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APPROVED FOR RELEASE: 2009/06116: CIA-RDPOl-00707R000200110003-0 6%/Gs/E Zaire April 1,973 NA110NAL INTELLIGEN FOR OFFICIAL USE ONLY APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 NATIONAL INTELLIGENCE SURVEY PUBLICATIONS The basic unit of the NIS is the General Survey, which is now published in a bound-by-chapter format so that topics of greater per- ishability can be updated on an individual basis. These chapters�Country Profile, The Society, Government and Politics, T he Economy, Military Geog- raphy, Transportation and Telecommunications, Ar; Forces., Science, and Intelligence and Security, provide the primary NIS 7overage. Some chapters, particularly Science and Intelligence and Security, that are not pertinent to all countries, are produced selectively. For small countries requiring only minimal NIS treatment, the General Survey coverclee may be bound into one volume. I Supplementing the General Surve;.- is the NIS Basic Intelligence Fact- book, a ready reference publication that semiannually updates key sta- tistical data found in the Survey, An unclassified edition of the fa(tbook omits some details on the economy, the defense forces, and the intelligence and security organizations. Although detailed sections on many topics were part of the NIS Program, production of these sections been phased out. Those pre- viously produced will continue to be available as long as the major portion of the study is considered valid, A quarterly listing of all active NIS units is published in the Inventory of Available NIS Publications, which is also bound into the concurrent classified Factbook. The Inventory lists all NIS units by area name and number and includes classification and date of issue; it thus facilitates the ordering of NIS units as well as their filing, cataloging, and utilization. Initial dissemination, additional copies of NIS units, or separate chapters of the General Surveys can be obtained dii or through liaison channels irom the Central Intelligence Agency. The General Survey is prepured for the NIS by the Central Intelligence Agency and the Defense Intelligence Agency under tho general direction of the NIS Committee. It is coordinated, edited, published, and dissemi- nated by the Central Intelligence Ager..y. WARNING This document contains informition affecting the national defense of the United States, within the meaning of tifle 18, stctions 793 cid 794 of the US code, as amended. Its transmission at revelation of Its contents to or receipt by an unauthorized person ia prohibited by low. CLASSIFIED BY 019641. EXEMPT FROM GENERAL DECLASSIFI. CATION SCHEDULE OF L. 0. 11632 EXEMPTION CATEGORIES 38 (1), (2), (3). DECLASSIFIED ONLY ON APPROVAL OF THE DIRECTOR OF CENTRAL INTELLIGENCE. APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 WARNING The NIS is National Intelligence and may not be ro- leased or shown to reprosen7atives of any foreign govern- ment or international body excGpt by specific authorization of the Director of Central Intelligence in accordance with the provisions of National Security Council Intelligence Di- rective No. 1. Foir NIS containing unclassified material, however, the portions so marked may be made a for official pur- poses to foreign nationals and nongovern-nent persormel provided no attribution is made to National Intelligence or the National Intolligence Survey. Subsections and graphics are individually classified according to iontent. Classification /control designa- tions are: (U/OU) Unclassified/For Official Use Only (C) Confidential (S) Secret 4V APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 Thk chapter was prepared for the N!S by the Central Intelligence Agency. Research was sub- stantHally completed by January 1973. APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 CONTENTS This Generai Survey 4upersedes the one dated Sep. tember 1970, copies of which should k, desfroyed. A. Economic appraisal 1 Size and wealth of naoural resources; period of military and civil unrest following independence; relative stability after 1965, importance of mining sector; decline of agriculture; importance of foreign aid; re-versal of nationsklization policy, B. Structure of the economy 3 Structural change. Increasing Importance of copper. 1. Metals and minerals 3 Prominence among world mineral resources; rapid postwar production expansion. a. Copper 4 Nature and location of deposits; process- Ing facilities; output; expansion program; new mining concessions to foreign firms. Fort OFFICIAL USE ONLY APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 Page b. Cobalt and zinc a Relation to copper processins; output. c. Cadmium and germanium 7 Location of dep4sits; output. d. Tin 7 Location of deposits; production facilities, e. Columblum-tantalum 7 Production qnd use; production faefilties. f. Cold 7 Location of deposits, production facilities 2D and output. g. Industrial diamonds 7 Location of deposits; production f"Itie& and output; poaching and smuggling prac. tical. h. Manganese 9 Output; size and location of deposits; factors affecting production. 22 i. Other minerals 9 Type of deposits; plan to exploit bauxite deposit, 2. Agriculture, fisheries, and forestry 9 Effects of political situation on production tand growth after independence. a. L:%nd use 9 il ffect of climate and terrain on vegetation; utilization of land; type of iand ownership. b. Food crops for export 11 Coffee, its varieties, location, output, and sales; tea and cocoa. location and output of plantations. c. Food crops for domestic consumption 11 Cassava, plantains, and carea] grains; vege. tables and fruits; sugar. effect of civil disturbances on output, supply and de- mand situation. d. Industrial crops 12 Palm oil, output, effect of 6pressed world palm oil prictis on local production, palm oil extraction process, uses, foreign sales; cotton, location, output, projected further development, government price Increases; rubber, type of cultivation and location, production and export. e. Livestock 13 Ownership; location of herds size of herds; beef consumption. f. Fishing 13 Locadon of fisheries; supply and demand of fish and fish products. g. Forestry 14 Size and location of forest resources out- put and export of forest products; Otgree of government control and regulation of cutting and reforestation. Page 3. Fuels and power 15 Size of electric power Industry; contribution of hydroelectric power to total power output; government control of electric power Indus. try; size and location of power potential and Insbilled capacity, princilW consumers; con. struction of Ings dam hydroelectric plant; peroleum refining capacity; petroleurn and natural gas deposits; sources of supply; loca. tion and sin of cog deposits; coal output. 4. Manufacturing and construction 16 Growth since World War 11; principal manu. facturing areas; type of products; domestic requirements, growth of construction industry since independence; type and source of con- struction materls1s. 5. Domestic trade 17 Methods of distribution; condition of trans. portation network. C. Economic policy and development IS 1. Policy 18 Government legislation in 1966 to reduce for- eign influence over the economy; subsequent legislation to encourage foreign investment. a. Government finance 18 Centralized control of public finance; in- creased tax power of central government; tax rates, budget expenditure; public debt; credit developments. b. .4oney and banking 2D Banking system. 2. Development 20 Development plans and programs; government priorities; dovetopment prospects; planned de- velopment by sector; government attempts to stimulate domestic and foreign capital; pr and public investment in 1971. 3. Manpower 22 Size and compositior, of labor foree; unem- ploymert problems; principal sectors of em- ployment; labor efficiency, wages, strikes; working conditions. D. International economic relatious 24 1. Foreign trade 24 Crowth of exports over past few years in relation to world copper prices; composition of exports; sharp increase In imports, growth of domestic demand, tasing of import restric- tions; recent government measures to cut back imports. 2. Balance of payments 25 Imposition -)f new controls on outflow of income earned by foreigners; adverse balance of balancv of payments -;,'tion, fall in export .e A revenues, decline in foreign exchange re- serves. I APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 page 3. Foreign economic policy and agreements 25 Coverntnent trade policy; hmshnent owan- too with the United Statu. page 4. Foreign aid Major donors and wnounts. GIOXIM 27 PICURES rage Fig. I Economic indicators (chart) I Fig. 2 Estimated gross domestic product 11 Vegetation (map) (chart) I 3 Fig. 3 Mineral production ranking (chart) 4 Fig. 4 Production of selected minerals (chart) I 16 (table) 4 Fig. 5 Copper mines and processing fa- Fig. 14 cilities (map) 5 Fig. 6 Copper production and targets (table) I., 19 (chart) 6 Fig. 7 Industrial centers and mineral zones (tnap I 8 Fig. 8 Agricultural production (table) 9 Fig. 9 Agricultural zones (ntap) 10 Page Fig. 10 Land use (chart) 11 Fig. 11 Vegetation (map) 14 Fig. 12 Consumption of electric power (chart) I 16 Fig. 13 Government revenues (table) IS Fig. 14 Government financial operations (table) I., 19 Fig. 15 Public capital budgetary expendi- tures (table) 21 Fig. 16 Employment by sector (table) 23 Fig. 17 Foreign trade (chart) 24 Fig. IS Principal exports (chart) 25 Fig. 19 Direction of trade (chan) 26 Fig. 20 Balance of payments (table) 26 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 A. Economic appraisal The Repliblic of Zaire is a vast eoinitr of W5,M) %(losare miles. efliliv.1lent ill size to that part of till I'llited States lying vast (if the Mi River. It is riehly e n d o%ve d %vith largely tintupped naturai resourev%, incloding large delmsits of o,x)I)Ix-r, cobalt. und inchistrial diamonds, and has the largest hydrovivetriv IN)tential of any voitntry in tilt world. A Wide range of climates permits the production of' a variety of agricultural crops. and t1w tropical rainforests %arbor the most exteli%ive reserves of virgin timber in Africa. Despite this great ruitential, [,lost of Zaire's 24 million I- )I)lv eke out only a stibsistene li i till. vast jilt( rior, often isolati:d from (he veonoll an d political centers h% in Invalls of' tratisporta- tiOn -'I'd colmillinicaltion. Personal allegiance is to farnily and tribe rather than to the abstract cmicepi o f liati althotigh the vetitral guvvninietit is gradijally increasing its prf-sence in the niore remote regiotis of the cotintry, Fdocation is (Itlit li i the mral arew. and, whcre available. foviises more Illmn a (-lassical ctirriculmn than ml ways to improve agricidlural prwhidion i.nd pobli l Belgium's grantitig of ilidVIN-11dence to Zaire (then known as the Belgian Collito and later iis the I)etnocratic Rewiblic of the Congo) in Jime iwio triggered .1 yv;irs of military nititinivs j ili t l -jvil r-helliolis which threatened to Balkanize Ill( coontry and destroy its econoln%. The at of Joseph I)esire Mobutti (no"- nal;;ed M o I )tl t ll Sese Svko) to the presidency in 1965 btought stability to all hot a few areas in eastern Zaire, with a concomitant grad 11 A concentratioti of [x)litit-al [H)%% in the hands of the President. K-onoinic recovery from thu 1),;Iiildependell 11pheavals has been Spectacular I)t:t inievell., trend In several major economic indicators re shown in Figure 1. Gross domestic prodoct (CI)P) ill 1971 reached .111 estimated $2.1 hilli-,n, having increased in reid ternis NOTE�Thu enfire content of thk Chapte. i% UNCLASSIFIED but i% FOR OFFICIAL USE ONLY by 25"1 over that of 1968: per capita animal jnuon, however. is still 1 ('ss 01 $I(X). The mining sector Contill"Ps 10 eximild, accolinting in 1971 f(jr almost 01)(1-I'mirtli of' CDP in(] providing inore dian 80('(' of export earnings. Indti%trial produetion has risen con siderably since 1%9, with many manufactures in the modem sector surpassing prv-1960 otitput levels. Prodticts are mainly light consumer goods an(] e(iminnent and chemicals for mining and ine(albirgy. Commercialization of agrictilture, on the other hand, ias agged; more than 40% of ,igrictiltural prodtiction is from subsistence farming, Progress has been made in the prodw.4ion of palin oil, coffee, and rubber, the principal export crops; and grejter efforts art- being made to increase the prodtiction of iimber from Zaire's extensive tropical rainforests, APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 FIGURE 1. Economic Indicators The governmNit has bt-vit phgued since indepen- dence by inadequate revenues. the only vx%-i-ption being in 1969, when copper reventivs were much higher than anticipated. Export taxes have provided around 60%; of total public revenue; but this dependence upon tariffs for reveitue Makes government finance vulnerable to fluctuations in world trade and world market prices. The drop in copper prices during 1971, for example, accotinted for most of the $60 million decline in government income from the record 1970 level, and no other sector (if the economy has been able to fill this gal), Agricultural output still suffers from tile severe. disruptions of tP,, postindependence upheavals. and the small indzis sector has only recently reached pre-INO production levels. Although unable to balance expenditures with revenues, Zaire has made significant str-des in organizing its financial operations. Most of these efforts are part of the economic stabili: program initiated in 1%1 with assistance from the Interna- tional Monetary Fund (IMF) and include tit(- presentation of a formal btidget, expansion of the tax base, improved coliection of taxes, and tit(- establisilment of pr(wedures for limiting expendittires. Almost all fiscal powers are in the hands of central authorities, with previously tincontrolled provincial expenditures now dependent tqxon funds from Kinshasa. Foreign aid has been a major factor in maintaining Zaire's economic viability by providing essential Commodities and technical assistamv, The United States has contributed more than $420 million, of which $348 million consisted of stipport assistance and P.L. 480 shipments. Belgium is another major aid donor, having provided about $25 million annually since 1966, primarily in the form of technical assistance. Other sotirces of foreign aid include West Germany, France, t:,,- World Bank, and tile United Nations. The main goal of the govvrainent's economic policy consistently has been to reduce foreign economic domination. Most industries and commercial farms have been in foreign hands since colonial days, and the important copper mines, although owned by the Zairian Government, are, managed by Europeans. A program to "Africanize" the economy�increase tile share of ownership and skilled personnel slots held by Congolese in foreign businesses�was launched in late 196& after Mobutu became President. A special target has been the Belgians, who not only dominate the modern sectors of the economy but had left Zaire with virtually no experienced managers at the time of 2 indepetideiiee. flowever. only a few major Belgian in(crests them the mioing fiern Mining 1.11nion )f (!plx-r Katanga (UMIIK) and the large financial institution 0ingolese Ranking Company (SOCOBANQUE)�huve beeii nationalizAil. Pr;vatf. foreign investment came to a virtual halt after tit(- takeover of U M I I K in I)evendwr 1966. and Kinsha%.4 superm.