authorities have failed to protect them and to improve the region’s economy. It is therefore not surprising that they voted heavily for Mr Ssemogerere in the presidential poll and now believe that their failure to show support for Mr Museveni will condemn them to remaining out of favour.

—including those in West Recent political developments in West Nile reflect a similar decline in the Nile region’s fortunes, with local people harking back to their pre-eminence during the Amin period. This region suffered badly during the second Obote regime as

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Uganda 13

the army took revenge for Mr Amin’s atrocities. The West Nile had seemed grateful for Mr Museveni’s attempts at reconciliation, marked by the promotion to cabinet rank of Mr Ali, and the population voted heavily for the NRM in the CA elections. The anti-Museveni vote in the presidential election was a big surprise, but it reflects the success of the WNBF under Juma Oris, even if its aim of bringing back Mr Amin is fanciful. As in Acholi and Lango, it is difficult to see long-term success against the rebels without some tangible improvements in living conditions.

Improved relations with A signal of the improved relations between Uganda and Kenya has come in the Kenya bring benefits for form of a cooperation agreement aimed at ending conflicts and crossborder Karamoja— rustling between the Karamojong people of Uganda and the Turkana of Kenya. The agreement comes at the end of protracted negotiations to establish a secure environment in order to facilitate trade and industrial links. Karamoja and Turkana are both regions in which traditional economy and society continue to flourish. Both regions are remote and remain to some extent outside the control of the central governments, which have a mutual interest in the establishment of settled conditions. Mr Museveni made a four-day state visit to Kenya in July, during which his discussions with his Kenyan counterpart, Daniel arap Moi, were dominated by economic matters. The president is committed to a policy of harmonisation of the tax regimes in the new East African Cooperation (2nd quarter 1996, page 15), but is concerned about protecting Uganda’s industries. Meanwhile, the currencies of Uganda, Kenya and Tanzania became fully convertible on July 1.

—while regional Regional cooperation was also demonstrated with regard to the crisis in Burundi. cooperation may defuse The Ugandan government participated in March in the regional peace initiative the crisis in Burundi led by the former Tanzanian president, Julius Nyerere. The initiative has been working for a negotiated solution to the crisis in the neighbouring country, but has also been considering military assistance. In the aftermath of the coup of July 25, the group changed tactic and imposed economic sanctions on Burundi to force the government to bring back constitutional rule (see Burundi). Mr Museveni has strongly condemned military coups and has been adamant that no time should be lost in Burundi to restore the constitution.

The economy

The budget backs up The annual budget was presented in June (as usual) after a slight procedural campaign promises— hiccup. The finance minister, Jehoash Mayanja-Nkangi, had wanted to delay the budget and extend the financial year by one month, but the National Resistance Council (NRC, the former legislature) decided that this would be unconstitutional. The budget speech itself was more of a broad policy statement than a traditional listing of revenue and expenditure items. The framework of the budget was deliberately built around the election campaign promises of the president, Yoweri Museveni, concentrating on primary education, investment in the road system, improvements in security and the alleviation of poverty. The budget speech also reaffirmed the key policies of privatisation and liberalisation.

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 14 Uganda

—building on a year of Mr Mayanja-Nkangi began his presentation with a summary of the position in sound economic fiscal 1995/96 (July-June), which showed some sound economic achievements. achievement During 1995/96 GDP was estimated to have grown by 8.2% (or 8.5%, according to Background to the Budget), with a notable 18% expansion in manufacturing (the best for ten years) and an unprecedented 16% in cash crop agriculture. This good overall performance was achieved in spite of a 33% fall in coffee prices during the year. However, non-coffee exports increased by 20%. Annual inflation at the end of May (year on year) stood at 6%, and, although this was above the government’s 5% target, it represented a satisfactory level of price stability when set against the rapid rate of economic growth. Investment was buoyant, at 17.6% of GDP, with private investment contributing 11%. Improvements in the balance-of-payments position continued, and an overall surplus of $110m was recorded. This enabled the Bank of Uganda (BoU, the central bank) to strengthen its foreign reserves to the equivalent of more than four months of import cover. The improvement resulted from an increase in the flow of foreign exchange (mainly for investment) and from good non- coffee export performances.

Defence, roads and The minister referred to the government’s Poverty Reduction Action Plan, primary education receive which is shortly to be finalised, but whose priorities have already been defined priority by the president. There is to be an increase in defence expenditure (he did not say by how much) mainly because of the need to provide greater security in the north. There will also be a substantial increase in spending on road improvements in order for rural people to gain better access to markets. Spending on feeder roads will rise to NUSh16bn ($14.5m) in 1996/97, compared with NUSh6bn in 1995/96, with a further NUSh2bn to equip each district with its own feeder roads unit. Maintenance of trunk roads will also increase during this fiscal year to NUSh21bn, compared with NUSh16bn last year. The government has just finalised its ten-year road sector development programme to be submitted to donors, for upgrading all major gravel roads to tarmac standard. The third priority area is primary education, in response to national research that has shown that improvements in this sector bring increases in income and a reduction in mortality. There are to be substantial increases of funding to the sector. In particular, the minimum wages of primary teachers will be raised to NUSh722,000 ($680) per month, and the programme of classroom construction will be expanded. The government is also committed to paying school fees for four children per family from January 1997.

The decentralisation Fiscal 1996/97 will see the completion of the decentralisation programme, with programme is to be all 39 districts receiving unconditional grants from the central government. completed However, the authorities recognise that there will be a transitional stage during which it will be necessary to ensure that national priorities are being observed. There will therefore be a separate conditional grant which will be used to reward those districts which achieve certain minimum levels of service provision.

Industrial bottlenecks in The government is committed to the improvement of the business environ- land and power supply ment for the private sector. The Investment Code is to be amended to intro- are addressed duce voluntary registration, and a commercial division of the High Court is to be established to ensure the speedy resolution of commercial disputes. The

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Uganda 15

availability of suitably serviced land has been highlighted as a priority, and NUSh11.5bn has been set aside for identifying and developing industrial sites. Power supply problems are also to be addressed, with the Uganda Electricity Board (UEB) acknowledging that the present 60-mw supply deficit causes frequent load-shedding. No easy solutions are possible, mainly because the new expansion at Owen Falls is behind schedule, but UEB’s monopoly of power generation is to be removed to permit small-scale power generation and the government hopes to secure donor funding for additional gas-turbine capacity from 1997/98.

The privatisation policy Privatisation has gone well, with key industries like Hima and Tororo Cement continues to go well and (recently) NYTIL-Jinja in production under new ownership, and Uganda Commercial Bank (UCB) and the telecommunications side of Uganda Post and Telecommunications due for completion this year. The proceeds of privatisation have so far netted NUSh131bn and the government is confident that 85% of parastatals will have been privatised by the end of 1997. With the establishment of the Capital Markets Authority, some privatisations may be carried out through a stock market. Significant progress was made in financial-sector reform in 1995/96, including the restructuring of some banks, and the government intends to pay NUSh60bn towards the recapitalisation of the BoU.

Index of industrial production 12-month moving average and month to month % change in the moving average

4 12-month moving average, 1987=100—right scale 400 Monthly % change in moving average—left scale 3 350

2 300

1 250

0 200

Oct..Jan..Apr..Jul..Oct..Jan..Apr..Jul..Oct..Jan..Apr..Jul..Oct..Jan.. 1992 93 94 95 96 Source: Ministry of Finance and Development Planning, Background to the Budget.

Budget support from According to the finance minister, the 1995/96 budget outturn shows that total donors will decline sharply revenue and grants were, at NUSh926bn, 5.1% higher than previously projected. Expenditure was NUSh1,023bn, 1.1% above the budgeted figure. The revenue target for 1996/97 is NUSh824.3bn, which represents 13.6% of forecast GDP. The share of the total budget supported by donor grants will continue its sharp decline of recent years. Import grants in 1996/97 are estimated at $50m, compared with $96m last year. Total expenditure is budgeted at NUSh1,233bn, of which NUSh661bn is recurrent and NUSh561bn development spending, while NUSh12bn are accounted for by net lending and investment. The budget deficit, excluding grants, is projected at 6.7% of GDP and only marginally down on the outturn for 1995/96. Public expenditure will include a 40% increase in the government’s salary bill, reflecting the commitment to raising civil service salaries to a reasonable level.

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 16 Uganda

VAT is set at 17%— The most important item of taxation announced in the budget was the intro- duction of 17% value-added tax (VAT) from July 1. The new tax will replace sales tax and the commercial transactions levy, and is expected to be revenue neutral. While sales taxes were higher than 17%, the excise duties will be adjusted upwards in compensation. Excise duties have therefore been increased as follows: beer from 55% to 70%, sodas from 40% to 55%, cigarettes from 100% to 122%, and spirits from 30% to 45%. It remains to be seen, of course, whether the machinery for collecting the VAT contributions will be effective.

—but income tax remains No changes in income tax were announced in the budget, although the collec- unchanged— tion of PAYE is to be streamlined to ensure prompt payment by employers. A double-taxation agreement was concluded with South Africa during 1995/96 and similar agreements are expected to be finalised this year with Kenya, Tanzania, Mauritius, Egypt, Zimbabwe and India. Employees of non- governmental organisations (NGOs) and foreign missions and businesses are not exempt from income tax unless arrangements have been specifically made.

—while import tax A number of changes have been introduced which affect importers. The exemptions are narrowed scheme for refunding import taxes (on inputs) to exporters has been extended to include taxes on all inputs into export products. The statutory period for warehousing has been reduced from 12 to three months to encourage prompt clearance. Following a review by the Uganda Revenue Authority (URA), the only agreements on import tax exemptions which will remain are those with other governments, the UN and its agencies, and the multilateral financial institutions. Tax exemptions on certain investment goods, introduced last year, have been abolished.

Vehicle registration fees Records of vehicle licences and driving permits are to be computerised this are to rise year, and the issuing of new number plates is to be privatised and taken over by local dealers. Vehicle licence fees are to rise by 20%, with commercial vehicles charged 50% of the now abolished commercial transactions levy (CTL).

Inflation is slightly higher In June 1995 the year-on-year inflation rate was 5.4%, up on the 3.4% recorded one year earlier, but down on the 6% seen in the previous month. The underlying rate (excluding food crops) declined over the year from 10% (year on year) in June 1995 to 7.9%. In 1995/96 underlying inflation remained in double digits (fuelled by rent, fuel utilities, transport and communications) until March, but has fallen steadily since. Food crop inflation remained low throughout most of 1995/96 (as it did in the previous year), and the year-on-year rate in June 1996 was -1.3%. Annual average inflation for fiscal 1995/96 was 7.4%. The government views its inflation record during the year as a remarkable achievement given the pressures to increase spending in an election year, and it believes that its prudent management of the budget and tight monetary policy were the most important contributory factors.

