Friday, November 28, 2008

Economic Harbinger? reports that the Chinese firm ZTE is divesting itself of its 51 percent share in Congo China Telecom (CCT), a mobile phone company. The article, originally published in Le Potentiel, says that no reasons for the divestment have been given.

ZTE's involvement in the Congo dates back to December 1997, when Laurent Kabila made a deal with the Chinese telecommunications firm on a visit to that country. The Chinese provided Kabila with a loan of 200 million yuan, and after he seized power in May 1998 Kabila created a new telecommunications parastatal which promptly gave ZTE the contract to supply equipment.

The article implies that Congolese officials may use government funds to purchase shares of the company at fire sale prices on their personal behalf. But I wonder if this divestment isn't a harbinger of more Chinese companies deciding to withdraw from the Congo. With the prices of Congo's raw materials plunging, disillusionment over the government's continuing confusion and inertia, and their own economic woes, China may be pulling back from its commitments to the DRC.

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