Document of UNITED NATIONS DEVELOPEKNT PROGRAMITHE WORLD BANK Report No. 7283-ANG ANGOLA AN INThODUCTORY ECONOMIC REVIEW (in two volumes) Volume II June 26, 1989 ANG/87/001 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without UNDP or World Bank authorization. CURRC EQ n Since 1975 US$ 1.00 - Kz 29.92 FISCAL YEAR January 1 - December 31 ANGOLA AN INTRODUCTORY ECONOMIC REVIEW TABLE OF CONTENTS Volume II - Annexes and Statistical Appendix List of Annex Tables Page No. ANNEX I ECONOMIC DEVELOPMENT DURING THE COLONIAL PERIOD 169 A. Introduction ................. 169 B. A South Atlantic Link ............ ..... . ........ 170 C. Settlement and Contract Labor ..... ................ 174 D. Soldiers and Industrialization ...................... 181 .E. Economy and Society at Independence .... ............. 189 Bibliography ........................................ 193 ANNEX II THE ANGOLAN ECONOMY IN COMPARATIVE PERSPECTIVE 196 ANNEX III GOVERNMENT INSTITUTIONS 199 ANNEX IV THE SYSTEM OF NATIONAL ACCO'UNTS IN ANGOLA 202 ANNEX V THE LEGAL FRAMEWORK OF SEF 210 ANNEX VI THE TAX SYSTEM 217 ANNEX VII AGRICULTURE 221 A. Agricultural Performance, Policy and Production Response ......... ................................... 215 B. Major Agricultural Products ......... .............. . 225 C. Rural Structure ..................................... 233 D. Agricultural Support Services ....................... 236 E. Agricultural Policy Adjustment and Reform .... ....... 237 ANNEX VIII TRANSPORT AND COMMUNICATIONS 243 A. Sector Overview and Organization .... ................ 243 B. Highway System ...................................... 247 C. Rail Transport ...................................... 253 D. Air Sector .......................................... 258 E. Maritime and Port Sector ............................ 263 F. Mail and Telecommunications ......................... 272 G. Availability of Modal Spare Parts .... ............... 277 H. MINTEC Analysis and Planning ........................ 279 I. Issues, Prospects and Recommnendations ..............2 .86 This document has a restricted distributior. and may be used by recipients only in the performance of their official duties. Its contents may not 1t r-i- ' . '- '- * - ,* . . Pase No. ANNEX IX EDUCATION 291 A. Structure and Organization of the Education System ....................................................... 291 B. Primary Education .................................... 297 C. Secondary Education ................... 300 D. Higher Education .................................... 303 E. Recommendations . .............. ..# ...... ...... ... . 306 Statistical Appendix ....................................... 309 MaPs *............... Map I Angola Map II Angola: Relief Map III Angola: Population Density ANNEX TABLES Page Number Annex I: ECONOMIC DEVELOPMENT DURING THE COLONIAL PERIOD I.1 Principal Exports, 1950-73 ............................. 175 I.2 Major Imports, 1952-73 ................................. 176 1.3 Output of Major Agricultural Product3, 1952-73 ......... 177 1.4 Population and GDP, by Type of Activity ................ 178 I.5 Manufacturing Output by Major Industry Group, 1966-70 .179 I.6 Balance of Payments, 1955-73 .180 I.7 Monetary Development, 1960-73 .181 I.8 Gross Domestic Product, 1953-73 .182 I.9 Selected Social Indicators .183 Annex VI: TAX SYSTEM VI.1 Petroleum Taxation, 1980-8 .217 VI.2 Changes in Price and Output of Crude Oil, 1980-86 218 VI.3 Transfers to Government by Salected Public Enter- prises, 1984-86 .............. 219 Annex VIIs AGRICULTURE VII.1 Distribution of Cattle and Goats in Southern Angola ... 227 VII.2 Losses of State owned Agricultural Enterprises .228 Annex VIII: TRANSPORT VIII.1 Output of MINTEC Controlled Transport Services, 1985-87 ....................................... ........ 244 VIII.2 Output of Transport and Communications Sector .......... 245 VIII.3 Road Network, by Type and Length, 1986 .... ............ 247 VIII.4 MINTEC Bus Utilization Data, by Province, 1985 ......... 250 VIII.5 ETP Urban Bus Performance Indices, 1985-87 ............. 250 VIII.6 Rail Transport, Passengers and Cargo ................... 254 VIII.7 Railway Locomotive and Rolling Stock Data, 1985-e . 255 VIII.8 Benguela Corridor Implementation Costs .257 VIII.9 TAAG Operations, by Market, 1986 . 259 VIII.10 ENAMA Airport Network, 1987 .. 261 VIII.1l Size and Output of Maritime Fleets, 1986 and 1987 .. 265 VIII.12 ANGONAVE Cargo, by Category, 1986 .. 266 VIII.13 SECIL Maritima Fleet, Selected Data, 1986 . . 267 VIII.14 Main Port Freight Throughput, 1985-1987 . . 270 VIII.15 Cabotage Traffic, 1985 .. 271 VIII.16 Throughput of Angolan Mail Office, 1986 . . 274 VIII.17 Interurban Telephone Network, 1975 and 1980 . . 275 VIII.18 ENATEL and EPTEL, Selected Data, 1985 and 1986 .. 276 VIII.19 Projected Freight and Passenger Movements . .281 VIII.20 MINTEC Short Term Strategy, 1987 . .282 VIII.21 MINTEC Proposed Program, 1987 .. 288 Page No. Annex IX: EDUCATION IX.1 Government Budget for Educ'tion, 1980-87 ............... 296 IX.2 Government Expenditure on L..ucation, 1980-82 .296 IX.3 Primary Education - Number of Teachers, Classrooms and Schools, 1981/83 ................................... 298 IX.4 Primary Education Enrollment Ratios .................... 298 IX.5 Primary Education Net Enrollment Ratios for four Provinces .299 IX.6 Primary Education - Average Promotion, Repeat and Dropout Rates, 1980-84 .300 IX.7 Enrollment in Higher Education .304 -169 - ANNEX I Page 1 of 24 ECONOMIC DEVELOPMENT DURING THE COLONIAL PERIOD A. Introduction 1. Unlike the majority of former European colonies in sub-Saharan Africa, which became independent in the late 1950's and early 1960's, Angola has been an independent nation only since 1975. The length of the Portuguese colonial presence in Angola (over 500 years) and its particular characteristics left a colonial legacy which continues to constrain Angolan ecenomic development. The unique natute of the Portuguese colonial cystem is that it was based on an indigenous labor system that was never 'free.* Domestic slavery was legal until 1870 when it was replaced by a brutal system of forced labor (euphemistically c.'led 'contract labor") until £961 when it was abolished in the wake of the nationslist uprisings. Moreover, since the 1920s, Angolan development policy focused primarily on raising the number and prosperity of the white settlers and increasing the coffers in Portuga' at the expense of the indigenous Angolan peoples. Angola's best agrizultural lands were seized by Portuguese settlers. Angola became the dumping ground not only for hundreds of thousands of largely illiterate Portuguese but also became the repository for Portugal's key exports such as alcholic beverages. Prior to the outbreak of the armed struggle in 1961, Portuguese economic interests enjoyed a virtual monopoly over investments in the colony and, given Portugal's own economic under- developmeut. this raused unique distortions in the Angolan economy not found in parts of Africa colonized by the British, French, or even the Belgians. Finally, the fact that over half of the 325,000 white settlers had never gone to school and the vast majority of the re t had less than four years of education, resulted in the Portuguese occt2ying almost every position in the modern economic sector from engineers and doctors to waiters and taxi drivers. Thus, shockingly few Angolans were trained in any skilled profession. The singularity of Portuguese overseas policy makes it particularly important to analyze the pattern of colonial development in Angola in order to understand the opportunities and constraints of the People's Republic of Angola fourteen years later. 2. Angola's colonial economy can be characterized through various stages or cycles of development. These cycles can even be named after the major export and its directions slaves to Brazil, coffee to Portugal and oil to the United States, each cycle defining a period during which the external sector of the economy is dominated by a particular product, by a particular market or both. The analysis of Angola's development cannot neglect the interaction between economic dependence and colonial rule. For purposes of exposition, the colonial economic history of Angola can be divided into three broad periods. The first period includes the early alliance between the Portuguese and Congolese crowns, as well as the slave trade directed mostly to Brazil, (sometimes referred to as a South Atlantic link). The second period begins with the hundred years of transition from slaves to coffee, during which territorial occupation and settlement took place, and includes the emergence of a coffee export economy based on quasi-forced labor. In the forties, the Angolan economy initiated a growth - 170 - ANNEX I Page 2 of 24 process that involved considerable immigration from Portugal, in response to the coffee boom. The white settler population increased from 44,000 in 1940 to about 325,000 by 1974. Generally favorable prospects for external trade were decisive in the evolution of internal conditions, reflected by changes in industrial regulation, in agricultural incentives, in labor laws and in monetary policy. A third period begins with the Portuguese military response to the 1961 armed revolt when some of the economic constrai~lts of colonial rule where relaxed, allowing repid industrialization to tal;e place alongside the coffee economy and concludes with the beginning of the *oil boom* which immediately preceded the 1973 price increase by OPEC and the 1974 Portuguese revolution. B. A South Atlantic Link 3. In the thirteenth century Angola was inhabited primarily by Koisan- speaking groups who were forced to migrate by the push of Bantu-speLking peoples whose migratory patterns and developed (slash and burn) economies took them into the territory. Some were well developed kingdoms (e.g., Luanda and Kikongo) who moved southward into Angola during the thirteenth and fourteenth centuries in seaL.h of new areas to cultivate. 4. The first encounter between Europeans and Angolans occurred in 1483 during a voyage of Diego Cao on his way to find a sea route to India. The initial contacts between the Portuguese and Kikongo were quite egalitarian and included the establishment of diplomatic relations between the two Kingdoms. The Kongo royal family even uirged Lisbon to send missionaries to facilitate the conversion of Kikongo to Christianity. Within a decade of the first contacts, however, Portugal focused almost all attention on the slave trade and by 1526 the situation had deteriorated to the point that the Knngo King wrote to his Portuguese counterpart that the slave traders brought "ruin to the country. Every day people are enslaved and kidnapped, even nobles, even members of the King's own family." 1/ 5. At the time, the Congo occupied a vast region, including the parts south of the present Congo and Zaire and north of Angola, where the capital was situated. The region was densely populated. The population lived mainly on the cultivation of a certain number of food plants such as massambala, massango and luco. 2/ On a lesser scale, banana, vegetables, sugar-cane and the palm tree were cultivated, the latcer being used to make a fermented drink called malufo. This spirit constituted on of the country's principle handmade products, besides weaving and metal-working. While malufo was produced by the peasants and satisfied an important dietary requirement, the rest of production was reserved for the nobility. Metal-working (iron, copper and gold) was practised in this 1/ Paiva Manso, Historia do Congo, p. 54. 2/ W.G.I. Randles, L'Ancien Royaume du Kongo des origines a la fin du XIX siecle (Ed. Mouton, Paris, 1968), p. 65. This book is the major reference for this period. A text from the end of the 16th century notes the sweet potato as the basic food. - 171 - ~~~ANNEX I - 171 - Page 3 of 24 part of Africa from the first century B.C. 3/ In the same way as palm was used to produce malufo, the production of cereals also gave rise to a manufacturing process for obtaining flour. The first European chronicles also note the raising of beef cattle, sheep, and poultry, but animal traction and the weaving of wool were not practised. 4/ Except for the sowing uf the land, agricultural work was the responsibility of the women. Overall, available tools were extremely modest, although despit6 periods of drought or plagues, production was described as abundant. 6. Land 'elonged to the kingdom. On the death of a particular farmer, all hi' fixed property reverted to the King or traditional chiefs, who then decide on the future of the estate. Inheritance was therefore dependent on royal consent. The recorded testimonies agree that this policy prevented private wealth accumulation, so that the differences between rich and poor were determined for each generation by the political process. The peasants paid taxes to the village chief, who paid the provincial governor, who in turn paid the King; at each stage of the process the receiver kept for himself a certain percentage. Although some testimonies report that the process was quiet harmonious, other testimonies report that the collection of taxes almost always implied (principally in the backward regions) the resort to violence, provoking occasional revolts. 5/ 7. Long-distance trade was controlled by the King or by the governors of the provinces. Salt from the coast and raffia products form inland areas were two of the main products exchanged. Some Portuguese chronicles note that the zimbo (a small shell from Luanda island) served as currency. However there is no solid evidence of the use of zimbo for the acquisition of food; it is merely conjectured that the zimbo may have served, in certain cases, for long distance trade. Moreover, the zimbo together with other products and even slaves, seem to have been used to pay taxes. 61 The King is reported to have fixed the prices of 3I R.P.A., History of Angola, p. 34. "The blacksmith enjoyed considerable economic prestige ... he was frequently soothsayer, judge and witch- doctor. The fact of possession of metal weapons made certain tribes and peoples superior in offensive power over their neighbors who had only stone weapons. This explains how the Bantu, who arrived in the territory inhabited by the Koisan, settled there." 4/ Op.cit., Randles, p. 69-70. This and the following section are based on citations of H. de Bolonha. 5/ Cavazzi, cited in Randles, p. 76. 6/ Felner, History of the Kingdom of the-Congo, cited by Randles, Op.cit. - 172 - ANNEX I Page 4 of 24 products. 71 Indeed, the analysis of documentation from the various periods suggest that such prices remained relatively stable over four centuries. 8. The first attempt at white settlement occurred in 1575 with the arrival in Luanda of Paulo Dias de Novais who landed with the title of Idonatario* of the Angolan coast, a method of colonization ussd in Brazil. Novais and his men were more interested in finding the fabled (but norexistent) silver mines near Cambambe than in establishing permanent white settlements. They also brought the pursuit of slaves carried out among the Kikongo in the north to the area around Luanda inhabited by the Kimbundu. A period of wars and incursions followed, during which the rumors about the existence of silver mines in Cambambe proved to be false. 8/ This coincided with the Brazilian depression, and forced the colonial pon,er to search for a new economic use for the former ally. For about three hundred years, this new use was going to be the slave trade, which became the basis of all colonial economic activity until the mid 19th century. Since Angolan slaves were mostly sent to Brazil, a South Atlantic link emerged between these two Portuguese colonies. Throughout, the international market conditions were highly rewarding for the slave trade. 91 Although the Crown continued to pursue a moralizing policy and prohibited the inland slave trade, this prohibition was probably not effective since it was declared in 1620, shortly before the second cycle of the Brazilian sugar boom. 9. The Dutch conqueet of Brazil, in the middle of the seventeenth century, led Holland to seek control of the source of the slaves. The Dutch made strategic alliances with key Angolan leaders, like the famous Queen Nzinga, who helped them drive the Porti'guese from the coast in 1640. The Dutch did not accede to Queen Nzinga's admonition to eliminate all Portuguese in the area as they found the Portuguese to be useful middlemen in the slave trade. Luanda was reconquered in 1648 by a Brazilian fleet led by the Governor of Bahia. Once the area was recovered by the Por- tuguese, the Dutch were naturally forced to evacuate the important ;lave markets of Luanda and Benguela (founded in 1617), and other lesser ports in the north. The Sa expedition was almost entirely financed by Brazilian merchants and undertaken despite the clear policy of Dom Joao IV not to offend the Dutch in the difficult times following the Portuguese restora- tion. The King even threatened to punish Sa, who nevertheless was the initiator of a period of 12 years durin& which the governors of Luanda were 71 Proyat (1776) cited by Randles, Op.cit. 8/ D. Birmingham. Trade and Conflict in Angola. 1483-1790 (Oxford: Claredon Press, 19o6), p. 62. 9/ Beruard Founou: Cours sur le Developpment de l'Afrioue - Amorce du Sous- Developpments La Traite Nearire, queloues donnes chiffres (IDEP - Dakar, March, 1979) - 173 - AM= I Page 5 of 24 Brazilians. During that period, the Brazilian slave trade became so predominant that there was a local revolt against the arrival of one of the governors in 1670, when appointing a new governor from Portugal, the Crown granted a Charter to the Luanda settlers for their protection. 10. During the 'srazilian consulate, the conflict against Congo and Maramba f( the control of the inland trade continued. The African Kingdoms were defeated between 1665 and 1681 and both Kings accepted a truce, becoming vassals of the King of Portugal. However, the Portuguese continued not to control the slave trade, given that they had to pay a toll to the Imbangalas for the caravans coming from the Londi Erpire. For that reason, it was necessary to raturn to the regime of exchange, with prices dictated by the English and French competition in the north. By that time, however, the sugar boom was over and Portugal was going through a severe depression. The volume of the slave trade decreased accordingly. 11. There are no reliable records on the number of slaves exported from Angola and Congo during the period from 1500-1700. There is some agreement on the slave imports into Brazil which total 625,000. It is thought that about half came from Angola. However many slaves exported from Angola were declared, for tax purposes, as having Brazilian destination, although they would go to Spanish America instead. 10/ North European competition for African slaves picked up after 1650, due to the sugar boom in the Caribbean, after the Dutch had been expelled from Brazil. In the 18th century, the English and French controlled over 801 of the West African slave trade. Portugal, however, handled about two-thirds of the south Atlantic trade. In the period 1700-1850, almost 1.8 millior slaves were exported by Angola and Congo, whereas Brazil imported about 3.6 million. Almost all of Angola's exports went to Brazil, and taking mortality into account, the total number of slaves exported from Angola may have been as high as 2.5 million. The anticipation of the end of the slave trade led to enormous slave imports into Brazil in the late 1820's followed by a sharp drop in the early 1930s. However, the coffee related demand for labor maintained slave imports at a high level until the middle of the century. At the end of the period, there is little doubt that Angola and the Congo were severely depopulated as compared to the 16th century. Contrary to what seems to have occurred in West Africa, the increase in population brought by new food products like maize and manioc was not sufficient to offset he drain of the slave trade. 12. The colonial trade mechanisms lay basically in the relationship between the powerful coast merchants and the traditional chiefs inland or in the wandering activities of the hawkers, the small white, mixed race and black merchants, components of an incipient creole society. It is in this creole society that attempts at economic diversification were made several years before the abolition of slavery. In fact, in 1780 an active economic 10/ Jorge Braga de Macedo, Colonial Development of Angola: The Rice and Fall of a South Atlantic Link (mimeo, Yale University, March 1978). Estimates of the total number of slaves shipped from Angola during this period range from 750,000 to 1 million. - 174- ANNEX I Page 6 of 24 policy was pursued in Angola under the governorship of Sousa Coutinho, leading, for example, to attempts at producing iron in Nova-Oeiras, near Massangano. These efforts collapsed after Coutinho's departure but when the Brazilian demand picked up again, they were replaced by attempts to expand east and south. In 1830 the first coffee plantations appear in Massangano and Ambaca and cotton is grown in Golungo. At the same time, trading settlements like the Dondo, on the barks of the Cuanza, gained importance and Portuguese coming from Brazil settled in the Namibe desert where Mocamedes was founded. Most of Angolan foreign trade was with Brazil, the slaves being paid for by Brazilian cane liquor and gold. 13. Slavery was abolished in three phases, spanning over forty years. First, there was the prohibition of slave exports in 1836, followed by the abolition of slave trade under the Portuguese flag six years later; finally there was the abolition of slavery itself, in 1878. The prohibition was felt as a great loss and in the 1830's the idea of remaining associated to prosperous Brazil found many supporters in the local 'comprador' class. Nevertheless, the pro-Portuguese faction won and some efforts were made to develop a tropical export economy. Wax, ivory, palm oil, and peanut exports came to the fore after the slave trade subsided. In 1870, the rubber boom spread through the territory and, until 1915, this product was to be Angola's first export, with yearly averages on the order of 2,000 tons. 11/ C. SETTLEMENT AND CONTRACT LABOR Territorial Occupation 14. At the Berlin Conference in 1885, the principle of effective occupation was accepted over the Portuguese idea of priority of discovery. The partition of Africa imposed obliged Portugal to effectively occupy the territories it claimed to have discovered. This led to renewed interest in the exploration and the gpacificat4--; of the interior, and to a debate over the use of the colonie' Tfne debate was dramatized by an English Ultimatum in 1890 against the Portuguese idea of linking Angola and Mozambique by land (the so-called *pink map'). In Angola, Portugal had occupied Luanda and its immediate hinterland since 1575, and Benguela and surrounding districts since 1617. However, only in the 19th century can the Portuguese presence be considered staele in parts of the north (south of the Kingdom of Congo) or on the coast south of Benguela). In 1906, the settled area refers mostly to the zone of influence of the Benguela railway, built by the English with the purpose of transporting the minerals from Katanga and the Copperbelt and owned mostly by Tanganyika Concessions. The scant penetration and its pattern demonstrated the considerable dependence of the colony on external factors. Moreover, it suggested that after all these centuries, Portugal's colonial policy had been unable to ll/ Joao Maria Cerqueira d'Azevedo, Subsidios Para o Estudo Economico de Angola nos Ultimos Cem Anos (Luanda, 1950). -175 - ANNEX I Page 7 of 24 secure an administrative occupation comparable with that achieved by the other partners in the Berlin Conference. This explains the statement that the effective Portuguese presence was limited to 65 years in about 80' of Angola's territory. 12/ 15. At the end of the First World War, when various military occupa- tion campaigns were in progress, the international price of rubber fell. This trend continued and, in the 1930's, it forced the disappearance of rubber from the list of Angolan exports, where coffee already comes first in 1926. During this period of falling export prices, and national humiliation from the British ultimatum, some measures of colonial policy became relevant, such as th^ customs restrictions of 1892, which attempted to transform Angola into a closed market for Portuguese wines and textiles. Angola would thus be prohibited from manufacturing spirits which had become one of the main imports. In 1906, moreover, the native poll tax was introduced to alleviate the continuing crisis of the Angolan public finances and facilitate the recruitment of forced labor. 16. Simultaneously, important railway lines began to be built, linking the coast to the interior of t}.e country. In 1909, the Luanda-Halange Railway was inaugurated, crossing a large segment of the territory where the commercial exchanges and the plantations had acquired considerable economic importance. The construction of the Benguela Railway (C.F.B.) was initiated six years earlier, though only in the 1930's does it attain the objective of reaching the eastern frontier to serve as the outlet for mining production from the Belgian and British possessions. A third railway was to connect the port of Mocamedes to Lubango, where the Portuguese had established a colony since the end of the l9th century. International investment in Angola was reflected not only in its use as a corridor by the Benguela Railway, but also by investments in the mining sector, especially in the diamond area of Lunda, where an association of English, South African, Belgian and Portuguese interests gave rise to Diamang in 1921. In 1929, the production of diamonds had reached 250 thousand carats and employed over 6,000 Africans as well as 155 Europeans. Monetary Reform 17. The negative effects of the Great Depression on the prices of raw materials, three successive locust plagues in the 1930's and budget mismanagement contributed to the colony's economic difficulties. A monetary reform designed to stabilize the Angolan currency was introduced in 1926. This was the origin of the langolar' (which enjoyed fixed parity with the Portuguese escudo) as well as of the 'Junta da Moeda de Angola" (Angola Monetary Authority), a Government Department controlling the matters dealing with currency circulation as well as the management of the Monetary Reserve Fund. The Authority supplied the colony with the amount 12/ Gerald J. Bender, Angola Under the Portuguese- The Myth and The Reality, (Berkeley: University of California Press, 1978), Chapters 3 and 4. A map of the settled area in 1906 is reproduced in Randles, v'. cit. - 176 - ANNEK I Page 8 of 24 of 'angolares' to cover transfers from Portugal as well as Portuguese Escudos in Lisbon to cover transfers from Angola. The Bank of Angola began to issue angolares in 1928. 18. Despite this reform and the fact that the country's finances were kept under control until the end of the fifties, monetary difficulties plagued the colonial economy since monetary creation was directly linked to falling export revenues. The transfers of the settlers to the mother country and the slump in the export business opened a trade balance deficit in 1929, leading to the promulgation of the 'Acto Colonial' in 1931, where the social, economic and financial policies of Lisbon for the colonies took constitutional form. In the face of the persisting crisis, the Portuguese government imposed credit ceilings, set up an Exchange Fund and restricted the transfer of funds, requiring the surrender of 75Z of export receipts and a strict control of imports. These measures went against the objective of transforming Angola into a Portuguese settlement colony. Regarding authoriza-ion for transfer of profits, the restrictions were less severe, suggesting that the objective of attracting foreign capital was seen as instrumental in settling the territory. Government control, relaxed after the coffee boom in 1946 and again in 1963 when monetary integration of the so-called 'Escudo Zone" was introduced, was to return forty years later with the restriction on payments in 1971. In the meantime, the economic stabilization and recovery e; the colony was initiated with the reduction of imports, thus allowing a trade balance surplus during the Second World War. The Coffee Boom 19. During the war, Portugal increased its share of Angolan imports from 39Z to 65Z. At the same time, the occupation of land by the settlers increased rapidly, mostly in the north. Official statistics refer the share of the land controlled by the settlers as having increased from 12 to 40Z in two years, probably an exaggeration. One of the means used to spread control over land was to demarcate the estates to encompass African coffee production as 'natural growth'. Production in 1946 can be considered the result of land occupations at the beginning of the decade, since the coffee trees needed five years before the first harvest. In 1945, diamonds were the principal export in value terms, but in 1946 despite a 40X increase in diamond exports, coffee exports became the main export, reaching over 46,000 tons. Coffee was to dominate the list of products exported by Angola from 1946 to 1972. The rise of coffee prices in the world market after the start of the Korean war in 1950, stimulated coffee cultivation further, and turned out to be a powerful attraction for the immigration of settlers from Portugal. The white population increased from 44,000 in 1943 to 173,000 in 1960, which together with the 53,000 of mixed race represented 5Z cf the total population of 4.8 million. In any event, demand for skilled labor in Angola was so strong that, from the mid - fifties, it was no longer necessary to have a 'letter of appointment", generally issued by the employer in the colony and guaranteeing that the settler/immigrant could find work there. - 177 ~ ANNEX I Page 9 of 24 20. Besides coffee, whose share of total exports remained between one-third and one-half during the fifties, Angolan diamond and sisal exports normally made up the other half (Table 1). Lesser export products were sugar, cotton, manioc flour, fish-meal, dried fish and corn.After 1957, iron-ore began to be exported and in 1960, it already ranked as the fifth export. The forties were a decade of accelerated growth, due to the favorable trends in raw material prices, especially coffee and cotton. The subsequent stagnation starting in the Ksd-fifties coincides with the fall of raw material prices despite the increased quantities exported. During the same period, clG.e to one half of imports was accounted for by wines and spirits, textiles, freight vehicles, bulk and work iron, industrial machinery and equipment, and railway material (Table 2). 21. Angola's j:incipal customer in the fifties was the United States, with about one fourth of exports. The share of Portugal declined from about the same to less than one fifth, whereas the share of the United Kingdom and Holland rose from one quarter to one third during the same decade. Angola's main supplier was Portugal, with close to one half of the total, with the United Kingdom and Germany providing about one quarter of imports and the United States accounting for about lOX. The predominance of Portugal in Angola's imports, while exacerbated by the legislation reserving the Angolan market for certain Portuguese products, such as textiles and wines, was not as pronounced as in other European colonies, perhaps a reflection of the mother country's relative underdevelopment. 22. The rise in the value of coffee exports after 1946 helped the Angolan trade balance, which showed surpluses between 1950 and 1956, the largest one being recorded in 1953. From 1957 to 1960, the trade balance was in deficit, due to both the temporary fall in the price of some exports (coffee, sisal and maize), and a sustained growth in imports, mainly of textiles, wines and equipment. Nevertheless, the rate of growth of imports declined sharply over the period. This sharp drop in the pace of imports did not prevent a serious exchange crisis. Although some restrictions on the spending of foreign exchange earnings had been imposed already in 1955, more drastic restrictive measures were imposea " the Lisbon authorities in 1959. Residents were required to surrender to the territory's Exchange Fund approximately 90Z of foreign exchange earnings, besides adhering to a list of priorities for imports. This situation remained in force until 1963, when a new system of payments came into force in the 'Escudo Zone". Colonial Policy of the 'New State' 23. Integrating the colonies in a Portuguese economic union was one of the objectives of Salazar's 'New State". Indeed, the Colonial Act mentioned the principle of 'natural solidarity" between the metropolis and the colonies in article 34. This natural solidarity was said to be the foundation of the various economies, and stemmed from the "moral and political links' between the metropolis and the colonies. In the fifties, Portugal exchanged manufactures for tropical materials with its overseas territories. However, the level of development of Portugal and its - 178 - ANNEX I Page 10 of 24 colonies, implied a pattern of trade for metropolitan Portugal which made it unlikely that the 'Escudo Zone* would be able to exercise monopoly power in international trade, in line with the objective of collective self reliance desired by Salazar. 24. The Political Constitution of the Portuguese Republic was enacted in 1933, but it was not until 1951 that the philosophy of economic integra- tion with the colonies was fully accepted. Article 34 of the Colonial Act was thus replaced by article 158 of the Constitution, and a paragraph was added which clearly stated the objective of national integration: 'The economic reorganization of the overseas territories must integrate itself with the general economic organization of the Portuguese nation and participate through it in the world economy. To reach the aims stated in this article, the free circulation of products within the national territory should be facilitated by appropriate means, including the gradual reduction or elimination of tariff duties. The same principle will apply insofar as possible to the circulation of people and capital assets*. In the same statute, the colonies were renamed 'overseas provinces' - a traditional label which had been abandoned after the Republican revolution of 1910. 25. At the time, though, Portuguese attempts to establish an economic union with the colonies began to clash with the general European trend toward decolonization. Thus, in 1953, when countries like France and England were starting to prepare for the decolonization of their colonies, Salazar's government promulgated the Lei Organica do Ultramar (Overseas Territories Act), stating the objectives of Portuguese presence as 'exploiting the resources and the peoples' together with 'raising the living standards of the natives within the framework of social justice". 26. Steps were thus taken to facilitate trade between the various Portuguese customs territories, so as to move towards a customs union. A decree in March 1957 established free trade among the different overseas provinces as far as their domestic production was concerned. It was also decided that metropolitan imports from overseas would only pay 30 percent of the minimum tariff and some products -- such as tea, cattle, lumber, fruit and fish -- were free of duties. Moreover, imports from metropolitan Portugal were generally granted a 50 percent rate reduction in the tariff of the overseas provinces. Contract Labor and International Factor Mobility 27. It was therefore in the fifties that the suthorities in Lisbon created a framework that would justify their presence in African ter- ritories, despite the shifting international values and the increasing reluctance of international agencies to condone European colonialism. The number of home-based companies that began to invest in the colony increased, and many settlers whose prosperity derived directly or indirectly from the coffee boom started a considerable number of small and medium-sized companies. In all cases the availability of local labor was the basic condition, whether by the practice of low wages or by the resort to so-called contract labo;. ('contratados'). - 179 ANNEX I Page 3.1 of 24 28. Manufacturing industry, very incipient and geared to the local urban population, was based on the refining of sugar, treatment of tobacco, spinning and weaving, soap-making and fish derivatives (mainly fish-meal). The cement, beer and textile industries (those carrying largest weight in the manufacturing sector), the large agricultural companies and the import-export trade were tied to Portuguese capital, apart from the monopoly of all Angolan maritime freight, which was held by Portuguese companies. Foreign capital was dominant in the Benguela Railway, in the mining sector (mainly diamonds, copper, manganese and iron) and also in some agricultural companies such as Cotonang and SETA which had Belgian/Portuguese and American/Portuguese capital respectively. Industrial licensing continued to bar entry to the colonial economy for industries that might have generated competition with Portuguese exports into Angola. Hence he Angolan economy continued to be sustained by mining and agricultural activities. 29. The expansion of the plantations and the mines and the launching of work on infrastructure created a strong demand for labor, in part satisfied by the methods of recruitment already described. More specifically, recruiting officers provided forced labor in the diamond mines and plantations, while police raids provided the labor for public works, especially the opening of new roads. The vast majority of the contract labor was recruited among the farmers and herdsmen of the central provinces. Prior to the fifties, the number of forced workers is difficult to determine. Recruiters travelled all over the bush and managed to obtain the number of workers that had been promised to the companies. The methods ranged from capture for non-payment of taxes and for misdemeanors to the corruption of some tribal chiefs. An alternative form of recruitment was through the imprisonment, in the cities, of natives ("indigenas") who were not carrying a valid work permit. The use of forced labor was to diminish towards the end of the fifties, in the face of resistance from the popula- tion and the beginning of nationalist struggle and international pressures. In 1961, labor policy would be changed with the abolition of the Native Work Code (dating from 1928) and its substitution by the Rural Work Code, which defined working conditions in farms and mines. 30. In the fifties, the majority of the indigenous population was employed in agriculture, and the commercial network, which extended from the principal markets of Angola to the hinterland, was rooted in the purchase of agricultural products and the sale of imported products. The white population which lived from agriculture possessed large estates or resided in the settlements. As the name indicates, these were zones in which the settlers' families were fixed, developing the agro-liveatock potential of certain areas of the territory, which had been selected by the central government authorities. The regime of settlements was intended not only to provide an incentive for the immigration of Portuguese farmers, but also to rationalize and improve farming production, bearing in mind the requirements of the export markets and domestic consumption (Table 3). Ihe creation of new agricultural bodies - farm cooperatives - also began to be encouraged. Together with this associative movement, there was a growing intervention of the Provincial Agricultural Technical services, - 180 - AINE I Page 12 of 24 chiefly in the 'campaigns for the stabilization of indigenouslitinerant agriculture, with the aim of organizing indigenous rural life, creating a class of small, settled farmers, which both facilitated technical and social assistance and protected the soil against erosion'. 31. The prevailing social structure could be roughly described in terms of the fol7-wing categories: (a) a dominant class whose representa- tives remained in the colony for the term of their *service commissions', useful even as a means of promotion in metropolitan public life (in a sense this was an "absentee' class, because most of its members did not reside in Angola); (b) an upper middle class consisting of resident Europeans (and their descendants) who became owners of medium-sized companies or attained top positions in business or public administration, thus controlling the economic life of the colony; (c) a lower middle class with mixed racial characteristics, though whites predominated (at the end of the fifties, it included about half of the 172,000 white inhabitants, almost all the 50,000 'assimilatedO blacks and nearly all of the 53,000 mixed-race people); small proprietors, salaried employees and petty officials were included in this social layer, from which the forces behind the fight for independence were to emerge; (d) an urban proletariat, divided into two types according to races a large number of white workers having a standard of living comparable to part of the lower middle class, and employed rural workers, entirely black, and with lower wage levels than the urban proletariat; and (e)in the four or five cities, and chiefly in Luanda, a kind of 'lumpen-proletariat' became noticeable and included the majority of the black population who lived in the 'muceques" surrounding the capital, as well as white street vendors and under-unemployed workers. 32. Although official statistics on earnings by race are unavailable, it is estimated that in the mid-fifties. Europeans earned a daily wage between US$100 and US$120, Cape Verdeans between US$60 and US$80 and black urban workers between US$10 and US$20. The wage differential, reflecting the lack of skills of the Angolan black worker as well as race, was even greater with agricultural workers, for whom daily wages ranged from US$6 to US$10. These wage differentials and the poor working conditions in rural areas led to internal migrations to the cities (mainly Luanda). In the civil service, the wage categories were practically the same as in Portugal, though fringe benefits were sometimes higher. Social stratification roughly matched racial differences. Thus, as a rule, management posts (even at the middle level) were held by metropolitan Portuguese; subordinate positions were occupied by Angolan whites, those of mixed-race and unqualified metropolitan Portuguese whites, while office boys and unskilled workers were black. Economic Causes of Nationalist Rebellion 33. In 1960, in the north of the country, the coffee boom led many settlers to apply constant pressure to enlarge their plantations, disregarding the rights of the black owners. Simultaneously, deprivation and discontent in the countryside was attributed to the high prices charged by the traders in the hinterland and the low quality of the products they sold. While the resentment towards the bush traders was common in the - 181 - ANNEX Page 13 of 24 whole territory, native property rights were more respected in the rest of the country than in the coffee growing region. The occupation of land by settlers was practiced on a smaller scale in the center, and was almost non-existent in the extreme south of the country, where the herdsmen kept possession of their cattle. 34. Perhaps because of the coffee boom, but certainly as a reaction to the drastic increase in the Portuguese population (up 570Z from 1950 to 1960 in the coffee district of Uige), political/cultural movements espousing African nationalism grew during the early fifties. In 1952, 500 Angolan nationalists sent a petition to the United Nations requesting the end of Portuguese rule. In 1953 the Party for the United Fight. of Angolan Africans, was founded and became the MPLA in 1956. The presideitial elections of 1958 in metropolitan Portugal revealed also that a number of settlers were against Salazar, since the opposition candidate Delgado is thought to have won in Luanda. The campaign led to the arrest of 57 nationalists (the majority considered of mixed race) in December 1959. This political arrest set a course that would culminate in the beginning of an armed struggle for independence in February-March 1961, followed by a generalized insurrection in the northern countryside. 35. The lack of organization and technical means on tiae part of the northern rebels, their cruel treatment of the settlers and the prevailing tribalism obstructed the progress of the insurrection itself. The rebels controlled various agricultural and plantation communities in the then district of the Congo. causing damage to equipment and buildings, but leaving the coffee trees practically unscathed. The reaction to the rebels came with a vengeance: between 8,000 and 30,000 African Angolans were killed, the former being the Portuguese official figure and the latter being the one the United Nations committee accepted. According to the same source, by December 1961, another 150,000 inhabitants from the northern rural areas fled to the Republic of the Congo-Leopoldville. 36. The events of 1961 led to reformist measures, supported by a new reinforcement of the military presence in Angola. In particular, these reforms allowed the access of a greater number of Angolans to secondary education and intermediate posts in public administration as well as the changing of work relations, with the substitution of the Native Work Code by the Rural Work Code. The resorting to contract labor became more and more sporadic. This contributed towards the creation of a more modern labor market, despite the limitation derived from the racial composition of the unskilled labor force. Because a large share of immigrant labor from Portugal reached the colony with very limited skills, the increase in the labor inflow did not improve the skill mix as much as it changed the racial mix. D. Soldiers and Industrialization 37. The direct effects of the 1961 nationalist rebellions on produ- ctive capacity were rather small. Only the cultivation of cotton was seriously affected by the armed struggle, especially since its production area - the Cassange basin - was the scene of serious incidents in the - 182 - ANNEX I Page 14 of 24 aftermath of peasant protests. This led to a massive flight of workers, who were not replaced. In the coffee area, on the contrary, thousands of new workers were hired in the central plateau and sent north. The difference was probably due to the realization that the Angolan economy depended much more on the export of coffee than on cotton. As discussed in the following section, as a result of the events of 1961, the Lisbon authorities also abolished some laws and regulations, thus increasing the number of economic activities the colony could develop; they also improved wage conditions and created *rural markets', where the surpluses of the peasants could be sold in an organized fashion. These new policies, together with the rising Portuguese imaigration and military contingent stationed in the territory, created employment and increased overall purchasing power, laying the basis for the expansion of industrial activities as well as coffee production. 