AFRICA REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00289R000301480001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 22, 2016
• Document Release Date: June 13, 2011
• Sequence Number: 1
• Publication Date: September 19, 1986
• Content Type: REPORT

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Directorate of
Intelligence
lrlf~ "W7 P!1-711.1 WIT
Africa Review
19 September 1986
re
ALA AR 86-018
19 September 1986
copy 393
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Africa Review
19 September 1986
Articles Tanzania: Nyerere Continues To Meddle
President Mwinyi's campaign against official corruption may lead to
a confrontation with still influential former President Nyerere, who
could try to undo damage to his prestige and socialist policies by
capitalizing on public resentment over IMF-recommended austerity
measures enacted by Mwinyi's government.
Zimbabwe: Success of Farms Threatened 5
Transport problems resulting from South African retaliation against
sanctions, as well as the possibility of reduced price incentives to
farmers and increased land redistribution to small black farmers,
could endanger the high production levels maintained by
Zimbabwe's farms.
Ghana: The Exiles and Regional PoliticsF____1 9
Exiles based in Nigeria, Togo, and Ivory Coast are plotting against
the Rawlings regime, but they probably do not represent a serious
threat to the government over the near term.
Sierra Leone: A Troubled Economy I 13
President Momoh's limited economic reforms have failed to halt the
country's financial collapse, but Momoh fears that imposing stiff
austerity measures could spark unrest among the already hard-
pressed population.
Comoros: Profile of the Opposition I 17
A variety of moderate and radical opponents are seeking to exploit
mounting dissatisfaction with conservative President Abdallah.
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ALA AR 86-018
19 September 1986
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Briefs
Comoros-USSR: Baiting the WestO 21 25X1
Malawi: Police-Army Rivalry
Angola Chronology
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Production Sta,T, Office of Arican and Latin American Analysis,
Articles have been coordinated as appropriate with other offices within CIA.
Comments and queries regarding this publication may be directed to the Chief
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Secret ii
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Africa Review
Tanzania: Nyerere Continues
To Meddle
President Mwinyi's campaign against official
corruption has earned him widespread popularity but
may draw him into sharper political conflict with
Party chairman and former President Nyerere.
Although Nyerere has given tacit public support to
the campaign, his reputation has suffered from his
close relations with many top officials who are now
under suspicion. We believe Nyerere also is probably
bitter over Tanzania's recent accord with the
International Monetary Fund (IMF) and may be
looking to undo the damage to his prestige and
socialist policies by capitalizing on public resentment
over IMF-recommended austerity measures.
New Broom Sweeps Clean
Mwinyi's anticorruption drive wreaked havoc this
summer on bloated and inept state-run enterprises,
earning him considerable acclaim from the public and
pragmatic members of the government. Mwinyi, who
took office last November, has appointed a number of
investigative committees, audited parastatals, and
fired and charged with criminal activities a number of
corrupt officials. At a recent rally, the Dar es Salaam
party regional commissioner publicly encouraged his
efforts to sweep Tanzania clean of "victimization,
embezzlement, and negligence." The Tanzanian press
has kept the campaign in the public eye, reporting on
it in some detail and giving Mwinyi himself prominent
coverage. We believe that the campaign has caught
the attention of most Tanzanians, who now can blame
corrupt officials for the country's severe economic
decline.
Mwinyi, however, has stopped short of bringing
corruption charges against any of Nyerere's closest
followers, most of whom are from Nyerere's native
Musoma region and appear to be the most heavily
involved in fraud, embezzlement, and misuse of
We believe Mwinyi, caught between his fear of
Nyerere's political influence and pressure from
moderates, does not want the anticorruption
campaign to appear to be a purge of Nyerere's
loyalists.