Foreign assets boost the Total domestic credit decreased from NUSh150.8bn in June 1995 to an esti- money supply mated NUSh139.8bn in June 1996. The reason for the decline was yet another rise in the government’s net savings with the banking system. Private-sector credit remained buoyant, growing by 18% during 1995/96. Money in

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Uganda 17

circulation (M1) increased by 9.6% between June 1995 and June 1996, but broad money (M3, including demand deposits and foreign exchange accounts) grew by 17.5%, from NUSh504.4bn to NUSh592.8bn. The largest contributor to the growth in the money supply was the increase in net foreign assets, which reached NUSh166.3bn in June 1996, compared with NUSh60.2bn a year earlier.

Agriculture and manufacturing

Cash crops raise farm Monetary agriculture remained a very dynamic sector of the economy during output— fiscal 1995/96. Within the sector, cash crops provided the greatest boost to production, growing by 15.8%, compared with 8% in 1994/95. Livestock production, which declined by 4.9% in 1994/95, recovered well and expanded by 10.2%. Subsistence (non-monetary) agriculture fared much worse, growing by only 0.3% in 1995/96, compared with 5% in 1994/95. Overall, agriculture continues to do remarkably well, with food production expanding steadily. The improved security and infrastructure in the south of the country, the main agricultural region, has clearly provided an incentive to farmers. Only twice in the last five years has monetary agricultural growth fallen below 5%, and those occasions can be explained by poor weather conditions. The rising incidence of AIDS does not yet appear to have had a significant impact on productivity in that sector, although it may account for the much weaker performance of the subsistence sector.

Coffee deliveries, exports and price realised Tonnage delivered and exported (12-month moving average for periods ending in months shown) and average price realised each month for exports 20 3.5 Price, US$/kg—right scale Exports, '000—left scale Deliveries, '000—left scale 15 2.5

10 1.5

Jan..Apr..Jul..Oct..Jan..Apr..Jul..Oct..Jan..Apr..Jul..Oct..Jan..Apr 1993 94 95 96 Source: Ministry of Finance and Development Planning, Background to the Budget.

—but the prospects for Despite falling prices and increases in the production of other crops, coffee coffee exports remain continues to dominate the cash crop sector. In 1995 some 156,273 tons were gloomy procured, compared with 198,311 tons in 1994. Exports in 1995 amounted to 168,859 tons (the difference with procurement being accounted for by the speculative holding and release of stocks) compared with 194,325 tons in 1994. The export crop fetched $384m in 1995, compared with $343m in 1994, but its value will be down sharply in 1996. Present indications suggest that world coffee prices will continue to fall in the short and medium term. The EIU’s projections for global exportable production in 1995/96 and 1996/97 have been trimmed in the light of current trends, but they still point to a substantial increase in supply compared with 1994/95. The good showing of exports during the 1995/96 year

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 18 Uganda

has been marked by some sales of stocks by producer countries, confirming the slow death of the export retention scheme introduced by the Association of Coffee Producing Countries (ACPC) in June 1995. We foresee very little impact, if any, from the ACPC’s new export programme, which merely aims to ensure stable (not higher) prices and so acknowledges its limitations. There are signs that the drawdown of consumer stocks (now down to one-third of their peak a few years ago) is ending, and that the market is moving into oversupply. Prices of robusta coffee (Uganda’s main export variety) are projected to fall by about 28.6% in 1996 and by a further 8.4% in 1997.

Manufacturing output Output from manufacturing has been accelerating for four consecutive years continues to recover well and the 18.1% growth claimed by the government in 1995/96 was the best performance since the National Resistance Movement (NRM) came to power in 1986. In March 1996 the index of industrial production stood at 373.1, compared with 309.1 a year earlier, representing an increase of 20.7%, but average production in the 12 months to March 1996 was actually 26.8% higher than in the previous 12 months. Details for subsectors show that the best performances in 1995 (calendar year) were in leather and footwear (69% growth), and bricks and cement (48%), with good growth also in drinks and tobacco (36%), chemicals, paints and soap (34%), timber and paper (28%), steel and steel products (25%), miscellaneous manufacturing (23%), and food processing (17%). Only textiles and clothing (down by 8%) moved against the general trend.

Foreign trade and payments

Falling prices hit coffee According to provisional government figures, total exports of goods and non- exports factor services in fiscal 1995/96 were worth $681m, compared with $649m in 1994/95, an increase of about 5%. However, merchandise exports fell by nearly 4%, and the overall increase was due to a sharp, 76% rise in services. The main reason for the fall in sales of merchandise was a $50m drop in coffee earnings in the fiscal year, to $393m. There was a 33% increase in the volume of coffee exports, but this was not large enough to offset the decline in prices obtained. Cotton exports did especially well, with revenue up by 267% to $12m; also fish exports were 76% up on the previous fiscal year, earning $30m despite marginally lower prices. The fish industry has seen heavy private-sector investment during the last few years. Little change was recorded in exports of tea, tobacco, hides and skins, but cereals and beans exports were sharply down, by 62% and 42%, respectively. Good rains in neighbouring countries, especially Kenya, and the reduction of relief supplies to Rwanda and Zaire probably explain this decline.

Oil and services push up Overall economic recovery also boosted imports, which rose by 13% in imports— 1995/96 to $1.54bn. Big increases were recorded in oil purchases and non- factor services (especially technical assistance), which grew by 37% and 29% respectively. Government imports were also 14% higher than in the previous year, while non-oil private imports were only up by 4%, after their 72% surge in the previous year, in the wake of the coffee boom.

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Uganda 19

—but transfers help to The net effect of these changes was a widening of the trade deficit by $143m to keep the payments $860m. However, current transfers rose by almost 30% to $799m, and these balance in the black brought the current-account deficit down from $164m to $114m. The main feature of the current transfers was the surge in net private transfers from $355m to $534m, with net official transfers remaining relatively unchanged at $265m. The government believes that the continuing strong growth of private transfers represents a vote of confidence from the international economic community. With the capital-account balance in credit by $221m, the overall balance-of-payments surplus in 1995/96 was $106m.

Balance of paymentsa ($ m) 1993/94 1994/95 1995/96b Exports of goods & services 333.1 649.2 681.4 Imports of goods & services –840.9 –1,366.7 –1,541.5 Net factor income –51.1 –63.4 –53.3 Net current transfers 492.1 616.7 799.4 Current-account balance –66.9 –164.1 –114.1 Net medium- and long-term loans 182.1 286.1 229.0 Debt relief 45.8 41.2 75.0 Net short-term borrowing –54.7 –21.8 –83.4 Capital-account balance 173.2 305.4 220.6 Overall balance 106.3 141.2 106.6

a Fiscal years starting July 1. b Provisional.

Source: Ministry of Finance and Development Planning, Background to the Budget.

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 20 Rwanda

Political structure: Rwanda

Official name: République Rwandaise

Form of state: unitary republic

Legal system: based on Belgian law, the June 1991 constitution and the Arusha accords of August 1993

National legislature: Assemblée nationale, with 70 members, appointed by the government in consultation with party leaders

Last elections: December 1988 (presidential and legislative)

Next elections: no date has yet been set

Head of state: president, Pasteur Bizimungu, appointed by the RPF on July 17, 1994

National government: self-appointed in July 1994, and consisting of ministers from the RPF, MDR, PSD, PL and PCD; last reshuffle August 1995

Main political parties: Rwandan Patriotic Front (RPF); Mouvement démocratique républicain (MDR); Rassemblement pour le retour des réfugiés et la démocratie au Rwanda (RDR); Coalition pour la défense de la république (CDR); Parti chrétien démocrate (PCD); Parti libéral (PL); Parti social démocrate (PSD)

President Pasteur Bizimungu (RPF) Prime minister Pierre-Célestin Rwigyema (MDR) Vice-president & minister of defence Paul Kagame (RPF) Vice-prime minister & minister of interior & community development Alexis Kanyarengwe (RPF)

Key ministers agriculture, livestock & forestry Augustine Iyamuremye (PSD) civil service Abdulkarim Habimana (RPF) commerce, industry & crafts Prosper Higiro (PL) environment & tourism Jean Nepomuscene Nayinzira (PCD) family & women’s affairs Aloyise Inyumba (RPF) finance Marc Rugenera (PSD) foreign affairs Anastase Gasana (MDR) health Joseph Kalemera (RPF) higher education, research & culture Joseph Nsengimana (PL) information Jean-Pierre Bizimana (MDR) justice Marthe Mukamurenzi (independent) labour & social affairs Pie Mugabo (PL) planning Jean-Berchmans Birara (independent) primary & secondary education Laurien Ngirabanzi (MDR) public works & energy Charles Ntakirutinka (PSD) rehabilitation Patrick Mazimpaka (RPF) transport & communications Charles Muligande (RPF) youth & sports Jacques Bihozagara (RPF)

Governor of the Banque nationale du Rwanda François Mutemberezi

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Rwanda 21

Economic structure: Rwanda

Latest available figures

Economic indicators 1991 1992 1993 1994 1995 GDP at market prices Rwfr bn 212.8 217.3 208.9 165.1 323.7 Real GDP growth % –5.9 –3.2a –10.0a –50.0b 25.0 Consumer price inflation % 19.6 9.5 12.4 n/a 22.0 Population m 7.17 7.36 7.55 6.80c n/a Exports fob $ m 95.6 68.5 67.5a n/a n/a Imports fob $ m 228.1 240.4 294.5a n/a n/a Current account $ m –34.1 –84.6 –111.5a n/a n/a Reserves excl gold $ m 110.1 78.7 39.0 32.0 125.8 Total external debt $ m 833 874 913 954 n/a External debt-service ratio % 17.3 20.1 18.7 12.5 n/a Green coffee productiond ’000 tons 34.2 38.8 29.2 1.8b 20.0b Exchange rate (av) Rwfr:$ 125.1 133.4 168.2 n/a n/a

June 30, 1996 Rwfr309.6:$1

Origins of gross domestic product 1993a % of total Components of gross domestic product 1993a % of total Agriculture 40.5 Private consumption 82.5 Industry 21.5 Public consumption 22.6 Services 38.0 Gross fixed capital formation 16.0 GDP at factor cost 100.0 Exports of goods & services 9.5 Imports of goods & services –30.7 GDP at market prices 100.0

Principal exports 1992 $ m Principal imports 1992 $ m Coffee 35 Capital goods 50 Tea 21 Fuel & energy 37 Cassiterite (tin ore) 3 Other intermediate goods 120

Main destinations of exports 1995e % of total Main origins of imports 1995e % of total Brazil 45.5 Belgium-Luxembourg 15.4 Belgium-Luxembourg 14.3 USA 12.9 Germany 7.8 Tanzania 12.3 Netherlands 7.8 Kenya 11.7 UK 1.9 France 4.6 a World Bank estimate. b Official estimate. c Includes refugee population. d Crop years (April-March) starting in calendar years. e Based on partners’ trade returns; subject to a wide margin of error.