-&A rnany of the more extreme aspects of Africanization with an investment code (enacted in 1%.9) to attract %orely CIO-e4led overseas capital. Encouraged by tile 1l(*w code and it subsequent c0m;lensation agreement between tile government and UMIIK, significant amounts of private funds were attracted during the past 3 years. U.S.. Europt-an, and Japanew! firms have decided to inv-st nearly $400 million in expanding copper production, which should brighten considerably Zaire's economic prospects throu-b die latter haif of the 1970's. lit addition, several other large overseas firms have expressed interest in locating in the Kinshasa area and around the Inga dam complex oil the Congo River below Kinshasa. Africanization is tiot a dead issov, however. and Mobtitti occasionally threatens to take action against foreign business wilvii he helicvv% Kinshasa's interests are not being full% considered or %hen lie wishes to divert attention from domestic problems. Because of the somewhat uncertain envirminiew for private foreign investment, the central government has become the major factor in the determination of further ecotiornic progress. Unforinnatel%, however, fiscal res;wnisibihty has been lacking among many Kinshasa officials; waste and inefficiency have greatlY inflated btidgetaty cxisu and re(Inced ftinds available for devvlopment. Nevertheless, public investment is tit important t-l(!ni(-iit of the government's tota expenditures. Budgeted capital spending by KinshaSik dates from 1968 and is intended to operate in accordance with the economic priorities of restoring transportation and zgriculture. lit reality, hawevor, the largest single allotment of funds has always gone to the presidency, which has fav niore prestigious projects in the mining, power, jnd manufactming sectors. A change in this emphasis may be fort licom i ng. The Ministry (now Departmetit) of Plan, crealed in early 1972 and headed by President Mobutu, is to develop and secure financi g for specific projects, primarily in I n the transportation and agricultural sectors. Tile department's ability to carry out its designated function, however, may be hampered by tile currently tight budgetary situation resulting from a precipitous drop in mining income. Increasing costs of APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 I dir nonds and cobalt, and is among the world leaders in tire production of several other me(als. especially copper (Fil-ure 31. The mining industry expanded rapidly following World War 11, and 1971 output of -several minerals %%as at record levels (Figurr- 4). The annual val"v of mineral producdon rofe hetween 1950 and 1956, reaching S:38o m illi on; i 1971, output registered a high of almost 1%525 million. This wits achieved desnite a steady decline throughout 19�,l in the price of copper, which aevounts for almost three-fourths of the total value of the annual mineral outp Z;nc, cobalt. industrial diamomls, arid tin comprise most of the remainder. Zaire's mineral deposits and mining installations c0l'stitute an extremely valuable national asset th until -c-cent Years, was controlled and operated largely by a Belgian holding firtr and its subsidiaries. In 1966', after the achievement of relative stabilit within the country, several laws were Promulgated which progressively reduced foreign domination of the mining sector. One law, requiring th fo.-eign comPanies to transfer their headquarters to Kinshasa, touched off an immediate dispute with (he majo copper produce-, UMHK, and the company's assets v Pre seized by the government in December 1%.6. Oth laws canceled all concession granted prior to independence and provided for majority control by the government of many firms in which'it previousl had field only a small in'terest. A few small co mp-. 1n i es 3 government operations arid declining Public revenues may bring cutbacks i Kinshasa'-. development program... As a result of the ahove conditions. a i r economic slowdown appears likely. &)mc re li e f may come I 1975 in the form of increased copper production. but basic problem will remain. The econom i s till unbalanced, iacorne distribution is still inequi(tible, the domestic market is still t(to small to support large industries, and the co)untry still depends heavily on foreign soutces for its supply of skilled per%onnel.'The government ha! Yet to d any determination to switch its developmental emphasis from quick- Profit, showcase undertakings to more fundamental and less glamorous proj"cts in agriculture, t;ansrx)rt.t- tion, avid education. B. Structure of the economy Mining plays a leading role in the Zairian ecomoiny, While subsisten agriculture plays an unusually mint)r role for a developing country. Since indepe' ndence, growth rates of the major sectois of the economy have varied greatly, in many cases substantially it' Itering their relative contrihutions to GDP. T'he most significant of these changes has been the increase in the relative importance of mining arid commerce, art(] the decline in commercial agriculture. Copper revenues, whose reco)rd levels provi'ded tire major impetus for the economic bo of the late 1960's. grew most rapidly, averaging gains o f a 10% a year from 1968 through 1970. Lower world copper prices in 1971, however, substantially reduced incomie from this source. causing the mining sector*s contribution to GDP to drop to 23%, compared to 30% in 1970. Commercial agriculture has never recovered from the postindependence disruptions and has declined to roughly 12% of GDP from a preindepen- dence level of about one-third of GDP The share of manufacturing arid construction in GDP rose by about 7.5% annually from 196A through 1971, while the share of the government and services sr, remainef, virtually unchvitged (Figure 2). I. Metals and minerals Mining is by far Zaire's most important ecimornic activity, generating more than 80% of the country's foreign exchange earnings and a substantial part of public revenue. The mining sector employs around 60,000 laborers, or about 9% of all Zairian wage arid salary workers. Among non-Communist coitntries, Zaire ranks first in the production of industrial APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 FIGURE 2. Estimated gross domestic product, by sector, 1971 remain in private hands, btit the central government is clearly the dominant force in ffie mining sector. a. Copper Shaba Region in the southern part of the country is Zaire's richest mineral area arid rat her complex metal ores. High-grade coppr deposits are found in it belf abotit 50 miles wide extending about 280 miles along the Zanibial, border: they art. it contintiation of tit( rich Zarnbian deposits an d contain about l2c?'r of the world's known coppe reserves. 'I'l processing of coppvr yields not onlN copper metal but SUCII L-0products arid h%prodncts as cobalt, lead, zilic, germanitim. cadlilinill, gold, and silver. Most of the tires mined in Shaba are high in inetal co llt ell I world standards, arid estimates of proved ore deposit point to Sliaba's continuance as a significant %%orid supplier of copper and cobalt for at least tit( next 50 years. Reserx of tit( largest copper producer alone are estilliated at about 18 million tons of copper inetal occurring in 4 ore. UNIFIK, it Belgian firm with concessions d back to tbe early 1900's, exploited these rich deposits lintil I jantiarN 1967, whon its Congo property %%its taken over h% Kinsha%a's own firm, tit(- Gi-neral Congolese Ore (*m"pany (GEX'01\1 INES.). recentiv renamed General Quarries and Mines (.ollipall% o f Zaire ((;E(:. 'I'lle Congolese lacked the technical e.xpertise to nin the operation. however. and the management in(] marketing affiliate of UMIIK. Ceneral Ore Compativ (SG.M), was hired to keep production arid exports at profitable levels. (.opper mining and ore processing take place at three locations ill Shaba J'igurc 5). 'I'll(- western facilities around Kolwezi account foraboilt t%%o-thirds of all copper ores, and the Kamoto mine in that area is tile most productive in Shitba. 'I'lle inines in the western group yield ores containing 4 to 6 copper. 'I'll(- installation ill Octobvr 1969 of a highly antoinated ore concentration plant at Karnoto removed a major production bottic.ieck arid has heen responsible for rinich of the increased output since then. I'he central group of inines, which produce sulfurated ores, h;)s as its focal point tire smelters arid electrolytic refineries at Likasi and Shittirti. In the FIGURE 4. Production of selected metals and minerals (Thousands of metric tori! unless otherwise shown) 4 1969 1970 *1971 364.1 1 9159 1966 1967 190 Copper 282.3 316. 9 320.5 326. C Zinc 67.2 114.9 121.5 119.3 Cobalt 8.4 11.3 9.7 10.4 rin 9.3 7.2 6.6 6A Manganese na 2 271.6 321.8 Cold (kgs.) 10.8 5.0 -1.9 5. 3 Industrial diainonds** (million (-or- n 14.2 12- 13.1 IIA Columbitini-tantaluin Onetric tons). 256.0 96.0 146.0 11:3.0 na Data not available. *Preliminary. "Legal production only. 4 1969 1970 *1971 364.1 387.1 406.0 95.5 104.0 116.0 10.6 14.0 14 .3 6.7 6. 5 6.1 311.4 346.9 387.0 5.r .5.15 5. t; 11.6 12.4 12.0 174.0 132. 0 114.0 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 FIGURE 3. Position in the non-Communist world in mineral production, 1970 Luenaf 7 r FALCONBRIDGE L Tota re Production 1970 %-mnuru Central Ka nt fhill) is assunted Group to be f ocation of Katonto (m e). tj Southern Group Lubumbashi Kipusht Z a m a 25 Congo Z a i re .Uebo Kinshasa i a Da; es V Mat I alaa Tanzania o Area f Map Lobitq Ll _j Angola Za hia Z Lusak: Malawi I' bu South-Wes o esia Africa ire )tswan Mozambique Atlantic Ocean 501117 2.73 Soul Africa ourengo Marques FIGURE 5. Copper mines and processing facilities, 1971 Muso shinsenda 0 25 50 Miles 6 A 5 0 Kilometers 26 GECAMINES concession usanga Smelter area Other concession area a vern Western Group G 0 8 7 4 8,247,546 5 r 6 Concentrator tv Matiffel cO Washing plant M 24 metric tons tr'c 0 n s Hydroelectric powerplant and smelter) Z a i r e Powerline Del c mmune, Central ro. Central Group rume 3,221,894 Kat n' ajq a a So Kam South. Southern Group I 1,038,699 Lac Wes t 6 rn NIZ30 Lac'de Gro Kakontw de /a iijori %-mnuru Central Ka nt fhill) is assunted Group to be f ocation of Katonto (m e). tj Southern Group Lubumbashi Kipusht Z a m a 25 Congo Z a i re .Uebo Kinshasa i a Da; es V Mat I alaa Tanzania o Area f Map Lobitq Ll _j Angola Za hia Z Lusak: Malawi I' bu South-Wes o esia Africa ire )tswan Mozambique Atlantic Ocean 501117 2.73 Soul Africa ourengo Marques FIGURE 5. Copper mines and processing facilities, 1971 Muso shinsenda 0 25 50 Miles 6 A 5 0 Kilometers 26 GECAMINES concession Smelter area Other concession area Concentrator 0 Copper-base mine cO Washing plant .6 Metal works (refinery Hydroelectric powerplant and smelter) Powerline 5 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 oldcr southern group of installations around Lubumbashi, it smelter produces blister copper from ores from both the Kipushi mine (which produces sulfide ores containing up to I I copper) and minvs from the central group. in 1971 the production of electrolytically refined copper and blister copper totaled 406,0W metric tons. A program which may well double copper production and exports by the end of the 1970's is in full swing and involves both domestic and foreign investment. GECAMINEIS' expansion program calls for an increase in output to 460,000 tons by 1974 and an investment of over $100 million. Nearly half of thc total investment will be required for expansion of the mines, ane the remainder will provide for tile coiistruction of concentrator.%, smelters, and refineries. To firiance the program., the central government has exempted GECAMINES from paying taxes on all copper production in excess of 360,000 tons per year and from paying import duties on equipment being installed. Tile recent decline in both copper prices and compa profits has forced GECAMINES to borrow from the European Investment Bank and the Export- Import Bank of tile United States. GECAMINES plans further expansion of productive capacity to 600,000 tons by 1980, but this would require a substantial increase in Zaire's electrical capacity. Tile government is currently studying the possibility of constructing a power transmission line fmal the Inga facilities on the Congo River below Kinshasa to Shaba Region. The line would be one of the longest in the world (1, 100 miles), but there are substantial technical problems to be solved before the project can be completed. !n the meantime, the building of a dam and powerplant at Busanga in Shaba is also being considered as an alternate source of energy. Further private foreign investment in the copper industry has beer sought by Kinshasa far some time. The restoration of order in 1965 finally bore fruit about 2 years later, when an agreement was reached with a group of Japanese firms to develop copper deposits in Shaba South oi Mus.)slii and around Tshinsenda. Both regions have ores very rich in metal content. To carry out mining operations, the Industrial Development and Mining Company of Zaire (SODIMIZA) was formed in April 1969, with 15% participation by the government and 85% interest by several Japanese firms. Extraction of the copper ore was scheduled to begin in October 1972 (at Musoshi), and initial production from these ores is tc be 50,000 tons of concentrates per year. Current plans provide for an additional annual output of 50,000 to 75,000 tons by 1975. Tile concentrates are to be 6 exported to Japan via rail through Zambia, Rhodesia, and Mozambique, and then by ship. A second group, often called the American consortium, was given a Concession of previous UMHK holdings at Tenke and F'ungurunie in September 19 The Zairian Government owns 20% of the new company, The Mining Company of Tenke-Fungurume (SMI'F'), with tile remainder being held by a multinational assortment of U.S., ilrench, British, and Japanese firms, SMTF bopes to begin mining operations by 1975, with an initial prodv.Iion goal of IW,000 ton- of metal annually. Tl,e SODIMIZA and SMTF' projects could mean an investment of almost $400 million through the 1970's and an increased copper production of around 2(X),O(X) tons annually by 1975 (Figure 6). b. Cobalt and zinc Zai is the world's largest producer of cobalt. Most of tile output is a byproduct of copper refining. Copper-cobalt ores are processed at the Luilu and Shitura metallurgical plants Lmd shipped out as electrolytic cobalt granulc or cathodes. An integral part of GECAMINES' copper cxpansion program is to increase cobalt production froin 10,600 tons in 1969 to 16,000 tons by 1975. Output in 1971 totaled 14,5W tons. Zinc concentrates obtained from the sulfide copper ores at Kipushi are roasted at the Kolwezi plant of General Industrial and Chemical Company of Shaba TONS (Thousand) WDO 800 ZfLe 400 200 0 GECAMINES Target GECAMINES Actual Production SODIMIZA Target Tenke-Fungurume Target 1 V70 1971 1972 1973 1974 1975 1980 FIGURE 6. C_*Pper production 1970-71; production targets, 1970-80 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 (SOGECHIM) and s ubsequently Processed into elcctrol tic bars at the Kolwezi electroi0c plant of ti Zinc Metallurgical Company (META Both SOGECHIM and METALZ_INC are parts of tile GECAMINES holdings. Production of zinc fluctuates depending upoll the zinc content of the copper ores mined at 11"ipushi (Figure 4). C. Cadmium and germanium Several r,,re metals arid other minerals have also been produced in Shaba. Flue dusts recove at the Lubumba-Ai smelter arid Processed by METALZINC yield an annual average o f about 15 tons of germanium and 300 tolls of cadmiu Lead is produced at a small electric sme in Likasi all Output is co.