U.S. State Department Geographic Bureaus: Africa Bureau

UNITED STATES DEPARTMENT OF STATE
MARCH 1995 INVESTMENT CLIMATE REPORTS--SUB-SAHARAN AFRICA
Bureau of African Affairs

INVESTMENT CLIMATE REPORTS

SUB-SAHARAN AFRICA

MARCH 1995

INTRODUCTION

I am pleased to transmit to you the 1995 Investment Climate Reports for Sub-Saharan Africa.

As we approach the threshold of a new century, and as the Cold War takes its place in history, we are focussing more and more on a reassessment of Africa, its outstanding human and natural resources and the role that U.S. trade and investment can play in helping the nations of Africa take their rightful place among the nations of the world.

This Administration is committed to serving the economic and commercial interests of the United States. As a way of reenforcing this commitment, the Africa Bureau continues to strengthen its program to support and facilitate U.S. business. Our Commercial Coordinator together with our Economic Policy Staff and our Desk Officers are available to assist you in the Department. At our posts in Africa, our embasssy staff is there to help you.

There are increasing opportunities for U.S. trade and investment in Africa with its roughly 600 million consumers. The growth and expansion of democratic governments and institutions, together with significant economic reform and liberalization, are promoting an enabling environment for the private sector in many African countries.

We hope that you will find the Investment Climate Reports a useful source of information. We have tried to provide a brief overview of developments and trends in individual countries which may have a bearing on your business interests during the months ahead. We are pleased to share this information with you.

As you consider the opportunities for expanded trade and investment in Africa, your feedback would be of great value to us. The Department of State and the Africa Bureau are ready to assist you.

George E. Moose Assistant Secretary for African Affairs

TABLE OF CONTENTS

COUNTRY

         Angola.......................................... 1 
         Benin........................................... 2 
         Botswana........................................ 3 
         Burkina Faso.................................... 4 
         Burundi......................................... 5 
         Cameroon.........................................6 
         Cape Verde.......................................7 
         Central African Republic.........................8 
         Chad.............................................9 
         Comoros.........................................10 
         Congo...........................................11 
         Cote D'Ivoire...................................12 
         Djibouti........................................13 
         Equatorial Guinea ..............................14 
         Eritrea.........................................15 
         Ethiopia........................................16 
         Gabon...........................................17 
         The Gambia......................................18 
         Ghana...........................................19 
         Guinea..........................................20 
         Guinea-Bissau...................................21 
         Kenya...........................................22 
         Lesotho.........................................23 
         Liberia.........................................24 
         Madagascar......................................25 
         Malawi..........................................26 
         Mali............................................27 
         Mauritania......................................28 
         Mauritius.......................................29 
         Mozambique......................................30 
         Namibia.........................................31 
         Niger...........................................32 
         Nigeria.........................................33 
         Rwanda..........................................34 
         Sao Tome and Principe ..........................35 
         Senegal.........................................36 
         Seychelles......................................37 
         Sierra Leone....................................38 
         Somalia.........................................39 
         South Africa....................................40 
         Sudan...........................................41 
         Swaziland.......................................42 
         Tanzania........................................43 
         Togo............................................44 
         Uganda..........................................45 
         Zaire...........................................46 
         Zambia..........................................47 
         Zimbabwe........................................48 

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ANGOLA

The United States established diplomatic relations with the Government of the Republic of Angola (GRA) in June, 1993. The U.S. Embassy in Luanda is pleased to assist any U.S. companies interested in pursuing investment or trade opportunities in Angola.

On November 20, 1994, after a year of UN-sponsored negotiations, the Angolan government and UNITA signed the Lusaka Protocol, which ended the brutal civil conflict described by the UN Secretary-General as "the world's worst war." The Lusaka Protocol would allow Angola to resume its interrupted transition to democracy and begin economic recovery. The past decades of warfare have largely destroyed Angola's infrastructure. In addition, a scarcity of managerial, administrative, and technical talent, plus failed attempts at collectivist economic planning, have hampered economic performance.

Angola is potentially one of the richest countries in sub-Saharan Africa, with extensive petroleum reserves, rich agricultural land, and valuable mineral resources. Several American and foreign petroleum companies, including Chevron, Texaco, and Exxon, are active in Angola, and U.S. companies have never been prohibited from operating in the country. The United States is Angola's largest trading partner; Angola is the United State's third largest trading partner in sub-Saharan Africa, after South Africa and Nigeria.

The GRA has publicly committed itself to pursuing rational, market- oriented economic policies, and encourages investment by the U.S. and other foreign countries. Commercial activities that increase exports, produce raw materials for industry, and train workers are encouraged by the GRA. Foreign investment is prohibited in defense, public utilities, and air and maritime transport. Repatriation of profits is guaranteed. BUSINESS LANGUAGE: Portuguese

Department of State
March 1995

BENIN

After years of Marxist/Leninist rule, Benin has emerged as one of Africa's front-runners in democratization. Nicephore Soglo, a former World Bank director, was elected President in March 1991 after a transition to multiparty democracy and the promulgation of a new Constitution. Along with western-style democratic reforms, Soglo has emphasized economic reforms, privatization, and the encouragement of entrepreneurial spirit.

With help from international financial institutions and bilateral donors, Benin began its first phase of a structural adjustment program in 1989 and entered the second phase in 1991. It continues to reach the majority of targets set by the World Bank and IMF and achieved an impressive 4.2% growth rate in 1993. It is working to streamline its public sector and has made significant improvement in tax collection. Benin is making good progress in three key areas of economic reform: privatization of state enterprises, lifting and reducing controls on commodity trade and prices, and instituting a new Investment Code offering incentives for private investment. The 50% devaluation of the CFA Franc in early 1994 has made the cost of labor and local goods quite competitive. OPIC programs are currently available in Benin.

Benin's 4.7 million inhabitants engage mainly in subsistence agriculture, cotton exports, some offshore oil production, and the importation of goods for re-export, especially to Nigeria. Five private international banks, including Credit Lyonnais, presently operate in Benin.

Market potential and opportunities exist for U.S. businesses in the sale of equipment and maintenance services for the Seme oil field project. Other areas of potential interest include: fruit juice production, glass bottle manufacture, sea salt extraction, vegetable and cashew nut processing, fish culture, mineral water production, a turnkey regional hospital, and transportation. Tourism may also be a profitable start-up area for investment given Benin's two game parks and other attractions. American firms hold the service contract for Benin's petroleum operations and a large hotel.

The 1990 Investment Code offers advantages for foreign investors, including tax breaks, a five-year exclusion of 50% of import duties on imported raw materials, and provisions for repatriation of profits. However, a number of government actions taken as part of the structural adjustment program, particularly import duty cuts, have made the Investment Code terms less necessary. Benin is eligible for programs involving the Overseas Private Investment Corporation (OPIC). At present, Benin's ability to import is somewhat limited by the need for economic austerity and the impact of the recent currency devaluation. Nonetheless, U.S. exporters continue to be successful in selling modest amounts of used clothing and shoes, loose tobacco, and wheat.

BUSINESS LANGUAGE: French

Department of State
February 1995

BOTSWANA

As the most stable and prosperous democracy in southern Africa, Botswana exercises an influence in the region disproportionate to its small population of 1.4 million. Its multi-racial, democratic government and free market economy create a natural affinity between Botswana and the West. Fueled by development of significant deposits of diamonds, copper, nickel, coal and other minerals, Botswana's economy has grown at a rapid rate since the early 1980's. The government is actively pursuing economic diversification to ensure future growth. It manages its finances well, has a positive balance of trade, and has no trouble arranging for loans.

Botswana has a relatively close economic relationship with South Africa. It is part of a customs union binding it with South Africa, Lesotho, Namibia, and Swaziland in a free trade area with few internal tariffs, free flow of labor and capital, and a common tariff structure. Botswana is relatively open to imports and recently acceded to the General Agreement on Tariffs and Trade (GATT). Road and railroad transport are available, and telecommunications are good in the major centers and improving in rural areas.

U.S. based companies have had difficulty breaking into Botswana's South Africa-dominated import market. However, imports from the United States have increased, as buyers realize that it is cheaper to buy American goods directly from the United States rather than through South African subsidiaries. Leading trade prospects for U.S. businesses include consulting and design engineering services and project- associated equipment, heavy mining and earthmoving equipment, agricultural equipment and supplies, and water and hydraulic equipment. Exports have increased in food, fuel, textiles and footwear, vehicles, transportation equipment, including aircraft. Sectors identified for future growth are communications equipment (including significant opportunities in railroad communications), electronics equipment, financial services, tourism, and products related to airport and aircraft maintenance. Exporters should also consider the market for personal care and health/beauty products, as well as consumer electronics, clothes, music, and recreational products.

Botswana has relatively few rules and regulations governing foreign investment. The business climate is excellent. Profits are easily repatriated, as are royalties, franchise fees, and service fees. There has never been an expropriation of foreign assets, and the U.S. Embassy is unaware of any disputes with foreign investors in recent years. Botswana seeks foreign investors in manufacturing and agribusiness and has shown an interest in attracting U.S. firms engaging in banking, consulting and design engineering, insurance, and financial management. Botswana's Financial Assistance Policy provides incentives for local and foreign investors, including cash grants, tax holidays, and reimbursement of a large share of training expenses for unskilled labor. The government encourages joint ventures in tourism, previously dominated by expatriates. Fast food franchises also present good opportunities. The Commonwealth of Virginia recently opened its Africa Trade Office in the capital, Gaborone. Botswana has an OPIC agreement, and a number of American companies have OPIC insurance for their investments.

BUSINESS LANGUAGE: English

Department of State
February 1995

BURKINA FASO

Burkina Faso, a land-locked Sub-Saharan country of some 9.5 million inhabitants, is one of the poorest countries in the world. Its agriculture-based economy is highly vulnerable to the fluctuations of weather conditions. Frequent droughts constitute a major problem for the over 80 percent of the population engaged in subsistence farming. The country also faces severe periodic insect infestation. These natural handicaps, however, are offset by the population's reputation for discipline, adaptability and hard work. Per capita income is about $300 per annum.

A member of the fourteen-nation CFA Franc zone, Burkina Faso was party to the January 1994, fifty percent devaluation of that regional currency. This monetary adjustment has, in the short-term, added to natural economic hardships and those stemming from an IMF-directed Structural Adjustment Program (SAP), underway since 1991. Despite a low level of economic activity, the economic situation is generally stable and there are some encouraging economic and business prospects. Nominal GDP growth rate was 6.1 percent for 1993. The IMF-led SAP for 1994-96 projects this rate to fall to 5 percent which still exceeds the population growth rate of 3 percent. Because of generally careful fiscal standards, government debts have up to now been manageable.

Political conditions continue to stabilize following presidential elections in December 1991, legislative elections in May 1992 and the country's first multiparty municipal elections in February 1995. President Blaise Compaore, who came to power following a coup in 1987, continues to dominate the government of the Fourth Republic with his political party, the Organization for Popular Democracy/Labor Movement (ODP/MT), since being elected President, in a single party election, in December 1991. Opposition parties protested what they alleged was widespread vote rigging and fraud when his ODP/MT party won 78 of the l07 seats in the National Assembly, but the opposition agreed to participate in the first government of the Fourth Republic, which took office in late June 1992. A score of parties participated in the peaceful 1995 municipal elections, again dominated by the ODP/MT, in which voter turnout was heavy (75 percent). The cabinet contains several ministers with backgrounds in finance and commerce, and the government is encouraging a more active role for the private sector. A new constitution, passed by public referendum in June 1991, heralds a system of law more conducive to foreign investment.

Relations between Burkina Faso and the United States remain strained by Burkina's intervention in Liberia. The U.S. continues to provide humanitarian assistance to Burkina in the form of food aid, along with modest levels of regional and bilateral development assistance although the USAID in-country mission will close in september 1995.

Although the U.S. has few direct commercial interests in Burkina Faso, opportunities for exports exist in computers, small mining and construction equipment, telecommunications equipment, and consumer goods. With the implementation of the SAP, Burkina now offers a significant market for consultancy services regarding various projects financed by both the World Bank and African Development Bank. Exporters currently marketing in the region should consider expanding into Burkina Faso. Despite recent downsizing, the embassy remains willing to make available its limited resources to organize visits for businesses interested in the mining and other sectors. Burkinabe businessmen occasionally approach the U.S. embassy seeking U.S. technical and financial collaboration in proposed ventures ranging from a plastics factory to a vegetable marketing scheme.

Central to the evolution of the Burkinabe economy continues to be the IMF/IBRD-supervised structural adjustment program which has now entered its second (1994-96) phase. The SAP has already significantly liberalized the country's economic environment and given greater incentive to private enterprise. Most price controls have been lifted, and import and export policies have been simplified. Burkina Faso is privatizing non-strategic parastatal enterprises and implemented a new investment code in June 1992 to encourage private investment. investor response to the parastatal offerings has, so far, been slow.

The new regulations covering the commercial, industrial and mining sectors do allow for one hundred percent foreign ownership rights although the government encourages a joint-venture approach to many investment opportunities. For instance, the Commercial Code guarantees equal treatment of foreign and domestic investors in like situations, with no discrimination through special taxes. It also guarantees foreign investors the right to transfer abroad any funds associated with an investment in the original currency of the transaction, subject to a 1966 decree governing the transfer of capital abroad. Revisions to the country's Customs and Labor Codes have also been completed. The Mining Code, which was adopted in May 1993, provides special customs and tax privileges to foreign investors during exploration and production stages. This code is currently under review, with the intention of making it even more attractive.

BUSINESS LANGUAGE: French

Department of State
February 1995

BURUNDI

Burundi is a small landlocked country with a population of about 5.5 million. One of the world's poorest nations (1993 per capita GNP of $164), it has the second highest population density in Africa, low agricultural productivity, and a rapid rate of population growth.

Ethnic tension between minority Tutsis and majority Hutus has erupted into large scale violence on several occasions. In October 1993, the country's first freely elected President was assassinated during a failed coup attempt. Widespread ethnic violence followed, causing as many as 50,000 deaths. Since that time, there have been repeated political crises and frequent episodes of ethnic violence. Lengthy multiparty discussions resulted in a powersharing agreement in September 1994, which paved the way for the installation of Sylvestre Ntibantangunya as President, with an opposition party prime minister and coalition cabinet. However, repeated political crises have prevented normal functioning of the government and seriously undermined the economy, which has been in contraction since the failed 1993 coup attempt.

Burundi's economic well-being depends on the annual coffee crop and foreign assistance flows. A largely agricultural society, Burundi has limited basic industries (a brewery and factories for textiles, general plastics products, cigarettes, matches, soap, and bottles and glass). Modest mineral deposits, primarily nickel, phosphate and gold, remain largely unexploited. Most imported equipment and supplies are tied to donor programs. The import market is dominated by European producers, although Japan has a significant market share. Burundi imports cement and cotton from its African neighbors.

In 1986, the government signed agreements with the IMF and World Bank to undertake an economic reform program. Implementation of the reform program continues but has suffered since 1993 as a result of an economic slowdown and the failed coup attempt in October of that year. In November 1991, the IMF approved an Enhanced Structural Adjustment Facility (ESAF) of US $58.9 million to support the 1991-94 reform program. In May 1992, an additional World Bank credit of approximately US $30 million was granted. The main objectives are to reform the foreign exchange system, liberalize imports completely, reduce restrictions on other international transactions, promote exports other than coffee, and eliminate the losses of coffee-exporting operations. In December 1994, the World Bank approved a $14.6 million credit for an emergency assistance project.

Private sector development has been an important component of the U.S. aid program. However, recent instability and turmoil has caused a shift in the U.S. aid program toward humanitarian relief and support for democracy and human rights. Burundi has established a Free Trade Status for non-traditional businesses which offers tax consideration and easing of certain operational restrictions to attract foreign investment.

U.S. investment and trade are limited by the uncertain political and security situation, as well as the language barrier, the small domestic market, limited availability of hard currency, geographic isolation, and high transport costs. There is little infrastructure for spare parts or service to support U.S. products. However, opportunities for U.S. investment in Burundi exist in some fields. American technology is respected and several U.S. firms are already represented. American products are generally handled by a European subsidiary through a local agent. Successful penetration of the market depends on an ability to do business in French. Opportunities in indigenous energy sources, nickel mining and coffee growing, and in the sale and distribution of construction materials, pharmaceutical supplies, and capital equipment. Current U.S. exports to Burundi consist mostly of insecticide, fertilizers, and computer equipment.

BUSINESS LANGUAGE: French

Department of State
February 1995

CAMEROON

Located on the Gulf of Guinea on the west coast of Africa, Cameroon has been administered at one time or another by Germany, France, and Britain. In addition to being officially bilingual (French and English), Cameroon's population of 12.3 million is socially diverse, comprising over 200 ethnic groups.

Since independence from France in 1960, Cameroon has had constitutional, civilian government dominated by a single party system until 1990. President Paul Biya, who inherited power constitutionally in 1982, was narrowly reelected in October 1992 multiparty balloting; his mandate was weakened because international observers described the process as seriously flawed. The former ruling party lost its absolute majority in March 1992 National Assembly elections, judged to be fair, but it subsequently attained a parliamentary majority in coalition with two other parties. A consultative constitutional review committee appointed by President Biya met in December 1994 for one week to consider a draft prepared by the Government without outside consultation. This process was interpreted by many observers as an effort to manipulate constitutional changes in a way that minimized public debate or broad participation. Multiparty local and municipal elections have twice been postponed and are now scheduled for the end of 1995.