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 22 Rwanda

Rwanda

Outlook

The government will The political wing of Burundi’s most powerful Hutu militia, the Conseil probably enforce the national pour la défense de la démocratie (CNDD), is looking out for signs that blockade the regional sanctions against Burundi’s new Tutsi-dominated government, which came into power in a coup in late July, are being enforced. The country it is most suspicious of is Rwanda, and it will probably accuse it of cheating. The Rwandan government will be able to ignore these accusations if they come from the CNDD alone. Now that the observer force of the Organisation of African Unity (OAU) is leaving Burundi, most aid agencies have been driven out of the northern regions, and as journalists cannot travel there, there may be no one else around to make such allegations. Thus, if the Rwandan government wanted to cheat, it could for a while. However, large numbers of Burundian Hutu refugees are a security hazard for Rwanda. The government’s desire to avoid their continued arrival is likely to outweigh the financial advantages of covertly breaking the blockade.

Few obstacles remain in Now that the Assemblée nationale (parliament) has accepted the revised geno- the way of genocide trials cide bill, the constitutional court is likely to accept it also, without too much delay. The president’s signature will then be a formality. The government would derive particular satisfaction in starting its trials before those conducted by the international tribunal, which begin on September 19. The international tribunal is beginning to look like it will have enough suspects on trial to make the process seem credible. Even so, most of the major organisers of the genocide are still at large, and have not been extradited or even arrested. Also, the killing of genocide survivors over the last few months will make the rest reluc- tant to travel to Arusha to testify.

If RPA massacres If Rwandan Patriotic Army (RPA) reprisal killings continue at a high level, the continue, aid may international community will be forced to respond. Having just made generous be delayed commitments in Geneva, the way is clear for donors to show their disapproval by slowing the disbursement of the pledged funds. The EU has made the most pledges, and would likely be the first donor to make such a move. However, the international community may be waiting for the situation in Burundi to become clearer, before antagonising one of the governments participating in the regional initiative.

The RPA may launch raids Rwanda’s poor relations with Zaire pose a growing threat to the region’s already into Zaire threadbare stability. Since the conflict in north-east Kivu is likely to continue, aided and abetted by the Zairean army, more refugees are likely to cross into

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Rwanda 23

Rwanda. The RPA could retaliate with crossborder raids, to which Zaire would feel bound to respond.

Aid should flow faster this Unless donors decide otherwise, aid should flow quicker into Rwanda follow- time ing this donor roundtable than after the last one. Structural capacity has improved along with GDP, which grew by 25% in 1995. GDP is officially predicted to grow by 15% in 1996, primarily because of improvements in agricultural production. The return of refugees, most of whom are peasants, has been the main reason for the increases in farming output.

Coffee production will Coffee production is still low, and is forecast at 21,000 tons for fiscal 1996/97. recover only slowly Stability over a two- or three-year period is required before output can start to approach pre-war levels, but continued international assistance for the sector will also be vital.

Review

The political scene

Rwanda joins the Rwanda is participating, with other countries in the region, in the economic initiative to isolate the blockade of Burundi. The government announced the decision on August 8. new Burundian regime— Although some outside observers expected ethnic affinities between the bulk of the Rwandan Patriotic Front (RPF), and the Burundian army-appointed head of state, Pierre Buyoya, to determine the policy in Kigali, other factors have proved more compelling. The main one is the prospect of tens of thousands more Burundian Hutu refugees arriving in the already volatile south-western regions of Rwanda. By the end of July 6,000 had already crossed the border. Most of the refugees who have arrived would rather have gone to Zaire or Tanzania, but the borders are now closed. Having just been driven from their ancestral homes by a Tutsi-dominated army, and having hosted Hutu- dominated militias in their home regions for at least two years, these refugees make the Rwandan government nervous. No proper sites have been designated yet by the government to accommodate those who have crossed the border.

—in a bid to stop more The Rwandan government appears to have calculated that regional sanctions refugees crossing the are the best way to force negotiations between the belligerents in Burundi, border easing their conflict, and thus halting the refugee flow. There remains a strong possibility, however, that the situation at border crossings will be more nu- anced than the policy announcement dictates. Many of the Rwandans who arrived in Burundi as refugees before 1994 trade commercial goods between the two countries, and these are often in high demand. Despite the war in Burundi, they have managed to ply their business until now, and will be loath to stop just because there has been a coup in Burundi. It is as yet unclear just how cooperative the Rwandan Patriotic Army (RPA) will be.

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 24 Rwanda

Rwanda and Burundi Allegations from the office of the UN High Commissioner for Refugees collude to force back (UNHCR) and other humanitarian bodies, as well as from Burundian militias, Rwandan refugees of cooperation between the Burundian and Rwandan armies to oust over 15,000 Rwandan refugees from northern Burundi, and drive them into Rwanda, in the week preceding the coup of July 25, prompted outraged denial from Kigali. Many of the refugees are from the Kibeho camp that was destroyed by the government in April 1995 (2nd quarter 1995, page 21). The RPF is particularly suspicious of people from this camp, and hundreds of arrests for alleged involvement in the 1994 genocide are likely. By the end of July, 60 had been detained, according to the UN Human Rights Field Operation (HRFOR). All of the rest have returned to their home communes in Butare.

The evidence suggests that Rwandan troops did cross the border to assist in the removal of the refugees. Joint border patrols by the two armies were proposed by their governments in mid-1995 (3rd quarter 1995, page 38), but this brutal uprooting was their most ambitious project to date. The forced repatriation halted after the coup. Military cooperation is supposed to have ended, but no independent monitoring of this has been possible. However, if the Rwandan government is serious in its support of the diplomatic initiatives of the former Tanzanian president, Julius Nyerere, it will have ceased cooperation with the Burundian authorities for now.

Militia attacks provoke Rwandan (mostly Hutu) militias operating from Zaire and Burundi, and prob- mass reprisals ably from inside Rwanda itself, have struck beyond the border areas and into the central regions and Kigali. However, the bulk of their attacks are still in the border regions. They have targeted genocide survivors, and have killed at least 110 people this year. Most have been killed individually, but 19 were mas- sacred in the Rwamatamo commune in Kibuye on June 18, and 19 more in Gisenyi on June 28. Militias have also killed local officials, and particularly baHutu, whom they accuse of collaborating with the RPF-dominated government. Lists of future victims are circulating, and genocide survivors endure frequent anonymous threats. Militias have also attempted to liberate prisoners, sometimes successfully. A previously unknown organisation called Peuple en armes pour la libération du Rwanda (Palir) claimed on June 26 to be waging war against the RPA from Cyangugu, in south-western Rwanda, and has put a price on the head of all US citizens inside the country. The government has denied that any militias are based in Rwanda, but its ministers are increasingly frustrated by the obvious collaboration between large numbers of Rwandan civilians and the militias, particularly in border regions (2nd quarter 1996, page 21). The RPA is frustrated too, and angry. In communes where the militias have struck, and particularly if genocide survivors have been targeted, soldiers have enacted vicious reprisals against entire villages, often indiscriminately. At least 170 people were killed in reprisal attacks by the RPA in Gisenyi and Ruhengeri between July 5 and July 15. One operation was in retaliation for the militia attack in Gisenyi on June 28. On May 19 some 46 prisoners were killed in Bugarama (Cyangugu). The government claimed they were killed in the cross- fire when a militia attempted to free them, but the evidence suggests they were killed in cold blood by the RPA.

EIU Country Report 3rd quarter 1996 © The Economist Intelligence Unit Limited 1996 Rwanda 25

Genocide survivors are Nonetheless, genocide survivors continue to be murdered, and particularly angry with the those who have testified against the perpetrators. They are angry at their inse- government— curity—which adds to their already intolerable burdens of personal loss—and have criticised the government for letting, as they put it, the genocide continue. It is not a criticism that the government can brush away lightly. The RPF’s invasion into Rwanda in 1990 provided the crucial spur that transformed the previous regime’s dreams of genocide into real plans. These were legitimised by the old government as the best way to prevent the RPF taking power, which, they assured Rwandans, would lead to a genocide of baHutu. The RPF stopped that genocide in July 1994, and has used this achievement since as its moral justification for power. Yet it is returning Rwandans, and particularly those from Uganda, who have been the prime beneficiaries of the new political order. The government, and the RPF in particular, needs to be seen to be delivering to genocide survivors as well.

—but legislation has Although its arrest and detention of over 80,000 people for genocide does not finally been agreed impress genocide survivors threatened by the thousands it has not arrested, the large number alarms the international community. For them, the detentions have long had a macabre aspect, where every time one imagines absolute capacity has been reached, several thousand more suspects are squeezed into the prisons. A justice system of sorts is now in place for trials, but until now there has been no genocide law for it to operate by. Donor countries, annoyed by Rwanda’s rejection of their offers of legal personnel, have demanded that the government at least put its legislation in order. The justice ministry proposed different levels of genocide guilt, essentially from instigator to accomplice (2nd quarter 1996, page 25), and also made provision for plea-bargaining. This would have allowed those guilty of genocide to lessen their sentence by implicating others. However, mindful of the need for the RPF to be seen to deliver to genocide survivors, its delegates in the Assemblée nationale (parliament) led its rejection on the bill on July 7, saying that it did not give this constituency justice. The government hastily rewrote some sections of the bill, and it was passed on August 9. The bill must now be ratified by the constitutional court, and signed by the president.

