VZCZCXRO8122
PP RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMR RUEHRN
DE RUEHKI #0674/01 1691034
ZNR UUUUU ZZH
P 181034Z JUN 07
FM AMEMBASSY KINSHASA
TO RUEHC/SECSTATE WASHDC PRIORITY 6336
INFO RUEHXR/RWANDA COLLECTIVE
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
UNCLAS SECTION 01 OF 03 KINSHASA 000674
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ETRD EINV ECON PGOV KDEM CG
SUBJECT: SOUTH KIVU ECONOMIC OUTLOOK: MUCH POTENTIAL,
LITTLE INFRASTRUCTURE
REF: 05 KINSHASA 1067
1. (SBU) Summary: South Kivu, much like many other parts of
eastern DRC, is an area of great economic potential with
little means to realize it. Years of conflict, neglect, and
mismanagement have turned the province into a shadow of its
former self. Port facilities are in a state of disrepair;
passable roads are nearly non-existent; and decades of war
have ruined the region's industrial base. Provincial
officials remain hopeful for a brighter economic future and
talk of plans to revitalize the region. Their efforts,
however, will be hampered by continuing insecurity and
budgetary constraints. End summary.
2. (SBU) Officials throughout South Kivu portray the province
as a potential catalyst for eastern DRC's economy. PolOff
toured South Kivu May 22-29, meeting with a variety of
political officials and community leaders, who all expressed
optimism that the province was on its way towards greater
development and economic vitality. South Kivu in the past was
a producer of agricultural goods including processed sugar
and cotton, as well as a major point-of-entry for foreign
goods. Years of conflict, neglect, and mismanagement slowly
destroyed much of the province's economic capacity.
------------------------------
ROAD REHABILITATION A PRIORITY
------------------------------
3. (SBU) South Kivu Governor Celestin Cibalonza told PolOff
in Bukavu that one of his main development priorities is
rehabilitating the province's roads and infrastructure. He
said rural development in particular will be key --
connecting the province's cities and villages with the
provincial capital. Cibalonza said many areas, including the
High Plateau region around Minembwe, remain cut off from much
of the rest of the province. Such conditions, he said, stymie
economic growth, leaving some communities little opportunity
to engage in trade.
4. (SBU) The province's roads are in a state of serious
disrepair. South Kivu's main highway runs from Bukavu to Fizi
in the south, though the only paved section is from the Lake
Tanganyika port city of Uvira to the border town of
Kamanyola, about 25 miles south of Bukavu. The remaining
sections of the road, originally built in the Mobutu era as
part of the Pan-African Highway, are little more than rutted
dirt and boulder-strewn tracks. Many portions are often
impassable during the rainy season.
----------------------
AGRICULTURAL POTENTIAL
----------------------
5. (SBU) Governor Cibalonza highlighted his plans for
economic development and his desires to increase agricultural
production. Without providing details on how he intended to
do so, he claimed he wanted to make South Kivu a leading
producer of goods such as sugar, cement, cotton and
livestock. Cibalonza added that South Kivu also has
significant mining potential, especially in gold. Uvira
Territory Administrator Daniel Eloko echoed the governor's
optimism, saying there was also a huge potential for
commercial fishing in Lake Tanganyika. Eloko said the port in
Uvira could also be a major source of revenue from trade
along the lake.
------------------------
OBSTACLES TO DEVELOPMENT
------------------------
6. (SBU) Cibalonza's and Eloko's dreams of economic
prosperity, however, face a harsher reality, as South Kivu's
industrial base is almost non-existent, aside from a
pharmaceutical company and a brewery, both of which are
majority foreign-owned. A case in point is the former sugar
refinery in the town of Kiliba outside Uvira. At the height
of its production in the early 1990s, the plant reportedly
employed some 5,000 workers and processed nearly 18,000 tons
of sugar a year. According to the plant's current managers,
the facility generated its own electricity, using the steam
from burning sugar cane husks to power on-site generators.