Cameroon is a member of the UN, the OAU, and the NAM, but has not assumed a leadership role in these organizations. U.S.-Cameroon relations have cooled in recent years due to human rights concerns and the unfulfilled promises of the democratization process, lack of constitutional reform, postponed elections, severe restrictions on Freedom of Assembly, and Government monopoly of TV and radio services.

For twenty-five years, Cameroon had one of Africa's more prosperous and successful economies. In 1985-86, however, a sharp drop in market prices for its principal exports--oil, coffee, cocoa, and cotton-- combined with adverse currency exchange rate movements, pushed the economy steadily downward. Investment and trade slumped. Real per capita GDP has declined by more than 60 percent from its 1986 peak. The economy was further damaged by a mounting liquidity crisis, declining oil and other revenues, and sporadic strikes and boycotts. Corruption is a critical problem, depriving the government of significant customs and tax revenues. Lack of political and economic confidence significantly hampered economic revival.

Cameroon's first two IMF programs (1988-90 and 1991-92) lapsed without having fully achieved their objectives. However, in 1993, the GRC cut civilian public sector salaries by an average of about 70 percent. In January 1994, the CFA franc--the currency for Cameroon and 13 other African countries--was devalued by 50 percent. These moves, which should help ease Cameroon's severe competitiveness problems, paved the way for Cameroon to negotiate a new stand-by agreement. The government signed a letter of intent with the IMF on February 17, 1994, but by June the stand-by was transformed into a non-disbursing staff monitoring program, principally due to shortfalls in revenue collection, failure to reduce public sector employment, and parastatal reform/privatization. Excessive public sector employment, as well as political drift and administrative and coordination weaknesses, leave in doubt the government's ability to implement the massive economic and political reforms required to reverse the country's financial decline in the short term.

In February 1994, Cameroon implemented a new regional UDEAC (Union des Etats de L'Afrique Central) tariff regime, with temporary modifications to mitigate the effects of the CFA franc devaluation. The IMF and donors are urging the government to proceed with privatizing non-financial parastatals, to privatize and introduce price competitiveness into its banking system, to dismantle the few remaining monopoly export marketing boards such as for cotton and to revise its internal tax system.

In November 1993, the U.S. announced its intention to close its AID mission, calling the GRC a "poor partner in development" due to the government's poor performance in implementing political and economic reforms and continuing human rights concerns. This was accomplished by end of 1994.

In 1985, the U.S. and Cameroon signed a bilateral investment treaty, which entered into force on April 6, 1989. In 1990, Cameroon enacted a more liberal investment code, and in 1992, it enacted a more liberal labor code. However, foreign investors, including U.S. firms, have found it hard to obtain enforcement of their legal rights, including contracts and property rights, in the current legal system.

Nevertheless, export, contracting, and investment opportunities for U.S. firms may be created by World Bank and African Development Bank projects and by the prospective construction, by a consortium led by EXXON, of a pipeline to take oil from Chad to the Atlantic Ocean by way of Cameroon.

Supplying perhaps 5 percent of Cameroon's imports and buying perhaps 6 percent of Cameroon's exports during 1990-92, the United States may be Cameroon's fifth-largest trading partner, after France, Spain, the Netherlands, and Italy. Cameroon's exports consist mainly of oil, tropical woods, bananas, cocoa, coffee, and cotton. Imports, in the wake of the recent public sector salary cuts and currency devaluation, are likely to shift away from consumer goods and towards capital goods. However, Cameroon will continue to be a significant importer of American wheat.

The U.S. Embassy has tentatively identified the following sectors as having potential for American exporters: inputs into agriculture, including fertilizer; heavy machinery and material for forestry, transport, agriculture, and oil pipeline construction; and computer, business, and electronic equipment.

Several dozen American companies are represented in Cameroon either directly or through agents or distributors. Due to pervasive credit risk, extending even to the banking and public sectors, many U.S. firms exporting to Cameroon find it prudent to insist on irrevocable letters of credit drawn on banks with strong foreign correspondents. EXIMBANK financing is limited to short-term loans and guarantees for exports to private Cameroonian buyers.

U.S. firms with substantial investments in Cameroon include Pecten Oil, which produces crude oil offshore; Phillips Petroleum, which is exploring for oil offshore; Mobil Oil and Texaco, which distribute domestically refined petroleum products inside Cameroon; Dole fresh fruit, which owns a minority share of a French banana growing company; and Del Monte which operates a large banana concession which exports to European markets. A consortium led by EXXON signed a framework agreement in February, 1995 with the GRC to build a pipeline to take crude oil from Chad to the Atlantic via Cameroon.

BUSINESS LANGUAGE: French (English is also an official language but is not as widely used as French).

Department of State
February 1995

CAPE VERDE

In 1991 Cape Verde became the second African country (after Mauritius) to change governments peacefully following a popular election won by an opposition party. Carlos de Carvalho Veiga, leader of the Movement for Democracy (MPD), became prime minister, and Dr. Antonio Mascarenhas Monteiro, an independent, was elected president. Replacing a one-party, Marxist regime that had ruled since independence in 1975, the new Government has worked to carry out its promises of democracy, scrupulous observance of human rights, and economic liberalization. The next round of general elections for a new president, prime minister and national assembly is scheduled to take place early next year, with intense political activity beginning in 1995. This focus on political issues could delay some of the planned economic reforms. However, the current Government has promised to continue the privatization of state- owned firms and has announced publicly the restructuring of at least one major enterprise, the state telecommunications company. Additionally, the Government has obtained a grant from the Swedish aid agency to study the feasibility of launching a stock exchange.

Cape Verde maintains good relations with Western, former Communist, and Third World countries, and serves as a voice of moderation in African politics. The government encourages foreign investment and private trading. A 1989 investment code provides specific guidance and broad opportunities for the private sector. This code was amended in October 1993, to give greater security to foreign nationals and corporations who might be interested in investing in Cape Verde. AID helped establish a "one stop shop" for marketing promotion and investor advisory services.

Cape Verde is in the Sahelian climatic zone. Even in years of optimum rainfall, the island chain is unable to produce enough food to feed its population of 350,000. In 1991 the islands experienced their worst drought since 1985, requiring substantial international food aid. U.S. aid programs address Cape Verde's chronic economic hardship and drought. U.S. development assistance to Cape Verde has averaged $3 million per year over the last few years, with grant food aid (PL-480 Title II) ranging from $500,000 to over $6 million, depending upon drought conditions and availability of resources.

With few natural resources, Cape Verde depends on the hard work of its people. Large, industrious emigrant communities in New England and Europe provide a continuous inflow of foreign exchange. The strong, openly-traded currency is stable and pegged to a basket of nine major Western currencies. Fishing has the potential for generating a financial surplus and creating employment. The Government, for its part, is giving priority to fisheries as a strategic sector for the development of the country, and is hoping for private sector involvement. The dry, tropical climate, diverse terrain, warm, clear waters and beautiful, deserted beaches provide untapped possibilities for tourism.

Cape Verde is located at the crossing of mid-Atlantic air and sea lanes off the west coast of Africa. Recently improved port facilities at Mindelo, the international airport on Sal Island, and the free trade zone offer potential for export and warehouse facilities, enhanced by the government's open-door business policy. There is direct-dial telephone service with the United States.

U.S.-Cape Verdean contacts date from the early 19th century, when the New England whaling industry was at its peak. The large Cape Verde- American communities of Massachusetts and Rhode Island reinforce the cultural and historical ties between the United States and Cape Verde. Significant emigration to the United States continues.

BUSINESS LANGUAGE: Portuguese with English gaining wider acceptance and use. French is also widely spoken and used.

Department of State
March 1995

CENTRAL AFRICAN REPUBLIC

Central African Republic (CAR) is a developing country of approximately 3 million people which completed a successful transition to democratic government in 1993. The government of President Felix Ange Patasse has taken significant steps towards economic reform and recovery. President Patasse is continuing the privatization program begun by the previous government, and has reinstituted regular salary payments for civil servants. CAR received renewed assistance from the IMF and World Bank during 1994 and is hoping for further aid in 1995. It will take some time, however, for the country to fully recover from the effects of the many years of economic mismanagement, corruption and prolonged labor strikes under previous military regimes. Economic recovery efforts should be helped in the long term by the effects of the January 1994 devaluation of the CFA franc.

CAR's economy is based mainly on agriculture, diamond mining, and logging. Diamonds are the country's principal export. Some gold is also mined. CAR is nearly self-sufficient in food production and has the potential to become a net exporter. Principal food crops are manioc, corn, peanuts, bananas, millet, sorghum, rice and sesame. The CAR exports cotton, coffee, tobacco, and cattle.

CAR's economy is disadvantaged by the country's landlocked position, which isolates it from foreign suppliers and markets and contributes to rising import prices. It suffers as well from inadequate transportation and market infrastructure, and from political instability in neighboring countries which sometimes causes border closings and transportation delays. These problems are compounded by the vagaries of the weather and fluctuating world prices for the CAR's primary export commodities.

Foreign direct investment is primarily in the diamond mining and timber sectors. Several American companies have expressed interest in mechanizing the artisanal diamond sector. France continues to be CAR's major trade partner, providing about 50 percent of total imports, with other EU countries providing about 14 percent. CAR's main imports are wheat flour, other processed foods, vehicles, petroleum products and basic tools and equipment.

American goods are at a disadvantage in CAR because of traditional commercial ties with France and because transport is costly and infrequent. Given the government's financial straits, U.S. suppliers should expect to arrange credit for those purchases not financed by donors. Business representatives must be able to transact business in French.

CAR still retains parastatal monopolies in electricity, water distribution, river transport, sugar and palm oil production, and other areas. The state also has non-majority interests in some banks and hotels, but plans to continue a privatization program. The parastatal petroleum products company is being reorganized and private ownership of service stations will be allowed. The CAR Investment Code, rewritten in 1990, welcomes foreign investment, and guarantees equal treatment under the law; freedom from expropriation and nationalization, except under certain circumstances; freedom from political or economic interference; and other rights. The transfer of funds valued at more than CFA 500,000 (about US$ 943 at March 1995 exchange rate) requires permission from the Ministry of Finance, which usually takes approximately one week. Tax and customs laws may be more rigidly applied to foreigners, and it is useful to have a local partner to negotiate the complex web of regulations required to establish a business.

BUSINESS LANGUAGE: French

Department of State
March 1995

CHAD

Chad has suffered since the mid-1960's from civil war, foreign occupation, insurrection and periodic drought. The current government has been in power since December 1990 and is committed to a program of democratization and economic reform. A National Conference in 1993 set up a program for transition to a democratic political system and elected a legislative council representing all sectors of society. A constitutional referendum and elections for president and a national legislature are envisioned for 1995. Although the government's control was not threatened during 1994, armed opposition groups were involved in sporadic clashes with government troops in the countryside. Instability has in the past discouraged foreign investment.

Petroleum is the most promising sector for investment. Esso Chad, a consortium led by Exxon and including Shell and Elf, is currently exploring what are believed to be extensive and commercially exploitable crude oil reserves in southern Chad. The consortium concluded a framework agreement in January 1995 with the governments of Chad and Cameroon for construction of a proposed oil pipeline from southern Chad through Cameroon to the coast. Current projections call for production to begin near the end of the decade. There are significant potential opportunities for U.S. companies in finance, construction and oil- related industries. Esso Chad is also involved in development of a smaller oil field north of Lake Chad. Plans include a pipeline to N'Djamena, a mini-refinery, a generating plant and a national power grid.

Chad's mineral reserves, especially gold, may be of interest to U.S. investors. A recent study has encouraged the Ministry of Mines to actively seek foreign investors to exploit reserves.

High-grade cotton is currently Chad's major export and continues to hold commercial promise. The parastatal COTONTCHAD uses American cotton gins and has contracted for American fertilizer. U.S. sales to COTONTCHAD are constrained, however, by its continuing deficits and a strong French financial interest in the company, which effectively keeps much purchasing activity in French hands. Livestock remains an under- exploited sector of the economy, and could provide interested U.S. firms with opportunities in meat and dairy production, leather, glue, fertilizer and other products. An abundance of open and fertile agricultural land presents potential for agricultural production. Export taxes on agricultural products were largely eliminated as part of a January 1995 tax reform, thus giving added incentive to commercial agricultural production.

Gum arabic is a fast-growing export of potential interest to U.S. trading firms. Chad is the second largest world supplier of gum arabic (after Sudan), and recent efforts by USAID have raised local awareness of its export potential. Numerous producers and traders are currently exploring non-traditional markets in the U.S., Japan and the Middle East, in addition to continuing sales to France.

Commercial possibilities in the industrial sector are very limited. Aside from COTONTCHAD, the only significant industrial enterprises in Chad are a sugar refinery, a brewery, a soft drink bottler, a cigarette manufacturer and a small bicycle assembly plant. SONASUT, the parastatal sugar refinery, will be fully privatized in the next few years. Several other government-owned and parastatal firms are making plans for privatization. Chad offers a modest but developing market for telecommunications equipment and services. The state-owned telephone company lacks international direct-dialing capacity, modern equipment and accounting procedures. Company officials have expressed interest in establishing contacts with U.S. telecommunications firms.

Chad's current economic policy encourages foreign investment, and few legal impediments exist to discourage foreign enterprise or trade. The investment code permits 100 percent foreign ownership of firms, except in national security or strategic industries. Chad's currency is the CFA franc, a regional currency supported by France at a fixed value. No restrictions exist on the transfer of funds into or out of Chad. The January 1994 devaluation of the CFA franc has made products from non-CFA countries more expensive for Chadian importers. Tax reforms enacted in January 1995 decreased the tax burden on some industrial goods and machinery to help offset this effect. As a member of UDEAC (the Central African Regional Customs Union), Chad also implemented reforms in import and value-added taxes to conform with UDEAC regulations.

Chad lacks infrastructure and is landlocked, posing additional challenges to foreign investment. Electricity and telephone service are almost non-existent outside the capital and several major towns. The literacy rate in Chad is estimated at only 25%. About 80% of the population is engaged in subsistence farming and livestock raising. With an annual per capita GDP of approximately US $180, Chad is one of the poorest countries in the world. The government's perennial revenue shortages encourage official corruption and hinder its ability to honor financial commitments. In 1994 it defaulted on Exim Bank loan guarantees of over $5 million.

Chad's relations with the U.S. are good. U.S. government assistance to Chad will undergo changes in 1995 with the closing of the USAID office in N'Djamena. Modest U.S. assistance to development and democratization will be maintained through centrally-funded programs.

BUSINESS LANGUAGES: French

Department of State
March 1995

COMOROS

The Federal and Islamic Republic of the Comoros declared its independence from France in 1975. The country is a federation of three small, scenic islands located at the northern entrance to the Mozambique Channel. The government also claims the fourth island in the archipelago, Mayotte, which at the time of independence voted to remain a French territory.

The political system opened up following the assassination of President Abdallah in 1989. Long-dormant opposition groups reappeared and fielded candidates in presidential elections in March 1990. These elections, and legislative elections in late 1992 and early 1994, went relatively smoothly and can be considered free and fair. However, the government remains ineffective, especially in the economic area.

The Comoros is a very poor country with a population approaching 500,000, with a further 100,000 Comorians living overseas, mostly in France. It has almost no industry, only one deep water port (on the island of Anjouan), and a limited road system. Eighty percent of the population live in the countryside, usually without running water or electricity, and engage in subsistence agriculture and fishing. Agriculture accounts for most of the export revenue but the market for the Comoros' tropical cash crops is fragile. There is some development of the tourist industry, mostly to serve nearby countries such as South Africa. Sun International Hotels operates one major resort hotel, and recently opened a second, but generally tourism remains underdeveloped. The fishing industry is equally unexploited, with commercial fishing rights in territorial waters licensed to foreign companies.

Economic prospects for the Comoros remain limited. The economic growth rate cannot keep pace with the population growth rate of around 3% a year. There is widespread unemployment and underemployment, with a bloated and often corrupt civil service supplying most of the jobs. Almost all arable land is already under cultivation and erosion and deforestation have reached devastating proportions in certain areas. At present there are only limited prospects for industrialization.

The devaluation of the CFA has made exports more attractive, but has also raised the cost of imported goods. Since 1981, foreign assistance, primarily from France and the EU, has made up more than half of the Comoros' budget. A World Bank/IMF structural adjustment program has succeeded in reducing the public payroll, but other reforms have yet to significantly affect the economy.

While the economic prospects for the Comoros remain less than favorable, investment and trade opportunities do exist in several sectors. With the recent devaluation agricultural exports such as cloves, vanilla, perfume essence (ylang ylang) and exotic fruits and flowers become more attractive. Tourism, including the rehabilitation of existing hotels, and fishing are two further potential investment sectors that may become more attractive with devaluation. Since fuel is imported and extremely expensive, solar or geothermal energy are also viable. Finally, foreign donor-funded programs, especially in transportation and communications, offer some opportunities for the sale of American goods.