38. In the sixties, Angolan exports continued to be dominated by the coffee/diamond tandem. Sisal remained the third most important export product until 1968, when it was replaced by iron ore. Oil already ranked fourth in 1969 and second by 1971. In 1973, oil became the lead export, followed by coffee, diamonds and iron ore. Other products carrying weight in the export trade were sisal, cotton, sugar, manioc flour, fish products, timber, palm-oil and, after 1969, bananas. Angola's main customer in 1961 was still the US, but from the following year until 1972, it was replaced by Portugal, which bought about one third of Angola's exports, both agricultural products and minerals. Portugal was not always the final destination though, since diamonds were re-exported to the United Kingdom. In 1973, the US would again top the list of countries purchasing from Angola (with 28X), mostly due to oil and coffee exports. Portugal accounted for about one quarter of exports, followed by Canada, Japan, and major European countries. 39. From 1962 onward, the Angolan economy started to recover from the 1957-60 exchange crisis as well as from the temporary fall in the prices of its exports. A comparison of international price indices for coffee and the price of Angolan coffee shows that the years 1963/64 and 1972 were the only ones in which the international price index rose more than the Angolan index. Despite fluctuations in the relative price of Argolan coffee, export earnings grew rapidly and the balance once again recorded a surplus. This was to continue until the end of the colonial period (with the exception of the years 1967 and 1968, as a result of a strong rise in imports of equipment and motor vehicles). The strength of the external balance is evident in the data presented in Tables 6 and 7 below. 40. Unlike the early coffee cycle, during which the structure of merchandise trade seemed to change more on the export than on the import side, a change was noticeable in the composition of imported goods after 1965. Growing imports of transport equipment, industrial and farming machinery and equipment, raw and worked iron indicated the effort to equip the light manufacturing and extractive industries as well as the creation of infrastructure, such as roads and other forms of communication. The rising military contingent may also have helped step up the importation of Portuguese food and drink products, as well as textiles. - 183 - ANNEX I Page 15 of 24 41. Regarding the supplier countries, Portugal remained at the top of the list even though its share of Angola's imports gradually diminished from 44Z in 1961 to 26Z in 1973. In 1971, Portugal's share was still larger than the combined share of the next three suppliers, Germany, the US and the UK, with about 102 each. Despite the possible demand bias for Portuguese consumer goods, a pattern similar to the one which followed the protectionist regime of 1892 can be observed in the structure of trade during the sixties. Despite the increase in volume, Portugal's share was decreasing significantly. A New Colonial Economic Policy 42. As mentioned above, after the events of February 1961, the Lisbon authorities felt the need to reinforce the Portuguese presence in the territory. To this end, the Portuguese government adopted a series of measures which stimulated export-led economic development and industrialization in Angola. This was also the policy that the Portuguese government was pursuing for the development of the mother country, in the framework of the European Free Trade Association (EFTA), of which Portugal was a founding member since 1960. At that time, Portugal's accession to the General Agreement on Tariffs and Trade (GATT) required the creation of an additional free trade area with the overseas territories, in such a way as to avoid the application of the most favored nation clause to the trade between GATT partners and the Portuguese colonies. 43. A significant step was taken by a Decree in November 1961 which abolished all barriers to the free circulation of domestic products within the various territories of the nation. As general economic conditions warranted, capital account liberalization was also to be attained. The abolition of customs duties was to be implemented progressively, in accordance with the level of imports. Existing quantitative restrictions, or the introduction of new ones were to be justified on grounds of facilitating the adaptation of economic activities to the new conditions of competition or in situations where a particular sector was experiencing difficulties which threatened the economic situation of a region and no other measures could be taken. This Decree also took measures to promote the elimination of disparities between legal and administrative systems, which hindered inter-regional trade, as well as the improvement of transportation. Finally, the Decree contemplated the liberalization of exchange controls between territories. 44. Even from a strictly commercial viewpoint, Portuguese economic integration had much weaker effects than the integration of the metropolitan area with Europe, including both the European Free Trade Association to which Portugal belonged and the European Community, with which it signed a free trade agreement in 1972. In the fifties, the share of the overseas territories in metropolitan Portugal's imports declined while the corresponding share increased for exports. In the sixties, however, both shares declined significantly. In 1972, the share of Europe in metropolitan Portugal's trade reached 56Z for imports and 62Z for exports, up from 40? in 1954, while the corresponding figures for shares of - 184 - Ah=X I Page 16 of 24 all the 'overseas provinces' were 10 (down from 17t in 1954) and 15Z (down from 25? in 1954). The introduction in 1961 of a free trade area with the overseas territories was therefore not as important economically as it was politically. 45. Accordingly, an exchange rate union was set up in 1963, which was maintained until 1971. The new system of payments, known as the Escudo Zone, started from the principle that there would be no shortage of foreign excb.nge in any of the component parts of the system.If this should occur, the Monetary Fund of the Escudo Zone would intervene, granting credit to the Exchange Fund of the colonial territory in deficit. For example, an Angolan importer who purchased merchandise from Portugal would have to pay his debt in 'Angolan' escudos to the Exchange Fund which was managed by the Bank of Angola, which would then automatically effect the transfer, in Portuguese escudos, to the creditor in Portugal. 46. The improvement in the foreign exchange situation thus allowed the liberalization of payments outside Angola. The system of designating priorities for transfers, in force since 1955, was abolished. The surplus in the overseas territories' external piyments contributed to the overall surplus of the "Escudo Zone' in the per.od. Despite the emergence of a growing trade deficit after 1964, invisible receipts allowed a surplus on the current account throughout the period. Similarly, despite a deficit on capital account between 1963 and 1968, the overseas territories contributed to the accumulation of reserves at the Bank of Portugal, a situation not unlike the Franc Zone during the same period. 47. An 'Investment Code' was also enacted in April 1965 to strongly encourage the flow of foreign capital to Angola. This Code - which also coincided with a greater opening of the Portuguese economy to foreign investment from other countries in the Organization of Economic Cooperation and Development (OECD) - was seen as a signal for the start of the 'race for the progress of Angola". The Lisbon authorities wanted to be able to count on the military, political and economic support of the major OECD countries. Therefore, they could no longer keep exclusive control of such widespread natural resources; it was necessary to share them. Later in 1965 scheme of 'new industrial licensing' was revoked, cancelling the previous legislation that prohibited the setting up of new industries in the colonies, especially textiles. Coffee-Led Industrialization 48. These new policies contributed to the year 1965 being a turning point in the growth of the Angolan economy. From a level of about 17? of gross domestic product in the early sixties, the industrial sector (including extractive and construction industries as well as manufac- turing proper) reached 38? of GDP in 1970. Metropolitan and foreign capital were concentrated in both the more capital-intensive extractive industries suci as diamonds, oil, iron ore, petroleum derivatives, cement and the more labor-intensive activities of the agricultu=al sector, such as coffee, cotton, sisal, sugar, tobacco. In addition to these activities, which in one way or another used natural resources, several manufacturing - 185 - AMNE I Page 17 of 24 activities were created in the sixties, particularly during the second half of the decade, including chemical products, paper, glass, electric cables, paints and metal containers. 49. Industry was very dependent on Portugal from where a high percentage of raw materials and semi-finished products came. The Portuguese authorities encouraged the process by exempting those materials and products from import duties. There were also tax exemptions granted by the Overseas Minister for the new industries to be created in the colony. These exemptions and tax incentives allowed the development of some industrial zones, centered in the Luanda area and to a lesser extent in the area of Lobito and Benguela. Moreover, in 1971, pressure from local industry forced Lisbon to adopt protective customs measures against competitive imports. 50. The sectors of activity that dominated local industry were: food and beverages, textiles and tobacco, contributing (in the 1966-71 period) an average of about 54Z to the global value of sector output (Table 5). The food and drink industries alone accounted for 44Z of total output. Overall manufacturing industry grew, between 1962 and 1967, at an average annual rate of 15Z, and, from 1968 until independence, at a rate of 202. This growth reflects the effects of economic measures such as the Investment Code, new Rules of Industrial Licensing, dismantling of Customs tariffs, te- exemptions, and investinent in transport infrastructure, adopted in nae mid-sixties and incorporated in the Interim Development Plan (1965-67) and the Third Development Plan (l 68-73). 51. Although Angola had one of largest industrial sectors south of the Sahara, the participation of the manufacturing sector in exp(rts from Angola was weak. As shown in Table 5, the average percentage of gross industrial production exported was about 20Z during the 1966-71 period, the rest being absorbed by the domestic market. By 1973, the food and beverage industries represented about 62 of the total export value, the chemical industry about 0,42 and textiles about 62. With respect to the textile industry, more than half of the value of these exports was accounted for by cotton wool for metropolitan Portugal, and the remainder by fabrics and other textile articles exported to Zaire and Sao Tome and Principe, according to the Bank of Angola (1973 Report). The local textile industry (which had strong competition from Macao) concentrated basically on seed-removal or ginning and pressing of cotton, spinning, weaving and finishing of cotton, the shredding of sisal and rope-making. Malange was the main center of the cotton textile industry, with the factories of Cotonang and the city's Agricultural Cooperative. 52. In addition to the increased industrial activity, large- scale agricultural and other projects were also implemented in the sixties and early seventies. The Rural Extension Missions were created in 1971, to co-ordinate projects for the development of zones with agricultural potential,in much the same way as the settlements created in the fifties. Besides the promotion of agro-livestock activity, these projects were elso intended to improve the living conditions of the peasant population. In the Lunda district, the activities of Diamang became quite significart in - 186 - ANNEX I Page 18 of 24 the late sixties, when production reached 2 million carats. About 20,000 people were employed by the company, which also had a dominant role in providing the region with infrastructure. Colonial Finances 53. Angola had its own budget, containing all of the revenues and expenditures authorized by the Central Government. Expenditures had to be fully covered by the revenues obtained from the colony's resources. From the thirties onward, Angola's general budget always showed an overall surplus. However, after 1961, the effort required by the colonial war, which was not entirely supported by the extraordinary tax for the defense of Angola, caused the budget surplus to drop, and even required borrowing at times. The budget structure, which did not change much from 1930 through 1973, included an "ordinary budget' and an 'extraordinary' budget. Ordinary expenditures included civil service and its management. Revenue sources included direct and indirect taxes, taxes on industries subject to special tax schemes as well as taxes on other activities. Until 1973, the direct taxes were the most important revenue source, but after that year the taxation of industries subject to a special scheme (e.g., oil products) took the lead because of the large increase in oil production. Taxes accounted for half of revenues and state property provided about one quarter. T.he extraordinary budget included development expenditures on social and economic infrastructure. Up to the end of the fifties, these expenditures were mostly borne by Angola itself in view of the large surplus available. From the sixties on, extraordinary expenditures were mostly financed by loans provided by Portugal aa well as shares of Diamang profits, sales of bonds and proceeds from a tax on extraordinary rents (imposto de sobrevalorizacoes). Money and Banking 54. The rapid growth of the Angolan economy was facilitated by the liberalized payments system. Even though the Escudo Zone seemed beneficial to the metropolis (where most of Angolan savings were transferred through an increase of imports and over-invoicing as well as remittances from the settlers) it turned out to generate large foreign exchange payments on Angola's bEhalf, so that it accumulated liabilities to the Monetary Fund. Indeed, the liberalized system of payments was to be abolished again when the financial system was seriously strained by an extraordinary volume of delayed transfers. In November 1971, Lisbon once again introduced limita- tions with a view to 'stopping the accumulation of the so-called 'delayed transfers' from the province to the metropolis, and trying to create the conditions required for the regularization of those 'delayed transfers' (see Table 6 on the balance of payments). 55. The genezal principles in the decree which re-imposed exchange restrictions were the following: a) the limitation of transfers from each of the overseas provinces abroad (including other national territories as well as foreign countries) to the extent of the cover obtained by the same province; and b) the channelling to the official market means of payment which fed the parallel foreign exchange markets, to prevent unofficial - 187- ANN-I Page 19 of 24 deal_ngs in escudos or in foreign currency. Thus, the colonies were subject to prior registration of imports, exports and re-exports, as weil as to 'special and prior' authorization of current invisible transactions. and the import and export of capital. At the time, there was concern in Portuguese government circles about the effects of the limits imposed on imports (especially Angolan and Mozambiquan) on Portuguese exports, assuming that such limitations 'of merchandise from the metropolis are reduced to the barest minimum for the realization of that objective". The list of priorities for the spending of foreign exchange favored the import of equipment and raw materials to the detriment of other current consumer goods. In other words, the exchange system which came into force in 1972 reinforced the Code of Investment of 1965, trying to turn it into a true instrument of development for Angola, based on the transformation of agricultural and mining products. 56. Accelerated growth dating from the early sixties was accompanied by a strong money supply increase (about 8432 from 1960 to 1973). During that period, the share of currency fell from 28Z in 1960 to 6Z in 1973. The high level of banking time deposits are shown in Table 7, as an indicator of the financial development experienced by Angola. Another indicator of financial development, the income velocity of money, doubled in the ten years from 1960 to 1969. By then, the growth of money supply at a rate higher than the GDP played a role in the appearance of a parallel exchange market where the Portuguese escudo brought 10 to 202 more than the official exchange rate. Moreover, a certain inflexibility of the system of payments between the two countries in force since 1963 raised difficulties in obtaining Portuguese escudos in time to meet the growing demand due to the acceleration of economic growth. 57. Another indication of its financial development is the con- siderable banking network Angola acquired. The commercial banks (including the Bank of Angola founded in 1926) were connected to the metropolis (Banco Comercial de Angola, a branch of Banco Portuges do Atlantico; Banco de Credito Comercial e Indu.-trial, a branch of Banco Borges & Irmao; the branch of Banco Pinto & Sotto Mayor of Lisbon) or to foreign banks (Banco Totta Standard de Angola an association of Banco Totta and Standard Bank of England; as well as Banco Inter-unido an association of Banco Espirito Santo and The First National City Bank). In addition to the commercial banks, special investment banks also operated in Angola, mostly engaged in credit operations covering real estate, industry, agriculture and cattle- breeding. These included Instituto de Credito de Angola, Banco de Fomento Nacional, and Caixa de Credito Agropecuario. The Origins and Role of the Oil Enclave 58. Although oil only becomes the main export product of Angola during the last two years of the colonial period, drilling and searching had begun much earlier. In 1952, the Ministry of Overseas Colonies had been authori- zed to sign a mining concession with Companhia de Combustiveis do Lobito (Carbonang). Carbonang established the Missao de Pesquisas de Petroleo (Petrofina) which began working in a coastal region between the rivers Kwanza and Zaire. In 1955, oil was discovered in a region near Luanda - 188 - ANNU Page 20 of 24 called Benfica. Oil extraction began in 1958, in small quantities. Only after 1968 did oil become noticeable in the list of Angolan exports, with 0.12 of the total value of exports. In the following years, though, oil exports increased, rapidly becoming one of the key exported products.In 1973, oil overtook coffee as Angola's first export product and by 1974,oil export values were higher than the combined total of coffee, diamonds, iron, sisal, cotton, fish, fishmeal and corn. As of the end of 1973, there were four companies with a concession for search and exploration, the most important being the Cabinda Gulf Oil Company (CABGOC), a subsidiary of Gulf-Oil. A Fragile Pattern of Growth 59. Despite the limitations of the data, the output figures reported in Table 8 show a pattern of accelerated output growth in the mid to late sixties, which becomes increasingly inflationary in the last years of the colonlial period. The effect of the government budget on the one hand and external constraints on the other, on this pattern of growth are illustrated in Table 8. Throughout the period, private savings exceed private investment, the difference fluctuating from 22 to 7Z. This is consistent with acceleration of growth in the mid to late sixties, when the new colonial policy began to have a positive effect on industrialization, and induced greater investment opportunities. Indeed, the decomposition of this difference between public dissaving and foreign investment confirms that growth accelerated in the late sixties, inducing an overall budget deficit of 52 of GDP in 1971, whereas in the late fifties and early sixties the deficit was less than 2Z. 60. To understand Angolan development in the late colonial period, it is important to examine relative price movements, as suggested by the ratio of output deflators in Portugal and the United States and in Angola, given that the nominal effective Gxchange rate measured with equal shares for the two countries remained fixed until 1971, and only registered a slight revaluation in 1971 and 1973. A real devaluation of about 62 over the second half of the fifties is evident, exactly offset by a real revaluation over the second half of the sixties, and stability of the real exchange rate in between. In the early seventies, however, there was a change in the macroeconomic balance, with the savings/investment gap disappearing in 1973, and a real revaluation of 202 developing between 1971 and 1973, and of 252 between 1973 and 1975. It is clear that the extraordinary improvement in the terms of trade may make Angola in the early seventies another example of the so-called Dutch disease, observed in many developing coumtries, whereby manufacturing is discouraged and loaes competitiveness due to the export of mineral resources. 61. The real appreciation of the Angolan currency also appears to be a strong reason to doubt that the coffee-led industrialization could ever have turned colonial Angola into a newly-industrializing country, even without strong protective barriers. The inconme elasticity of imports was originally close to 2, but it was negative in 1972 - a consequence of the change in the payments regime - and fell below 1 in 1973. A comparison of receipts from trade taxes and imports does not suggest an increase in - 189 - I Page 21 of 24 protection, but the elasticity remains about 1.5, suggesting that the level might be considerable in light of the free-trade objective. In any event, given the available evidence, the demise of coffee-led industrialization was due largely to oil and exchange rate appreciation rather than changes in tariffs, given that the changes in payments regime implied stricter exchange controls. 62. The oil boom thus obscured the fragility of the industrialization pattern brought about by the combination of primary product exports and a rising urban population, increasinglv made up of soldiers, as well as a growing group of settlers and mixed groups, with no political allegiance to colonial rule. Put another way, the policies of 1965 and 1971 did not prevent a duality in Angolan economic development. The peasantry, and to a much lesser degree, the urban worker may have in fact suffered from perverse changes in the distribution of income during the process. Gross domestic product per capita in 1972 was about $200. While this places Angola among the highest levels in sub-Saharan Africa, it masks large discrepancies between the income of the white and 'assimilado' population and the remaining 90Z. Per capita income of the black population was less than 10? of average white and 'assimilado' incomes (though there were significant variations in the latter category). In addition to this perverse pattern of income distribution, education and health standards did not significantly differ from the ones observed in African countries with lower incomes per head. This suggests that, whatever the effect of colonial rule in bringing Angola to the middle-income level in the early seventies, it did not bring higher social welfare at the time of independence (See Table 9 for some Angolun social indicators). Moreover, even at similar income levels, there were qualitative differences between the social services available to the African population relative to the Portuguese soldiers or even the population of Portuguese descent. E. ECONOMY AND SOCIETY AT INDEPENDENCE 63. The revolution of April 1974 in Portugal led to a decisive political opening in all territories under Portuguese administration. Though at the time the war was not very intense in Angola, the Portuguese revolution did not put an immediate end to it. There were three cease-fire agreements, the last of which was signed about the middle of the year. Meanwhile, several incidents occurred in Luanda, giving rise to racial confrontations. The major economic consequences of these incidents were a strike explosion, especially a strike on the part of the stevedores and other port workers, and the total destruction of shops established in the African residential area ('muceque"). The port strike was important for two reasons. In view of the strategic importance of seaports in the Angolan economy, the interruption of port activities was reflected in almost all other economic activities. Secondly, the hardship involved in loading and unloading ships made the workers more aware of how low the pay had become, given the change in political environment. Another crucial link of the colonial economy with the rest of the world was cut when the banks also went on strike. There, the great majority of clerks was white or mixed; nevertheless, the strike found a virtually complete acceptance. - 190 - ANNEX I Page 22 of 24 64. The destruction of the muceque shops also had a major economic and social impact. These shops were owned by Portuguese traders who controlled almost all the distribution ef staples and other essential commodities. The muceque merchants were a symbol of colonial oppression, which was reinforced every day since the shops made evident how weak the purchasing power of black families was. Customers also found falsified products, weighing and measuring frauds as well as threatening and racist behavior. Among whites, the muceque business was seen as the result either of the lack of skill or capital to set up another commercial activity. The muceque merchants and, to a lesser extent, the traders in the bush, were led to exploit all the opportunities for quick profit at the expense of the native population, so as to get enough capital to start a more comfortable - so called *rich*-business. The resentment against these merchants made them a logical target for anti-colonial feelings among the population. 65. The bush merchants were not only devoted to sell but also to buy products from peasants and re-sell them to wholesalers. These dealers went out of business later than the muceque dealers did, and rarely as a result of direct violence upon them. Most fled when overall village safety was at stake or the threat of agitation became intense. When these two groups of merchants vanished, a source of social tension and occasional racial conflict ended but a serious problem came to the fore: the supply and distribution channels vanished and no alternative arrangements were in place. The lack of internal trade activity, together with the existing military and political conditions created an atmospher a) If the colonial economy was first hit by the deterioration of foreign trade and commercial and financial activities, the entire colonial society quickly collapsed after civil rights were restored for the whole population. People responded in a way that seemed to reflect the importance of their roots in the countrys most of the adults made plans to leave while many of their grown children born in Angola, mixed as well as white, initially chose to stay. Those plans notwithstanding, a massive exodus of the Portuguese population began. 66. Beginning in the last quarter of 1974, over-invoiced goods began to be supplied against import contracts, as a way to smuggle out foreign currency, further reducing the quantity of goods imported, since prices had also increased sharply in the wake of the oil crisis. The production stoppages also explain why machinery imports fell by a much greater percentage than imports of consumer goods. A good example is the pattern of automobile imports, which were subject to quantitative restrictions. In 1974, the overall figures fell by 50? relative to 1970, and the share of commercial vehicles dropped from 38Z in 1970 to 102 during the same period. Value figures reported in the 1974 Report of the Bank of Angola show a 15S increase in 1971, no change in 1972/73 and a drop of 50? in 1974. For export trade, due to a terms of trade improvement of about 75Z implied by the oil price rises, quantities were slightly reduced but values almost doubled. 67. In contrast to most of the colonial period, on the eve of independence, the financial situation of the country was excellent. However, the economy was quickly disintegrating, with the collapse of - 191- ANNIX I Page 23 of 24 distribution networks and the subsequent fall in production in 1975. Against the background of declines of 30Z in economic activity and even higher figures for exports, small industry geared to the domestic market was temporarily stimulated by wage increases in 1974. According to the booklet of official statistics for 1974, food industries increased output by 25Z and textile industries increased by over 40Z. 68. After the mid-1974 cease-fire agreements with the Portuguese, an intense social and political upheaval, soon to have significant military consequences, was felt throughout the country, but mostly in Luanda. At year-end, the Alvor agreement, between the three parties recognized by the colonial authority, namely the Popular Movement for the Liberation of Angola (HPLA), the National Front for the Liberation of Angola (FNLA) and the National Union for the Total Independence of Angola (UNITA) established the date of independence as November 11th, 1975 and determined the conditions for the transition government. It was formed by an equal number of Ministers from each one of the three Movements as well as from the Por- tuguese Government. A triumvirate performed the functions of Prime Minister according to a monthly rotation. The Portuguese Army as well as armed people attached to the three Movements formed the Mixed Armed Force of Angola. 69. Only two months after the transition government was sworn in, though, new encounters took place between the MPLA and FNLA, simultaneously with widespread armed robbery in the muceques, leading the urban population to feel more and more insecure. By the middle of 1975, when the transition government was almost paralysed, a reconciliation attempt took place in Nakuru, Kenya, resulting in a protocol signed by the three different parties. However, this protocol did not last longer than a few weeks and was followed by open war between the liberation movements, this time involving UNITA as well. In August 1975, the Angolan territory was divided into three zones, with Luanda held by the MPLA and the Portuguese Army. 70. A short while after the transition government began, the Minister of the Economy, who had been selected by the Portuguese, submitted an Economic Programm for accelerated growth based on the existing infrastruc- ture and on the production levels obtained before the Revolution. A reduction in foreign dependence and a better distribution of resources were other objectives included in the development policy recommended by the transition government. To follow this program, Angola had to keep growth rates equal to those of the past years and correct some of the previous distortions, especially in income distribution. This required respect for the Alvor Agreement, no resort to violence and the possibility of carrying out elections and forming a stable government. At the same time, it was necessary that most of the technical and professional labor force remain in Angola. As none of those conditions were met, the program did not begin to be implemented. 71. When shortly after the cease-fire of Nakuru, violence resumed, there was a sudden change in the attitude of the Portuguese. Very quickly, nearly all farms were abandoned not only by the farmers themselves but also by workers who had no pay and feared ztilitary attacks. The same - 192 - ANNEX I Page 24 of 24 applied to most of the small and middle-sized industries, while commercial activity in towns was mostly confined to drawing down inventories. With the interruption in supplies, and the massive flight of Portuguese owners and technicians, together with the paralysis of most banks, Angolan industry suffered a devastating blow from which it has not yet recovered. The same characteristics manifested themselves in construction activity, which was already in recession. The exodus of the Portuguese, both from public and private management and other technical activities, created an enormous vacuum, since an insignificant number of Angolans had the chance to get proper skills, and some of those who did also left the country. 72. As the colonial administration ceased to function without being replaced by any of the liberation movements, taxes were not collected and maintenance of infrastructure ceased. Large businesses (commercial, agricultural or mining) kept their local management but limited their activities as much as possible to a mere presence. For security reasons, even oil production was suspended for a few months. As far as transporta- tion was concerned, the Luanda airport and the seaports operated under top priority of evacuating the Portuguese people and their belongings. It is estimated that Angola lost by destruction or smuggling 75Z of its stock of trucks, which was about 27,000 vehicles. Finally as a result of the country's division into three warring zones, any regular long distance communications, including postal services, were suspended. 73. When Luanda was taken by the MPLA, the FNLA and UNITA ministers took cover in their own zones of influence. The first foreign troops entered the country and on November 11, 1975, which had been designated as Independence Day, the colonial period ended and all the conditions for a protracted ecotomic and social crisis were in place. - 193 - BIBLIOGRAPHY REPORTS Anuarios Estatisticos de Angola (1952 to 1965) Estimativas Abreviadas do Rendimento Nacional de Angola do Ultramar Portugues, Lisbon: Missao de Estudo do Rendimento Nacional do Ultramar Portugues (MERNC), 1969 Infornmacao Estatistica, Instituto Nacional de Estatistica de Angola (1970 to 1974) Planos do Fomanto de Angola (lo, 2o, 3O e 4o) Relatorio e Contas do Banco de Angola (1953 to 1974) Relatorios da Secretaria Provincial de Economia, 1962-68 and 1972, Direccao Provincial dos Servicos de Economia de Angola BOOKS AND ARTICLES Andrade, Mario and Olivier, Marc., La Guerre en Angola, Paris: Ed.F. Maspero - Cahiers libres, 1971 Bender, Gerald J., Angola Under the Portugese - The Myth and the Reality, (Berkeley: University of California Press, 1978) Bhagavan, M.R., Angola's Political Economy 1875-85 (Uppsala, Scandinavian Institute of African Studies, 1986) Bhagavan, M.R., Prospects for Socialist Industrialization, Uppsala, Scandianivan Institute of African Studies, 1986) Birmingham, D., Trade and Conflict in Angola (1483-1790). Oxford: Clarendon Press, 1966 Birmingham, D. and Martin, P.M. History of Central Africa, London: Longman, 1983 Carreira, Antonio, Angola, da escravantana ao trabalho livro, Lisbon: Ed. Arcadia, 1973 Castro, Armando, 0 Sistema Colonial Portugues em Africa, Lisbon: Ed. Caminho, 1978 Cerqueira d'Azevendo, Joao Maria, Subsidios para o Estado Economico de Angola nos Ultimos Com Anos, Luanda, 1950 Comte, Phillippe, L'abolition du travail force en Afrigue Portugaise, policopiado, s/d Costa Oliveira, Jose Eduardo, Servindo o Futuro de Angola, Luanda, 1972 -194- Delgado, Ralph, Historia de Angola, Lisbon: Ed. do Banco de Angola Dilolowa, Carlos R., Contribuicao a Historia Economica de Angola, Luanda: I.N.A., 1978 Duffy, James, A Question of Slaves, Oxford: Clarendon Press, 1966 Estermann, Carlos, Etnografia de Angola (Sudoests e Centro), Lisbont Instituto de Investigacao Cientifica Tropical (I.I.C.T.) Ferreira, Eduardo de Sousa, Aspectos do Colonialismo Portugues, Lisbon: Soara Nova, 1974 Founou, Bernard, Cours sur le Developpement de l'Afrigue - Amorce du Sous-developpment: La Traite Negriere, guelques donnees chiffrees, Institut Africain de Developpement Economique et de Planification (IADEP) - Dakar, March 1979 Goncalves, Antonio C. Kongo - Le Lignage contre l'Etat, I.I.C.T. e Univ. de Evora, 1985 Goncalvos, Jose, Le Developpment du Capitalisme Colonial en Angola, IADEP, Dakar, 1973 Goncalvos, Jose, Sobre a Economia Colonial de Angola, draft, Centro de Socio-Economia (CSE)/I.I.C.T., Lisbon, November 1987 Guerra, H., Angola, Estrutura Economica e Classes Sociais, Luanda, 1974 Guimaraos, A., Uma Correnie do Colonialismo Portugues, Livros Horizonte, 1984 Henderson, Lawrence W., Angola: Five Centuries of Conflict (Ithaca, Cornell University Press, 1979) Historia de Angola, Rep. Popular de Angola, mimeo, s/d Hodges, Tony, Angola to the 1990s: The Potential for Recovery (London, The Economist Intelligence Unit, 1987) Kaplan, Irving (ed.), Angola: A Country Study (Washington, American University Araa Handbook Series, 1979) Kitchen, Helen (ed.), Angola, Mozambique and the West (New York, Praeger, 1987) Klein, Herbert, "The Portugese Slave Trade from Angola in the 18th Century", Journal of Economic History, Dec. 1972 Macedo, Jorge Braga de, Notas sobre a Historia Economica de Angola, mimeo, Luanda: CCFAA, 1975 Macedo, Jorge Braga de, Colonial Development of Angola: The rise and fall of a South Atlantic link?, mimeo, Yale University, March 1978 - 195 - Macedo, Jorge Braga de; Cristina Corado and Manuel Porto, the timina and sequencing of trade liberalization episodos in Portugal, draft, Country Policy Department, The World Bank Macedo, Jorge Braga de, "Collective Pegging to a Single Currency: The West African Monetary Union" in Economic Adjustment and Exchange Rates in Developing Countries, ed. by Sebastian Edwards and Liaquat Ahamed, NBER, the University Chicago Press, 1986 Macedo, Jorge Braga de. Interpendencia Economica, Sistema Monetario Internacional e Integracao Portugeuesa, ed. Banco de Fomento Nacional, Lisbon, 1977 Macedo, Jose, Autonomia de Angola, Lisbon, 1910 Marcum, John, The Angolan Revolution: The Anatomy of an Explosion (1950-62), Cambridge, MA: MIT Press, 1969) and The Angolan Revolution: Volume Two - Exile Politics and Guerilla Warfare (1962-76), (Cambridge, MA: MIT Press, 1978) Martin, Phyllis, M., Historical Dictionary of Angola, Metuchen, N.J., The Scarecrow Press Inc., 1980 Memoria a respeito dos escravos, Communicacao em 1973, reeditada por Cadernos "Homen e Sociedade". Porto: Pub. Escorpiao, 1977 Mendes, A., 0 trabalho assalariado em Angola, Lisbon: I.S.C.S.P.U., 1966 Randless, W.G.L., L'Ancien Royaume du Kongo des origines a la fin du XIX siecle, Paris: Ed. Mouton, 1968 Redianha, Jose, Distribuicao, Etuica de Angola, Luanda: Centro de Informacao e Turismo de Angola (C.I.T.A.), 1971 Santos, Fernando, B., Angola na hora dramatica da descolonizacao, Lisbon: Ed. Prolo, 1975 Smith, Cervase C., The Third Portugese Empire (1825-1975). a Study in Economic Imperialism, Manchester University, 1986 Somerville, K., Angola, Politics, Economics and Society, London: Frances Pinter; Colorado: Lynne Rienner Inc., 1968 - 196 - ANNEX II Page 1 of 3 THE ANGOLAN ECONOMY IN COMPARATIVE PERSPECTIVE 1. This Annex presents some comparisons between the social and economic conditions of Angola and those of other countries in Sub-Saharan Africa. Such comparisons are based on statistical data which are of especially poor quality and should therefore be viewed cautiously. 1/ Nevertheless, they can provide a useful general portrait of Angola's economic and social development in comparative perspective. 2. Social conditions in Angola are among the lower range of those found in low-income countries, where low-income countries are defined as those with 1986 per capita gross national products of US$425 or less. In Angola, life expectancy at birth in 1986 was 44 years, compared to an average of 67 in low income countries and an average of 50 in Sub-Saharan countries. Related social indicators also place Angola in the lower range of low-income countries. It is estimated that in 1985, 160 infants out of 1,000 born in Angola died before reaching one year of age. This compares with an average of 69 for low-income countries and an average of 113 for Sub-Saharan Africa. 3. Indicators of health conditions also place Angola in the lower range of low-income countries. Per capita daily calorie intake in Angola was estimated to be 1,926 in 1985 which compares to an average of 2,329 for low-income countries, and 2,024 for Sub-Saharan Africa. The estimated population of 15,521 per physician in Angola in 1985 compares with an average of 6,050 for low-income countries (1981 data), and 25,310 for Sub- Saharan Africa (1981 data). 4. While indicators of social conditions in Angola place it in the lower range of low-income countries, on the basis of per capita GNP, Angola would be placed in the lower range of lower middle-income countries. However, it should again be emphasized that in view of the incomplete data on the Angolan economy, any GNP estimates are necessarily crude. Keeping this caveat in mind, in 1986 Angolan per capita GNP was equivalent to US$97. This compares to a 1986 average of US$270 for low-income countries, US$370 for Sub-Saharan African countries, and US$750 for lower middle-income countries. With the partial recovery of oil prices ir 1987 and increased oil production, Angolan per capita GNP in 1987 climbed 'o US$37. 5. The structure of production in Angola differs from the average for Sub-Saharan Africa in that agriculture and fisheries contribute a 1/ In the intercountry comparisons that follow, data for countries other than Angola are from the World Bank's World Development Report 1988. (Oxford University Press: 1988). and World Development Report 1988 (Oxford University Press: 1987). -197 - AMUI II Page 2 of 3 significantly smaller share of output. For example, from 1980-87, 21.0 percent of Angolan GDP at 1980 official prices came from agriculture and fisheries, 44.7 percent from industry, and 34.3 percent from services. This compares to a 1986 average in Sub-Saharan Africa of 36 percent from agriculture and fisheries, 25 percent from industry, and 36 percent from services. The difference is explained mainly by the impact of the war on rural areas and by the large share of oil output in Angolan GDP.. 6. The structure of aggregate demand in Angola is much more oriented toward government consumption and away from private consumption in comparison with most other countries in Sub-Saharan Africa. From 1982-87, government consumption in Angola averaged 30Z of GDP, private consumption averaged 52Z, gross domestic investment averaged 17Z, and exports of goods and non factor services averaged 42Z. This compares with a 1986 average for Sub-Saharan Africa of 13Z for government consumption, 74Z for private consumption, 14? for gross domestic investment, and 19Z for exports of goods and non factor services. The comparatively large weight of government consumption reflects mainly the burden of war expenditures on the budget. In Angola, defense accounted for almost 44Z of recurrent expenditure in 1984-87. In addition, large expenditures are incurred for military equipment. In Sub-Saharan Africa, defense expenditures as a percentage of total central government expenditure averaged 11.2? in 1985. 7. In the area of government finance, Angola is notable for the large proportion of government revenue that it derives from the petroleum sector. In recent years this proportion has varied between 40Z and 60? since fluctuations in oil prices introduce a strong element of instability in the budget. On the other hand, non-oil taxes are relatively low, averaging 10X of non-oil GDP in 1985-87. In Sub-Saharan Africa, the average ratio at taxes to GNP was 172 in 1985. S. The Angolan budget deficit, at 8 percent of GNP in 1985-87, is more than twice as large as the average for Sub-Saharan Africa (3.3Z of GNP in 1985). The budget deficit has been a major cause of the rapid growth of the broadly defined roney stock in Angola, which has averaged 15Z annually from 1980 to 1987. In Angola, this growth in the money supply did not result in open inflation in the official market because of tight and pervasive price controls and the fixed exchange rate, which at present is grossly overvalued. However, strong repressed inflationary pressures are evident in Angola in the extreme scarcities of goods offered at official prices and in the very large differences between prices in the official and parallel markets (which tend to range between 1 to 20 and 1 to 60). 9. The structure of Angolan merchandise exports is more unbalanced than usual due to the extreme dependence on petroleum exports. In Angola, fuel and mineral exports comprise about 95Z of total exports while the other 5? consist of other primary commodities. The average Sub-Saharan African country derived 48Z of its merchandise export earnings from fuels, minerals, and metals, and 17Z from other primary commodities. The only Sub-Saharan African countries which share Angola's extremely unbalanced dependence on the output of one sector are Zambia and Nigeria, which derives 96Z and 94? respectively of their export earnings from mineral exports (copper and oil). - 198 - ANNEX II Page 3 of 3 10. Angola's holdings of gross international reserves are charac- teristic of the low levels generally held by low and lower-middle income countries. Angola's reserve holdings from 1984-87 covered on average about 1.3 months of imports. This compares with a 1986 average of 2.1 months coverage for Sub-Saharan African countries. In the area of external debt, Angola's situation is also fairly characteristic of other Sub-Saharan African countries. In 1987 Angolan external debt was 70 percent of GNP and Angola devoted about 22Z of its exports of goods and services to servicing its debt. It is estimated that fully servicing its debt in 1987 would have required about 25Z of its exports of good and services. The average external debt as a percentage of GNP in Sub-Saharan Africa stood at 39.1 percent in 1985. The average for debt service as a percentage of earnings from exports of goods and services for Sub-Saharan African countries was 21.5 percent in 1985. - 199 - ANNEX III Page 1 of 3 GOVERNMENT INSTITUTIONS General Aspects 1. The Popular Movement for the Liberatlor of An&ola, MPLA, was founded in December 1956 with the objective of liberating the country from colonial rule. The armed struggle against the Portuguese colonial regime began in February 1961. After a period of struggles with other rival liberation movements in 1975, the MPLA assumed control of the Government when Independence was proclaimed in November 1975. 