The Kiliba refinery closed in 1996, however, after the start
of hostilities, and has not operated since. While much of the
physical plant still exists, it needs a major overhaul. Plant
KINSHASA 00000674 002 OF 003
managers said it would require at least USD 17 million over
three years to rehabilitate the entire facility.
7. (SBU) Eloko's vision of a revitalized port in Uvira also
faces obstacles. While the port always required regular
dredging due to silting, it is the DRC's largest after Matadi
in Bas-Congo province. Correctly, as Eloko himself admitted,
the port barely functions. The only crane in use is the one
owned by the World Food Program. Eloko said in order to make
the port fully functional, the lake needs to be dredged,
security measures must be put into place, and warehouses and
docks must be built. Eloko estimated it would cost tens of
millions to rehabilitate the port, and there is no sign of
any money forthcoming to do so.
-------------------------
PROBLEMS IN MINING SECTOR
-------------------------
8. (SBU) In the mining sector, government officials admit
corruption and security remain serious issues, and local
government has little control. Cibalonza said he wanted to
"clean up" South Kivu's mining industry and was looking into
changing the province's mining authorities. He claimed as
well that many mines are under the control of FDLR forces,
who illegally exploit and traffic gold in the areas of
Shabunda, Walungu and Misisi. Canadian Banro Gold has several
exploration permits in South Kivu and adjacent Maniema
province, but no industrial production is occurring.
Artisanal gold and cassiterite mining are leading sources of
income throughout the province, according to MONUC officials.
PolOff saw several newly-dug cassiterite mines near the
village of Lemera (an area with heavy FDLR presence), with
several dozen men digging. Most vehicle traffic in the
southern part of the province, according to Fizi
Administrator Alfred Efoloko, is of trucks crammed with
diggers heading to the gold mines near Misisi.
---------------------------
SECURITY VERSUS DEVELOPMENT
---------------------------
9. (SBU) South Kivu officials themselves are divided on how
best to achieve conditions for economic growth and
development. Cibalonza argued that improved security is the
first priority, which could then lead to more investment and
reconstruction. Eloko and Efoloko maintained that poverty and
a lack of economic opportunities drive conflict. Eloko said
that in the absence of jobs or constructive alternatives,
many people -- especially young men -- are more apt to join
militias and commit violence. Efoloko added that nearly half
of the population in Fizi is illiterate, making it even more
difficult for many to find sustainable employment.
10. (SBU) Despite these challenges, most officials were
upbeat about the province's prospects. Cibalonza said that
even though his provincial budget faces serious constraints
due to a lack of resources from Kinshasa, he intends to press
for major development projects. Efoloko said he is encouraged
by the recent return of some 40,000 refugees from Tanzania
who can add to the human resources available in the province.
He cautioned, however, that many returnees had become
accustomed to life in refugee camps, where nearly everything
was provided them, and have lost the desire to work.
Nonetheless, he and Uvira Administration Eloko claimed there
is a new "dynamism" growing in their communities, with signs
of new construction and investment appearing throughout the
province.
-------------------------------------
COMMENT: SOUTH KIVU'S WOES NOT UNIQUE
-------------------------------------
11. (SBU) Comment: South Kivu's economic difficulties are not
unique in the Congo, as nearly all the provinces have been
beset by violence, a lack of resources, degraded
infrastructure, government neglect and overzealous and/or
illegal tax collection. What sets it apart, though, is its
significant unrealized potential, aided by its access to both
East and Southern Africa markets. Provincial leaders
nonetheless face significant obstacles in realizing greater
development. The newly-formed provincial government has
little capacity to manage the few resources it has and will
receive little immediate support or financing from a
cash-strapped central government in Kinshasa. Security
KINSHASA 00000674 003 OF 003
remains the biggest problem, however, in a region that has
been the cradle of many of the DRC's wars and insurgencies.
Without a durable peace, South Kivu will remain in its
current condition. End comment.
MEECE