Amazing Angola is rebuilding after a long civil war. A model for us?

[Libaax-Sankataabte]

Rebuilding a nation

JOHN GROBLER | LUANDA, ANGOLA

Sep 06 2008 06:00

 

With $53-billion in foreign direct investment and with oil revenues estimated to increase to $20-billion by 2010, Angola's economic growth is galloping ahead at a whopping pace.The International Monetary Fund estimates that economic growth will top 40% over the next two years, making it one of the most happening economies in the world.

 

According to the IMF in 2005 Angola recorded a GDP of $37,2-billion, with the economy growing at 20,6%, mostly due to huge foreign investment in its hydrocarbon industry, which has overtaken Nigeria's as Africa's biggest oil producer.

 

Exports -- mostly hydrocarbons, diamonds, gas, coffee, sisal, fish, timber and cotton -- brought $24-billion into the economy, while imports of machinery, electronic equipment, vehicles, spares, medical supplies, military equipment, food and textiles cost $15,1-billion in 2005.

 

But the economy is growing so fast that economic data is overtaken by reality as soon as it is published. Heavily subsidised fuel prices -- a litre of petrol costs about $0,50, and diesel $0,38 -- and an exchange rate that has remained stable for the past three years have contained, but could not completely suppress, the inflation rate, which is running at about 23%.

 

Flush with cash from high oil prices and with an eye on elections, the Angolan government has embarked on a multibillion dollar rehabilitation of the country's war-ravaged infrastructure on a scale that is often breathtaking.

 

Blessed with prodigious natural resources of oil, diamonds, and rich agricultural land, the country has the potential to become one of the richest nations in the world.

 

Its ambitions in this regard are thought to be the main reason why Angola has so far declined to sign the SADC free-trade agreement. Not wishing to do so from a position of relative weakness, Angola fully intends to become a counterweight to regional economic juggernaut South Africa -- once it has built up the requisite economic muscle.

 

Brand-new, dual-lane highways, built by Brazilian, Chinese and South Korean contractors, snake through the country, connecting Luanda with cities in the interior, which could once only be reached by airplane or days of bone-jarring driving over rutted roads.

 

State-of-the-art fibre-optic telecommunications facilities are now being installed in most of the major cities. Where physical connections are not possible, smaller rural areas can now connect to the outside world via satellite-based communications systems.

 

The government recently signed a $327-million agreement with a Russian company to put its own communications satellite into space, allowing it to beam national television programmes to even the smallest of villages.

 

The most significant infrastructural development, and the one which has the greatest potential to affect a shift in the regional balances of power -- is the rehabilitation of the Benguela Railway Line. An estimated 30 000 Chinese workers have been imported to completely rebuild the line, originally built between 1899 and 1924 and which runs from the Atlanticport of Lobito to the highland plateau surrounding Huambo.

 

By 1934 the line had been extended all the way into what is now the Democratic Republic of Congo and its immensely rich copper and cobalt deposits in southern Katanga.

 

The Chinese, who in a separate deal a year ago extended a $500-million soft loan to Kinshasa to rehabilitate the Congolese section of the 3 500km-long railway line, clearly have big ambitions for the Congolese mining industry, and Angola expects to benefit handsomely.

 

In Luanda, which is creaking under an overburdened and over-crowded infrastructure designed for 400 000 people but home to an estimated five-million Angolans, the scope of reconstruction borders on the audacious. To create more office space in the city centre, an international construction consortium is filling in half the Bay of Luanda while dredging the rest to accommodate cargo ships lined up 50-deep in the outside bay.

 

To reduce the congestion and overcrowding in the city, a satellite city with thousands of apartments and houses is under construction outside Viana, on the south-eastern outskirts of the city, in an oil-for-financing agreement with Beijing. In just one such development an estimated 5 000 apartments in a dozen 20-storey blocks are rising from the raw red earth, resembling something from the sci-fi movie Brazil.