-sumed within Shaba. Uranium, radjurn, vanadium, and other minor metals are available for mining, but high operating costs render su operations infeasible. d. Tin Zaire. is among tile leading producers of ti although it accoupt for only 2% of non-Communist world production. The zone of tin deposits extends in a narrow belt for about 600 mil from northern Shaba through Kivu Region and ipto Haute-Zaire Region (Figure 7). Tin Output was affected seriouslv I) th rebellions, and 1966 production was only abo of the 1959 level. Continued security problems i Kivu, deteriorating processing facilities, and an international quota system tied to a fluctuating world market have kept tit output below preindependence levels. Almost all tin mining is carried out b t companies. The largest is the Till Wiing Syn (SYMETAIN), whose mines in Kalima, Ptjtiia, and other locations in Kivu provide about two-thirds of Zaire's production. SYMETAIN's reserves are estimated at 13 0,000 tons, metal content. Tin concentrates of around 15% metal coitent are obtained by crushing, screening, and washing the ore; the concentrates are shipped over the long river- railroad system through Port de Kindu to Kisanganj and down to Matadi. Less than half of SYMETAIN's prodij. -tion operations are mechanized; most are small hand-worked sluices. Efforts to expand production include the opening of a new quarry arid processing facilitv east of Manono to ease the gradual exhaustion of existing production sites. The only other important tin mining firm is Zaire-Tin (Zaire-Etain), located in m,rtherr Shaba. It operates a fairly soiobisticated proces complex, including a smelter at Manono. Zaire-Tin was created in October 1968, with one-half ownership by Zaire, arid the remaining shares being held by (.;c()I()gi(. and Mining Company of Belgian Industrial Engineers (GEOMINES), whi also Inanages the entire Production process f rom mine to inarket. e- COlumbium-tantalum Collillibilln)-tantalum Minerals are obtained as coprodticts of tin mining. As in the case of tin, production of eolt) italum has remained below preindependence tolals arid is currently l ess than half the output registered in 19,59. Z accounts for around 55 of tire total production, and the Mining Company of Kivu (KIVUMINES) for most of the remainder. A local affiliate of Union Carbide began mining columbijrn in l late 1970, but it discontinued operations at the end of 1971 because of excessive production cos f. Gold Gold production has increased onl sl'iglltiv from the IOW levels of the disturbed postindePeridell ce war period. 'Mining operations are carried out exclusivelv within a narrow belt along the eastern border of Kivii and Haute-Zaire Rcgiolls, generally overlapping the tin zone (Figure 7). Gold output feli in the mid-1960's as rebels, m erce ,naries, and tit(- military successi plundered the mines. Even with the retu of security, many of the mines have remained closed because of high operating costs. The govern men t-owned Kilo- Moto Mille near Lake Albert is the major producer, accounting for about 75% of Present production. The only other important producer is the Afdcan Great Lakes M ining C (MGL), operating all underground mine near Bu An expansion of gold output and substantial reduction of associated high production costs will require both modern processing facilities and tile !xPlOitation of new deposits with higher metal content. g. Industrial diam Zaire is the non world's largest producer of industrial diamonds and is to have tile world's largest diamond reserves. Deposit tire 10 c kted in Kasai -Occidental arid Kasai-Orient regio the principal area being around Mbuji-Mavi in Kasai-Oriental. More than half of the nor)- Communist market for industrial diamonds, mostiv it) the form of crushing bort, is supplied by Zaire; (;nlv about 2% of tnntral productio is in gem stones. Th sole marketing agent for diamonds mined in the country is British Diamonds, an affili of the DeBeers Central Selling Organization. APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 OTHER MINERALS Mn Manganese. r Iron ore reserve Qiamonds 0 Diffield Bauxite reserve INDUSTRY 0 Center of light industry j a Metal refining a Hydroelectric powerplant jh Petroleurn r-?fining 501644 2-73 FIGURE 7. Industrial centers and mineral zones. 'rhe main producer of diamonds is the Bakwanga Mining Company (NIIBA), which since Mav 1969 has been half owned by the central gov'ernment. Previously MIBA owned virtually outright by Enterprise and Investment Company of Beeeka (SIBEKA), a Belgian company in which South African and U.S. companies hold minority shares. No change 8 i it the foreign management of M I P-A or its operations took place with the governinent"i becoming majority owner, but annual production has been temporarily' limited to 12 million carats, the maximum amount which British Diamonds has guaranteed to market in view of increasing competition from synthetic diamonds. APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 Copper -cobalt -zinc mineral zone Sri Tin (also produces silver, gold, platinum, tin, cadmium, germanium) Au Gold mineral zone containing tin, gold, coal, Cb Columbium columbium. tantalum, wolfram, beryl, coal bismuth, rare earths The few diamonds of gelil quality are fo-li'd primaril% in the Tshikapa area of' Kasai-0ccidental. No diamonds have becti Illined legally from the area since 1966, Whell chaotic security conditions forced International Forestry in(] Mining Conip o f ti Congo (FORMINIERE) to close down operations. The conlirlatly assets were liquidated, old it Concession reverted to the central government The deposit is worked regtilarl% by Zairian poachers, and tile diamonds (inchiding diamonds poaellvd oil tit(- MIBA concession) are smuggled into Brazzaville, RePl'blic of tit(- Congo, and Biiiiiinbora. Btirundi. The Zairian Goveryinient is taking steps to redtice diamond sinuggliog through new and better techniques of surveillance. tougher penalties, and reopening of the Tshikapa purchasing office, closed down since 1970 because of personnel shortage and invfficiell,. Around 4 million carats of both gern and industrial diamonds were carned ()tit of tit( country illegally during 1971. h. Manganese Zaire produces about 350,000 tons of manganese annually, ranking eighth anlong n producers. Manganese deposits art- exploited IW Kisenge Mining Company, regi and owned by Societe Generale de Belgique. Reserves are large (approximately 6 million tolls, with a 425r', manganese content), and the location of the mines near the railroad line to the Angolan port of Lobito is commercially advantageous. As a restilt of unsettied market con( and rebel incursions, production has varied considerably and stopped entirely bet%veen November 1967 in(] March 1968. Since 1968 production has returned to near normal levels. Other subsidiaries of the company act vs consultants oil operations and exploration at Kisenge. A complement of 2,0W Zairians and about 50 foreigners run the opera tion i. Other minerals Various other metals and minerals are found in Zaire. Large deposits of iron ore exist in many areas, but the absence of coking coal and the long, costly routes to the sea have prevented their development. Bauxite was discovered in 1958 in Bas-Zaire Region. The government is negotiating with two large U.S. aluminum firms, Alcoa and Kaiser, to establish a major metal processing facility using power from the Inga dam, no%% under construction on the Congo River. Limestone and clay deposits are adequate for many years at present consumption rates. Other constructimi materials available include gypsulli, sandstone, granite, basalt, (loartz, all(] stone sititable for road surfacing. 2. Agriculture, fisheries, and forestry Agriculture. which provicivs employment for approximately 70"1 of Zaire's population, has lagged over tit(- past 12 years. Farin production suffered considerably becaiise of tit( local strife which broke out after independence gr a nted i ll 1960. Prosperous agricultural coo1wratives, created I)% the Belgians (hiring 1945-60 to modernize native farining techniques, %vere abandoned, and tit(. large, export- oriented European plantations fell into disuse. Urban markets were frequently isol hoin Iheh niral suppliers, and great num bei.. of native fartners reverted to subsistence agriculture. BN 1966, cash farm outpot was about III-Ilf that of 195 8, and officially recordod exports fell front slNo lilillion to S70 I'llillion�pIlls all estiniatcd $40 million in goods smuggled out of tit(- country. 'Maiiy foods all(] fibers previously exported had to he itilported. Sine( 1965, with the gradoal restoration of' internal security, the trend of agricultural prodoction h be slowk i 11) wa rd. Nevertheless, amitial oolptit of most important crops is still belo%% preindependence levels. reflecting the major inipediments of all inadequate it twork of roads and waterways and the lack of ade(Imite price and income incentives for producers Figure 8). a. I,and use Zaire lies astridv the EI(Itiator, but because of its varying altitudes, temperate and subtropical crops as well its tropical crops are grown. The sparsely populated. low-lying. densely forested Congo River FIGURE 8. Production of selected ogricultural commodities (Thousaruk of metric tons) COMMODITY 1959 1966 1967 1968 1969 1970 Palin oil 245 147 180 206 201 203 Palm kpi oil and oil cake 168 68 97 105 109 107 Cotton.meed oil 90 1 1 1 2 1 Coffee 62 36 39 55 51 67 Tea 4 6 3 5 5 9 Cocoa 5 4 5 5 4 4 Sugar 39 32 35 36 39 41 Cotton 63 7 8 12 18 17 Rubber 40 30 32 41 37 33 ion er* 440 317 269 257 255 239 *Ili thousands of cubic ineters. 9 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 basin covers about a third of the land area wid is %%(-Il suited to palln, rubber, and other tropical trevs Figure 9). A high pla-teau. mostly grass covered %%itli scattered trees and shrobs, inakes Ili) most of the rest of the countr%. Subtropical crops sucli as cotton are grown in this area. III southern Shaba arid aloag the eastern border, the elevation is of suff-cient neight that crops requiring cooler weather, stich as Arabica coffee, tea, and potatoe. art' raised along with livestock. In most of Zaire, the chinate is ti-tipical, with uniformly high temperatim- and high litimidit%. Precipitation in the Congo River basal is mainly in tile form (if thundershowers, with no pronotinced dry season. To the north of that region, a dry seisoll extends from Novetnfer throtigh March, and to tile south from April through September. Wide animal variations in total rainfall aad periodic droughts occor in the olatean wd highland vreas. 501643 2-73 E77 Rice *K Fish Land has always been inidertitilized. Only I of the area is finder cultivation or fallo%v at all% little, and I is in permanent pasture. Sonic 20(;i of (be area is stfitable for crops or grazing I)kjt is unt-rent1% unnsed. I-'oro-sts r?- ke Ili) of' Zaire's total land sin-face, and the remainder is built-tip or %%asteland jIgure 10). Ili pait, the tindertitilization of agrictilbiral land is of ue to I It(- nat tira I infertility of Zairian soils. Exceptions art- found in the Congo [liver flood plain. where sediment front scasonal flooding is deposited, and in Kivo Region, where volcanic soils are deep and rich. lit most other areas, however, Ilw soils become exhatisted r-pidl% unless fertilized and require lollit fallow periods for regeneration. Most of tile land is collectively owned by villages with no right of mortgage or sale. M-tails of the traditional land tenure systern vary widel in different parts of the conittry, but, in general, local chiefs allow .T Oil palm Coffee FIGURE 9. Agricultural zones I Tea W Cocoa APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 I the usufruct of land to individual families, %%lio may retain tile sarne "property" for mail%! years. A system of modern land rights has developed in and arcund the cities art(] for commercial crop growing. Mail%- of these land rights were granted by tile Belgians dti;illg the colonial period and are under scrutiny for possible rc,/ocation by !he central government. b. Food crops for export 0 1 Coffee� Two varieties of coffee a-c grown, and most of the annual crop is exported. The cheaper Robusta variety, used principally to producc instant coffee, accounts for most of the production; the higher grade Arabica is grown in much smaller quantities. Ti,c hardy Robusta coffee tree is grown ii tropical lowla principally around ;iro in the northeast. Arabica coffee, native to the tr(.pical highlands, is produced almost e.