Mwinyi has garnered the support of Horace Kolimba,
a Nyerere appointee who investigated corruption
among Musoma officials several years ago and is
known to be a strict and honest administrator. By
using Kolimba and others known to have had
Nyerere's confidence, Mwinyi probably hopes to
minimize Nyerere's disapproval and enhance the
campaign's image among Tanzanians who still hold
Nyerere in high esteem. Mwinyi also is using the
judicial system for investigations and audits, rather
Secret
ALA AR 86-018
19 September 1986
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President Mwinyi holding iron
broom, symbolic of
anticorruption campaig,
than the country's sole political party, which
previously handled such matters, but which is still
susceptible to Nyerere's intervention. He is also
circumventing Prime Minister Warioba, from the
Musoma region, in a departure from normal
procedure,
Mwinyi is relying heavily on the Tanzanian security
service, which has been instructed to concentrate on
"economic crime,"
Nyerere's Reaction
We believe that Tanzanians generally regard Nyerere
to be free of personal corruption, and
he will not be investigated because e
purportedly was unaware that those close to him were
abusing their power. We believe, however, that guilt
by association probably has slightly tainted his
pristine reputation and undercut his political
influence, as many of his loyalists are under
investigation or suspicion.
Nyerere, however, will not continue to protect his
probably to avoid further damage to his reputation.
followers
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Highlights of the Corruption Campaign
Government reveals GAPEX scandal; $3.5
million in government revenues embezzled by
authorities. (GAPEX exports about 30
agricultural commodities that earn foreign
exchange.)
Nyerere's hurried promises were merely meant to
placate Mwinyi, in our view, and he is unlikely to stop
Foreign press implicates Bank of Tanzania
officials in GAPEX scandal. Six private
businessmen arrested for complicity; GAPEX
director-general suspended.
Government-appointed corruption probe team
concludes that official negligence led to massive
deaths of state-owned cattle on Zanzibar, costing
the government almost $2 million.
Seven telecommunications and transport sector
parastatals get new directors.
In a press conference, Mwinyi announces that
government officials found to have misused their
positions or caused large losses to the
government will be fired, tried in court, and made
to repay the government by nationalization of
their private holdings.
GAPEX director-general and 3 subordinates are
charged with defrauding the government of over
$2.5 million.
Mwinyi holds meeting on corruption with
Cabinet and provincial governors; cites country's
moral crisis, rise in alcoholism, embezzlement.
Announces surprise audits for parastatals.
Ten local Dar es Salaam officials-including
city director and city treasurer-are removed
and indicted for misuse of public funds.
Mwinyi announces strict enforcement of directive
disallowing members of parliament from being
appointed to boards of parastatals.
Director-general of National Provident Fund
(social security program) is fired after
government audits disclose Fund losses of over
$460,000. The Fund's chief accountant and
director of finance is also terminated.
Investigations reveal large loss to the
government-owned Tanzanian Agricultural
Research Organization through fraud, forgeries,
and accounting manipulations.
meddlin in the overnment.
Nyerere has organize
an opposition group within the Cabinet to counter
support for the new IMF accord and the
anticorruption campaign. We also expect that
Nyerere will attempt to recoup his diminished
prestige in the near term by focusing on other
domestic issues, notably the relationship between
mainland Tanzania and the semiautonomous
government of Zanzibar, joined in tenuous union since
1964. Nyerere's attempt to prop up the ailing
mainland economy by transferring all of Zanzibar's
foreign exchange earnings to mainland banks has
stalled
Opposing the IMF Accord
A longtime opponent of the IMF, which he claims
interferes intolerably in internal affairs, Nyerere also
probably believes his position has been hurt by
Tanzania's recent accord with the Fund. Dar es
Salaam has already implemented some IMF
recommendations, including a hike in producer and
consumer prices, import liberalizations, and a
preliminary devaluation-measures Nyerere resisted
while president. More important, we believe Nyerere
may see the agreement as the first step away from his
24-year legacy of socialist economic policies. His
approval of the agreement-politically necessary to
secure it-probably was only grudgingly given in the
face of worsening economic conditions, popular
dissatisfaction, strong pressure from moderates in the
government and financial circles, and the refusal of
traditional donors to maintain aid levels until an
agreement was reached.
Dar es Salaam's recent austerity measures may
provide Nyerere with the means to derail the accord,
an action he may believe necessary to reestablish his
political predominance. Austerity so far has prompted
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two episodes of civil unrest-unusual in Tanzania-
and may provoke more demonstrations as other
measures are implemented this fall. Last month
provincial police suppressed a strike by factory
workers for higher wages, resulting in the deaths of
three workers and over a dozen wounded. In addition,
according to the US Embassy, students at the
University of Dar es Salaam demonstrated in late
August because of cutbacks in food services.