BUSINESS LANGUAGE: French

Department of State
February 1995

CONGO

U.S. relations with this oil-producing nation are good. The Republic of Congo ended three decades of Marxist rule in 1991, when a National Conference installed a transitional government charged with organizing a series of elections. The first freely-elected President in decades took office in August 1992. Congo appears to be emerging from a tumultuous period of civil confrontation. Investor confidence will be a direct function of its success in consolidating peace.

High oil prices led to economic growth in the early 1980s. By mid- decade, however, lower oil prices (90% of export earnings) and an import-driven burgeoning foreign debt led to financial crisis. In 1986, Congo negotiated debt rescheduling agreements with its Western creditors and embarked on a World Bank/IMF structural adjustment program emphasizing fiscal reform, civil service reductions, and privatization of state-owned companies. In late 1990, however, in the face of widespread strikes, the government retreated from its economic reform program. In 1994, Congo reached new agreements with the Paris Club and hopes for a new rescheduling this year. Congo is seeking to restore its relations with the Bank and Fund and embarked on a new structural adjustment program after signing a Letter of Intent in February 1994, but difficult economic challenges remain.

Congo's government is eager to attract foreign investment, and is working to privatize parastatals. The 1992 investment code is designed to encourage increased business activity, profit reinvestment, and investment in less developed areas. High labor costs and an outdated labor code remain problems.

Petroleum and tropical wood are Congo's most important export products. Congo is Africa's fourth largest producer of oil, and exports most of its oil to the United States. Major U.S. investment is in the petroleum sector and several U.S. firms are involved in petroleum exploration. Special incentives are available for investment in forestry and agriculture. A Bilateral Investment Treaty, ratified in 1994, guarantees U.S. investors terms no less favorable than those enjoyed by anyone else.

France accounts for 35 percent of imports, followed by the United States (11 percent), Italy, Japan and the Netherlands. The European Community as a whole provided 56 percent of imports in 1993, down from 71 percent in 1989. Imports include heavy machinery, vehicles, business equipment, clothing, medicines, consumer goods, and foodstuffs. Impediments to U.S. export opportunities to Congo include high transport costs, a weak banking sector, language difficulties, and the need for continuing contact for spare parts and repairs.

BUSINESS LANGUAGE: French is essential

Department of State
February 1995

COTE D'IVOIRE

Cote d'Ivoire (formerly Ivory Coast) is the world's largest producer of cocoa, ranks among the top four producers of coffee, and exports significant quantities of cotton, rubber and palm products. With an overall population of 12 million, it has been a significant regional employer, with a foreign populations of between four and five million from neighboring countries. Because of Cote d'Ivoire's history of stability and its relatively well developed infrastructure, several regional financial institutions, including the African Development Bank, are headquartered in Abidjan. Cote d'Ivoire's Gross Domestic Product accounts for about half of the output of the West African franc zone.

President Felix Houphouet-Boigny led the country from independence from France in 1960 until his death on independence day, 1993. According to constitutional procedure, he was succeeded by the President of the National Assembly, Henri Konan Bedie, who will serve until Presidential elections are held in 1995. From the beginning, President Houphouet encouraged an open and liberal business and investment climate, particularly compared with other nations in the region and the developing world. The country's close links to France have, however, provided an inside track for French business interests. President Bedie, who served as ambassador to Washington and Finance Minister earlier in his career, is continuing to follow market-oriented policies and seeks to expand Cote d'Ivoire's range of international business relations.

Glutted markets and severely depressed prices for Cote d'Ivoire's principal exports prevailed throughout the eighties and into the nineties, leading to negative growth, increasing unemployment, a massive public sector debt, and labor and student unrest. At the beginning of 1994, the thirteen member countries of the regional CFA franc zone agreed to devalue their currency by 50%. In Cote d'Ivoire, the devaluation was quickly followed by agreements on an Extended Structural Adjustment Facility (ESAF) with the IMF and by disbursement of a large package of concessional loans by the World Bank. Debt restructuring - including the write-off of half of all official debt from France - followed shortly. Together with a series of reforms negotiated with the IMF and the World Bank, these measures, if comprehensively undertaken, should go a long way toward reducing the burden of government and debt on private business and toward ending the stagnation that has characterized the economy over the past decade.

On the political front, President Houphouet in 1990 authorized multi-party elections and named Alassane Ouattara, a Wharton-educated former IMF senior official, to be the country's first Prime Minister. A number of positive steps were taken on economic issues at the same time that the political opposition and a vibrant free press began to take root. Under President Bedie and the country's second Prime Minister, Daniel Kablan Duncan, an active program of governance and reform is continuing. General elections in 1995 should further consolidate the legitimacy and authority of government institutions.

Attracted by Cote d'Ivoire's past political stability, liberal foreign investment code, and freely convertible currency, nearly 50 U.S. companies have invested about one billion dollars in the country and many maintain offices in Abidjan, often as regional bases for the West African area. With some 200 U.S. firms already distributing products, export opportunities exist in paper products; telecommunications; computer hard- and software; agriculture, irrigation, mining, construction, air conditioning, refrigeration, medical and security equipment; textile, forestry and woodworking machinery; cosmetics, toiletries, and health care products; drugs and pharmaceuticals; consumer electronics; pumps, valves, and compressors; and industrial and agricultural chemicals.

U.S. firms should be prepared to do business in French and to develop a local presence. The best way to facilitate ready market access of goods and services is to devote sufficient time, effort, and follow-up to the appointment of a reliable, financially sound dealer/agent or distributor. A reputable dealer/agent can do effective market penetration for U.S. goods and services, but only if marketing and technical manuals are provided in French. Cost-cutting mimeographed sheets will do more harm than good in this increasingly sophisticated market.

For items of lower value, price is the single most important market penetration factor. For goods with higher value, attractive financing, quality, and the ready availability of services facilities are critical factors. However, the most important factor is the personal rapport between buyer and seller or investor and local partner. An increasing number of Ivoirians who trained in the United States are available for work with American companies operating in Cote d'Ivoire.

There is an office of the U.S. Foreign Commercial Service in Abidjan which has a particular mandate to assist U.S. firms seeking participation in projects financed through the African Development Bank.

BUSINESS LANGUAGE: French (Some business elites can use English).

Department of State
March 1995

DJIBOUTI

The Republic of Djibouti is a small country located at the junction of the Red Sea and the Gulf of Aden. Since independence from France in 1977, Djibouti has pursued a moderate foreign policy. In December 1992, Djibouti began a two-year term in the U.N. Security Council and has been a forceful advocate of conflict resolution. It retains close relations with other western nations as well as with moderate Arab states. Djibouti is host to several thousand French military personnel and permits U.S. naval and air access.

Djibouti's population of approximately 450,000 is mainly of Somali origin with a substantial minority of Afars who are members of an ethnic group based predominately in northeastern Ethiopia. The Somalis are divided along tribal and clan lines. There is a small but influential Arab population, mainly from Yemen, as well as a large, primarily French, expatriate community.

In late 1991 rebels from the Afar ethnic group occupied the two northern districts of Djibouti. In December 1994, the authorities signed a peace accord with the rebels, granting them status as a legitimate political party. Hassan Gouled Aptidon, the only president Djibouti has had, was re-elected for a six-year term in 1993. The government has begun taking some steps to expand democratic governance, but progress remains limited.

Djibouti's economy has been weakened by the cost of waging an anti- insurgency campaign against the Afar rebels. Growth is negative and public and external accounts are in deficit. The government is not currently actively pursuing structural economic reforms. In October, the entire country gained the status of a free export zone. The government also is exploring military demobilization as a means of reducing public expenditure and stabilizing Djibouti's economic situation.

Lacking major natural resources, Djibouti's economy is primarily service-based, with the country's port facility and a railroad linking it to Addis Ababa accounting for the bulk of economic activity. The service and commercial sectors account for 85 percent of GNP, but have been harmed by instability in the region which has reduced traffic at the port and on the railroad. Djibouti remains extremely dependent on foreign assistance, and almost all food and other goods must be imported.

Djibouti welcomes foreign private investment. The Government has signed an OPIC agreement. The currency, the Djiboutian franc, is pegged to the dollar and is freely convertible. There are no foreign exchange restrictions . Shipping and other port-related activities are among the prime candidates for investors, and recent evidence indicates that gold mining may hold some promise. Obstacles that American investors could encounter include high labor costs, an outdated and restrictive labor code, high energy costs, and a special tax to finance military operations against the Afar insurgents.

BUSINESS LANGUAGE: French

Department of State
March 1995

EQUATORIAL GUINEA

U.S. relations with Equatorial Guinea (EG), a small, isolated nation on Africa's west coast, are strained due to continued U.S. concern with the human rights situation and slow pace of democratization. The present Government of Equatorial Guinea (GREG) came to power in August 1979 by overthrowing the country's first president and dictator, Macias Nguema, but is run by many of the same people. The regime has allowed the legalization of several opposition parties, and discussions are currently underway to revise the electoral list and law in preparations for municipal elections in 1995. The ruling party won virtually all seats in the November 1993 legislative elections, which were so blatantly flawed that most citizens boycotted the process. Opponents to the regime are still sometimes detained and occasionally abused while in custody, although the frequency and duration of these detentions noticeably decreased in the latter half of 1994.

Equatorial Guinea sank from being one of the wealthiest African states in terms of per capita income at independence to one of the poorest, as the result of mismanagement and terror under Macias. The economy has not improved much since. EG has agricultural potential, especially cocoa and lumber production, and in that it is located near oil-producing Nigeria, Cameroon and Gabon, may have substantial hydrocarbon reserves. An American firm has been producing commercial crude oil since December 1991, and two other foreign enterprises are currently prospecting in the continental region of the country.

Equatorial Guinea is a member of both the Central African Customs Union (UDEAC) and the CFA franc zone. Equatorial Guinea has received appreciable development assistance from the international community, although this has fallen over the last several years in reaction to the regime's human rights abuses, hostility to genuine democratization, and unwillingness to reform the economy.

The United States provided USD 1 million annually from 1981 for poultry production and the establishment of agricultural cooperatives, but this aid ended in 1992. A Peace Corps program with ten volunteers started in late 1988 and grew to 33 before being terminated in 1992 following regime harassment of the volunteers. Spain continues to play a major role in its former colony and provides substantial humanitarian assistance (although it halved its amount in calendar year 1994). French influence is growing.

With a limited pool of trained people, weak demand for its cocoa and coffee, and a serious balance of payments deficit, EG faces continued economic stagnation. Accordingly, commercial and investment prospects in the near term are not bright. The government has adopted a public investment program which has been endorsed by the World Bank and in 1992 enacted a foreign investment code with long-term incentives, freedom of repatriation of profits and capital and other benefits. While the regime is anxious for greater Western investment (suggesting fisheries, tourism, agriculture, communications, and energy as priority sectors), its lack of respect for the rule of law has served to retard the development of an open commercial sector. Irregular requirements from officials can impede the conduct of normal business relations.

BUSINESS LANGUAGE: Spanish (Some French, but very little English spoken in the business community.)

Department of State
February 1995

ERITREA

A thirty-year civil war ended in May 1991 when the Eritrean People's Liberation Front (EPLF) defeated Ethiopian military forces and established a provisional government. Eritrea became independent in May 1993 following a U.N-supervised referendum the previous month, in which 99.8 per cent of the people voted for independence. Eritrea is in a four-year transitional period to full democracy, including the drafting of a constitution and press and party laws. This process will culminate with multiparty elections.

Eritrea is a poor country, with a per capita income of less than 150 dollars a year. The government is committed to a mixed economy and welcomes outside investment. A new investment code and land proclamation were issued in the fall of 1994. The new investment code is one of the most liberal in Africa. For example, joint ventures are not required. You can have wholly owned foreign ventures, free movement of capital, and repatriation of profits. The code also provides special incentives in the following sectors: agriculture, industry and natural resources, construction, tourism and hotels, commerce, transportation, services, and mining.

Eritrea became a member of the World Bank and the IMF in June of 1994.

Eritrea receives assistance from a variety of bilateral and multilateral donors. In FY 94 U.S. assistance included a nine-million- dollar USAID program, plus approximately thirty-two million dollars in food aid and other forms of assistance.

In recent months American business interest in Eritrea has been from the following sectors: energy (at least three companies interested in oil or natural gas exploration), agriculture, construction, heavy equipment, mining, telecommunications, banking, tourism and hotels.

Eritrea is anxious to privatize at least some of the 42 state owned enterprises (industries, hotels, etc.). Apart from infrastructure improvements, especially electricity and industrial machinery, the Ministry of Trade and Industry is especially interested in modernization of the textile, glass, and leather industries.

Comment: Credit cards are not accepted in Eritrea. Foreigners must pay their hotel bills in U.S. dollars or other hard currency.

BUSINESS LANGUAGE: English is widely spoken within the business community; however, Tigrinya and Arabic are the official languages.

Department of State
February 1995

ETHIOPIA

Ethiopia, three and one-half years after the fall of the Marxist "Derg" regime, expects to end its Transitional Government following the May 7, 1995 parliamentary and regional elections. In June 1994, Ethiopia elected a Constituent Assembly, and in December, this body approved a new constitution. Over the past year, the government has also pursued a policy of decentralizing authority to the regions, with mixed results. This has occurred along with increasing political stability and an uneven but gradually improving human rights record.

Economic reform in Ethiopia is taking place under complex and difficult circumstances. In an effort to transform a centrally-planned economy into a market-oriented economic system, Ethiopia has removed price distortions and many regulations and restrictions which had been stifling market forces and private sector initiatives. Macroeconomic stability has been maintained through a determined tightening of fiscal and monetary policies. Foreign assistance, in terms of emergency relief and developmental assistance, continues to play a major economic role. The International Monetary Fund approved the second tranche of its Structural Adjustment Facility in late 1994, indicating Ethiopia's progress in macroeconomic reforms.

Recent Ethiopian Government efforts to create a more open market include the establishment of the Ethiopian Privatization Agency; implementing taxation reform; legalizing private banking and insurance ventures; enhancing the role of the Investment Office of Ethiopia to assist investors in establishing businesses; issuing of treasury bonds; lifting restrictions on imports; allowing a near convergence of currency exchange rates; increasing the availability of foreign exchange for importation; awarding mining permits to foreign firms (including one American firm and another with its corporate offices in the United States); and pledging to privatize government-owned houses, stores, hotels, restaurants, and enterprises. Opportunities for joint ventures with either the Ethiopian Government or Ethiopian firms appear to be increasing. The issue of land ownership, however, remains problematic, with the recently adopted constitution stating that land is owned by the state. Urban land leasehold regulations, under review with respect to their final form and mode of implementation, will likely have a significant impact on the investment climate.

Business opportunities for American firms, however, abound. There are currently more than 35 American concerns with representation in Ethiopia. Investment and sales opportunities include aircraft, equipment and machinery, agricultural chemicals and fertilizers, mineral exploration and extraction, computers and other office equipment, telecommunications equipment, consultancy services, and vehicles and spare parts. American firms compete favorably for Ethiopian Government tenders, which are principally funded by the World Bank and the African Development Bank and generally involve public infrastructure projects. A recent example is that of the contract for the construction of a sugar refinery in the amount of 83 million dollars by an American firm.

This project is unique not only in its size, but also in that it represents the first application in Ethiopia of U.S. Trade and Development Agency assistance (a $500,000 training grant) and use of the Overseas Private Investment Corporation political risk insurance program (in the amount of $50 million dollars). Both of these elements figure strongly in the strengthening of trade ties with Ethiopia, which is currently one of our largest trading partner in sub-Saharan Africa.

BUSINESS LANGUAGE: Amharic with fairly widespread capacity in English

Department of State
February 1995

GABON

This small equatorial country with a population of about one million is on Africa's Atlantic coast. Gabon became independent in 1960 and, reflecting its colonial heritage, economic, linguistic and cultural ties with France remain strong. President Omar Bongo, in office since 1967, was re-elected in 1993. The government is headed by a prime minister and also includes a National Assembly elected every five years, and a constitutional (supreme) court. President Bongo's party and coalition partners hold a large parliamentary majority. By agreement enshrined in the "Paris Accords" of September 1994, the government formed in October 1994 includes six ministers from parties formerly in the opposition. Municipal elections are scheduled for October 1995 with legislative elections six months later.

Gabon has one of Africa's highest per capita income figures--almost $4000--but the income distribution is extremely skewed. Its economy is heavily dependent on oil, which accounts for some 34 percent of GDP and 90 percent of exports. Gabon is also exploiting timber from its extensive forests, manganese, and uranium. Following the January 1994 devaluation of the CFA franc, used by Gabon and 12 other French-speaking African countries, Gabon qualified for an IMF standby agreement and reschedulings at the Paris and London Clubs. Gabon successfully met IMF conditions and will be discussing a renewed IMF program in March, 1995. Likely conditions will be reduction of the government's large internal arrears and restructuring of large parastatal enterprises.

