NewsSouthern AfricaAngola | Lourenço’s long road

Sun,18Nov2018

Posted on Thursday, 18 October 2018 09:38

Angola | Lourenço’s long road

By Paulo Guilherme Figueiredo and José Gama in Luanda

President João Lourenço: some say the country’s cleansing is only skin-deep - Vladimir Astapkovich/Sputnik/AFP
The Angolan president has dealt some big blows to the former ruling family and corrupt chief executives of state-owned entities, but he still has a long way to go to bring the country out of its economic crisis and attract the kind of investors who value transparency and ease of doing business

 

The backbone of Angola’s road system is the Luanda-Huambo road. About 550km long, it is an essential route for connecting farms in the centre and south of the country to the capital city’s market. But what should be a scenic five-hour drive through the country’s heartland is now a wrenching and exhausting 12-hour experience of skirting frequent mid-pavement craters and muddy dirt paths around trees and bushes.

With former President José Eduardo dos Santos handing over his last sliver of power – the leadership of the ruling Movimento Popular de Libertação de Angola (MPLA) party – in September, newish President João Lourenço has all the control over Angola’s direction. The country is in the midst of an economic crisis, with huge debts to Chinese ­entities, dropping oil production, sky-high inflation, creaking infrastructure and the corrupt hangover from the former regime.

A common joke in political circles is that the only two MPLA politicians who were not corrupt are both dead – historical figures Lúcio Lara and Paulo Jorge. Now in charge of the presidency and the ruling party – after replacing Dos Santos as MPLA chief on 8 September – Lourenço is widely expected to drive anti-corruption efforts even deeper. The former minister of defence and MPLA secretary general refers to corruption as a “scourge” and says it discourages private investment. He says the develop­ment of a productive economy based on agriculture, industry and mines can only be made with private foreign investment (see page 54).

Improving the economy is Lourenço’s top priority. Early this year he told reporters: “We’re going to relaunch fishing and agriculture, and we will open the country to foreign investment.” In May, the government confirmed plans to privatise more than 70 state-owned companies, mostly in the manufacturing sector. Backed by a new law, the government is starting to chase after money it says was taken out of the country illegally, after first giving a grace period for people to invest the money in Angola.

- Angola’s poor roads are indicative of a wider infrastructure deficit and hamper the transport of goods - Credits:  Alamy

High expectations

Lourenço scored points by taking on Dos Santos’s powerful family. Last year, he won plaudits for sacking Isabel dos Santos from her leadership position at the state oil company, Sonangol, and removed her brother from his position as head of the country’s sovereign wealth fund. The government is now in talks with the International Monetary Fund (IMF), a move that could boost investor confidence by increasing transparency and the oversight of the government’s reform agenda. The IMF predicts that Angola’s gross domestic product will grow by 2.2% this year and 2.4% next year after hitting just 0.7% in 2017.

Critics warn that Lourenço’s reforms so far are only skin deep. Justino Pinto de Andrade, an economics professor at Universidade Católica de Angola, tells The Africa Report: “Lourenço has surrounded himself with the same people as Dos Santos, and I don’t see how their culture could have changed. They were educated in the Dos Santos model and will not give up old habits of manipulation, influence peddling, stealing from state coffers […]. They pretend they have changed, but they’re wolves in sheep’s clothing.”

But Pinto de Andrade points out that the weakening of the Dos Santos clan has taken place “in an apparently peaceful” manner, and expectations are still high, both inside and outside the country, that Lourenço could turn the country around.

However, the Dos Santos government’s preference for opaque Chinese deals continues to hurt Angola. Diplomatic sources put total Chinese financing since 2002 at around $60bn. Officially, the finance ministry acknowledges that the government currently owes China $23bn. Important details about these finance deals – including interest rates, repayment timetables and the amount of oil exported to China as payment – are unknown outside of small circles in government. A single project, the new Angola International Airport, which is being built in Luanda by China International Fund, has cost more than $6.3bn. And more than a decade after construction started, it is not yet completed.

The infrastructure that Angola has received for its billions of dollars in oil revenue has often been of poor quality. The Chinese-reconstructed Caminho de Ferro de Luanda (CFL), Caminho de Ferro de Benguela (CFB) and Caminho de Ferro de Moçâmedes (CFM) railways are operating poorly, mainly due to the locomotives from China. According to a government source, problems with tracks are slowing traffic. Locomotives are limited to 30km per hour in the upper section of the CFM, a third of the speed originally planned. Due to similar problems, the rail trip from Luanda to Malanje now takes 12 hours, more than double the time initially expected.

The operations of the three railway companies are currently unsustainable and all have accumulated massive debts – with revenue not even covering workers’ wages. An improved CFB could be used to export ore from the copperbelt in Zambia and the Democratic Republic of Congo. But, given the current state of the railways, the government is considering their partial privatisation, according to the same source.