Outlook
Although corruption has almost become a way of life
in Tanzania, the campaign has boosted Mwinyi's
popularity enormously, especially on the mainland
where he has only a small base of support and, as a
Zanzibari Muslim, belongs to an ethnic and religious
minority. In particular, his newfound grassroots
support may help cushion discontent over austerity
measures and enable him to press his advantage by
removing Nyerere appointees in the government or
reorganizing the Cabinet.
The anticorruption campaign will probably wind
down in the next few months, ands
it is not certain that Mwinyi
will pursue proven perpetrators if they are top
Nyerere administration officials. If Mwinyi does not
prosecute the most blatant offenders among Nyerere's
cronies, he is likely to lose substantial support among
moderate and pragmatic officials-many of whom
spearheaded the IMF agreement and probably view
the anticorruption campaign as an opportunity to
clean up corruption and reduce Nyerere's meddling in
the government. Mwinyi is unlikely to lose much
support among the general population, however,
because the public remains largely unaware of the
mostly secret allegations against the Musoma clique
and will probably be satisfied with the more visible
results from the parastatal dragnet. At any rate,
Tanzania's overworked judicial system is already
unable to handle the wave of prosecutions, and many
cases will probably lapse or drag on indefinitely.
Nyerere's extensive influence probably has suffered
only marginally from his clumsy attempts to counter
Mwinyi's new programs and from suspicions that the
former President's top proteges are the most deeply
involved in corrupt activities. We believe he will
continue to take every opportunity to reassert his
authority and maintain his political predominance.
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Zimbabwe: Success of
Farms Threatened
large, white-owned commercial farming sector and in
stimulating rapid increases in production by a
significant group of small, black-owned farms. Harare
A review of US Embassy, IMF (International
Monetary Fund), and open-source reporting indicates
that, since independence in 1980, Zimbabwe has
succeeded both in maintaining the productivity of its
African countries.
nationalization and collectivization policies that have
been at the root of farm problems in many other
has expanded extension, financial, and market
services to small farmers and maintained price
incentives for farm products. Despite Prime Minister
Mugabe's commitment to eventually build a socialist
society, the government in the first six years of
independence has avoided the destructive
market prices.
Government plans to continue to expand extension
and other services to black farmers will result in
further crop increases over the next several years, in
our judgment. Counterbalancing this relatively
promising outlook is the likelihood that Zimbabwe
will face transport problems that will disrupt
agricultural exports because of South African
retaliation against sanctions. In addition, a possible
increase in the pace of land redistribution may lead to
cuts in productivity on rich land now owned by white
farmers. Finally, the government may further soften
its price incentives to farmers to reduce budgetary
drains resulting from crop surpluses. Surpluses have
saddled the government with heavy expenses for
storage and induced it to export substantial quantities
of corn at a loss because of the difference between
subsidized domestic prices and low international
Record of Growth
Tobacco, cotton, and corn highlight the farm success.
Tobacco and cotton are Zimbabwe's second and
fourth most important export commodities, and corn
is the main food crop. Depressed by severe drought
during 1982-84, tobacco and cotton posted record
harvests in 1985 and 1986. The government-owned
Grain Marketing Board had an unprecedented 3
Zimbabwe: Marketed Volume Thousand tons
of Corn, Cotton, and Tobacco (annual average)
Corn a
Cotton
Tobacco
1971-75
1,006
142
67
1976-80
859
157
97
1981-85
1,157
192
102
1986
1,457
245
124
a Data exclude about 650,000 tons retained annually by farmers for
family consumption.
million tons of corn from the 1985 and 1986 harvests
available for local marketing and export following the
April 1986 harvest. Export contracts totaling nearly
The keys to success have been a rapid increase in
production of corn and cotton by small, black-owned
farms, and a switch by many white farms from corn to
tobacco. White farmers have increased tobacco
acreage by one-third since independence, to more
than 50,000 hectares. During the same period, small
farms have increased their share of total corn
production from less than one-tenth to nearly one-
half, and of cotton from one-fifth to one-half. The
increases in corn and cotton production by small
farms have more than offset losses resulting from the
shift of acreage on larger farms into tobacco.