Oil production is expected to remain relatively stable in 1995, as exploration continues both on- and offshore. In 1993, Gabon exported petroleum worth approximately $1.7 billion. Timber exports were $162 million and manganese exports were $90 million; total merchandise imports were about $860 million. France has traditionally been its leading supplier, but the French share of Gabon's imports by value has tended to fall (from 37 percent in 1989 to 26 percent in 1992) while the United States is generally the second supplier with 27 to 30 percent of the market by value.

Gabon's investment code, adopted in July 1989, contains incentives similar to those found in other francophone African countries. There are no restrictions on introducing foreign capital into Gabon, and funds may be transferred freely for commercial transactions within the zone and abroad through regular banking channels overseen by the regional central bank.

While large foreign firms officially operate on the same basis as national firms, Gabon reserves the right to favor local firms. At the African Trade and Investment Conference held in Libreville in February 1995, conference organizers recommended, for several countries including Gabon, improvement in the strengthening of legal systems and the rule of law so that contracts would be consistently enforced on an international basis.

French firms and subsidiaries are significant commercial players in Gabon, and there is a relatively large resident French community engaged in all sectors of business. French firms may benefit from concessional financing and mixed credits from the French government. Opportunities in the petroleum sector remain the most attractive for U.S. companies, particularly in oil field services and drilling. The government wishes to encourage investment in fisheries, port development and light industry.

BUSINESS LANGUAGE: French

Department of State
February 1995

THE GAMBIA

Elements of the Gambian National Army seized power from the democratically elected government in a coup on July 22, 1994. The new military junta suspended constitutional institutions. Its members generally behaved in an arrogant and erratic manner characterized by flagrant abuses of human rights. The previous government's commitment to market economics and privatization of parastatal companies has been compromised. In the wake of the coup, donors have curtailed development assistance and have generally suspended balance-of-payments support.

The Gambia's per capita GDP was approximately $350 in 1993. In 1993 re-export trade accounted for 63 per cent of foreign exchange receipts. Tourism provided 26 per cent, with the agriculture sector (especially groundnuts) providing most of the remainder. Trade and tourism receipts were up during the first half of 1994, but have fallen precipitously since July. The figures for 1994 have not been finalized, but re-export and tourism earnings are believed to have declined by as much as 70 percent in the second half.

The Gambia enjoys excellent international telephone service, a good maritime port, and adequate airport facilities. Business law has remained technically intact since the July 22 coup. However, the military junta has frequently overridden legal protection to interfere with enterprises providing essential services and those in which members of the former government hold a stake. Effective pursuit of business- related litigation in The Gambia usually requires the presence of the plaintiff or the plaintiff's U.S. representative.

Parastatal accounts have been raided by the military government, which has also arbitrarily abrogated management contracts held by foreign investors. The former National Investment Board, a one-stop government-operated investment service, has been disbanded. Its replacement, the National Investment Promotion Authority, has uncertain efficacy.

Under current conditions, investments in major projects with significant government participation or oversight cannot be recommended. Opportunities remain for trade with The Gambia's small traders, who carry on a lively business in cosmetics, clothing, African art and fabrics, and jewelry. U.S. vendors and customers are often preferred by these merchants.

Prior to the coup, investment opportunities existed in tourism, horticulture, fisheries, agribusiness, and consumer goods. Commercial opportunities also existed in port building, import-export operations, and durable goods. These could reappear if political and economic stability were restored.

BUSINESS LANGUAGE: English

Department of State
February 1995

GHANA

In January 1993 Ghana inaugurated a new civilian government under a new Constitution. Flight Lieutenant (Retired) Jerry John Rawlings, who had headed the previous Provisional National Defense Council (PNDC) government, assumed the office of president, having won the November 1992 election with 58.3 percent of the vote. Despite some irregularities, international observers accepted the validity of the results, although the opposition political parties did not. There is widespread acceptance of and support for Ghana's new Constitution and the system will be tested again at the polls in presidential and legislative elections in 1996. The Constitution contains strong provisions in support of human rights. The independent press, human rights monitoring groups, opposition parties, and the judiciary act as constitutional watchdogs. Major decisions involving the business sector are usually made by the president, or on his behalf by close advisers in consultation with senior officials in the Ministry of Finance and Economic Planning and the central bank (the Bank of Ghana).

In 1983 Ghana launched a comprehensive economic recovery program, augmented three years later by a structural adjustment effort supported by the international financial institutions and many bilateral and multilateral donors. The reforms included devaluation of the Cedi, liberalization of trade and foreign exchange, decontrol of many prices, and restoration of fiscal and monetary discipline. The banking system is due to be restructured in accordance with terms agreed to by the World Bank, which is providing support through a structural adjustment credit. The Government has announced its intention to privatize three state-owned banks, including Ghana Commercial bank, the largest in Ghana.

The reforms have stimulated sizable inflows of foreign aid, which are financing renovation of basic infrastructure such as roads, railways, ports and telecommunications. Private capital has also been active in the telecommunications sector, particularly in the development of wireless services. While Ghana's cumulative debt has risen to $4.4 billion, most of this is long-term concessional loans. Some debt has been forgiven, and Ghana has eliminated its arrears.

Ghana is rich in natural resources (gold, diamonds, and tropical hardwoods) and welcomes foreign investment. Nearly all foreign exchange is earned through the export of cocoa, gold, and timber. Recently, through a trade and investment program supported by the United States Agency for International Development (USAID), Ghana has made an effort to diversify its export base into non-traditional exports such as horticultural crops, processed wood products, fish and seafood and handicrafts. Non-traditional exports totaled $71.7 million in 1993 and $56.9 million for the first six months of 1994.

Real GDP growth slipped to 3.8 percent in 1994 from the 5 percent reached in 1993. This can be attributed to disappointing growth in the agricultural sector, which still accounts for 45 percent of GDP. The Government's goal for 1995 is to achieve a recovery back to the 5 percent level. Pushing growth to even higher levels would require substantially increased domestic savings and greater domestic and foreign investment.

Promising sectors for investment include gold and diamond mining, tourism, agribusiness, aquaculture, oil and gas exploration, refrigeration and cold storage systems, equipment leasing, and light manufacturing using local raw materials. The Government has indicated that it intends to privatize most of the more than 300 state-owned enterprises. While the net worth of many parastatals is difficult to establish, some could be of interest to investors despite a need for restructuring, rehabilitation, and recapitalization.

The minimum required equity for foreign investors is $10,000 (in joint ventures) or $50,000 (for enterprises wholly-owned by a non- Ghanaian). Trading companies either wholly or partly owned by non- Ghanaians require minimum foreign equity of $300,000 and the firm must employ at least l0 Ghanaians. The higher minimum investment required in trading companies is meant to be a disincentive for foreigners to engage in this kind of activity. Investment in mining and petroleum exploration are regulated by separate legislation and incentives. Under the new investment code (the Ghana Investment Promotion Center Act of 1994), the Government guarantees free transferability of dividends, loan repayments, and licensing fees. It also provides for the repatriation of capital upon the sale or liquidation of foreign enterprises.

U.S. goods and services enjoy a good reputation for quality and reliability in Ghana. Interest in representing U.S. businesses locally remains high. Although Ghanaians are often willing to pay a premium for goods "made in America," competition with exports from Japan, France, Germany, the United Kingdom, The Netherlands and Korea is strong. Very high local interest rates mean that attractive financing has a strong influence on the sourcing of imported goods, especially where sales are not linked to donor assistance.

The importation into Ghana of certain types of goods is restricted for health or safety reasons. Generally speaking the Ghanaian market is open to foreign goods.

U.S. exports to Ghana have fluctuated widely in recent years. For the first nine months of 1994 U.S. exports totaled $81.5 million compared with $159.7 million during the same period in 1993. Bulk foodstuffs such as grains are the largest category of U.S. exports while construction and mining machinery have also done well recently. Significant potential exists currently in the following areas: mining, earthmoving, and construction equipment; telecommunications equipment; computer software, hardware, and peripherals; forestry and woodworking equipment; pharmaceuticals; food processing and packaging equipment; light and heavy trucks; air conditioning and refrigeration equipment; management, engineering, and consultancy services; and agricultural commodities.

BUSINESS LANGUAGE: English

Department of State
March 1995

GUINEA

Since April 1984, Guinea, one of the most stable countries in the West African region, has had a military government led by President Lansana Conte. In 1989, President Conte announced sweeping political reforms. Following the overwhelming popular approval of a new constitution in 1990, the ruling military council was replaced by a mostly civilian transitional body. Presidential elections were held in December 1993, and legislative elections are scheduled for 1995. The United States extends economic assistance, with a strong emphasis on economic reform and grass roots development.

Guinea is very underdeveloped, with a population of 7.3 million and a per capita GDP of just over $500. Illiteracy is widespread, trained managerial and technical personnel are few, and productivity is low. Independent since 1958, Guinea's first 26 years of independence were dominated by socialist policies which wrecked all but the mining sector of the economy. More than 90 percent of export earnings come from mining, particularly bauxite and diamonds, locus of most U.S. investment. Guinea also has gold and iron ore deposits.

Since 1984, agricultural and commercial activity have expanded. Fisheries currently exploited by non-Guinean fleets have potential. The government embarked on an IMF-IBRD assisted program of economic reform in 1985. Reforms included eliminating restrictions on agriculture and foreign trade, liquidation of 100 parastatals, the creation of a realistic exchange rate, and cutting the government bureaucracy. Although the program derailed in 1991, Guinea met prerequisite conditions to get its IMF-IBRD supported reform program back on track by October 1992. The Paris Club rescheduled debts in November 1992. In January 1995, it forgave approximately $70 million of Guinea's $170 million external debt.

The French are well entrenched. Nonetheless, U.S. exports include mining machinery, textiles, canned and dry foods, and outboard motors and furniture. U.S. firms also sell computers and trucks to donor- sponsored projects. Transportation, communications and industrial infrastructure are inadequate, but the government is moving to privatize parastatals, which should improve this situation.

There have been no expropriations in the recent past. The expropriation of Mobil Oil assets remains unresolved more than ten years after the expropriation. However, judicial protection of investors is sometimes inadequate and the court system is not always able to adjudicate disputes reliably or enforce contracts. In practice, investors have had difficulty obtaining full implementation of promised incentives. Although a new land tenure code was effected in 1992, a lack of clear land titles continues to be a problem. Several donor- sponsored policy reform projects aim to improve the policy and judicial framework for investors in Guinea.

Essential business skills for Guinea are French language ability, patience, and presence or trusted representation in Conakry. Exporters are strongly advised to deal only through irrevocable letters of credit. Although there are no currency controls, foreign residents are required to keep certain accounts locally, in Guinea francs. Guinea is not a member of the CFA-franc zone.

BUSINESS LANGUAGE: French

Department of State
February 1995

GUINEA-BISSAU

The Republic of Guinea-Bissau held its first multiparty elections in 1994. This was the culmination of a move to democracy which began in 1991 with the adoption of a new constitution. Joao Bernardo Vieira was reelected President in a fair and free process hailed as an example for others to emulate. Economic transformation of the country began in 1986 with an IMF and World Bank monitored stabilization and structural adjustment program.

Guinea-Bissau's population of one million has a per capita GDP of about $210. However, over 60 percent of economic activity is informal and is not reflected in statistics. The economy is dominated by subsistence farming. Agriculture, fishing and forestry provide 90 percent of employment and 50 percent of GDP. Commercial farming includes cashews, peanuts and palm kernels. Cashews comprise 70 percent of product exports, generating over $20 million in 1994, double the revenue earned from fishing licenses. Although rice production has grown, imports of this staple remain high.

The nation is completing the transition to a market economy. The state no longer dominates either the productive or service sectors, having abolished state marketing boards, privatized some companies, ended price controls (except on petroleum), passed a new investment law and adopted laws and procedures to facilitate private economic activity. Transport, commerce and service sector responses to these changes have been very positive.

The best successes of Guinea-Bissau's structural adjustment program have been in trade reform and price liberalization. The government cut 1993 expenditures by over seven percent of GDP and improved tax and customs revenue collections. Inflation dropped from 70 percent in 1992 to 16 percent in 1994 and real GDP has grown steadily at about three percent per annum. However, foreign aid comprises over 60 percent of GDP. Guinea-Bissau has one of the heaviest debt burdens in the world. External debt is over $600 million; a debt-to-GDP ratio of 300 percent. The November 1994 Guinea-Bissau Round Table Conference on the Economy and Consolidation of Democracy exceeded donor expectations. A Paris Club rescheduling of bilateral debt early in 1995 will further improve the economic climate.

There is strong potential for production, processing and marketing of rice, cashews, fruits, vegetables, fish and forestry products. USAID's program aims to eliminate constraints that inhibit growth in these sectors. Over the next several years, USAID will assist public and private efforts to expand investment opportunities for market entry and improve the operating environment for local and foreign firms. The World Bank and other donors are working to strengthen the banking industry, revenue collection, infrastructure and the social sector.

The United States and Guinea-Bissau enjoy good bilateral relations. In addition to our USAID projects, the Peace Corps has a dynamic program and we provide limited military assistance.

BUSINESS LANGUAGE: Portuguese is the official language; French is useful in business circles.

Department of State
March 1995

KENYA

After several years of lackluster economic performance and lapsed efforts at reform, the Kenyan government has undertaken a major economic restructuring. Under the guidance of multilateral lending institutions, Kenya is working to reduce its fiscal deficit, restructure inefficient state-owned enterprises, reduce the civil service, and liberalize the foreign exchange market.

The renewal of reform efforts has resulted in an impressive economic recovery, with growth in 1994 estimated at over three percent. This has further increased the confidence of Kenya's business community. Foreign reserves have grown, while inflation continued its downward trend in 1994.

While Kenya's economic picture has brightened in recent months, several factors will combine to inhibit robust growth. Corruption remains a serious concern, although some steps have been taken to correct this problem. Kenya's rapidly growing population is creating a major unemployment problem, especially among young people. Kenya's difficult transition to multiparty democracy has also created uncertainty about Kenya's long-term economic and political prospects.

Since 1991, Kenya's donors have linked assistance to economic and political reforms, including improvements in human rights and good governance. Recognizing Kenya's progress in implementing a difficult economic restructuring program, donors pledged some $800 million in assistance in late 1994. At the same time, the United States and other donors made clear that Kenya's progress on corruption, human rights, and democracy will continue to influence decisions on assistance commitments. U.S. bilateral aid has remained at about $18 million over the past several years, with 90 percent of this project aid channeled directly to non-governmental organizations and private communities.

Kenya's mixed economy consists of an active private sector and a large, inefficient public sector. Despite ongoing problems, Kenya's improving financial system and its experienced local business community greatly facilitate business activities for foreign investors. The recent liberalization of the foreign exchange market has been a particular boost to investors. Kenya has a relatively good infrastructure in telecommunications and transportation, including the deep water port of Mombasa. The work force is generally characterized by solid skill levels.

Tourism and coffee are Kenya's largest foreign exchange earners. Other agricultural exports include maize, tea, and horticultural products. Kenya has one of Africa's most extensive manufacturing sectors, which includes food processing, beverages and production of tobacco, footwear, textiles, cement, metal products, paper and chemicals.

Kenya encourages private foreign investment, though investment levels have been stagnant in recent years. Preference is given to firms expected to earn or save foreign exchange, increase the country's technical knowledge, increase employment, and utilize local resources. There are no formal requirements for minimum local participation in either equity or management, although the government seeks higher levels of Kenyan participation in all investments. Expatriate work permits can be difficult to renew or acquire. Licensing requirements are extensive and often overly bureaucratic.

Kenya hopes to reorient its industry towards greater export performance in order to alleviate chronic balance of payments difficulties. The plan, which includes the creation of several Export Processing Zones with special incentives for investors, appears to present some good investment opportunities for U.S. business. Kenya's interest in expanding commercial links with South Africa may also fit with the objectives of U.S. companies. Major project opportunities for U.S. firms exist in geothermal energy development, telecommunications, lease/purchase of commercial aircraft, and textile equipment.

Total U.S. investment is about $250 million, and 75 U.S. firms have offices in Kenya.

BUSINESS LANGUAGE: English

Department of State
February 1995

LESOTHO

Lesotho is a small, landlocked, mountainous kingdom surrounded by South Africa. March 1993 elections returned the country to civilian democratic rule after 23 years of unconstitutional and military government. The democratically elected government weathered several episodes of unrest in 1994, including intra-army battles in January, the killing of the Deputy Prime Minister by army elements in April, and an attempted royal coup in August. These incidents underscored the fragile state of democratization. The government maintains close ties with the West and is committed to free enterprise. Its relations with South Africa are pragmatic.

The economy is based on subsistence agriculture, livestock, and the remittances of workers employed in South Africa. From a small manufacturing base, Lesotho exports garments to the United States and Europe. Other agricultural products are exported primarily to South Africa. Lesotho has managed its finances competently under IMF tutelage, and enjoys budget surpluses. The economy remains heavily dependent on external factors, including development aid.

Lesotho relies on South Africa for food imports, trade, transportation, telecommunications, and employment. Proceeds from membership in a common customs union with South Africa form the majority of government revenue. Lesotho's manufactured products enter South Africa duty-free. Imports to Lesotho from the United States include corn, pharmaceuticals, iron tubes/pipes metalwork and office machinery. There are prospects for sales in agricultural equipment as well as heavy construction equipment for use in the Highlands Water Project.