%clusively in the elevated area of Kivu Region in castern Zaire. Most of the coffee crop comes from large European-owned plantations; native production occurs on small farms. Coffee production suffered greatly from the mal)V internal upheavals, as workers fled the plantations and reverted to subsistence farming, Few coffee trees were damaged, however, and the return to earlier production levels has occurred almost spontaneously wherever plantations have been restored by their owners. Official reporting does ;!0t reflect all production; all estimated 5,000 to 10,(XX) tons are illegally harvested and smuggled out of the country. For some time, output should exceed total domestic consumption plus exports under the Internaional Coffee Agreement quota: because of a massive planting c1nipaign in the 1950's, manycoffee treesare now in their most productive period. Officially recorded production diifing 1970 reached more than 67AX) tons, almost double the output achieve(] in 1966. Ifigh prices caused the value of coffee exports in 1970 to surpass that of palm oil for the first tirno. Foreign sales of coffee totaled almost $4.3 million, about .34% of Zaire's agficultural extN)rt.i that year Prior to July !472, coffee had been marketed bv individual producers or through produet coopera- tives. Several large and numerous small private firins owned principal]% by Greeks and Portuguese, purchased coffee alid other produce from the natives and provided a limited variety of consumer goods to the interior. In July 1972, a new law enacted creating the National Coffee Office (ON Q, which has nole responsibility for marketing coffee. All growers must now sell to ONC, which in turn exports the coffee. (2) Tea and cocoa�Tea is grown primarily in Kivu Region oil European-owned plantations and, to a lesser extent, on native farms. Annual production is at approximately 8,(X)o to 10,(M tons, of which about one-lialf is legally exported and mast of the remainder is smuggled out of the country. Most of the tea consumed domestically is provided by native farmers who are unablu to sell their crop to European planters for processing and export because of its allegedly inferior qualitN. Cocoa is a minor food crop; it is grown oil plantations in the Mayunibe forest near tit(- coast and in the north near Lisala and Budjala. Production, which is fairly stable at between 4,000-5,(YX) tons, is almost entirely exported; oveiseas sales totaled $3 million in 1970. c. Food crops fordoriestic consumption (1) Cassava, plantains, and cereal grains�The average Zairian citizen relies heavily upon starchy foods, particularly cassava (manioc), plantains, and corn, for his dailv diet. Although found almost evcrv%% in Zaire cassava il produced primarily in tile Kinshasa and Kasai areas; minor producing areas are in Shaba and Kivu. Prior to independence, production was high enough to allow the exportation of 60,000 tolls of cassava flour; since 1963, however, foreign sales have been negligible. Plantains are grown throughout the country and, next to cassava, are the most important domestic food crop. Corn. the principal cereal grain, is cultivated ext, on small patches of land. Some corn was expo,,ed before IWO, but the subsequent civil disturbances have APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 FIGURE 10. Estimated land use, 1971 forced authorities to import an average of 45,000 tons a year. about 40% o' -'omestic consumption. Rice is another staple grain crop, grown along the rivers in Haut-Zaire and Equateur regions and to some extent in Kivu. The rice production process, from the distributi of seeds to marketing, is controlled by private European firms. Around 20,000 tons of rice must be imported annually to supplement domestic production; demand for ric,-, totals about I 10,(XiO tons annually. (2) Vegetables andfruits�The basic starchy Zairian diet is supplemented by a variety of vegetables arid fruits, including beans, peas, potatoes, lettuce, and strawberries. These are grown in the Kivu upland region of eastern Zaire. Relatively large quantities of these products formerly were shipped to urban areas throughout the country, but internal disorders and transportation difficulties have reduced shipments to below preindependence levels. With the exception of bananas grown for export on European-owned plantations in the Mayumbe coastal region, very little produce is marketed outside the immediate producing areas. (3) Sugar�Sugarcane is produced in only two places in Zaire: the Zairian Sugar Company (CSZ) plantations in Bas-Zaire and the plantations of Sugar Mills and Refineries of Central Africa (SUCRAF) in the Ruzizi valley of Kivu. Production of cane by SUCRAF has suffered from past rebel disturbances in Kivu, but losses have been largely offset by expanded produ-?tion at the CSZ plantations. The demand for sugar continues to expand as people move into the cities, where the commodity is more readily available and prices are regulated. Production does not satisfy damand, arid imports now supply oue-third of the total domestic consumption. Expansion of dornesti output will necessitate an increase in crop plantings and in mill capacity, but this increase, in turn, depeads upon higher prices than are now allowed by the government. d. Industrial crops Output of Zaire's industrial crops kernel oil, cottor., and rubber�was severely curtailed during the postindependence disturbances and is still below 1959 levels. Only 360,000 tons of these crops were harvested in 1970, compared with 550,000 tons in 1959. Exports in 1959 and 1970 totaled 362,000 tons and 262,000 tons, respectively. (1) Palm oil production of palm oil, palm kernel oil, and oil cake increased to 310,000 metric tons in 1970 from 200,000 tons in 1965, following the 12 return of political stability in the prodticing Lreas. Output in 1970, however. was still only about three- fourths that in 1959. Significant expansion in output of this important agricultural export will require an extensive replanting program and an adequate labor supply, but labor has become increasingly attracted to urban jobs, which pay more, Depressed world prices for palm oil are forcing Zairian prod to abandon the less efficient graves of wild palm trees arid to concentrate production on large plantations, where .nore s%Istematic harvesting and cultivating techniques result in greater kields of higher quality oil. This has caused a dechne in the harvests of the large wild palm region in the Kwilu area, with a resultant shift to increased plantings in Equateur Region, which has vw;t tracts of rainforest ideally suited for palm plantations. Major palm oil producers are relocatir-, their facilities to this region. Palm oil is obtained from the exterior fIc-.shy pulp of the palm fruit, and palm kernel oil q extr3eted iron) the hard kernels, These oils are used as cooking fats; in the manufacture of margarine, other food products, and soap; and ir the copper, steel, and tinplating industries. Most processing of palm oil is done local]% to insure a hgh-quality oil arid to reduce transportation costs betweeo remote producing areas and the markets. Domestic dernand for palm oil, which is around 50,000 tons, is for use in foods, soap production, and in the copper flotation process. Art additional amount. currentiv unknown but believed to be rather large, is consumed bk the rural population. About 500X) tons of palm kernel cake. a livestock feed, are processed and exported. Until surpassed recently by coffee. palm oil was the leading agricultural export, LO W prices resulted in a decline in the value of palm oil exports in 1970 to $41 million, or about 31% of all farm exports. (2) Cotton is grown in three distinct areas: north of the equatorial rainforest in Equateur and Hat2t-Zaire regions, south of the rainforest in Kasai- Oriental, Kasai-Occidental, arid Shaba Regions, and a small area bordering the northern part of Lake Tanganyika. An average of one-third to one-half hectare per family is used for growing cotton. Prior to independence, each native family in the cotton- growing area was compelled to plant at least one hectare of cotton, with Belgian-run cooperatives supervising the entire industry from planting to marketing. By 1959, 63,000 tons of cotton fiber were produced, with only 10,000 tons being retained for domestic use. During the first chaotic years of independunce, production dropped precipitously to a low of about 6,000 tons in 1965, arid cotton had to be APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 imported to satisfy domestic requirement I)es a slight decline in 1970. production since IW has been generallk; upward. primarJv because ofstability in the countryside but also because foreign-owned cotton COmparnes resumed their earlier Practices of pmvid;ng seed, handtools, and insecticides to the Zairian farmers. Such assistance, however, has almost entirely ceased, since the government no longer reimburses the companies for their expenses. Zairian authorifies, with assistance from Aroad Wend to develop cotton production as a means of increasing -Income in the rural ar-as. One crop- intensification project is already underway and is exceeding production goals; a second such project anticipates an increase in output of 27,000 tons o seed cotton in 6 years. expar.ding current output b% almost 505 Producer prices were raised in July 1969 111 all effort to stimulate production in marginal growing arc-as as well as the principal cotton regions. Even --vith the increase, however, prices are still quite low, compared with those in neighboring countries. In late 1971, a q uasi -govern men tal organization was established. which. in May 1972, was given sole authority over the operation ot the cotton industrv. (3) Rubber�Rubber is principally a plantation crop, but some is obtained from peasants who tap wild trees and Wher sell the latex to the plantations or, established in cooperatives, produce rubber sheets with their own equipment. The major rubber- producing area is the &)ende region of Equateur. Most of the latex is exported as ribbed smoke sheets; only a small amount is processed for domestic use. Rubber production on plantations suffered extensive material and manpower losses during the ]%.'4-65 rebellions, arid exports fell to a postindeperidence low of 21,W0 tons. 1,.)w world ves have kept rubber output below 40,000 tons annually, despite efforts to rejuvenate the industrv. e. Livestock Cattle are kept by Zairian herdsmen and Etiropean ranchers, although the natives consider the animals more as a symbol of wealth than a marketable commodity, usually maintaining only a subsistenc- level of meat consumption. Animal husbandry is largely confined to semipastoral tribes in Kivu and Haut-Zaire Regions. 'rhese regions constituted the center of an important meat and dairy product industry prior to independence, whert several European-owned herds of more than 30,000 head each were located there. Herds were greatly reduced in size during the first years of independence because of indiscrimin slaughtering and the lack of ade(Itiate disease-prevention services; veterinary facilities continue *.o be scarce and substandard in Kivu and Haut.-Zaire regions. Receptly, there has been a modest but encouraging develop'nient of Zairian cattle ownership in Bas-Zaire Region. where livestock breeding centers are providing cattle to farmers who eventually repay then, in kind front the offspring. Several substantial herds have been built tip under this system and could pr wide an important fWure source (if meat for the Kinshasa market, which is heavilv dependent upon meat imports. Eurowan ranchers ar'e located mainly in Bas-Zaire and Shaba regions, where they are (livid into either large corporate ranching organizations with herds of 20,000-30,000 head or Individual ranchers with generally smaller herds. In 1969 there were an estimated 650,000 head of cattle, 1.5 million goats, and 641,0W sheep in Zaire. 1)(Imestic 1 consumption was arounJ 45.CX)0 tons in 1970, of which 12,500 tons we imported frorn Chad. Argentina, arid South A c ol sum pti on (i f milk, cheese, and other clairy products continues to run well above production; tire market is suppli primarily by imports. Poultry raising is of little commercia! significance because (if ti.e high cost of feed. Flocks are kept in the Kinshasa area and in other major towns, but dornestic demand for poultn products is met largely through imports. f. Fishing Zaire is rich in fresh-water fish resources. Large catches are harvested from the Congo River watershed, countless other rivers and streams, and lakes along the eastern border. Annual consumption is reportedly around 2(X),O(X) tons, 9Wj of which is from noncoastal waters. Most of the ell is distributed arid catc -n fresh, bui dried, smoked, and salted fish is traded wher(-ver transportation and marketing facilities permo. A small amotin, of frozen fish is shipped to urban centers. Fishing along the rivers is engaged in almost exclusively by individual native fishermen using pirogues and small nets, while the eastern lakes are the domain of European firms, mostly Greek, using motorized launches and large nets. Maritime fishing along Za;re's 23-mile Atlantic coastline is the primary responAbilit of the Zaire Maritime Fish Company (PEMILRZ,0, operating out of the Matadi port area. PEMARZA supplies both fresh and frozen fish to the market arid exports those varieties of seafood (such as so!e. lobster, and shrimp) that do not appeal to Zairian tastes. The company has experienced slow growth for several years because of international competition in the coastal fishing areas, high operating costs, and low 13 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 gmernmentalk fixed price.. PENAARZA's total catch ill 1970 almost I. tolls, solliv%%hat 1)(.Io%% tilt- IS.(XX)-toii capacit% of the conipan%*s tramler, IN-spite (he abtindance of fish ill Zairian watvr, tbe total corninerviial. catch (66,M) toils ill 1970) is tiol large enough to satisfy demand, and :300M-40,M) tolls of fish and fish prodlicts llitist be imported each %var. Man% itidustrial fisheries along the eastern Likes m-re abandow-d thiring the rebellions of t1tv varl\ 1960's, while those still operating are pla by it lack of rt-placeincio part., for motorboats atid trtickN. Restoration of Zaire's fishing sedor will retpfiry substantial imestment and Welinical asistairicv, iteither of %\hich is readil\ a\ailable at the presetit tinle. g. Forestry Zaire possesses tht- largrest restnesokirgw. forc Africa. the\ are located primarily ill the 1,ropical rainfort-st of Ilie 'otigo fliver basin hgute I I This vast tropical rainfore%t covi-rs most of' F(Itiateur and I la(it-Zairy Regiotis all(] parts of Kivij, Bandtindij, and Kasai Regions, a total of more thaii 95 millimi liectaws. 'I'll(- Ma\ijinhe rainforilm near (if(- AtIalitic coast is significanti% sinaller ill size. covering almid .3(X).