by Virginia Muwanigwa (This is the second in a jour-part series on Angola)
The Angolan President, Jose Eduardo dos Santos, announced a dramatic reshuffle of his government recently, partly as a result of the growing economic and social crisis facing the country.
Action for Southern Africa (ACTSA) reports that the sacking of the Prime Minister, Marcolino Moco, by President dos Santos had been predicted by analysts owing to growing discontent at the performance of the economy, spurring calls for demonstrations in Luanda against the government.
Announcing the reshuffle, dos Santos warned that the country faced the most serious socio-economic crisis ever, stating that repeated experiments over the last three years to counter the crisis had failed.
As a result, there is in Angola, “the virtual paralysis of the productive sector, except oil production; the drastic erosion of the social infrastructure, notably electrical power and water; hyper-inflation whose annual rates exceed 3,000 per cent; the worsening of the budget deficit; the unbridled expansion of economic credit; and a huge increase in the issuing of money, but with no return.”
Dos Santos also referred to the existence of two currencies, the legal one and the black market, that has “discredited and undermined the banking system” through a major lack of control over foreign exchange.
The President criticised the speculative commercial sector, and its parallel financial system, which amount to over 90 per cent of the country’s overall imports. Analysts point out that this system has led to vast fortunes being made by those with access to hard currency at preferential exchange rates, with great loss to government revenue.
“…most salaries have become virtually symbolic, notably salaries in the civil service”, and “the state health and education sectors have almost collapsed due either to the resignation of many of the officials and workers or to the worsening of basic working conditions.”
Citing government ineffectiveness, the President said since the beginning of the year, the Government, in economic terms has” …done nothing but propose and approve new fiscal laws to review successively the official foreign exchange rates and ‘rehearse’ the payment of a new salary scale for the civil service sector, though not fully covering the entire sector.”
As a result, said dos Santos “the time of reckoning has come. Those that have failed must modestly take responsibility for their mistakes. One must change, and to do that we must identify precisely the fundamental causes that have led to this state of affairs.”
Whilst the President accepted the part played by the Union for the Total Liberation of Angola (Unita)’s return to war after the 1992 elections, he also firmly placed blame upon the influence of speculation and illegal diamond-mining on the economy.
Most symbolic in this instance, were deals between de Beers, the South African company and the Unita leader. Jonas Savirnbi, who has been reluctant to withdraw from the diamond provinces of Lunda north and south which currently form the basis of his economy, despite government’s efforts to gain control there.
As a result, UNIT A still has an upper-hand in diamond mining. Africa Analysis, a London-based monthly reports that in 1995. US$690 million worth of diamonds were-mined with-$430 million going to VNITA. The latter continues to mine the Luzamba area in Lunda north which has also served as a conduit for illicit smuggling of weapons from neighbouring Zaire.
Under pressure from investors to resolve the diamonds issue, the government has held talks with De Beers, a South African diamond company believed to have been involved in illegal deals with VNITA. As a result of the talks. Endiama, the state-owned diamond company, has signed an agreement with De Beers for diamond prospecting, committing the latter to spend $50 million.
The Director of Endiarna, Paulino Neto, and Government representative Higino Carneiro, have meanwhile visited Bailundo to discuss with Savimbi the future of the diamond industry after the government resumes administrative control of the whole country.
Meanwhile, other countries envisaging the final consolidation of the peace process, have moved in to stake their claims economically. Reconstruction poses yet another hurdle for the Angolans and their economic partners are making plans as to the roles they will play.
The London-based Monthly Regional Bulletin (MRB) reports that Portugal, vying for the position of biggest player in Angola’s lucrative reconstruction process, has agreed to reschedule some of Angola’s debt.
During a meeting of the joint Angolan-Portuguese commission in Lisbon in early May, 18 agreements were signed including the rescheduling of VS$1.5 billion debt and transforming it into Portuguese shares in some major Angolan companies.
Angola’s former coloniser wants to upgrade its position from trade partner to partnership in investment. Saying that it will not wait for any analyses by international monetary institutions on Angola’s worthiness, Portugal aims to proceed with a programme of associate investment in the country as long as Angola is willing.
The European Union (EV) has promised up to VS$90 million in aid for the reconstruction and rehabilitation programme which will focus on health, education, communications infrastructure and farm development projects.
The US government, once an ally of Savirnbi, has also pledged VS$I92 million in reconstruction aid to Angola spread over the next two years depending on the outcome of the peace process. The US has, in recent years, changed its policy and recognises the government of Angola.
The sacking of the government by dos Santos is obviously an acknowledgement that things have not been well. However, a solution will need commitment not only from the government but other players, especially Savirnbi, to ensure that the peace process is consolidated and reconstruction can truly begin. (SARDC)