International tribunal Trials will then be able to begin, and the Rwandan government may yet beat trials are delayed again the international tribunal, based in Arusha (Tanzania) to it. The tribunal’s first trial is now fixed for September 19. Three people have been charged with involvement in the genocide, and have all pleaded not guilty. Six more have been indicted. Tribunal officials continue to bemoan their lack of funding. The continued killing of genocide survivors is a problem for the tribunal, as it needs to persuade survivors to travel to Arusha to testify, drawing attention to themselves in the process. The tribunal is unable to offer credible witness protection, and will therefore struggle to attract them. Several countries have now agreed to extradite suspects already held by them in detention, to Arusha. Cameroon is to extradite Colonel Théoneste Bagosora, now that Belgium has dropped its extradition request. He is the most senior suspect apprehended so far.

The RPA is killing Persuasive evidence was presented—compiled by Human Rights Watch and the government officials— International Federation of Human Rights Leagues (FIDH)—in late July that

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suggests that as well as killing civilians in reprisal massacres, the RPA is also killing judicial officers and local government officials. It cites the cases of Vincent Munyandamutsa, the burgomaster of Rushashi commune, north-west of Kigali, and the assistant prosecutor of Rushashi, Floribert Habinshuti. Both were murdered on July 7. The government claimed that militias killed them, but the human rights organisations’ research suggests otherwise. The likely reason for these murders is that the RPA, probably at local level, decided that the two were too sympathetic towards those accused of genocide. Some 34 local officials have been killed in Rwanda this year, although most by militias. The price the RPA and the Rwandan government pays for the murders, and the RPA reprisals, is that the RPA is viewed as an illegitimate army of occupation by growing sections of the population. A telling example, for a nation of soccer enthusiasts, was the defection of five members of the national squad when in Europe in June. Their manager told reporters that more would have defected if precautions had not been taken.

—but donors find reason In normal circumstances, the government would also pay the price of inter- to turn a blind eye national condemnation, and the withdrawal of financial aid. That, after all, is what has happened in Burundi. There has been no international condemnation in this case though, or even much expression of concern. At the Geneva conference on June 20 donors were generally upbeat about Rwanda’s prospects and endorsing growth strategy (see The economy). Financial support worth $627m was pledged for 1996-98, and criticism was reserved for the justice system alone. The US government is behaving particularly positively towards the Rwandan authorities. It pledged $40m at the conference, but it is unclear whether this includes its military assistance. Human Rights Watch confirmed the allegations of US military support made by the Bishop of Bukavu on this matter (2nd quarter 1996, page 22) in its report of July 26, stating that nine US “special forces” soldiers were working with the RPA. It is their presence that has prompted the Palir threat to US citizens (see above).

One reason why the USA and other donors have so far desisted from serious condemnation of RPA killings is their pressing desire to reduce their financial commitments to the region. The international community had by July pledged around $382m to the various UN agencies operating there for 1996. The USA alone had earmarked $137.6m, representing 36% of the total. Spending by the agencies has already been cut, as the $382m is a hefty $286m short of the amount the agencies have appealed for, and conditions in the camps, in particular, has deteriorated accordingly. While the World Food Programme’s food aid was 91% funded by July, the UNHCR had only received $115m, 40% of its requested $288m for the year. It now wants camps in Zaire moved further inland, so that the refugees can at least grow their own food.

The FRD begins its Forces de résistance pour la démocratie (FRD) is the new name for the party political struggle launched by former ministers Seth Sendashonga and Faustin Twagiramungu earlier this year. It has been busy trying to convince the world of RPA atrocities, and so hoping to attract a Rwandan following. Mr Twagirumungu’s claims that nearly 600,000 people have been killed by the RPA are far-fetched, but some of Mr Sendashonga’s revelations about the inner workings of the new government

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have been more convincing. Particularly credible is his claim that the RPA controls much of the mining industry (see The economy).

Kenya closes the Rwandan The attempted assassination of Mr Sendashonga in Nairobi in February led to a embassy— diplomatic rift between Kenya and Rwanda (2nd quarter 1996, page 27). In mid-June, angered by the refusal of the Rwandan government to lift the diplomatic immunity of Francis Mugabo, whom the Kenyan police suspect of having carried out the attempt, the Kenyan government closed the Rwandan embassy. This hurts Rwanda more than it hurts Kenya. It has made life very difficult for Rwandan import-export dealers who ply the route from Mombasa to Rwanda, and are vital to Rwanda’s economy. The Rwandan government has thus, unusually, desisted from proclaiming righteous indignation, or even re- taliating, but has instead expressed the hope that relations can be restored as quickly as possible.

—and relations with Zaire The Kenyan government may soon be satisfied that it has taught its Rwandan reach a new low counterpart a lesson, and relent. Repairing Rwanda’s relations with Zaire will not be so simple. The long-lasting conflict between Banyarwanda and Hunde people in north-east Kivu has escalated badly since the arrival of Rwandan refugees in 1994. Among the victims of the conflict are Tutsi Banyarwanda. Over 25,000 of them have fled to Rwanda as refugees this year. The Rwandan government alleges that genocide is once again being perpetrated on baTutsi, and has demanded the Zairean government put a stop to it. It has also affirmed that the refugees are Zairean, not Rwandan. History supports this, as they lived in the area before Zaire existed as a state, but Zairean nationality law does not. Also, the Zairean president, Mobutu Sese Seko, judges Hutu people to be more loyal than Hunde, which will be important for him if elections ever take place. The Zairean government has called for an international inquiry on the nationality question, and has repeated its demands that the Rwandan government improve conditions in the country sufficiently for the 1994 refugees to want to return. On July 7 nine Central African countries, including Zaire, signed a pact of non-aggression, but Rwanda refused its signature, despite pressure from the Organisation of African Unity (OAU) and UN Security Council. It may yet sign, but has sent out a signal that it is prepared to use force against Zaire if its demands are not met. Rwanda has the more formidable army of the two. Talks between a Zairean delegation led by the foreign minister and the Rwandan government on July 29 yielded nothing of substance. For the moment, the region’s attempts at solidarity over Burundi are containing the crisis in relations, but they cannot be relied upon for long.

Meanwhile, the flow of Rwandan refugees from Zaire and Tanzania has slowed considerably. Since April it has been little over 2,000 per month. An estimated 1.7 million refugees remain, but plans to move them further from Rwanda’s borders are still just plans.

The economy

Donors express optimism The mood at the donor conference on Rwanda held in Geneva on June 20 was and pledge liberally— more upbeat than many had expected. The Rwandan government frequently

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antagonised donor states and organisations the last conference in January 1995, and the recent increase in killings by the Rwandan Patriotic Army (RPA) provided the international community with reasons to slow aid delivery, if they were looking for them. But instead donors endorsed the government’s growth strategy, drawn up with the assistance of the World Bank, and pledged $627m for 1996-98. A follow-up conference, this time in Kigali, is scheduled for January 1998. The strategy requires the international community to shift its orientation away from humanitarian and emergency assistance, and towards longer-term developmental projects. Donors were gratified to hear that the government considers the return of refugees and the rebuilding of the justice system as essential, if conditions conducive to development and growth are to be generated within the country.

—but short of the The Rwandan government had asked for $836m. Over half of that amount was Rwandan request— to be for public investment, around $200m for balance-of-payments support, $65m for the rehabilitation of the industrial sector, and the balance for social spending. Its plan proposes the privatisation of all parastatals, despite strong opposition to this from the Assemblée nationale (parliament). It also stresses the need for a reduction in the inflation rate. Both are policy objectives the World Bank and IMF particularly wanted to hear. The annual average inflation rate was at around 22% in 1995, according to the Ministry of Finance. Its overoptimistic wish is that inflation will come down to an average 10% in 1996 and 5% in 1997-98.

The US representatives at the conference went further than any others present to endorse the Rwandan government’s perception of events, by taking up its suggestion that money currently spent on refugees be redirected to their home communes instead. This was noted by the others, but not pursued. The USA pledged $40m. The EU’s pledge of $228m was the largest overall, with the Netherlands’ $100m the most sizeable bilateral one. Belgium put forward $33m and the World Bank $50m. The UK, despite its closer ties with Rwanda, pledged only £5m ($7.7m), outside of its EU contributions.

—and the share of new However, it is unclear how much of the assistance pledged this time round is money is unclear new money. Almost $600m was promised by donors in January 1995, but only about $400m has actually been disbursed, leaving a $200m shortfall. Of the $627m promised this time, only $340m is to be given directly to the Rwandan government, mostly in the form of balance-of-payments support. It is likely that some of this is simply money carried over from undisbursed pledges. It is difficult, however, for the UN Development Programme (UNDP), which is coordinating much of the assistance, to work out how much exactly is old money, as donors use frustratingly different accounting methods when dis- bursing aid.

Rwandan GDP grew 25% The conference, and a seminar held in Kigali in May on privatisation, provided in 1995 some rare and useful data on the state of the Rwandan economy. The Ministry of Finance estimates that 1995 saw real GDP growth of 25%, on the back of a 50% contraction in 1994, bringing the overall value of GDP to Rwfr328bn ($1.1bn; the IMF quotes Rwfr324bn). Feasibly, it predicts 15% growth in 1996, mainly because of the recovery and rehabilitation of the agricultural sector

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(see below). Nonetheless, the World Bank now rates Rwanda as the poorest country in the world, as it calculated its GDP per head in 1995 at a measly $80 per year, compared with $210 in the early 1990s. Total debt stands at around $1bn, or 91% of GDP. The ministry reported that government receipts totalled Rwfr23bn in 1995, or 7% of GDP, while its spending was Rwfr39bn or 12% of GDP, three-quarters of which was consumed by salary payments. This leaves a fiscal deficit of Rwfr16bn, Rwfr5bn higher than reported earlier this year (2nd quarter 1996, page 27). Some 54 out of Rwanda’s 88 industrial enterprises are now working again, and manufacturing output has reached 54% of its 1990 levels. Furthermore, the establishment and functioning of several new banks has breathed new life into the services sector, which is estimated to have picked up over 40% in 1996, from a desperately low level in 1995.

Coffee harvest projections However, government estimates for the 1996/97 coffee crop (April-March) are pruned— have been revised downwards. In November 1995 production was forecast at 25,000 tons, but the more realistic figure of 21,000 tons is now quoted. How- ever, it may yet be higher. Given the insecurity in neighbouring Burundi, coffee will be smuggled out of the country, and Rwanda is the prime benefici- ary of this process. Overall, coffee production is well down on the estimated 40,000 tons harvested annually before the genocide.

