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A poisonous legacy of poverty and decay

Nowhere is his inheritance more poisonous than in the economic sector. For Laurent Kabila and the Alliance of Democratic Forces for the Liberation of Congo, winning the war will prove far easier than reforming an economy which long ago fell off the scale of what is considered normal.

"The economic situation is disastrous," acknowledges Jose Endundo, head of Zaire's Business Association. "We will have to make a clean sweep and start again."

Zaire, renamed the Democratic Republic of the Congo by Kabila, is the African country that gave potential a bad name. Rich in cobalt, copper, gold, diamonds, uranium, its mineral wealth dwarfs that South Africa. Its rivers offer abundant hydroelectric power and its oil reserves remain largely untapped. Its fertile land could be a regional breadbasket, its virgin forest a huge source of timber. By rights it should be one of the continent's economic powerhouses.

The reality is rather different. By 1994, World Bank figures show, Zaire's economy shrunk to its 1958 level, while the population had tripled to 45-million. If the country had sustained pre-independence growth rates, gross national product today would be $1 400 a head. Instead, it is below $100.

Bulky wads of notes that pass from hand to hand attest to the hyperinflation that haunts the lives of Zairean's. Last year it was 750% but that paled in comparison to 1994's 9 800%, with the result that the only currency regarded as trustworthy - the dollar - is issued by a foreign country: the dollar.

Frozen in time, the economy is dominated by loss-making parastatals whose contribution to state coffers declines with each passing year. The state had become a little more than a leech on a population dependent on wheeling and dealing.

The informal sector has expanded to embrace even banking, with commercial banks holding just 8 000 accounts. This tangled mess is what the AFDL will take over at precisely the moment when it desperately needs fresh injections of cash to reward fighters kept loyal with promises of future remuneration. The movement will also come under pressure to spend on another front. Rebuilding the dilapidated roads , repairing the railroad, tackling some of the $3-billion in annual reconstruction work the World Bank estimates is needed.

But where is the money to come from? Both Gecamines, the copper-producing parastatal and MIBA, the majority state-owned diamond company, applied in recent years for tax concessions because their finances were so parlous. And although the mining contracts the AFDL recently signed with foreign companies have attracted huge publicity, few involve cash on the nose. "The only quick way Kabila will be able to raise money will be to widen the tax base, which is very, very thin," predicts a Kinshasa banker.

That will not be easy. Unable to administer a tax system boasting a European level of complexity, the state long ago confined itself to milking dry a dozen parastatals and high-profile multinationals.

But as the ANC has learnt in South Africa, changing tax avoidance habits is very hard. "Kabila cannot impose tax collection overnight without taking a high political risk," warns a leading businessman. If he doesn't have a strong political base to put an unpopular message across, he will be in trouble."

So far the signs from the AFDL have been decidedly mixed.

Assurances from Mwana Nanga Mawampanga, the AFDL's US-educated "finance minister", that the AFDL favours private enterprise and a free market economy, were welcome from a movement led by a former Marxist. On the other hand, the sacking of MIBA and Gecamines' executives smacked of interventionism.

Adds a banker: "This is probably the hardest economy in Africa to reform. But if the alliance cannot deliver on the economic front, its political gains will vanish very quickly indeed." - Financial Times

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