 

The city itself resembles one huge construction site,with construction cranes -- manned by thousands of Chinese imported as part of the $8-billion oil-backed Chinese loan scheme -- racing to complete luxury office blocks, condominiums and recreational areas such as cinemas and gymnasiums.

 

In anticipation of all these new homeowners, shops offering the latest in European interior decor and flat-screen television sets abound.

 

Personal income taxes are setat a low 15%, but company taxes -- including fuel and consumption taxes -- are relatively high, at 35% per annum. While it has made real progress towards establishing a market economy, old habits die hard: Angola, a command economy until 1991, still has one of the most bureaucratic business regimes in the world.

 

Development difficulties

The non-profit Heritage House Foundation, which rates countries' economies for their freedom, gives Angola a low score of 36,5% mostly because of the restrictive national regulatory environment. Starting a business takes an average of 119 days, and obtaining a business licence takes longer than the global average of 19 procedures and 243 days, it said.

 

Foreign investment in sectors such as defence, public and state security, certain aspects of banking and the running of ports and airports "remains somewhat off-limits" with the government increasingly insisting that Angolan nationals be hired. With a massive professional skills shortage, obtaining work permits for their expatriate labour remains a major headache for foreign companies.

 

Although there are 15 commercial banks operating in the country's financial sector, financial services remain underdeveloped. Two of the largest state-owned banks, which in 2006, controlled about 45% of banking assets, are to be privatised.

 

The private insurance sector remains heavily regulated and the formally constituted Angolan stock exchange is still not operational.

 

Other structural problems remain. Although the government has broadly agreed to International Monetary Fund recommendations to refinance the central bank and national oil and diamond companies Sonangol and Endiama, progress has been slow.

 

A key development would be to move the regulatory powers held by these companies into independent, statutory bodies that would comply with international standards of accountability and transparency. But with political patronage a major feature of these industries, the MPLA government appears to be dragging its heels.

 

One of the biggest political headaches is the heavily subsidised fuel prices. Sonangol's ageing refinery, built during pre-independence days, cannot supply more than 24% of the country's growing fuel needs.

 

This means that Sonangol has to import the balance, procured at international prices, from wherever it can. Fuel shortages, especially in smaller towns, remain a problem.

 

Property rights, contract enforcement and general commercial rule of law also remain an obstacle to attracting private foreign investment. Foreign businesses' most common complaint is that it is nearly impossible to obtain land legally because of a confusing welter of pre-independence colonial laws and often arbitrary allotments of land to individuals by the politically powerful provincial governors.

 

A new Land Act, promulgated in 2004 by President José Eduardo dos Santos has done little to clear up the red tape, apart from making it easier for government to appropriate communally-held land, local NGOs said.

 

As a result, there is little faith in the Angolan judiciary's powers to enforce the law evenly. "The rule of law cannot be guaranteed by Angola's legal system, which suffers from political interference by vested interests and weak statutes," Heritage House said in its most recent report on the country.

 

As result, the Angolan judicial system does not handle commercial disputes efficiently and, because of high legal fees, most such disputes are settled out of court, it noted. While labour costs are relatively low, Angola's previous dreams of creating a workers' paradisehave led to employment regulations that can make it prohibitively expensive to dismiss any worker.

 

Not surprisingly, corruption is perceived to be pervasive, especially among high government officials and the MPLA leadership. In its most recent ranking, Transparency International placed Angola 142 out of 163 countries, a rating that has much to do with the fact that seven of the 10 richest people in Angola are top government officials.

 

The richest is Dos Santos himself -- people joke that he is the third-richest man in Brazil who is known to have extensive commercial holdings via his wife and other family members in Portugal.

 

guardian.com

[N.O.R.F]

Libaaxow, what the article doesn't mention is the great disparity between rich and poor in Angola. I saw a report last week that stated Angola was short on fuel. Imagine an oil rich country without enough fuel for it's own citizens. There are many positives but a balance is needed.

[Cara.]

^Is that due to the lack of refineries?

 

Interesting article. Wasn't there an article from the Economist a few months ago that said African nations make up 5 of the 10 fastest growing economies? I think either Angola or Equatorial Guinea were number 1, with a ~20% growth rate, more than double the next country on the list.