(XH) hectares, bid its greater acet-ssibilih ha% illade it the principal source of' commercial Imidwr and Iiiinher exports. The for(- indtistr\ consists of man\ indepelldvilt loggiltg outfits. [llc,-haWzcd ,awillilk several 1)1% "ood and venver plants. and minicrotis pitsa% carpeiRr\ shops. and ftiekood ctitting operations. The otitpit and export of forest pro(hicts have dit-creased stcadil\ sitice indvix-ndence, %%ith total domestic prodtiction falling to abotit oiie-half the 1959 Ivvd of 4400)0 cijbic t-m-ters, Log \%cre stispentled from October 1969 to April 1971 bccausv of the \irtual vOiaw4ion of coninierciaN\ exploitable Rainforest Dense forest or alpine scrub Savanna Tall brush and grassland Marsh or swamp 501642 2 73 FIGURE 11. Vegetotion I I APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 7 J_ Kinshasa ,Kikwit Kanings Rainforest Dense forest or alpine scrub Savanna Tall brush and grassland Marsh or swamp 501642 2 73 FIGURE 11. Vegetotion I I APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 stands in the Mayumbe area. Although smine rough limber is being shipped overseas, curretit output is designed primarily to satisfy domestic demand. Sornv veneers and plywood are exported, but even these have deLlined in volume during the past 2 vear%. Foreign cash sales in 1970 totaled $3.4 rriflilion, slightl% over half those of 1966. A 36-year reforestatiol) program financed by a tax levied upowi the forestry companies should restore limited parts oi Mayum!ie to production within 5 or 6 vears., but cutting will be sharply reduced compared ta previous levels. The decline of the Mayumbe forest as a major source of v ood products has forced lumber operations to shift to the Zaire River basin. The transfer process has been slow, however, since the costs of transpo)rting forest products from tire Zaire basin area are high arid profits from ol are comparatively low. An imu)rtant determinant of Zaire's ability again toy become an impowtant exporter of wood arid wood products is how well cutting operations are supervised by -overnmental authorities. The forestry service of the Department of Agriculture inherited from the colonial administration an elaborate forest manage- merit plan encompassing licensing and surveillance of commercial operations and a comprehensive reforestation program. Until 1972, however, the government has had neither the technical personnel nor the financial means to regulate the industry full% arid forest managerrient has been extremely lax. The consequences have been severe: royalt payments to the government have been evaded, reforestation has lagged, and the depletion of primary reserves has accelerated. I Fuels and power The electric power industry is relatively striall, but it ranks seventh irt Africa in installed capacity arid fifth in the production of power; annual domestic per capita power constimption (148 kw.-hr.) is also high. Total installed capacity is in excess of 751,000 kilowatts, arid electric power production t'airing 1970 amounted to more than 2.9 billion kilowatt hour.%. Hydroelectric plants produced 90%, of the total output, and the mining industry accounted for over 70 of total consunaption. Nearly all of the large urban areas have electric service, but rural areas are poorly supplied or are totally lacking in electricity. Control of the electric power industry is vested mainly in the federal government, tinder the Department of Energy; control is exercised through a centralized authoritv, Water and Electricity Distribution Administration of Zaire and Rwanda- Burundi (REGIDESO). Four publicly owned companies construct and operate large powerplants, such as Public utility plants which furnish electricity on in interregional basis. REGIDESO functions as a holding com and is responsible for overall management, thus providing continuity in develop- ment and operation. The mining and other indu companics produce electricity for their own needs. making any surplus x)wer available for public distribution. The high-voltage transmission system is owned by GECAMINES, which regulate-, interregional flows of electricity as well as international exchanges with Zambia, 0)ngo, Rwanda, arid Burundi. Because of the dearth of fossil fuels. the countrv's vast watcqxower resources have been developed to provide the backbone of the national power grid. H-Mroelectric development is concent rated in the vicinity of Kinshasa and in southern arid eastern areas of the country. Around four-fifths of the installed hydrMectric capacitv is in four large plants located in Shaba Region: Le Marinel (276,M0 WA Nzilo (120,0M kw. 1 Ilebo) (%.,(X)o kw.), arid Zonzo 1 (75,000 kw.). The remainder is accounted for by -mviler stations with capacities up to 47,000 kw. Thermal plants. which are scattered throughout the ctnintry, are predominantly diesel powered. These plants are used on a standby basis, operating when water is insufficient for full hydroelectric powerplant operation arid during peak-load periods. The principal consumers of electric power are the mining art(] metallurgy industries, which accounted for more than 72 of the domestic consumption in 1970. Other industries arid the railroads consumed about 10%, households and comnivrAal users in the larger towns accounted for I I%, and 6.3% of the output was exlx)rted (Figure 12). Most nonindustrial use is in ur6an areas, where abomt.3 million kw.-hr. are constimed annually. mainly for household and street lighting. Only about 10% of the country's homes have electricity, and about one-half of these are in the Kinshasa- M atadi area, which also accounts for much of the commercial use (mainly street lighting). A small amount of the total available power is used by a 42 mile-long electrified railroad extending between Tenke, Lubudi, Lubumbashi, arid Kolwezi, A very small' amount is also used for the operation of irrigation pumps. Zaire's tinharnessed hydroe'ectric potential� estimated at 103 million kw' �represents about 13% of the world po)tential, of which over 10% is in the lower basin of the Congo River. Less than I% of the natioi.'s poten'ial has been exploited. On the lower Congo River, part of the first stage of the Inga dam 15 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 Total 2.949 million kilowatt hours* and I'lly 2.133 72.337, Electrified '4Wp.Or.ts 120 Othe Railroaas 183 Kinshasa 187 Metropolitan Area 326 Comprising all industrial and nonindustrial convimption in the Kinshasa metropolitan area FIGURE 12. Consumption of electric power, 1970 hydroelectric plant was completed in late 1972, and bids are being taken for construction of the second stage. Electricity produced by the first stage will be transmitted to Inga, Kinshasa, Matadi, and Boma in the lower river region. Seven transformer stations are planned: two each at Inga and Boma, and one each at Kwilu, Kinshasa, and Matadi. Because of inadequate domestic technical and financial capabilities, completion of the Inga project is dependent on foreign assistance. Primary donor countries are Italy and the European Development Fund (FED). Zaire's consumption of petroleum products has been increasing rapidly since the country's only refinery was completed in March 1968. The plant, located at the ocean port of Banana, was built 'Uy the Italian state- owned company, National Hydrocarbons Agency (ENI). Operating entirely on imported crude oil, initial refining capacity was 650,000 tons per year, but it was recently expanded to 750,000 tons, Production totaled 631,000 tons in 1970, somewhat more than 75% of total domestic consumption for the year. The refinery, which is capable of processing crude oil into gasoline, diesel fuel, fuel oil, and jet fucl, is operated by Zairian-Italian Refining Company (SOMR), jointly owned by the Zairian Government and ENT. C Drily file] oil is exported. Petroleum products destined for Kinshasa are shipped from the refinery by barge and pipeline products going to Shaba are sent by tanker to Lobito, Angola, for transshipment via the Benguela 16 railroad. The major area not served by ti iafinery is Kivu Region, which imports petroleum pr lucts from abroad through east Africa. There 's no domestic souree of crude oil for the refinery, although exploration by private companies indicates the presence of a substantial offshore petroleum reservoir and deposits of oil and methane gas in Lac Kivu. Methane gas has also been discovered near Kisangani. The petroleum deposits are located within concessions granted to foreign interests, however, and commercial exploitation would probably be focused upon intern.ktioral markets, primar4y in Weste. Europe and Japo.i. Some production may well be diverj,d to the refinery at Banana, but it is unlikely that tiiis would significantly ease Zaire's dependence oipon imported crude oil. At the present time, crude petroleum s obtaimd front Middle East suppliers by the four distributors of oil products in Zaire: Mobil, Petrozaire, Sliell, and Texaco. In addition to deposits of petroleum and methane gas, Zaire possesses rather large coal reserves� estimated at several hundred million tons�but their relatively poor quality has forestalled extensive exploitation. The only two mines in operation are located in Shaba Region-, they belong to the Luena Colliery, an affilitate of GECAMINES. The mines provide about one-third of the annual domestic requirement of around 350,000 tons; the remainder is imported, primarily from Rhodesia. 4. Manufacturing and construction In comparison with other sub-Saharan countries, Zaire has a large and diversified manufacturing base. The country leads the continent in the production of beer and ranks high in cigarettes, textiles, and metal and chemical products used in the mining industry. Ownership of' most manufacturing plants is held by foreigners, primardy Feigians;' other firms are controlled in varying degrees 1)) Greek, 1J.S., British, Dutch, or Canadian nationals. The establishment of local manufactitring industries was prompted by the nation's isolation from the main suppliers of consumer goods and spare parts during World War 11. Production increased rapidly until 1958, spurred by the country's general economic growth and encouraged by government policies favorable to the establishment of new plants. Output stagnated between 1958 and 1961 because of depressed economic conditions and p6!:tical uncertainties following independence. During the next 5 years, rising demand, spurred by the increased purchasing power of the growing number of civil APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 servants and by restrictions on imports of foreign goods, encouraged manufacturers to increase production bv 40%. Competition became keener, however, when monetary arid fiscal reforms enacted in June 1967 reduced urban purchasing power and removed nianv import restrictions. Man high-cost industries cut back production drastically because of curtailed demand and the increased availability of cheaper import goods. Other industries, however, used more liberal import arid domestic credit poiicies to bring in Ladly needed modern equipment to increase production and' improv the quality of their products. As a result, the manufacturing sector was better equipped to rneet the rising demand for consumer goods, and output in most industries surpassed totals registered before the 1967 monetary reform. Only the clothing, met fabrication, and furniture indintries remain below pre- 1967 production levels, because of the superior quality of imported goods. Additional improvement ill industrial production depends laigely upon liberaliza- tion of the current price policy, which has frozen producer prices at June 1967 levels. Subsequent increaSL in the cost of labor and raw materials and reduced profit margins have decreased the amount of local capital available for expansion arid moderniza- tion. Manufacturing is concentrated in the Kinshasa area arid in the Shaba copper belt; Kalemie and Kisangani are minor production centers. Most plants sell their output locally because 'ransportation links between the widely scattered industrial centers are inadequate. Consumer goods account for the bulk of industrial output--647c of the total value in 1970. Major industries include the production of sugar, vegetable oils and fats, beer and soft drinks, and cigarettes. The textile i ndustry is also important, having all installed capacity of about 120,000 spindles and 2,200 looms; one large plant in Kinshasa has almost two-thirds of this capacity. Other consumer goods, produced primarily from local materials, include clothing, blankets, shoes, and rubber products. Durable items, such as automobiles, motor scooters, refrigerators, stoves, phonographs, and radios are assembled in the country, usually from imported parts. Equipment requirements of the Shaba mines have provided a steady market for several industries, primarily chemicals and metal fabrication. The chemical plants are located within the m-ning area and provide sulfuric acid for processing copper, cobalt, explosives, and various metal products. The construction industry stagnated during the early years of independence but has registered a significant revival since 1965. Few major development projects are underway, but considerable ne" construction of homes, offices, and factory buildings is taking place, primarily near Kinshasa. The construction industry i5 dominated by a few large enterprises, most of which are Belgian owned. An increasing number of Zairian entrepreneurs are entering the industry to take advantage of quick profits from real estate operations. Frequently, Zairian contractors subcontract to BeIgian-owned firms or hire Belgian technicians. Most construction materials are produced locally. These include roofing and building tiles, cemen concrete pipes, cinder blocks, and bricks. Only highly specialized types of cement are imported. Five major cement plants serve the Bas-Zaire Region, the copper belt, and the eastern part of the country. The two largest plants are expanding production i n anticipa- tion of increased demand for cement in Zaire arid in neighboring Zambia. Bricks and a wide variety of other construction materials are produced at "two plants operating in Kinshasa and Lubumbashi; the output is consunied locally and is sufficient for present requirements. 