Rebel leader Laurent Kabila is making economic decisions that could impoverish Zaire further. Stefaans Brmmer reports from Lubumbashi
LAURENT KABILA’S alliance has shown itself adept at waging war, but signs are it has a lot to learn about managing the peace. Erratic decisions by the rebel leader’s young “government” have eroded outsider confidence. His actions may strangle the goose that lays the golden eggs, in a manner reminiscent of Mobutu Sese Seko.
There are some hopeful developments. Last Saturday Kabila’s mining minister, former language teacher Florent Kambale, was treated to his first underground mine visit by the Zairean state mining company Gecamines, and America Mineral Fields, a Canadian mining venture company. In tow they had a group of 20-plus North American and European analysts and investors, weighing the risks of betting on Kabila’s liberated “Congo”.
What Kambale saw at Kipushi, near the rebel provisional capital of Lubumbashi, was a copper and zinc mine that once counted among the richest in the world, but stopped production in 1993 because Mobutu and his cronies siphoned so much off Gecamines that reinvestment was not enough to keep the mine going. Zaire’s total copper output plunged from 476 000 tons in 1986 to a low of about 31 000 tons in 1994.
The rebel government has moved fast to reverse the trend. On April 16, soon after the fall of Lubumbashi clinched the rebel conquest of mineral-rich Shaba province, Kabila’s Alliance of Democratic Forces for the Liberation of Congo-Zaire (ADFL) signed an estimated $1-billion deal with America Mineral, which includes joint ventures with Gecamines for the rehabilitation of Kipushi and the reprocessing of fabulously rich copper and cobalt tailings at nearby Kolwezi.
South Africa’s Anglo American, which also tendered for Kolwezi, has challenged the legitimacy of the rebel government’s early tender award, but to many the deal was a sign the ADFL is earnest about rejuvenating a newly liberalised economy. Said a Toronto-based investor, one of the group jetted in by America Mineral, during a face-to-face meeting with Kabila earlier the same day: “We are excited about the possibilities … We are looking forward to rebuilding this great country with you.”
But there are notes of discord, in particular, around the May 5 “nationalisation” of Sizarail, a South African, Belgian and Zairean joint venture that managed the Zaire rail system. Justifying his decision, Kabila told the investors: “We should move out all these people who were related to Mobutu and who were pillaging the country.”
Whether Sizarail had “pillaged” the country is a moot point. When the company commenced a five-year contract to manage the rails in July 1995, workers were paid again – some for the first time in three years – and transport times were cut from as long as six months for a 1 000-km stretch to about four days. Sizarail made $1-million in profit last year. But, said Patrick Claes, the Lubumbashi-based manager of Sizarail: “All these profits were ploughed back into the company for reinvestment.”
Claes, who was ordered out of his offices by ADFL troops on May 5, added: “They have closed something that worked with private capital. Before, it didn’t work with public capital … It’s crazy.”
When Sizarail – whose South African stake is owned by Spoornet – was given the boot, the rail system ground to a halt again. The result: Lubumbashi, the rebels’ command centre, ran out of aircraft fuel, an essential for rebel troop movements, and other supplies.
But perhaps most disturbing to the investors looking for signs of confidence in the new economy was that Gecamines, heavily reliant on the rails, was again hamstrung by a political decision. Michel Haubert, financial director of Gecamines, said at the weekend: “The decision should be reconsidered. Private shareholders were not consulted.”
He said Gecamines – which owed part of an old Zairean railways debt of $22-million to Spoornet – was concerned its minerals, if exported through South Africa, could be attached by Spoornet. The rail standstill meant Gecamines’s stocks of 100 tons of copper and 200 tons of cobalt could not be exported by rail. To exploit favourable world prices, the cobalt would be airlifted to Brussels.
The “nationalisation” has also damaged relations between the ADFL and South Africa. Apart from the debt to Spoornet, which would have been covered by Sizarail profits, at least $20-million in South African rolling stock and another $20- million in other investments are at stake. A representative of the South African Department of Foreign Affairs has confirmed the threat to nationalise was discussed with Kabila’s delegation during the first round of negotiations aboard the SAS Outeniqua on May 4, a day before it was carried out regardless.
Those sympathetic to Kabila point out that there are bound to be initial mistakes, and say the Sizarail issue may be resolved soon. Said Joe Martin, acting chief executive of America Mineral: “It was a mistake of a young government.” Martin, whose company has provided Kabila with the use of a private jet, said his information was the ADFL was keen to renegotiate the Sizarail deal, but without losing face.
Yet there are more signs the ADFL, for now at least, is more interested in early military victory than a stable economy. Mawampanga Mwana, Kabila’s finance minister, confirmed to the Wall Street Journal this week that Gecamines had been ordered last week to inject $2,5-million into the local economy at the rebel-ordered exchange rate of 140 000 Zaires to the dollar, less than a third of the old dollar value. Another $5-million was to be injected at the unfavourable rate by cash- strapped Gecamines this week.
He also said the better part of a $50- million payment by Canada’s Tenke Mining Corporation to Gecamines in another joint venture would go to the war effort. Asked Mawampanga: “What good is investing in the mines if we don’t win the war?”
There is no evidence the rebels have, like Mobutu, used the Gecamines piggy-bank for personal enrichment, but it has threatened the goose that lays the golden eggs. At independence in 1960, the parastatal contributed as much as 70% of state revenue and 80% of export earnings.
South African policy towards Kabila appeared this week to take into account questions about Kabila’s fitness to rule. The thrust of the South African effort, closely mirrored by US initiatives, has been to get Mobutu to relinquish power freely – thereby averting a bloody battle for Kinshasa. The intended spin-off, though, was that Kabila would be tied into a negotiated and broad-based transitional authority, of which his ADFL would be but one constituent – and not able to call all the shots.
But the ADFL has made it clear it sees Kabila as head of any transitional authority, and that it may not allow free political activity until elections are held in about a year.
Said a South African insider this week: “A pure replacement of Mobutu by Kabila is not a solution.”