—while food production is A mission by the UN Food and Agriculture Organisation (FAO) and the World predicted to rise by 15% Food Programme (WFP) evaluated Rwandan subsistence agriculture in mid- June. It found that 7% more land had been planted this season than the previous one, and predicted a 15% increase in food production this year, reflecting the farming activities of returning refugees. It estimates that cereal and pulse production in the second harvest will reach 181,000 tons, leaving a 64,000-ton import requirement, 44,000 tons of which will be requested as food aid. The food aid will be distributed to just under 600,000 people the WFP considers to be particularly vulnerable.

The WFP reports that it has made extensive use of a food-for-work system, in an attempt to reduce the dependency usually associated with substantial food aid for prolonged periods. Over 65% of its food aid is now distributed in this way, leading to the construction of around 6,000 houses, land and road rehabilitation, and some irrigation and drainage projects. Nonetheless, some vulnerable people whose houses are due to be erected have told journalists that would-be builders often keep the money without doing the work.

Mr Sendashonga alleges The former interior minister, Seth Sendashonga, has claimed that Rwanda’s RPA control of mining directorate of military intelligence, headed by Colonel Jean Karenzi Karake, is running Rwanda’s small mining sector. He alleges that it buys tin ore from producers in Bugarama (Cyangugu), and gold from prospectors in Myove (Byumba). He further claims that the directorate is also attempting to control the small sapphire mining industry in the Nyungwe forest, Cyangugu, and exports the gems to Thailand. The money apparently goes into secret defence ministry accounts and is not counted as government revenue. These claims, unlike some of the wilder ones emanating from his new party (see The political scene), are mostly credible. Bugarama tin mining is relatively organised, with a parastatal already in place, and establishing control over marketing would not

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have been hard. However, the gold mining in Byumba is anarchic and evolv- ing, like gold rushes everywhere, and it would have been difficult for the RPA to establish the control it allegedly has over buying. Even now, if it does not match prices offered by Ugandan traders, it will lose market share. The chaos at Myove creates an ideal situation for revenue to be siphoned off to secret accounts. However, if Mr Sendashonga knew about them at the Ministry of the Interior, the question remains how secret they really were and are. The Nyungwe forest is still thought to have both Burundian and Rwandan militias lurking within it, who have a healthy interest in anything valuable, and thus RPA control over the sapphire trade may not be total.

The EU presses for an The Rwandan minister of the interior and community development, Alexis abolition of import tariffs Kanyarengwe, now also the vice-prime minister, and the minister of planning, Jean-Berchmans Birara, met the EU aid commissioner, Emma Bonino, in Brussels in June. High on the agenda was the issue of tariffs on the import of aid goods, which the government imposed in December 1995. The EU wants them removed, but no agreement was reached during the meeting.

Aid news • The Rwandan president, Pasteur Bizimungu, visited China and Japan in early June. China promised $5m in aid, most of which will be in the form of military hardware. Chinese military officials had been to Rwanda in March to discuss this matter. Japan pledged $3m that had been destined for Rwanda’s previous regime.

• The International Fund for Agricultural Development (IFAD) is lending Rwanda $5.4m to help finance private enterprise in rural areas. Some 12,000 people, 75% of whom will be women, are expected to benefit.

• The FAO agreed in August to spend $330,000 to support the Ministry of Agriculture’s extension programme, and $170,000 to relaunch rural radio programmes.

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Political structure: Burundi

Official name: République du Burundi

Form of state: unitary republic

Legal system: based on Belgian law and the new constitution approved by referendum in March 1992

National legislature: Assemblée nationale, with 81 members elected by universal suffrage on June 29, 1993. Suspended since July 25, 1996

Last elections: June 1993 (presidential and legislative)

Next election: date not yet set

Head of state: president, Pierre Buyoya

National government: appointed by Mr Buyoya on August 2, 1996

Main political parties: Front pour la démocratie au Burundi (Frodebu); Union pour le progrès national (Uprona, formerly the sole legal party); Parti du peuple (PP); Rassemblement pour la démocratie et le développement économique et social (Raddes); Rassemblement du peuple burundais (RPB); Parti pour le redressement national (Parena). All parties have been suspended in the aftermath of the coup on July 25, 1996

Prime minister Pascal Firmin Ndimira

Key ministers agriculture Damas Ntiranyibagira basic education Nicéphore Ndimurukundo civil service Monique Ndakoze commerce, industry & tourism Frédéric Nzabampema communal development Pierre Bambasi communications Pierre-Claver Ndayicariye defence Major Firmin Sinzoyiheba development planning & reconstruction Evarisite Minani energy & mines Idi Buhanga Procede finance Gérard Nibigira foreign affairs & cooperation Luc Rukingama health Juma Kariburyo human rights & women’s affairs Christine Ruhaza institutional reforms Eugène Nindorera interior & public security Epitace Bayaga-Nakandi justice Gervais Rubashamuheto labour Barnabé Muteragiranwa public works Pascal Nkurunziza resettlement of refugees Anne Bariyuntura secondary & higher education Samuel Bigawa territorial management & environment Bernard Barandereka transport Leonce Nsinzinkayo youth, sport & culture Bonaventure Gasutwa

Economic structure: Burundi

Latest available figures

Economic indicators 1991 1992 1993 1994 1995 GDP at market prices Bufr bn 222.4 248.4 250.7 269.6 n/a Real GDP growth % 5.0 2.3 –5.5 –18.0 –3.0 Consumer price inflationa % n/a 1.8 9.7 14.8 19.3b Population m 5.62 5.78 5.77 5.87 5.98 Exports fobc $ m 90.7 79.3 75.0 125.4 n/a Imports fobc $ m 195.9 181.8 172.8 174.5 n/a Current account $ m –35.5 –57.3 –28.1 32.7 n/a Reserves excl gold $ m 141.4 174.2 163.0 204.7 209.5 Total external debt $ m 964 1,022 1,061 1,126 n/a External debt-service ratio % 31.0 35.9 36.0 25.2 n/a Green coffee productiond ’000 tons 41.9 46.1 28.6 50.9 31.7e Exchange rate (av) Bfr:$ 181.5 208.3 242.8 252.7 249.8

August 16, 1996 Bufr318.4:$1

Origins of gross domestic product 1993 % of total Components of gross domestic product 1994 % of total Agriculture 51.9 Private consumption 87.6 Industry 21.1 Public consumption 15.6 Services 27.0 Gross domestic investment 11.5 GDP at factor cost 100.0 Exports of goods & services 11.6 Imports of goods & services –26.3 GDP at market prices 100.0

Principal exports 1995 $ m Principal imports 1995 $ m Coffee 80.8 Mechanical goods 17.1 Tea 9.6 Malt 12.7 Manufactures 7.0 Electrical appliances 12.5

Main destinations of exports 1995f % of total Main origins of imports 1995 % of total Belgium-Luxembourg 25.2 Belgium-Luxembourg 15.4 Germany 21.5 France 10.1 USA 7.9 Germany 8.1 Rwanda 4.1 Japan 5.7 a Consumer price index for Bujumbura only; index changed in 1991. b Provisional. c Balance-of-payments basis. d Crop years (April-March) starting in calendar years. e April-January. f Based on partners’ trade returns; subject to a wide margin of error.

Burundi

Outlook

The UN Security Council The new Burundian government is working hard to ensure its survival, but its has some decisions to success remains in doubt. Helpfully for the president, Major Pierre Buyoya, and make— the Burundian army, the UN Security Council is still undecided about its stance. However, one of the high probabilities in this fluid phase that Burundian politics has now entered is that the Council cannot stay undecided for long.

—having backed the OAU The Organisation of African Unity (OAU) and its special mediator, Julius peace initiative up until Nyerere, have crafted one of the most credible regional peace initiatives Africa now has yet seen, and the Security Council has loudly backed it all the way. From at least May the regional initiative envisaged the provision of military assistance to Burundi. However, it now opted for economic sanctions against Burundi instead, knowing that the dispatch of troops would probably be its undoing, as they would most likely be drawn into the conflict or at least be accused to be taking sides, but it did not rule out military action should the sanctions fail. The overall thrust of the peace initiative, which is to induce the Burundian army to negotiate with the militias in a regional context, would bring Burundi and the region a step closer to ending the terrible carnage; and the Security Council acknowledges this.

Sanctions replace the idea When the former Burundian prime minister, Antoine Nduwayo, was arm- of armed intervention for twisted into joining the then president, Sylvestre Ntibantunganya, in request- now— ing the military assistance of other countries in the region on June 25, the Security Council supported that, too. It was this request for regional military assistance that led to the collapse of the national convention government. Mr Buyoya’s subsequent coup was quickly denounced by the Security Council and the OAU. The OAU then decided to impose sanctions on the regime until constitutional government returns, but the Security Council has not decided whether to support this. However, sanctions mean that the task of assembling an intervention force is avoided for now. This should come as a relief to the Security Council and should thus provide a strong reason for UN support of the OAU stance.

—and will have some Sanctions will bite regardless of whether they are supported by the Security immediate effect— Council. Burundi is a landlocked country and, although partially self-sufficient in food, is dependent on imports for nearly everything else. Severe petrol rationing has already been introduced. The army needs oil to fight the war and stay in power. However, it has secret stocks, priority over everyone else in the country, and good parallel economy contacts all over the region to help it through. If these advantages look like being enough for the government and

army to survive the sanctions, regional heads of state will squabble over which country is to blame for the leakages. Rwanda would be the main suspect, but would protest its innocence. It might then be telling the truth (see Rwanda).

—although getting the The Security Council’s desire that the warring parties negotiate is on record. main parties to talk will Mr Buyoya has signalled his willingness to talk to the other parties to the be difficult conflict, including the main militia group fighting the Burundian army, the Forces pour la défense de la démocratie (FDD), and its political wing, the Conseil national pour la défense de la démocratie (CNDD) if they stop fighting. However, given the way the army reacted to a previous such proposal by Mr Ntibantunganya, Mr Buyoya is unlikely to be in a position to act on it. For its part, the CNDD had indicated that it may consider talking to the new government if it was established that Mr Buyoya was not involved in the 1993 coup attempt. However, it appears to have backtracked from this position, and is adamant that it will not negotiate. Although the UN released the findings of its inquiry into the coup attempt and Mr Buyoya dismissed three senior officers implicated in the events, little is expected to change. The dismissals should be interpreted primarily as a measure designed to appease the international community. The three officers have been replaced by other Tutsis, probably uphold- ing the hardline attitude of the army and leaving Mr Buyoya with little room for manoeuvre. The CNDD leadership will not be satisfied with this token acknow- ledgement of army involvement in the events surrounding the coup attempt.