2. In December 1977 the MPLA became a party, and renamed itself MPLA - Labor Party (MPLA-PT). The MPLA-PT declared itself the "leading force of the Angolan State and Society", organized and acting "according to the principles of Democratic Centralism" and having as its strategic objective the construction of socialism. Party structures are involved to some extent in all aspects of the country's social, economic and political activity. The MPLA-PT is associated in particular with all major decisions concerning the country's economic management. In addition to guiding the activities of administrative departments, enterprises and trade unions, which are the three focal points of the country's economic activity, the Party also defines basic principles and policies. Constitutional Law reinforces the dominant position of the MPLA-PT, particularly through Articie 2 which gives the Party "the economic and social leadership of the State in its efforts to construct a Socialist Society". It should be noted that although party structures are supposed to be visible in all areas of economic activity, in fact this has not always been fully realized. The Orzanization of the MPLA-PT 3. The MPLA-PT's higher organs are: (i) The Congress, at the national level, whose functions include electing the President of the Party, determining the orientation of internal and external policy; (ii) the Conference, held at national, provincial, municipal and communal levels, which is responsible for orienting regional activities according to the decisions of the Congress and of other central organs of the Party; (iii) the Assembly of Members, held at the level of base organizations, which are structured in cells and committees formed in work places, residential units, etc., and are grouped spatially within the country's administrative framework, namely communes, municipalities and provinces; - 200 - ANNEX Page 2 of 3 (iv) the Central Committee, which ensures the direction of the Party in the periods between the Congresses, and the Political Bureau, which directs political activity between Central Comittee meetings; and (v) the President of the MPLA-PT, who is a full member of the Central Committee and of the Political Bureau, elected by the Congress. The President of the People's Republic of Angola is the President of the MPLA-PT. 4. The MPLA-PT guides and directs the work of popular and social organizations, such as the National Union of Angolan Workers (UNTA), which is a non-Party organization. The Party's orientations are transmitted through the influence of MPLA-PT members within this organization. General Organizational Aspects of the State 5. The People's Assembly is Angola's supreme organ of State power and it normally meets twice a year. Law 2186 introduced important modifications in government structure. The posts of Minister of State were created for Economic Affairs, Production and State Inspection and Control, in addition to Defense. The Ministers of State were charged with the task of co-ordinating the activities of the various ministries in their 'sphere". New changes were introduced at the beginning of 1989, including the apparent restructuring or elimination of the Ministry of State for the Productive Sphere. 6. Two other organs of the State apparatus should be noted, the Council of Ministers and the Council of Defense and Security. The Council of Ministers has the traditional functions of organizing, directing and coordinating all the ministries' activities. It is also charged with preparing the National Plan and the General State Budget for discussion and app .oval by the People's Assembly. The Council of Defense and Security was created in 1984 and assumes the functions of the Council of Ministers in the periods between meetings of the latter. It is presided by the President and constituted by the Ministers of Defense, Interior and Security, the three Ministers of State and others. Since it is a more flexible body than the Council of Ministers, it has been particularly important in making decisions regarding economic policy. 7. Territorially, Angola is divided for political and administrative purposes into provinces, municipalities, communes, neighborhoods and settlements. The People's Assemblies are the highest organs of State power at each level of the territorial division of the country. The executive organs of these Assemblies are the Provincial, Municipal and Communal Commisariats. The Commissariats are directed by a Commissar who is the representative of the President and of the Government at the provincial level. Law 8/81 which establishes local state institutions, has not been applied. Therefore, certain basic legal instruments for decentralizing administrative actions have not been created. - 201 - ANNEX III Page 3 of 3 8. The lack of operating regulations is in fact, a quite common situation in Angolan economic administration. Thus, operating regulations do not exist for the National Price Directorate, for example, or for a large proportion of the National Directorates covered by the Ministries. These institutions were created, given personnel and other means for functioning, but were not given operating instructions: what and how they should do was not defined. Nor were their employees's jobs defined. Thus, a large part of public administration lacks a description of the activities it is supposed to perform. The SEF Secretariat 9. An Economic Commision p-esided by the Head of State and including 13 Ministers was created in 1988 to discuss all the important decisions in the area of economic policy and in particular to approve the legislation and all the more important measures required by the implementation of the SEF program. The Co-mission comprises three sub-committees for economic affairs, for the productive sectors and for social affairs, respectively. The Commission is supported by the Secretariat of the SEF, which prepares the proposals of decisions, the draft laws and the analysis of the problems submitted for discussion. - 202- ANNEX IV Pogo I of S THE SYSTE( OF NATIONAL ACCOUNTS IN THE PEOPLE'S REPUBLIC OF ANGOLA Introduction 1. This Annex has the following purposes: (a) to provide a brief presentation of the current system of national accounts and of its scope and limitations as regards national product and expenditure; and (b) to analyze the difficulties involved in establishing a unified system of national accounts. GDP Estimates Using the Factor Income Approach 2. The gross domestic product at factor cost (GDP fc) refers only to official transactions, and consists of total factor income, as presented in the various ministries' reports on financial execution of the National Plan. Althougb limited in scope, the methodology for this calculation is satisfactory. However, the quality of the calculations is constrained by the enterprises' accounting capability. In addition, the National Accounts Center does not have the direct access to the enterprises' balance sheets that would enable it to assess the quality of the data. Information by enterprise is furnished only in the reports on industry and fishing; the remaining execution reports provide only aggregates, some of these being incomplete, so that indirect estimates must be used, with varying degrees of reliability. It must also be noted that the calculations are performed by the supervisory ministries, and therefore do not correspond exactly to the standard economic classifications for output by sector. For example, sugar production is included in the industry accounts, because agroindustry enterprises are supervised by the Ministry of Industry. 3. The following paragraphs describe the scope and the quality of the calculations of value added by sector. (a) Agriculture and Livestock This includes the activities of state enterprises, associations, and the output of small-scale farmers traded by the state through the Ministry of Internal Commerce. It also includes Frescangol marketing (i.e., the distribution of imported meat). It excludes on-farm consumption and the parallel market. It is estimated that only 101 of output passes through the official market. (b) Manufacturing and Mining This includes output from state, mixed, and private enterprises, together with the production and processing of sugarcane by state enterprises in Benguela and Bengo. The calculation of value added in this sector covers approximately 802 of total activities. - 203- ANNEX IV Page 2 of 8 (c) Fishing This includes fishing itself (with six state enterprises, one being a joint venture with the Soviet Union, and fishermen's cooperatives); fish processing (ten state enterprises, together with the enterprise Manpesa in Benguela, which was excluded from the 1983 and 1985 figures because of delays in the provision of data); ship repair (four enterprises, three belongir.g to the state, and one being R joint venture with Portuguese nationals, i.e., the former Sorefame); salt extraction (accounts for the two state enterprises are included, although there are certain private enterprises that were excluded, mainly in Namibe province); and wholesale fish marketing (four enterprises, retailing being part of the commercial sector). Not included are output produced by fishermen not belonging to organizations (this being sold in the parallel market), own consumption, and the output from two salt- extracting enterprises in Namibe. In addition, the accounts exclude half the landings resulting from operating agreements with non-At.golan enterprises, a,theugh the tax on fishing rights paid by foreign fleets is included. (d) Transportation and Comrunications This includes enterprises operating road transportation (64), rail transportation (four), airlines (two, one of which is TAAG), ports (five), and coxtunications (three). Accounts in this sector do not include tranbportation-related enterprises supervised by other ministries, and whose accounts are reported by those ministries, such as fishing and internal commerce. There are also some transportation-related enterprises whose accounts are not recorded anywhere (as in the case of industrial enterprises). The accounts also excluded small private freight and passenger carriers. (e) Construction This includes state and private enterprises concerned with construction, engineering, the manufacture of construction materials, and the Angola eng:neering laboratory. It excludes self-construction and construction by non-Angolan enterprises operating in the oil sector (drilling activities are regarded as part of the oil sector, but the accounts for the construction of houses, buildings and other works are not recorded anywhere), and in the energy sector (i.e., Gamek in Kwanza). It is estimated that value-added calculations cover only 502 of the secto-. (f) Petroleum The accounts includes indirect taxes, profits, payroll, and depreciation (Sonangol); and direct taxes from non-Angolan enterprises, and refinery profits. They exclude payroll, profits, rentals, depreciation, interest from non-Angolan enterprises, and - 204 - ANNEX IV Page 3 of 8 Sonangol rentals and interest. Although Sonangol does not provide balance sheets for inspection and recording in the national accounts, the statistics are reliable, and include about 70X of value added generated by the sector. (g) Energy This includes only payroll, depreciation, profits and direct taxes relating to the five electric power enterprises in the sector. It does not include rentals and interest for electric power enterprises, or household production of charcoal and fuelvood. (h) Commerce This includes retailing, hotels and catering, worker's food services, and social consumption (e.g., hospitals, creches, etc.). Retail value added is calculated from the commercial fund (fundo mercantil)--i.e., deposits in BNA (the Natior l Bank of Angola) by private, state and cooperative retail enterprises--and from the marketing margin (officially set at 25Z), excluding administrative expenses (published in the Ministry of Commerce's execution report). This results in a value added of between 15Z and 18Z of GDP. The commercial fund information provided by BNA is comparable to the data in the National Plan's financial execution report, so that the statistics used can be submitted to a reliability analysis. Not included are the parallel market, the wholesale fish market (which is included in fishing), or the supply of spare parts (which is included in the transportation subsector). Data quality is low, because calculations are based on subjective assessments. (i) Services This includes payrolls for central and provincial governments. education, health, culture, social services (excluding creches, which are free) and defense. The source is OGE, and data quality is good. Excluded are payments in kind to the armed forces (i.e., food, drink, tobacco, and clothing). Food baskets provided by BNA, the Ministry of Planning and the oil and energy industries are bought by government personnel, and therefore regarded for accounting purposes as part of the commercial fund. In the case if the Ministry of Planning, the baskets are bought from Angoship, a private enterprise providing supplies for vessels. The esaterprise uses the resulting revenue (in Kz) to buy US Dollars from the Government at the official price. 4. For calculating gross domestic product at market prices (GDP mp), indirect taxes are added to the gross domestic product at factor cost (GDP fc), and subsidies are subtracted. Indirect taxes include those applied to the production and consumption of industrial alcohol, petroleum products, liquified gases, domestically produced beer, imported beer, and other taxes on production and consumption, together with national reconstruction stamp - 205 - ANNEX IV Page 4 of 8 taxes, tax payment certifications (selo de verba), the oil industry output tax, export and import levies, taxes on services, and the people's resistance tax. The people's resistance tax is incorrectly classified as an indirect tax, because it is really a surtax applied to income taxes payable by natural and legal persons. The sources used in calculating indirect taxes are the National Plan's financial execution reports (which contain the enterprises' own figures). These show a small statistical discrepancy with the data published by the Ministry of Finance (which indicate the figures for budget execution). Included as subsidies in the calculation of national accounts are all losses published in the National Plan's financial execution reports; i.e., total subsidies to state enterprises (UEEs) are equal to OGE transfers (i.e., losses from UEEs plus allocations of available own resources and price subsidies) plus loans to enterprises from BNA, covering the difference between total losses and resources provided by OGE. Such a classification is incorrect, because the loans are not used solely to finance the enterprises' deficits, even if intereF' and amortization payments are latet deferred. GDP Estimates Using the Product Approach 5. The Angolan authorities, with the assistance of the United Nations Development Program (UNDP), have prepared preliminary estimates of GDP based on the value added production approach using 1980 official prices. While these estimates are preliminary, they represent an improvement in the estimates of subsistence agricultural production and are not thought to be as distorted by delays in delivery of the required information. The estimates have been prepared for 1980-87 using data mostly from the firm level, complemented by indirect estimates and ministry information to complete the available data series and to check the reliability of the aggregates. The defined sectors follow the Angolan classification of economic activities, but can easily be translated into the standard UN classification. 6. The following paragraphs describe in more detail the estimates of the valued added production of each of these sectors. (a) Industry. This includes the following extractive and manufacturing activities: power energy, mining, metallurgy, metal construction, electronics, machinery, chemistry, rubber, printing, lumber, paper, construction materials, transport materials, glass ceramics, textiles, clothing, leather goods, food, beverages, coffee, sugar, tobacco and other industries. Production is by state, mixed, and private firms as well as foreign enterprises. These data account for about 90? of the sector's production. The remaining component comes from estimates of the output of small producers not under government supervision. These estimates were based on previous studies of production capacity and indirect information. (b) Construction. This includes the construction activities of state enterprises (under the Ministries of Construction, - 206 - ANNEX IV Page 5 of a Energy, and Petroleum), foreign firms, and self- construction. The self-construction estimates are based on population growth, size of a standard house, cement consumption, and international indicators. (c) Agriculture. Forestry and FishinR. This includes farming, cattle raising, fo,estry, and fishing activities of state enterprises and of about 850,000 small producers working in associations or individually. It includes production for self-consumption as well as production for the market by state enterprises and small producers. The self-consumption estimates are conservative and are based on the size of the farming areas, average productivity, nutritional habits, and population growth. (d) Transportation and Communication. This comprises railroads, air, coast and ocean shipping activities, including loading, unloading, and expedition services. Data on communication services were collected from the relevant enterprises under the supervision of the Ministries of Transportation and Communication. Highway transportation of passengers are freight were collected from public enterprises under the supervision of the Hinistry of Transportation. These estimates are currently being revised to include mission information as add private transportation. 'e) Commerce. This includes retail and wholesale activities, rural trade, hotels and foreign trade. The commercialization margins were estimated from state enterprise sales and purchase data. Preliminary estimates of the value in the parallel market are also included. The product approach estimates of the value added in the commerce sector are an improvement over the previous factor income approach because they include the commercialization margins for trade in rural areas and foreign trade. They are also based on actual measure of commercial margins rather than the fixed official margins used in the factor approach. The commercialization margin from oil exports is not yet included, but exports of oil are included in the industrial value added at FOB prices. (f) Services. Estimates of the value added in the service are based on the budgeted salaries in the sector. Per Capita U.S. Dollar GNP Estimates 7. In deriving an estimate of Angolan per capita GNP in U.S. dollars, it is better to rely on the data from the production approach rather than the factor approach due to the former's greater comprehensiveness and better methodological foundation. However, a major drawback of the - 207 ANN-X IV Page 6 of 8 production approach data is that calculations are reportedly based on 1980 official prices and cover a period in which there were major changes in the relative price of oil and non-oil production. 8. Since the authorities specified the 1980 value added in the oil sector by converting dollar oil sales and costs of production into kwanzas at the official exchange rate (29,918 kwanzas to the U.S. dollar), the 1980 oil sector value added in U.S. dollars is obtained by using the official exchange rate to reconvert the data into dollars. Using the authorities' estimates of oil production value added for subsequent years at 1980 prices, an index of the real value added from oil production for 1980-87 can be constructed. This index, combined with the annual average dollar prices of Angolan oil from 1980-87, permits an estimate of the nominal value added from Angolan oil production. 9. Converting the value added from non-oil production into U.S. dollars is more problematic. From the authorities' production estimates using 1980 official prices, and indices of the real quantity of non-oil production value added can be constructed. However, it would be misleading to use the official exchange rate to convert the 1980 kwanza value of non- oil production into U.S. dollars since there are strong indications that the official exchange rate was overvalued. In fact, the official exchange rate, which was established in May 1976, had by 1980 substantially appreciated in real terms. Rough estimates indicate that the 1980 purchasing power parity exchange rate for officially prices goods should be depreciated 23Z relative to the official exchange rate. Using this estimate, to obtain a U.S. dollar measure of non-oil production for 1980, indicates that oil production was 29Z of GDP at factor cost. Since alternative estimates have placed oil production as 30 to 352 of GDP, the resulting U.S. dollar GDP estimate for 1980 appears reasonable, but perhaps biased up slightly. Finally, assuming that the dollar price of non-oil production grows at the same rate as the U.S. GNP deflator, a nominal U.S. dollar estimate of non-oil production is obtained for 1980-87. 10. From the U.S. dollar estimates of oil and non-oil production as well as population and net foreign factor income estimates, an estimate of Angolan per capita GNP in U.S. dollars is obtained. This estimate is presented in the Appendix in Table C.3. GNP from the Expenditure Side 11. There is no official calculation of GDP from the expenditure side. Accounts for the public, financial and external sectors are incomplete, and their structure is unsuited to the preparation of national accounts. In addition, there is no coordination between the Ministry of Planning, the Ministry of Finance, and BNA in the use of data. Examples of the inadequacy of existing accounts are that the government budget makes no provision for interest payments on external debt payable by the Treasury, it does not record external debt managed by BNA, and the government accounts for not provide any means for calculating gross fixed capital - 208 - ANNEX IV Page 7 of 8 formation (GDCF) by the Government and by state enterprises. Balance of payments figures for capital goods imports are not reliable. Because data on long-term loans are also incomplete, it is difficult even to estimate such imports indirectly, i.e., on the basis of capital flows. Obstacles to the Implementation of a Unified System of National Accounts 12. Developing a reliable, unified system of national accounts requires that it become a political priority. This will be done only when the government is convinced of the importance of national accounts for economic planning, monitoring, and evaluation. Once the political decision has been taken, establishment of a unified system of national accounts will depend on three factors: organization, discipline, and resource. 13. As regards organization, it is recommended that a Department of National Accounts be established, subordinate to the Director of Planning at the Ministry of Planning. This measure is justified by the need to establish a link to BRA and the Ministry of Finance. Currently, there is merely a project (under an agreement with the UNDP) for establishing a system of national accounts, in which the national project director must fulfill a number of extremely demanding functions such as those of Director Planning at the Ministry of Planning, Technical Secretary of SEF, Director of the Department of Economic and Social Affairs of the Central Committee of MPLA-PT, and National Director of the National Accounts Project. It is proposed that the Department of National Accounts should be the responsibility of the Head of the Planning Board, together with the Department of Foreign Exchange for External Trade, Planning Methodology and Control, International Finance and the Data Processing Center. An alternative would be to make INE responsible for national accounts. This possibility should be considered after the implementation and consolidation of the system of national accounts. However, during the initial phase, the preparation of national accounts should be kept separate from the compilation of basic statistics, which is INE's function. Such a separation would enable qualified experts to be deployed exclusively in the preparation of national accounts. 14. In whatever department the national accounts are prepared, it is imperative that efforts to improve the national accounting framew-ork be closely coordinated with the work on basic statistics done in the INE. The national accounts will only be based on reliable, well-defined data when the INE fulfills its role as the central institution which specifies classifications, defines statistical concepts, develops survey methodologies, designs questionnaires, and provides a central source for the exchange and publication of national data. Currently, the INE's performance of these crucial functions is far from satisfactory. Consequently, any attempt to improve the national accounts must be combined with a major effort to upgrade the ability of the INE to provide comprehensive and accurate economic and demographic data in a timely fashion. 15. Establishing a form of discipline by which economic agents will provide the data necessary for operating the unified statistical system - 209 - ANNEX IV Page 8 of 8 will be a difficult obstacle, and will require firm political will on the part of the country's leaders. An indication of the lack of discipline in this area was provided by the enterprises' response to the attempt to establish the SCOPO (the Operating Control System for the National Plan). The main 172 enterprises in the country were to provide monthly data on 163 selected indicators. INE was to use these data to prepare a monthly report monitoring execution of the Plan. So far, only nine enterprises have complied. 16. It must be recognized that developing a national accounting system that can be used with confidence to monitor the economy, measure the impact of policy changes, and serve as a basis for national economic plans will require a substantial commitment of scarce human resources. While in the short run it is advisable for the government to contract outside experts to aid in establishing basic statistical methodologies and procedures, it is imperative that high quality counterpart personnel are als', Involved to sensitize the experts to local conditions and to cont4-.ae the development of the national accounts after the foreign experts T.ave departed. Establishing technical training programs for persornel involved in data collection and analysis should also be a priority. 17. Finally, it should be noted that UNDP is currently involved in a technical assistance project (ANG/84/001) directed toward improving the national accounting system. While the project has made significant steps in this direction, its scale is too small to adequately address Angolan needs and it has been hampered by delays. For example, the project called for stationing in Angola two experts in fiscal accounts and the balance of payments, but this has not yet occurred because, of apparent delays in appointing Angolan counterpart personnel. Moreover, project participants spent almost the whole ef 1986 preparing basic statistics to be used in the national accounits. Consequently, it is suggested that UNDP and the Angolan authorities extend this project for at least another year and broaden its scope to include upgrading the process of collecting and analyzing basic descriptive statistics. - 210 - ANNEX V Page 1 of 7 LEGAL FRAMEWORK OF SEF 1. The content of the SEF program is such that it requires adjustment of major areas of the law. The Government of Angola has already published new legislation on foreign exchange, economic activities in general, securities, foreign investment, and state enterprises. This annex provides an overview of the content of these various legislative initiatives. Their development at the regulation level is at an -.dvanced stage and legislation on procurement is also under preparation. Legislation governing the banking system, enterprise management and economic planning has also been approved. 2. The following overview of the legislative measures taken so far by the Angolan Government show the commitment with which it is pursuing the implementation of the SEF program and its institutionalization. In particular, the changes made in the area of foreign investment and public enterprises are worth highlighting. Foreign investment outside the context of mixed economy enterprises is now permitted in other than import substitution activities, the approval process has been simplified, and arbitration is recognized as a means of solving investment disputes. In the field of public enterprises, the emphasis is on providing effective autonomy, on the enterprises taking responsibility, on reducing the number of supervisory bodies and delimiting more clearly their supervisory function. As stated above, there is a series of legal instruments under preparation which will develop those reviewed here and complement them. It is to be hoped that their application will be in the same spirit with which they have been or are being prepared. Exchange Law (Law 9188) 3. The exchange law establishes the obligation of delivering to the exchange authority (the Minister of Finance) the foreign exchange received by the resi4cnts, forbids compensation of debts and credits between residents and non-residents, and limits the ability to carry out exchange functions to the entities so authorized by the exchange authority. One of the reasons for issuing the new law is the fact that exchange legislation is very dispersed, out-of-date and unknown to the public at large. The law applies to the state enterprises (unidades economicas estatais) but not to the State itself and its services or to public collective entities. 4. The Central Bank is responsible for managing the foreign exchange and resolving any doubts on whether a person or entity is or is not a resident for purposes of the exchange law. Only with Central Bank authorization may residents open foreign exchange accounts or non-residents foreign exchange accounts with national credit institutions. The law has detailed provisions on monetary and jail sanctions for foreign exchange contraventions. The Central Bank has also exclusive responsibility to institute any suits for breaches of the Exchange Law. - 211 - ANNEX V Page 2 of 7 5. The Exchange Law has been developed by three regulations approved but not yet published. They cover current operations of invisibles, operations related to goods and operations related to capital: (i) capital operations need authorization by the Central Bank and beyond a certain level by the Minister of Finance. Foreign investment will need to be authorized and registered by the Central Bank. The Central Bank is responsible for issuing the corresponding licence; (ii) goods operations: the import, export or re-export of goods requires a licence. The licensing authority is the Ministry of Foreign Trade- The first fortnight of each month the Central Bank will inform the Ministry of the maximum amount of foreign exchange available for licences to be issued the next month. Priority in the issuance of licences is given to those which will meet the objectives of the National Plan. Overall, the distribution of licences is left with the licensing authority; (iii) invisibles: The licensing authority is the Central Bank which may give global licences for up to 180 days when it is necessary for the activities of the beneficiary. Law on Economic Activities (Law No.10/88) 6. This law is a basic or framework law to regulate economic activity in the country. It applies t, activities related to the production or distribution of goods or the rzndering of services with the objective of making a profit. The State reser -s itself activities in central banking, military industry, distribution of water and power, basic sanitary services, telecommunications, transport, except for short range maritime transport, and port and airport administration. 7. No economic activity may be performed without previous authorization Dy the competent authorities. Economic acti.vity may be developed individually or through enterprises. Enterprise activity may be performed by state enterprises, mixed enterprises, cooperatives and private enterprises. State enterprises are classified as enterprises to which the Law of State Enterprises applies, which means enterprises owned by the State but operating under commercial law. Mixed enterprises are those established by state funds or state enterprises and private capital (national or foreign). 8. The law recognizes the right of individuals to practise their own professions independently and the right of individuals and companies to associate to further their economic and professional interests. Except for central banking and military industry the Council of Ministers may, exceptionally, authorize the performance of economic activities by other private parties in the other sectors reserved to the State. Natural resources owned by the State in terms of the Constitutional Law may be explored only through concessions or other regime not involving the transfer of ownership. 9. The Law gives the Council of Ministers 60 days to define the rules for the reorganization of the public enterprise sector in order to establish sector and regional priorities and criteria of economic, technical and - 212 - ANNEX V Page 3 of 7 financial viability. The Council of Ministers is charged with revising the legislation on establishment and functioning of cooperatives, nationalization and expropriation, intervention of the State in private enterprises, and licensing of economic activity. In the meantime, any intervention of the State in private enterprises on the basis of the existing legislation requires authorization by the Council of Ministers. Secarities Law (Law No.8188) 10. This law regulates the issuance of treasury bills with the objective of raising financing for the national budget and to balance the monetary resources distributed as salaries to the level of goods available. In addition, it was necessary to create a legal instrument to give the State the possibility of proceeding with the financial restructuring of state enterprises and to channel national savings towards the financing of investments. 11. The law provides for the following types of securities: (a) Savings bonds described as bearer bonds with maturities ranging from 12 to 18 years. Savings bonds may be subscribed by individuals, residents in Angola, and will be denominated in kwanzas but, at maturity, the holder may receive the total or partial amount of the bond in foreign exchange. (b) Development bonds which will be nominative, with a maturity of up to 7 years. Development bonds are intended to be subscribed by collective entities and the interest or the capital of these bonds may be paid in foreign exchange. The funds raised by the issuance of these bonds will be used exclusively to finance investments included in the general budget of the State. (c) Restructuring bonds which will be nominative with maturities ranging from 5 to 10 years. Restructuring bonds are meant for creditors of bankrupt public enterprises and, in conditions to be determined, could be converted into development bonds. 12. The People's Assembly will determine annually the global limit of the bonds to be issued under types (a) and (b). Restructuring bond amounts will be decided by the Council of Ministers. The bonds will be exempt from taxes, may be pledged and can't be subject to expropriation or any other act of intervention by the State. Foreign Investment Law (Law No.13/88 of June 16, 1988) 13. This law abrogated the previous law of 1979 which was never developed by the necessary regulations. It has as an objective to improve the organization, function and supervision of the Government related to foreign investments, and to simplify the process of negotiation and approval. This law expressly leaves standing the laws applicable to petroleum and mining to the extent that they don't contradict it. - 213 - ANNEX V Page 4 of 7 14. Foreign investments will be permitted by entities of adequate technical and financial capacit; provided that the investments are in accordance with the social and economic development interests of Angola. Mu law excludes from investment by non-residents the areas of defence, central banking, education, health, water supply and sewerage, electric power, postal services, telecommunications, social communications, administration of ports and airports, air transport, long range maritime transport. This list notwithstanding, the Council of Ministers may authorize specific investments in areas complementary to those so listed. 15. A foreign investment may consist of the actual transfer of funds, supplier's credits, equipment or rights to industrial processes. The law foresees the creation of an organ for the application of the law which will be responsible for the evaluation of investments. In the concrete case of equipment, its value will be the actual market value. The law does not provide for the basis of valuation of rights to industrial processes or suppliers' credits. The Council of Ministers is competent to determine the priority areas in which foreign investment should take place; although this determination was due 90 days after the date of the law, none has been done yet. 16. Foreign investment may take place through the following possibilities: (a) Mixed Enterprises of a foreign company with a state enterprise. The state enterprise should have 51% of the equity unless the Council of Ministers permits a lower percentage. (b) Joint Enterprises of a foreign investor with a non-statal national investor. (c) Private Enterprises entirely owned by the foreign investor. 17. The law specifically provides that in the first three cases the requirements of commercial laws regarding the establishment and registration of companies apply. In the last instance, it goes further to say that the companies so established will be regulated by commercial law. 18. The law recognizes a just and equitable treatment to the investors and in particular it guarantees the repatriation of profits or of the foreign investor's share in case of liquidation or sale of the enterprise. In both instances, the prior authorization of the Minister of Finance is required. In case of expropriation, the investor will be given "just compensation". 19. Entities established under this law may be given certain incentives, such as the exemption or reduction of income taxes and customs duties on inputs or outputs. They may also benefit of other incentives available under existing legislation in cases in which they reinvest profits, develop activities of a social character, and train and use local labour and management. 20. A specific investment proposal must be presented to the organ yet to be established referred to in paragraph 24 above which will evaluate it - 214 - ANNEX V Page 5 of 7 within 90 days. After evaluation, it will make a recommendation for approval or rejection to the Minister of Planning. If the Minister accepts the recommendation of approval, the investment proposal is forwarded to the Council of Ministers for final approval. The Council of Ministers has 45 days to decide from the date of evaluation. The organ referred to above will keep an investments register. 21. In case of disputes between the foreign and local investor which can't be solved amicably, the parties may have recourse to arbitration according to UNCITRAL rules. It should be emphasized that the disputes which may be subject of such arbitration are not those involving the State but only those between the local and foreign partners. Thus, in the case of expropriation, there would not be the possibility of submitting a dispute regarding compensation to arbitration. 22. The law leaves a number of matters to future regulation. These include areas of priority for foreign investment, compensation in case of expropriation, guarantees which might be required from the investor, terms of the contract to be signed between the investors after approval of the investment, and obligation of employment of local labor. 23. In addition to future regulations of the foreign investment law, there are a number of other laws which will be of interest to investors and which will affect the assessment of whether to invest in Angola is an attractive proposition. The main ones would be the Labour Code, Tax and Exchange laws and the Portuguese Commercial Code of 1822 which is still in effect in Angola. 24. It would be very useful if as soon as the various regulations have been published, a publication for investors be issued with practical advice and guidance on all the relevant legal norms and administrative procedures applicable to foreign investment in Angola. This publication could also include information on bilateral treaties on investment protection, double taxation, or recognition of arbitral awards. Law of State Enterprises (Law No.11188) 25. It is the objective of this law to improve the conditions of execution of the planned economy, to reinforce the autonomy of the state enterprises, to increase their efficiency and rentability, to increase their influence in the distribution and commercialization of their products, and to improve the process of constitution and organization of state enterprises. 26. State enterprises are defined as those owned by the State with separate juridical personality, and administrative, financial and patrimonial autonomy. The law states the principle of autonomy in the management ot the enteprises and, except as provided by the law, no organism of the State or other third party has any right to interfere in the conduct of the enterprise business. State enterprises are expected to generate profits, to charge for their products or services and to be self-financing. Enterprises should be managed so as to increase efficiency and productivity, to make investments based on their rate of return, and assessment of risk and of period needed to - 215 - ANNEX V Page 6 of 7 recover the invested capital, and to increase the professional level and the working conditions of their workers. 27. State enterprises are obliged to prepare multi-year plans and budgets and annual plans and budgets. They may fix the prices of their products on the basis of current legislation and are subject to taxation. They respond of their obligatior.s with their own patrimo.ay. The State is not liable for their obligations. 28. At the time of their constitution, the State provides each enterprise with a 'fundo de constituicao" ("establishment fund") which would be in an amount adequate for the exercise of the enterprise activity. Profits arter taxes will be allocated in accordance with the following priorities: constitution of a legal reserve as required by commercial law, of an investment fund, and of a social fund. Any remaining profits will be distributed to the State as owner of the enterprise and to workers in order to recognize their individual performance. 29. The supervision of the enterprises corresponds to the Ministries responsible for the sector (Ministro de Tutela) of the activity concerned and Finance. The sector Minister guides and supervises the activities of state enterprises by defining the development policy of the economic activity concerned, approving the multi-year plans and budgets proposed by the enterprise, evaluating the performance of the enterprise, appointing the administrators ane directors and approving the enterprise accounts. In case of companies of large dimensions, the Council of Ministers may require approval by the Minister of Planning of the multi-year plans and budgets and of the investment programs of the enterprise. 30. Enterprises maLy only be created by the Council of Ministers by decree. They are subject to the registration requirement of commercial law. 31. The organization of the enterprises consists of a Board, the Management, a Management Council and a Fiscal Council. For the medium and small-scale enterprises these organs are reduced to a Director, Management Council and Fiscal Council. 32. The Board has responsibility for preliminary approval of the multi- year plans and budgets, investments, follow up the activities of the enterprise, approve the internal regulations, present the proposals for the appointment of director general and evaluate his performance, and approve price proposals. The members of the Board consist of a President appointed by the Council of Ministers or the "Ministro de Tutela" depending on the size of the enterprise, one Board member each by the "Ministro de Tutela' and the Minister of Finance, one member elected by the workers, and the Director General. If the Board consists of only three members, the President is the Director General appointed by the Ministro de Tutela. The other two members are appointed by the Minister of Finance and the workers. The Board meets every three months and decides by majority of its members. 33. The Management consists of the Director, Deputy Director and those responsible for various areas of the enterprise (area managers). In the case - 216 - ANNEX V Page 7 of 7 of large enterprises, the Director is appointed by the Ministro de Tutela as proposed by the Board, or by the Ministro de Tutela without any further intervention of other parties in the case of smaller enterprises. 34. The Management Council is a consultative organ which the Director needs to consult on the draft plans of the enterp,:ise, accounts, report on the execution of the plan, sales of fixed asaets, investment programs, classification and training of workers, manageme;t appointments and criteria to give premia to compensate good performance. This Council is composed of the Director, area managers, two party representatives, and one representative of the trade union. 35. The Fiscal Council is basically responsible for checking compliance with the laws by the enterprise and giving its opinion on the accounts. It consists of a president and two members. The President and one member are appointed by the Minister of Finance and one member by the Ministro de Tutela. In small enterprises, the function of this Council may be performed by one person appointed by the Minister of Finance. All members of the Fiscal Council will need to be registered accountants and not be staff of the enterprise. 