5. Domestic trade Every village arid town has a public marketplace maintained and supervised by native Zairians, who rent space to retailers. The ;arger markets consist of a number of specialized areas in which particular types of merchandise are sold. Merchants and peddlers sell goods in small quantities at prices determined by bargaining. They purchase merchandise from local wholesalers and traders who themselves often own rotail shops arid employ many petty traders. The latter are frequently non-Zairians who, in addition to working for retailers, also travel through the countryside peddling their wares. This Lraditional system provides an outlet for small agricultural surpluses and facilitates the exchange of hMcrafted items and the distribution of imported consumer goods. in addition to the traditional distributior- system, there is a modern merchandising sector, which caters primarily to the foreign community and the Zairian urban elite. Wholesale import houses and their retail stores are found in all the major urban centers. Most of their business comes from the large mining companies, which purchase consumer goods for sale to their employees, and from small shopkeepers and petty traders. The most significant requirement for the expansion of Zaire's domestic trade sector is the upgrading of the 17 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 country's road, rail, and water transportation systems, which deterioratcO, markedly during the years of civil strife following independence. Roads have fallen into serious disrepair. and most river and rail transportation has b affected adverselv b administrative disorder, lack of maintenance, and the absence of imported replacement parts. After independence, the volume of traffic handled by major transportation companies fell to about one-half of the pre- 1960 level. Since the mid-1960's, the railroads have been reequipped to some extent, and the volume of traffic is rising. The most acute problem is the 000r condition of the roads, which, as adjuncts to the railroads and waterways, are basic to domestic trade. The transportation problem is being studied by the Zairian Government and various aid donors; commitments to upgrade parts of the system have been made b% the United States, the ELropean Development f tind (FED), and the International Bank for Reconstruction and Development (I BRD). C. Economic policy and development 1. Polic The main goal of Zaire's economic policy has been the reduction of foreign dominance over the economy. A special target has been the Belgians, who, when they departed their former colony at the time o f independence, left behind virtually no experienced native entrepreneurs or managers. The chaos of the early 1960's was followed by efforts to Africanize the ec(snoniv and to renegotiate those agreements of prior g(; ernments which were considered overly favorable to ireign interests. The culmination of Zairianiza- tion" came in 1966, when the Mobutu Government passed a series of laws which (1) canceled al'. land, forestry, and mining rights granted prior to 1960 and required reapplication by all foreign concessionaires; (2) required foreign firms to move their headquarters to Kinshasa; and (3) permitted greater financial control of foreign firms by the government. In practice, government action against foreign interests has been very limited, the most notable exception probably being its seizure of the assets of UMI-IK in 1966. Indeed, the government has eased many extreme aspects of Africanization in an effort to improve the investment climate. An investment code promulgated for this purpose in June 1969 p fc r the possible extension of fiscal and other benefits to firms whose investment projects are considered important for the country's economic and social development. Fo-eign managers, a rarity during the upheavals of the early years of independence, are 18 permitted again in the public sector to supervise municipal electricity and water systems and to reorganize water transport and road maintenance. a. Government finance The central government, with assistance from the IMF, initiated a general economic stabilization program in June .1967. Important fisca! aspects included the presentation of a formal budget with provisions for development allocations, expansion of the tax base, improved collection of taxes, and procedures for limiting expenditures. Fiscal powers todav are primarily in the hands of the central authorities, with previously uncontrolled provincial expenses now dependent upon funds from Kinshasa. In addition to its new control over the disposal of public funds throughout Zaire, the central government has expanded its taxing power in a combined effort to increase revenues and help stabilize the economy. The main feature of the prourram is the i!eavy reliance on e' indirect taxes, particularly on exports. Remaining sources of government incorne-direct taxes, portfolio investments, fees, service charges, and receipts frorn governmcn! property-contribute about 30 of total tax revenues and 35% of badgetary income (Figure 13). The heavy dependence on taxes on international trade, however, makes public finances vulnerable to fluctuations in the level of trade and in world market prices. Direct although still a secondar%, source. of government revenue, are increasing in importance, FIGURE 13. Government revenues (Millions of U.S. dollars) Total tax revenues 535.9 588.2 5 15. 4 Other revenue 9.5 25.1 54A Adjustments* 6.4 17.2 0.0 Total government revenue 539.0 630.6 569.8 *Adjustments result from receipts not yet classified by revenue category or not yet transferred to the central account of the Treasury. APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 1969 1970 1971 'faxes on net income and profit 139.1 144.1 134.4 Corporations 86.2 92.8 76.0 Wages and salaries 41.1 37.0 43.5 Other 11.8 14.3 14.9 Taxes on property 7.2 6.0 9.8 Taxes on production, consumption, and domestic transaction 56.1 72.2 102.1 Internal turnover tax 35.2 49.3 72.1 Excise 20.9 22.9 30.0 Taxes on international trade 332.3 364.2 268.3 Other taxes 1.2 1.7 0.8 Total tax revenues 535.9 588.2 5 15. 4 Other revenue 9.5 25.1 54A Adjustments* 6.4 17.2 0.0 Total government revenue 539.0 630.6 569.8 *Adjustments result from receipts not yet classified by revenue category or not yet transferred to the central account of the Treasury. APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 reflecting increased wages an(] corporate profits. Personal income is subject to it progressive tax ranging from 4% to 60%. Corporate income is taxed at a single rate of 40%: prior to 1967, it was taxed at a sliding scale ranging from 14% to 40%. Collection of corporate taxes has been accelerated by the requirement that companies pay in advance 50% of the previous year's tax as an initial installment toward the current vear's tax liabilitv. Total bulget experidittires, including public debt amortization, increased by more than 60% in 1968-70 (Figure 14), before declining export revenues forced a decline in the rate of growth of spending in 197 1. Both current arid capital expend it tires increased during the 1968-70 expansion, but the 1971 retrenchment affected only capital outlays, since investment spending stagnated (F'igure 15). Current expenditures continued rising primaril% because of increases in wages and salaries, financing operations of various government ministries (particularly defense and education), the central government's assumption of provincial budgets, and special outlays directed by the presideacy. These functions accounted for about two- thirds of projected government spending in 1972. as shown in the following percentage distribution of central government expenditures according to functions: Administration (incl. Office of the President) 30 Investment FIGURE 14. Consolidated government financial Education I 20 operations* 11 Regional budgets 6 Debt service (Millions of U.S. dollars) Others 4 1968 1969 1970 Expenditures 45W3 586.4 730.0 Revenues** .1lo.". 588.0 686.1 Deficit -40.0 1.6 -43.9 Financing the deficit 40 J -1.6 +43.9 Domestic 1 0. 2 10.6 28.3 Central Bank 7.6 -11.0 25. 7 Commercial banks 7.7 -0.3 0.4 Post Office -0.1 1.7 -0.3 Other borrowing 3.9 2. 5 Foreign 20.8 9.0 15.6 Lung-term loans 14.9 11.6 12.3 Suppliers' creuits 13.7 9.5 WA Reimbursements -7.7 12.1 13.2 *Totals may not add because of rounding. **Include government revenue and foreign aid. reflecting increased wages an(] corporate profits. Personal income is subject to it progressive tax ranging from 4% to 60%. Corporate income is taxed at a single rate of 40%: prior to 1967, it was taxed at a sliding scale ranging from 14% to 40%. Collection of corporate taxes has been accelerated by the requirement that companies pay in advance 50% of the previous year's tax as an initial installment toward the current vear's tax liabilitv. Total bulget experidittires, including public debt amortization, increased by more than 60% in 1968-70 (Figure 14), before declining export revenues forced a decline in the rate of growth of spending in 197 1. Both current arid capital expend it tires increased during the 1968-70 expansion, but the 1971 retrenchment affected only capital outlays, since investment spending stagnated (F'igure 15). Current expenditures continued rising primaril% because of increases in wages and salaries, financing operations of various government ministries (particularly defense and education), the central government's assumption of provincial budgets, and special outlays directed by the presideacy. These functions accounted for about two- thirds of projected government spending in 1972. as shown in the following percentage distribution of central government expenditures according to functions: Administration (incl. Office of the President) 30 Investment 22 Education I 20 Armed forces 11 Regional budgets 6 Debt service 7 Others 4 Total 100 Actual expendiLures have consistently exceeded budgetary appropriations (by 43% in 1969 and 48% in 1970), with overruns of $160 million and about $200 million in those respective years. Even a reduced 1971 budget underestimated actual spending by 25%, or around $150 million. The public debt at the end of 197 1 was estimated at $519 million, 45% of which was foreign debt. Domestic debt consisted almost entire]% of claims held by the banking system, mainly the Bank of Z.iir,. the country I s central bank. A favorable budgetary situation permitted a reduction in the domestic debt in 1969. but increased government borrowing has taken place since inid-1970, again raising the debt level. The country's foreign debt was eased considerably in July 1971, when Belgium agreed to take over the indebtedness of the Belgian-Congolese Amortization Fund. The fund had been created in 1965 to refinance the outstanding foreign debt incurred while the Congo was a colony but %vhich had not been guaranteed by the Belgian Government. The liabilities of the fund represented over 40% of Kinshasa's total foreign debt by 1971. The remaining foreign debt is owed in large measure to the United States, Italy, France, Belgium, and the IBRD. Since 1960. deficit spending has characterized public finance. The only exception was in 1969, when revenues from copper exports were much higher than had been anticipated. To finance budgetary deficits, the government has borrowed heavily from domestic iources, particularly the country's banking system. By 1967, easy financing of excess spending, combined ith frequent increases in an(] salaries, had led to rampant inflation and it marked deterioration in the countrv's overall financial Posture. The reforms of June 1967 instituted several restraints on government spending; an annual budget to be drawn LIP in balance with anticipated revenues; wage and salary increases were to be limited; and a ceiling was placed upon commercial bank credit to the central government. Although these measures have not always been adhered to, the% have maintained some degree of constraint upon current operating expenditures. Foreign sources-principally private bank loans arid Eurodollar loans-are being used increasingly for financing budgetary deficits, but these are costly. Overall credit developments %vere moderately expansionary from June 1967 through 1969, with more than 60% of total borrowing coming from the private sector. With the deterioration of the national budgetary situation in 1970 and 1971, however, domestic credit increased rapidly, by perhaps as much as $120 million in 1971 alone. Credit expansion in both the public and private sectors is controlled by a H APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 system of credic ceilings, probably the most important monetary too! currently being used. The government may receive direct advances from the central bank tit) to 15% of the average annual receipts in the precedin 3 years; these advances are not to be extended for more than 300 days during each calendar year. Quantitative credit restraints may be imposed upon the private sector as well, but more important is the selectivity which the central bank h,s utilized to allocate and' redistribute credit resources among various economic constituencies. By using the cilement of selectivity, the bank has become influential in directing the country's economic development, especially transportation arid export projects. b. Money and banking The Bank Zaire is the country's central bank it operates under statutes incorporated in the 1967 reforms. Central bank policy is determined bva board headed by the bank's governor. In addition 'to voting members, the board has a nonvoting delegate who represents the Department of Finance. Besides its control over domestic credit, the Bank of Zaire is authorized to act as banker arid cashier for the central and provincial governments as well as for public arid sernipublic enterprises and to manage the country's foreign exchange transactions. The central bank ni'ay also establish reserve requirements, set discount rate%', and regulate commercial bank credit operations. Bank resources may he used to finance public participation in private ventures that contribute to the economic development of the country. The commercial banking systern consists of eight operating institutions, most of which are branches or affiliates of foreign banks. The only commercial bank established by private Zairian inte rests is the Batik of Kinshasa, founded in November 1970. The government has pressured quasi-governmental organizations to use the bank for all transactions, and native depositers are also strongly urged to avail themselves of the bank's services. Further 10Cal involverrient in the banking system came in August 1971, when the country's second-largest foreign- owned bank, Congolese Banking Company (SOCO- BANQUE) was reorganized as the People's Bank and placed tinder sernipublic control. The largest foreign- owned commercial bank is the Commercial Bank of Zaire, with deposits accounting for more than 60% of all commercial bank deposits. Principal ownership is shared equally by the Societe Generale de Belgique and the Zairian Government; the Morgan Guaranty Trust of the United States is the largest minority shareholder. Several branch offices of the bank have 20 limited authority to act for the central bank in cashier arid depository roles. The First National Citv Bank/Zaire is the only wholly owned U.S. branch bank in the country, having begim operations in November 1971. Financial institutions other thaa commercial banks play only a minor role in Zaire's money arid credit operations. The handling of savings deposits has been the responsibility of the National Institute of Social Security (INSS), the National Insurance Company, arid the Ceneral Savings Batik; li(p6dity problem's have hampered their activities, howeve A lie holding agency, the National Trust and Finance Company (SOGEFI), was set tip in late 1970 to encourage domestic savings by investing in local enterprises. Most of its portfolio is in the country's fotir main automobile importing agencies. fit air attempt to step tip