Future cooperation with South Africa is assured by the Lesotho Highland Water Project (LHWP). The LHWP is a multi-year, multi-billion dollar project to supply water to South Africa and hydroelectric power to Lesotho by capturing and rerouting the headwaters of the Orange River. It will provide income to Lesotho from the water royalty payments, and open a relatively underdeveloped region to tourism. United States firms generally have been unsuccessful in winning contracts under the first phase, but are competing for follow-on phases.

The Lesotho National Development Corporation encourages foreign investment and has been moderately successful in stimulating the establishment of light industries. Two American manufacturing investments were launched within the last year. The government has discussed privatizing the telecommunications and air transport sectors. Foreign investors may own 100 percent of firms, and procedures for the transfer abroad of funds associating with an investment are not onerous. Lesotho is a member of the International Center for the Settlement of Investment Disputes and has expressed readiness to accept binding international arbitration of investment disputes.

BUSINESS LANGUAGE: English

Department of State
March 1995

LIBERIA

After months of intense negotiations, a new peace accord -- the 11th since the Liberian civil war began in 1989 -- was signed in Accra, Ghana on December 21, 1994 by all seven warring factions. The new accord called for a cease-fire, the installation of a new transitional government in January 1995, national elections in November 1995, and the installation of a democratically elected government in January 1996.

As of early March 1995, the new transitional government had not been installed due to disputes among faction leaders over Executive Council composition and leadership. Although the capital, Monrovia, is protected by West African peacekeepers (ECOMOG), fighting continues in the countryside.

The war has devastated Liberia. Out of a pre-war population of 2.7 million, 300,000 people have been killed or wounded, more than three quarters of a million have fled to neighboring countries (Guinea, Cote d'Ivoire, Sierra Leone) and over a million Liberians have been internally displaced.

The war-ravaged economy, previously based primarily on iron ore, rubber, timber, diamonds, and gold exports, remains in decline. Gross domestic product is less than eighty percent of prewar levels. Foreign investment is negligible and much of the capital base and infrastructure has been destroyed or badly damaged.

However, if peace is secured, there will be significant business opportunities in infrastructure rehabilitation. The African Development Bank, World Bank and other donors are expected to provide support for major development and reconstruction projects once Liberia is under central administration and on a path toward democratic elections. Specific opportunities could include iron ore, gold and silver mining.

Due to continued unsettled conditions, the State Department has issued a Travel Warning for Liberia. As of March 1995, a dusk-to-dawn curfew remained in effect in Monrovia, enforced by ECOMOG. Nonetheless, some hotels are operating in the capital, air transport from Abidjan and Freetown is possible, and the port of Monrovia (controlled by ECOMOG) is operating. The U.S. Embassy remains open although the U.S. Government does not officially recognize any government in Liberia.

BUSINESS LANGUAGE: English

Department of State
March 1995

MADAGASCAR

An island nation in the Indian Ocean with a population of about 12 million, Madagascar ranks among the poorest countries in the world. For the past 15 years average annual GDP growth has lagged behind the population growth rate of about 3%. Real incomes have fallen by 50% in the last twenty years. Despite this substandard economic performance, Madagascar's unique natural environment, wide variety of resources, low- cost labor force, and location on a crossroads between Asia and Africa should interest investors.

The country made a successful transition to democratic government in 1993. During the transition period, however, economic decision-making was impeded and economic reforms begun in the late 1980's were halted. Having peacefully implemented an elected, parliamentary system, the focus is now on resuming economic reforms and pulling the country out of the failed socialist experiment of the past. Lower commodity prices in the 1980's hit the agriculturally-based Malagasy economy hard, cutting revenue from vanilla, coffee, cloves, rice, cotton, and sisal. Lowered export earnings and dwindling foreign exchange reserves compelled the government to liberalize the foreign exchange market in May 1994. Although the government has not finalized a new structural adjustment program with the IMF, it is under negotiation and forms the background for liberalization reforms the government is taking.

Madagascar's appeal to investors stems from its extremely low-cost, mostly literate and highly trainable workforce. A large number of garment manufacturers seeking to cut production costs have located in the Free Trade Zone, established in 1991. The absence of quota limits on textile imports to the United States and special access to the European market under the Lome Convention has further stimulated this growth. Over 150 firms are now Free Trade Zone investors taking advantage of its provisions. The 50% devaluation of the Malagache Franc from the liberalized foreign exchange market further enhances Madagascar's export competitiveness.

The fishing, mining, tourism, and agriculture sectors are promising. Potential investors in Madagascar should be aware of the country's unique but highly threatened environment. Excess population growth and slash-and-burn agriculture have already led to widespread deforestation and loss of watersheds. International donors and institutions are increasingly concerned about the environmental impact of investment projects, which may necessitate environmental impact assessment prior to approval.

The deteriorated state of Madagascar's communications and transportation infrastructure is the chief impediment to doing business. Internal communications are very difficult, and international telephone service is unreliable and expensive. The local road network is in very poor condition and is sometimes impassable during the rainy season. Air service is also substandard, though recent moves toward liberalization of communications and air transport may alleviate some of these problems.

The legal and regulatory environment in Madagascar can be a further source of frustration for foreign investors. Foreign ownership of land, though legal, is rare, and the security of private property, the enforcement of contracts, and the assignment of liability are not assured by the inadequate judicial system. Widespread corruption among government officials also affects business transactions. Government efforts to redress these problems are underway but progress has been slow.

The current investment code provides for exoneration from taxes on profits, and taxes on imports such as equipment, for two years. Free transfer of profits from investments made in foreign currency is permitted. The new export processing zone program offers permanent exemptions from taxes, including taxes on imports of primary materials.

Good prospects for future U.S. sales and investment are in food processing (especially seafood), construction, textiles and telecommunications. Tourism, especially "eco-tourism," has significant potential. There are also opportunities in consulting, engineering and related professional services for many international donor projects.

BUSINESS LANGUAGE: French

Department of State
February 1995

MALAWI

1994 was a watershed year in Malawi's history culminating in the country's first ever multiparty presidential and parliamentary elections. In these elections, which were judged "free and fair" by several different outside observer groups, businessman Bakili Muluzi and his United Democratic Front ousted former president Hastings Banda from power. During this period, Malawi's human rights record has improved dramatically and donor assistance has resumed.

Malawi is hospitable to foreign and domestic investment. In response to structural and economic pressures during the early 1980s, Malawi embarked on an IMF-approved reform program. In addition to providing price incentives and improved market facilities for smallholder crops, the government moved to reform or divest parastatals, eliminate many agricultural subsidies, trim the public sector deficit, and dramatically cut domestic borrowing. In February 1994, the government initiated a floating foreign exchange regime for the Malawi kwacha. The government simultaneously introduced regulations which allow local companies and individuals to hold foreign currenty accounts within Malawi.

Tobacco, tea, cotton and sugar account for 34 percent of GDP and 90 percent of exports. Poor agricultural output, due primarily to erratic rains, has led to declines in GDP in two of the last three years. Inflation in 1994 was estimated at 30 percent, up from the 1993 rate of 23 percent.

A critical factor effecting any economic decision in Malawi is the cost and reliability of transport. The country's cheapest and fastest routes to the outside are rail links to Mozambican ports and a road through Mozambique to the Zimbabwian capital of Harare. The government hopes the recent peace settlement in Mozambique will not only increase transportation reliability but also encourage the repatriation of an estimated 100,000 Mozambican refugees still in Malawi.

Private foreign investment is encouraged. Telecommunications are relatively reliable. The government provides incentives to new investors which include tax holidays, rebates, and duty waivers. Although few legal restrictions exist on repatriating after-tax profits, recent foreign exchange shortages have delayed remittances. Malawi recently introduced a foreign exchange auction system.

Britain and South Africa are Malawi's traditional trading partners. Importers are interested in U.S. goods, ranging from chemicals, computers and word processors to hair-care products, but many U.S. exporters have been put off by the country's small market and remote location. However, recent import liberalization has inspired some U.S. firms to enter the Malawian market, and a number have opted to service Malawi from their operations in Zambia or South Africa. Ongoing bilateral and multilateral assistance programs offer many opportunities for U.S. companies to bid on projects, including the development of forestry products and coal, bauxite and gypsum mining.

BUSINESS LANGUAGE: English

Department of State
February 1995

MALI

One of the world's poorest countries, Mali has a population of 9 million and a per capita GDP, calculated at the devalued CFA rate, of about U.S. $150 per year. Nevertheless its mineral and agricultural resources and the government's pro-investment and pro-enterprise orientation offer potential investors some advantages. Dictator Moussa Traore was deposed in March 1991 and a democratically elected government took office in June 1992. Instability in far northern Mali caused by Tuareg unrest continues sporadically, although there is little impact on the rest of the country.

Relations with the United States are excellent. USAID has an extensive program, one of Africa's largest, and the biggest U.S. Peace Corps program in sub-Saharan Africa is also found here.

Americans are warmly welcomed. Post-independence socialism has been replaced by emphasis on free trade and private enterprise, shaped by economic reform policies supported by the IMF, World Bank, and other donors including the United States. Mali would like to have foreign private investment to boost economic activity. It continues to implement a program of privatizing public enterprises. A U.S. firm won international bidding in 1993 to purchase the state-owned tannery. The Investment Code offers duty-free importation of capital equipment in priority industries and liberal repatriation of profits. The recently adopted Commerce and Labor Codes provide incentives to both foreign and domestic investors. Mali is eligible for OPIC financing and insurance programs. Foreign residents (not tourists) are sometimes required to obtain an exit visa but the enforcement of this regulation is very uneven.

Eighty percent of the population engages in farming, livestock raising or fishing. Production of cotton, Mali's biggest export, has expanded in recent years and the fifty percent CFA Franc devaluation in January 1994 has boosted cotton and other exports through improved price competitiveness. Locally manufactured goods include clothing, cement, textiles, leather, paint, plastic products, pharmaceuticals, food and beverages. Known mineral deposits include gold, bauxite, uranium, iron, copper, manganese and phosphate; only gold, Mali's third most important foreign exchange earner, has been exploited significantly.

Mali imports petroleum, vehicles, machinery, processed foods, clothing, cosmetics, electronics, telecommunications and mining equipment, and most other manufactured items. French products dominate imports in several areas but North American, Japanese and other products are steadily gaining market share as Malian entrepreneurs seek other supply sources. Exports of U.S. goods to Mali were U.S. $32.6 million in 1993. That amount declined to U.S. $5.4 million for the first 6 months of 1994 as a result of an overall decrease of imports to Mali following the January 1994 devaluation of the CFA.

Investment opportunities exist in mineral exploration, telecommunications and computers, water resources development, livestock and other agro-industries, food processing, new and used clothing. Procurement contracts with USAID and other development organizations offer other chances to sell agricultural, construction, irrigation, telecommunications, computers and other equipment and services. Marketing and technical manuals should be in French. All persons desiring to do business in Mali should visit the country and be prepared to spend considerable time developing personal contacts. Petty corruption is a problem, but no worse than in many other countries at a similar level of development. The current government is committed to market reforms which should reduce the problem.

BUSINESS LANGUAGE: French

Department of State
February 1995

MAURITANIA

With a population of over two million Maurs, Halpulaars, Soninkes, and Wolofs, the Islamic Republic of Mauritania, located on the northwest coast of Africa, is an ethnically diverse country. It has few natural resources beyond iron ore and some of the richest fishing grounds in the world. Ethnic tensions have resulted in periodic civil disturbances, the most important of which occurred in April-May 1989. The government has made progress on human rights, but some violations, including vestages of slavery, continue. A military regime came to power in 1978 in a bloodless "palace" coup. In April 1992, after presidential and legislative elections, a civilian government was put in place.

Mauritania faces daunting economic challenges: desertification and other after-effects of prolonged drought; massive unemployment; one of the highest per capita debts in Africa; poor infrastructure; inadequate health and education systems; and a mass exodus from the rural areas to the overflowing slums of Nouakchott. The return of about 200,000 Mauritanians in 1989 who had been living in Senegal has added to this burden.

Almost three-fourths of the country is in the Sahara Desert where rainfall is absent or negligible. The population has been largely nomadic, but desertification has made nomadic husbandry and oasis farming more difficult. As a consequence, the country is rapidly urbanizing and more than a quarter now live in and around Nouakchott. The main sectors of economic activity are fish, iron ore, agriculture, livestock and some light manufacturing. Fisheries have replaced iron ore as the country's greatest contributor to foreign exchange earnings. Fish and iron ore together accounted for more than 95 percent of total exports by value in 1993.

Mauritania's economic reform programs, including a thoroughgoing structural reform effort, have been on track since late 1992. France is currently Mauritania's primary aid donor, but Saudi Arabia and Kuwait have traditionally contributed 30-40% of Mauritania's foreign assistance. The Mauritanian Government is pushing to reestablish that relationship which was disrupted by Mauritania's tacit support of Iraq during Desert Storm/Shield.

Impediments to increased U.S. investment include the lack of infrastructure, currency inconvertibility, traditional ties to France and Spain, and a mutual lack of knowledge of business practices and potentials. Mauritanians would welcome U.S. investment, particularly in fisheries. U.S. exporters have been active in the mining sector, although primarily through European offices or agents, and export opportunities exist in transportation, fishing, agriculture, and boat repair and port handling equipment. Two U.S. companies conducted offshore exploration campaigns for oil but finds showed limited promise. An American firm, Harris Corporation, recently signed a $17 million contract with the Mauritanian government to install a telecommunications system here.

BUSINESS LANGUAGE: French and Arabic (A limited number of the business elite speak English)

Department of State
February 1995

MAURITIUS

Mauritius is a small, densely-populated Indian Ocean island nation some 1000 miles off the east coast of Africa. It has become a model of successful political and economic development, with a vibrant multi- party parliamentary system and a market-driven economy.

A former French and British colony, Mauritius achieved independence in 1968 and became a republic in 1992. The present moderate government has been in power since 1983, being re-elected in 1987 and again in 1991. It has pursued pragmatic domestic policies, international non- alignment and an exemplary record of respect for human rights.

Mauritius' economic performance during the past decade has been remarkable with an average annual growth rate of 6%. Real GDP growth in 1994 was 5.1% and is expected to go up to 6% in 1995. Mauritius is considered a middle-income developing country with a per capita income around $3,000. Its population of one million people is multi-racial, made up of approximately 68% Indians (mostly Hindus, but some Muslims), 27% Creoles, and small communities of Sino- and Franco-Mauritians. It has a mixed economy, based on light manufacturing (mostly textiles), sugar production and tourism, with a strong private sector. With the steady increase in the activities of the offshore banking and business center, the freeport and the stock exchange, Mauritius is also developing into a financial and trade center for southern and eastern Africa. While sugar remains the backbone of the economy, with most exports going to the EC and a smaller percentage to the United States, diversification to other industries remains a priority. The textile sector, one of the early diversification successes, is now facing increasing competition from lower wage countries, and the government is actively seeking investments in other sectors such as light engineering, printing and publishing, electronics, information technology, jewelry, plastics, pharmaceuticals and health care, and agro-based industries.

Mauritius has established Export Processing Zones, built small industrial plants and developed a complete program of investment incentives for the private sector. Mauritius is now moving from a labor-intensive to a capital-intensive industrial structure concentrating on high value added based on advanced technologies. A joint government and private sector agency, MEDIA, promotes investment and facilitates licensing and approvals. Its stable political situation, attractive fiscal and financial incentives, good infrastructure, and educated labor force make Mauritius an excellent location for foreign investors. Other advantages are duty free entry of Mauritian products into the EC, the proximity of Mauritius to the important South African market, and preferential access to the Preferential Trade Area (PTA) now known as the Common Market of Eastern and Southern Africa (COMESA), which groups 22 countries representing a market of more than 300 million consumers. Constraints on investment include increasing labor shortages and Mauritius' distance from the United States.

The following projects/sectors represent the best prospects for export of U.S. products and services to Mauritius. (1) Printing machinery and supplies, (2) EPZ sector: Textile machinery, yarn, dyestuff, etc., (3) Sugar sector: Power generating plants and sugar mills equipment (mainly boilers and alternators) for the bagasse/coal- fired power plant in the sugar industry, (4) Telecommunications equipment, (5) Port Development Project: Container-handling cranes, forklifts, trucks, (6) Airport Development Project: Extension of the runway and passenger terminal and the supply of equipment to upgrade the air traffic control center, (7) Computers and information technology, (8) Sewage and waste water treatment, (9) Agricultural machinery including cane harvesters, loaders, tractors, sprayers, and irrigation equipment, (10) Hotel and catering (including fast food) equipment and supplies and food processing machinery, and (11) Dam construction.

Most major projects in Mauritius are won by firms whose proposals are accompanied by an attractive financing package. In order to be competitive, U.S. firms should approach the Export-Import Bank, the Overseas Private Investment Corporation, and the U.S. Trade and Development Agency to arrange for the best possible financial terms when bidding for a major project.

Although not generally legally required, a local partner can be useful to facilitate investment. There is a framework for both banking and non-banking offshore activities with the Mauritius Offshore Business Activities Authority (MOBAA) established to provide information, assistance, and promotion for the growing offshore sector.