36. The statute of manager of public enterprises will be regulated separately and the regulation will provide for a definition of the technical requirements, duration of the mandate, cases in which they may be removed and accountability. 37. In addition to the participation of workers in the Board and in the Management c.ouncil, the law provides for Workers Assemblies which will 'analyze' the drafts of the plan and budget of the enterprise, degree of execution of the plan, productivity level, working conditions and compliance by the enterprise with the labour legislation. 38. The extinction or dissolution of a state enterprise is the responsibility of the organ which created it. The comLoercial laws of bankruptcy or dissolution of companies do not apply to state enterprises. Consequently, the law provides for a special liquidation commission which will dispose of the assets of the bankrupt or dissolved enterprise and settle the claims. The State will pay out of the budget any claims accepted by this commission which the assets of the enterprise are not sufficient to cover. 39. The new law will be applied to existing enterprises as determined by the Council of Ministers on a case-by-case basis and as part of the process of financial restructuring of the public sector. The success of the new law will depend on how effectively it is applied in terms of non-interference, accountability and how effectively prices and salaries are also liberalized. - 217 -ANNX VI Page 1 of 4 THE TAX SYSTEM OF ANGOLA 1. Tax revenue in Angola is derived from four main sources: taxes from the exploitation of petroleum, taxes on income, taxes on production and consumption, and taxes on international trade. Taxes on Petroleum 2. The government receives revenue from exploitation of Angola's oil reserves in the form of royalties, taxes on profits and a share in the profits of Sonangol, the state-owned oil company. Two types of agreement govern the relations between the government and the operating companies. The tax regimes applied by these agreements differ in their impact on government revenue. The Joint venture agreement between Sonangol and the foreign partners is the oldest type. Under this agreement, Sonangol, the sole concessionaire for oil exploration and production, shares the investment with foreign companies. The joint venture pays three kinds of taxes: (a) a royalty, currently 20Z of crude oil sales; (b) a tax on profits of 65.75Z; and (c) a tax on excess profits (transaction tax) of 70?. 3. Under the more recent production sharing agreements, Sonangol subcontracts with foreign companies to undertake the exploration and production operations in return for a share in the output. The foreign company retains part of the output (maximum 5CI) to cover its costs ('cost oil'), and pays a 502 income tax on its share f the remainder of the output (,profit oil'). In addition, the gove;.nment receives a share in Sonangol's profits. The principal difference in fiscal impact between the two agreements lies ir. the tax yield over time. Compared to a joint venture, the production sharing agreement yields less revenue in the early years when high initial costs result in retaining the full 50S 'cost oil' allowance. Furthermore, it tends to provide Sonangol, rather than the treasury, with the largest part of Angola's share, while in joint ventures the bulk of the revenue accrues directly to the government in the form of taxes. In 1986, joint ventures accounted for approximately 802 of government revenue from oil. Table VI.1 shows a breakdown of government revenue from oil. Table VI.l: PETROLEUM TAXATION, 1980-88 (Kz. billion) 1980 1981 1982 1983 1984 1985 1986 1987 1988 Royalty 6.4 9.1 6.8 7.0 11.2 10.2 6.4 8.7 9.0 Income tax 17.6 26.6 10.7 14.6 14.0 11.8 7.9 12.5 9.4 Transaction tax 8.3 8.4 3.5 5.0 17.0 19.7 6.7 11.7 13.7 Transfers from Sonangol 1.6 1.1 0.1 - - - 9.0 2.9 3.8 …___ ---- ---- ---- ---- ---- ---- ---- ---- TOTAL 33.9 45.2 21.0 26.7 42.3 41.7 30.1 35.8 35.8 Source: Appendix table D.1 - 218 - ANNEX VI Page 2 of 4 4. Since 1980, price and output of oil have moved in opposite directions (see table VI.2). A strong rise in production followed a slump during 1972-82. The latter resulted from a lack of exploration and development during the few years after independence. output then doubled between 1982 and 1986, which cushioned the effect of the fall in the oil price, and contributed to the recovery from 1982 to 1985. However, changes in price and output differ in their impact on revenue due to the nature of the tax regime. Since profits from oil operations are the primary source of oil taxes, and excess profits are highly taxed, government income from oil reacts more sharply to variations in price than in production. Another factor that prevented the full revenue impact of the price decline in 1986 from being felt was the large transfer of profits from Sonangol in that year (Kz 9 billion), which included arrears for 1983-85 when no transfers were made. Table VI.2t CHANGES IN PRICE AND OUTPUT OF CRUDE OIL, 1980-86 (1980 = 100) Price Output 1980 100 100 1981 110 95 1982 86 96 1983 87 132 1984 86 151 1985 81 171 1986 45 208 Source: IBRDs Angola, Energy Assessment. Taxes on Income 5. This category includes four types of taxess transfers from public enterprises, corporate income tax, personal income tax, and a tax on income from capital. Together they are the principal source of non-oil taxes, accounting for between half and two-thirds of the total. Income taxes on the whole have not performed well, judging by their average nominal growth of 2-1/2Z a year since 1980. This has been largely due to a lack of growth in the transfers from public enterprises -hich account for the bulk of these taxes. However, the other tax components show a more encouraging trend. 6. Transfers from public enterprises. Public enterprises have to remit part of their profits to the state. Until recently this share wast 90Z for firms in the productive sectors, 972 for those in the petroleum sector, and 98Z for service industries. With effect from 1986, the transferable portion has been reduced to a flat 50?. The share of these transfers in total taxes on income declined from around 80Z in the early 19808 to 67Z in 1985 and 62Z in 1986. As most enterprises have greatdifficulty in preparing timely accounts, the transfer to the State is - 219 - ANNEX VI Page 3 of 4 calculated on the basis of the planned financial results for the year as agreed by the management and the Ministry of Planning. It is payable in quarterly installments. When actual data become available, adjustments are made. 7. In 1986, the financial sector accounted for the largest share of profit transfers (23Z), followed by internal trade (19Z) and fisheries (17Z) (see Appendix table D.2). Of the 137 enterprises (excluding Sonangol) that made transfers that year, 3 firms account for 30Z of total transfers (BNA, Cafangol and the National Lotteries), and the 10 largest contributors for 57Z of the total. However, the profits on which they are based do not always represent genuine operating results of these companies. E.g., the profits of Cafangol include increases in the value of large state-held stocks of coffee, and the results of fishing enterprises include part of the fish catch of foreign operators. Table VI.3: TRANSFERS TO GOVERNMENT FROM SELECTED PUBLIC ENTERPRISES, 1984-86, (PERCENTAGES) 1984 1985 1986 BNA 30 11 12 National Lotteries 11 8 10 Cafangol 2 15 10 Edipesca (Namibe) 5 5 7 Edipesca (Luanda) 5 5 1 Expedicao conjunta __ 3 5 Emprotel -- 6 -- Frescangol -- -- 4 Other 47 47 51 TOTAL 100 100 100 Source: Ministry of Finance 8. Corporate income tax. A basic rate of 35Z is levied on the income of enterprises in the private sector, including so-called mixed enterprises in which the state has a share (imposto industrial). In addition, there is a progressive surtax ranging from 2 to 30Z imposed on the same income (imposto de resistencia popular). While the maximum tax rate on enterprise profits is, thus, 65?, the average is around 502, which equals the current share of profits transferred by state enterprises. The share of corporate income tax in total tax on incomes rose from 142 in 1980 to 28Z in 1986. The government intends to merge the basic tax and surtax, and impose a single tax on profits of all enterprises, public and private. 9. Personal Income Tax. Income tax rates range from 1Z to 402 for wage and salary earners, deducted at source, and from 3Z to 60? for those independently employed. The system is quite complex, and collection problems are severe, although there has been a considerable improvement in - 220 - ANNEX VI Page 4 of 4 tax yield in recent years. Nevertheless, total tax collected, including from those independently employed, represented only 32 of the total government wage and salary bill in 1986, and less than 6Z of non-petroleum taxation. Taxes on Production and Consumption 10. These indirect taxes include duties on petroleum products consumed locally, on production and consumption of beer and about a hundred other products whether produced locally or imported, stamp duties, and royalty on diamonds. Together thiy accounted for 22X of non-oil taxes in 1986. After stamp duty, tha most important source of these taxes is the duty on beer. However, beer production, and thus the tax yield, is sensitive to the availability of imported inputs, which accounts for the fall in revenue in 1986. when foreign exchange allocations to industry were reduced. Moreover, theft and payment-in-kind of workers is widespread in industry and further reduces the indirect tax base. Taxes on International Trade 11. Given Angola's relatively high level of imports, ta:es on imports could be a significant source of budgetary revenue. However, in 1985 the effective duty on (recorded) merchandise imports was only 9.4Z, having dropped from 15.52 in 1982. These import duties have been contributing between 15 and 25Z of non-oil taxes. An outdated import tariff, serious collection problems, and a shrinking tax base account for the low yield of these taxes. The tariff, which dates from 1953 and contains many specific duties, has never been brought up to date. As a result, many importa carry low duties. Moreover, the tariff structure is complex and hinders implementation. 12. The collection problem has several causest the import tariff is complex, which makes proper application difficult; the Customs service operates with about a third of its estimated personnel requirement, and staff lack necessary qualifications; 1/ available transport, communications and office equipment are totally inadequate: and due to the war, the surveillance of borders is hazardous and communication is difficult. Tax collection is further affected by the decline in the volume of imports on which duty is paid. Many imports are covered by exemptions issued by various authorities, and tax evasion is widespread. The latter is made easier by the lack of authority customs staff have in the port. Army, police, port security staff and others interfere with the customs operations. Many take advantage of the lax application of procedures governing importation and clearance of goods; unauthorized imports are a major source of supply of the parallel market. 2/ 1/ According to one estimate, the Customs service requires a total of 2,800 staff. Its actual strength is only 832. 2/ More than 50Z of imports are said to enter Angola without an import license. - 221 - ^2 V__ Page 1 of 22 AGRICULTURE A. Agricultural Performance, Policy and Production Response I. Agricultural Performance. Seventy to eighty percent of the population derive a living from agriculture, which generates about 20 percent of official GNP. 1/ V'ith an area of 1,246,000 km3 (4bl.3 thousand square miles) and diversified ecological setting, Angola can grow a large variety of tropical and semi-tropical crops. Extensive areas are suitable for grazing with the Southern regions free from the tse-ts4 fly. Arable land is plentiful with estimates ranging from five to eight million hectares. There is potential for significant production of a broad variety of agricultural, livestock and fishery products, including, corn, cassava, beans, sorgum, sunflower, millet, potatoes, coffee, citrus, cotton, sugar, tobacco, bananas, palm oil, sisal, beef, pork, poultry, forestry and fish products. This range of crops can adapt to most soils and climatic conditions, ranging from cereals grown under irrigation in the cold season in the plateau region, to other cereals suited to the hot, rainy season; from robusta coffee in the forests (matas) of the Northeast to arabica coffee in the central plateaus; or from oil palm in Cabinda and Zaire Province to olive trees and vines in the Bero and Giraul lowlands, in addition to the country's forestry, livestock and fisheries potential. In the Maiombe and Dembos massifs, valuable forestry species abound such as African mahogany. Forests in the East and Southeast contain sizable stands of other worthwhile tree species. Eucalyptus and pine, of proven economic value, perform well in commercial plantations, especially above the 1,200 - 1,300 meter line. 2. Agricultural production, including livestock and fishery products, grew steadily until the disruption by the anti-colonial war. Angola was self-sufficient in all major food crops. The production of maize, the basis of the diet in the heavily populated central zone, had reached 710,000 tons in 1971, sufficient to permit significant exports (112,000 tons). Surpluses of other food crops, notably bananas, rice, sugar and palm oil, were also exported. Angola produced enough tobacco to satisfy its own needs and, in addition to being the fourth largest exporter of coffee, it was also one of the world's major producers of sisal. Exports of forestry products were considerable and livestock resources were abundant. According to the 1971 census, the last census available, there were more than 2 million heads of cattle and nearly a million goats. Moreover, Angola's long shore line (1,600 km) and Benguela's sea current provide rich potential for fishing along the Southern seaboard. In 1972, the fish harvest reached 600 thousand tons. 3. Since independence, agricultural output has experienced a dramatic decline which has affected virtually all products. The sudden departure of 1/ This represents only agricultural production marketed through official channels, which is estimated to be 10 to 15Z of total production. - 222 - L-M_II Page 2 of 22 the Portuguese resulted in the abandonment of most of the Portuguese-owned and managed farms, and created a manpower vacuum in many areas that are crucial to the effectiveness of agricultural operations, such as agricul- tural marketing, transport, input supply and research. Another major cause of the poor agricultural performance since independenci is the war. The limited access to the rural areas, the destruction of infrastructure, the disruption of families and communities, and the budgetary demands of the war have had an immense impact on agricultural activity. Finally, an equally important contributory factor has been the failure of agricultural policy and government intervention to provide producers with adequate incentives and the necessary support services. 4. The current situation in the sector is in stark contrast to both pre-independence production levels and to Angola's agricultural potential. Appendix Table F.1 presents estimates of current output levels for a range of agricultural products compared to pre-1975 figures. Production of the principal staple foods (maize, cassava, sorghum, millet) is estimated at 25-352 of the maximum output achieved just before independence. Production of many other crops (tobacco, sisal, cotton, palm oil, groundnuts) does not even reach 102 of earlier levels. While the number of cattle declined by only about 202, and the goat population actually grew by around 502, the number of swine as well as beef production were well below previous levels. The fish catch had dropped to a fourth of the 1972 catch as the Portuguese exodus deprived Angola of its fishing fleet and expertise. 5. Angola has been transformed from a country self-sufficient in food to one dependent on increasing food imports, including food aid, and on the verge of famine. Food aid requested for 1987/88 amounted to 200,000 tons of cereals, three times morer than the 68,000 tons requested in 1983/84. The ability of government to finance commercial food imports diminished from 238,000 tons in 1983/84 to 94,700 tons in 1986187. In addition, 18,000 tons of meat were imported in 1987. 6. Agricultural exports have virtually dried up. Production of coffee, until 1973 the principal foreign exchange earner, had fallen to 13,500 tons in 1987 as compared to 240,000 in 1974. Timber exports in 1985 were only 142 of the volume exported in 1973. A number of products that were previously exported are now imported (e.g., sugar, palm oil, beans). 7. Agricultural Policy. The massive abandonment of the Portuguese- owned and managed farms at independence created a vacuum with which the new government had to deal. With commercial private sector agriculture disin- tegrating, a centralized organizational set-up was introduced in an attempt to quickly fill the gap and establish a state controlled agricultural model. The central government institutions dealing with agricul.ture, have since formally administered prices, production, investment, marketing, distribution, exports, imports and all other aspects of the sector. They have attempted this in the face of severe technical, human resource, and administrative deficienc:es. Central planning, price controls and other macro-economic distortions, together with the neglect of the peasant sector, which was the major producer of food, eliminated incentives. - 223 - f 5Vi Page 3 of 22 Prices at all levels have been centrally determined and rarely changed and constimer goods have become increasingly scarce in the countryside. 8. A plethora of agricultural agencies has been established in spite of severe deficiencies in qualified staff. Only 1 percent of the labor force under the jurisdiction of the Ministry of Agriculture is cLassified as technical and most agricultural schools are closed. Under the Ministry of Agriculture alone, there are more than one hundred public enterprises and agencies. They include state farms and integrated agrarian complexes, as well as specialized forestry enterprises, service companies, etc. Under yet different bureaucratic jurisdictions, other public entities are responsible for agro-industries such as sugar cane, the production of agricultural implements and materials. In summary, Angola's initial experiment with centralization and administrative controls is understandable, in view of the post-independence disruption and insecurity and is to a large extent a reaction to the harshness of the Portuguese system of private sector exploitation and the subsequent the disarray following the massive exodus of Portuguese farmers and traders. Nevertheless, the maintenance of these policies despite the obvious constraints and failures is now recognized by many Angolan policy-makers as a mistake. 9. In addition to the problems of security and inadequate policies, investment in agriculture has been limited and poorly planned and imple- mented. In 1986, for instance, of the US$12.6 million in foreign exchange equivalent originally approved !or investment, only US$2 million was made available, in view of the severe balance of payments constraints. Moreover, while a cursory review of the 1986 investment performance shows a level of implementation exceeding 100 percent, it appears that 69 percent of the total investment for agriculture went to build 900 residences in Kuanza-Bengo, a questionable project not contemplated originally in the Ministry of Agriculture's plan. In contrast, only 47 percent of the planned investment for training and support services took place. 10. Production Response. Country-wide agricultural development is not possible at this time because of the war. As a result, two different situations of geographic response are examined. (a) secure areas; the part of the country where agriculture can be freely carried out consists primarily of the western coastal strip and amounts to about 20Z of Angola's land area. The supply of agricultural products from these areas is of considerable importance. Three million inhabitants, or 38Z of the popula- tion, live there, the majority concentrated in the urban centers of Luanda, Lobito, Benguela, Lubango and Namibe. And (b) insecure areas; the rest of the country's territory is subject to considerable security constraints and limitations of movement. Agricultural development in these areas is restricted and localized, confined to the perimeters of main urban centers. These areas are often refugee centers where survival depends on supplies brought in from outside. 11. The secure area where agricultural supply response to policy reform Is now possible can be divided into two zones: (a) the South-Southwest Zone(S-SW); this extends from Lobito-Benguela to the Cunene and consists - 224 - 5__Vl Page 4 of 22 largely of the territory of the Fifth Military Region (provinces of Namibe, Huila and Cunene). Areas of greatest potential are the Huila Uplands, the mid-Cunene Valley and the plateau strip from Lubango to Matala/Capelongo; and (b) the North-Northwest Zone(N-NW); this consists of the coastal strip from Cabinda to Sumbe (formerly Novo Redondo), of varying width but widest in the Soyo and Luanda-Dondo areas, coinciding with Baixo Cuanza. 12. In the South-Southwest Zone(S-SW) zone, the Huila Uplands and the strip extending eastward to the Cunene (Matala-Capelongo) have high agricultural production potential, especially for maize growing. Within a short period (four years), Huila could probably supply the entire S-SW region's market grain needs, estimated at 90,000, t/a in addition to the farmers' own consumption of about 70,000 tla. Infrastructure is mostly in place in this area. The traditional sector plus a number of medium-size commercial farms in the plateau area are expected to respond quickly to incentives. About 25,000 tons of maize were marketed in the course of the current farm year (1986-87), compared with 8,000 tons in the previous year following an improvement in incentives for farmers. Huila could also contribute substantially toward meeting the region's demand for beans, potatoes, sweet potatoes and various fruits (pears, apples, citrus and plums). Livestock potential is considerable in the S-SW region, particularly for cattle. Sufficient surpluses to meet the regional requirements, estimated at 8,000/10,000 tons of beef per year, are possible in the short run. Potential exists to meet the needs of the N-NW region as well, which includes the densely populated Luanda area. The region also has considerable potential for export crops of which cotton and tobacco are the most promising. Processing facilities for these crops exist in Benguela. The alluvial plains of the Benguela and Namibe areas in the S-SW offer high potential for irrigated agriculture. The supply of horticultural products and tronical fruit (bananas, papayas, mangoes, avocados) is easily assured from the truck-farming area of the Cavaco in the Lobito-Benguela area and those in Bero-Giraul in the Namibe area. Fruit canning plants in Lubango and Lobito can be reactivated. 13. The North-Northwest Zone(N-NW) includes the city of Luanda. Improving agriculture in this region is essential. Shipments of food from Huila, in addition to what is already brought in by air, are problematic because of the long distances involved and the lack of security. The N-NW Zone will have to rely on its own resources. Cultivation of the basic food staple, Cassava, is best suited to the N-NW area. Cultivation of this crop has already been considerably expanded in the areas around the capital. Cassava is now grown on many thousands of hectares of 3musseque"-type soils on the Luanda plateau. Its expansion into the interior of the strip has been continuing steadily, despite the fact that unit yields have fallen sharply as a result of viral diseases. Another major crop is sweet potatoes which is grown in the wet lowlands. Various forms of peas and beans such as the cowpea, the pigeonpea or Angola bean and the hyacinth bean are also grown, while maize is also becoming quite popular. Fruit and veRetable growing in the Luanda surroundings are carried on by large numbers of family-type operations. This source constitutes the main supply of fresh produce for the capital. A wide variety of horticultural products are grown in the dry season and tropical fruit the year round. - 225 - A" VII Page 5 of 22 14. Since rainfed crops are likely to contribute most decisively toward resolving the regional food problem, it is on them that development efforts should be focussed. Nevertheless, because of rapid population growth and land scarcity arising from a lack of security, irrigated agriculture should also be considered. From a technical point of view, prospects for irrigated agriculture in the N-NW strip are good. Land suitable for irrigated crops in the Lucala-Mucoso zone have been identified. Development of 30,000 ha based on gravity-type irrigation would be feasible through diversion of the Lucala river. Until such time as this area comes under irrigation, efforts in the river plain will be limited to the areas that are least affected by flooding. A wide variety of crops is raised in this area (bananas, oil palm, mangoes, papayas and citrus) together with a range of horticultural products. A substantial proportion of the agricul- tural products sold in the Luanda markets today comes from this region. 15. The N-NW strip is also suitable for cotton. It used to be grown in large parts of Bengo and Cuanza Sul provinces and especially in the Catete, Dondo, Porto Amboim and Sumbe areas where industrial-scale cotton ginneries are still to be found. Peasant farmers are familiar with the crop and the traditional system of cultivation practices. They should readily respond to policies and incentives aimed at reactivating cotton production. Livestock potential in the secure areas is especially promising in the coastal area south of the Longa river down to the Balombo Falls, with tens of thousands of hectares of prairie land on the Porto Amboim and Sumbe plateaus. This used to be an extensive commercial ranching zone with some tens of thousands head of improved cattle, while the raising of Karakul sheep was becoming a significant activity. Reactivation of stock raising in this zone should not present major difficulties. The forestry sector is also of significance in the N-NW region with a considerable production potential in the Maiombe forests in Cabinda and the Dembos in the interior of Luanda-Ambriz. Forestry development should focus on Cabinda province for a number of reasons including the proximity of the forests to the ports of shipment and the existence in t!-e area of infrastructure facilities, most of which are still usable or can be rehabilitated. B. Major Agricultural Products 16. This chapter presents in some detail the characteristics of the major agricultural products. The areas referred to are the 36 agricultural zones (AZs), identified in Map 1 attached to this Annex. They were delineated by the Angola Agriculture Study Mission, 1970-71 (Missao de Inqueritos Agricolas de Angola). They represent homogeneous units on the basis of soil, economic and environmental characteristics. (1) Crops and Forestry 17. Cotton was for decades confined to the semi-arid coastal strip (AZ 7/8 and 15) where production fluctuated because of low and irregular rainfall. Cotton growing in the Cassange Basin (AZ 9) was more satisfactory due to more and regular rainfall. In the coastal zone cotton is grown on heavy soils (vertisols) known locally as the "black Catete - 226 - Page 6 of 22 soils (terras negras de Catete) which retain water very well. Starting in the mid-sixties cotton spread to other regions, covering large areas in the Cubal and Quilengues regions (AZ 23 and 27) where rainfall patterns are much more favorable than along the coast; also to the Malange plateau, especially in the Cacuso and Cota regions (AZ 13/14). Cotton-growing potential also focused in other areas, notably the alluvial fringes of major rivers in the semi-arid South and Southwest, more particularly the extensive Cunene lowlands and adjacent areas. Total production of 86,000 tons, of which 25Z (19,992 tons) from peasant holdings and 75Z (62,795 tons) from the commercial sector, was zeported in the 1970/71 crop year. At present cotton production is down to about 300 tons. Peanuts (Ground Nuts) are a traditional food in northern and eastern Angola. In the traditional growing areas, peanuts do well on recently cleared light soils. Peanuts are a traditional smallholder crop grown for both on-farm consumption and for sale, promising quick response to production incentives. Production in 1970/71 amounted to 26,936 tons, mostly from the smallholders, although commercial production was rising sharply at the ti.ne, notably in the Cubal-Ganda region (AZ 23). Present production is orly, about 1,700 tons. 18. Rice is an important crop in the areas of the Cuquema and Songo Rivers. Smallholder rice growing takes advantage of the temporary flooding during the rainy season which coincides with the growing cycle. Yields vary depending on fluctuations in water levels. Rice is grown commercially i-n regions such as the Quibala (AZ 17), where the flooding of river bottom lands can be controlled, and on higher elevations in northeastern Lunda (AZ 10), where upland rice is grown. The semi-arid belt in southern Angola, particularly the vast river plains of the Cunene and Cubango, should also be able to produce high rice yields. In 1971/72 paddy (unhulled rice) production amounted to 57,604 tons. Smallholder production was approximately 52Z of the total. At present rice production is estimated at about 800 tons. Bananas grow throughout much of the country and are an important element in the local diet. Areas of greatest potential are limited, however, to the littoral and sublittoral zones north of the Coporolo, extending from the shoreline to 400 m elevation (AZ 2,4,7/8 15 and the northern portion of 22/29). Because this section of the country is prone to drought, irrigation is needed, and deep, fertile soils with the correct characteristics are required. Best conditions are found in the lower reaches of the main watercourses. These river valleys offer the most favorable climatic conditions: high mean annual temperatures (above 23-24 degrees C), stable temperature and weather conditions. Commercial banana growing started early in the sixties in the Cavaco Valley (Benguela), spreading to favorable areas in the Cuanza, Dande, Lifune, Cubal and Cuvo Valleys. Exports totaled 75,000 tons a year in 1974 and 1975. About 25,000 tons are produced at present. 19. Potatoes: Potato cultivation spread considerably during the sixties. Growing was initially confined to higher elevations (above 1,600- 1,700m) in the Central Plateau, in the mountainous region of Vila Flor - Quipeio. The cultivation soon extended beyond to the Central Plateau (AZ 24) and in surrounding transitional zones (AZ 17 and 31). The Cela region became particularly important for commercial growing, in the early sixties, - 227 - ANNEX VII Page 7 of 22 as the main supplier of potatoes for the Luanda market. Outside the plateau region, potatoes can be grown during the cooler season, where the lower the temperature, the better the results. Potential also exists in the alli.vial bottom lands along the coast south of the Rio Catunbela, particularly the valleys of the Cavaco (Benguela) and the Bero and Giraul (Namibe). In 1971/72 production amounted to 138,757 tons with 54 percent from the commercial sector, and 46 percent from the smallholder. Production has since declined to about 8,000 tons. Sweet Potatooes are an important local food staple, following cassava and maize in importance. They are grown widely throughout the country, on land adjacent to river bottoms. They require relatively fertile soils, either dry (or not very susceptible to flooding) or growing on higher ground or hillsides in rainier areas. They are usually associated with other crops (intercropping). Yields are best in the humid and subhumid areas with higher mean temperatures; they do less well below latitude of 14 d gree S. Estimated production was about 250,000 tons in 1973. Present production is estimated at about 100.000 tons. 20. Robusta Coffee is grown over a wide area, ranging from the northern and northwestern frontier zones to latitude 12 degree S along the mountain relief between the sublitoral zone and the subplateau region in the interior. This area benefits from ocean moisture which helps form on- shore fogs of considerable duration in the dry season, offsetting the lack of rainfall. This sustains the dense semideciduous type forest where robusta coffee (coffea canephora) is a subforest shrub. Growing is largely confined to Dembos-Uite (AZ 3) and Libolo-Amboim (AZ 16), occupying only a fraction of the potentially suitable area, particularly in the case of Dembos-Uige, where plantations can be established under the cover of the natural forest. Certain savanna areas (AZ 17) bordering the forest and enjoying similar climatic and soil conditions (paraferralitic soils and ferrisols), are also favorable for coffee plantations under forest cover. Arabica Coffee: Favorable conditions for arabica coffee are found in the central region above elevations of 1,400 - 1,500 meters where mean temperatures fluctuate in the 18-19 degree C range and mean annual rainfall is in excess of 1,300 mm. These areas are associated with a particular type of paraferralitic soils (thick, agrillaceous and well structured), with capacity to retain and store water for the 5-6 month dry period. Serra da Chicuma, 'wiere commercial growing predominates, and Andulo- Nhareia, where smallholder production prevails, are traditional arabica growing areas. (AZ 24). Output of arabica coffee is small, representing not more than 4-5X of the total quantity of coffee traded. Total coffee production (robusta and arabica) reached 240,000 tons in 1974 but has declined to 13,500 tons since then. 21. Sugar Cane is grown over a vast expanse of Angolan territory (AZ 7/8, 17, 22/29, 23, 27, 33, 34, 35 and 36). Production scale requirements and high costs of sugar mills limit the potential areas. Irregular rainfall in areas otherwise suitable make irrigation necessary. Consequently sugar mills were all established on the coastal belt and on the margins of large rivers, where--in addition to large tracts of suitable alluvial soils--they found a convenient and assured source of irrigation water. This low-lying littoral and sublitoral zone, particularly the - 228 - hL VII Page 8 of 2? alluvial lowlands of the Cuanza, Lucala, Longa, Queve and Coporolo, represent the country's potential sugar-growing reserve. The Lower Cunene region (AZ 34) with its favorable climate holds high potential for industrial-scale production. Now that the flow of the Cunene has largely been regulated (Gove reservoir), water could be made available to irrigate land suited to growing cane. In 1970/71 sugar production was 75,864 tons. By 1974/75 it had risen to 80,000 tons. Thereafter production declined sharply, and is now at less than 15,000 tons a year; one of the four refineries (the A9ucareira do Bom Jesus) has in the interim suspended operations. 22. Beans: Various types of beans are consumed by the population. Mention should be made of the different varieties of kidney bean (Phaseolus vulgaris) and cowpea (Vigna unguiculata) which grows just about everywhere, frequently in association with other crops, mostly in the plateau areas of central Angola (AZ 17, 23, 24, 25 and 31). Beans are a standard item in the popular diet, a good source of protein consumed daily when available. Yields fluctuate with soil fertility and cultivation practices. Other types of *peal and wbean' are Angola, Congo or pigeon peas (Cajanus cajan) and hyacinth beans (Lablab vigor), characterized by their hardiness and adaptability; the former are of particular interest for northern Angola, especially the drou&ht-prone areas (AZ 2 and 7/8). Production in 1970/71 amounted to 65,479 tons, with the peasant sector accounting for much of the total. Commercial growers contributed less than 4 percent. Production has declined significantly since then to 2.5 thousand tons. 23. Fruit: Economically significant fruit growing for which conditions are favorable include pineapples, mangoes, papayas, passionfruit (maracuja), guavas, avocados and various types of citrus. Pineapples adapt readily to medium-elevation subplateau conditions with well-drained ferralitic soils of medium to light texture, conditions found in large parts of AZ 4, 5, 13/14, 17 and 23. Mangoes and papayas are widely distributed but they do best in hot, humid regions without major temperature fluctuations, and deep, well-drained, fertile soils. This explains the preference for low- to medium-elevation areas in the northern half of the country, more particularly AZ 2. 4, 7/8, 13/14, and 17. Passionfruit, guavas and avocados grow readily in large parts of the country, and do best at medium elevations in the subplateau and plateau regions. Citrus fruit, including oranges, tangerines, lemons and grapefruit, adapt well to ecological conditions found in Angola, provided suitable soils are chosen and irrigation offsets lack of water during the dry season. Certain areas lend themselves to large-scale expansion of citrus growing for juice concentrates. These areas are in the southern half of the country (AZ 31, 33, and 34). 24. Sunflower became an important crop in the provinces of Malange, Cuanza-Sul and Benguela. Seeds were processed locally for oils and fats. As a commercial crop, it would be of potential interest in the South and Southwest, largely between latitudes 12 degrees S and 15 degrees S (AZ 23, 27, and 31) where there are large areas suitable for sunflower cultivation. With proper cultivation techniques, fairly high yields should be possible, making sunflower growing an attractive proposition for Angola. From a - 229 - N VII Page 9 of 22 start in the early sixties, production rose steadily to almost 20,000 tons a year (17,930 tons in 1970/71). Present production is negligible. Cassava is the most widely consumed food of the local diet. It is a traditional crop in the northern half of Angola, (AZ 1, 2, 3, 4, 5, 6, 9, 11, 13/14, 19, and 21). Climate and soils are very favorable for cassava: 6-7 month rainy season followed b-y a dry season, rainfall ranging between 700 mm and 1,400 mm, mean annual temperature from 21 degrees C to 26 degrees C, and relative humidity averaging 65Z over the year. Cassava is eminently a peasant crop. Production amounted to 1,134,262 tons in 1970/71, exclusively from the smallholder sector. It is presently down to 250,000, though this estimate is very tentative. 25. Sorghum (known locally as massambala) is a cereal characteristic of hot, dry climatic zones, found particularly in the semi-arid band occupying the South and Southwestern parts of the country (AZ 27, 30, 31 (southern portion), 33, and 34). Sorghum, and also millet, another cereal resistant to drought, are closely linked with the traditional practices of pastoral peoples who engage in subsistence farming and cattle raising. Sorghum is relatively undemanding in terms of soils and cultural practices, and it adapts well to heat and drought. It provides a good dietary complement to the milk and dairy products which are the mainstay of the local population. Production estimates are difficult to make. Millet (known locally as massango) is grown in the broad stretch of southern Angola that extends from the Cunene to the Cuando, (AZ 32, 33, 34, 35, and 36). Millet is characterized by its hardiness, and is more drought resistant than sorghum. It is well adapted to the poor sandy soils of the South and Southeast. Like sorghum, it is typical of the subsistence agriculture of pastoral peoples, who frequently establish their plots (lavras) in areas that have been manured by their cattle. 26. Maize is the basis of the diet in the densely populated central region of Angola. It is grown over a wide area. Essentially a rainfed crop, it is the cornerstone of smallholder farming (AZ 17, 18, 24, 25, 30 and 31). Most favorable conditions are found between latitudes 14 degrees S and 15 degrees S, with precipitation in the 800-1000 mm range concentrated in a relatively short period of 4-5 months. This characteristic rainfall pattern changes from S to N, with the rainy season growing longer and having a brief dry period (known as the pequeno cacimbo) separating two periods of heavy rainfall. Well-structured argillaceous soils are well suited to this crop, particularly those with vertic characteristics and even tropical fersialitic and parferralitic soils. Until the mid 1970s, Angola produced sizable maize surpluses. )utput in 1970/71 amounted to approximately 709,750 tons, of which almost all came from the peasant sector. We estimate present production to be about 250 to 300 thousand tons a year, mostly for home consumption. 27. Oil Palm (elaeis guineensis) grows in a band of territory in the N and NW up to an elevation of 500-600 m. Oil palm trees are found in the hot, humid valleys (AZ 1, 2, 3, 4, 6, 7/8, and 15), where dry-season water requirements are met by groundwater close to the surface. Palm oil plays a major role in the local diet, extending far beyond the tree growing areas. Smallholder cultivation would be of considerable interest along the banks - 230 - AN _E U VII Page 10 of 22 of the major watercourses. Oil production was in the 20.000 ton range in the early 1970s with the smallholder sector accounting for about 10 percent of the total. Production has since declined to negligible levels, about 600 tons in 1986. Sisal: Angola was one of the world's major sisal producers. This fiber was grown in two main regions: north of the Cuanza, in the subplateau region of Lucala-Cacuso (AZ 13/14), and South, in the Bocoio- Cubal region and subplateau region (AZ 23). In addition to these areas with favorable transportation infrastructure (with the southern area also benefitting from proximity to the port of Lobito), sisal plantations were also found in other parts of the country, notably the interior plateau in Kuanza-Sul. Yields were generally high. The Lucala-Cacuso subplateau zone can be identified as the most favorable area for this crop. (AZ 17,23 27). The region generally has a subhumid climate with a relatively hot six-month dry season followed by a rainy season with precipitation averaging 800 - 1,100 mm. and good soils. Sisal cultivation has virtually ceased today. Production was around 48,000 tons a year in 1970/71. 28. Tobacco is an important smallholder crop especially in the Cacuso-Cota area (AZ 13/14) and a significant commercial crop in the Southwest, particularly in the Quilengues-Chongoroi area (AZ 27). Smallholder production is in small plots using simple technology to produce a dark air-dried tobacco with ready local market. Commercial growing is practiced on the moderately fertile light or medium-textured soils found along the banks of the major rivers of the Southwest, yielding high quality flue-dried yellow tobacco. In addition to the traditional tobacco-growing areas listed above, other regions also lend themselves to this crop, notably AZ 25, 31 and 34. Tobacco production satisfied the needs of the Angolan market. Three processing plants (two in Luanda and one in Benguela) were fully employed. In 1973, 4,800 tons of Virginia and Burley type tobacco were produced, including a few hundred tons of dark tobacco produced by the smallholder. Today production is negligible. Wheat growing was widespread in the higher-elevation areas of the planalto, particularly in the Central Plateau (AZ 24) and the Huila Highlands (AZ 30), where it is cooler during the rainy season. Cooler conditions coincide with the crop's vegetative cycle, making it rather susceptible to rust and causing considerable fluctuations in output. Thus, whereas production in the fifties was in the region of 30,000 tons, the 1970/71 harvest amounted to only 22,566 tons. The smallholder sector contributed 432 of the total. Trials at the Cunene Experimental Station for Irrigated Crops (AZ 34) with irrigated wheat, produced excellent results, effectively controlling the rust problem. 29. Forestry Resources: Angola's forestry resources and potential are considerable. In 1973, 182.0 thousand tons of forestry products were exported. In 1985 wood exports were 24.9 tons, up from 1.2 thousand tons in 1980 (Appendix table F.6). Maiombe in Cabinda (AZ 1) and Dembos (AZ 3) regions have the main forestry potential. Dense humid forests are the centers for the production of such valuable species as mahogany, mulberry, tola and limba. Worthy of mention are other stands of forest in other parts of the North and Northeast, (AZ 6), containing noble species (panga- panga), (AZ 4). In the East and Southeast of Angola, (AZ 26/28, 32 and 35), the dry forest or open forest stands growing in the vast territory - 231 - ^NN2L_VII Page 11 of 22 covered by Kalahari sand also include a variety of species of economic value such as girassonde and mussibi. The potential for exotic species of trees such as eucalyptus and pine is considerable. Eucalyptus grandis and E. saligna adapt well, particularly at elevations above 1,200-1,300 meters. A number of pine species do well, notably pinus patula, f3und in extensive areas at higher elevations. The eucalyptus area exceeded 150,000 ha in the early 1970s, with the wood produced going to the Alto Catumbela pulp mill and the Benguela Railroad. A second pulp mill was under construction ir& the mid seventies but was never completed. The Alto Catumbela pulp mill has been out of operation for several years. (2) Livestock 30. Livestock potential is significant though production faces similar difficulties as the rest of agriculture. Water has become a major problem. Livestock acquires special importance in the immediate future considering that about 45 percent of livestock is found in relatively secure areas. Native livestock herders, pastoralists, raised cattle as a way of life long before the arrival of the Portuguese colonizers in the 15008. In the early colonial period Portuguese merchants exchanged goods for animals with the pastoralists. As the colonial rule became more established, merchants turned farmers and cattle raisers while continuing to trade with the native people. Later, large scale ranches were es- tablished with improved animal stock and increased commercialization. The pastoralists travel from place to place as a way of life, searching for water and grass, trying to escape from tripanosomiasis transmitted by tse- ts6 fly. For them cattle are the main source of food, beef and milk, which is bartered for goods. They are also the peasant's status symbol. Cattle raising, due to its economic, social, religious, and cultural characteris- tics, is the center of a peasant's life in these regions, the standard of value, and cattle are part of the festivities of birth, puberty, and wedding. Though pastoralism and ranching are different systems of cattle raiong, the two became interdppendent. The ranchers were the main source of ueat, the pastoralists were an alternative source, with the stock they maintained as their security and savings. The disruption of ranching at independence and the neglect of the pastoralists, compounded by security problems and lack of goods for exchange, reduced beef production from 24.5 thousand tons a year in the early seventies to 3.5 thousand to1is at present. Having been a meat exporter in the early 1970s, Angola imported 18.0 thousand tons of meat in 1986. 