ANGOLA’S OIL PRODUCTION 10 AND FOREIGN DIRECT INVESTMENT

ANGOLA’S GROWTH IN CREDIT TO THE PRIVATE SECTOR AND NON-PERFORMING LOANS

New-town woes

Better known to the average Angolan are the construction problems in Chinese-built neighbourhoods – ­locally known as centralidades. In these new towns – namely Sequele, Kilamba Kiaxi and KK5000, all in the outskirts of Luanda – apartment residents often complain of water infiltration, poor piping, insufficient drainage and warping of walls, among other problems.

Breaking the government’s bad habits with China will be difficult, as few investors have shown an interest in the big infrastructure projects that the economy needs. The presidency-linked Gabinete de Reconstrução Nacional (GRN) – the cabinet of national reconstruction – was the linchpin of Luanda’s deals with the Chinese government and Chinese companies. General Hélder Vieira Dias ‘Kopelipa’, former head of the president’s military cabinet and one of the country’s richest men, led the GRN. He is married to one of Dos Santos’s daughters and has not yet been a target of Lourenço’s anti-corruption drive.70 Number of stateowned companies, mostly in the manufacturing sector, that the government plans to privatise in the medium term

In March, the Portuguese press revealed that Kopelipa is the subject of money-laundering investigations in Lisbon, but he says that all of his transactions were for legitimate business purposes. A corruption trial began in January in Lisbon against former vice-president Manuel Vicente, but he is now an eminence grise of the Lourenço regime – serving as an adviser. Vicente claims his money transfers were for legitimate purposes, and he successfully got his case transferred to Angola, where he is assured of a friendlier reception.

The fight against corruption has been a theme in Lourenço’s many trips abroad – visiting Berlin, Brussels, Paris, Johannesburg, among other destinations. However, in Beijing during the Forum on China-Africa Cooperation in September he merely showed appreciation for Chinese assistance.

Less has been said and written about small-scale corruption – ‘gasosa’ (meaning ‘refreshment’) – which is widespread in Angola. It could be anything from the police officer on the beat to the municipal clerk saying he can help you out if you help him out.

Business leaders have other complaints, too. Veteran local business­woman Celeste Rola dos Santos is the sort of respected investor the government says it would like to see leading the charge in private investment. But she is not at all impressed with the country’s prospects. Born to a family of coffee producers, she has owned multiple businesses in Luanda since the 1970s, from restaurants to furniture factories. Today, her time in Luanda is not focused on boardroom meetings but on courtroom cases.

In 2002, she sold half of a construction company but quickly clashed with her new associates, whom she accuses of excluding her from the management. For 16 years, the case has been moving back and forth in the courts, with rulings and appeals going in both directions. A Supreme Court decision is now pending. She says justice can be bought in Angola. “How do you expect people to invest in a country that cannot provide investors with the most basic of things – protection of their investments?” she asks.

$23bn Amount the Angolan government currently owes China, according to official data from the finance ministrySome younger entrepreneurs, like Claudio Silva, co-founder of Luanda Nightlife, acknowledge the country’s shortcomings but are more optimistic. Fresh out of university in the US in 2013, he launched his lifestyle app, which has become popular. But the economic crisis has hurt young people’s discretionary income for eating out or travelling inside the country. The devaluation of the kwanza, the lack of foreign currency and Angola’s import dependency make it “a very expensive country”. For start-ups, access to financing is difficult, although the situation is improving, he says.

According to Silva there has been a “rebirth of hope” in the past year. He says that while the “road to social wellbeing is long”, people feel that “if you can bring down an all-­powerful dictator, then you can build a brighter future.” He concludes: “The new government is more engaged in tourism and putting in place concrete measures,” including easier issuance of entry visas. Smartphone use is growing and other young entrepreneurs are launching start-ups. “Future prospects are excellent, but I’m an optimist. Take it with a grain of salt.”

Other viewpoints provide scepticism about the potential for change. One of the episodes of the Dos Santos era that brought harsher criticism to the regime was the locking up of more than a dozen young people in June 2015. They served more than a year for assembling in a private residence to discuss political reform; according to the authorities, they were planning a coup.

Among this group of intellectuals, rap musicians and artists was journalist Sedrick de Carvalho, who sees his country as freer today than during the Dos Santos era. He says people are reclaiming the right to “protest, petition and even speak out”. But he does not believe in the regime’s ability for renewal, considering the events of the past year, which include the death on 3 September of one of his former cellmates, João Alfredo Dala. Some of the police involved in his detention and torture have since been promoted. 

 

 

This article first appeared in the October 2018 print edition of The Africa Report magazine

Photos
- President João Lourenço: some say the country’s cleansing is only skin-deep - Credits: Vladimir Astapkovich/Sputnik/AFP
- Angola’s poor roads are indicative of a wider infrastructure deficit and hamper the transport of goods - Credits:  Alamy



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