BUSINESS LANGUAGES : French and English

Department of State
February 1995

MOZAMBIQUE

In October 1994, Mozambique held its first democratic elections and successfully concluded a two-year peace process which brought an end to the country's 16-year civil war. The destruction of the war, along with the severe 1991-1992 drought devastated Mozambique's fragile economy. In 1987, the Mozambican government adopted a structural adjustment program which it has adhered to with varying degrees of success. While economic growth in 1994 was a respectable 5%, the World Bank still ranks Mozambique as the world's poorest country with a per capita income of about $80.

The Mozambican economy (estimated GDP of $1.5 billion) remains dependent on foreign assistance, which is likely total over $1 billion in 1995. Significant business opportunities exist in the numerous aid projects financed by the World Bank, the African Development Bank, and many donor agencies, including USAID. Major investments are planned in agriculture, road construction, and health. For example, the World Bank is sponsoring an $800 million project for the rehabilitation of the country's road network. The government is also considering proposals for the introduction of privately-owned toll roads.

Foreign investment in Mozambique remains low, less than $40 million in 1994, but interest is growing, primarily from South African and Portuguese investors. A U.S. firm, ENRON, has signed a memorandum of understanding with the Mozambican government to build a natural gas pipeline from Pande in central Mozambique to South Africa. While negotiations for the pipeline continue, this project would constitute the country's largest investment ever, worth several hundred million dollars.

For the investor not averse to the risks associated with operating in less-developed markets, Mozambique offers substantial investment opportunities in energy, mineral extraction, agriculture, fishing, tourism, and timber. In particular, Mozambique's Department of Energy is interested in private power generation schemes. OPIC insurance is available for American investments in Mozambique.

The government passed new investment laws in 1993 to encourage both domestic and foreign investment. These laws provide additional tax incentives and simplify the approval process for new investments. Regulations were also enacted to permit the establishment of export processing zones. Thus far, these changes have not encouraged significantly greater investment as most businessmen agree they are still insufficient to overcome the many disincentives to investing in Mozambique.

A dysfunctional banking system, cumbersome business regulations, widespread corrupt practices, a complicated and lengthy process for approving foreign investment, high corporate tax rates, expensive telecommunications, poor physical infrastructure, and paucity of skilled workers all combine to give investors pause. The Mozambican government's new economic team which came into office following the elections has made encouraging announcements about their intentions to tackle these problems and to promote an improved business climate, but it remains to be seen how rapidly they will be able to bring about change.

The annual Maputo International Trade Fair (FACIM), to be held from August 26 to September 4, 1995, provides a good opportunity to gain an overview of the local economy and to visit with companies active in Mozambique. The recently-established U.S.-Mozambique Chamber of Commerce in Maputo can also provide a useful orientation to first time visitors.

BUSINESS LANGUAGE: Portuguese

Department of State
March, 1995

NAMIBIA

Namibia is a large, arid, and sparsely-populated country on the southwest coast of Africa. Although most of its population of 1.44 million engages in subsistence agriculture and herding, Namibia has a skilled workforce of more than 200,000, as well as a small professional and managerial class. The country boasts a highly-developed formal sector based on capital-intensive mining operations, beef and hide production, sea fishing and fish processing, and wildlife-based tourism.

The democratically-elected Namibian Govermment has earned a reputation for political stability and pragmatic, free market economic policies. In elections in 1994, President Sam Nujoma was reelected to a five-year term and the ruling South West Africa People's Organization (SWAPO) increased its majority in parliament. Corruption is the exception rather than the rule in Namibia, and cases of official malfeasance are pursued in court. The legal system is transparent and the judiciary independent. Namibia's overall human rights record is excellent.

The Namibian Government has demonstrated an ongoing commitment to sound fiscal management (public sector borrowing is minimal) and a partnership with the private sector. The country's liberal Foreign Investment Act of 1990 provides for freedom from nationalization, freedom to remit capital and profits, currency convertibility, and a process for settling disputes. The government introduced land reform legislation early in 1994, and has approached this sensitive issue in a deliberate and reasoned manner. While it realizes that more Namibians must enjoy the economic benefits of independence, the government also recognizes that commercial farming remains a pillar of the economy.

Namibia introduced its own currency, the Namibia Dollar (ND), in September 1993. The Bank of Namibia approached this initiative in a very professional manner, employing an effective "awareness campaign" designed to make Namibians feel comfortable with their new money (which will remain linked, at par, to the South African Rand for the foreseeable future). There has been widespread acceptamce for the ND throughout the country and, while Namibia remains a part of the South African Common Monetary Area, it enjoys much greater flexibility in monetary policy.

Given its relatively small domestic market, regional trade is vital to Namibia, which is a member of both the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). On March 1, 1994, the deep water port of Walvis Bay was transferred to Namibia from South Africa. The Namibian Government expects Walvis Bay to become an important gateway to the southern African region. Namibia currently enjoys a superior transportation network, and construction is underway on two new arteries -- the trans-Caprivi and trans-Kalahari highways -- which will ultimately feed into Walvis Bay. Furthermore, Namibia is in the process of procuring state-of-the-art technology to modernize its already impressive communications infrastructure.

While mining continues to be the economy's largest export earner, depressed world mineral prices have led to decreased activity in this sector. Sea fishing and fish processing offer dynamic growth potential, and other promising sectors include eco-tourism, meat amd leather processing, offshore oil exploration, electricity generation, and marble and granite extraction and beneficiation. The government has implemented special tax incentive packages (particularly for manufacturing enterprises) in order to generate employment and the resources needed to develop those regions of the country neglected during the pre-independence days of apartheid. Demand for computer hardware and software should continue, as well as for low-cost building materials suitable for sunny, arid climates. Local entrepreneurs continue to have a strong interest in obtaining the training and name recognition offered by American franchisers.

The United States and other key countries lifted all sanctions against Namibia at independence four years ago. The United States has granted MFN and GSP trading status to Namibia, which is also a GATT signatory. The U.S. Export-Import Bank has opened it credit facilities to Namibia, and OPIC programs are also available. In June 1993, President Nujoma became the first sub-Saharan African head of state to call on President Clinton, and he made a strong commitment that American investment is most welcome in Namibia.

BUSINESS LANGUAGE: English (German and Afrikaans widely spoken).

Department of State
February 1995

NIGER

Niger is a landlocked country in West Africa with limited arable land, found almost exclusively along the southern border with Nigeria and in the west along the Niger River. Recurrent drought and advancing desertification are severe problems. Niger is one of the poorest countries in the world.

Niger is a young constitutional democracy lead by a popularly elected President and National Assembly. The first democratically elected Assembly and President were installed in April 1993. Elections in January 1995, which were judged free and fair by international observers, brought new delegates to the National Assembly. In February 1995 a Prime Minister from the opposition majority was named, starting a period of "co-habitation" with the President and Prime Minister being from opposing parties. Niger continues to grapple with student, labor and military demands for scare economic resources. The October 1994 truce with Tuareg insurgents, however, held without incident and was renewed in January 1995.

Following the devaluation of the CFA Franc in January 1994, the government of France and other international donors forgave a large part of Niger's bilateral debt. The devaluation spurred exports within the region mostly of agricultural products and mostly through informal channels. However, the political crisis that began in October 1994, and which led to the January 1995 elections, indefinitely postponed progress toward a Structural Adjustment agreement with the International Monetary Fund and the substantial multilateral assistance that would have resulted. The Standby Agreement which had been negotiated with the IMF was downgraded in January to a shadow program, worsening Niger's financial problems.

Niger enjoyed large export earnings and rapid economic growth during the 1960's and 70's after the opening of two large uranium mines in the northern town of Arlit. However, world prices declined rapidly in the early 1980's thus ending the era of economic growth. The economy stagnated and many people turned to informal activity to support themselves. The economy generates no new formal sector jobs and few investment opportunities.

The government is conscious, nevertheless, that private investment is the key to economic growth and development. In recent years it instituted a Revised Investment Code (December 1991), Petroleum Code (October 1992), and Mining Code (March 1993). However, dwindling reserves of foreign exchange and stagnant export earnings continue to make it difficult to obtain foreign exchange from the central bank, and delays are common in remitting dividends. There have been no expropriations since the 1970's and there is no pattern of discrimination against foreign firms.

Investment opportunities exist in the minerals sector, principally in oil and gold, but in other minerals as well. International companies, including several American firms, have taken out exploration licenses for the gold seam in western Niger which also contains deposits of other minerals. An Elf/Exxon joint venture recently concluded a decade-long oil exploration campaign with some signs of success in the southeastern part of the country. Meanwhile, Hunt Oil is exploring in the northeast.

The government has welcomed U.S. proposals to invest in Niger telecommunications and minerals. Other investment opportunities may be found in small-scale industry, such as food processing. An OPIC investment guarantee has been in effect since 1962, but no OPIC mission has ever visited Niger.

U.S. relations with Niger are excellent. The United States seeks to assist Niger in its efforts to further strengthen democracy and to help achieve the goal of sustainable economic development. USAID supports programs which emphasize policy reform, natural resource management, health care and family planning.

BUSINESS LANGUAGE: French.

Department of State
February 1995

NIGERIA

Nigeria is Africa's most populous nation and the United States' fifth largest oil supplier. It offers investors a low-cost labor pool, abundant natural resources, and the largest domestic market in Sub- Saharan Africa. These advantages must be weighed against inadequate infrastructure, confusing and inconsistent regulations, and corruption - - all of which mean that much time, money, and managerial effort must be expended for a firm to begin operating, and earning profits in Nigeria.

Nigeria has been ruled since 1985 by military governments. After an annulled election in June 1993, the return to democratically-elected civilian government was indefinitely postponed. In the interim, Nigeria is ruled by a military council headed by General Sani Abacha, who inaugurated a National Constitutional Conference (NCC) in June 1994. Currently in recess, the NCC is scheduled to reconvene in March 1995, when delegates will recommend to the government a new constitution.

Through much of Nigeria's history, misguided economic policies and political instability have held back development. The Nigerian Government used much of the revenues from the oil boom of the 1970s to finance a high level of consumption and some ill-advised investments, leaving Nigeria's economy debt- ridden and vulnerable to the oil-market downturn that followed through the 1980s. To correct these problems, Nigeria launched a Structural Adjustment Program (SAP) in 1986, which ultimately was undermined by economic mismanagement and indiscipline in the early 1990s.

In conjunction with his 1994 budget announcement, Head of State General Sani Abacha abandoned most 1986 structural adjustment reforms, and instituted tight government control over key economic variables, which included: fixing the value of the naira at 22 per dollar; instituting strict foreign exchange and import controls; eliminating the role of the parallel market exchange; and setting caps on interest rates.

The new economic policy climate created by these measures caused the Nigerian economy to record near zero growth in 1994, while the manufacturing sector contracted by five percent. In its 1995 budget, Nigerian economic policy makers committed to dismantling government control over the economy. These include moves to reopen the autonomous foreign exchange market, loosen controls on foreign investment, renew promises to cut the fiscal deficit, reduce tariffs and end the ban on selected imports. Though similar commitments have been made in the past and implemented, some observers are pleased by the budget program's liberalization of the foreign exchange market and repeal of the enterprises promotion decree.

The recent repeal of the enterprises Promotion Decree of 1989 allows foreigners to take a greater ownership share in Nigerian firms. However, rules regarding foreign investment, dividend remittance, and ownership structure remain unclear, pending the release of government guidelines. The list of reserved sectors was one factor preventing the conclusion of a bilateral investment treaty between Nigeria and the United States.

Whatever the new guidelines, the Abuja-based Industrial Development Coordination Committee (IDCC) will likely continue to play a role in the granting of approvals necessary for foreign investment in Nigeria. In the past, the time lapse between initial submission of paperwork to the IDCC and final approval could take up to eighteen months. To remit dividends or repatriate capital, foreign shareholders must also obtain "approved status" from the IDCC.

Two other laws that impact on U.S. investment are the Companies Act of 1990, governing the establishment and operations of companies in Nigeria, and the Immigration Act, limiting the number of expatriate workers permitted for any one company. Slowdowns in the approval of requests to maintain expatriate staff in Nigeria have caused problems for some firms in the past.

Nigeria further requires that 40 percent of cargoes are reserved for Nigerian vessels, and assesses cargo revenue fees on foreign vessels. Though Nigeria has revised the list of items exempted from a pre- shipment inspection, the government still requires that an international inspection service certify the price, quantity and quality before shipment of all containerized shipments valued over USD 1,000 as well as uncontainernized goods valued at USD 10,000 and more.

Nigeria has reduced the number of prohibited products by four and no longer bars imports of day old chicks and parent stock, sparkling wine and champagne, and fruits. Nevertheless, maize and rice imports remain prohibited. U.S. products are also hampered by tariffs as follows: sorghum, 100 percent; cigarettes 200 percent; cotton 60 percent; wheat 15 percent; and passenger vehicles from 30 to 100 percent. Other import restrictions apply to aircraft and ocean-going vessels.

There have been several trade and investment disputes involving U.S. companies over the last few years, largely in the oil sector, but they do not reflect a pattern of discrimination against U.S. or other foreign companies. Nigeria has been a member of the International Center for the Settlement of Investment Disputes since 1966.

In May 1993, the Government of Nigeria signed the Berne and Rome Conventions and became a full member of the World Intellectual Property Organization (WIPO). Though Nigeria participates in many of the international conventions on intellectual and industrial property rights, and despite the apparent interest of the government in IPR issues, little has been done to stop the widespread production and sale of pirated tapes, videos, computer software, and books in Nigeria.

Nigeria's basic infrastructure is extensive, but it is inadequate for the demands of a large country with a population of nearly 100 million. Inadequacies range from crumbling roads and bridges, to erratic telephone service, and endemic shortages of water, fuel and electricity. Added to these problems are political uncertainty, a deteriorating economy, and widespread corruption and fraud, which detract from the Nigerian Government's professed interest in attracting foreign investors.

BUSINESS LANGUAGE: English

Department of State
February 1995

RWANDA

Rwanda, a small, landlocked country with a population of about 7 million, is one of the world's poorest nations (1993 per capita GNP of $195). Ninety percent of the population is involved in subsistence agriculture; eighty five percent of Rwanda's export earnings have historically been derived from the sale of coffee and tea.

Widescale war and ethnic violence in 1994 destroyed much of the physical infrastructure of the country and displaced more than half the population. Over 500,000 people were killed, and two million refugees remain outside the country. Following four months of fierce fighting and mass ethnic slaughter, a new coalition government was installed in July 1994. The government has few resources and is only beginning to establish full administrative control over all areas of the country. A 5,500 man UN peacekeeping force is helping to maintain security and restore confidence.

In January 1995, donors pledged $588 million to help the country recover from the war. After the U.S. and other donors helped pay Rwanda's arrears to the World Bank, the Bank agreed to extend a $50 million emergency credit to the new government, which will be disbursed between March 1995 and March 1996. The Bank also plans to reprogram $160 million in project funds which were in the pipeline at the time the war broke out.

U.S. investors have been involved in tea processing, sugar refining, and minerals exploration. Opportunities also exist in the telecommunications area and in the supply of durable goods and vehicles, most of which must be replaced as a result of the war. Rwanda's breathtaking scenery will provide opportunities for development of the country's tourism industry, once infrastructure has been restored.

BUSINESS LANGUAGE: French

Department of State
February 1995

SAO TOME & PRINCIPE

Ruled by Portugal for almost five centuries, this small (population: 125,000) island nation located off the coast of Gabon became independent in 1975. Fifteen years of single-party Marxist rule ensued, causing the already poor economy to deteriorate further. The single-party era ended in 1991; parties which won subsequent elections have generally moved toward economic liberalization although their preference is to subsidize consumption of necessities.

Per capita GDP was $250 in 1993. Sao Tome's economy still faces serious structural problems. In 1994 after significant successes in privatizing agriculture, Sao Tome was unable to meet remaining conditions for disbursement of the final tranche of an IMF program, particularly concerning liberalization of exchange rates and an end to fuel subsidies.

Sao Tome remains principally an exporter of cocoa, a product which still provides employment for most of the active population. Cocoa estates have in some cases been privatized, but the state remains a key player in production. Sao Tome is seeking investors to assume management and ownership of the estates.

Rich soils and abundant rain are propitious to cultivation of most tropical products, with potential markets in the region and in Western Europe. the Government hopes to promote industrial fishing in national waters. Tourism is of potential interest although the islands are well off usually traveled routes.

Exports to the U.S. were $5.5 million in 1991. Cocoa accounted for $4.5 million, with copra, palm kernels, and coffee constituting most of the balance. Imports from the U.S. were $24.5 million in 1991, including $10.7 million in investment goods, $4.7 million in foodstuffs, and $2.2 million in petroleum goods. Consequently, Sao Tome ran a $19 million trade deficit with the U.S. (37.5% of GDP).

The Voice of America is constructing a $61 million relay transmitter in Sao Tome. This should constitute a significant boost to the country's economy, in addition to raising Sao Tome's international profile.

BUSINESS LANGUAGE: Portuguese (some business and government leaders speak French as well).