31. Beef Cattle raising in the South and Southeast is dependent on the availability of water. Water tends to limit, even more than pasture, the reproduction rate and herd size. In the traditional pastoral zones (AZ 22/29, 23, 27, 30, 31, 33, 35 and 36), cattle numbers reflected the limitations imposed by the environment. Numbers would decline sharply at the height of the dry season, when the animals were obliged to crowd around the few sources of water. Many would die from lack of food brought on by overgrazing. Action was taken in the mid-fifties to break the boom-and- bust cattle cycle of abundance followed by drought. These measures took the form of providing, throughout the region in question (AZ 22/29, 33, 34 and 35), a series of livestock watering facilities by tapping underground - 232 - ANNEX.VI Page 12 of 22 water resources and constructing reservoirs. The results of these measures were spectacular. Instead of the old pattern of disastrous concentrations of animals around the few permanent water sources ard on the banks of the Cunene during periods of crisis, the herds remained uniformly distributed across the territory, allowing a significant increase. In the course of some two decades, this expansion in grazing areas in the South resulted in an increase of one million head of animals (from 1.8 million in the mid fifties to approximately 2.8 million in 1974/75). The commercial sector increased significantly, with grazing areas ranging in size from 5,000 ha to 20,000. The period saw the establishment of several dozen large cattle ranches. Meanwhile beef cattle raising spread outside the traditional pastoral areas of the South into the plateau region (AZ 13/14, 17, 24 and 25) where oxen had hitherto been associated with farming only as work animals (for plowing and animal traction). The harshness and difficulties of the environment (poor natural pasture and inadequate health conditions) were overcome through proper disease and pasture control. The central region became a favorable area for stock raising, and in some respects more promising than the traditional areas in the South, as it was possible to raise a higher number of animals per unit of land without water availability proiblems. A large industrial abattoir was established in the city of Huambo, processing several hundred head of cattle a day. Cattle raising in Southern Angola is becoming increasingly difficult. South- African troops have been systematically destroying the water spots (artesian wells, small dams and water pools), most of which are now unusable. In consequence of the water problem, security and policy conditions, several areas where cattle were previously raised are now almost deserted. 32. Dairy Cattle: To judge by the success achieved in Cela where output reached 120,000 liters of milk a day after just a decade of opera- tion, Angola's dairy potential is considerable. In many other parts of the country, particularly in the higher-elevation plateau regions, potential is as good. At independence, Angola had three main dairy production centers. The largest of these was the Cela-Catofe dairy with some 60,000 cows producing 120,000 liters a day, followed by Huambo (30,000 liters/day) and Matala/Capelongo (15,000 liters/day). Apart from these modern 'ell- equipped creameries (pasteurized and sterilized milk, cheese and butter), there were also smaller production facilities near the towns of Lubango, Benguela and Luanda. Goats represent a major source of animal protein for the local population and are resistant to drought. Like pigs, goats are found throughout the country. Their concentration was highest where a system of markets existed, geared to the consumer market in Luanda. 33. Herd Estimate: The likely distribution of cattle and goats in these provinces is shown in Table VII.l. - 233 - L_ 2[Ll Page 13 of 22 TABLE VII.1 Distribution of Cattle and Goats in Southern Angola Province Cattle Goats Huila 45Z 63Z Cuneme 301 14Z Namibe 10o 9Z Source: Ministry of Agriculture and Mission estimates. According to the 1971 census, the last census available, there were 2,244,000 cattle and 872,000 goats. The Ministry of Agriculture estimated that in 1984 there were 5,408,000 cattle and 2, 101,000 goats. For these estimates, it was assumed that the annual net growth rates remained the same since independence as in the colonial period, i.e. an average growth rate of 7Z per year for cattle and goats. A 72 growth rate, however, is excessive for the conditions prevailing in Angola since independence. The Mission estimates that cattle and goats have had a more modest rates of increase: 5? from 1971 to 1975, 2? from 1976 to 1981; 1? from 1982 to 1987. Thus in 1987 the cattle stock of Angola should be closer to 3,420,000, and the goats to 1,300,000 animals (Appendix Table F.1). (3) Fisheries 34. Angola has a rich 1,600 km long shore for fishing. The Benguela's sea current improves the potential for catch along the Southern seaboard. The 1972 fish harvest reached 600 thousand tons. The Portuguese exodus in 1975 depleted Angola of its fishing fleet and expertise and the catch declined to as low as 76 tons in 1983. Present estimates are around 195,000 tons. Some estimates are as high as 470,000 tons. The increase is due to the agreements the Angolan government reached with foreign companies to fish Angolan waters. These contracts helped to increase the catch, of which Angola receives 15 to 20X. The problem with these arrangements is that Angola does not have the means to independently verify the catch. Thus, although it is estimated that in 1985, 470,000 tons of fish were caught, reported amounts were only 195,000 tons. The technologies used by some foreign fishing fleets are endangering future potential. It is suspected that some use sucking techniques, which cause irreparable damage to seashore plankton. There have been reports of deterioration in fishing locations. C. Rural Structure 35. Producer Organization. Policies regarding the organization of agriculture since independence have emphasized state or collective owner- ship. In the words of Agostino Neto, Angola's founding president, soon after independence, 'Thousands of Angolans are owners of the means of production. We know very well how difficult it is in rural areas to - 234 - 3__II Page 14 of 22 transform these small-holdings into cooperatives or state farms. . .'. 2/ However, some private commercial farms continued to exist and the present S.E.F. program encourages the expansion of private commercial farming and gives greater attention to the individual peasant producer. 3/ Two main forms of production organization were established: 1. The AUPs (ARrupamentos de Unidades de ProduQ&o) or State Farms. Abandoned commercial farms were combined into state-owned production units with managers and workers as public employees. Ir. the case of coffee they are known as " empresas territoriais de cafe " ( ETC ). AUPs depend on the Government for financial support and almost without exception, they have incurred substantial losses. In 1986 the reported losses of state agricultural enterprises were 1,815 million Kwanzas, or U.S. $61.3 million at the official rate of exchange (Table VII.2). The AUPs reported a loss of 477 million Kwanzas, or 26Z of the reported financial loss of the enterprises under the Ministry of Agriculture. Table VII.2: Losses of State-owned Agricultural Enterprises ('000 Kwanzas) 1983 1984 1985 1986 AUPs (State Farms) 1,259,957 714,800 399,073 476,590 Comp. AgrAr. e Empresas Locais 849,084 738,100 456,843 449,816 Emp. Territ. Cafe 396,537 725,600 1178,771 951,519 Emp. de Servicos 923,867 245,700 47,768 379,737 Emp. Sect. Florest - - 52,394 261,512 EDAs - - - 54,825 TOTAL DEFICIT 1,581,711 2.424.200 2,134,849 1,814,525 Source: Relatorio Sobre a Actividade do Sector Agrario em 1986, Ministry of Agriculture, 1987. This table does not include ENCODIPA which comes under the Ministry of Commerce. Its deficit was reported to be at about 100 million Kz in 1986. 2. Peasant Associations. Intended originally to be collectives, some as cooperatives, they have become agglomerations of peasant households making their own production decisions. Their presumed advantage is 2/ As reported in M. Wolfers, and J. Bergerol, An&ola in the__Front Line Zed Press, 1983 p. 140. 3/ The Angolan constitution allows private ownership: "private activities and property, even those of foreigners, so long as they are useful to the country's economy and to the Interests of the Angolan people' - 235 - A _ Page 15 of 22 priority access to government services and inputs. Unlike state farms, peasant associations do not collectivize production. 36. Despite the effort to change the rural structure to conform to ideological considerations, the underlying peasant organization remains the same as it was before independence. Today the rural structure consists of three major groupings: (a) declining large-scale state farms; (b) relatively small numbers of Portuguese farmers known as "cooperantes,* producing mainly fruit and vegetables; and (c) a large and dominant sector of peasant (small holder) agriculture. Various types of producers make up peasant agriculture. They include pastoralists herding in the Southern regions; small scale farmers producing maize, sorgum and cattle in the transitional zones of the pastoral areas of the South; small farmers of the fertile and densely populated central plateau; small farmers in the coffee areas; small farmers growing cassava as their main staple in the Northern and North Eastern regions and in the tropical forest; and a small number of hunters in the far South. The typical peasant family cultivates 1.5 to 2.5 ha with subsistence crops. Rotation and intercropping is the usual practice. Tools are rudimentary with the hoe most common. Animal traction is used in some areas as in the fertile areas of Huila province. We estimate that there are about 800,000 to 1,000,000 peasant family units. 37. Whereas peasant agriculture remained essentially unchanged since independence, commercial farming which flourished in colonial times, has almost disappeared. The Portuguese colonial policy supported settlers from Portugal with land grants and financial incentives (coffee, cotton, citrus, tobacco, beef, poultry, etc.) Substantial investments were made in infrastructure such as irrigation and transport in support of commercial farming. Efficiency varied, with highly productive farms in the minority, many of which belonged to urban-based industrialists and businessmen. Farm size varied, with some farms as large as several thousand hectares. Commercial livestock production is estimated to have been as high as 402 of the total. The commercial sector was supported by agro industries, marketing and processing infrastructure. Animal feed mills catered to the dairy, swine, and poultry industries. Other industries included flour mills, slaughter houses, fruit canning, vegetable processing, tobacco, and cotton processing. 38. Marketing. The Ministry of Internal Commerce (MIC) is responsible for the supply and distribution of goods in both rural and urban areas. In rural areas MIC is expected to supply consumption goods in exchange for agricultural products. However, the distribution of meat comes under the Ministry of Agriculture. Between twenty and thirty thousand merchants performed the rural marketing function before independence. Most combined trading with faanming and cattle raising. The variety and flexibility of the large number of private traders and entrepreneurs responded to the local conditions in ways which the present centralized national trading system is not able to do. The availability of consumer goods and access to them by the peasantry determine the amount of rural surplus available for exchange. The present system is failing to provide these needed goods, both consumer goods and agricultural inputs. As a result, the peasant is no longer producing for the market but only to meet his family's needs. In - 236 - N VII Page 16 of 22 response to this situation, a sizable parallel market developed with prices that range from 20 to 60 times official price. With such major markets distortions, government stores have few goods to offer. It is estimated that up to 90Z of family income in Luanda is consumed in the parallel market. Imports and food aid are increasing dramatically to close the food gap. As most peasants have sufficient cereals, imported food goes to meet urban demand, the needs of the armed forces, and the displaced. 39. It is difficult to estimate how much of the domestic agricultural production moves through official channels, although it could not exceed 10 to 15Z of production. For instance, in 1986, maize production through official channels was 18.6 thousand tons. In contrast, total maize production is estimated to be about 300 to 350 thousand tons, having been as high as 700,000 tons in 1971. Consumer goods, when available in rural areas, can be purchased up to the value of the produce the peasant supplied the store at official prices. The shelves of these stores, however, are empty and what goods become available move quickly to the parallel markets. Greater reliance on market forces is needed, not because such reform is in itself sufficient to encourage agricultural development but because the flexibility which markets allow is a prerequisite for other requirements of long-term agricultural development. D. Agricultural Support Services 40. The Ministry of Agriculture is responsible for most agencies and organizations that provide services to agriculture. Their effectiveness is seriously compromised by excessive centralization and a shortage of qualified staff. In the provinces, the Ministry of Agriculture is represented by the Delegation (Delegag&o) with "directorates supporting peasant associations, livestock, conservation, and other corresponding services from the national level. The emerging attention to the neglected peasantry is mistakenly perceived as requiring the creation of another layer of costly official institutions. The recently introduced agricultural development stations (EDAs), for instance, are already burdened with Departments of Planning, Finance, Human Resources, Technology, Supply, etc., another cumbersome bureaucracy. Agricultural policy should move in the opposite direction and should rely less on the public sector because of the latter's severe human, financial and organizational constraints. Some of the agricultural support services provided are described below. 41. Mechanization: ENAMA (Empresa Nacional de Mecanizacao Agricola) provides mechanical services to agriculture. It is involved in ground clearing, leveling, and construction of earthworks for reservoirs. ENAMA's work is presently concentrated in the most secure areas in the south and in large scale state farms. In the absence of precise data it is difficult to assess the performance of the ENAMA. It is unlikely, however, that tractor cultivation, with some exceptions, is economic in the conditions prevailing in Angola. Scarcity of technical and material resources have severely affected the work of ENAMA as well as the rest of agricultural services. In 1986 less than 2Z of the work force of ENAMA was classified as technical. More than 70Z of its tractor fleet was inoperative due to lack - 237 - Page 17 of 22 of spare parts and maintenance problems. The parts problem is complicated by a lack of uniformity in makes of equipment, a problem that is aggravated by individual donors promoting their own brands of equipment. 42. Fertilizer and Implements: DINAMA (Distribuidora Nacional de Materiais Agricolas) is responsible for the procurement and distribution of implements, fertilizer and insecticides. It distributes these materials on the basis of a national master plan for the agricultural sector as elabora- ted by the Ministry of Agriculture and approved by the Ministry of the Plan. DINAMA is heavily dependent on imports (Appendix Table F.4). There i exists some Luenda-based capacity to manufacture small equipment such as machetes, hoes, and plows. In 1987, domestic production of implements was at a standstill, however, because of a lack of raw materials. All chemical fertilizers are imported. DINAMA has warehouses in Luanda and in the provincial capitals with outlets in some localities, which sell directly to the public and act as distribution points for delivery to state farms, peasant associations, etc. However, even when fertilizer and other inputs are available, transportation is a major constraint. The transport fleet of DINAMA cannot meet the demand for transport of large volumes of materials over long distances on poor quality roads. The problem is exacerbated by the high percentage of equipment out of commission, estimated at about 702 of the fleet. The security situation further hinders distribution. 43. Seeds: AGROS-MENTES is responsible for the purchase and distribu- tion of seeds. Agrosmnentes was formed under the Ministry of Agriculture in 1983. Until then ENCOPIDA was responsible for this service. Sped distribution is given high priority by the Ministry of Agriculture. The amounts of seed distributed have been increasing in recent years. The distribution of maize seed increased from 773 tons in 1984, to 1,668 tons in 1985, and 1,994 tons in 1986. There has been some improved seed production under Yugoslavian supervision. There are plans for seed development in multiplication centers in a number of areas. Even when seeds are timely distributed the productivity of hybrid seeds is dependent on the timely availability of fertilizers (supplied by DINAMA). The coordination of complementary inputs has not worked well. AGROSEMENTES emphasis upon hybrid maize appears to be of limited relevance to the mass of peasants for whom the supply of proven local varieties might well be more beneficial. 44. Marketing and Distribution of Goods: ENCODIPA (Empresa Nacional de ComercializagAo e Distribuicao de Produtos Agricolas). ENCODIPA provides consumer goods to rural areas in exchange for agricultural products. Until 1981 ENCODIPA was in the Ministry of Agriculture. Since then it has been under the Ministry of Internal Commerce. It operates through commercial outlets in urban and rural areas. The amounts of goods procured and distributed by the Ministry of Internal Commerce are determined by the central government, as are the distribution among provinces and between cities and the countryside. The goods available through ENCODIPA fall far short of need and the system as presently functioning does not provide adequate incentive for production and exchange. Extension Services: The "dinamizadores rurais" (rural - 238 - ANNX5 VII Page 18 of 22 mobilizers) can be considered a type of rural extension agents. Approximately 1,000 dinamizadores have been trained since independence. Attrition has been around 302. Their preparation is poor with only about one-third receiving any training in agriculture. Many receive only six months of training in total, some only three months. There does not seem to be any linkage between the work of the dinamizadores and the other services to agriculture. 45. Agricultural Development Stations (Estacoes de Desenvolvimento Agricola - EDAs) are a recent introduction and a response to the failures of other institutions. EDAs aim to support peasant associations by helping with organization, technical, financial, and marketing services. The intention is to transform the state farms into peasant associations. Unlike state farms peasant associations do not collectivize production. The EDAs were designed to fill the gap between DINAMA and AGROSEMENTES and the peasant. They are to receive supplies and deliver them to the peasant associations through lower level Centros de Desenvolvimento Agricola (CDAs). The CDAs in turn direct the activities of the dinamizadores rurais (extension). EDAs are flawed by the same structural and strategic inade- quacies found in the overall agricultural structure and policy. They face the same problems as all institutions set up to serve agriculture, notably a lack of training, an excessive centralization, and a lack of resources. 46. Agricultural EduLation and Research. (a) Agricultural Education. The institutions which serve agriculture, whether private or public, depend upon skilled people. The scarcity of trained people at all levels is enormous. The colonial regime provided little training to Angolan nationals. Decolonization and the withdrawal of trained persons depleted all sectors of the skills needed to manage agriculture from the most basic level. The situation of the agricultural schools described below shows the poor state of agricultural training facilities. 47. The Agricultural School at Huambo began graduating Eng. Agronomos (general agricultural degree) in 1983. It expects eight to ten graduates a year in agriculture plus four to five in veterinary science. Of about 80 students admitted, 75? dropped out the first year. Staff, materials and genebral infrastructure are very deficient, and lack of food is a main reason for the high drop-out rate. Of the elementary and secondary level agricultural training schools in Angola, none is fully operational, due mainly to the security situation. They include: (1) Escola de N'Gangassol; Situated in the province of Malange, it was inaugurated in 1979 to offer training in basic agriculture, livestock, cooperative development, accounting and agricultural mechanizaticn. The plan was to have 300 students. Because construction was not completed, the maximum capacity is 80 students. As of August 1983 this school has been closed due to the gravity of the military situation. (2) Escola de MecanizacAo de Sumbe; this school is located in the province of Kuanza-Sul. It was inaugurated in 1979. Its objective is training in agricultural mechanization at the regional level. Its planned capacity was 200 students, but construction was never completed. Though - 239 - SEi- l Page 19 of 22 enrollment reached 59 students, the facilities proved inadequate. The deterioration of the military situation in the area forced the school's closing in March of 1984. (3) Escola de Mecanizacaao de Huila; this school is situated in the city of Lubango. It was inaugurated in 1978 as an agricultural mechanization training school to serve the needs of the provinces of Huila, Namibe, Kunene and Kuando Kubango. The school has a maximum capacity of 120 students, and being located in a secure city continues to be in operation. (4) Escola A raria do Cafe da Gabela; this school is in Gabela in the province of Kuanza-Sul. In 1978, 127 students studied courses in sanitation. Its present state is not clear, but it is probably closed. (5) Centro Comandante N'zaae (Huila). Closed. Offering only occasional seminars. (6) Centro de FormacAo de Dinamizadores Rurais para o Cafe do Kilombo (Kuanza-Norte) has been closed since May 1982 because it has no eating facilities. There is lack of water, light and food. (7) Centro de Formacao de Quadros do Huambo; has been closed since 1982 for regular courses. A few training courses are given intermittently in the province. 48. With such limitations in training facilities and the exodus of qualified personnel at independence, human resources for agriculture are practically non-existent. The human resource deficiencies and the long time needed to reach even a minimum critical manpower level call for alternative less human-resource intensive paths. Even when institutions such as those for extension and research are considered immediate prerequisites to agricultural development, simple and very selective forms should be encouraged rather than the wholesale transplant of institutions from environments with ample human resources. A better understanding of already existing peasant systems and their improvement might be a better approach to rural development in these circumstances. 49. (b) Agriculuural Research: The Instituto de Investigag&o Agronomica has a staff of six agronomists, five of whom studied at Huambo. The institute is the entity responsible for agricultural research in Angola. It is located at Chianga, 25 km from Huambo. Before independence the institute had 60 professionals, some with graduate training. With the Portuguese exodus only one remained. There are no Angolans with MS or PhD degrees in agriculture disciplines in the country. The lack of trained people and the dismantling of the limited agricultural research at indepen- dence, left Angola with no research capability. Some sporadic contacts with international research centers take place (CIMMYT, ICRISAT, - 240 - Page 20 of 22 INTSORMILL) 4/ and national programs, such as vrith EMBRAPA in Brazil. Such linkages, when systematic and over the long term are vital to Angola's needs for agricultural development. For this to happen, however, a minimum of human resource development must take place. More interaction with international research efforts is of benefit to Angola and must be encouraged. The necessary two way scientific communication, however, can take place effectively only when national professionals with minimum scientific and research method training are available. Without Angolan professionals agricultural research will remain dependent on external human resources and Angola will not acquire the capability for adaptation and continuity. E. Agricultural Policy Adjustment and Reform 50. Policy Adiustment and Response. The memory of colonial exploita- tion and the identification of that period with a liberal market-based agricultural policy, should not prevent the return to greater market reliance. The objectives of SEF are an indication that Angolan economic policy is beginning to make this distinction. The distribution of power and land ownership are now different from that in the colonial period. The possible adverse effects of market-based agricultural policy can be dealt with through corrective measures and selective controls. The balance between social and economic objectives in agriculture does not have to preclude incentives for individual production, especially from the peasant- ry. 51. The Government authorities consulted by the Mission wre unanimous about the need for urgent reform of agricultural policy. Policy reform is prerequisite to the neened technical assistance, institution building and agricultural investment for the country's long-term agricultural develop- ment. Present production levels are so distant from production possibilit- ies and past performance, that an initial positive response is assured. A program of agricultural policy adjustment should draw from experience elsewhere in Africa and should include: (a) production incentives through remunerative prices and the availability of consumer goods and inputs in the country-side; (b) institutional reform encouraging local intermediaries and private transport for marketing and distribution; (c) investment for rehabilitation of storage and transport; and (d) coordinated and focussed technical assistance and training to strengtten selective support services for agriculture. 52. Agricultural supply response to price ircentive is shown to be positive throughout Africa, and Angolan agriculture shoudl not be an exception. A recent experience in Angola illustrates this. Improved availability of goods in the countryside of the Huila Province has brought about significant increase in marketable supply. The total production of 4/ CIMMYT - International Center for Wheat and Maize, Mexico ICRISAT - International Center for Semi-arid Tropics, India INTSORMILL - International Project for Sorghum end Millet, Nebraska EMBRAPA - Brazilian Agricultural Research Company - 241 - A L VII Page 21 of 22 maize moving through official channels reached 17.5 thousand toons in 1986, of which ;/3 was produced in Huila. Though this performance reflects better security conditions in this orovince, it is also an indication of peasant response to incentives. rhis production increase is modest when considering that in 1970 Huila marketed 50.0 thousand tons of maize. 53. Marketing Policy should focus on improving domestic and interna- tional marketing of agricultural products. The marketing structure for agriculture shotild follow the guidelines of S.E.F. for decentralization and reducing public sector dominance of the economy. Retail outlets should gradually be transferred to the private sector. The Ministry of Internal Commerce (MIC) should become a regulating and monitoring agency instead of being directly involved in the marketing function as at present. Public sector marketing, to the extent that it remains, should have to compete with the private sector with respect to imports and wholesale trade. Measures to improve marketing include: (a) legalization of the "Candongueiro" (private intermediary) and development of a system of support for marketing such as credit for transport; (b) transfer to the private sector of the retail outlets of the Ministry of Internal Commerce; (c) concession to private traders of a major share of foreign exchange earnings from exports; and (d) review of the operations of the more than one hundred public enterprises under the Ministry of Agriculture with a view to divesting or eliminating them, with exception of those providing technical assistanc,, training, and research services. 54. The projected supply response outlinjd in Appendix table F.7 is thought to be attainable with resources already available. Maize yields are presently about 500 kg/ha. At present average yields, 1.6 ha per family is needed to meet subsistence needs; without land productivity gains a family can increase cultivation to 2 ha. with their available labor and land. Even though short term production response can come from the available labor and land, the long term development of Angolan agriculture will require improved practices, inputs and trained people. Increasing the financial and human resources, and improving the institutional set-up and organization necessary for such development is a long-term process. Use of improved seeds, fertilizer, insecticides and animal traction will raise yields significantly. The projecr "Le Developpement des Cultures Vivrieres dans la Province de Huila" with support from Caisse Centrale de Cooperation Economique of France, expects yields of 1.5 tons for maize per ha by the participating 15,000 target farms. The average yield of maize reported by the pilot survey at Hogue was 1,216 kg/ha. 55. Increasing agricultral production will require institutional reform to reduce central state control and provide for more reliance on markets and the peasantr . Such a reform is not as radical as it might appear since, in practiL production and distribution of the bulk of the agricultural output already takes place outside the formal institutions and controls. This is also the case with institutional policy, i.e., the gap between the official, controlled and planned actions and what actually happens, is considerable. - 242 - ANM VII Page 22 of 22 56. The political economy of adiustment. A broad liberalization of agricultural production, marketing and distribution for all agricultural and food products within the context of a liberal macroeconomic policy as expounded in the objectives of S.E.F., is a preriquisite to reversing the dangerously declining food situation in Angola and to start re-energizing the country's agricultural potential. The major part of the economy already operates in the parallel informal sector. As the contribution of agriculture to Government revenue is marginal, with the exception of coffee, the liberalization of agricultural policy will have no adverse effect on current public finance. Rather, with appropriate policies, the increase in agricultural production should improve agriculture's contribution to public revenue. 57. The short-term effect of price liberalization will be adverse for those who presently benefit from access to agricultural products through channels at controlled prices. But only a small share of the population has access to this limited supply and the percentage of income spent on price controlled goods is small. A senior level public servant family in Luanda, with two members working, consumes about five percent of its monthly incomeon the circuito official' --Goverment stores at official prices. What the agricultural policy reforms will accomplish is to formalize/legitimize what is no-w the parallel economy. An indirect benefit of more reliance on the market, would be the reduction of corruption which the large discrepancies between official and parallel market prices is fomenting. 58. In conclusion, there are secure areas in Angola for an immediate agricultural production response to policy adjustment. The gap between present levels of production and potential is so great, that initial response should be significant. For this to happen the system of state control must move toward much more reliance on markets and private initia- tive than at present. The social costs of such adjustment are small as the bulk of the agricultaral economy is already operating outside the formal channels. Policy incentives and institutional reforms should be followed by investments for long-term development of human resources, infrastructure and services to improve productivity. - 242a- AGRICULTU!.AL ZONES (AZs) : ZONAS AXR(COLAS | ZOgAS 6EO-CHOMIClAS 1-AID 1@|0 9-INFLUNCtA 0 CoF c -LESfE 2 -LITORAL NORTE 20- hAt#4AA 00 NOXIC0 1 -CAFEACOLA OCMOS0-UIGE ZIALTO0 Z-NGEZE | 4 ~~~~~- SUIPLANALTO 00 CONGO 22129 -LITONAL SUL |~~~~~~~ 5PLANALTO 00 CONGO 23 -tRNSICAG CENtRO-OESIiE S -CUANGO 24 -Pt ANALTO CENTRAL 7/S -LItONAL OE LUANDA Z5-GANGUEAS 9 - SAIXA CE CASSANGE 2*l2O-6UNOAS E LUCIIAZES 10 -NOROEStE CA WUNOA 21.GUILE NGuES t t -LWNOA IO-TERIAS ALIAS GA NUILA 12-SJURUANA CE LUANDA )l-tRANSsgAO CENtRO-SUL l)lits-PLANALTO OE MALA^NGE )2-CUANOO-CUSANGO IS - LItORAL SUL 00 CUANZA )1 -GAMOOS Is -LIBOLO *AMeONM 3M-ISZA CUNENE * ~ ef t ,.- . rtr-cv - 243 - ANNEX VIII Page 1 of 48 TRANSPORT AND COMMUNICATIONS A. Sector Overview and Organization 1. Sector Overview. In 1975, Angola had an enviable modal mix for a developing nation, comprising rail, highway, air, cabotage and shipping. It possessed a distinctive lateral three rail-port corridor symmetry (north, central and southern), supported by feeder road networks. Additional highways provided very basic north-south provincial links, as well as access to national borders. The air sector linked all key provincial cities and has subsequently grown to become the only dependable means of passenger and light freight transit over much of the country. 2. In general, Angola has a sparse provincial transport coverage which reflects the export corridor orientation inherited by the Government and the subsequent inability to modify this in the immediate post-colonial period. The air sector has grown significantly in terms of traffic, stock and revenues during this same period, though its infrastructure remains weak and suffers from under-investment. Ports are struggling to adjust to bi-directional traffic flows, new technologies and a cumbersome, inefficient labor system. Cabotage and international shipping services languish for lack of investment, poor organization and elderly, obsolete ships. 3. In 1988, Angola's transport infrastructure comprised 72,000 km of roads. 2,500 km of railwaysl/, 3 international and 3 cabotage ports, and a hierarchy of 31 airports. An estimated 30,000 non-military trucks and 400 buses, 40 locomotives, 11 long distance ships, 10 cabotage vessels, and 21 aircraft operated infrequent modal services at low levels of efficiency. Rail and port systems form specific corridors, which in 1975 ran eastward from Luanda to Malange (a distance of 430 km) in the north, Lobito to Luau (1,350 km) in the central heartland and Namibe to Menongue (750 km) in the south. Regions are linked to these corridors by 9,000 km of paved highway and 66,000 km of secondary and feeder roads, which together with the air services provide the main means of north-south travel. Cabotage currently accounts for 180,000 tons of freight between the four main ports and has potential for substantial growth. The Cabinda enclave is dominated by the oil industry and the non-petroleum infrastructure is small. 1/ The figure of 2,500 km for the rail network is "operational or quasi- operational". For example, it includes the whole Benguela corridor kilometrage, incorporating that portion not used due to the security difficulties. The figure of 3,069 km cited in Vol. 1, Chapter 1, page 2, probably represents the total registered network, including abandoned sections. - 244 - ANNEX VIII Page 2 of 48 4. Output for 1985 through 1987 for the system under the Ministry of Transport and Communications (MINTEC) control is given in Table VIII.1. Total freight traffic for 1987, at around 3 million tons, is about a quarter less than for 1985, principally due to a large decline in port traffic. In 1987 the number of passengers carried fell to below 24 million, following a sharp fall in bus services, despite rail and air transit meeting a steady demand. This figure is only 60 Z of the 1985 levels. The potential importance of the sector in terms of the national social product can be seen in Table VIII.2, where the performance of the transport sector under MINTEC control for selected years in the 1980's is compared with the final year of colonial rule. Data for the mid-1980's show the sector stagnating after recovering from poor performances in the early years of the decade. Between 1986 and 1987, rail and maritime showed a rise in output, while road, ports and communications registered declines. Air service remained constant while the total sector registered a 7 X reduction over 1986. It is sobertng also to note that the value of total sector output in 1987 was about half that achieved in 1974. Table VIII.1. OUTPUT OF MINTEC CONTROLLED TRANSPORT SERVICES, 1985-87. Freight I PassenRers Z 1985 1986 1987 1985 1986 1987 Road 997 1,309 1,100 29,475 19,546 16,703 Rail 521 465 517 7,201 7,980 6,398 Maritime 512 598 530 - - - Air 43 35 42 927 1,098 815 Ports 1,739 1,551 1,172 - - - Total 3,812 3,959 2,884 37,602 28,624 23,516 Notes: 1. Thousands of tons. 2. Thousands of passengers. Sources MINTEC, 1988. - 245 - ANNEX VIII Page 3 of 48 Table VIII.2. OUTPUT OF TRANSPORT AND COMMUNICATIONS SECTOR 1 Sector 1974 1984 1985 1986 1987 Transport: Road 10,432 2,164 3,457 6,277 5,261 Rail 7,393 807 864 820 910 Maritime 1,041 1,617 1,828 2,084 2,613 Air 1,411 5,371 6,905 5,397 5,212 Ports 13,708 1,793 2,112 2,130 1,716 Conmmunications 958 1,712 1,916 2,172 1,919 Total 34,945 13,464 17,082 18,880 17,631 Note: 1. Gross output, in nominal values. Source: MINTEC, 1988 5. The sector has significant real potential as an earner of foreign exchange which should be recognized in future national planning decisions. Foreign exchange revenues from international air links, foreign shipping and potential mineral shipments by rail could be considerable. The dramatic decline of the rail, port and shipping sectors as foreign exchange earners, however, cannot be easily reversed, especially given the present security situation. The importauce of transportation to the Angolan economy and its central role in national recovery should be explicitly recognized in assistance programs. Transport services should be organized to provide agriculture with essential inputs, as well as moving produce to marketing and export centers, and providing the population with personal mobility. 6. Role of the Ministry of Transport and Communications. Before 1975, most transport policy issues were the responsibility of the Ministry of Public Works, Highways and Transport. The new Angolan government, despite a general preference for centralized planning, did not continue this apex organization, possibly due to the chaotic nature of post- Independence provision of transport services and the need to separate those transport activities of a strategic nature from other transport activities. The well documented destruction and exportation of all types of vehicles, as a result of armed hostilities and the Portugese exodus respectively, devastated the Angolan stock and the supply of vehicular services abruptly ceased in many regions. 7. The Ministry of Transport and Communications - MINTEC - was formed during 1976-1977 with the objective of providing public freight and passenger transport services to major markets and users throughout the provinces. It was given powers to fix tariffs, routes and service frequen- cies, as well as regulating the inflow of spare parts for vehicles through - 246 - ANNEX VIII Page 4 of 48 a material supply organization (ABAMAT) and through a series of special regional maintenance centers, each based on a specific manufacturer (HAHAUTOS). MINTEC's responsibility extended to all major modes although its power was in practice limited to assisting the formulation of policy and monitoring annual performance data. In an operational sense, the entities providing air, maritime, cabotage and rail services under the MINTEC umbrella can be regarded as autonomous. Investment programs are probably the main collaborative area. It now seems to be accepted at ministerial levels that a serious mistake was made when forming parastatal entities in the transport sector. In general, they were made too large and problems of scale, combined with associated management and manpower problems have resulted in poor productivity and a need for subsidies. The Minister of Transport is advised by three specialist units, covering planning, technical evaluation and judicial affairs. These have been successful in developing new strategies and organizational changes for most modes, in an effort to meet Angola's changing economic conditions. 8. MINTEC data on transport service flows, levels and efficiencies, as well as output and financial information only relate to entities under its control. However, road transport is the only mode seriously affected by this constraint since highway traffic data exclude those trucks and buses operated by parastatal enterprises under other ministries, notably the Ministries of Construction, Agriculture, Fisheries, Interior, and Mines and Energy. Data collection for private sector vehicles, for example, is presently the responsibility of the Ministry of the Interior. In general, a number of government officials expressed a desire to return to an apex ministerial department with sole responsibility for all transport data collection and policy planning. The considerable fleet of Angolan military vehicles is excluded from this report though they do at times provide transport services in sensitive areas. It should be recognized that MINTEC data under-record the numbers of active vehicles in Angola and this should be taken into account when considering road transport data in this report. 9. Security. Any review of the Angolan transport and communications sector must be prefaced with some observations about the security problem. Angolan independence was born out of armed hostilities and these have persisted, with varying degrees of intensity, up to the present time. The security problem has disrupted all transport modes and severely constrained corridor dimensions. Services have been cut, capital investment programs cancelled and domestic transit efficiency lowered. Destruction of at least 45 bridges and key sections of track has virtually paralyzed regional rail movement and only 20 percent of the system can be operated normally. Mineral shipments have ceased and port activities, (1.6 million tons in 1987), are concentrated on handling import commodities for urban consumption, especially food, for which rail transit is not well suited. Road transport to autarchic regional centers is only possible with armed convoys, operating irregularly and at great cost. The road system has not been systematically maintained since Independence, in part due to guerilla attacks, and 5,400 km (60Z) of paved surfaces need rehabilitation or reconstruction. In addition, over 200 bridges are in need of replacement. An unfortunate consequence of these severe constraints is to attribute many transport modal inefficiencies to the war and not to - 247 - ANNEX VIII Page 5 of 48 sectoral constraints such as entity scale, managerial incompetence, lack of trained staff, inadequate spare parts, subsidies and state monopolies. MINTEC is now recognizing this in its technical evaluations, and attempting to distinguish a balance between many intractable problems caused by the lack of security, and those unrelated and independent issues where financial and organizational improvements would increase modal effectiveness. B. The Highway System 10. Characteristics. The current road network classified by type and length is given in Table VIII.3. The paved part of the system - about 9,000 km or 12 percent of the total network, provides basic economic and strategic links between key provincial cities and towns. Little or no maintenance has been given to these highways and more than half the length now requires rehabilitation or reconstruction. Pavement wear over time in the absence of maintenance is exponential and unless this problem is rapidly addressed, most of the paved network will soon show severe deterioration. Although gravel material provides an excellent running surface at low cost for the traffic levels typically observed in most provinces, it represents only 5 percent of the Angolan network. Since such roads are sensitive to lack of routine and periodic maintenance, it can be assumed that such roads are now in a very poor condition. The high levels of roughness which prevail are due to the lack of gravel road maintenance. Table VIII.3. ROAD NETWORK BY TYPE AND LENGTH, 1986. Paved Gravel X Earth Penetration Re ion North 2,640 1331 7,270 3,011 West 1,828 930 8,074 9,776 Central 2,561 491 9,385 6,159 South 1,997 1.055 8,917 9,760 Total 9,026 3,807 33,646 28,706 Network Total 2 75,185 Notes: 1. Includes other local materials 2. Excludes 443 km. of unclassified types Source: Ministry of Construction, 1987 11. Over 80 percent of the Angolan road network is classified as either earth or penetration. The former has some basic engineering design standards and the latter is purely judgmental in alignment, while both rely - 248 - ANNEX VIII Page 6 of 48 on the qualities of local soils. Maintaining good drainage and appropriate grading frequencies are the key elements in ensuring reasonable vehicular passage over their surfaces. These road types, however, are very vulnerable to iack of maintenance since they are inherently weaker than the other categories. Operators indicated that some sections of these roaes had deteriorated to the point where they were barely passable and travel speeds had fallen to under 20 percent of normal operations. The main result of such road conditions is to raise rates to compensate for high operating costs and low productivity in precisely those areas where economic development is most vulnerable to high transit costs. To summarize, the highway system is in poor condition and needs modest funding for improvements which can be expected to have high rates of return. 