Angola Needs Big Investment - And May Get it
Former residents returning from Portugal see potential beyond oil. HLWAR-BATTERED ECONOMY
ANGOLANS of Portuguese descent, who fled to South Africa and Portugal at independence in 1975, could play a major role in rebuilding the war-shattered economy and realizing its potential as one of Africa's most prosperous nations.
"The Portuguese can be the link between the Angolans and the South Africans and other foreign investors," says Jose Jorge Monteiro, a former resident of Angola who returned recently from Portugal to investigate business opportunities.
Many of the 350,000 Angolans of Portuguese descent who quit the country when the MPLA government seized power at independence in 1985 are returning to see if they can reclaim their properties and do business in Angola.
Mr. Monteiro is investigating buying a soap factory in Huambo.
With foreign resident status, he has retained an Angolan bank account, is eligible for loans, and can capitalize on a resident investor's rate for the United States dollar, which is six times less than it would cost a foreigner.
"It's certainly risky but it's a good time to buy," he says. "Many things are up for grabs. If a deal works out here, you can make in one year what would take 100 years to make in Portugal."
"But it's very difficult to come to Angola with any kind of a plan," he says. "If you see opportunities, you take them as they come."
On a per capita basis, Angola could be the richest country on the continent. But its harsh colonial legacy and a bitter civil war have shattered transport and communication networks and left the economy in ruins.
The government formed after this week's historic democratic ballot will face the difficult task of building confidence in the economy. Oil output has climbed steadily from 170,000 barrels per day before independence to more than 500,000 b.p.d., providing about $2 billion a year, or 90 percent of Angola's foreign earnings.
Proven reserves are 2.1 billion barrels, with an estimated 3 billion in deep water off the oil-rich enclave of Cabinda. More than half the oil revenues have gone toward paying Angola's war bill. The war also left the nation with a $9 billion foreign debt.
The diamond trade has begun picking up; the relaxation of the law against Angolans selling diamonds earlier this year sparked a black market now estimated at $750 million a year - three times the size of the official market.
But once-thriving coffee and cotton production has almost ceased and manufacturing is virtually paralyzed.
"It is a potentially diverse economy," says Tony Newton, deputy director of the US Liaison Office in Luanda. "But there is a limited formal economy outside of oil and diamonds at present. There is massive trading and bartering so people manage to get what they want."
Most of the money in circulation goes into foreign savings and imported consumer goods. "People buy television sets and fast cars and make investments in Portugal," says Jose Goncalves, an Angola journalist of Portuguese descent who has lived here since birth.
Amid the decay of Luanda there are few consumer goods that one cannot buy on the flourishing black markets (kan-dongas) such as Roque Santeiro, a vast sprawl of traders who gather daily on a smoldering garbage dump overlooking the Angolan port. Many goods are brought in by Angolan and Zairean traders who fly weekly to Johannesburg.
"But at present there is no re-investment by the private sector at all," Mr. Goncalves says.
"What the country needs is several years of peace and sound advice on economic management," Mr. Newton says.