Department of State
February 1995

SENEGAL

Situated on the West Coast of Africa, Senegal has a population of about 8.1 million people and a per capita GDP of $453. The country stands out as a relatively open multi-party democracy with a free press, a strong attachment to the rule of law, a disciplined, non-political military, and a tradition of respect for human rights. President Diouf is widely respected as an articulate and moderate leader. Relations with the United States are excellent.

In January 1994, Senegal and the 13 other countries of the franc zone devalued their currency by 50%. This measure was the basis for the resumption of IMF and World Bank programs which had been suspended since mid-1992. Senegal is seeking to control public expenditures, to control inflation, and to encourage consumption of local goods in order to reinforce international competitiveness and improve its balance of payments.

The investment code is designed to attract foreign private investment. It provides equitable treatment of foreign firms (also guaranteed by its bilateral investment treaty with the U.S.). Free transfer of capital and profits is guaranteed, and there are special incentives to companies willing to locate outside of the Dakar-Cap Vert region. The Labor Code has been revised to permit more flexibility in layoffs, but factor costs remain high and credit tight.

Senegal has some of the best commercial facilities in West Africa -- good domestic and international transportation links, good water and electricity supply, as well as banking, insurance, accounting and computer services. It also has a well educated though often underemployed middle class. Senegal has over time moved to liberalize the import system and to rationalize the system of effective protection. Following the devaluation of January 1994, export subsidies were discontinued, customs duties generally reduced, and previous quantitative restrictions on certain goods eliminated.

Principal exports are fish, phosphates, and peanuts. Tourism is also a major foreign exchange earner and has come to occupy a more important role in the economy since the devaluation. Major imports include crude and refined petroleum products, machinery, electrical appliances, rice, grain, lubricants, and dairy products. Fisheries and agro-industry may offer prospects for U.S. investment.

Senegal imports from the United States hulled rice, milled rice, tallow, wheat, sorghum, wheat flour, corn meal, and milk fats, as well as spare parts for light manufacturing and agricultural machinery. Potential exists for U.S. exports of farm equipment and implements, irrigation systems, and pumping and hydraulic equipment as more land is irrigated along the Senegal River. Heavy duty trucks and construction equipment may be needed for mining and housing projects. Exporters should not overlook consumer goods such as personal care products, and personal radios and recorders.

BUSINESS LANGUAGE: French (English is spoken by a number of persons in the business community)

Department of State
February 1995

SEYCHELLES

Seychelles is a scenic, small island nation of about 70,000 people located 1000 miles east of Kenya in the Indian Ocean. Thanks to a successful tourist industry and rich fishing grounds, it has the highest per capita income in Africa (over $5,000). Long identified with the non-aligned movement, and skillfully playing on cold war rivalries, Seychelles also profited from one of the highest per capita foreign aid levels in the world. Domestic policies have been socialist-oriented but pragmatic.

In 1993 Seychelles significantly changed its political system, approving a new Constitution and running free and fair multiparty general elections. President Rene and his party, the Seychelles Peoples Progressive Front, easily defeated challenger (and ex-President) James Mancham and his Democratic Party.

Rene's popularity is based largely on his engineering a cradle-to- grave welfare system, paid for by tourism, fishing licensing, and foreign aid. A U.S. Air Force Satellite Tracking Station also provides well-appreciated revenue. Traditional agricultural exports of copra, cinnamon and tea continue to lose importance.

Seychelles' future economic success is not assured, however. The tourist market remains volatile, and the islands' quality to price ratio lags behind other similar destinations. Tourist revenues grew in the first eight months of 1993, but dropped substantially towards the end of the year, exacerbating a severe budget and foreign exchange shortfall. This decline continued into 1994. Seychelles had 116,180 tourists in 1993 and only 109,901 in 1994. Aid levels--primarily from France, Britain and the United States--are also down sharply, and will continue to decline.

In response, the Rene government has raised taxes, and is taking other tentative steps to reform the economy. A National Economic Consultative Committee, which includes opposition politicians and private businessmen, has been created to advise on economic policy. While the parastatal sector will remain dominant--partially because the mostly-monopolistic firms are run by the political elite--some firms are being privatized, and controls on tourism, agriculture and fisheries are being relaxed.

The small import market is dominated by French, British, and South African firms. Most imports from the United States are unprofitable due to distance and the small size of the market, and since import duties are based on cost and freight. Restrictions on imports of cars, televisions, and other "luxury" goods were imposed in late 1990. Most of the restrictions are based on foreign exchange controls. The Seychelles Government has established a "pipeline" system in order to provide foreign exchange to businesses involved in international trade. By putting Seychelles Rupees "in the pipeline," a company may have foreign exchange in 4-6 months, although this time delay may increase to as much as one year. The Central Bank controls the pipeline system. Four international banks maintain branches in Seychelles, which has one of Africa's most stable and convertible currencies. There are limited currency and exchange controls for banks.

The most promising sectors for U.S. sales and investment are in tourism, fishing and fish processing. High and inelastic import prices are impediments to the economy and should be factored in by potential investors.

BUSINESS LANGUAGE: Creole, French, English

Department of State
February 1995

SIERRA LEONE

Sierra Leone is a country of 4.4 million people. With a per capita GNP of $190, Sierra Leone is one of the least developed countries in Africa, and was recently classified by the United Nations as among the poorest countries in the world.

Sierra Leone has been pro-Western and pro-business since gaining independence from Great Britain in 1961. The country enjoys extensive mineral resources, many of which have not been fully utilized. There are significant deposits of diamonds, gold, bauxite, iron ore and rutile. Rich fishing grounds lie off the coast of Sierra Leone, but they are not effectively exploited, either. Approximately 70 per cent of the population is engaged in agriculture, mostly for subsistence. Coffee and cocoa are the major cash crops. Other cash crops include palm kernels, kola nuts, ginger, cashews, and groundnuts. The potential exists for expanded agricultural production, but the country is not self-sufficient in food.

The government encourages foreign investment and has made significant progress in liberalizing the economy. The foreign exchange rate is market-determined and fairly stable. Private foreign exchange bureaus operate freely, bank interest rates accurately reflect market conditions, and U.S. dollar accounts may be opened. The IMF approved an Enhanced Structural Adjustment Facility for Sierra Leone in 1994. The concessional Facility can provide a catalyst for financing from the World Bank and other multilateral and commercial lenders for projects in the energy, agriculture, telecommunications, education, mining and water industries.

A military government, the National Provisional Ruling Council, took power following a coup in April 1992. A domestic insurgent group, the Revolutionary United Front (RUF), operates in the Eastern and Southern Provinces, where most of the country's mineral and agricultural wealth is found. Sierra Leone historically has depended on production from these regions for virtually all of its foreign exchange. Fighting between the government and the RUF, and the need to care for persons displaced by the conflict, has disrupted economic activity.

Potential investors should consider the practical problems Sierra Leone shares with many developing countries. Impediments to commerce include poor physical infrastructure, a low literacy rate, practical difficulties in converting local currency, and the government's periodic difficulties financing its external debt.

BUSINESS LANGUAGE: English

Department of State
February 1995

SOMALIA

The 21-year regime of President Siad Barre ended in January 1991, when rebels captured the capital city of Mogadishu. Attempts to form a new government failed, and the country entered a period of chaos, famine, and death. The combination of a severe drought and interfactional violence resulted in mass starvation. Somalia's most vulnerable suffered the most. In response to this crisis, troops from a U.S.-led international coalition intervened, first with airlifts to hard-hit areas and then, in December 1992, by providing direct security for the delivery of assistance.

Coalition forces succeeded in creating a more secure environment for the delivery of humanitarian assistance. International action helped to expand food cultivation and to ease its subsequent distribution throughout the country. Similarly, the international community helped to spark a revival of commercial activity. Despite this progress, movement toward national reconciliation stalled.

The absence of progress toward reconciliation and the continuing expense and danger of operating in Somalia prompted the UN Security Council to end the mandate of the international effort in March 1995. However, a number of international relief agencies are still active in Somalia. The Department of State monitors developments in Somalia from Nairobi. Because the absence of a permanent diplomatic presence makes it impossible for the U.S. Government to provide timely assistance to Americans in need, the Department of State has advised Americans not to travel to Somalia.

Even before the country's current troubles, Somalia was one to the world's poorest nations. The continuing civil conflict has exacerbated the country's extreme poverty. While traditional leaders have regained influence in some areas of the country, there are no nationally recognized legal institutions for resolving disputes -- save for armed militia fighters. A modicum of order exists in the northwestern region of Somalia. Known as Somaliland, this area unilaterally declared independence in May 1991. A rudimentary legal system operates in this part of Somalia, and the authorities are eager for foreign investment.

Past U.S. investment in Somalia was restricted primarily to oil exploration agreements. These agreements remain in force, but no firm is now carrying them out. Foreign investors, including Americans, are most attracted to sectors like cellular/satellite telephones in which they have to risk limited capital in Somalia's unstable environment. A major U.S. firm is active in the cultivation and export of fruit.

BUSINESS LANGUAGE: English

Department of State
February 1995

SOUTH AFRICA

South Africa has the most advanced and productive economy in Africa. It is a middle-income country with a GDP of approximately $100 billion (1992) and a population of nearly 40 million. South Africa remains the economic cornerstone of southern Africa because of its highly developed modern industrial sector and mineral wealth. Exports of South African gold have decreased but other mineral exports have grown, in addition to manufactured exports such as paper, vehicle parts and chemicals.

South Africa is a dual economy with an underdeveloped sector made up primarily of poor urban and rural blacks. Instability under the former government led to capital flight which, in turn, led to the imposition of a partial moratorium on debt repayment and the institution of a two- tier Rand exchange system. South Africa successfully renegotiated its foreign debt in 1993, and the new Government of National Unity (GNU) intends to abolish the Financial Rand sometime in 1995.

The South African economy has emerged from four years of recession. Figures for 1994 indicate 2.3 percent growth. Economist expect 3-4 percent GDP growth in 1995. The substantial downturn in 1992 occurred primarily because of a slow international economic recovery, a severe drought in southern Africa, and continuing political uncertainty and violence. Slow growth in real production and a rapid population increase have caused real GDP per capita to decline steadily for the past two decades. The stagnation results from long-festering structural problems: shortages of skilled labor, inefficient trade policies, concentration of economic power within conglomerates, and high taxes which paid for multiple apartheid institutions.

The GNU, led by Nelson Mandela has forged a consensus between government, business leaders and trade unions to pursue market-based policies with the private sector as generator of wealth and the government actively addressing the inequities in health, education, housing and social services. The GNU's macro-economic blueprint for addressing the socio-economic legacies of apartheid is the Reconstruction and Development Program (RDP).

On November, 1993, President Clinton signed the "South Africa Democratic Transition Support Act" repealing all remaining federal sanctions not lifted in July 1991. In addition, since September 1993, nearly all remaining state and local government sanctions have been repealed.

South Africa imports most of its capital goods, transport equipment (e.g. diesel engines and airplanes), oil and other manufactured goods. Chemical imports have become increasingly important, and South Africa continues to rely on imports of plastics and rubber, textiles and scientific equipment, medical equipment, and computer software. Because companies were less likely to purchase new equipment or to expand during the past few years, the domestic capital stock has been aging, and will need replacement. Growth of U.S. exports is also anticipated in electrical apparatus, pollution control equipment, records and tapes, books and franchising.

Upon joining the World Trade Organization (WTO), South Africa undertook to reduce and consolidate its tariffs and eliminate export subsidies. Still, South Africa's protective import policies present barriers to foreign goods. Importers must apply for import permits for goods including foodstuffs, clothing, fabrics, footwear, books, wood, paper products, motor and aviation fuels, and raw wool. Rates of tariffs range from 5 to 50 percent with luxury goods as high as 60 percent and automobiles at 100 percent. In the short to medium term there may be continuing market access problems with products such as poultry, but the overall trend should be toward trade liberalization. Additionally, South Africa's Trademark's law has not yet been updated to conform with international standards.

Foreign investors generally receive national treatment, except that they are subject to certain lending limits under the foreign exchange and capital flow restrictions that are expected to be phased out. The dual exchange rate system ended on March 11 with the abolition of the financial rand (finrand). Local content rules apply in certain industries. In 1990, South Africa eliminated any legal restrictions against foreign-owned financial institutions, which may now establish subsidiaries or branches or acquire domestic banks.

The Export-Import Bank may provide assistance for U.S. exports to South Africa. Such assistance can help open many markets in housing, education and health care to American exporters and provide a trade promotion tool of the type already available to firms from most of South Africa's other major trading partners. In November, 1993, the Overseas Private Investment Corporation (OPIC) signed a bilateral investment encouragement agreement with South Africa and can now assist U.S. investors in that market with services such as political risk insurance and identification of investment opportunities. The Trade and Development Program is also actively exploring opportunities to fund feasibility studies.

BUSINESS LANGUAGE: English

Department of State
March 1995

SUDAN

Sudan has been ruled by a military government since 1989, when the elected government of Prime Minister Sadiq al-Mahdi was overthrown. The current head of state is General Omar al-Bashir. Sudan is beset by problems, chief of which are the civil war in the south and increasing alienation from its regional neighbors. Two of Sudan's most promising economic prospects--the Chevron oil project and the Jonglei Canal project to increase river water available for irrigation--were postponed due to their location in the contested areas.

Sudan's economy has been deteriorating for the past decade. Years of mismanagement, overambitious development, drought and consumption at the expense of investment have left the country almost without infrastructure. The government's pro-Iraqi stance during the Gulf Crisis and human rights abuses led many donors to cut aid. Production of staple grains has generally fallen short of the country's needs, although the harvest in much of the country was much improved this year. Cotton exports, Sudan's largest foreign exchange earner, have fallen due to poor quality, world glut, and poor marketing practices.

In 1994 the economic situation remained generally poor. In August 1993, the IMF suspended Sudan's voting rights. Sudan's right to make withdrawals under effective and not fully disbursed loans and credits with the World Bank remained suspended. EXIMBANK coverage is not available at the present time.

Sudan professes to welcome foreign investment, but the commercial climate is not favorable. The commercial ramifications of Islamic law, instituted in 1983, hamper the business community. In the issuance of business licenses, the government has discriminated in favor of businessmen associated with the National Islamic Front. Subsidies and price controls also distort business. In October 1993, the government reimposed currency controls, making it illegal to possess foreign exchange without prior approval.

U.S.-Sudan relations have deteriorated markedly since August 1993, when Sudan was placed on the State Department's list of countries which support terrorism. Placement on the Terrorism List makes Sudan ineligible for commercial sales of U.S. munitions list items, and imposes a prior licensing requirement for any U.S. exports to Sudan of goods or technology that could make a significant contribution to Sudan's military potential. Sudan is also ineligible for U.S. foreign tax credits and certain trade benefits, and is disqualified from non- emergency U.S. Government assistance.

There is a travel warning in effect for Sudan; Americans are discouraged from travelling there because of the potential for violence.

BUSINESS LANGUAGE: Arabic and English

Department of State
February 1995

SWAZILAND

Swaziland is a modified traditional monarchy currently ruled by King Mswati III and a group of senior politicians and traditional leaders. An effort to democratize and reform the political system is, with the King's support, making gradual progress; parliamentary elections in October, 1993 produced Swaziland's first directly-elected House of Assembly in over 20 years and local elections will be held in April, 1995. Swaziland's views are pro-Western and relations with the United States are excellent.

Swaziland has a population of about 900,000 and a per capita GDP of $1331. Its currency is freely convertible with the South African rand. Swaziland's economy grew through the late 1980's and early 1990's, but the southern African drought hurt the agricultural sector in 1992 and 1993. Debt levels are low and financing manageable. New investment should give Swaziland the capacity for sustained growth, but the population growth rate--over three percent per year--poses a challenge to long-term economic development.

The modern, export-oriented sector of the economy consists of commercial agriculture, forestry, mining and manufacturing. The country's main exports are sugar, wood pulp, soft-drink concentrates, timber, citrus, and canned fruit. The government believes in a free market economy and actively encourages foreign private investment, most of which comes from the United Kingdom and South Africa. Demand exists for joint venture investments in a developing textile industry free of American and European import quotas. Swaziland is a good base for southern African operations. Opportunities exist for developing Swaziland's substantial coal reserves either directly or through providing mining technology and equipment.

U.S. exports to Swaziland are at a disadvantage because of the market's small size, distance from U.S. exporters, and proximity to (and dominance by) South African competitors. However, there are opportunities for U.S. exports of goods and services. Swaziland's first flour mill opened in 1991 and about 35,000 metric tons of hard wheat will be imported annually to meet demand. The sugar, wood pulp, and fruit industries offer good prospects for U.S. sales of harvesting, loading, weeding, fertilizing, and irrigation equipment.

TELECOMMUNICATIONS: TDA has funded a cellular/data transmission feasibility study. The Swazi Post and Telecoms Corporation is considering privatizing Swaziland's phone service. Contact: Ministry of Transport and Communication and the Department of Posts and Telecommunications.

HYDRO-ELECTRIC PROJECT: The hydro-electric project has received a promise of partial funding from the South African Development Bank. Full financing has not yet been arranged, the project will create opportunities in the environmental, housing, agricultural and rural development fields.

AIRPORT INFRASTRUCTURE: Swaziland plans to build a new terminal and upgrade airport equipment. A feasibility study must be conducted, and financing found. EXIMBank may be willing to provide support to a U.S. company interested in pursuing this project.