12. Highway Infrastructure. The Ministry of Construction (MC) is responsible for the design, construction and maintenance of the highway network and MC staff are fully aware of the attractive economic rates of return associated with possible highway investments and maintenance. However, they are presently operating with a severely restricted budget. This enhances the benefits from bi-lateral funded projects which have grown in importance as a consequence. By mixing funding sources, they have been able to maintain a small construction/rehabilitation program which could be easily expanded should more funding become available. In general, maintenance activities have been very neglected and remain so, with little prospect for an immediate improvement. The infrastructure budget for 1989 is 40 Z higher than in 1988 (at Kz 3,5 billion) although maintenance represents just 152 of this figure. Currently, there are five rehabilitation projects which, with the exception of Malanje to Saurino ( 570 km funded with Italian assistance), are short sections located within the coastal belt. More projects are being evaluated for economic viability. In addition, 8 steel bridges are being replaced at a cost of US $ 1 million, though over 200 are unusable over the network. 13. Finally, there are several lateral highway sections linking the coastal network with the interior provinces which are considered good potential projects by MC staff, but as yet no prospect for their funding exists. Such projects are linked to distinct production centers for coffee, cotton and diamonds. MC planners indicated there was little chance of improving the overall network while the present administrative and financial structure was in operation. A solution was outlined which would create an autonkomous highway organization. It would be funded directly from users and oth.er beneficiaries, and charged with the planning, implementation and operation of the network. The colonial Junta Autonoma de Estradas de Angola could be one such model for this organization, especially since it is known to be effective in the Angolan highway context. In planning terms, highway investment is attractive because its inherent flexibility allows regional impacts to be finely tuned and it has appealing employment prospects, especially in the area of maintenance. Once economic recovery starts, production movements will create more truck demand, so it is important to determine a system of truck user charges to create the funding base for future investments. - 249 - ANNEX VIII Page 7 of 48 14. The 1987 truck population is estimated at 30,000 units but many of these are not operational or are severely under-utilized. For example, in 1986, only 34Z of the heavy vehicles controlled by HINTEC were operational and averaged around 11,500 km a year. The state trucking sector has been successful in channeling newly imported trucks into their operations which has resulted in a fleet profile younger in age than the private sector. The representative vehicle is the Volvo N 10, either in three axle rigid form or as the tractive unit of a 40 ton unit. The private sector, in comparison, operates vehicles generally at least 10 years old and of simple, robust design. Fortunately, they are well suited to current Angolan conditions where journeys are rarely longer then 50 km and vehicle trip speeds are low. ABAMAT has obtained some new trucks for the private sector, but these have gone to own-account operations and not to the professional operators. The representative truck for this category is a Scania 75 or Mercedes-Benz two axle 13 ton unit. 15. Road Passenger Transport. All transport modes in Angola are capable of providing passenger transit. At Independence, however, it was the road system which offered the best prospects for efficient movements within urban areas, between cities and for the majority of inter-provincial north-south flows. The basic highway network was sound, bus operations neither required high levels of technical assistance nor large iv-xrstment plans. Tariffs, if properly structured, would have generated funds for maintenance, fleet growth and improvements in transit infrastructure, such as bases, terminals and collector stations. A study for Luanda mass transit had been commissioned, and the sub-sector looked to have a healthy future. The scale and ferocity of the struggle and disruption of the mid- 1970s altered all these parameters. Most of the vehicular stock comprising over 250,000 units was destroyed, exported or abandoned without the prospect of adequate maintenance. This, together with the exodus of managerial staff resulted in a dramatic decline in the supply of passenger services. As noted earlier, one reason for the creation of MINTEC was to correct these deficiencies through the provision of public transport services, at both provincial and city levels. In spite of some early success, principally in the Luanda conurbation, public transport services have failed to match demand and are currently in a state of total collapse. The war situation has contributed significantly to the decline by diverting potential investment funds, restricting non-urban flows through destruction of infrastructure and vehicles, and creating an impetus for rapid, unplanned urbanization. 16. Table VIII.4 gives bus passenger and utilization data for the latest available years. The MINTEC-controlled bus fleet has fallen consis- tently through the 1980's to around 700 units in 1985, but more importantly, only 17Z on average are actually operating. This is one of the lowest rates encountered among developing countries2/ and confirms the failure to meet even a small proportion of potential demand levels. 2/ In World Bank Technical Paper No. 68 entitled "Bus Services - Reducing Costs, Raising Standards", only Accra (242) and Lagos (201) have companies that come close to the Luanda figures. - 250 - ANNEX VIII Page 8 of 48 Passenger traffic levels have fallen for all categories of trip - urban, provincial and inter-provincial-and Table VIII.4 shows that bus availability has virtually ceased throughout many provinces. Table VIII.5 takes 1981 as a base to give indices for selected performance criteria for the Luanda public transport bus fleet for 1985 to 1987, which shows the dramatic contraction of service levels during this period. It should be remembered that this persistent decline occurred at a time when Luanda experienced one of its highest growth rates vi t the influx of war refugees. Table VIII.4. MINTEC BUS UTILIZATION DATA, AVERAGED BY PROVINCES, 1985 Category and Provinces Fleet Size Bus Availability A- Active Buses 1 Bie, Kuene, Kwanza N, Kuando Kubango, Moxico, 1 - 20 3.3 1.4 Zaire. 2 Cabinda, Huambo,Luanda N, Luanda S, Namibe, 21 - 50 6.5 4.6 Malanie, Uige. 3 Beguela, Huila, Kuanza Sul. 51 - 100 10.3 9.3 4 Luanda 23b 62.0 53.0 TOTALS (*=its) 728 165 2 121 2 Notes: 1. Those available for service. Active units are those in use. 2. Availability is 23Z and Active 17Z, of Luanda's total fleet. Source: MINTEC, ETP, 1986. Table VIII.5. ETP URBAN BUS PERFORMANCE INDICES, 1985-1987 (1981-100). 1985 1986 1987 Active Units 34 27 23 Trips 30 21 18 Passengers handled 29 19 13 Passengers per trip 96 89 74 Route Kilometers 30 21 19 Source: ETP, MINTEC; 1987 - 251 - ANNEX ViII Page 9 of 48 17. How then do people maintain mobility if public transport is not available? In Luanda there is some use of local trains. However, in most cases they simply walk, unless they are prepared to pay for private services. Pedestrian flows are particularly dense at rush hour periods, and it is reported that, on average, over an hour is spent walking on each trip. The average trip fare for public transit in Luanda was only changed in 1987 for the first time since independence to around 12 Kz. while sharing a private taxi or pick-up costs 500 Kz. This average private fare or 'processo quinhentos" is universal and governs all destinations within Luanda city boundaries for passengers, excluding large baggage which is extra. Since the average monthly salary is on the order of 12,000 Kz., regular use of private services is not a valid option for most travellers, unless they are able to access the parallel market. Accordingly, private companies and parastatals have taken to providing buses to collect their workers, in an effort to compensate for lack of public transport and assure timely attendance at work. Such arrangements are not socially efficient, however, since these buses operate a limited schedule at less than capacity along routes where lines of prospective public passengers wait at stops. Inter-provincial traffic has all but ceased, and is unlikely to pick up until after the security situation improves, although MINTEC has plans for improving mobility in safe areas. Efforts are therefore being concentrated on urban operations in general, and the Luanda conurbation in particular, to effect short term corrective actions. These will be discussed in a later section of this Annex. 18. Road Transport and the Security Problem. Persistent lack of security throughout much of Angola has had a dramatic impact on road use, vehicle operating costs, tariffs and highway maintenance. The typical scenario over the past decade demonstrates the pernicious effect of regional instability on highway efficiency. First, attacks on farms and marketing centers interrupt the demand for road transport services while the supply of such services is affected by armed attacks on vehicles and personnel. Rates increase to compensate for reduced payloads and the risk of severe vehicular damage. Road maintenance ictivities become vulnerable to guerilla activities and cease in sensitive areas. Pavement damage, especially to the running surface, is not corrected and the resulting roughness causes additional vehicle damage and higher operating costs. Tariffs then become so high that many products cannot be taken to market and sold at prices that cover production and transport costs. If vehicle attacks become severe, regional authorities may institute a convoy Lystem where 20 or more vehicles are escorted by armed military patrols. This further reduces vehicle productivity since it may take days to assemble all trucks, speed of travel is set by the slowest vehicle (typically under 20 kph) and the convoy must stop for any breakdowns. Ultimately, the level of service is characterized by high costs, low speed, infrequent schedtules and inadequate capacity. 19. These effects can be measured in at least two ways, by surveying Angolan operators and by simulating the major cost impacts. Data collected from ETP suggests that annual vehicle utilization is now 20Z of the level before Independence. Cross-checking with private operators brought a similar response. Trips that were accomplished in a week (e.g. - 252 - ANNEX VIII Page 10 of 48 Luanda-Andrada-Luanda) prior to guerilla activities now take a month on average and have been as long as 53 days, principally because of convoy operations. Another group of constraints identified by operators are those resulting from a lack of any vehicle servicing infrastructure over most of Angola. Vehicles therefore travel with extra fuel, oil, water, spares and food for the crew which combine to raise costs and drive up rates. Tariffs in the public trucking sector rose from 1,7 to 6,7 Kz per ton.km over the period between independence to 1987, but generally such adjustments lagged rises in costs. This resulted in few vehicles being supplied at these prices and operated over a restricted route structure. Private sector vehicles are more numerous (though older in age) and owners base their prices on real resource costs. 20. Vehicle operating cost (VOC) impacts were simulated by using the VOCs sub-routine (Brazil equations) from the 1986 Highway Design and Maintenance model (HDM III), with input data supplied by ETP Luanda. Surface roughness is measu-ed in terms of international roughness index (IRI) units which record meters of vehicle suspension displacement per kilometer of travel. Cost data were taken from operators records and are in financial terms, that is gross of tax. Where imported items were identified, they were taken at nominal value and converted at the exchange rate of 30 Kz to the US dollar. This should not affect the thrust of the arguments, however, since it is the cost differentials not the levels that are of interest. Some of the results selected to demonstrate the security impact on vehicle operations and road maintenance are presented in the statistical Appendix Table I.3. Two average operating conditions were calculated from Angolan vehicle records; normal: where annual vehicle utilization is 50,000 km and the vehicle travels fully loaded in each direction of travel; and cucrents where vehicle utilization has fallen to 15,000 km per year and no return loads are available. The drop in annual utilization affects lifetime usage. In the absence of road maintenance, the ton.km cost under normal operating conditions would be about a third of the cost under current conditions. 21. ETP staff confirmed that their vehicle utilization had fallen by at least these amounts, though they were unable to measure the effect on their rate structure, which had remained unchanged. Using HDM III to quantify the impact of current low levels of use, the ton/km cost is predicted to rise by over 300 percent compared to normal operations, assuming that road maintenance is carried out. However, it has already been noted that road maintenance has virtually ceased and if this is modeled by deteriorating the pavement to 12 IRI - as is the case over much of the country - the ton/km cost rises by over 420 percent from normal levels, and this excludes any war damage premiums. The cost differentials resulting from the security problem in Angola as modeled in Appendix Table 1.3 would make most agricultural products impossible to market, thus affecting both regional development and urban food supplies. 22. Road Accidents and Safety. It is not surprising that the combination of rapid urbanization, poor highway maintenance, disregard for safety and speed restrictions, heavy pedestrian flows and the growing urban mix of light and heavy (including military types) vehicles has resulted in - 253 - ANNEX VIII Page 11 of 48 high levels in vehicular accidents, personal injuries and property damage. In the first six months of 1987, 2,549 accidents were reported, resulting in 475 deaths and estimated damage exceeding Kz 30 million. Urban Luanda accounted for 75 percent of reported accidents involving over 3,800 vehicles. In comparison with the corresponding period in 1986, deaths have increased by 15 percent and accidents by more than 80 percent. Outside Luanda, Huila and Huambo provinces registered increased accident rates, although the deteriorating security situation has prevented many regional authorities from reporting any data. The figures are, therefore, incomplete and almost certainly under-reported. What is important for the planning p-ocess is to note that the suffering and costs associated with traffic accidents in Angola are on the increase and contribute to the decreased efficiency and increased costs of the road transport system. 23. Sub-Sector Policy Advisory Groups. MINTEC has recently established a series of specialized working advisory groups to consider policy and operational changes for a variety of modes. Thb road transport sector group was one of the first to be formed, and includes a wide selection of industry and sector representatives. The group has been very productive, and has prepared position papers on the reorganization of the road transport sector, the role of the private operator, a schemae to rehabilitate the national fleet, a new system of vehicle sales and service support, and a financial evaluation of three regional trucking entities recommended in the reorganization document. Though changes in law and current practices are likely to take some time, these documents represent constructive policies to improve modal effectiveness and provide the economy with much needed trucking services. C. Rail Transport 24. Background. The rail system was principally designed to transport minerals and other goods across export corridors to key Angolan port complexes for maritime trans-shipment. Passengers were also carried but the relatively small number of carriages in the rolling stock shows it was not the main business activity. The security situation since 1975 has hit railways particularly hard and the figures in Table VIII.2 show that by 1987 the value of output of Angolan railway systems had fallen to 12 percent of the 1974 figures. Rail output has been relatively constant over the period 1985 through 1987, at around half a million tons of freight and between 6 to 8 million passengers. Improving the poor passenger figures should be a feature of a short term rail recovery program. The financial consequences of rail's continuing inability to supply those services for which it was designed is shown in Appendix Table I.4 which gives the simple income and expenditure accounts of the three main rail companies in 1985 and 1986. Only Mocamedes (CFM) was profitable and in both years it was only enough to offset the losses of Luanda (CFL), leaving the massive annual deficits of Benguela (CFB), sustainable only through government support. 25. In all three railway systems, a variety of serious problems plague operating efficiency. The rail infrastructure is in poor shape, guerrilla activity has damaged bridges on all three systems and in some - 254 - ANNEX VIII Page 12 of 48 regions the track has been mined. Lack of maintenance has resulted in loss of rail ballast and the track consequently cannot support the weight or travel speed for which it was originally designed. Rails need to be made consistent in specification and renewed over selected sections. Locomotives have been under-utilized and frequently committed to premature scrapping through lack of skilled manpower and spare parts for their maintenance. The passenger and freight traffic data for the three systems orer a selected period (including 1973 to show pre-Independence) are shown i3 Table VIII.6 and demonstrate the serious disruptions in service schedules. Locomotives and stock availability and activity for 1987 is given in Table VIII.7, together with a breakdown of active units by company. Despite the sharp reduction in rail output, the railway companies continue to employ the largest number of workers of any mode, nearly 8,000 individuals. The implications for each of the main rail companies, together with a description of current activities is discussed below. Table VIII.6. RAIL TRANSPORT, PASSENGERS AND CARGO1, 1973-85 1973 1980 1984 1985 1986 1987 Luanda Passengers ('000) 946 4,058 1,585 1,291 1,697 938 Cargo 2 301 129 84 63 21 45 Benguela Passengers 1,591 2,470 3,617 3,871 4,119 3,546 Cargo 3,279 344 199 263 249 192 Namibe Passengers 394 1,108 1,848 2,040 2,154 1,868 Cargo 249 86 171 196 194 279 Notes: 1. Excluding traffic at Amboim 2. In thousands of tons Source: Annuario Estatistico, MINTEC 1987. -M - ANNEX VIII Page 13 of 48 Ti.ble VIII.7. RAILWAY LOCOMOTIVE AND RCLLING STOCK DATA, 1987 1987 Company Luanda Benguela Mocamedes Locomotives ' Existing 152 Available 36 3 25 8 Carriages Existing 191 Available 57 20 24 13 Wagons Existing 3,970 Available 2,335 153 1,657 525 Note: 1. Excludes steam engines. Source: MINTEC, 1987; Lobito Port Transport System, SATCC, 1987; Reconstruction Program for the Provinces of Huila, Namibe and Cunene, Dar Al-Handasah Consultants for UNDP and Ministry of Planning, 1986. 26. Luanda System. Luanda (CFL) is the neglected rail corridor of Angola. It may have the best potential for making a strong short-term impact in the transport sector, since it has both links to the port of Luanda and lines through the largest conurbation, possesses excellently located (if somewhat dilapidated) secure maintenance and marshalling yards, and is regionally linked to Dondo and Malange, both of strategic and economic importance. At the moment, however, it is in a very weak and neglected condition. In 1987 it employed around 1,400 and carried 940,000 passengers, about 35 percent of its 1978 figure, and 45,000 tons of cargo, down from the 1985 figure of 63,000 tons. Its port activities are virtually non-existent, it contributes to downtown vehicular congestion, the service to Dondo (210 km) is down to once a day and the line to Malange is cut, with 10 bridges destroyed. The potential for providing urban passenger transit to Luanda is under-exploited and there is no interaction with bus services. There is an urgent need to provide additional locomo- tives, renovated passenger carriages and other rolling stock to increase service schedules, first within Luanda province and subsequently in other regions. A proposal to improve this system is discussed in a later section. 27. Benguela System. The Beaguela railway (CFB) is the best known Angolan transport facility. Running a total length of 1,350 km from the port of Lobito to Be-guela, then eastward via Huambo where the engine sheds are located, to Luau on the Zambian border, it represents a social, economic and political link that both government and foreign nations have found a very attractive investment possibility. It is by far the largest rail company, employing over 4,500 staff although its operations are - 256 - ANNEX VIII Page 14 of 48 severely constrained. Currently, CFB reports that 24 of its locomotives are out of service or sabotaged and despite five transferred from Mocamendes in 1984, the total of operational tractive units now numbers around 18. It has standardized on the General Electric type U-20-C, even though the 15.4 ton axle load when laden makes it heavy for the 60 lb/yd rails used over some sections of the track east of Huambo. Diesel locomotives are used on the Lobito-Benguela link, and from the coast up to Huambo but CFB have the intention of extending diesel use over all its network given track renewal and availability of locomotives. There are sufficient wagons available but passenger coaches are in short supply, and the 26 units are totally inadequate for current demand. The Huambo workshops, with the apprentice training school, are equipped for all types of repair and maintenance work, although the new diesel repair shop is unfinished. The security problem has closed down the lucrative international mineral businees and national freight traffic is confined to the Benguela province (175,000 tons) and between Lobito and the provinces of Bie and Huambo (70,000 tons). Passenger traffic has steadily grown and should be a source of future growth and income. 28. A number of difficult problems would have to be resolved before the corridor could resume normal operations, including the most serious one of all, that of security and regional political stability. SATCC and some European countries (notably Belgium whose Societe Generale is the ma4or stockholder) have attempted to prepare the way, both politically and financially, for the rehabilitation and reopening of the corridor. A ten year development plan has been prepared, and a donor conference held in early 1989. It is proposed that the project be divided into three phases; an emergency program for 1989; a short term phase from 1989-90; and a long term program from 1993-97. Estimated implementation costs, excluding local labor inputs, are given in Table VIII.8 where the different components and timing can be seen. The financial and technical issues are similar to the Beira corridor project, and Benguela should in theory benefit from the lessons learnt on that program. Should the political issues be removed and the corridor catchment area made secure, there is io doubt that international investment funding would be made available. The inherent risks associated with timing, cost over-runs, sequencing, project management, security, and demand forecasts (including an assessment of traffic diverted to other corridors) require that a full cost-benefit and operational evaluation be carried out, and this pushes the program into the medium to long term planning horizon. - 257 - ANNEX VIII Page 15 of 48 Table VIII.8 BENGUELA CORRIDOR IMPLEMENTATION COSTS, t US $ Million) Sector Emergency Short Term Long Term Total Ports 15.3 56.5 10.7 82.5 Railway 53.2 154.1 138.9 346.2 Road 6.8 12.4 - 19.2 Communications 3.9 24.8 6.4 35.1 Aviation 0.1 10.0 - 10.1 General 34.3 47.6 - 81.9 --------------------------------------------------------------------- Total 113.6 305.4 156.0 575.0 -----------------------------------------------------------------__-- Source: SATCC, 1988. 29. In the short term, there are alternative investment options that. can be considered for CFB. The Lobito to Huambo section of the system has been carrying increased passenger traffic in the 1980's and additional carriages and locomotives could significantly increase future flows. Freight traffic is very modest but if some regional agricultural development can be directed into the secure area of the central zone, demand for agricultural inputs ard exports of produce should create higher levels of rail demand. Even with this program, however, significant problems remain. Like all other railway companies in Angola, CFB lacks trained operational and management staff and such shortages cannot easily be resolved. In the short run, therefore, the situation for CFB looks bleak. There is little prospect of increasing its business to the point where income and expenditures might broadly balance, and the accumulated deficit looks set to grow larger. 30. Mocamedes Railway. The Mocamedes railway (CFM) contains 756 km of track, most of it running between Namibe and Henongue in the Cuando-Cubango province. There are two branches; Lubango-Chibia-Chiange (120 km), now completely abandoned and Dongo-Cassinga (110 km), also closed since the iron ore mines ceased operations in 1975. Currently, traffic is operating normally between Namibe ani Matala (430 km) and armed military convoys are necessary for travel beyond Hatala to Dongo. The war situation makes it difficult to schedule any services beyond Matala, and the proximity to Namibia has made the system vulnerable to sabotage. Nevertheless, CFH has managed to achieve a steady growth in passenger traffic up to the mid- 1980s, comprising urban services in Lubango (1.02 million in 1985) and long distance between Namibe and Lubango (1.07 million, 1985). However, service schedules have fallen back recently, and passengers carried had declined 10 percent by 1987. There is still considerable demand for the Namibe to Lubango trip which takes around seven hours (at about 30 kph) for both passenger and freight services. Costs for cargo are about one third the road ton/km rate, which indicates that any regional agricultural activity will use the rail corridor as a central transit link to the coast. - 258 - ANNEX VIII Page 16 of 48 31. CFH employs around 1700 staff although there is a distinct lack of trained personnel in all professional categories. The railway needs more locomotives (arguably through a rehabilitation program) and additional rolling stock, particularly passenger coaches. Of the 10 engine units now operational, half are ovez 20 years old and are considered to be in poor condition. The long distance passenger schedule is modest and runs every other day. Passenger demand is high due to the cost and irregular service of alternative modes (principally road) which results in coaches being overcrowded and comfort levels minimal. CFH believes that there is sufficient demand to run a train a day, in both directions. Freight trains are full running eastwards and empty from Lubango to Namibe, although regional agricultural activities could bring more balance in the future. 32. To summarize, there are similar constraints within the three systems. First the security situation makes rail networks particularly vulnerable to attack and sabotage. Large sections of the network are now unusable due to damaged bridges and mined track. Secondly, technical assistance is urgently required to help maintain locomotives, upgrade rolling stock and check electrical equipment. Thirdly, there is a lack of spare parts and special supplies like lubricants which has resulted in low utilization patterns as equipment awaits repair, as well as the premature scrapping of locomotives and rolling stock. Finally, track infrastructure is weak and many stations and supply points have been abandoned. Short term investment programs can be devised for all systems, though they are challenging because they are multi-faceted. Even modest programs require engineering, management, technical and planning inputs which need careful coordination. These will be considered in later sections. D. The Air Sector 33. Angolan Airlines - TAAG. The domestic air system was established in 1940, when 6-seater Rapides operated services between Luanda and the cities of Lobito, Huambo and Mocamedes. It grew steadily during the colonial period and has been the only mode to show continued growth since Independence. It was re-created in 1977 as Angolan Airlines (TAAG) which by 1980 had taken over the duties of other companies confiscated or made redundant after 1975. During the period 1980 to 1986, passenger traffic has increased at an annual rate of 15 percent, while freight and mail traffic has been closer to 20 percent. In 1987 and 1988, passenger traffic has fallen back by around 20 percent, suostly a consequence of the large adjustments in fares. Cargo demand has continued to hold steady and seems more price inelastic. Table VIII.1 shows that in 1987 over 800,000 passengers flew TAAG and 42,000 tens of cargo were carried on company planes. The value to the Angolan economy is considerable, and Table VIII.2 shows that 30 percent of the total value of output of the transport and communications sector in 1987 was attributable to TAAG operations. It is clearly an extremely important, though vulnerable, mode and improving its financial and operational efficiency is critical to economic growth. - 259 - ANNEX VIII Page 17 of 48 34. ';MAG has direct responsibility for carrying out a wide variety of activities, ranging from the usual marketing/ticketing through to cleaning and catering, the latter currently sub-contracted by the most efficient world airlines. This broad responsibility results in a cumbersome structure with a large and inefficient workforce which is difficult to manage. TAAG in early 1987 employed around 5,400 staff (which made it larger than any other African airline, with the exception of Nigeria). Most had little technical skills or managerial experience. In terms of marketing, TAAG divides its domestic operations into four regions of approximately equal importance, while international flights are grouped by continent - Europe, South America and Africa. Scheduling performance is not good and only 87 percent of TAMG's scheduled flights in 1986 were actually operated. Timing is also poor and only 32 percent of international flights and 56 percent of domestic flights were considered on time. Operations in 1986 grouped by geographic markets are given in Table VIII.9. Table VIII.9. TMAG OPERATIONS BY MARKET, 1986 Domestic Zone North East Central-South Litoral-South Passenger (Z) 25 25 21 29 Freight (Z) 16 16 14 54 International Europe South America Africa Passenger (Z) 64 7 29 Freight (Z) 79 13 8 Source: TAAG, 1987. 35. Traffic in terms of domestic passengers and freight is relatively balanced, with the exception of the coastal routes south of Luanda (especially the key Luanda-Benguela route) where there is a strong demand for cargo services. Internationally, Europe continues to dominate the market and more especially the Luanda-Lisbon route, which accounted for 36 percent of total passenger movement and 42 percent of cargo flows. Luan- da-Brazil is the only South American route and is growing fast as trade links develop and the Kapanda dam project is implemented. 36. Details of the 1986 TAAG civil aircraft fleet are given in Appendix Table I.5. The fleet comprises 6 Boeing 707's for international routes, 5 Boeing 737's for African and domestic flights, 5 Fokker F27-600's for domestic flights to the smaller airports and 2 Yak 40's to complement the Fokkers. TAAG also operates a fleet of 10 light aircraft. The age in flight hours and years of the long range Boeing's would indicate that they - 260 - ANNEX VIII Page 18 of 48 will soon require replacement. The Boeing 737 is the workhorse of the fleet, and will continue this role despite the relatively high nur'ber of annual landings and losses due to accidents (3 aircraft in recent years). The Fokkers have provided excellent service and seem ideal for the smaller airports. The Russian Yak aircraft are used infrequently, with a number awaiting repair at Luanda. 37. Flight crews are highly regarded by TMG management and the company is confident about the purely operational ele.ient of their business. Indeed, in late 1987 they began separate charter operations. It is the joint problems associated with general management and back-up services that create most problems. Scseduling, management, ticketing, spares and inventory control, support services and airport management are identified by TAAG as constituting constraints to growth and efficiency. Scheduling is a serious problem, particularly on domestic services where Luanda is the hub airport. Lack of basic services at regional airports - fueling, storage, simple maintenance, cleaning and safety feat-2res - make it a general rule that aircraft return to Luanda for overnight parking. Overnight bases in addition to Luanda would permit a more efficient route network to be operated leading to higher productivity. Management of the TAAG umbrella organization is complex and inefficient in Angola's present condition where staff with technical and middle management experience are difficult to hire. A simpler structure with the timely privatization of activities like cleaning and catering would be extremely beneficial, and has recently been proposed. 38. Ticketing is a particular problem given the existence of the informal market in goods and services, and the consequent variations between official and parallel prices. TAAG ticket tariffs were last changed in 1982 and remain priced at the official exchange rate. In early 1988, a case of beer (24 cans) eold on the informal market at Kz 1,500 per can would raise Kz 36,000 and this was sufficient to buy a US$1,200 airticket at a TAAG booking office. There are some safeguards against arbitrage - permission has to be sought before flying on international routes, for example - but there are no such hindrances on domestic flights. Accordingly, most domestic flights are heavily overbooked, creating unpleasant airport control problems, full flights and many disappointed travellers. In fact, TAAG records show capacity and load figures in excess of 100 percent on a number of internal routes. The company is conscious that it is not offering good services and attracting foreign customers who have a choice, and currently only 20 percent of TAAG's international passengers pay in foreign exchange. This could be an important growth segment of the market once TAAG becomes more competitive. 39. There is a clear need to drastically cut the TAAG inventory cycle, and address the spare parts problems. In addition, improvements to foreign exchange access at BNA would enable costly items to be purchased on demand, rather than kept in stock. Almost 90 percent of the parts and materials are purchased from the United States and these can now be supplied in hours given suitable credit arrangements. TAAG has installed computer programs to track the parts inventory so use patterns can be established for more effective forecasting. It may soon be appropriate to decentralize some - 261 - ANNEX VIII Page 19 of 48 maintenance activities, leading to improved facilities at airports like Benguela and makinig domestic scheduling more efficient. Support services need drastic impravement, especially cabin cleaning and catering. The major problem is a managerial one, although lack of materials like food and cleaning items contributes to poor service performance. There is a need to strengthen the technical side of the maintenance work and this should be the main focus of concern for TAAG's management. 40. Airports and Air Navigation - ENANA. Angola's airports need to be improved for both passengers and aircraft, as most were built in the colonial era for light aircraft and small passenger demand. Airports and control of airspace is the responsibility of the National Airport and Air Navigation Development company (ENANA), formed in 1980. However, the entity has not effectively met the basic objective of improving airport efficiency for which it was formed and its reorganization is currently under review. 41. ENAMA's basic responsibilities are to ensure an adequate network of airports and to provide and operate the basic facilities at each airport site. It is also responsible for the provision of airport safety services needed by TAAG, especially radio beacons and navigational assistance. Finally, it must maintain adequate good traffic control over Angolan airspace. The airports under its control are shown in Table VIII.10, grouped by available facilities. Table VIII.10. ENANA AIRPORT NETWORK 1, 1987. Category Number Location I 1 Luanda II 11 Benguela, Cabinda, Huambo, Kuito, Lubango, Luena, Halange, Henongue, Namibe, Sumbe, Uige. III 4 Soyo, Amboim, Soyo, Wako Kungo IV 8 Ambriz, Andulo, Damba, Jamba, Luau, Kamgamba, Nzeto, H'Banza Congo Notes 1. Excluding numerous municipal landing strips, '.echnically under ENANA control. Source: ENANA-U.E.E., 1987 42. ENANA employs over 700 workers, of which 240 are associated with air traffic control, (around 170 at the Luanda international airport and over 200 at regional airports). Category II airports typically employ between 10 to 20 ENANA staff, while other categories frequently have less than five personnel. Over hal^ the staff are engaged in various cleaning activities and turnover in this category is high. In common with other companies, ENANA has introduced food subsidies and the provision of - 262 - ANNEX VIII Page 20 of 48 transport to work. A critical labor problem is the failure to hire technically trained personnel as well as the lass of staff who have become experienced through on-the-job training within the company. Air traffic control, safety and radio comunication effectiveness is vulnerable to these persistent staff shortages and this partly explains the totally inadequate support services that affect TAMG's operating efficiency. The financial situation of ENAHA is not particularly healthy, even though the company earns a significant amount of foreign exchange from international carriers. The receipts from these services are held at the BHA and in 1987 totaled about US$3 million, which the company apparently has not been a'-lowed to access. This has clearly complicated the purchase, servicing and replacement of most ENANA equipment needs. 43. With the exception of Luanda, most airports were built in the 1960's to meet the modest aviation needs of that decade. Aircraft were slow and of medium size, the Douglas DC3 being a representative type. Since Independence, the rapid and persistent growth in demand for aviation has not been accompanied by matching inivestment in air infrastructure. Currently there is almost total disequilibrium between demand and supply of airport services. Inadequate runways constrain airport capacities; they are too short, have poor geometry for modern craft, possess rough surfaces and weak sub-bases. Accordingly, Boeing 737's cannot operate over the full network and cannot use high pressure tires for risk of runway damage through impact landings. The more expensive low pressure tires wear more rapidly on rough runway surfaces and consequently have shorter lives, leading to higher operating costs. 44. Facilities at airport sites are also generally weak and inade- quate. Lack of refueling systems results in additional flight fuel loads, thus reducing payloads. In addition, few airports control cargo weight adequately due to lack of scales and trained personnel, resulting in over- loaded, dangerous takeoffs and landings. Passenger facilities of every type are poor and levels of comfort and security minimal. In 1985, ENANA recommended a regional investment program for the renovation of 12 provin- cial airports where operating conditions had severely deteriorated, but as yet no decision has been reached on its funding. 45. The colonial radio navigation and communication system, with dual civil and military functions, was strengthened by improvements recommended by Boeing Aerosystems International and implemented by 1980. However, much needed support did not materialize due to sabotage and unforeseen air traffic additional growth rates. Currently, the Boeing system is virtually inoperative due to an inflexible system design, obsolete equipment, high cost of spares, lack of energy at many airports, armed attacks and lack of trained maintenance personnel. A consequence of these factors is an inability to navigate at night and the daily shut-down of most airports at 16.30 hours. These constraints also affect inter-airport communication and services like meteorology, aviation information and statistics, as well as links with neighboring countries. - 263 ANNEX VIII Page 21 of 48 46. The Luanda international airport complex now known as February 4th Airport was established in the 19509, improved 20 years later and rapidly became congested after Independence. In 1985 a new extension for domestic and internat'onal flights was completed. However, for secarity and congestion reasons, domestic flights were transferred to a nearby (inferior) remodeled hanger. A number of features remain to be completed at the new terminal to enable it to function as designed, although it already appears to be operating at capacity. The domestic arrangements need a total overhaul and ENUNA is presently waiting for a decision on funding proposals to improve facilities. Other airport buildings are deteriorating, the parking areas and taxiing paths need maintenance and rehabilitation work, and the mix of aircraft types (civil, military, passenger, cargo) and variations in size complicates ground control. French airport staff have helped develop improved facilities a8 the February A site and TAP airlines have provided technical assistance in improving air traffic control. The latter is the crucial obstacle to short term improvements in productivity. Airport facilities throughout Angola must be the object of rehabilitation investments to improve traffic control, navigation and safety if the sub-sector is to maintain growth and competitiveness. 47. MINTEC's specialized aviation working group recommended in 1988 that TAAG's structure be changed to permit divestiture of certain troublesome labor-intensive activities, and allow concentration on operations, schedules and service levels. Such changes would reduce staffing numbers, salary needs, and manpower planning problems, as well as allowing TAAG managers to concentrate on raising aircraft productivity and financial efficiency. The activities taken from TAAG would pass to mixed companies, in much the same way other companies have contracted out services. ENANA has also been evaluated for reorganization, but in many ways its problems appear more intractable than those of TAAG. A basic airport rehabilitation program has been costed at US $ 107 million, while the first phase of an air traffic control up-date will cost US $ 25 million and a second phase US $ 48 million. ENANA's weak financial base is inadequate to meet any investment needs, and its manpower planning problems are great, especially in technical positions. ENANA currently employs only 322 of its targeted teclnical staff, and only 15? of its air traffic control positions were filled in 1988. This combination of weak revenue generation, under-investment, and manpower problems, represent significant constraints to company efficiency and growth. As a start, it seems essential to establish cost recovery mechanisms to fund the infrastructural programs, and then improve technical staffing through TA programs, bilateral aid, and the strengthening of the aeronautical school. E. Maritime and Port Sector 48. Background. At Independence, Angola's 1,650 km of coastline, good network of ports, excellent export corridors and potential for regional growth focussed government attention on port and shipping activities. State companies were formed from nationalized entities, and joint ventures emerged where Angolan experience and investment potential was found to be - 264 - ANNEX VIII Page 22 of 48 weak. The sectors have been through several crises but now appear to be showing signs of recovery. Table VIII.1 shows that the 1987 Angolan maritime sector output fell about 11 pe_.ent from its 1986 level of 598,000 tons, while total output tf all ports dropped 24 percent to 1,172,000 tons over the same period. In terms of value, Table VIII.2 shows that in the last available year, 1987, maritime value rose 20 percent from its 1986 level of Kz 2,084 million while ports fell 20 percent to Kz 1,716 million. 