The government is fast Even ingenious sanctions-busting cannot prevent Burundi’s impending bank- running out of money ruptcy. Reserves are falling by $10m per month, and will probably soon be down to $40m. Almost all non-humanitarian aid to Burundi has been frozen, so the Gross domestic product % change, year on year new government will be ill-inclined to service external debt. This will release

5 funds to pay selected civil servants, and the army in particular. Yet if Burundi is prevented from selling appreciable amounts of coffee this year, the government

0 still will not be able to pay the army. This does not guarantee its fall from power, as the army can increase looting levels accordingly, but it is not what Mr Buyoya

-5 envisages for his second presidency. He would rather stop the war, and then see how the region and the world treats him. To make acceptance of him easier for -10 the international community, he will press ahead with plans to relaunch the Burundi “national debate” and return to democracy. He hopes to get it right this time. In Africa -15 the meantime, the president of the Hutu-dominated Front pour la démocratie au Burundi (Frodebu), Jean Minani, may succeed in maintaining his party’s -20 1990 91 92 93 94 95 boycott of new institutions, thus denying the new government any of the

Sources: EIU; IMF, World Economic Outlook. legitimacy its 1993 electoral victory still gives the party.

Aid convoys will be Until at least a ceasefire is declared, the war will rage at current levels, and may attacked again well intensify. The economy and the state’s revenue collection will collapse still further. Thousands more innocent civilians will lose their lives. Aid agencies are seeking to attend to survivors, both in and outside the country. Those still working inside Burundi will be subject to attacks. Both sides to the conflict believe that aid deliveries prolong the resistance of their opponents, and are thus legitimate targets. Oil and vehicle supplies of the agencies will become increasingly desirable as sanctions continue. It remains possible that they will be forced to withdraw completely.

Review

The political scene

Pierre Buyoya seizes Major Pierre Buyoya came to power for the second time on July 25 in a blood- power— less coup. He immediately suspended all political parties, closed the Assemblée nationale (parliament), and sacked the government, thus ending the brief and troubled attempt at democracy that he had launched in 1991.

Mr Buyoya’s first coup in 1987 prompted little condemnation and plenty of relief. Jean-Baptiste Bagaza, his cousin whom he replaced as president, was detested by regional heads of state, Western governments, the Roman Catholic and Anglican churches, increasing numbers of baTutsi, and most baHutu. The man he ousted this time, Sylvestre Ntibantunganya, who has been living in the US embassy in Bujumbura since July 23, saying nothing and reportedly watch- ing videos, had few friends left either. Most people in his own party, the Hutu-dominated Front pour la démocratie au Burundi (Frodebu), had abandoned him. Many have opted for the armed struggle led by the former interior minister, Léonard Nyangoma, and his Forces pour la défense de la démocratie (FDD). Others, particularly the deputies in the Assemblée nationale, looked for leadership instead from the president of the party, Jean Minani. Although this latter grouping condemned the FDD, and formally supported the convention of government through which the president shared power with the prime minister, and although the assembly became an increasingly irrelevant side show, they distanced themselves from Mr Ntibantunganya’s ever more embar- rassing concessions to the Tutsi-dominated Union pour le progrès national (Uprona) and army. To the latter, in turn, Mr Ntibantunganya was the enemy within. They perceive his concessions to them as merely a disguise for a secret support for the FDD to undermine them, in order to undertake the genocide of Burundian baTutsi. Western governments as well as regional heads of state, fearful of “another Rwanda”, privately long despaired of his vacillations. Even those who have strongly denounced the recent coup have been muted in their calls to have him return as head of state.

—in a “creeping coup” Behind the question of Mr Ntibantunganya’s personal strengths and weaknesses lurks a process that has been well characterised as a creeping coup. The coup attempt of October 1993 killed the then president, Melchior Ndadaye, and most of Frodebu’s top politicians. This fundamentally weakened the party’s grip on power. The convention of government, signed in September 1994, just before Mr Ntibantunganya became president, undermined the party’s position still further. The convention took precedence over the Assemblée nationale, which was the only remaining democratically elected institution in the country, and drastically reduced its powers. The prime minister’s position was strengthened, and a newly created Conseil national de sécurité (CNS)—composed of the president, key ministers from both sides of the conflict, and the nominally independent justice and defence ministers— was given supreme power. Between then and July 1996, military governors replaced Frodebu ones in five provinces. Several others have been assassinated,

as have 15 Frodebu members of the Assemblée nationale. Hundreds of Frodebu local officials have been arrested or killed.

The army learned important lessons from the failed coup of 1993. The first was that it cannot remove a popular and elected president and get away with it, nationally or internationally. Second, because it believes that Frodebu local officials organised the killings of baTutsi that followed the assassination of Mr Ndadaye, it concluded that they must be neutralised before any new attempt was made. On July 25, 1996, the army toppled an unpopular, unelected president, aware that Frodebu was unable, even if it so desired, to coordinate genocide in the rural areas. The coup that begun in October 1993 has crept to its conclusion.

African states impose Nonetheless, Mr Buyoya is finding his takeover much harder work than in sanctions— 1987. This time, coordinated by the shrewd Julius Nyerere, Tanzania’s former president who has led regional peace efforts since March, the entire region and the Organisation of African Unity (OAU) have condemned his coup and have instituted sanctions against his regime until constitutional rule is returned. Tanzania was the first to move, immediately after the coup, and Zaire the last, on August 9, but now every one of Burundi’s borders is closed. Being landlocked, Burundi is particularly vulnerable to such sanctions. As it has virtually no manufacturing industry and few stocks, it cannot support and feed itself much longer. Already salt has run out, and there is petrol rationing.

Aid agencies have reacted with alarm to the sanctions, as they fear that they cannot feed and nurse those most affected by the violence in Burundi. Tanzania agreed to allow aid convoys through on August 12, and other countries in the region agreed also to exempt the emergency food aid for Rwandan refugees in Burundi from the sanctions. However, providing aid is dangerous in Burundi. The aid agencies have been attacked many times this year already. On June 4 three expatriate Red Cross workers in a clearly marked vehicle were killed in an ambush in Cibitoke, northern Burundi, prompting most agencies to suspend work for a week, and some to pull out altogether.

—which force concessions The sanctions appear to be having some effect on the new regime. Mr Buyoya from the new regime announced that his government would be in place for a transitional period of three years, and that during this time he would prepare the grounds for a return to constitutional rule and involve all political groups in the national debate. Mr Buyoya even said that he was prepared to negotiate with Mr Nyangoma if the FDD stops fighting. This was Mr Ntibantunganya’s negotiating stance, but was vehemently denounced by every opposition party (2nd quarter 1996, pages 34-35). It was also strongly opposed by the army. Its senior commanders and the defence minister, Firmin Sinzoyiheba, have often said that there should be no talking to those who commit genocide.

Mr Sinzoyiheba gave several pointed warnings to Burundi’s government from early June until the coup about its weaknesses and inadequacies. He has retained the defence portfolio, even though Mr Buyoya’s instinct must have been to take it for himself, and is certainly a key figure behind the coup. Unless there is disagreement on Mr Buyoya’s policy of negotiation with the FDD’s political wing, the Conseil national pour la défense de la démocratie (CNDD), represents

a major concession by the army. The CNDD initially agreed to talk to Mr Buyoya provided that he is not shown to be implicated in the coup attempt of 1993 that resulted in the assassination of Mr Ndadaye. However, later Mr Nyangoma, also the leader of the CNDD, said that he would not participate in an open debate with the regime.

The UN makes public its The UN Security Council has taken long to decide on the publication of its inquiry into the 1993 inquiry into the 1993 events and it still has not made up its mind on whether to events— support the regional sanctions or not. Persuading the UN to instigate an inquiry into the circumstances of the 1993 coup attempt and subsequent massacres had been one of Frodebu’s very few achievements after Mr Ndadaye’s death. The point of the international inquiry for Burundian politics is to provide an outside and reasonably neutral ruling on this issue, and Frodebu’s involvement in the widespread killings of baTutsi that followed Mr Ndadaye’s death. Investigators arrived in early 1996, and conducted inquiries in a very low key way. They wrote their report in June. It was presented to the Security Council on time, but publication was delayed probably for fear of triggering further instability. The refusal to publish prompted all kinds of rumours about who the report implicates in the coup attempt. The contents of the report were made public in mid-August. The report implicates senior army staff in the coup attempt and assassination of Mr Ndadaye, and mentions specifically the army chief-of-staff, Colonel Jean Bikomagu, but asserts that there was insufficient evidence to bring any person to trial. The UN document went on to accuse Frodebu politicians of being involved in the organisation of the massacres of Tutsi civilians shortly after the coup attempt. In a clear attempt to please the international community, Mr Buyoya moved swiftly to dismiss Mr Bikomagu as well as the head of the gendarmerie, Colonel Pascal Simbanduko, and the head of the military at the presidential palace, Colonel Gedeon Fyiroko.

—but is hesitant to The Security Council has not taken a stance, however, with regard to the support the sanctions— sanctions. This is despite the fact that it, and its member states, rarely lost an opportunity before the coup to support Mr Nyerere’s work. There are, however, obstacles to its members’ agreement on this issue. Most important, the French and US governments differ in their stances on Burundi. The US administration has taken a strong interest in the country this year. Top-level envoys have visited regularly, and the US administration recently suspended its aid package in an alleged bid to strengthen “moderates” in the country (2nd quarter 1996, page 33). France, however, scaled up its military cooperation and called for an increase in aid. The French government abandoned this policy in late May, withdrawing its military advisers and halting aid. As talk of an international intervention force intensified in June and July, it was visibly irritated by US attempts to support the force without committing any troops of its own, while at the same time calling for France to lead the initiative, which would mean the deployment of French troops. It ruled out their deployment.

—as it thinks Mr Buyoya However, unity may yet emerge. Although hosting Mr Ntibantunganya in its can control the army embassy, the US government appears to share an emerging Western view that Mr Buyoya may be worth supporting. This is partly because he seems able to speak for the army and to persuade it to support his political initiatives.

Mr Ntibantunganya was never able do this. Mr Buyoya is also seen as preferable to Mr Bagaza. The latter has a large and militant following among baTutsi, particularly young ones, and his Parti pour le redressement national (Parena) consistently denounced the former government as illegitimate. Rumours of his plans to seize power once more have circulated in Bujumbura since his return in 1993. These are probably the reasons why regional sanctions have not yet been supported by the international community (with the exception of Canada), but they sit so ill with the Security Council’s professed support for democracy in Africa that none of its members has been prepared to say so publicly. The Belgian government has, however, described Mr Buyoya as the least bad altern- ative. The Security Council’s hope appears to be that Mr Buyoya will make his government look representative enough, and set a credible enough timetable for a return for democracy, that they can justify supporting him at some point in the future.