industrial expansion, the Development Finance Company (SOFIDE) was created in January 1970, with initial capital supplied by the central government, several private investment groups, arid the World Batik. Loans through June 1971 totaled almost $14 million, primarily to agricultural industries, light mechanical industries, and beverage and chemical industries. The Republic of Zaire's currency is the zaire, which replaced the franc in conjunction with devaluation in the 1967 reforms. The official buying rate is 0.5 zaire to US$I. 2. Development Recent economic progress in Zaire has occtirred in accordance Nvith established economic prioritivs, rather than through it formal development plan. The "Pheavals following independence forced the government to shelve a 10-year program, begun in 1960, which envisioned $1 billion ill public investment with emphasis oil improving agric"Itural production. The government has made subsequent attempts to initiate a development plan, but a lack of trained personnel and of funds doomed most of them to failure. The most recent effort to promote the formulation of a rational economic investment program was the creation in carly 1972 of the Ministry (now Department) of Plan. headed bv Presiden Mobutu. The department is to be staffed bv a small number of experts, including foreigners who are. to develop and sectire fin.Ancing for specific projects within the framework of established priorities-- primarily the transportation arid agricultural sectors. The department is also responsible i"or preparing the investment budget, but there. to I)e no coilcerted effort to formulate all overall economic development APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 I plan for several years. The concentration within one agency of all functions related to development should make investment planning more orderly than it has been. Although Zaire's generally acknowledged economic priori ty-restoration of the country's infrastructure and its agricultural prod-iction apparatus-has remained essentially unchanged since 1965 capital budgets have emphasized other sectors of the economy. Since the capital budget was inaugurated in 1968, the largest single allotment of funds hai always gone to the presidency, which has placed more prestigious projects above the more urgent goals of integrating the rural population into the country's economic mainstream and of rehabilitating the transportation network. L ader the government's proposed 1972 capital budget, for example, only I I% of the total outlay is earmarked for agriculture arid transportation, compared to almost 30% allocated to the President's office for other projects favored by Mobutu (Figure 15). Development prospects are brightest for the mining sector, which has provided the major stimulus for tbe country's economic development. A decline in world copper prices, however, has already forced GECA- MINES to borrow several million dollars abroad to finance its current investment effort. A continued declin in world copper prices might force a revision of expansion programs planned for the post- 97.5 period. The power sector received art important boost during 1972, when two 50,000-kw. generators of the massive Inga hydroelectric powerplant complex began operations. The plant is to provide cheap electricity for FIGURE 15. Distribution of public capital budgetary expenditures (Millions of U.S. dollars) 1968 1969 1970 1971* 1972* Indirect investments**. 10.6 Direct investments. 40.7 Presidency 13A Public Works 7.0 Transport and com- 119.9 munications .7 Energy .5 Agriculture 3.6 Other*** 15..j 12.5 4.9 9.6 14.1 92.5 119.9 124.2 131.2 50.1 68.5 52.1 43.0 15.6 2.7 5.9 7.4 3.3 5.9 8.4 9.2 8.5 12.3 20.7 38.7 6.8 4.3 4.1 7.1 8.3 26.3 33.0 25.8 Totalt 51.2 105.0 124.7 133.9 145.3 *Budgeted, not actuai expenditures. "Capital participation equipment subsidies and loans. ***Includes Che repayment of suppliers' credits. tTotals may not add because of rounding; they do fil include investments funded by foreign aid. the raushrooming Kinshasa metropolitan area and power for the planned expansion in Shaba's mining region. Four other 50,000-kw. generators are to he installed before the first of the three-stage prote,-t at Inga is completed. The estimated 30 million km potential of the Inga power complex is far in excess of the surrounding region's contemplated power needs. and further development of the project will probabl% depend upon finding additional users. Manufacturing production depends largely upon the existence of sufficient domestic and foreign markets, adequately trained Tnanpo�. and an investment climate conducive to fo-eign participation. Foreign capital arid management are particularly important to the development of Zairian industry, since native sources of both inputs are relatively scarce. Cost reduction and quality improvement are essential for the expansion of markets. Planned development of the transportation network appears extensive, but past experience has shown that government investment probably will be belwv planned levels arid accomplishments will he limited to rehabilitation of the existing network rather than expansion. There is strong interest in the construction of a rail line from llebo to Kinshasa to provide a continuous link from Shaba to Matadi, Zaire's main port. The World Batik is engaged in a comprehensive study to determine the costs of building that line plus alternate transpintation routes from Shaba to the sea; costs are 6, he calculated within the context of projected traffic flows during the next 20 years. Mining, electric power, arid manufacturing continue to be favored by both public and private investment, but it is agriculture, the most fundamental sector of the e that desperately needs rejuvenation and expansion. Increased farm output after 1965 was a spontaneous response to the return of law and order further increases require the allocation of additional domestic resources, which the government has been reluctant to do. The mere 7.1 of the 1972 public investment budget reserved for agriculture is continued evidence of the low priority assigned to that sector. The Zaire Government has tried in recent years to make conditions attractive for private investment, particularly foreign investment. The Africanization campaign following Mobutu's ascendancy to the presidency has been superseded by a more realistic effort to promote Zairian participation in private enterprise, but not necessarily Zairian control. Although foreign investment is encourage(], at least a S1104 equity is frWrVed for the government it% mest loroeigii capifid 11(4-"A A personal visit to the 21 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 United States by President Mobutu in the fail of 1970 initiated an active campaign to secure American capital, not only for technological reascns but also to dilute the country's dependence upon Belgium. Although U.S. investments lia%e risen significantly during the past 18 months, they have not reached the levels hoped for by Mobutu. Major deterrents have been the limited domestic market arid the policy of Africanizing foreign-owned businesses already in country. Although applicaiion of the policy has been limited primarily to a few Belgian banking and commercial interes!s, even this restricted application has been sufficient to discourage prospective foreign investors. Primary facets of Kinshasa's program to promote domestic and foreign capital investment in Zaire are the investment code of June 1969, which grants fiscal and other benefits to firms undertaking new investments, and the creation in January 1970 of a new investment agency, SOFIDE. The role of this new agency in stimulating local enterprises will be limited to small firms, since the size of any single investment is restricted to 20% of the paid-up share capital of the enterprise; investors interested in large undertakings will have to turn to other sources for financing. Specific provisions of the investment code that encourage investments include profit and dividend repatriation, corporate tax concessions, and the removal of duties on epaital goods imports. New investment during 1971 continued an upward trend, totaling an estimated $650 million, W/i of which came from private sources. The 1971 total represented an annual increase of 6%, compared with increases of 32% in 1970 and 45% in 1969, when government investment budgets were minimal. New actual puNic investment in 1971 stagnated at the 1970 level of $176 million, reflecting bodgetary stringencies, while private capital expenditures of $474 million were 8% higher than the year before. The Zairian Government has drawn tip a comprehensive listing of capital projects for the period 1971- combining major elements of a development program for the 1970's. The total planned 5-year investment is about $1.4 billion, of which about $1 billion is to come from public funds and $400 million from private sources. In addiJon to these special development efforts, private investments are expected to continue at current levels in traditional endeavor%. Large-scale iFIVOlVement by domestic and foreign private enterprises in the plan is emphasized as it means to complete the rather ambitious list of projects, which stresses manufacturing, extractive industries, and, to a much smaller degree, transportation. 22 3. Manpower At the time of its independence in 1960, the Congo was handicapped by a severe dearth of trained manpom-er, a situation that forced the vountr,- to rely upon foreign personnel for managerial and technical expertise. Kinshasa has established an increasing ,lumber of specialized training institutions, but the supply of skilled native personnel is still far below the demand. Acute shortages will 'he felt in the operation and management of transportation, communications. and civil aviation services and in the management of public works programs and agricultural schemes. In 1%.8, the last year for which statistics are available, the population of legal working age-14 years and over�was estimated at 8.3 million, 495i of the total estimated population and Wi of the population aged 14 years and over. Males accounted for only 48 of the total labor force. but thev had a labor force participation rate (percentage of a populaCon group that is ec(onomically active) of 82 compared with 81 for fernales. In addition to the legally defined labor force, large numbers of children aged 6 to 13 are traditionally active in the subsistence economy. Large portions of the labor force are either underemployed or, particularly in urban areas, unemployed. Underemployment is especi preva- lent in the subsistence economy of the rural areas, where tribal traditions dictate that adult males participate in the production of subsistence crops only to the extent of clearing the land; the cultivating, harvesting and processing of the crops are done by %%omen and children. Unemployment was unofficiallN estimated at 800,W0 in 1968, or about 10% of the labor force, and has probably increased since that time because of the continue(] influx of inigrants from the farms to the u. areas. Government efforts to relocate urban unemployed in their home villages have met with little success; most of those forced to leave cities simply return and try to avoid periodic roundups by the authorities. I n 1968 approximately 85% of those employed were in agriculture., fishing, forestry, and hunting. The majority of those engaged in agricultur in the subsistence economy, working for themselves or as unpaid family workers. Some subsistence farmers also raise cash crops; others periodically work for wages as cutters of palm fruit or as seasonal workers on plantations. Most of the remaining 1.3% of the employed were wage and salary earner% in the monetized sector of the economy and in government service; significant APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 numbers were small-scale trader.%. primarily in rural areas. and smaller numbers were self- artisans (Figur 16). Zairians dominate semiskilled and unskilled positions, but a small number of workers from other African countries also compete for these lower paying j Managerial and highl technical Positions continue to b filled primarily by non- Africans. Labor productivity is generally low. Major limiting factors are a general lack of skill's and. particularly in agriculture, the low 1,-vei of government procurement prices. Other detrimental factors include the lack of equipment, low salaries, and poor working conditions. In subsisteriLv farming, output is hampered by the widespread use of primitive techniques, which requires a heavy input of labor and restricts the amount (if land that call be cultivated. Subsistence farmers plant crops to fulfill food requirements for their families. regardless of the crops' suitability to soil and climate. Government programs initiated to increase agricul- tural output by replacing traditional farming practices have foundered because of shortages of trained agricultural agents. Even with the acquisition of wore advanced technical knowledge, farmers have difficult obtaining credit to buy necessary equipme and materials to utilize the newly learned 'techniques. fr. contrast to subsistence farmers, Most commercial farmers use machinery and advanced techniques of soil preparation. seeding, and insect control, as well as FIGURE 16. Employment by sector, 1968* SFL rOR EMPLOY- P KRC E NT %I K N"r OF TOTAL Agriculture, forestry, fishing. and hunting 120,549 Mining and metallurgy 59,347 9 Manuiacturing 89,930 13 Construction Transportation and communications. 11,953 2 64,550 9 Commerce, banking, and services. 36,985 Government 301,400 44 Career civil servants 26,500 4 Armed forces 43,000 6 Police 20,900 3 Teachers 60,000 9 Contract employees 150,000 22 Public officeholders and staffs I, wo Negi. Total 684.714 WO Statistics f"! 