Angola's Choice: Reform or Regress
Africa Report N°61
7 Apr 2003
EXECUTIVE SUMMARY AND RECOMMENDATIONS
One year after more than four decades of internationally fuelled civil conflict came to an end, Angola is faced with a stark choice. If the government undertakes and sustains meaningful political and economic reforms, peace and prosperity would be assured. If it delays and obfuscates on fundamental issues of transparency, diversification and pluralism, the country will likely be condemned to further decades of poor governance and localised violence.
ICG's first report on Angola dealt with the humanitarian and security challenges to peace building. Economic and political issues are equally important. Good governance in the context of a war that left so many destructive legacies faces many obstacles. Regional and ethnic inequalities that intersect with an inadequate governmental response to the needs of the displaced and the former UNITA insurgents can sow the seeds for future instability and warlordism. Interests entrenched in the political and economic system undermine reform tendencies at every turn. Decades of atrocities make reconciliation much more difficult. A history of external intervention and exploitation leaves the government resistant to meeting some international preconditions for engagement and aid.
Nevertheless, there are elements within the government and, more broadly, throughout civil society, that want to increase international engagement, make economic policy more transparent, and liberalise the political system. Battles within the government – and between the government and opposition parties and civil society – over basic policy directions are intensifying, and the outcomes are uncertain.
For a host of reasons, it is increasingly in the Angolan government's interest to move down the economic and political reform path. Upcoming elections require the ruling party, the Popular Movement for the Liberation of Angola (MPLA), to seek electoral support, and the most direct way is to improve the state's capacity to deliver goods and services. The government's desire to enhance its international image and project itself on continental and world stages also creates a reform logic, as does President dos Santos's wish to enhance his legacy.
Political and economic reform – combined with a commitment to begin to address some social ills and inequities – would ensure more broad-based economic growth, allow a genuine private sector to develop, free up hundreds of millions of dollars for social investment through a more transparent budget process, transform the political system into a more pluralistic one that promotes human rights and lay the groundwork for long-term stability.
However, there are numerous obstacles. The benefits derived from wholesale diversion of oil revenues to individual accounts will be the most difficult to overcome, particularly in an environment of rising oil prices and discoveries of new reserves. Genuine reform would threaten the concentration of power in the presidency, or Futungo, the unimpeded annual diversion of an estimated U.S.$1 billion in oil revenues, and the patronage network and private accounts supported by that diversion. Leadership by progressive elements in the government and a fundamental decision by President dos Santos that reform is in the strategic interest of the country and the MPLA are needed.
To the Government of Angola:
1. Address the problem of state capacity transparently by focusing on improving existing national and provincial administration, and in particular:
a) give priority to basic social services (health and education), agricultural development, and support for micro-enterprise;
b) invest in basic infrastructure that will help move goods and people around the country; and and
c) extend state administration gradually in the areas of the judiciary, police and other elements of the rule of law.
2. Begin to create the architecture for the upcoming presidential election by:
a) setting a date, accelerating the constitutional reform process, and clarifying electoral laws and other related actions; and
b) giving civil society organisations and political parties the space to organise, operate and campaign freely, including throughout the provinces.
3. Diversify the economy beyond oil, including by taking such specific steps as working with the U.S. government to qualify for participation in the benefits of its African Growth and Opportunity Act (AGOA).
4. Restructure the investment and commercial codes.
5. Develop an equitable, consistent and transparent land use policy that balances agri-business and smallholders and avoids the stereotypical situation in which coastal residents own most of the land in the interior.
6. Formulate and prioritise a poverty reduction strategy that lays the groundwork for structural adjustments that will benefit more than just the wealthiest segment of the population and helps prepare for the promised donors conference.
7. Agree with the IMF on a reform program to make economic management more transparent, especially in the oil sector, and demonstrate commitment to this objective by giving the newly established "accountability court" real enforcement power, particularly for large public companies.
To Donor Governments, the United Nations, and the International Financial Institutions:
8. Fully fund an agricultural assistance program in advance of the September 2003 planting season.
9. Work closely with the Angolan government in advance of any donors conference to create a strategic partnership and quid pro quo on three or four fundamentally important areas such as demining, roads, health and education.
10. Advocate that the Angolan government set a date for the upcoming presidential elections and as the electoral process unfolds, urge constitutional and electoral law reform and guarantees for the exercise of basic freedoms.
11. Donor governments should provide increased assistance for political party development and civil society capacity building.
12. Get on the same page regarding the economic reforms expected of the government and in particular stay focused on the threshold steps to improve transparency and accountability set by the IMF.
To International Investors in Angola's Oil Sector:
13. Make cooperative efforts with the government to achieve more transparency surrounding the business practices of the major oil companies investing in Angola.
Luanda/Brussels, 7 April 2003