Support for Small Farms
Both Zimbabwean and Western experts attribute
much of the country's farm success to a shift of
emphasis by government extension services under
Mugabe from the white-owned commercial farming
sector to small, black-owned farms. About 1,500 to
2,000 extension agents now provide advice and ..
Secret
ALA AR 86-018
19 September 1986
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training to small farmers on timely land preparation,
proper fertilizer and pesticide application, efficient
harvest and storage methods, and better land
conservation, according to Zimbabwean farm
journals. Extension agents and seed company
salesmen help keep farmers aprised of hybrid seed
development, and, as a result, more than 90 percent of
Zimbabwean farmers purchase hybrid corn seed
annually, according to US Embassy reporting.
Harare also has improved finance and marketing
services to small farmers. The Agricultural Finance
Corporation, which prior to independence had
exclusively served large commercial farms, now has
about 100,000 loans to small farmers totaling more
than $30 million, according to the US Embassy. The
Grain Marketing Board has opened more than a
dozen new depots in black farming areas over the past
fewi years, and the Cotton Marketing Board has
extended its services from the 900 white commercial
cotton farmers to include the marketing needs of
about 160,000 small-scale registered cotton growers,
according to press and Embassy reporting.=
Three farm organizations with memberships
encompassing nearly all Zimbabwean farmers give
the farm sector a strong voice in important
government decisions, such as the annual exercise of
setting prices and subsidies for coming crops. As a
result, corn and cotton prices have been maintained
by the government at favorable levels in most years
since independence. Although not controlled by the
government, tobacco sales are benefiting from the
opening in mid-1986 of a large new auction facility
constructed by a subsidiary of the Zimbabwe Tobacco
Association.
Problems of Surplus
Surplus corn is imposing large budgetary drains on
the government. In addition to rising costs of storing
surpluses, Harare is experiencing serious losses
because of the difference between domestic subsidized
prices in excess of $100 a ton and export prices of
about $60-65 a ton. Budgetary losses on subsidized
corn exports will continue to increase, in our
judgment, because further increases in production by
black farmers are likely and because of a large
disparity between Zimbabwean farm costs and world
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Zimbabwe: Structure ofAgriculture
Agricultural land in Zimbabwe is divided roughly
equally, about 16 million hectares each to
commercial and communal farming. About 4,500
white-owned large farms and 9,000 black-owned
small farms are located in the commercial area, and
700,000 to 900,000 black farm families live on the
communal land. Because of preindependence
ownership patterns, more than three-fourths of black
families live on land that is best suited to cattle
ranching because of low soil quality and rainfall
shortages, while 80 percent of white-owned land is
suitable for intensive farming. About 2.2 million
hectares of formerly white-owned land have been
purchased by the government and distributed to
34,000 black families since independence.
By value, the leading crops are tobacco, cotton, corn,
sugar, and beef. Tobacco annually accounts for 20 to
25 percent of nongold exports. Although farms and
ranches in the commercial farming area are privately
owned and operated, the government exerts tight
control on virtually all farm pricing and marketing
except tobacco.
levels. Constraints that keep Zimbabwean farm costs
high include inadequate amounts of rich land,
sometimes spotty rainfall, a technology lag, and long
transport routes to ports in South Africa and
Mozambique that are vulnerable to disruption by
Pretoria and by South African-backed insurgents in
Mozambique. To restrain the growth of corn
production, Harare has limited new price incentives
this year, and the farm extension service has begun
pushing farmers to plant alternative crops such as
soybeans. Production and marketing prospects for
these crops, however, still are uncertain.
Prospects
Further growth in production by small, black-owned
farms over the next several years seems assured
because of the government's commitment to continue
to expand extension, financial, and marketing services
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to this group and to improve living conditions for
blacks. Whether these increases will still assure
agricultural self-sufficiency and export growth is
questionable, however, because of potential problems
that could interfere with exports and cut productivity
on land now farmed by whites. Zimbabwe almost
certainly would experience severe cuts in export
shipments of all crops in the likely event of retaliation
by Pretoria for international economic sanctions
against South Africa. Transport cuts by South Africa
could occur this fall.
