Slowdown Blights DR Congo Economy

As the G20 summit in London draws closer, African leaders have warned of an economic "tsunami" poised to hit their continent. Our Africa correspondent, Andrew Harding, has been to the mining centre of Likasi, in the Democratic Republic of Congo, where the global slowdown is already causing havoc.

In the gentle green hills around Likasi, the global economic meltdown makes a pleasant, twittering sound.

Thousands of excited birds have begun nesting in the abandoned mines and factories that now litter the region - their songs abruptly replacing the throb and roar of machinery.

"All gone. Factory is closed. No jobs," says Mr Radju, guarding an empty Indian-owned copper processing plant on the edge of Likasi. He shrugs and wanders away past a giant pile of dark, broken rocks.

G20 LONDON SUMMIT

World leaders will meet next week in London to discuss measures to tackle the downturn. See to the G20 summit.
The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.

Since December, more than 60 enterprises in this one town alone have shut. Many Chinese businessmen simply locked their gates and fled the country, as the price and demand for copper collapsed spectacularly.

In Katanga province as a whole, the authorities estimate that 300,000 people have lost their jobs virtually overnight.

"It's a shock - a brutal shock," admitted Denis Kalundgi, the urbane mayor of Likasi, surveying the town's deeply potholed streets, now crowded with unemployed and frustrated men. Mr Kalundgi said he was concerned that social tensions could quickly boil over.

"We're suffering. Fifty per cent of the economy has gone. For now, we are managing [to pay salaries]. But only just."

Vulnerable families

The world's economic storm has hit DR Congo just as this vast, dilapidated, conflict-ridden country was beginning to shrug off decades of turmoil and decline.

Largely thanks to soaring mineral prices, the DRC's economy was projected to grow by up to 12% last year. Around the continent as a whole, it was a similar story. Despite some glaring exceptions, Africa has enjoyed a decade of impressive growth.

But today, Adelard Kihoho is discovering just how vulnerable the continent remains to a sudden downturn. The 37-year-old mine worker lost his foundry job in December last year.

"The foreign owners just told us to leave one day," he said. "I don't know how long this will last. Before, I was earning about $250 a month, but now I am just trying to sell a few things on the street to survive."

Adelard has seven of his own children and two of his brother's children to support. They sleep together in a small, dark room on the outskirts of Likasi.

With no welfare state to fall back on, Adelard has been forced to make some painful choices since he lost his job. Since he can no longer afford to send all the children to school, seven-year-old Naomi and three of her brothers now spend their days at home, waiting for the mines to reopen.

"They say the great powers are to blame for this," said Adelard. "But it is we who are suffering." He wondered out loud whether "President Obama can fix this".

Like many African countries, the DRC is looking to the IMF for urgent new loans to help it weather the current storm. The G20 summit is expected to hear calls for at least $30bn in outside help for Africa. But grim as things are, it's still possible to find optimists here.

Defiantly upbeat

It is a 20-minute helicopter ride from Likasi to Boss Mining's giant new copper and cobalt mine. From the air, you can see where huge hills have been peeled and sliced apart by armies of mechanical diggers.

"It's been really tough," concedes Gordon Thompson, the chief operating officer of Boss Mining's parent company, the British-registered Central Africa Mining and Exploration Company. Work has come to a virtual standstill, but none of the workforce has been laid off.

"This is a very challenging environment. But Congo has to [bounce back]. It doesn't have an option, does it? We're seeing it as an opportunity," he says.

"We expect to be operating again in the next few weeks.

"Our business will recover and grow, and it's going to get stronger."

He acknowledges Congo's need for a "leg-up" from the IMF, but warns against "handouts", saying: "The money will just be spent and we'll be knocking at the door again for more in no time."

Back in Likasi, Mayor Kalundgi is racing between meetings, trying to end a strike by unpaid railway workers. But he, too, is defiantly upbeat.

"We didn't want this, but now it's happened, we can't just fold our arms. This crisis can have a positive effect," he says. "There is a need for foreign help, but there's also the mobilisation of internal resources.

"We have learned a lesson from this - it's made us realise that we can't just rely on copper and cobalt exports. We need to diversify." Warming to his theme, he speaks of persuading mining companies to start plant corn.

"The real problem we have right now is that we produce what we don't consume and we don't produce what we do consume. We need to change this state of affairs throughout the country."


Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7965221.stm

Published: 2009/03/27 08:57:01 GMT

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