Poverty’s Persistent Pull — The Case of Angola

Stephen DeAngelis

February 25, 2008

Some people I talk with about Enterra Solutions’ Development-in-a-Box™ approach take away the wrong message. They think that “in the box” solutions trivialize or make the development process seem easy. They’re wrong. Just because we believe that development can be jump-started by implementing pre-packaged world class standards (like those used in banking, telecommunications, utilities, etc.) and then adapt them to local circumstances, it doesn’t mean we think that development is easy or can be accomplished quickly — even when a country is blessed with natural resources. Angola is a good case in point [“As Angola Rebuilds, Most Find Their Poverty Persists,” by Sharon LaFraniere, New York Times, 14 October 2007]. Angola is, by most accounts, a country on the move (or, at least, one that should be).

“Two years ago, only the brave or desperate would attempt the 186-mile drive from this garbage-strewn capital [of Luanda] to the northern provincial capital, Uige. It was a 12-hour, teeth-clenching, hair-raising ordeal of dodging tire-blowing potholes and edges of roadway that crumbled into precipices. Now, thanks to Angola’s surging oil production, the journey takes half the time. And that is not all that is being transformed: All over Angola, hundreds of workers are rebuilding roads, airports, bridges and railways that were shattered during nearly three decades of civil war. For most Angolans, the drone of road graders and steam shovels is the first tangible evidence of a dividend from their country’s oil and diamond wealth, mined in earnest now after five years of peace. Many call it long past due. Angola is gushing oil, pumping about 1.5 million barrels a day, more than any other African country except Nigeria. The International Monetary Fund projects a 24 percent economic growth this year — one of the fastest rates in the world. The government is taking in two and a half times as much money as it did three years ago. “

Yet as bustling as all that sounds, the good times are not reaching everyone.

“But Angolans, by many indications, remain as poor as ever. The poverty rate is a matter of debate: the government claims a 12 percent drop in the past five years; analysts for the Catholic University of Angola’s research center say two in three Angolans still live on $2 or less a day, the same percentage as in 2002. Still, no one disputes that most Angolans face appalling living conditions, sky-high infant mortality rates, dirty water, illiteracy and a host of other ills. The United Nations ranked Angola last year as the world’s 17th least developed country. In a December [2006] poll by a pro-democracy group and the United States Agency for International Development, 6 in 10 Angolans said their economic situation was no better now than five years ago.”

That doesn’t mean that the government’s efforts aren’t working at all. It takes time to build the necessary infrastructure upon which a sustainable economy can grow. That is what is the government is currently trying to achieve — sort of.

“The government’s huge effort to rebuild the county’s infrastructure is intended to help change [the country’s poor economic condition]. Aguinaldo Jaime, the nation’s deputy prime minister, said Angola had taken out between $8 billion and $9 billion in loans from China since 2004, exchanging guarantees of oil supply for reconstruction work. Others, like the World Bank, estimate the Chinese loans at $12 billion. Reconnecting roads and railways, Mr. Jaime said, will help jump-start agriculture and commercial sectors and spread the wealth beyond a small elite.”

The cruel truth is that whenever large sums of money and African leaders are mentioned in the same sentence, the word “corruption” is never far behind. Unfortunately, LaFraniere reports the same is true for Angola.

“The government’s critics argue that progress would be quicker if public officials were not so busy enriching themselves. In 2003, the weekly newspaper Angolese Samanario published a list of the wealthiest people in Angola. Twelve of the top 20 were government officials; five were former government officials.”

I have repeatedly stated that good governance (meaning a government that operates transparently and with integrity) is a crucial pre-requisite for sustainable development. Corruption always undermines development efforts. Things have gotten a little better in Angola, but not enough to achieve the development its leaders claim they want.

“Since [2003], the government has opened some of its financial records. Mr. Jaime said in an interview that some officials had prospered not by stealing public funds, but by exploiting business prospects and Angola’s antiquated conflict of interest law. Still, Transparency International, the anticorruption organization, continues to rank Angola as the world’s 10th most corrupt nation. Many Angolans take it as a given that those who shop at Luanda’s new upscale mall or tool about in Land Cruisers are state officials or their friends. One car dealership manager, who caters to government officials, said he ordered only the costliest luxury cars. ‘They want to be first with the latest model,’ he said, speaking anonymously so as not to lose customers.”

Fortunately, 12 billion dollars is a lot of money and some of it has actually managed to miss lining the pockets of government officials and has found its way into infrastructure projects.

“Since 2002, the government says, it has rebuilt 2,400 miles of crumbled roads — more than half of the nation’s system — and renovated airports in Luanda and three other cities. More than 430 miles of new rail track have been laid, officials said. Even once forgotten provincial capitals like Uige are bustling with work crews in royal blue work outfits. One Chinese engineer who identified himself as Tom said his Beijing-based company had sent 100 workers to live in a compound surrounded by half-ruined buildings pockmarked with bullet holes.”

That needs to be put into perspective however. Angola is nearly twice the size of Texas and nearly five times the size of the United Kingdom. By comparison, the UK has over 240,000 miles of paved roads, 310 airports with paved runways, and over 10,000 miles of railway track. Angola’s infrastructure is puny by comparison. The influx of petrodollars should be a boon for the country. But the money is as much a curse as a blessing because it has given Angola’s leaders a sense of invulnerability that is bad for the country.

“Western diplomats and representatives of financial institutions like the World Bank try to keep up the pressure for elections and good governance measures. But as oil revenues have ballooned, their influence has diminished. This year, Angola joined the Organization of Petroleum Exporting Countries, but limited its cooperation with the International Monetary Fund. … Some Western diplomats say the West missed a major chance to help shape Angola when the United States and other nations turned down the government’s request in 2002 to hold a donor conference. Mr. Jaime said that rejection was a major reason that Angola turned to China to finance its reconstruction.”

The bottom line is that the even $100/barrel oil is not going to pull Angola out of its economic morass as long as corrupt officials enrich themselves at the expense of the rest of the country. Invested wisely, the money could, in fact, build the infrastructure necessary to encourage development in all Angolan economic sectors — creating jobs, improving lives, and breaking poverty’s
grip. With no one able to effectively put pressure on government officials, this is not likely to happen. The Chinese, who have the most influence, have shown in Sudan that they are more interested in oil than people and are unlikely to play the hero in Angola.