Despite the accommodation of white farmers by the
Mugabe government in the six years since
independence, we believe continuing pressures to
increase the pace of land redistribution still could cut
productivity on land now farmed by whites. Yields
(output per hectare) on white farms still exceed those
on black-owned land, according to Zimbabwean farm
journals, but white farmers often leave portions of
their land fallow if they judge that markets do not
justify planting. In contrast, black farmers-pressed
to maximize annual income-fully utilize all acreage
each year. Some press reporting indicates that this
difference in land utilization is perceived to have
heightened the unfairness of land ownership and
increased popular sentiment to step up redistribution.
A new Land Acquisition Act that became effective in
March 1986 gives the government first option on all
sales of farmland and enables it to acquire land that
has not been "substantially and continuously utilized
for the past three years." The dismal record of
government-operated farms throughout Africa leads
us to believe that yields on land acquired by Harare
would drop sharply if the regime followed through on
its public commitment to reorganize large farms
acquired from whites into state farms or agricultural
cooperatives
Other problems that could interrupt the growth of
farm output include recurring drought and, this year,
the possibility that locust swarms that are threatening
crops in other southern African countries may spread
to Zimbabwe. In addition, Harare's rapidly growing
budget deficits may induce policymakers to extend
this year's limitations on farm price incentives despite
a likely negative impact on the rate of improvement in
black farm welfare and on the growth of foreign
exchange earnings.
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Regional Politics
Ghana: The Exiles and
Ghanaian exiles based in neighboring Nigeria, Togo,
and Ivory Coast
probably do not pose a credible challenge to the left-
leaning Rawlings regime over the near term. The
dissidents-mostly former soldiers and
businessmen-have a long history of poorly planned
coup attempts, leadership rifts, and a shortage of
weapons, according to the US Embassy. Moreover, we
believe that the regime has successfully kept the
dissidents off balance with frequent security alerts
and preemptive arrests of alleged supporters. In our
view, however, the threat from these exiles is likely to
increase Rawlings's dependence on Marxist adviser
Kojo Tsikata, who, with East Bloc assistance, is
building an effective security and intelligence
network.
Since 1981, exiles have mounted at least seven
unsuccessful coup attempts and appear increasingly
unable to muster the resources to challenge Rawlings
seriously. A review of US Embassy and press
reporting indicates that, in the last two years, only a
handful of former soldiers have succeeded in crossing
the border into Ghana, and most have been captured
or barely escaped. Shortages of trained men led
London-based exiles to hire American mercenaries to
attempt a coup earlier this year, but the mercenaries
were subsequently imprisoned in Brazil for arms
smuggling, according to US Embassy reporting.
Factional Politics
A variety of reports from the US Embassy and other
sources indicates that the exiles are beset by petty
squabbling and a lack of financial resources. Most
exiles survive on United Nations refugee money or
funding provided by Ghanaian businessmen living in
indicates that the prolonged absence from their
homeland, Tsikata's effective security organization,
and a relatively strong Ghanaian economy have
seriously limited the exiles' ability to establish a
network of internal supporters.
P
A survey of Embassy reporting
A survey of US Embassy and
that pro-Soviet ruling council
member Tsikata is working behind the scenes to
establish an effective and personally loyal intelligence
service, designed to ferret out domestic opponents and
penetrate external dissident groups.
already have been deployed in government offices, the
customs and immigration services, newspapers,
regional ministries, the military, and the police.
Hamidu Group. US Embassy and press reporting
indicates that a dissident group led by former
Ghanaian Army Gen. Joshua Hamidu is probably the
largest organization, with about 20 members.
Although Hamidu, who served as head of Ghanaian
Secret
ALA AR 86-018
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military intelligence in the 1970s, has long claimed
the support of a number of African governments, we
see no evidence that he has received more than token
aid. he has
limited backing among disparate exile groups in Togo,
Nigeria, and Ivory Coast, and he reportedly maintains
links to London-based exiles.