The government is Mr Buyoya has been busy trying to please the international community and designed to look select an acceptable government. His new prime minister, Pascal Firmin representative Ndimira, although a political lightweight with no influence in the country, is Hutu. He is a member of the Union pour le progrès national (Uprona), the predominantly Tutsi opposition party to which Mr Buyoya once belonged. Nonetheless, his being a Hutu is meant to reassure the West. Mr Buyoya’s prime minister in the early 1990s, Adrien Sibomana, was also a Hutu Upronist. Six ministers from the former government have been retained. Two, Nicéphore Ndimurukundo, and Gérard Nibigira, are Upronists. Mr Ndimurukundo remains minister of basic education and a minor political figure. Mr Nibigira has been moved from planning to finance, a post he occupied under Mr Buyoya’s last presidency. He too is probably implicated in the coup. The three ministers from the minor parties allied to Frodebu, Idi Buhanga Procede, Bernard Barandereka, and Leonce Nsinzinkayo, have all agreed to stay on. Mr Procede remains minister of energy and mines. The sixth survivor from the previous government is Mr Sinzoyiheba, at defence. Most of the new ministers are unknowns, but some old faces have re-emerged. The foreign minister, Luc Rukingama, is an Upronist. He was Mr Buyoya’s minister for higher education in the early 1990s, and was appointed secretary of state for cooperation in October 1994. He is hostile to Frodebu.

Eugene Nindorera is a The most interesting and convincing appointment to the cabinet is Eugène convincing appointment— Nindorera, at institutional reforms. This ministry is supposed to organise the famed “national debate”, a nebulous exercise billed by many Burundian politicians as the solution to the country’s many problems (2nd quarter 1996, page 34). Mr Nindorera once headed Iteka, a local human rights association that was at that time considered politically neutral. For the last few years, he has headed the technical committee charged with organising the debate, and has pulled off the remarkable feat of retaining his credibility and independence with a broad spectrum of Burundians without noticeably compromising himself. He has always been refreshingly honest about the value of the whole process, given the easy manner in which Burundi’s political class has broken its solemn agreements in the past. His participation in this cabinet may prove to be his undoing, but for the moment his credentials are good.

—while no former The glaring and perhaps fatal problem with Mr Buyoya’s government is that it Frodebu ministers have has no former Frodebu ministers. Most are in hiding. Some are in other embas- joined— sies in Bujumbura. Mr Minani is in Nairobi, and has called for a Frodebu boycott of any imposed governmental body. Mr Buyoya is hoping to tempt some into his soon-to-be-appointed Assemblée nationale, which again will be loosely drawn from the disbanded one, but stuffed with the junta’s friends and allies.

—and Mr Nduwayo was Also absent from the new government is the former prime minister, Antoine not even asked Nduwayo. He was, nonetheless, pivotal to the collapse of the former government. During the third round of the so-called Mwanza talks, which took place in Arusha, Zimbabwe, on June 25, he and Mr Ntibantunganya both asked regional countries to assist in providing security in Burundi. This came about after pressure by regional heads of state and Mr Nyerere on Mr Nduwayo, and was a key concession by the prime minister. As the regional technical team began working on the details of assistance, both Mr Nduwayo and Mr Ntibantunganya returned home to sell the policy change to their constituencies. Frodebu supported the measure. The CNDD condemned it, mainly because of Uganda’s involvement. Uprona and all the opposition parties condemned it absolutely. Uprona’s leader, Charles Mukasi, accused the president and prime minister of ignoring the government convention and of treason. He later called for the overthrow of the government, as did Mr Bagaza. The army and Mr Sinzoyiheba also remained opposed to the Arusha concessions, demanding that any regional force be under Burundian army control. This demand would defeat the point of the military intervention, and was unacceptable to regional heads of state offer- ing the troops.

Mr Nduwayo then changed his story, and also demanded that the Burundian military command any intervention force. He claimed that he had only agreed to the establishment of the technical committee when in Arusha. This stance was rejected by Mr Nyerere. During an opposition rally, Mr Nduwayo denounced Mr Ntibantunganya, accusing him of a secret agenda to neutralise the Burundian army. Mr Ntibantunganya attempted to keep the process going by assuring Burundians that any force would be under “our” command, purpose- fully leaving it vague as to what this really meant. Meanwhile, the CNS appointed a cumbersome and guaranteeably lethargic Burundian technical committee, composed of three subcommissions, to deliberate on the assistance, and to delay it. Their composition suggested they were intended to delay it indefinitely. This was closely followed by the Bugendanga massacre of internally displaced baTutsi (see below). When Mr Ntibantunganya appeared at the fu- neral, he was stoned by mourners. Informed by the army that it could no longer assure his security, he fled to the US embassy. After a brief power vacuum, Mr Buyoya was proclaimed president by an unidentified group of “wise Burundians”. Mr Nduwayo said that he welcomes the coup, but his U-turns have earned the contempt of his former supporters. Certainly, his use to the army evaporated in Arusha, and his exclusion from the new cabinet is no surprise.

The army intensifies its Mr Buyoya was known in the early 1990s for his twin-track policy approach. warfare— On the one hand, he established mechanisms for a return to democracy, and for a new constitution, and on the other, he authorised and provided impunity for the army to be ruthless in its war with militias. Thousands of baHutu were

slaughtered at the time. The signs are that he is doing the same now. A sure indication is that 23,000 Rwandan refugees have returned to Rwanda since the coup who were previously determined not to return. Some 15,000 of those who returned before the coup were forced across the border by Burundian and Rwandan troops, after their camps were burned and destroyed by the Burundian army. Those who have returned since have almost certainly been driven out by the Burundian army. About 40,000 remain in Burundi, well down from the peak of 200,000 in April 1995.

Thousands of Burundians have continued to flee to Rwanda, Tanzania and Zaire, because of the actions of the army. Reports have filtered through of the massacre of hundreds of civilians in Gitega, Bujumbura, and Muramvya provinces since July 25. However, reliable information about most areas of the country has dried up completely, and most of the army’s massacres go unreported.

—and militias also step up The same is true of those killings perpetrated by the various militias that their massacres operate in Burundi. Their slaughtering activities have continued too. The scale of their penetration into the country, and their control of large chunks of it, is far greater than at any time before in Burundi’s post-colonial history. Their worst publicised attack in the past quarter was on July 20, when over 300 displaced Burundian baTutsi were killed in Bugendanga, Gitega. The event prompted particular outrage among baTutsi, and may have contributed to Mr Nduwayo’s U-turn. The CNDD, which usually admits to its operations, denied accusations that its forces murdered the displaced civilians.

The three main militias operating in Burundi are CNDD/FDD, the Front pour la libération nationale (Frolina) and the Parti pour la libération des peuples Hutu (Palipehutu). Uprona has always alleged an alliance between the three. Palipehutu and Frolina are older, originating from a split in Palipehutu some years ago, and are reputed by some to be more ethnic-supremacist than the CNDD. A Frolina spokesman denounced the CNDD on the BBC’s Swahili service in April suggesting, at the very least, the absence of a formal alliance between these two.

The economy

The militias destroy the Militias have damaged and destroyed key economic targets in this quarter. economy further— Electricity pylons were cut in Bubanza in June, and much of Bujumbura was without power until July. The Brarudi brewery was one of the few enterprises that kept going, thanks to its generators and fuel stocks. Brarudi provided a staggering 27% of tax receipts in 1995, more than double that provided by coffee. On July 3 the Forces pour la défense de la démocratie (FDD) destroyed the Teza tea factory, north-west of Bujumbura. Soldiers guarding it apparently ran away, leaving civilian workers to be butchered by the militia. Hundreds of sacks of tea were burned, and the factory was largely destroyed. A few days later, a coffee factory was destroyed in Karuzi. In late July, immediately following the coup, a rice factory and coffee plantation were damaged in Gitega. At least 3 tons of coffee were burned.

—especially the coffee Before the coup, the then agriculture minister, Pierre-Claver Nahimana, esti- industry mated that 20% of coffee growers had fled the country, and that a further 20% were displaced. Many others have switched to cash crops. The war raging in coffee-growing areas has ensured that at least 15% of the harvest has been left unpicked. Getting coffee from rural areas to Bujumbura has become increasingly dangerous, with the convoys becoming prime targets for militia ambushes. Traders have had to pay “taxes” to both militias and government soldiers to get their merchandise through. Even before sanctions were imposed, Burundian coffee exporters were experiencing difficulties in getting exports out. Now that Burundi’s coffee cannot legally leave the country, they cannot meet their orders, which are already being placed elsewhere. Exports were supposed to reach 24,000 tons this crop year, from a harvest of 30,000 tons, and earn around $100m, but there is no prospect of this happening unless sanctions are lifted soon. Smuggling is still an option, but does not earn the government much money, although some of its members may be personally involved. At least 10% of the crop is leaving the country this way.

Sanctions are hitting The sanctions imposed by Burundi’s neighbours are also preventing the legal hard— export of Burundi’s tea crop. Although the border with Zaire is officially closed and has been since May, it is notoriously porous, and Burundian manufactured goods are still reaching Zaire. Burundi gets most of its imports via Tanzania which is the country most serious about sanctions in the region (although it is allowing humanitarian assistance through). Salt has run out, and petrol short- ages are starting to bite, which has presented major temptations to would-be sanctions-busters operating from Kigali (Rwanda).

—and the government has The economic impact of sanctions is increasingly crippling; but even before the nearly run out of money coup Burundi’s finances were in a hopeless condition, in large part because of the freezing of EU and US aid. The former finance minister, Salvator Toyi, reported that foreign reserves were falling at $10m per month, having started the year off at $200m. His estimates, made before the coup, in early July, were that Burundi would be left with $50m in foreign reserves at the end of the year. This now looks optimistic. He also said in early July that the government had only $20m in its cash budget to last the rest of the year. Despite this, an extra 5,000 soldiers were taken on in May and June, all of whom need paying. Defence spending consumes at least 35% of government expenditure. Mr Toyi was planning to institute wage cuts throughout the civil service. Tax collection has collapsed in most of the country, although in some areas it has been taken over by militias, who have reportedly established parallel administrations.