49. Interim figures confirm that port income decreased in 1988, reflecting the joint consequences of lower oil revenues and the escalating cost of the war. Ports and shipping represent about a quarter of the total HINTEC transport and communications sector value, and are also important for security reasons. These modes are not easily attacked and are the importing channel for defense supplies, primary goods, spare parts and food aid. They also r9present a considerable opportunity for regional growth through the neglected cabotage sub-sector. Maritime and port activities are technically managed through the merchant marine and port national council (DNMMP), linked to MINTEC's technical programming and evaluation unit. DNMMP has three departments; merchant marine and ports, planning and finally marine security. The Angolan coast is divided into five sectors based on the main regional ports - Cabinda, Soyo, Luanda, Lobito and Namibe - for security purposes. The joint modes provide direct employment for over 10,000 staff, which exceeds all other entities in the transport and communications sector. 50. The entire maritime sector went through a major crisis in the early 19808. Increases in oil revenues brought about a rapid growth in imports transported by sea. Angonave entered into charter contracts for much of this business but port and trans-shipment facilities proved inadequate to meet the demand. The combination of inefficient shipping operations, ineffective port management practices, weak infrastructure and an overloaded import license bureaucracy resulted in a total paralysis of Angolan ports in 1981. Most ships had to wait over 90 days, and some chartered ships anchored over 12 months outside Luanda port. It is calculated that demurrage and other associated costs totalled around US$48 million, mostly met by the state. This lead to tha whole sector being financially restructured and the period 1983 to 1986 has been one of slow recovery, limited by a persistent failure to invest in new equipment, ships and physical distribution systems and to analyze total transportation system costs, rather than specific modal cost structures. This may change with the recent formation of a maritime specialist policy working group, chaired by a member of MINTEC's programming and evaluation unit, which has already made a number of substantial and far-reaching system-type recommen- dations. 51. Maritime Activities. Currently, long distance shipping services are principally prc.ided by Angonave-UEE and Secil Maritima, the latter linked to Africa Service (AFSER) of Copenhagen, while cabotage is provided by Cabotang-UEE. Table VIII.l1 gives details of their fleet sizes in 1986, and their output in 1986 and 1987. Angonave traffic held steady during this period, while Cabotang fell 26 percent and Secil Maritima rose 67 percent. Imported goods traffic fell significantly in 1986, and this is reflected in 265 - ANNEX VIII Page 23 of 48 the fall in chartered long d&tance vessels. The modest fleet size contains old, inefficient and fully depreciated units that need urge't replacement. Necessity dictated that when shipping operations were restructured in the 1970s, chartered vessels would be used until Antgolan ships could be profitably operated. Unfortunately, all Angolan vessels were purchased second-hand when many units were already old. Currently the national fleet is unable to compete efiectively for a larger share of the imported goods shipped to Angola. Export transit, where some comparative advantage should exist, remains weak and little opportunity for growth is offered. As a consequence, the fleet is underutilized. Table VIII.ll. SIZE AND OUTPUT 1 OF ANGONAVE, CABOTANG AND SECIL MARITIDA FLEETS,2 1986 and 1987 1986 1986 1987 Fleet Output Output ANGONAVEs Company 7 Hire/Lease 3 Totals 10 206,000 2C7,000 CABOTANG: Company 11 Hire/Lease 0 Totals 11 181,000 134,000 SECIL MARITIMAt Company 3 Hire/Lease 7 Totals 10 120,000 198,000 TOTALS: Company 21 Hire/Lease 10 Totals 507,000 539,000 Notes 1. Traffic in tons. ?. Angonave data slightly larger than company report, due to reporting period. Sources MINTEC, 1988. 52. Angonave, which is a member of the Central West Africa Conference line (CEWAL), was formed in 1978 to provide long distance marine cargo services through acquiring its own fleet, supplemented with chartered ships on short contracts. It was hoped that Angolan flagged vessels would take 40Z of total traffic although in 1986 the company claimed just 202. ANNEX VIII -266 - Page 24 of 4 Vessels were purchased second-hand and by 1983 fleet deadveight had increased from 7,000 to 95,000 tons, which fell in 1985 with the loss of a large ship. In the crisis of 1981, Angonave lost control of its operations and became financially insolvent, facing judicial actions, millions of dollars debt, fleet immobilized, and a ruined commercial reputation. The company has recovered slowly from that trauma but remains under-managed and under-invested. With it- charter arrangements, the company currently claims a capacity of 102,000 tons. It has correctly concentrated on improving internal management controls and staff training, but still lacks the financial flexibility reouired to stay competitive in the transport services sector. 53. Table VIII.12 categorizes the main commodities carried by Angonave in 1986. Government food purchases make this category the most significant, about 55? of total .-affic. The cargo was carried by ships in the national fleet making 26 voyages, and 512 of the traffic was in sacks, 402 general cargo (crates and bulk) and 92 in containers. The lack of silo storage of bulk commodities, especially at Luanda, is one reason for the high level of sack use. The inability to handle, store and process containers - which reached its zenith in 1981/82 when 12,000 clogged Luanda port - is shown in the low usage of this method of shipment. It also reflects a fall in the importation of equipment, macbinery and spares which are almost always sent in containers. All shipping companies complain about port efficiency levels and smallest possible improvements that would increase marine productivity. These will be considered in a lpter part of this section. Table VIII.12. ANGONAVE CARGO BY CATEGORY, 1986 (tons) Category Tonnage Food 121,100 Alcoholic drinks 7,050 Equipment and vehicles 6,800 Chemicals 31,874 Other products 28,508 Containers (2,335 empty) 5,400 TOTAL 200,732 Sourcet Statistical Appendix Table 1.6. 54. Secil Maritima offers both long distance and cabotage services, and is both smaller and more tightly organized than Angonave, despite carrying more traffic. The company played a crucial role after the 1981 crisis when Angonave contracts could not be honored and few foreign shippers would deal with the company. Secil Marit$ia substituted for - 267 - ANNEX VIII Page 25 of 46 Angonave and chartered sufficient vessels to maintain traffic flows. With the recent return to relative financial health of Angonave this role has considerably diminished and the company has sought traffic through tramping operations coordinated through its Copenhagen offices. The company is not presently investing in replacement vesaels, even though its fleet is between 16 and 23 years in age, and thus virtually obsolete. 55. Table VIII.13 showine SRcil Maritima's fleet productivity in 1986 demonstrates two key problems facing Angolan ship operators. First, there is the general task of finding work for the ships and secondly, there is the difficul3y of unloading at Angolan ports. The latter is highlighted by the cabotage figures in Table VIII.14 (to show that this is not a special case, some Angonave data for 1985 are presented). In that year, which is considered .airly typical of the 1980s, to unload 85,000 tons of general cargo and 114,400 tons of containers (7,629 units), the 14 ship fleet spent 1,068 days in port, 25 percent at anchor and 75 percent brrthed, waiting to be unloaded. The consequences are higher shipping costs either through higher operating costs or demurrage charges. Table VII.13: SECIL MARITIMA FLEET; SELECTED DATA, 1986. Shin TvDe A) Trips Days Spent: Z/ Port Sailing Cargo Empty Brasil C 6 229 136 Bengo C 32 326 39 Mar C 18 315 26 TonnaRe Japan T 34,318 57 96 70 26 Angola T 26,294 74 163 122 41 Denmark T 43,067 130 162 98 64 France T 19,385 38 87 59 28 Congo T 31,162 61 118 48 70 Argentina T 33,191 149 113 72 41 Notes: I/ C is Cabotage, T is Tramping. 2/ Days spent in port, sailing, sailing with cargo and empty. Source: Secil Maritima, 1987. 56. Cabotang was established as a state company in 1178 to provide cabotage services and ib arguably the most neglected Angolan shipping enterprise. This is paradoxical, given the strategic importance of the coast and the ability to provide safe, reliable yet cheap passenger and freight movements between regional coastal sites. It employs 320 staff, including Yugoslaviars, Cuban and Portuguese captains, and in 1986 reported - 268 - ANNEX VIII Page 26 of 48 a small profit of Kz 61 million. Currently, it has between 11 or 13 ships (figures disagree) totalling about 8,000 tons deadweight. Ships are old - five exceed 20 years in age - and do not have the desisn features to compete with other modes for specialized, profitable traffic. The heterogeneous nature of cabotage traffic, weak marketing acrangements, poor operational management (exacerbated by control probke)si and inferior transshipment facilities at port complexes combine to prevent cabotage from having a high impact on ameliorating transport problems in Angola's littoral regions. Tariffs have only been raised once, by 30 percent, since 1978 but a new scale of charges has been sent to the Ministry of Planning for approval. In 1987, Cabotang took delivery of a Dutch built, fast ferry boat capable of carrying 310 passengers and 440 cubic meters of cargo for use on the Luanada-Lobito route from January, 1988 onwards. A sister ship joined it in 1988. The intention was to build up a network of schedules, including links with Namibe, Cabinda and Soyo. However, the vessels have encountered considerable technical problems, and schedules have been only partly fulfilled. MINTEC's programming and evaluation unit now believe that an alternative design needs to be tested, which will delay the returns from improving cabotage passenger services. The potential benefits from efficient cabotage operations remain considerable, however, and therefore MINTEC should support complementary port improvements as important short term investment goals. 57. There are a number of maritime agencies handling shipping arrangements and problems associated with Angolan maritime jurisdictlon. Agenang-UEE is based in Luanda, while Manubito is a mixed enterprize using capital from Agenang, Sonangol and Leopold Walford Holdings-UK. There are also smaller entities, entirely privately owned, notably Hull-Blyth (UK) and AMI (Belgium). These companies seem well organized although they all complained of poor telecommunications, bureaucratic difficulti_s and the appalling productivity of all Angolan ports. The business reflects the overall trade balance and after a stable period, seems to be on the decline. In 1985, Agenang handled 1,773 ships (951 Angolan, 822 foreign) while in 1986 the total stood at 1,773 vessels (935 Angolan, 849 foreign). The figure for the first six months of 1987 was 796 ships (338 Angolan, 458 foreign) indicating a lower final figure for the year. Also the number of Angolan voyages are declining, reflecting oil revenues. Maritime agencies should be recognized as providing important services to shippers, as earners of foreign exchange and an integral part of the maritime transport system, when improvements are considered. 58. Port Activities. As previously noted, efficiency in Angolan ports is crucial to the effectiveness of the national transport system. Practically all freight imports arrive by ship and the coastal routes have now become the safest links throughout the littoral region. Unfortunately, port facilities have changed little since Independence and were originally designed for the efficient export of commodities in general and minerals in particular. The current need is to accommodate the large import needs, particularly food products which must be stored after unloading to avoid spoiling. Only Lobito has good silo storage with a capacit7 of 20,000 tons. MINTEC would like to see more customers building silos, with a related increase in port silo turnover or throughput. This would avoid - 269 - ANNEX VIII Page 27 of 48 demands to increase port silo capacity, which would add to port congestion and to its financing buirdens. Port productivity is low, at around 50 tons per ship/day compared with 250 tons per ship/day for an efficient operation. Part of the reason is equipment, with crane and forklift productivity affected by a combined lack of spares, maintenance and technical assistance. In 1985, utilization rates of 35 percent for Luarda and 26 percent for Lobito were recorded for these equipment categories. The port sector employed 8,500 personnel in 1986, the majority being stevedores at low rates of pay. They are not well managed, with the possible exception of Lobito, and this leads to widespread c_orruption and absenteeism. Port officials admit their inability to control the situation, particularly at Luanda, and the *privatization- of some berths and facilities is being considered. 59. Table VIII.1 shows that Angolan port traffic fell from 1,739,000 tons in 1985 to 1,172,000 in 1987, (a 33? decline). Value, as shown in Table VIII.2, fell 19Z to Kz 1,716 million over the same period. The impact of the closure of mineral shipments at both Lobito and Sacomar at Namibe can be seen by noting that the 1986 value is still only 15Z of its 1974 figure. Table VIII.14 shows 1985-1987 main port throughput. In 1987 port throughput held steady at around 1986 levels, after sharp falls from 1985 productivity, consistent with the shipping and agency traffic data. Figures exclude war material and supplies, however, which were considerable duLing both years. Notable also is the small export volume (14Z of 1987 total), whivh at ports other than Luanda includes cabotage data. In the period 1985/86, ovrer 23,700 containers were shipped from Luanda compared to less than 6.000 arrivals. Low container arrival figures for 1986 (1,456) confirm both the f&ll in trade and shippers lack of confidence in the Luanda facility. This has somewhat recovered, as seen in the 1987 container tonnage data. The movement of cargo from port areas fluctuates strongly, reflecting both irregular arrival patterns of vessels ( which in theory could be vastly improved ) and poor transshipment facilities. - 270 - ANNEX VIII Page 28 of 48 Table VIII.14. ANGOLAs MAIN PORT FREIGHT THROUGHPUT 1985 - 1987 (thousand tons) 1985 1986 1987 Luanda All Freightt Import 834 690 666 Export 104 132 120 938 822 786 Cabotage 85 108 109 Containersl (In) 4,398 1,456 NA (Out) 11,392 12,387 NA Container tonnage 195 117 179 Freight (Out)2 824 784 707 Freight (Warehouse) 109 45 42 Lobito Total Freightt 523 414 432 Import 462 366 338 Export 61 48 94 Cabotage 197 184 208 Namibe Total Freight: 180 156 152 Import 165 136 136 Export 15 20 16 Cabotage NA 68 77 Cabinda Total Freights 95 101 106 Import 81 85 81 Export 14 16 25 Cabotage NA 73 78 Notest 1. Units. 2. Freight tonnage leaving port facility Source. Annuario Estatistico, MINTEC 1987 60. Ca; 'tage traffic data are given in Table VIII.15 for the ports of Cabinda, Soy Luanda, Lobito and Namibe. There are a number of small fishing ports like Tombwa and Ambiom, but data from these are not included. Distinct patterns of trade can be noted, which are a result of imports being channeled to the three major ports, prior to further transit. There is little doubt that cabotage can be improved by planning and operating facilities designed specifically for its traffic and shipping needs. Historically, cabotage has been given a low priority which is reflected in lack of security for cargo, poor transshipment and passenger facilities, and bad citing within the port complexes. The acquisition of a new passenger boat has not been accompanied by related port infrastructure investment to complement the new service. As a consequence, its efficiency and commercial impact is weakened unnecessarily. - 271 - ANNEX VIII Page 29 of 46 Table VIII.15. ANGOLAt CABOTAGE TRAFFIC,1 1985 Cabind'a SoTo Luanda Lobito Namibe Totals Cabinda - 700 21,889 3,210 50 25,R49 Soyo 260 - 6,791 - - 7,051 Luanda 14,4i2 72 - 15,204 9,344 39,032 Amboim - - - 3,406 - 3,406 Lobito 3,549 - 11,644 - 1,816 17,009 Namibe 2,030 - 24,305 6,850 - 33,185 Totals 20,251 772 64,629 28,670 11,210 125,532 Notes 1. MINTEC and private shipping, tons. Source: Annuario Estatistico, MINTEC 1986 61. Delays in the ports have been a persistent characteristic of Angolan operations, reaching a crisis point in 1981 when at one time 90 vessels were waiting to be unloaded at Luanda. The sector had been expanded too quickly given its physical and management capacities; chartered ships were arriving with small quantities of cargo and shipowners content to wait and claim demurrage, given the slump in world shipping. A planned annuel capacity of 7,000 containers bore little resemblance to the actual capacity based on equipment, storage facilities and, most importantly, the ability of the shippers to deal with the vomplicated, slow moving importation bureaucracy. The exercise was a total fiasco, goods remained in their containers for years and many importers simply abandoned them at the ports. Again, containers are rented and this resulted in large claims against Angolan shipo.rs, agencies and ultimately the government. The 1985-86 range of '_ oeen 1,600 to 2,500 containers probably represents the safe capacit; or the port at the moment. 62. MINTEC data show recent improvements in turnaround times. In 1985, 327 long distance ships, carrying an average cargo of around 2,700 tons, were handled by Luanda. Fach on average spent a total of 18 days, comprising 5 waiting and 13 berthed. Any recent improvement in delay times is more likely to be a consequence of a trade decline rather than improvements in productivity. In addition, Angonave data show that their average wait in 1985 was 37 days, twice the average. This seems to confirm an impression that foreign flagged ships were being treated preferentially. The central reasons for the 1981 collapse still remain; poor management, inadequate equipment, badly organized and motivated labor, lack of storage, lack of transport, poor communications and little planning. Examples of serious delays can still be found: in 1988, a ship left Luanda port having taken 73 dayc (39 at anchor and 34 days berthed) to unload a frozen meat - 272 - ANNEX VIII Page 30 of 48 consignment of 2,000 tons. Lack of available storage space played a major role in tl.is delay but the demurrage costs of over US$150,000 have to be met somewhere in the distribution chain, and ultimately the final price. The impact transport costs can have on commodity prices is non-trivial. 63. All ports require restructuring and Luanda has the most critical need both because of its strategic and political importance, and the growing urban market outside the city perimeter. Lobito is smaller, better organized and possesses improved facilities for long distance berths, including crainage and quayside rail services. Namibe, like Luanda, has received little investment while its neighbor Sacomar is paralyzed due to the cessation of mineral shipments from the Cassinga mines in Huila province. Unfortunately, traffic cannot presently be diverted from Namibe to this modern facility because of its proximity to a fuel shipment and storage complex. There is not much to choose between port efficiencies. In 1985, Luanda annual output per employee was 190 tons and Lobito's was 209 tons. Ships are turned around faster at Lobito; productivity in 1985 was 48 tons per ship/day (6.6 tons per ship/hour) at Luanda, compared with 73 tons per ship/day (9.1 tons per ship/hour) at Lobito. However, this may simply reflect the better equipment (cranes, silos, stores) and any comparisons need to be made with circumspection. Cabotage productivity appears to show little variation between ports. Cabotang stated that 1986 comparative daily output tonnage figures were Luanda 39, Cabinda 42, Lobito 40 and Soyo 65. 64. The current problems of the maritime sector stem from a lack of planning which affects financial, operational, manpower needs and management at all levels, and an inability to formulate a coherent strategy and policy. Low discharging rates need not drastically affect overall productivity if the other stages in the transit system work well. The total transport system cost, in financial or time terms, is crucial to efficiency levels. However, when all stages start to fail, become inefficient or are not synchronized the cost implications become critical. There is no evidence that an analysis of this type, capturing the full physical distribution costs, has been used in any of the government decisions concerning the shipping and maritime sectors. The sector urgently needs trained staff at all levels to motivate workers, identitj and correct deficiencies (frequently of a simple nature) and to operate and maintain key equipment. It requires a radical operational re- structuring which includes both short and long term investments. A number of modes have been brought close to collapse in Angola during this decade but the maritime sector is vital to the economic recovery. Therefore, it should have a key role in any future investment program. F. Mail and Telecommunications 65. In common with many other Angolan sectors, for Telecommunications the years following Independence were characterized by nationalization and reorganization, with the operating needs focussed on maintaining existing service levels in a difficult environment. In 1980, the performance had deteriorated to a point where further restructuring was necessary. The existing mail and telecommunications directorate (DSCT) was disbanded and a - 273 - ANNEX VIII Page 31 of 46 tripartite organization was adopted which compriseds (a) a national telecommunications enterprise (ENATEL-UEE), responsible for domestic telecommunications, (b) the Angolan mail service (CDA-UEE), to provide national and international mail and telegraph services, and (c) an international and maritime telecommmnications enterprise. (EPTEL- UEE), to complement ENATEL. These entities combine with a number of small private companies (Standard Electric, Tecnidata, Teletra etc.) to make up the current communications sector. The national council for mail and telecommunications (DNCT) is responsible for coordinating activities and has close links to MINTEC, particularly its programming and evaluation unit which has set up a specialist advisory working group to develop policy changes for the sector. 66. Mail Services. Mail services are clearly vulnerable to the pv.ovincial security problems in general, and the difficulties with transport in particular. Table VIII.16 shows Angolan mail service (CDA) throughput for 1986 and it can be seen that the mail system is still managing to offer a full range of services, at both domestic and international levels. Compared to 1985, packages are up by 153Z while the rest are relatively constant, and telegrams are receiving competition from telex and direct dial telephone lines. Nevertheless, in 1987, total telegram transmissious increased around 10 percent to over half a million messages. Currently, the mail network is incomplete and irregular, due to the security problem. Roads cannot be used for most inter-provincial links and mail consequently depends on the air sector. Problems of limited cargo space on some planes and the inability of CDA to get designated transport priority on most modes contributes to delays in distribution. TAAG cannot meet over 13Z of their domestic schedules and this adversely affects mail distribution. CDA lack a dedicated vehicle distribution fleet and the private truck sector cannot offer suitable services because of its structure and paucity of appropriate vehicle types. CDA also lacks simpler forms of delivery modes like bicycles, and this adds to their distribution problems. - 274 - ANNEX VIII Page 32 of 48 Table VIII.16. THROUGHPUT1 OF ANGOLAN MAIL OFFICE, CDA, 1986. (thousands of units) In Out Registered Letters: National 6,037 6,010 International 3,177 3,057 Money orderss National 3 3 International 6 5 Packages: National 4 4 International 15 15 Telegrams: National 125 125 International 63 64 Sacks of Mail% Sacks of Hail: National 53 53 International 30 27 Source: Annuario Estatistico, HINTEC 1986. 67. While it may be possible to augment the vehicle fleet through new investment and speed up delivery schedules by improving operational efficiencies, air travel will remain the key domestic mode as long as the present security situation exists. -J tariffs could be increased, CDA might be able to pay for preferential treatment on air and other modes. The planned high speed coastal ferry network will offer a complementary form of mail transit which merits consideration in CDA's short-tenm planning. Management and motivation in CDA, like many other UEEs, is low, adding to the problems associated with improving overall efficiency levels. The average salary is low and there is little opportunity for making more on the job, so absenteeism is high. Government reforms aimed at raising mail service productivity are needed. 68. Telecommunications. At Independence, Angola was served by a short wave telegram network supplemented by automatic telephone systems in five cities, a nine-city telex link and an earth satellite station at Cacuaco. Domestic equipment comprised 52 telephone exchanges containing 49,000 lines and 9 telex centers with 470 machines, representing about 60Z of capacity. The new state companies for mail and domestic telecom- munications were formed from existing colonial monopolies, while EPTEL was - 275 - ANNEX VIII Page 33 of 46 based on a nationalized private company - Marconi - which was contracted to provide additional technical training and to supply both spares and equipment. EPTEL was also given the responsibility for maritime communications, in addition to international telecommunication services. 69. The period 1975 to 1980 was characterized by guerilla attacks, poor management, lack of technically skilled personnel and the need to continually maintain a system that was partly obsolete and operating under heavy loads. Telegraph use dropped dramatically, many local city telephone networks encountered severe operating problems that lowered service quality and telex use encountered difficulties as the network faced high demand. By 1980, telex capacity had fallen from 810 lines to 720, although the number of users rose to 587. Telex data are useful indicators of transport activity, since businesses in a number of modes (particularly shipping) recognize telexes as legal documentation. Inter-urban telephone, telex and telegraph use fell as the network deteriorated, as shown in Table VIII.17 which compares the 1975 and 1980 network characteristics. Table VIII.17. INTER-URBAN NETWORK, 1975 AND 1980. 1975 1980 System Stations Localitiesl Stations Localities VHF- 48 channels 28 12 15 6 UHF- Z4 channels 8 6 3 2 VHF- 6 channels 6 4 3 3 VHF- I channel 22 20 3 3 Other 2 2 - - Note: 1. Communications relayed between stations to exchanges and users in various localities. Source: MINTEC, 1987. 70. A 1980 restructuring of the telecom sector was followed by five years of commercial problems characterized by increasing difficulties in maintaining inter-urban systems, a consequence of the security situation and heavy demand. However, planning and investment was at least being taken seriously at all levels and the African Development Bank provided investment funds in 1985 to improve international links and efficiency. A system of micro-wave and troposcatter stations now provide links over about 65 percent of the country, a result of the investments planned during this period. Security still affects service provision and in 1983 two troposcatter stations were damaged and the link between Malange and Saurimo destroyed. Luanda's central telephone exchange has been reconditioned and the cable network renovated. Some characteristics of the telephone system for the years 1980 and 1985 are given in Appendix Table 1.7. The telex remains susceptiLte to lengthy breakdowns which has drawn complaints from transport agencies. In 1985, work began on developing an overall plan for - 276 - ANNEX VIII Page 34 of 46 the sector, using funds given by the African Development Bank. Finally, a telecommunications institute was created which, though in its infancy, recognizes the urgent need for improved technical and managerial manpower capabilities. 71. In 1987, service levels in the sector were still variable and prone to breakdown. The inter-urban network is incomplete and likely to remain so while the severe security and transport problems remain across most provinces. New investm3nt in automatic exchanges should result in better local and inter-urban services, and higher ENATEL revenue. Table VIII.18 giveE some selected operating data for ENATEL and EPTEL covering 1985 and 1986. The impact of automatic dialing can be seen in the 1986 fall in manual services, combined with the huge rise in automatic use to more than double the demand projected by ENATEL. International telephone use in 1986 was affected by government restrictions and undervalues the actual demand levels. If the international systems can be improved, it is believed that a similar surge in demand to the domestic market will take place, especially as the current program to improve international links, funded by the African Development Bank, should improve both capacities and the number of foreign countries with which Angola has direct links. Much of this traffic will be automatic, thus improving speed and cost-effectiveness. Telex use continues to play an important role in Angolan telecommunications, and the growth of the industry in very difficult circumstances is shown in its 1986 output value rising by liZ over the previous year. Table VIII.18. ENATEL AND EPTEL, SELECTED DATA (1985-86). 1985 1986 Telephone Manual Inter-urban 2,509 748 International (In) 2,250 2,120 (Out) 7,753 5,741 Automatic 2 82,000 215,680 Telex1 National 444 623 International (In) 1,715 1,640 (Out) 2,396 2,769 Value 3 1,297,101 1,435,035 Notes: 1. Thousands of minutes. 2. Thousands of impulses. 3. Thousands of Kwanza. Source: Annuario Estatistico, MINTEC 1987 - 277 - ANNEX VIII Page 35 of 4& 72. EN&TEL admits that the policy of concentrating investment in high technology areas, to the detriment of assets such as buildings and general infrastructure carries risks. Complementary investments for smaller exchanges, local cable networks and non-urgent maintenance have also generally been saczificed in the sharp cut-back of government funding. Such a policy is only sustainable in the short to medium term, and must be corrected in any future planning for the sector. Financial cut-backs by the government have affected the largest project since Independence - Angosat - which would provide national telecommunication and television coverage using satellite links. 73. It may now be more appropriate for maragement in the telecom- munications sector to concentrate on routine and preventative maintenance of all assets, and complete all currert investment programs as rapidly as possible. Attention must now be paid to the persistent manpower resource problem. Telecomunnications is capital-intensive and skilled technicians of all types are needed to maintain the various systems at their designed levels of productivity. Unfortunately, ENATEL and EPTEL cannot apparently either attract or retain sufficient numbers of trained personnel. Government actions to correct the salary imbalances should accompany an apprentice training program to address the manpower shortages. Since 1975, there are 302 more telephone subscribers, three times more inter-urban lines. four times the international lines and automatic dialing has produced higher use and profits in the domestic market. However, all this progress is constrained by the failure to recruit educated and trained technicians and managers. G. Availability of Modal Spare Parts 74. Efficiency levels in all modals were seriously affected by chronic spare parts supply problems. In theory, public and parastatal organizations are required to put spare parts provision in their prospective budgets or 'plafonds" which require ministerial approval. Spare parts for most modal equipment requires foreign exchange. Although some entities have authorization to spend up Lo a pre-determined level, such as US $9,000 for Angolan Airlines (TMG), generally BNA approval is required. This may be given in part, in full or not at all. It makes no difference if the enterprise earns foreign exchange or that lack of the parts may damage utilization, revenues and profitability. 75. The rules governing the supply of spare parts are basically simple. Public or parastatal enterprises need to estimate their needs twelve months ahead and include the estimated spare parts needs and costs in their annual budget for approval. Mixed companies have greater flexibility since the private partner can generally provide the foreign exchange and companies have such agreements sanctioned in the legal establishment contract approved by the government. A good example of the different cost impact this can produce is given by considering that ETP truck operations at Base Bungo, Luanda have had items on order for over twelve months. Also TAAG carries a US$18 million spare part inventory to meet contingencies given their normal eight-month waiting period for parts. In comparison, Intertransportes, a joint venture trucking firm with a road - 278 - ANNEX VIII Page 36 of 46 freight contract for the Kapanda dam project, receives a monthly ISO 40 foot container from Italy through which (telexed) spares requirem'ents can be shipped. This allows all spares to be placed on a 28-day cycle. Good cost control makes an important contribution Lo efficiency and profitability. 76. If enterprises are very large and important they may be allowed to deal direct with suppliers but the majority of transport operations must deal through the government importing agencies like ABAHAT. The heteroge- neous mix of transport types, makes and models in Angola, all obtained from a wide range of suppliers and nations, presents huge problems for any single importing agency. The problem of heterogeneity is particularly acute in road transport. MINTEC set up maintenance centers for specific vehicle makes - MANAUTO's - in the late 1970s to meet selected repair needs. Private vehicle owners are permitted to take their vehicles to these centers but generally choose not to do so. The inability of the official vehicle maintenance system to cope with demand in an efficient manner has predictably resulted in alternative private informal arrangements taking over. There is strong evidence that supplies destined for the public sector find their way into the informal markets and a new Volvo N10 fuel injection pump was noted on offer in the parallel market at Kz. 110,000 even though ETP were waiting delivery for such units. The problem has now become so serious that HINTEC have proposed an entirely new joint enterprise distribution system to ensure the regular supply of spares and materials for motor vehicles. TAAG has also made some recommendations to keep inventory costs down and both these schemes will be discussed in later sections. 77. Rail is critically affected by lack of trained personnel and spare parts for the maintenance of locomotives and rolling stock. A total of 165 locomotives, 198 passenger carriages and over 3,800 wagons (most over 15 years in age) need constant attention for a variety of skilled and semi- skilled maintenance tasks. The maintenance and repair facilities of the various railway companies are extremely underutilized and many machine tools have not worked since Independence. This accounts for the dramatic decline in registered fleet numbers and in these units and stock actually working, as described in the rail mode section of this report. All rail repair facilities are in secure areas of the country and could be used as centers for carrying out and training a whole variety of engineering tasks, not necessarily confined to rail transportation. The crucial need bere is trained personnel and it may be more efficient to select potential personnel for training at other African rail centers, as well as bringing in foreign specialists to assist on technical programs at the main Angolan rail centers with assigned counterpart staff. 78. All transport and communications entities have problems organizing their spare parts requirements through the existing government arrange- ments. Maritime vessels seem to cope reasonably well within the current system, helped in part by the surplus capacity in the sector which means that lower utilization and efficiency levels due to lengthy waiting for parts are not critical to financial profitability. In addition, ships can get serviced in foreign shipyards should it be necessary on a voyage, and - 279 - ANNEX VIII Page 37 of 48 this allows for particular categories of repair and maintenance to be treated effectively. Cabotage does not have these maintenance alternatives and is reliant on Angolan yards. Cabotage vessels are elderly and require frequent attention so a real problem exists if cabotage is to grow in the manner desired by MINTEC planners. However, this could be turned to national advantage by developing the well located shipyard of Estalnave to the point where it can quickly schedule and service all cabotage vessels. This would result in a southern Atlantic yard for small vessels which could be used by other African cabotage vessels and foreign fishing boats which are currently so numerous. This represents a very valuable potential source of foreign exchange. H. MINTEC Analysis and Planning 79. Evaluation. The shortcomings and difficulties within the transport sector and their adverse effects on economic efficiency and growth lead the Second Congress of the MPLA-PT in 1986 to redefine basic objectives and to require MINTEC to develop new plans for their implementation. These objectives were to make road transport the basic national mode, complemented by rail and cabotage, and supplemented by the air sector. Internationally, air would remain the passenger mode and shipping the long distance freight mode, although both would be expected to improve service levels, competitive performance and profitability. It was hoped that a program of short term measures could be identified that would lead to rapid improvements in selected modal services. MINTEC set up a small programming and evaluation unit to diagnose the central issues and make recommendations for improvement. The unit decided to examine the key areas of infrastructure, running stock and equipment, personnel and training, finance and service levels for each main mode. Their findings were released late in 1987 for consideration by the Minister, prior to submission to higher ministries. 80. Analysis. The analysis of the period 1975 to date is reasonably accurate in terms of performance, output and modal data but the key role of central planning in this period and its total inability to forecast, organize and operate transport services is unde:standably ignored. Perversely, the failure in many sectors is blamed on insufficient regulation or the wrong type of planning. Their main findings, by mode, are: (i) Good growth prospects exist for cabotage operations, both for freight and passenger, given port infrastructural improvements. Though it is considered to have little flexibility and requires modest investment, its low cost per kilometer of travel over similar congested air routes and security make it extremely attractive. (ii) Rail corridors should be treated separately. CFL is operating in most secure corridors and merits evaluation for investment. CFB is most affected by the military-political struggles and its short term prospects are limited to the Lobito-Benguela-Huambo section of the corridor. CFM has good prospects on the link Namibe-Huila, - 280 - ANNEX VIII Page 38 of 4& but no investments are presently worthwhile from Huila to Menongue. Rail's low cost per ton or passenger kilometer is more than offset by the vulnerability of the infrastructure, large investment needs and fixed corridor route systems. (iii) Highway infrastructure and use have been affected by loss of security, while vehicle operations have been constrained by the weak commercial environment. SEF and MINTEC's own plans for the sector should go some way to correct the latter deficiency. Regarding infrastructure, roads require modest investment, have great flexibility, can easily be extended to new regions and allow goods and passenger movements at affordable prices. MINTEC claim that the cost of one ton of air cargo is equivalent to 5 tons by truck, 15 tons by train and 20 tons by sea. It is proposed to reintroduce an effective road transport freight and passenger service, reactivate railways only in secure areas, invest in cabotage operations to take pressure off passenger demand for air services and to expand inter-provincial road trade links, thus allowing air to develop a strategy best suited to its operating characteristics. 81. Technology needs are addressed by focusing on the utility of rehabilitating the existing vehicle fleet and modernizing other modes like rail, coastal vessels, some aircraft and all modal infrastructure, using the latest technology where possible. This raises the need for trained staff to install and maintain such technology, and conflicts with the desire to reduce dependence on foreign assistance. Finally, the choice of technology, equipment suppliers, spare part needs, technical training and financing have also to be considered. In 1986, the sector employed about 36,000 personnel of which 912 were unskilled workers, 7.5Z administrative personnel and only 1.5Z technicians. It makes no sense to increase investment in high technology without matching it with funding for technical training, since all modes currently have difficulties finding staff at existing levels of technology. 82. Strategies. MINTEC's programming and evaluation unit considered three elements of the transportation problem; markets, modes and ownership. Markets were grouped into international, inter-provincial (national) and provincial for both freight and passenger traffic. The modes were treated as single entities (ignoring multi-modal systems) and owneLship was defined as either state, mixed, private national and private foreign. Angolan planning is not prejudiced against any of these ownership patterns, and monopolies are now present only in the air and urban bus transport sub- sectors. Matrices were drawn up representing acceptable combinations of mode and ownership forms, and MINTEC action for each combination identified six categories; develop, reorganize, negotiate, regulate, reduce and net allowed. Broad types of action, appropriate for short-term impacts, were developed from this exercise and are summarized in Table VIII.20. 83. MINTEC's programming and evaluation unit has worked hard to develop some well argued proposals. Inter-provincial links that meet the criteria developed by the MINTEC unit, together with project flow rates, - 281 - ANNEX VIII Page Sto of 48 are shown in Figure 1 for freight and Figure 2 for passengers. Table VIII.19 summarizes the flows by modal category. Annually, about 1 million tons and 26 million passengers movements are predicted to complement existing flows. It is difficult to give a comparison between predicted and current values, since cabotage passenger and inter-provincial road freight and passenger movements are not currently recorded. However, within the projected provincial passenger data, Luarda-Lu&nda accounts for 15 million passengers compared with 1.2 million current passengers. Generally, the figures represent modest projections and should well coordinated transport systems be implemented and operated efficiently, the actual demand data are likely to be much higher. MINTEC's programming and evaluation unit has also included proposals for telecommunication investments but most center on completing projects underway, particularly the micro-wave system (not yet 50% installed) and the seriously delayed cable network in Luanda. Table VIII.19 PROJECTED FREIGHT AND PASSENGER MOVEMENTS1 Mode Freight (tons) Passengers Road: Inter-provincial 155,000 4,240,000 Rail: Inter-provincial 450,000 3,280,000 Provincial 250,000 18,000,000 Cabotage 148,000 210,000 Total 1,003,000 25,730,000 Note: 1. Projected data, based on MINTEC 1987 proposals. Source: Esquema Director, MINTEC 1987. 84. Short-term measures are given in Table VIII.20 although no costs were available at the time of the main mission. Timing is fortuitous, however, since assistance and guidance on cost-benefit and economic/financial evaluations can now be given to allow a more detailed analysis of the proposals developed from initial proposal screening. At that time, when choices have to be made with limited funds available, the arguments for less regulation and a reduction in state or quasi-state intervention can be considered. - 282 - ANNEX VIII Page 40 of 48 Table VIII.20. MINTEC SHORT TERM STRATEGIES (1987) Sector Freight International: Improve Angonave and Secil Maritime productivity, profitability, aim for greater market share. Re-organize CFB in Lobito corridor. Re-organize docks. Set up container company. National: Diminish air cargo. Regulate road transport. Coordinate needs with National Council of Carriers. Improve cabotage facilities at ports for north-south links. Organize road transport into zones, consistent with rail corridors. Regulate road transport. Provincial: Reorganize road transport, set pric.es and control supply of services. Set up road transshipment terminals. .OassenRers International: TAAG; better service, improved competitive image, better negotiated commercial crntracts. No foreign operations without joint agreements. National s Develop inter-provincial links, using rail corridors where possible. Provide a cabotage service to relieve overcrowding on littoral routes. Reorganize and regulate the private bus operators, no foreign companies. Provincials Organize provincial transport sector. Allow regulated private operations. Regulation through licenses and user charges. Source: Esquema Director do Sistema de Transportacao na RPA, MINTEC 1987. 