HOUSING AND URBAN DEVELOPMENT: Swaziland plans a wide-ranging, longterm upgrade of low- and middle- income housing, with attendant infrastructure projects such as water and sewerage.

BUSINESS LANGUAGE: English

DEPARTMENT OF STATE
March 1995

TANZANIA

In 1992 Tanzania started changing its one-party political system. The government legalized opposition parties, and eleven are now registered. Nationwide multiparty local elections were held in 1994 and parliamentary and presidential elections are scheduled for October 29, 1995. So far, the legacy of social stability and harmony left by founding father Julius Nyerere persists, and Tanzania remains one of the most stable countries in Africa.

However, under Nyerere's socialist economic policies, Tanzania slid into a systemic economic crisis in the 1980s, and today its 26 million people are among the poorest in the world. Tanzania's economic problems are largely the result of a heavy emphasis on state control of the economy and inefficient government management. Worldwide inflation, high energy costs and low prices for export crops exacerbated the situation.

In 1986, under President Mwinyi, the government embarked on a program of market-oriented economic reform. An IMF structural adjustment facility (ESAF), which remains in effect, has had a major impact on economic growth and the general structure of the economy. The government has continued to address the external trade balance by encouraging exports, discouraging unwarranted imports, expanding the open general license, and abolishing duty and tax on the import of raw materials for industry. The government has also implemented banking and financial system reform which has resulted in two private banks opening (Meridian-BIAO and Standard Chartered), and a market-determined exchange rate. Regulations for repatriating profits have also been liberalized.

Tanzania's agricultural crops include coffee, tea, sisal and cloves, as well as horticultural products such as fruits, vegetables, and cut flowers. There are significant deposits of gold, diamonds, gemstones, nickel, phosphates, coal and natural gas. Furthermore, the rich animal life and varied, unspoiled countryside create tremendous potential for tourism. The fastest growing industries in Tanzania are currently tires and tubes, cement, paper, canvas, farm implements, corrugated iron sheets, soft drinks, aluminum products, soaps and detergents, and radios. Production in the industrial sector, however, is constrained by outdated plants and equipment, lack of spare parts and an unskilled workforce. Parastatal firms still dominate, but the government has started a privatization program.

At present, the Tanzanian government is actively soliciting foreign investment in the tourism, fisheries, export agriculture, mining and manufacturing sectors. Opportunities also exist in consumer and investment banking, chemicals, pharmaceuticals, consumer goods, aviation equipment and used clothing. Furthermore, investors may wish to participate in the numerous international donor funded projects to rehabilitate the roads, rail and telecommunications infrastructure. U.S. firms are currently operating successfully in the areas of petroleum distribution, agricultural equipment and construction, and data processing hardware. In addition, U.S. firms are involved in the production of tires, sugar substitutes, home care products, and soft drinks. Recently U.S. businesses have also had success in tourism and telecommunications.

Investors should be aware that they will face a sometimes inefficient and corrupt government bureaucracy. The recently formed Investment Promotion Center (IPC) has been unable to alleviate these problems, and in fact sometimes becomes yet another bureaucratic hurdle to be overcome. The IPC can issue certificates to those who invest more than $250,000 in any one project in specific sectors, allowing them a five-year tax holiday and duty free import of machinery and equipment. For doing business with Tanzanians, it is recommended that investors use the services of a local agent. In addition, when dealing with Tanzanian firms, investors should insist on an irrevocable letter of credit confirmed by an outside bank.

BUSINESS LANGUAGE: English

DEPARTMENT OF STATE
February 1995

TOGO

Situated on the coast of West Africa, Togo is a small country with a population of 3.8 million people and a 1994 per capita GDP of $275. The majority of the population depends on subsistence agriculture, but Togo has long had a vibrant trading sector. Coffee, cocoa, cotton and phosphates are the major exports. During the 1990-1994 period, Togo underwent a dificult transition from 25 years of authoriatrian rule to a more democratic form of government. In August 1993, seriously flawed presidential elections took place in which General Gnassingbe Eyadema was reelected after the opposition pulled out because of irregularities in the preparations. After hotly contested legislative elections in February 1994, the opposition majority split and Edem Kodjo was named as Prime Minister. He now heads a coalition government, installed in June 1994, in which his party joined President Eyadema's to form a slim majority in the parliament.

Togo has long served as a regional trading center because of its efficient port, stable banking system and relatively well-developed infrastructure and service sector. This position was eroded during the period of political instability, but a slow recovery is underway. Togo has good transportation and communications links to the economies of the Sahelian countries, as well as the coastal states of Benin, Nigeria, and Ghana. Togolese traders have traditionally sold to buyers from as far away as Gabon, Congo, Cameroon, and Zaire. A new three-year Structural Adjustment Program was approved by the IMF and World Bank in September 1994.

Togo's investment code is designed to attract foreign private investment. It provides equitable treatment of foreign firms. Free transfer of capital and profits is guaranteed. In 1990 the Government of Togo opened its new export processing zone near the Port of Lome and, as of January 1995, 65 firms have received at least preliminary approval for EPZ status and 21 firms are in operation. Exports from Togo enjoy preferential entry into the United States and the European Union.

The economy has been seriously hurt by political uncertainties and some bilateral assistance is in suspension. Unfortunately, another negative result of its political difficulties has been decreased imports. Despite Togo's traditional links to European countries, until impeded by political instability, U.S. firms had made progress selling to the Togolese market. After reaching a high of $30.7 million in 1990, U.S. exports to Togo decreased to $12.6 million in 1993. The devaluation of the CFA Franc by fifty percent in January 1994 has also depressed import levels. Primary U.S. exports to Togo include used clothing and shoes, computer equipment, wheat, and cosmetic products. Potential exists for increased U.S. exports of telecommunications materials, hardware and other small consumer products, cosmetics, pharmaceuticals, and farm equipment and implements.

BUSINESS LANGUAGE: French (Some English spoken by business leaders)

Department of State
February 1995

UGANDA

Years of quasi-anarchy and economic decay ended in 1986 when President Yoweri Museveni assumed power. Museveni's government has restored political stability to the country, and a Constituent Assembly is expected to ratify a new constitution in July, paving the way for national elections in late 1995.

Uganda's performance in implementing economic reforms is among the best in Africa. The economy, wrecked by years of political chaos, has sustained an impressive recovery, with growth rates averaging about 5 percent per year since 1987. The foreign exchange market has been completely liberalized, and the shilling now floats freely. The government recognizes that the private sector must play a key role in the effort to revitalize the economy, and has begun trimming the size of the civil service and reforming or privatizing several key Government- run corporations. The main area of concern among donors is Uganda's heavy reliance on foreign aid, which accounts for nearly 70 percent of total public spending.

U.S. assistance to Uganda totalled $50 million in 1994. Assistance is concentrated in agricultural development, health care and family planning, private sector development, export diversification, and natural resources management.

Uganda actively seeks private foreign investment, and adopted a new Investment Code in 1991. The Code created the Uganda Investment Authority, which will streamline investment procedures and serve as a one-stop investment service center. The Code includes liberal provisions regarding profit repatriation and protection against expropriation of assets. Foreign investors with capital of at least $300,000 may form 100 percent foreign-owned companies. Apart from this minimum investment requirement, there are no benchmarks for foreign investors.

The law offers incentives for investors in priority areas identified by the government such as tax free status for up to six years for investment over $500,000, and duty free entry of new capital equipment and manufacturing inputs. The government has promoted investment in the agro-processing sector especially vigorously. Other sectors eligible for incentive treatment include: oil milling; meat and fish processing; forest products and paper production; chemical industries; glass and plastic containers; textiles and leather industries; mining; ceramics; building materials; steel industry; tools and machinery; spare parts; high technology industries; real estate development; banking and packaging. Uganda's countryside and excellent fishing and game create strong potential for tourism.

Many opportunities are closely linked to internationally financed projects. The multi-million dollar World Bank Northern Uganda Reconstruction Project will offer many such opportunities. Agricultural equipment, processing machinery for oil and cereals, and inputs such as seeds, fertilizers, and pesticides are high priority imports.

BUSINESS LANGUAGE: English

Department of State
February 1995

ZAIRE

Zaire is beset with political and economic problems which discourage foreign investment. Despite President Mobutu's announcement of the end of the one-party state in 1990, he has consistently interposed obstacles that have frustrated the democratic process and significantly raised the potential for unrest. U.S. citizens are advised to register at the U.S. Embassy in Kinshasa and obtain updated information on travel and security within Zaire. Similarly, potential U.S. investors must be advised of the continuing high risk and insecurity associated with doing business in Zaire.

The Zairian economy is on a five-year downward spiral marked by high inflation, out-of-control fiscal deficits financed mainly by the printing of money, a depreciating currency and a declining real per capita income (estimated at about 125 U.S. dollars by Zairian authorities and at less than one hundred dollars by the World Bank). Economic mismanagement and corruption plague the country, whose problems have been compounded by several military mutinies since September 1991. The looting and pillaging of domestic and foreign enterprises that followed have caused an estimated billion-dollar loss to the economy. Purchasing power is at all time low, and real GNP is estimated to have declined by about 7.4 percent in 1994, the fifth consecutive year of substantial contraction in the level of measured economic activity. According to official Zairian figures (which still use 1987 as the reference year), the economy posted real growth rates of minus 16.2 percent in 1993, minus 10.5 percent in 1992, minus 8.4 percent in 1991, and minus 6.6 percent in 1990. This represents a cumulative decline in the country's gross domestic product of some forty percent over the past five years.

Annual average inflation for 1994 was approximately 6,000 percent, compared with 9,000 percent for 1993. Most of the adverse inflation performance for 1994 was determined during the first three quarters of the year. The rate is widely thought to reflect not only the adverse impact of uncontrolled deficit spending, but also the influx of large volumes of the national currency put into circulation illegally and outside the control of the domestic monetary authorities and the banking system.

The cumulative damage to Zaire's economy, including its infrastructure and traditional trade channels, has markedly reduced Zaire's exports and sustained the chronic shortage of foreign exchange, which has limited the country's capacity to import. Aid from Zaire's traditional donors to make up the shortfall is being withheld because of Zaire's debt arrears, human rights situation, and concerns about lack of progress toward conditions set down by the international financial institutions. The principal multilateral financial institutions, notably the World Bank, the IMF, and the African Development Bank have also suspended operations in Zaire. Donors have, however, adopted a wait-and-see attitude since the advent of a new transition government of national unity headed by Prime Minister Kengo wa Dondo. The Kengo government appears committed to implementing long overdue political and economic reforms.

Despite years of economic decline, Zaire remains a country endowed with considerable potential. The third largest country in Africa (as large as the United States east of the Mississippi), it possesses vast natural resources. Copper, cobalt, coffee, petroleum, and diamonds provide most of its foreign exchange earnings. The forests represent the world's largest reserves of tropical hardwood. Arable land is plentiful through much of Zaire, and inland waters contain abundant supplies of fish. The mining sector has long been a major user of U.S equipment, and Zaire has been a net importer of basic foodstuffs since independence. Other potential U.S. exports include construction equipment, air conditioners, food, agricultural equipment, telecommunications, pharmaceuticals, used clothing, cosmetics and four wheel drive vehicles.

BUSINESS LANGUAGE: French

Department of State
February 1995

ZAMBIA

Zambia is in the third year of an ambitious structural adjustment program which has produced impressive and rapid liberalization on most fronts. A very visible success was the lowering of the inflation rate from an annualized rate of over 200 percent in the first half of 1993 to below 20 percent on an annual basis in the latter half of the year. The government of President Frederick Chiluba has shown an outstanding commitment to economic reform and to creating a positive environment for the private sector.

The government is commited to an ambitious privatization program and hopes that by selling some 80 percent of its vast parastatal network, industries will become more competitive and efficient, and a major drain on the economy will be stemmed. While privatization has moved more slowly than expected, some 10 percent of commercially oriented parastatals have been brought to sale or final negotiations. Manufacturing accounts for a relatively small portion of the economy. Mineral production -- copper, cobalt, lead and zinc -- accounts for over 90 percent of export earnings.

Areas which have potential for investors include agriculture, mining, tourism and processing of local raw materials. Zambia is mineral rich and produces about 20 percent of the world's emeralds. Few mineral deposits aside from copper have been adequately exploited. Zambia has large tracts of uncultivated arable land with good soil, a favorable climate and ample water supply. The country is blessed with numerous natural attractions, including Victoria Falls, and relatively abundant wildlife which, if marketed properly, would attract more tourists. Manufacturers who process agricultural and mineral products for export are very successful.

The business climate is hospitable toward investors. In 1994, all exchange controls were repealed. This will make doing business in Zambia easier. Investors will be able to hold dollar accounts and transfer money freely in and out of Zambia. This will ease the externalization of profits, divident payments and the buying of goods and services outside of Zambia. Since the kwacha is convertible, and funds now transferable, the exchange rate can be volatile. Normal precautions against exchange losses should be taken.

The transport and communications infrastructure are good by regional standards, but fair to poor by western standards. Crime is a serious problem. Health and educational facilities are mostly of poor quality. The climate is very pleasant and the lifestyle comfortable. U.S.- Zambian relations are excellent.

BUSINESS LANGUAGE: English

Department of State February, 1995

ZIMBABWE

Zimbabwe is continuing an ambitious five-year economic reform plan which enhances the role of the private sector and reduces the Government's involvement in the economy. The Economic Structural Adjustment Program (ESAP) was developed in cooperation with the World Bank and receives considerable financial support from the international development banks and bilateral donors. Its emphasis on free markets and exports is a positive shift in government's approach to economic policy.

Economic reform goals include encouraging local and foreign investment in the productive sector, reducing the government's budget deficit by cutting government employment and ending parastatal subsidies, making the Zimbabwe dollar fully internally convertible, and liberalizing access to foreign exchange and imported goods. Implementation has been effective in macroeconomic areas, such as controlling the money supply. It has lagged in areas such as privatization until recently. Land reform measures adopted in 1992 raised fears that government would undermine the important commercial agriculture sector, but consultations with commercial farmers and appointment of a Land Tenure Commission have helped to reduce fears of expropriation. In addition, the government understands that foreign investment is a vital source of capital, technology and management skills, and it has taken steps to enhance Zimbabwe's appeal, including signing agreements with the Overseas Private Investment Corporation (OPIC) and the Multilateral Investment Guarantee Agency (MIGA).

The country has made impressive progress in decontrolling prices, liberalizing foreign exchange and trade controls, privatizing and commercializing parastatals, and opening up agricultural markets. Businesses may now maintain foreign currency accounts and repatriate 100 percent of after-tax profits. Progress has, however, lagged in reducing the government's budget deficit by cutting government employment and attracting domestic and foreign investment in the productive sector.

The economic reforms are consistent with the increasingly open political climate in Zimbabwe. ZANU-PF, led by President Robert Mugabe, remains the dominant political party, as Zimbabwe approaches a presidential election in 1996. Bilateral relations with the United States are excellent.

The economy is expected to grow four percent in 1995, and inflation should fall below 20 percent. The budget deficit is expected to decline. Earnings from tobacco, gold, platinum, diamonds, and other minerals should continue to be strong. BHP Minerals' US$250 million Hartley platinum project, Zimbabwe's most significant foreign investment to date, should generate more jobs in 1995.

The Zimbabwe Investment Center, with a new charter and a mostly private sector board of directors, is the principal point of contact for foreign investors. It can approve small and medium-sized investments and coordinate approval of larger projects. The government favors investments which will aid rural areas, create jobs, result in technology transfer, increase exports, and involve indigenous partners. An "Investment Register" outlining several hundred new or ongoing projects is intended to attract foreign and domestic investors to projects which contribute to these developmental goals. Local participation is strongly encouraged by the government, and is required in the services area.

Both government and the private sector are pursuing a wide range of projects which could offer significant opportunities for trade and investment. These include the $1 billion Batoka Gorge Hydroelectric project; the $300 million Kariba South Hydroelectric facility; power lines and substations linking Zimbabwe with South Africa's power grid; renovation and expansion of the Hwange coal fired power generation facility; a new international air terminal in Harare and airport expansion in Bulawayo; water projects across the country; rehabilitation of the telephone system; construction of residential housing; and new mining and processing facilities.

The Zimbabwe International Trade Fair, held each year in April in Bulawayo, attracts over 300,000 visitors from dozens of countries, and over 1,000 exhibitors. A large contingent of South African firms participates, demonstrating both the important bilateral economic relationship and the changing regional political environment, which should have a positive effect on Zimbabwe and the rest of southern Africa.

Imports are expected to continue rising by at least 10 percent per year. A large share will go to industry to refurbish factories and replenish raw materials and spare parts. The following U.S. products are competitive and offer good opportunities for future sales: mining equipment, agricultural equipment, transport equipment, power generation and transmission equipment, telecommunications equipment, textile machinery, food processing and packaging, engineering services, and construction materials and equipment. Zimbabwe has maintained an excellent payment record.

BUSINESS LANGUAGE: English

Department of State
February 1995

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[END OF INVESTMENT CLIMATE REPORT FOR SUB-SAHARAN AFFRICA]

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