Other Dissidents. A review of reports from the US
Embassy ndicates that
several small pro-Western dissident groups remain in
neighboring Togo and Nigeria but lack the resources
to challenge the Rawlings regime effectively. A group
led by former Ghanaian Army Captain J. L. Abito
probably has fewer than 20 men and is usually short
of funds to pay the rent on its quarters in Lome, Togo,
according to US Embassy reporting. Another group,
led by former Sgt. Daniel Akatapore, who was one of
the original members of the ruling Provisional
National Defense Council and who launched an
unsuccesful coup attempt in May 1982, divides its
time between London and Lome. Akatapore, once a
hardcore Marxist, now claims to be a staunch anti-
Communist. Akatapore's handful of adherents almost
certainly lacks sufficient arms and financial backing
to topple Rawlings, and we suspect that the group
may have disbanded.
Two London-based dissident groups generally limit
themselves to press releases and occasional appeals for
Western assistance. The Ghanaian Democratic
Movement, composed largely of officials from several
former Ghanaian governments, is led by J. H.
Mensah, who served as a finance minister in the early
1970s. According to US Embassy and press reports,
Mensah was arrested in New Jersey last year for
attempting to purchase weapons illegally, and in
March received a suspended prison sentence. The
Campaign for Democracy in Ghana is led by Boakye
Djan, the number-two official in Rawlings's first
regime in 1979, who claims he is seeking to restore
democracy in Ghana. According to a variety of press
and academic sources, his organization lacks funding
and has only a handful of supporters.
Regional Support
Togo. Ties between Ghana and pro-Western Togo
have been strained since Rawlings returned to power
in 1981. Togolese President Eyadema privately
believes that Libya helped to install Rawlings, and
has regularly told US officials that Ghana is the cause
of all of West Africa's security problems, according to
US Embassy reporting. Eyadema is particularly
irritated by the continued presence in Accra of the
Togolese dissident group, the Movement for
Democracy in Togo, led by the sons of former
President Olympio. For its part, Accra has frequently
accused Lome of failing to monitor the Ghanaian
dissidents sufficiently, and noted that almost all exile
attacks have been launched from Togo.
We believe the two countries are unlikely to resolve
the dissident problem. According to US Embassy
reporting, Eyadema earlier this year claimed that
Togo would return any dissidents if Ghana provided
their names and simultaneously handed over the
Olympios. Accra refused, claiming the Togolese
would execute the Olympios. Nonetheless, in June,
Togo expelled 13 Ghanaian exiles, including a minor
dissident leader, Capt. Edward Ampofo, in the
mistaken expectation that Ghana would reciprocate,
according to the Embassy. In our view, a swap is very
unlikely-the Olympios are closely tied to Tsikata,
while Togo probably regards the remaining Ghanaian
exiles as the only leverage it has over Accra.
Nigeria. Although Nigeria has long mistrusted the
left-leaning Rawlings regime, Lagos provides only
limited support to the exiles.
Nigerian President Babangida
believes that Accra represents the major threat to
West African stability and is disturbed by what he
regards as increasing East Bloc influence there.
the
Nigerians have provided financial aid to the Hamidu
group, but not enough for it to purchase substantial
quantities of arms or to recruit more soldiers. We also
note that Lagos has sought unsuccessfully to broker a
"united front" of anti-Rawlings exiles. In our view,
Lagos may continue to fund some of the exiles to
maintain limited influence over Ghanaian politics but
almost certainly realizes that the dissidents are not a
credible alternative to Rawlings
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Ivory Coast. Ivory Coast and Ghana maintain fairly
cordial ties, with neither actively harboring dissidents,
according to US Embassy and press reporting.
US Embassy reporting indicates that
Rawlings, fearful of regional isolation, carefully
cultivates the pro-Western Ivorian Government.
activities of the dissidents will reinforce Rawlings's
dependence on Tsikata, increase Ghana's reliance on
the East Bloc intelligence operatives, and provide fuel
for a radical-controlled press that claims the
dissidents are funded and trained by the United
States
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Economy
A survey of US Embassy reporting indicates that
President Momoh has initiated some modest economic
reforms in an attempt to halt the country's financial
collapse. He probably will agree to International
Monetary Fund (IMF) terms for a standby loan but
believes stiff austerity measures may prompt the
already hard-pressed public to take to the streets. The
US Embassy indicates that Momoh has had only
limited success in reducing the influence of Lebanese
businessman Jamil Mohammed, who continues to
deftly manipulate the economic system.