41 0 0 4WHIllpht personnel are based on a rensus conducted by 0� former Ministry of Ndtional Economy The data cover 1,100 enterprises, rel -senting about "I'll O f e eon 0 mic activity in the monetized sector. Not included are Individual farmers, personnel on small plantations, artbsans, and employees in small commercial establishments. modern soil conservation Practices. Agricultural Prodt'Ctivitv is two to ten times greater on commercial farms than on subsistence smallholdings. In the private nonagricultural secto-s of the econonly, a difference in labor productivity e between the small- and medium-sized firms which often lack the capital and sometimes the motivation to develop the skills of their labor force, and that of larger enterprises, which frequently train their workers for more high]%- skilled tasks. Larger enterprises have been ahle to increase further their labor productivity bN utilizing advanced equipment and by improvin' 9 living standards. Large firms also provide prod uctivi t v incentives such as Ilonuses based on output and promotions to more responsible poniti stich Policies have contributed to relatively low rates of absenteeism and job turnover in the larger enterprises. Efficiency in government suffers from a surplus of unskilled workers at the lower echelons and a shortage of trained adminktrators. The failure of government service to attract more highly trained supervisory personnel is due in part to higher salaries offered in nongovernment sectors; recent substantial wage increases have reduced, but 'lot eliminated, this salam gap. Because of lo%v pay, mail% government worker spend much of their time in' supplementing their income, primarily through illegal Pavoffs or embezz!ement of funds. The hiring of contrac workers has created administrative Problems and hampered productivity it s w ll. These workers are often hired because of personal or family obligations by employers. who then make irregula'r deductions from the emplovees' wages as compensation for the favor. Strikes have occurred. particularly by teachers, over nonpayment of wages and salaries resulting from fund shortages or embezzlement. These strikes are generall% illegal because striking workers usually do not complv' with the complex .nd lengthy conciliation and mediation procedures prescribed. In addition, tile government has declared strikes illegal unless authorized by the general secretary of the trade union center. The union leadership ha kept strikes at a minimum, however. because of a continuing dialog with both management and government. Diverse working conditions contribute to variations in productivity. The heat and humidity of the central hasin inhibit heav% work, while the tenitwrate peripheral highlands provide an environment more conducive to physical effort. Unprotected and often Polluted water S 1110es, especially in rural areas. undermine the lailorers' physical well-being and production Potential. Another' deleterious aspect of rural life is the absence of animal protein in areas 23 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 infested -with the cattle-d t setse fl worker, in these regio stiffer front malnutrition and related diseases. Meat Const mption among lo%%er paid urban workers also is precluded or greatly limited because of high prices. Also affecting productivit are laws covering hours of work, tight work, weekly rest, holidays, paid annu leave, an(] health and safety conditions. All employed %%orkers�e those in the judiciary. ci% il service, police. and armed forces, who art- cove 'red 1w separate laws�are protected by ti ic 1967 Labor Code and its impl legislation. Statutes establi a maximum S-hour day and a 6-day week, with limits ()it the amou o f overtime work according to the job's difficulty overtime and nightwork premiums are also defined by law. Workers are entitled to a rest period of 24 consec hours to 12 holidax's per year; and. after I year of service, to annua paid' leave of 12 working days if over IS years of age or 18 days if under 18. Legislation also') requires e%er% establishment to provide health sen 'for its employees a fe%% inadequate government-sponsored clinics are provided for subsistence farmers who generally suffer front lower health standards. Enforcement of all provisions of the 1967 Labor Code is the responsibilit,.. of the Geveral Inspectorate of Labor. Staff shortages. poody qualified personnel, lack of transportation, and corruption have greatly hampered the inspectorate's effectiveness, allowing wany small- and medium-sized establishments to conduct I ms i riess with working conditions below the standards required by law. D. International economic relations 1. Foreign trade Zaire is pfincipally an exporter of mineral and agricultural prod ticts and an importer of raw materials and consumer and capital goods. Copper alone accounts for about two-thirds of the value of tot exports; such heavy dependence on copper exports makes the country's entire export picture and, indeed, th- entire econom highly vulnerable to fluctuations in the world copper market. Exports increased from a total of about $470 million it' 196 to alrn( $800 million in 1970. The major 1111petus for (his growth in export receipts has been the high price of copper, which rose from $0.49 per pound in 1967 to an average of $0.73 per pound by mid-1970. Since June 1970, however. prices have steadily declined to an estimated average of $0.54 a pound it 24 1971, and overall exports dropped to around $670 million in 197 1, resulting in an iinfavorable balance of trade for the first time since IW3 (Figure 17). Agricultural expowts continue to lag behind pre-jjW) totals because of a general weakening in world market prices and domestic transpowt prohlcms. The composition of exports has changed consider- ably since I%.) due to the decline in agricultural prodtiction and the rise in the mineral trade. The share of mineral products in total exports increased from roughly 60 it. i-)59 to 83% in 1970; during the same period. copper alwie rose from 28( of all export receipts to WC. Although agricidwral output I) increased since the restoration of security in rebel- damaged areas, farm exports have not rec() their relative share of tot foreign sales (Figure IS). Accompanving the increase in exports an equall% signi fic upsurge in imponts. reflecting i t rapid growth of domestic demand and the easing of irtipont restrictions in June 1967. Imports totaled $693 million in 1971, compared %vitb $326 million in M'7, and were about equally divided among consumer goods, raw materials, and capital goods. In an effort to alleviate the countn's deteriorating foreign exchange Position. Zairian authorities recent]% passed two measures to reduce the volume of imports without APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 FIGURE 17. Foreign trade, 1966-71 resorting to the rigid import licensing program used before the 1967 fiscal reforms. Duties were raised sharply on imported luxury items and products which compete with domestically produced goods, arid impom licenses were to he denied on all goods whose Prices were not at least 3r/i below the minimum prices for 1971. Exemptions to the latter provision are reviewed on an individual basis, arid have been limited primarily to foodstuffs and equipme deliveries covered by approved investment agree- merits. Belgium is Zaire's principal trading partner, arid other member countries of the EC' constit tile second-largest trading bloc. The U.S. share of inipon s continues to decline because of reduced U-1. government financing through the aid program; exports to tile United States are minimal, and are principally agricultural commodities. Japan's share of Zaire*s imports has been rising rapidly in recent ycars, from 2% in 1%.7 to 10 ill 1970 (Fig 19). 2. Balance of payments Prior to 1970, Zaire almost always had it favor trade balance, but the narrowing trade surplus, plus rising deficits in the services accomia and the repatriation of investment income and salaries carried by foreigners, brought the country ill 1970 its first adverse balance of payments since tile 1967 fiscal reforms. Some easing of pressure oil tll serv account was expected following the impositi of liew exchange controls i October 1971. restricting Otitflows of expatriates' incomes to one-half of net paV, instead of merely requiring that a minimum of $2(X per month remain in the country. Increases in grants arid import-financing lo inder bilateral and multilateral foreign assistance programs have boosted government transfers to Zaire in recent v ars reaching a po)stindependence low in 196,S.' e after Private capitz I outflo% Con t exceed foreign capital inflows. although the latter have risen significantl%. since tire 1969 UMHK settlement removed a major obstacle to foreign investment. The .'aPital account received a UcIC lx)ost in June I *R' it. when Belgium agreed to assume the Belgian- Cong(-Jese Amortization Fund. responsible for liquidating all nonguaranteed debts contracted when Zaire was a Belgian colony. At the time of til agreement. the fund represented almut 40% of Kinshasa's outstanding foreign debt arid a significant portion of official capital payments. Gross holdings of gold and foreign exchange reserves increased from $48 million to $229 million from June 1967 to tire end of IW9, reflecting the favorable balance of payments. With the deterioration in the balance of payments in 1970, resen declined by nearly $5 million and had declined b% art additiona $18 million through September 1971 Gross foreign exchange holdings of the Bank of Zaire were $171 million b% October 197 1, equivalent in value to about two months' imports of goods air(] services (Figure 20). 3. Foreign economic policy and agreements Zaire has maintained it llondiscriminatorY foreign trade po)li following the pattern established %%-hen the country was under Belgian control. No preferential trade agreements exist. arid all countries receive the same treatment in matters of trade and investme Along with 17 other African states, Zaire in 1964 arid 1969 signed the Yaounde Convention, which governs economic relations between the EC arid the :ignatory African countries. Although its single column tari 6 precludes extending special treatment to goods purchased from the EC, Zaire, as all associated overseas country of the EC. receives preferential treatment in EC markets all(] receives assistance from the Common Market*s European Development Fund (FED). Zaire does not maintain all% bilateral payments agreements, ex those concluded with the no. 'ighboring states of Uganda arid the Central African Republic in IW6 to facilitate transit traffic and reexports. Zairp concluded an investment guarantee agree- Illent with the United States in 1962, under which the U.S. Government guarantees U.S. investors against inconvertibility, loss due to expropriation, and loss due to war. revolution, or insurrection. Zaire also is a member of tile IMF, tile IBRD. the IFC, the African Development Bank. arid the U.N. Econonli Commission for Africa. 25 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 FIGURE 18. Principal exports, 1967-70 A ZAIRE FIGURE 19. Direction of trade, 1970 FIGURE 20. balance of payments Other EC France Countries Federal Republic of Germany 1968 1969 1970 balance (f.o.b.) 278.0 277.4 256.-1 Services (net -209.0 -215.8 -266.0 IMPOR S -55.o -63.4 -69.0 U.S. $626 Million A ZAIRE FIGURE 19. Direction of trade, 1970 FIGURE 20. balance of payments (Millions of U.S. dollars) 1968 1969 1970 balance (f.o.b.) 278.0 277.4 256.-1 Services (net -209.0 -215.8 -266.0 Private transfers -55.o -63.4 -69.0 Government transfers 35.0 47.4 57.2 Balance on current accoLnt 49.0 45.6 -22.0 Private capital -12.2 -0.2 Government capital 14.8 8.6 11.6 Balance on capital account 2.6 8.4 2.4 Frrors and omissions -3.0 0.2 Allocation of SDRs 15.2 Net balance of payments. 48.6 55.4 --4.6 Net change in reserves*. -48.6 55.4 4.6 Assets held by banking sy-t- tem 21.6 4.6 -5.5 Gold and other assets --70.2 60. 0 10.1 "Increase in reserves indicated by minus 1. 26 Italy 970 Other IC Countries United States United Kingdom 4. Foreign aid Zaire has received large amounts of economic aid from numerous individual countries and imiltina- tional organi7ations. Prior to 1969, most (of this assistancv was to support its balar of payments, by providing essential ef)mmodities and technica'l assistance; major donor% have been the 13nited States and Belgium. U.S. economic aid to Zaire totaled almost $450 million through 1971, with $396 million being support assistance and P.L. 480 shipments. Belgian aid has averaged around $25 million annually since 1966, primarily in the form of technical assistance. Other sources of foreign aid include West German%' France, the World Bank, and the United Nations. Since 1969, Zaire has begun to focus upon its long- range development goals, with increasing emphasis now being placed on project aid. In this field, the FED is the principal financial source. Allocations by the FED totaled over $90 million through 1969, centering upon projects in the agriculture. education. and electric power sectors. UniuW States 14% 1111W!11111111 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 81""M AazazvxATrox i FoREPUN ENcLm I CSZ ENI Compagnie Sucriere du Zaire Zairian Sugar Company FORMINIERE Ente National 1 -%Lwburi Societe jnt~j Fo restiere et National Hydrocarbons Agency International Miniere du Congo Forestry an Mi n i ng C Of the Congo GECAMLNES La GeneWe des Carrie'es et des Gerwral Quarries and Mines Com- CECOIAINES Mines du Zaire Soci G enera l e Congolaise des Min- pany of Zaire General Congolese Ore Co. erair GEOMINES Compa G eo l og i que et Mi niere des Geological and Mining Co. of Bel- INSS Ingeneurs Industriels Belges Institut National de Securite Sociale gian Industrial Engirwers XIVUMINES Compagnie, Miniere 4de Kivu National Social Security Institute Mining Company of Kivu METALZINC Societe Miniere de Zinc Zinc Mining Company MCL MIBA Mini t Grarmis Lacs Africains African Great Lakes Mining Co. Societe Miniere de Baku;anga Bakwanga Mining Company ONC Office National du Cafe National Coffee Office PEMARZA Societe des Peches Maritimes du Zaire Maritime Fishing Co. Zaire RECIDESO Regie de Dirtribution crEat. et dElec- Water and Electric Power Distribu- tricite au Zaire et Ru;anda-Burundi tion Administration of Zaire and SCM Societe Genmale de Minerais Rwanda-Burundi General Ore Company SIBEKA Societe crEntrepris et d'Investime- Business and Investnwnt Compo ment du Beceka of Beeeka SMTF Societe Uiniere de TenkeFungurume Mining Company of Tenke-Fungu- SOCOBANQUE Societe Congol de Banque rume Congolese Banking Company SODIMIZA Societe de Deveh4mement Industriel Industrial Development and Mining ct Miniere du Zaire Company of Zaire SOFIDE Societe Financiere de Developpement Development Finance Company SOCECHIM Societe Generale Industrielle et General Industrial and Chemical Chemique de Shaba Company of Shaba SOCEFI Societe Nationale de Ges.ion et de National Trust and Finance company Financement SOZIR Societe 7 aire-Italienne Raffinage Zairian-Italian Refining Company SUCRAF Sucrerie et Raffinerle do l"Afrique Sugar Mills and Refineries of Cen- Centrale tral Africa SYMETAIN SVndlOat Miniere de rEtain Tin Mining Syndicate VMHK Union Miniere du Hafst Katanga Mining Union of Upper Katanga Banque Commerciale Zairoise Commercial Bank of Zaire Banque de Kinshasa Bank of Kinshrisa Banque de Peuple People's Bank Societe Generate de Belgique General Company of Belgium Societe Miniere do Kisenga Kisenga Mining Company Societe Nationale dAssurancet National Insurance Company Zaire-Etain Zaire-Tin Company APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0 FOR OFFICIAL USE ONL Y APPROVED FOR RELEASE: 2009/06/16: CIA-RDPOl-00707R000200110003-0