The precarious foreign reserves position has also had repercussions on the exchange rate. In June the Banque de la république du Burundi (BRB, the central bank) devalued the Burundian franc against the dollar, to Bufr320:$1. By mid- July the parallel market rate was Bufr360:$1.

Appendix 1

Quarterly indicators of economic activity in Uganda

1993 1994 1995 1996 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr Production Annual totals Coffee ’000 tons 141 ( 198 ) ( 220a ) n/a Cotton, lint “ 7a ( 7a ) ( n/a ) n/a Prices Monthly av Consumer prices, Kampala: 1990=100 215 224 232 223 229 241 245 244 256 256b change year on year % 3.4 11.4 14.9 6.2 6.5 7.6 5.6 9.4 11.8 n/a Money End-Qtr M1 NUSh bn 269.95 281.24 299.33 325.43 363.35 374.93 361.23 375.21 419.15 428.89c change year on year % 25.9 21.9 28.2 36.8 34.6 33.3 20.6 15.3 15.4 n/a Foreign trade Qtrly totals Exports fob NUSh m 44,011 74,634 81,010 122,820 115,496 124,025 100,051 88,676 133,334 102,534d Imports cife “ 109,728 195,619 208,702 224,372 221,718 267,408 210,673 253,407 292,829 193,389d Exchange holdings Foreign exchange $ m 146.3 212.1 219.3 283.2 318.3 342.0 388.2 382.5 458.4 443.7c Exchange rate End-Qtr Market rate NUSh:$ 1,130.2 1,030.6 969.6 920.5 926.8 927.1 965.9 969.4 1,009.5 1,016.0f

Note. Annual figures of most of the series shown above will be found in the Country Profile. a Estimate. b Average for January-February. c End-January. d Total for January-February. e Cash basis. f End-February.

Appendix 2

Quarterly indicators of economic activity in Rwanda

1994 1995 1996 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr Prices Monthly av Consumer prices: 1990=100 152.2 n/a n/a n/a n/a 266.0 304.4 308.5 n/a n/a change year on year % 5.2 n/a n/a n/a n/a n/a n/a n/a n/a n/a Money End-Qtr M1, seasonally adj: Rwfr bn n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a change year on year % n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Foreign trade Qtrly totals Exports fob Rwfr m 2,195 n/a 343 1,420 620 1,549 5,597 5,373 5,996 n/a Imports cif ” 11,908 328 285 4,749 10,175 14,583 17,788 19,017 16,554 n/a Exchange holdings End-Qtr National Bank: foreign exchange $ m 4.4 6.8 52.0 15.1 3.1 2.0 54.3 105.5 109.5 108.3a Exchange rate Market rate Rwfr:$ 386.6 452.2 313.9 138.3 247.7 291.1 313.9 299.8 304.3 309.6

Note. Annual figures of most of the series shown above will be found in the Country Profile. a End-May.

Appendix 3

Quarterly indicators of economic activity in Burundi

1994 1995 1996 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr Prices Monthly av Consumer prices: 1990=100 134.3 140.1 148.9 150.6 159.7 169.9 176.1 178.8 n/a n/a change year on year % 10.5 12.6 22.0 14.3 18.9 21.3 18.3 18.7 n/a n/a Money End-Qtr M1, seasonally adj: Bufr bn 31.47 33.57 39.46 39.87 44.56 39.56 n/a n/a n/a n/a change year on year % 9.5 14.3 41.4 28.0 41.6 17.8 n/a n/a n/a n/a Foreign trade Qtrly totals Exports fob Bufr m 3,508 2,401 13,314 10,811 10,767 6,638 3,840 4,737 1,462a n/a coffee “ 2,388 480 10,160 7,148 7,523 4,293 1,778 3,713 1,164a n/a Imports cif ” 12,655 12,922 16,691 14,201 14,486 14,751 15,510 13,454 4,529a n/a Exchange holdings End-Qtr Central bank: goldb $ m 4.90 4.86 4.92 4.91 4.83 4.95 4.90 4.91 5.10 4.85c foreign exchange “ 158.02 162.12 178.34 195.94 219.43 209.19 201.82 200.67 179.69 164.74c Exchange rate Market rate Bufr:$ 257.3 249.1 245.1 246.9 234.6 241.2 259.9 277.9 259.1d 318.6d

Note. Annual figures of most of the series shown above will be found in the Country Profile. a January only. b End-quarter holdings at quarter’s average of London daily price less 25%. c End-May. d Source FT.

Appendix 4

Foreign trade of Uganda

$ ’000 $ ’000 Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Imports cifa 1990 1991 1992 Exports foba 1990 1991 1992 Food 19,812 18,667 21,195 Coffee 140,384 117,641 95,140 of which: Tea 3,566 6,780 7,721 cereals & preparations 4,394 6,134 8,182 Oil seeds 5,234 11,106 22,305 sugar & preparations 8,380 5,203 6,343 Raw cotton 5,795 10,951 8,200 Textile fibres 5,954 8,965 12,689 Total incl others 190,102 196,009 171,353 Crude fertilisers & minerals 4,196 3,456 8,017 Petroleum & products 98,745 81,223 69,965 Animal & vegetable oils & fats 15,241 10,145 30,362 Chemicals 38,806 37,655 43,770 Non-metallic mineral manufactures 14,181 15,984 19,595 Iron & steel 18,445 27,286 34,315 Metal manufactures 18,304 18,710 20,737 Machinery & transport equipment 217,913 198,898 168,994 Total incl others 551,095 522,689 524,433

$ m $ m Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan Dec Jan-Dec Imports cifb 1992 1993 1994 1995 Exports fobb 1992 1993 1994 1995 Kenya 79 127 151 186 Spain 20 17 60 110 UK 52 50 69 86 France 21 17 56 68 Japan 34 32 51 57 Germany 17 13 47 67 India 21 31 36 39 Italy 9 9 30 46 Germany 28 32 23 39 Netherlands 28 10 14 40 USA 17 23 31 24 Poland 1 1 18 25 Italy 14 14 20 22 UK 15 10 22 16 Total incl others 398 457 536 710 Total incl others 178 157 369 469 a Source: UN. b Source: DOTS, derived.

Appendix 5

Foreign trade of Rwanda ($ m) Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Imports cif 1985 1986 1987 1988 1989 1990 Food, drink & tobacco 44.9 38.1 28.7 21.6 29.3 35.7 of which: cereals & products 23.3 18.1 11.0 9.9 13.4 17.2 sugar & products 4.7 6.9 3.0 3.1 4.7 6.0 Textile fibres & waste 10.4 7.9 7.9 16.5 6.3 5.0 Petroleum & products 44.2 48.4 49.9 47.7 44.3 44.6 Animal & vegetable oils & fats 15.3 12.1 9.5 n/a 11.0 11.4 Chemicals 18.2 18.6 21.7 10.2 28.8 29.6 Textile yarn, fabrics & manufactures 18.6 19.5 19.6 12.4 23.4 15.5 Non-metallic mineral manufactures 10.2 7.3 9.0 6.9 4.2 5.1 Iron & steel 16.9 22.9 22.0 35.8 20.1 0.0 Metal manufactures 12.1 14.9 18.0 8.6 13.8 5.0 Machinery incl electric 30.2 56.9 63.8 64.9 51.3 32.7 Transport equipment 33.6 47.3 47.2 46.2 27.5 14.1 Total incl others 295.7 352.0 356.5 368.8 333.2 291.1

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Domestic exports fob 1986 1987 1988 1989 1990 1991 Coffee 151.1 92.3 85.6 58.7 73.9 57.6 Tea 19.5 12.2 14.2 19.5 24.6 22.4 Tin 1.8 0.6 0.0 4.8 3.5 2.6 Total incl others 187.9 112.3 108.4 95.4 111.7 92.7

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Exports fobab 1992 1993 1994 1995 Imports cif 1992 1993b 1994b 1995b Brazil n/a n/a n/a 70 Belgium-Luxembourg 49 37 42 50 Belgium-Luxembourg 17 16 18 22 USA 5 8 38 42 Germany 24 31 12 12 Tanzania 23 27 33 40 Netherlands 14 10 7 12 Kenya 28 26 31 38 Italy 5 3 2 3 Japan 24 26 7 19 UK 4 3 2 3 France 20 25 19 15 Total incl others 197 100 75 154 Total incl others 288 276 272 325 a Source: DOTS. b Derived.

Appendix 6

Foreign trade of Burundi (Bufr m) Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Imports cif 1991 1992 1993 1994 1995 Food, drink & tobacco 4,294 4,174 5,174 8,731 9,471 of which: cereals & preparations 2,602 2,501 3,234 4,229 5,116 Petroleum & products 5,688 5,621 6,158 7,404 6,758 Chemicals 6,193 6,543 6,997 8,242 7,394 Rubber manufactures 1,226 1,076 1,710 1,002 1,158 Paper & manufactures 1,102 1,156 1,374 1,115 1,281 Iron & steel & manufactures 3,661 3,328 3,511 3,116 2,550 Machinery excl electric 5,516 4,744 5,030 3,997 4,340 Electric machinery 2,765 3,131 3,020 3,808 4,419 Road vehicles 4,484 4,818 4,495 4,271 5,465 Scientific instruments etc 1,219 2,039 1,023 2,214 1,548 Total incl others 46,154 46,106 47,434 56,468 58,200

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Exports fob 1991 1992 1993 1994 1995 Coffee 13,519 10,033 8,838 23,710 20,175 Tea 1,514 1,899 2,146 2,741 2,217 Beer 11 43 98 177 803 Tobacco & manufactures 341 549 749 431 3 Hides, undressed 434 339 206 597 525 Cotton, raw 0 0 794 880 425 Minerals & ores 35 115 204 199 275 Cotton fabrics 244 359 597 255 2 Total incl others 16,698 15,355 15,019 30,034 25,799

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Exports foba 1992 1993 1994 Imports cif 1994 1995 EU 4,791 22,579 26,024 EU 24,099 29,347b of which: of which: Germany 2,291 8,012c 7074c Belgium-Luxembourg 7,869 8,963 Belgium-Luxembourg 417 10,682c 12,380c France 6,415 5,851 Rwanda 1,250 1,699c 2,021c Germany 2,937 4,738 USA 1,250 728c 1,769c Japan 4,448 3,345 Total incl others 15,414 36,903 44,216 USA 2,112 2,856 Kenya 2,481 2,399 China 2,323 2,343 Zambia 1,836 1,932 Zimbabwe 1,256 1,035 Total incl others 56,468 58,200 a Source: DOTS. b Excluding Finland. c Derived.