Limited Reforms
Momoh's reforms have failed to materially improve
the economy, despite his pledge to make progress
when he assumed the presidency last November. The
Embassy reports that inflation has climbed from 70
percent to more than 100 percent; power outages in
the capital are frequent; smuggling of diamonds, gold,
and rice is rampant; and imports of petroleum,
foodstuffs, and basic consumer goods are limited.
Momoh has failed to cut public-sector expenditures,
and the Embassy reports he is bewildered by Sierra
Leone's economic complexities. Moreover, the
treasury is nearly empty-in July, Sierra Leone did
not have even $385,000 in foreign exchange to pay for
the operation and maintenance of the two presidential
helicopters
The reforms reflect Momoh's cautious, if not
indecisive, posture. The Embassy reports that the
government has raised producer prices for cocoa and
coffee, pledged to reform inefficient and corrupt state-
owned businesses, and, in June, lifted rice subsidies.
In violation of this pledge, however, and probably to
forestall coup plotting, US Embassy officials report
that Momoh has quietly kept intact rice subsidies for
the Army and the police. In late June, at the
recommendation of the IMF, Momoh floated the
overvalued currency. The Embassy reports that
Momoh has requested US assistance in implementing
budget reforms.
The IMF Issue
Momoh has been trying to obtain an IMF standby
loan since March, but Freetown must first repay
accrued debts and agree to implement major
economic reforms. According to the US Embassy,
Sierra Leone will be ineligible for a loan if $25 million
in arrears is not paid by 19 September, and so far has
been unable to secure a commercial bank loan to
repay this debt.
Freetown would probably agree to most IMF
recommendations, in our view, but will run the risk of
sparking public unrest. Momoh has yet to persuade
Sierra Leoneans of the longer term benefits of an
IMF accord, and some newspapers have argued that
an agreement will not solve the country's economic
ills, according to Embassy reporting.
strikes may erup it
Freetown implements the IMF-recommended
reduction of public-sector employment by 60 percent,
while doctors and university teachers may strike to
protest declining purchasing power as a result of the
currency devaluations.
Sierra Leonean police believe t e spira ing
cost o iving will spark riots in the coming months,
which we believe they are ill equipped to control.
Curbing Jamil's Grasp?
Momoh has had only marginal success in curbing
Lebanese businessman Jamil's wide-ranging control
of key economic sectors, according to US Embassy
reporting. Embassy reports say that so long as Jamil
dominates the diamond industry, Freetown will be
unable to amass enough foreign exchange earnings to
turn the economy around. The Embassy reports that
Jamil successfully demands that the government pay
its debts to him before other creditors, and that
Freetown is finding it difficult to take care of its
external obligations.
Secret
ALA AR 86-018
19 September 1986
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Diamond Monopoly. The Embassy reports that Sierra
Leone's $100 million-plus diamond industry is
dominated by smugglers, and, in particular, by Jamil,
who is aided by corrupt government officials.
the
government-owned diamond firm DIMNCO is
bankrupt and may have to lay off as much as 50
percent of the work force. In an attempt to undercut
Jamil's monopoly, the government held an
independent diamond auction in July.' Although
Momoh believes he successfully eluded Jamil's grasp,
Jamil's company overbid
to discourage other dealers, and delayed paying for
the gems, hoping to undermine the Sierra Leonean
economy further.
Oil Imports. The government has ended Jamil's
absolute control of petroleum imports, but a variety of
US Embassy reporting indicates that he remains the
primary broker and financier of crude oil. For several
years, Freetown has relied on Jamil because it was
unable to secure lines of credit from most exporters.
The major oil companies-Mobil, Texaco, and
Shell-continue to refuse to provide petroleum on
credit, insisting that Freetown must first make token
payments on its arrears, according to Embassy
reporting. In July, a US firm agreed to finance $3
million of oil imports from Nigeria, but
Freetown, still lacking
sufficient foreign exchange, may default on this debt
and jeopardize future transactions with
multinationals and Nigeria.