 

Flush with cash from high oil prices and with an eye on elections, the Angolan government has embarked on a multibillion dollar rehabilitation of the country's war-ravaged infrastructure on a scale that is often breathtaking.

That is heartening.

[Jacaylbaro]

I don't want to ruin the topic and make it a political nacnac but i must say Somaliland recovered and rebuilding without that Billions of dollars and all that oil business.

 

Quite remarkable indeed ...........

 

 

Angola must be a lesson to those in the area like Congo, etc.

[MZanzi]

LoL@JB NINYOHO muwaadin xag jiro ayaa tahay halkaa kasi wad bahasha

[Abtigiis]

dp

[Abtigiis]

JB- think big. Xaafadan yar eed isku soo ooday ka bax ninyahoow. Think about the bigger Somali nation. You and me are the same. Wanaaga Somali oo dhan la doon.

 

Sidii nigisaantii carruurta cidhiidhi ha noqon!

 

Afro-Dance;

 

Salaams walaashay! and please stop the dance for the Ramadaan. Hana danbaajin fadlan.

[N.O.R.F]

Cara,

 

Is that due to the lack of refineries?

That could be the reason but you would think the govnt would have made that a priority.

[ElPunto]

Angola is doing much better - that is heartening but where is the spending on social services like health and education. Infrastructure spending tends to compliment and enhance existing economic activity not really lift people up out of misery like social service spending would. Add to that the toll corruption takes - and what you get is bad recipe to move the country forward.

 

As for Somalia - :rolleyes:

 

In 30 years of war Angola, Mozambique and Eritrea did not destroy their capital cities the way Mogadishu was destroyed in the few short years after Siyad's overthrow. We are in whole other league boys and girls.

[Blessed]

Originally posted by J.a.c.a.y.l.b.a.r.o:

I don't want to ruin the topic and make it a political nacnac but i must say Somaliland recovered and rebuilding without that Billions of dollars and all that oil business.

 

Quite remarkable indeed ...........

صح لسانج

 

But it can do much, much better.

[Fabregas]

Originally posted by J.a.c.a.y.l.b.a.r.o:

I don't want to ruin the topic and make it a political nacnac but i must say Somaliland recovered and rebuilding without that Billions of dollars and all that oil business.

 

Quite remarkable indeed ...........

 

 

Angola must be a lesson to those in the area like Congo, etc.

thatz because Somaliland doesn't have "all that" oil business and billions to spend And Angola is gearing towarda a different level than what one would call " rebuilding" in Somali enclaves.

[NGONGE]

Originally posted by *Blessed:

quote:Originally posted by J.a.c.a.y.l.b.a.r.o:

I don't want to ruin the topic and make it a political nacnac but i must say Somaliland recovered and rebuilding without that Billions of dollars and all that oil business.

 

Quite remarkable indeed ...........

صح لسانج

 

But it can do much, much better.

(but it's lisaanak for Jb and lisaanij for a female). Eesh cala khaleeji

[Blessed]

^

Mashkooor, maa qasart / kh(?)sart.

[Caano Geel]

what's the comparison saaxiib, angolan's are smarter than your typical somali's

[Coloow]

True, I had to book a hotel 5 months in advance. The cost/night was almost 290 dollars. I went to a small village and there were hardly any africans. It seems the chinese brought with them their own cooks, prostitutes, clerks, doctors, small shopkeepers and every other profession.

 

The price of homes/sq/meter is one of the highest in the world. They are building the infrastructure. Central Luanda looks like the NYSE.

 

Inflation threatens the economy; it seems the africans got what they wanted; money to buy expensive cars, dahab, etc

 

In the short term this development might be good but in the long run the country risks the dutch disease (contemporary gulf disease): innovation inertia, bonanza climate, false hope and the pinning of the economy on one source etc.

 

The angolan civil war is not comparable to our plight. Theirs was based on ideologies. Ours on a culture of moryaanism, qabilistans and inability to work for a living.