Momoh's Limited Options
Co-optation. According to a variety of Embassy
reports, Momoh-mistakenly, in our view-believes
he can co-opt Jamil, or at least persuade him to
reduce his grip on the economy. Momoh has not
directly challenged Jamil's control, but he has used
parliament members and journalists to criticize
publicly Jamil's stranglehold.
' Before this, Jamil, in his capacity as managing director of the
Government Gold and Diamond Office, evaluated and sold the
diamonds on behalf of the government. Jamil resigned from the
IMomoh's reluctance to curb
Jamil's activities probably stems from his belief that
Jamil has connections to various terrorist
organizations and possesses the financial resources to
topple him at any time,
"Divide and Rule." A review of US Embassy
reporting indicates that Momoh's economic fortunes
would probably improve somewhat if he played
Lebanese businessmen off against one another.
According to the Embassy, a number of Lebanese
businessmen are bitter rivals, particularly Jamil and
Tony Yazbeck. Yazbeck, a Lebanese Christian, may
be the richest man in Sierra Leone, according to
unconfirmed press reports. Like Jamil, he participates
in diamond smuggling and owns several companies in
Freetown, including the Mercedes dealership.
Yazbeck has occasionally loaned the government of
former President Stevens money to pay some of its
debts, and reportedly funded the construction of the
Army barracks in Freetown. A variety of US
Embassy and press reports indicate that Jamil and
Yazbeck financed rival candidates in the May
parliamentary elections. For the moment, it appears
that Momoh is reluctant to move away from Jamil
and seek loans from other Lebanese businessmen,
probably fearing retribution.
Martial Law. Momoh claims that if there is no
economic upturn by December, he will suspend the
constitution, declare martial law, and place the
military in charge of key ministries to enforce
draconian reforms,
A survey of US Embassy reporting indicates
that Momoh does not like the idea of martial law
because it will undermine the image of his
"democratic" government. Nonetheless, we believe
Momoh may opt for martial law if he comes under
significant pressure from the military to enact stiff
reforms or be overthrown. We note, however, that
martial law, while it might curb smuggling and other
illicit activities, would not immediately improve
Sierra Leone's fortunes. Jamil would almost certainly
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cease to provide the government with loans to pay for
critical food and gas imports, and Freetown-at least
for several months-would lack the foreign exchange
to make the purchases itself.
The "Israeli Option. " Momoh may attempt to use
Israeli businesses to usurp some of Jamil's influence,
according to the US Embassy and press reports.
Freetown, which severed diplomatic relations with Tel
Aviv in 1973, is encouraging an Israeli front company,
Liat, to fund the defunct parastatal National Trading
Company, which in the past controlled the country's
imports, and to invest in the diamond industry.
According to Embassy reporting, in recent months
Liat won a contract to sell tractors to the Agricultural
Ministry, sold buses to the government, and
reportedly gave Mrs. Momoh $250,000 to "donate" to
her favorite charities. The Embassy also reports that
Liat accepts the nearly worthless Sierra Leone
currency for payment, rather than demanding hard
currency.
While Liat's involvement may reduce Jamil's
influence somewhat, it is likely to create new
problems for Momoh. The reestablishment of ties to
Israel almost certainly will dash Freetown's efforts to
secure concessionary oil supplies from Kuwait, Iraq,
and Saudi Arabia, and will alienate Sierra Leone's
Muslims, who make up almost 60 percent of the
population. Liat's alleged links to South Africa-it is
registered in Bophuthatswana-may also cause
Momoh some domestic and international
embarrassment, in our view. We also doubt that Liat
and other Israeli companies have the financial
resources to bail out many of Sierra Leone's bankrupt
industries and to match Jamil's capital.
Outlook
Momoh is likely to muddle through with modest
economic reforms but may backtrack even on these if
he believes antiregime riots will erupt. Sierra Leone
cannot generate enough revenue from its exports to
pay off its mounting foreign debts and, for the near
term, will remain at the financial mercy of Jamil and
other Lebanese businessmen. Should Freetown fail in
its efforts to come to terms with the IMF, Momoh will
have no choice but to depend fully on Jamil as the
"bank of last resort" to pay for imports. On the other
hand, we believe the IMF-suggested austerity
program is likely to fuel urban unrest, particularly if
Momoh is unable to convince the public of the
necessity for such reforms.
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Central African
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