85. MINTEC's programming and evaluation unit has focussed attention on the general problem of spare part provision, and have developed an entirely new road sector distribution system. Its basic objective is to provide a full range of after-sales services to vehicle owners. This would include supplying new vehicles, rebuilding units, providing spares and technical support, all under one organization which will be responsible only for one - 283 - ANNEX VIII Page 41 of 48 manufacturer. A significant improvement in spares provision is essential if the stated MINTEC desire to develop bus and trucking operations has any hope of success. The cumbersome, inefficient central importing agencies would be replaced by idividual manufacturer parts distribution systems reflecting the national vehicle fleet composition. It is proposed to have two levels, the first representing key manufacturers like Scania, Mercedes, Volvo and IFA where the supply of parts is absolutely crucial to national productivity and a second tier representing minor makes whose impact is less vital. The second tier would be simpler in structure but would not operate at any commercial disadvantage. Manufacturers have been contacted and seem willing to seriously consider investing in the proposed joint venture over which they would exercise management control as long as some method of remitting profits (or a portion of profits) can be agreed with the BNA. It is hoped that the new financial and economic changes now being considered will provide the impetus for such an agreement. 284 ANNEX VIII - ~~~~~~~Page 42 of 4 6 MINTEC PLANS FOR INTER-PROVINCIAL FREIGHT FLOWS CONGOJ FRE3GHT cx3ccz_mm Railway Road A4 Marit. ZAIRE I 1xZ o l t LLjAN 4 O~~~ NORT - ~NRT AtilntiC °t g KWMAA J SUL AtIntic / BEN*d Ocean \~ ; ?f QsM'XC {1 NAMIBE 2 AMI B Ocean NG KA OOO i ~/< _ _ CUNENE \ ~~~NAMIBIA \ ~~~~~~~BOTSWANA \~~~i ml ,,,O 00 200 300 *oo oso 5oO 1SO 200 250 Figure 1 ANNEX VIII - 285 - Page 43 of 48 PUNTEC PLANS FOR INTER-ROVINCIAL PASSENGER FLOWS CONGOJ PASSENGERS cU . £ V Reilway A Road / t > \ZAIR ZAIRE Marit. Atlantic 0 LUNDA O3cean BEN moxico_ NAMHUIBIA | ZAMBIA \~~ 100o 200 300 '00 NA I KUANDOles k0 S 100 s200 300 l0 Figure 2 - 286 -- ANNEX VIII Page 44 of 48 I. Issues, Prospects and Recommendations 86. Issues. The sector would benefit from general planning changes and specific restructuring at all levels of modal +tvity. It is characterized by the following constraints: (a) Limited land-based modal opera ue to the poor security situation, lack of infrastructu intenance, reduced demand patterns and inadequate vehicular stock. (b) Failure of centralized planning to recognize the importance of transportation and its needs, to adjust to market changes, modify tariffs, supply desired services and support existing operations. This results in costly passenger and cargo rates in real terms and an inefficient demand for modal services. In general, the supply of services is totally inadequate to meet the demand at official price levels. Parallel pricing of maintenance and services is present i.. the road sub-sector, together with queuing and time delays in other modes. *c) Inability to cope with the rapid urbanization noted in many provinces, especially those that are considered more secure. Freight shipments (notably food) are affected but the most chronic failure is the lack of urban passenger transit systems to meet the needs of the growing city populations. (d) Foreign exchange limitatiots that complicate or prevent the purchase of equipment and spare parts for all transport and communications modes. Much of this is due to planning rules and BNA procedures which combine to overrule the operational needs of managers and result in short service lives of road vehicles, railway engines and mechanical handling equipment of all types. These difficulties then contribute towards sustaining the present unreliable and inconvenient service schedules. (e) Employment policies are inconsistent and ineffectual within the sector. Skilled staff are difficult to retain and state enterprises frequently required to maintain large numbers of untrained employees who are troublesome to motivate and manage. Training and educational schemes are not commonplace, and there is a dearth of technicians in all modes that affects productivity, service levels and preventive maintenance. Remuneration is poor and opportunities for auto-consumo limited so staff turnover, especially where skills are marketable, is high. (f) Infrastructure maintenance is poor and costly in terms of its effect on modal output and profitability. It also has social opportunity costs given that labor intensive policies could be adopted to reduce operating costs while generating employment opportunities. Many land systems are in a quasi-abandoned state; airlields lack basic facilities, rail tracks and stations are - 287 - ANNEX VIII Page 45 of 46 damaged and inoperative, and the highway network is in a deterior- ated condition and lacks any service facilities like fuel stations and food stops for drivers over much of its length. Ports require both physical works, (quays) and equipment maintenance programs to improve efficiencies and preserve investments, especially for cabotage operations. (g) The collapse of official price levels for many goods and services, and the attendant rise of the parallel market has caused distortions in the pricing of transport services. It is important that planning changes should avoid subsidies and allow modes to compete on equal terms. In this latter respect, the private sector needs to be stimulated and subsequently supported, and there is good potential for growth, particularly in highway and cabotage operations. MINTEC seems to be avoiding regulation and licensing as a means of controlling the sector and is aiming for a mixed competitive economy. 87. Prospects and Recommendations. In planring corrective action, the transport sector has limited capacity to absorb the related elements of large investment programs. Such limits are reflected, inter-alia, in inadequate local complementary services, lack of experience in managing large projects at Ministry and Provincial levels, and potential difficulties in meeting disbursement targets for locally-financed elements because of irregulur supply of locally-manufactured materials. In these circumstances, a program focusing on short-term high impact projects and modest financing seems an appropriate form of investment, supported by policy changes at Government level. Large single projects should be evaluated separately once their consequences in terms of sectoral absorptive capacity are recognized. 88. MINTEC have proposed new transport plans reflecting Provincial, Regional and national/international needs and these should influence modal and inter-modal investments and project selection. The main components of the program are given in Table VIII.21. In the short term it is desirable to reduce the national demand for air services, both cargo and passengers, by raising service levels in other modes, particularly highways and cabotage. In addition, all tariffs are grossly distorted and require urgent review. The following specific actions are recommended for the various modes. - 288- ANNEX VIII Page 46 of 48 Table VIII.21. MINTEC PROPOSED PROGRAM, 1987 Mode Action Road: Urban Reorganize Urban Bus Transit System Inter-provincial Rebuild links and provide freight and passenger services: Luanda - Malange, Luanda - Uige, Huambo Huila, Huambo - Benguela, Huila - Malange. Rail: Urban Develops Luanda - Luanda, Inter-provincial Re-open: Luanda - Malange, Huila - Namibe. Cabotage Create regular, efficient services between: Luanda - Cabinda Luanda - Lobito Luanda - Namibe Air Operate a reduced schedule profitably and air traffic control/navigation. Source: Adapted from Esquema Director, MINTEC 1987. 89. Highways. Vehicle fleets should be increased and vehicle life extended through easier access to capital for new vehicles and spare parts, trained mechanics and improved maintenance facilities. In addition, stricter control of loads, and improved road conditions would contribute significantly to prolonging vehicle life. Highway infrastructure needs to be monitored on a regular basis to identify construction, rehabilitation and maintenance needs. This would require the creation of an effective highway maintenance organization in Angola. possibly in three-tier form to reflect a national-provincial-district structure. The Ministry of Construction should be encouraged to seek funding for an evaluation of a new autonomous highway authority, with an adequate, dedicated revenue base. There should be an efficient private sector to complement State and company transport enterprises. Regulation should be very carefully evaluated, as excessive control has rarely had the desired effect in other African countries and vehicle licenses should be freely available as long as applicants meet required operational standards. Tariffs should be determined by market forces and efficient operators should be allowed to run multi-vehicle fleets. In urban transport, bus fleets need expanding and their routes improving to reduce vehicle damage. The desirability of parastatal bus operations needs evaluation and the private sector compris- - 289 - ANNEX VIII Page 47 of 46 ing taxis, pick-ups and mini-buses should be allowed to grow. In planning terms, road investment is appealing because its flexibility permits regional impacts to be finely tuned. A variety of vehicle types, giving different levels of service at different prices will decide the appropriate demand and price levels without undue regulation. It also has attractive employment prospects, particularly in the areas of road construction and maintenance. As part of the program, consideration may also be given to determining a system of vehicle user charges to cover infrastructural investment and maintenance. 9O. Cabotage. Regional development requires that goods and produce are transported to major markets without delay and at low cost. Cabotage has an excellent potential for providing services over part of the regional transport link from the producer to consumer, though it present performance is dismal. MINTEC is proposing programs for both passenger and cargo cabotage investment, principally in the ship fleet which is presently old, unreliable and incapable of giving the desired level of service. Two new 320 passenger ships are operating between Luanda and Lobito but facilities at all ports need to be improved to allow coastal ships to be promptly berthed, unloaded and serviced. The new proposals from the maritime advisory group on port reorganization should complement cabotage operations, making them more productive and profitable. 91. Railways. Investment requirements for Angola railway systems are considerable. There is a need to rehabilitate the permanent way, replace daimaged bridges, renew rolling stock, rebuild non-operational locomotive units, renovate signaling and communications, improve transshipment facilities, educate adequate numbers of technical staff and ensure a regular supply of spare parts for the entire operation. The analysis of the Lobito to Luau (Benguela) corridor should be treated separately under normal evaluation criteria to determine desirability and timing. Experience gained from the implementation of the Beira corridor in Mozambique should be very valuable in this exercise. Excluding the corridor issue, and looking at other railway investment opportunities, projects that promote short term sectoral impacts should be favored, such as improving rail transit in the port of Luanda, providing technical assistance to adequately maintain and rebuild existing engines and rolling stock in all three systems and finally to plan sequential investments within selected corridors. Such corridors should include urban passenger traffic where appropriate. 92. Air. The evaluation of TAAG's long distance aircraft should be a separate project and only measures to improve domestic services should be considered in the proposed program. TAAMG presently carries a large and costly eight-month inventory of spare parts because of difficulties in obtaining foreign exchange. Changes in Government financial policy, requiring little capital investment, are the most appropriate actions to remedy this problem. If ENANA airport safety and communications could je improved within the domestic system, TAMG could operate its aircraft over a - 290 - ANNEX VIII Page 48 of 48 longer daily period and so improve utilization. Due to tariff distortions and the fixed exchange rate, TAAG is subsidizing all its activities in real resource terms. A sequential adjustment to the tariff structure is urgently needed to allow TAMG to operate from a sound financial base. 93. Communications. The transport sector, in common with other commercial sectors, would benefit from improved public communications at all levels. Communications in general have failed to attract sufficient investment to match demand and to maintain standards of service, even though telephone subscribers have doubled to over 50,000 since 1975. Companies were nominally profitable in 1987 but tariffs do not reflect resource costs and the whole sub-sector needs reorganization in terms of tariffs, salaries, mail transport, maintenance, technical training and management control of staff and operating procedures. The mail system is essentially a low technology, personnel management operation while the telecommunications is characterized by high technology, substantial investments and good potential profitability. Reform of the mail service can be achieved by concerted Government action, with little help from external agencies. A number of projects in the area of telecommunications have been proposed by MINTEC and technical assistance and equipment could be provided where such investments contribute to the success of a transport project. 94. Human resources are a major issue in making all transport modes more efficient and productive. There is a lack of appropriate skills at virtually all levels of the modal employment hierarchy. A two-tier approach to the general problem is recommended in Annex IX, whereby basic educational programs in Angola provide the essential educational foundation for more skills-oriented training. The modes themselves would then be responsible for more specific training, possibly with the support of technical assistance. All modes would benefit from technical assistance to develop and train good managers, experienced technical staff and competent operators. Technical assistance should be targeted on critical areas. Equipment maintenance requires strengthening in all transport sectors and highway maintenance may require technical assistance with labor-intensive methods used to the fullest extent possible. This can be achieved by adopting a regional/provincial focus and a pavement management system approach. Finally, training programs from unskilled operators upwards are highly desirable and should result in higher equipment utilization and modal productivity, to the benefit of the Angolan economy. - 291 - ANNEX IX Page 1 of 18 EDUCATION A. Structure and Organization of the Educational System 1. The present educational system was established bv Decree 26 of January 1977 and changed by Decree 40, of May 1980 which divided it into three levelss basic or primary education, secondary education and higher education. While the first two levels offer regular courses for students in the normal age range, vocational training and adult education are available also to older students. 2. Regular Education. Primary education is also divided into three levels, in addition to one year of preschool. The first level lasts four years and is compulsory. The second and third levels each last two years. School attendance should start at six years in preschool classes; the first level should be completed at age 10, the second level at age 12 and the third level at age 14. However, acceptable ages are up to 14 years old in the first level, 16 and 18 years old in the second and third levels. The purpose of primary education is to provide the knowledge required to obtain skills through on-the-job training or secondary education. Secondary education is open for students who have completed the third level and offers two alternatives: the pre-university, a two-year course leading to entrance in the university and secondary technical education, offering different specializations and having a duration of four years. The system does not track as the completion of a level or its equivalents opens the same alternatives. Thus, secondary technical education also provides access to higher education. 3. The 2-year duration of the pre-university course has proven insufficient to provide the students with the knowledge required for university entrance. As a result, it has been extended, on an experimental basis, to three years. Access to secondary education and higher education is determined by a system called 'encaminhamento", which considers previous grades, vocational aspirations and the number of places available, in t.he selection of students. There are 14 pre-university schools. Of these, only three have their own facilities, located in Luanda, Uige and Malanje. Eight schools use facilities provided by the National Educational Institutes and three schools share them with secondary technical institutions. This, in part, reflects the fact that the pre-university courses conceived in 1978 are in a transition phase. Both curriculum and duration need to be reviewed in order that they can adequately fulfil their role of providing the knowledge required for admission to the university. 4. 3econdary technical education is a four-year course and has two programs. The first program is a teacher-training course for primary education teachers at the National Institutes of Education, located in 14 provinces. Besides these institutes, there are, in Luanda, the National Institute of Physical Education and the Pedagogical Industrial Institute. The former provides training for physical education teachers and the latter trains teachers in industrial disciplines for secondary technical education. The second program offers specializations for technicians in areas such as agriculture, electricity, health, mechanics, fishing, and finances in the - 292 - ANNEX XX Page 2 of 18 secondary technical institutes. Only 12 of the institutes are functioning as two were recently closed. During the last two years, students have to gain pLactical experience by working as apprentices in jobs related to their specializations. Most students of secondary technical education are *working-students*, i.e., are employees who are daily relieved of their duties for a number of hours in order to attend classes. For example, many teachers are also students at the National Institutes of Education in order to become certified teachers. The existence of uorking-students negatively affects learning. 5. The Agostinho Neto University, established in November 1976, is the sole institution of higher education and has three sites: Luanda, Huambo and Lubango. In Luanda, there are the Faculties of Law, Economics, Sciences, Engineering and Medicine. In Huambo, there are the Faculties of Agronomy and Medicine, as well as Economics and Law. In Lubango, there are courses in Economics and Law as well as in the Institute for Education Sciences. The purpose of this Institute is to provide teacher training for teachers of the National Institutes of Education. The Institute for Educational Sciences offers its courses also in Huambo and Luanda, although in these cities it does not have resident professors. These courses are correspondence courses and have many inadequacies. The faculties of Economics and Law at Huambo and Lubango do not have a sufficient number of teachers. As a result, many disciplines are not offered on a regular basis. To remedy this situation, professors from Luanda are sent at regular intervals to teach short-term, intensive courses. 6. Some faculties offer several specializations. All courses have two levels. The first level lasts three years and the second level two years, except for Medicine, which lasts six years. The teacher-training correspondence courses also last six years. Only the completion of the second level provides a diploma. Most students are "working-students" who receive full salaries. Students living in other cities receive free board and lodging. In Luanda, the University houses the National Center for Research; its policies are designed by the National Council for Research, a unit of MED having the rector as its president. 7. Adult Education and Professional Training. Students too old to be accepted by regular primary education have other options. Adult education is offered corresponding to levels I, II and III of primary education. In level I, it is a two-year program divided into fout semesters, the first one corresponding to literacy. Levels II and III each have a two-year duration also divided into four semesters. Those completing level III have access to secondary education. Adult classes are given at night using the facilities of regular schools. 8. Literacy programs equivalent to the first semester of Adult Education are carried out by the National Center for Literacy. The Center conducts one-year programs using volunteer teachers and the program and manuals used are specifically designed for the students' needs. The resources for these programs and their execution are managed by the Party (MPLA-PT). - 293 ANNEX IX Page 3 of 18 9. Provisional schools (concentrated in rural areas) offer a four- year course to children older than ten years and to dropouts. The first two years are spent learning basic skills and the last two years are dedicated to vocational skills such as agriculture, carpentry, masonry, shoe-making, printing, etc. Provisional schools are boarding schools and, as such, also cater to children and teenagers who have been abandoned or orphaned. Many provisional schools have had to be closed due to the war. At the moment, there are 13 provisional schools located in Bie (3), Namibe (2), Luanda, Benguela, Huila, Luanda-Norte, Malanje, Huambo, Kuango-Sul and Uige. 10. The centers for vocational training are in a state of flux, pending the reorganization that will occur according to legislation still being discussed. Up to now, these centers provide regular courses under the direct control of MED or offer courses for a firm's employees, financed by the Ministry that controls these firms. In the latter case, the role of MED is to provide manuals and exert some supervision. There are 45 Centers ope-ated by MED and 73 within firms. The Centers controlled by MED offer two cycles. The first cycle, corresponding to level II of primary education, takes two years and the major difference in relation to regular primary education is its objective: to provide the student with a marketable skill. In other words. the Centers provide a terminal education and thus offer an opportunity for their students to acquire a skill that is in demand. The second cycle apparently has few students and offers courses equivalent to level III of primary education providing equal access to secondary education. 11. There are three main problems regarding the Centers. The first is the lack of coordination, supervision and control, that should be exercised by MED. As a resuilt, many existing facilities are underused and the same specializations are taught with different procedures. The second problem results from the lack of knowledge about the need of qualified workers. There is a government questionnaire about the occupational structure of the existing labor force in a firm and its future manpower needs. However, many firms do not answer the questionnaire or do not answer that part regarding their manpower needs. Finally, there is the problem of financing the Centers. Recently, the government has made an effort to deal with these problems. The reform of MED has placed the responsibility for coordination of vocational training with the Vice-Minister for Vocational Training. New legislation establishing the National System for Vocational Training under the responsibility of the same VIce-Minicter is being proposed. Thus, this system maintains the utilization under MED, which does not have the human and financial resources required for the job and is not familiar with the teaching procedures and curricula of professional training. 12. Ministry of Education: Objectives, Organization and Resources. The main objectives of educational policy are fonmulated through the MPLA-PT Congresses and resolutions, and through Government legislation. Important among the former are the First Congress of MPLA held in 1977 and the Second Congress. The first Congress set the nature and goals to be followed by the educational system, including nationalization and secularization of schools, compulsory basic education, free education, and cooperation between commun.ty and school. The First Extraordinary Congress of the Party (1980) - 294 - ANNEX IX Page 4 of 18 reaffirmed these policies and showed concern with the quality of education. The Second Congress went further in its concern, with the issues of quality and efficiency, recommending a diagnosis of the educational system. Recently, in its 20th meeting held in November 1987, the Party's Central Committee approved two documents containing the diagnosis and expressed its concerns for more effective actions pursuing the existing priorities. 13. All government responsibilities and resources related to educa- tion, with some exceptions, are centered in MED. This ministry has four administrative levels: central administration, provincial delegations, municipal delegations and communal units. The central administration coordinates the educational policies, sets the guidelines, allocates the resources, determines curricula changes, buys school materials, sets teacher wages, supervises schools, organizes teacher-training programs, etc. It has two Vice-Ministers, each responsible for Departments or Directorates (see Chart -). In addition, there are the supporting units and the hierarchical relationship with the provincial delegations. 14. Under the reorganization of MED, through the Decree 9/87, the responsibilities of the Vice-Ministers were changed. Previously, one Vice- Minister was responsible for primary education and the other for secondary technical education (including the pre-university course) and for the University Agostinho Neto. Now, the University refers directly to the Minister. One Vice-Minister handles all matters related to secondary technical education and vocational training and the other is responsible for general education, consisting mainly of primary education. The changes increased the number of the supporting units from five to nine. Many units, such as the Planning Unit, International Affairs, Legal Affairs, Budget Administration and Human Resources, exist in all Ministries. International Affairs deals mainly with the administration of the "cooperantes" contracts. 15. The Vice-Minister for General Education has under his authority the National Directorate for General Education, which comprises four Departments: Physical Education, Adult Education, Special Education and Extra-curricular Activities. The former organization does not differ significantly from the new one as the responsibilities of the Vice-Minister were maintained with one exception. The Vice-Minister for Technical and Vocational Education has three directorates under his authority: secondary technical education, vocational training and teacher training. A comparison with the previous organization reveals the following changes: university affairs are now handled directly by the Minister and the pre-university course is the responsibility of a Vice-Minister. The added responsibilities include teacher training and the coordination of vocational training. The advantages of reallocating the responsibility for this level of teacher training are not clear. The main purpose of the organizational change was to place the responsibility for coordination of vocational training, which is facing a major crisis, in MED. At the moment, regular education taxes the planning abilities of MED, which are very weak, and burdens the administration with unsolved problems and large inefficiencies. It is hard to understand how MED can deal with the additional problems of vocational training, the nature of which is quite different from the ones of regular education, with the same administrative resources. - 295 - ANNEX IX Page 5 of 18 16. A more promising direction of change would be towa.d decentralization of decision-making in favor of provincial and muricipal delegations. Decentralization would result in shorter delays a-d a greater involvement of lower authorities. The scope for decentralization involves actions with regard to maintenance of schools and school suppliet'. An important measure in this respect was the decentralization of budget elaboration and implementation. The organization of the provincial delegations is similar to that of the Ministry of Education, with support units and executive departntnts, although their number is smaller. For example, the provincial delegation in Huila has three supporting units (Planning Unit, School Supervision and OCooperantes" Affairs) and eight departments (General Education, Adult Education, Vocational Formation, Budget Administration, Physical Education, Human Resources, Extra-Curricular Activities and Public Relations). In addition, there is a Consultation Council, formed by the department's directors. Contacts between the provincial delegation and the municipal delegations and communal coordina- tions are severely hampered by difficult communications, large distances and poor roads. There is no reliable information network between the hierarchical levels, and the autonomy given to the school's directors is minimal. As a result, delays in decision-making affect the schools, drastically reducing the number of school days and causing more adverse teaching conditions. 17. Not all government resources for education are included in the budget of the Ministry of Education. Separate budgets exist for the Agostinho Neto University, the National Center for Literacy and the National Institutes for Languages and for Scholarships, as shown in Table IX.l. The allocation for the National Institute for Languages is very small. While the National Institute for Scholarships, which started in 1982, receives about 3X of the educational budgets, the National Center for Literacy is far more important, receiving in most years more than 102 of the government educational budget. The Center is part of the Department of Education, Culture and Sports, a unit of the Secretariat of Ideolcgical Matters of the MPLA-PT. The Center promotes one-year literacy courses for agricultural workers, cooperative workers and employees. Those courses are equivalent to the first semester of the Course for Adult Education. 18. During the period 1980-87, education received an average of 122 of the government budget, with 102 being allocated to the Ministry and 22 to the other institutions, including the university. Even in nominal terms there are large fluctuations in budgeted educational expenditures. For example, in 1985 these expenditures were 122 below the 1980 level. Because of the cost of the increase in goods and services, the decline in real terms since 1983 is larger than the decrease of nominal expenditures. Cuts in budgeted expenditures reduced actual real expenditures even further. In the period 1980182 (Table IX.2) sizable cuts were made both in total government expenditures and in educational expenditures; the National Center for Literacy and the National Institute for Languages were most affected. - 296 - ANNEX IX Page 6 of 18 Table IX.1 - GOVERNMENT BUDGET WOR EDUCATION - 1980187 (Kz mil.ions) 1980 1981. 1982 1983 1984 1985 1987 Ministry of 10.029 9.030 9.507 8.407 9.021 7.9 11 Education University 26 239 491 33 474 500 851 Agostinho Neto I National Center 1.33 1.125 1.071 858 950 762 600 for Literacy National Insti- 16 18 28 20 * 19 9 tute for Languages National Insti- - - 140 81 * 377 384 tute for Scholarships ______________________________ 11.644 10.413 11.23 9.702 9.559 12.855 *Missing information Table IX.2 - GOVERNMENT EXPENDITURES ON EDUCATION - 1980/82 (Kz millions) 1980 1981 1982 Expendi- Reduction Expendi- Reduction Expendi- Reduction tures tZ) tures (Z) tures (2) Ministry of 7.883 21 7.929 lz 8.097 15 Education University 235 12 236 2 358 27 Agostinho Neto National Center 618 53 580 48 683 36 of Literacy National Institute 6 63 8 54 18 38 for Languages National Institute - - 135 4 for Scholarships Total Government Expenditures 76.920 17 91.639 16 72.138 29 - 297 - ANNEX IX Page 7 of 18 19. The distributional impact of educational expenditures can be seen in regional terms by comparing the per-capita expenditures for education by the 18 provinces. For 1983, the central unit of MED absorbed 8.2Z of MED expenditures. Expenditures in the provinces were an average Kz 916 per capita, varying from Kz 469 in Bie and Kz 715 in Luanda Norte, to Kz 3364 in Kuando Kubango and Kz 1784 in Benguela. The bulk of planned expenditures by the Ministry of Education is of a recurrent nature. Capital expenditures are, for most years, less than 1Z of total expenditures. Personnel expenditures account for more than 80Z of total expenditures. Expenditure on food is significant, which calls attention to the need to reevaluate the free room-and-board policy. The budget for the National Center for Literacy reveals that personnel experditure is the most important single item, representing more than 802 of total expenditures and about IOZ of the Ministry of Education personnel expenditures. This large share of resources employed in literacy programs for adults raises serious questions about its cost-effectiveneas. B. Primary Education 20. Enrollment in regular primary education in the period 1970186 shows a rapid growth up to 1979, and a sharp decline thereafter. The number of students increased from 484,000 in 1970 to 671,000 in 1976, and 1,932,000 in 1979, declining subsequently to 1,047,000 in 1986. Enrollment growth since Independence reflects the priority education received from the new Government. However, the attempt to enforce compulsory education has suffered severe setbacks, which deserve some explanation. While data on number of classrooms, number and qualification of teachers and number of daily shifts is not available for this period, it is reasonable to assume that the increase in enrollment between 1976 and 1979 has overtaxed the capacity of the system in physical terms by increasing student/teacher ratio as well as increasing the number of schools operating with three or four daily shifts. Also, there is no evidence of an increase in qualified teachers in this period that would partially compensate for the loss of qualified teachers after independence. Thus, the threefold increase in enrollment must have been accomplished with a smaller number of qualified teachers. 21. School maintenance has probably suffered from a combination of intensive use and insufficient repairs. Similarly, school materials hardly kept pace with enrollment. Thus, enrollment expansion must have increased inefficiencies and would hardly be sustainable, even if other factors were kept in check. But during the early eighties, war problems and economic problems intensified, with damaging consequences for the educational system. War consequences were felt in many ways. Firstly, impairment of the transportation network disrupted distribution of school supplies in many areas. Secondly, the dislocated population overburdened facilities in urban or secure areas. Thirdly, they contributed to the decline in the number of teachers through the draft of young soldiers. Fourthly, production losses and the cost of the war effort reduced the resources available for peaceful activities. - 298 ANNEX ix Page 8 of 1l 22. The distortions in the economy and the centralized allocation system reduced local production of school and construction materials as well as the distribution networks. As the import content of further education materials increased, their availability was affected by foreign exchange constraints, which also reduced the ability of the country to rely on foreigners ("cooperantesm) to reduce the shortage of qualified teachers. Perhaps most damaging is the effect of distorted wages on teacher morale and supply. Since teachers do not receive payments in kind, many consider their income insufficient and leave their jobs. 23. The decrease in resources available for primary education is shown in Table IX.3. For three years there are figures for the number of schools, classrooms and teachers. The number of teachers declined 23.6Z from 1981 to 1983, whereas the reduction in enrollment was less (12Z). Those who left because of low wages were probably the most able and qualified. The decline ir classrooms was larger (40Z), forcing an increase in the number of shifts and in the ratio students/classroom. Table IX.3 - PRIMARY EDUCATION - NUMBER OF TEACHERS, CLASSROOMS & SCHOOLS 1981/83 1981 1982 1983 1983/81 z Teachers 43.899 39.843 33.521 -23.6 Classrooms 17.921 16.742 10.670* -40.4 Schools 7.097 6.612 6.120 -13.8 24. Gross enrollment rates for primary education and level I declined by 422. The high figures for the gross enrollment rates for level I reflect the great number of over-aged students. For example, in 1981 almost half the students in level I were more than nine years old, as revealed by the comparison of gross and net enrollment rates. High dropout rates are also the main cause of net enrollment rates of less than 12 in levels II and III. Table IX.4 - BASIC EDIICATION - ENROLLMENT RATES 1980 1981 1982 1983 1984 Gross Enrollment Rate 75.7 69.2 62.8 55.1 43.7 Basic Education (6-14 years) Level I (6-9 years) 155.3 141.6 128.4 112.9 89.9 Net Enrollment Rate Level I (6-9 years) - 72.4 69.4 - - Level II (10-11 years) - 0.9 0.6 Level III (12-13 years) - 0.1 0.1 Source: Etapa Diagnostica, MED, 1986. - 299 - ANNEX IX Page 9 of 18 25. The censuses of 1983 and 1984 do not provide information on schooling level for those enrolled. However, they allow calculation of net enrollment rates for primary education and level I, on the assumption that students between 7 and 10 years old are in level I and that students between 7 and 14 years are in primary education. The results do not indicate major regional differences, as only Namibe has smaller enrollment rates, shown in the table below. Table IX.5 - NET ENROLLMENT RATES - FOUR PROVINCES Luanda Zaire Cabinda Namibe Net Enrollment Rate Basic Education 94.4 83.5 80.5 70.8 Level I 83.3 81.2 77.3 68.1 Sources Censuses of 1983 and 1984. 26. There are indications that the deterioration in primary education has ceased. Enrollment figures show a small increase since 1984 and the number of teachers in 1985 increased to 35,221. Still, increasing access to primary education and improving its quality will require far more resources than those presently available. Adult education enrollment also shows a decline between 1980 and 1984 and a substantial increase in 1985 and 1986. This type of education will have tn expand to accommodate the students who cannot attend regular primary education classes because of their age. The reduction in enrollment in regular primary education vastly increased the potential demand for adult education. The problems faced by primary education are illustrated by a study of demand for education in Luanda in 1986. Of the 221,400 students in the age group of 5-14 years old who tried to enroll, 31,200 did not find places in pre-school and first grade. Of the remainder 190,200, at least 71,200 were in the third shift or in classes with more than 40 students. If one considers that the third shift reduces the class hours/day of the other two shifts and that the high number of dropouts is partly a consequence of high repeat rates, the conclusion is that conditions for learning are extremely unfavorable. The study also mentions the need for an additional 780 teachers. 27. Internal Efficiency. Efficiency in primary education is low. One way to look at internal efficiency is to observe promotion, repeat and dropout rates (see Table IX.6). The promotion rates are higher for Level I than for Level II and III. Within Level I they are higher in 3rd and 4th grades; between Level II and III there is not a clear pattern, although on the average the promotion rates are higher in Level III. Taking the average value for 1980/84, promotion rates vary from 29.22 in grade 6 to 45.0Z in grade 3 and retention rates (promotion plus repeat rates) vary from 63.4Z in grade 8 to 74.42 in grade 3 class. In the period 1980/84, a clear trend is discernible. For Levels I and II, the promotion rate for each grade shows a steadfast decline. The reduction of promotion rates in the Level I is always larger than 1/5. This evidence points to a severe deterioration in primary education in the early 1980s. - 300 - ANNEX IX Page 10 of 18 Table IX.6s PRIMARY EDUCATION, AVERAGE PROMOTION, REPEAT AND DROPOUT RATES, 1980-84 Grades 1 2 3 4 5 6 7 8 Promotion 39.4 39.5 45.0 42.8 30.5 29.2 32.3 31.7 Repeat 33.8 34.7 29.4 31.1 35.5 35.9 31.4 31.7 Dropout 26.9 25.8 25.6 26.1 34.0 34.0 36.3 36.6 Sources Statistical Appendix, Table J.5. For the Level I, a cohort study shows that of a 1000 students starting the 1st grade 604 are promote-I to 2nd grade, 360 reach the 3rd grade, 326 attain the 4th grade, and only 142 students start Level II. The others became dropouts or had more than three consecutive repetitions. The average number of years it took to be promoted wass 1st grade - 1.46; 2nd grade - 1.85; 3rd grade - 2.12; and 4th grade - 2.43. 28. For each student who completes the Level I, the average number of years spent in school either by himself because of repetition or by dropouts is 7.03. Thus, wastage resulting from repetition and evasion increases the cost by 75Z. The results are even worse for levels I and II. Of the 142 students which start Level II, only 60 eventually reach 7th grade, 23 go to Level III, 9 are promoted to 8th grade, and 4 graduate. Among the students which are promoted to the next grade, the average number of years it takes to be promoted continues the upward trend observed Level I. Thus, for 5th grade it is 2.60; for 6th grade it is 2.78; for 7th grade it is 2.89; and for 8th grade it is 3.25. For each student who starts the Level II and graduates from the Level III, the average number of years spent in school either because of repetition or because of dropouts is 40. In this case, wastage increases the cost tenfold. C. Secondary Education 29. Secondary education has three major branches: secondary technical education, a four-year course offering several specializations; the National Institutes of Education, a teacher training covrse designed for primary education teachers; and the pre-university course, a two-year course leading to entrance into university. 30. Secondary Technical Education. Secondary technical education offers courses in agriculture (Huambo, Huila, and Uige), economics (Luanda and Huila), industry (Benguela, Luanda, and Huambo), health (Bie, Huambo, and Luanda), and other subjects (Fishing-Namibe, Petroleum - Kwanza Sul and Journalism - Luanda). Economics offers the following specializations: administration, commerce, statistics, finance, and planning. Industry offers courses in construction, electricity, mechanics, chemistry, and politechnics. Enrollment in secondary technical education has grown every year since 1978, to 4646 in 1985, at an annual rate of growth of 23? (see - 301 -- ANNEX_ Page 11 of 18 Statistical Appendix, Table J.6). This continuous expansion of enrollment was achieved despite serious problems which affected drastically the quality of education. Students are mainly working students, i.e., they have a regular job which allows them to go to classes. There are three categories of teachers: full-time teachers, teachers having a main job outside the Institute, and students encharged with responsibilities (monitors). Full- time teachers are usually "cooperantes"; among nationals, those having an outside job constitute a majority because of a lack of incentives to be a full-time teacher. Thus in 1986, of 513 teachers, 37Z were 'cooperantes", 25Z were part-time teachers, 162 were full-time teachers, 13.52 were monitors, and the remainder 8.5Z were classified as "other". Because of language problems and cultural differences, the work of "cooperantes" is not very effective. These circumstances are aggravated by their many nationalities and different institutional and technical backgrounds. The burden of teaching falls mainly on part-time teachers and monitors. 31. Two other aspects which constrain learning relate to reading materials and equipment used. Reading materials are generally adapted from foreign sources and do not adequately cover the subjects nor are they produced in sufficient number for all students. Also, there generally is no library. Equipment is inherited from colonial times, is well maintained but insufficient, and modern imported equipment frequently does not function because of maintenance problems and a lack of imported parts. Thus, it is not surprising to find a high evasion rate in the first year (9th grade) and an average promotion rate of 482. Aside from a generally low internal efficiency, Table J-7 in the Statistical Appendix reveals two facts. First, promotion rates in most cases are higher for the last grade. Second, the comparison of efficiency in 1983 and 1985, reveals an increase in efficiency in 1985. Low promotion rates are reflected in the modest number of graduates (see Statistical Appendix Table J.8).l/In Agriculture, the number of graduates fluctuates, with a maximum of 84 graduates per year. The Economics course shows a declining number of graduates, aggravating a serious bottleneck, that of middle administration echelons in government and in firms. Industry graduates are increasing at modest rates, far below the economy's requirements. 32. One positive change towards the improvement of efficiency would be to give the Institutes the authority to allocate their budgetary resources and so reduce the delay in the purchase of materials for class-rooms and lRboratories. Another proposal, to allow the Institutes to sell goods and services and in this way have their own source of revenues, has not yet been considered by the Government. 33. National Institutes of Education. There are 14 National In- stitutes of Education with the responsibility for training teachers for primary education in four-year courses. Enrollment in these Institutes increased from 778 in 1978 to 3970 in 1985, at an annual rate of growth of 262 (see Statistical Appendix Table J.6). However, when one compares the number of graduates with actual needs, a wide gap is observed. From 1981 to 1/ Additional information on agricultural education is provided in Annex VII. 302- ANNEX IX Page 12 of 18 1985, the graduates were 1743 (1981-68; 1982-228; 1983-461; 1984-526; and 1985-460) or less than SZ of the stock of teachers. Thus the graduates of the Institutes are not enough even to compensate for normal attrition, let alone to replace those who left because of low wages. Since most students are teachers, the net addition of teachers is practically negligible. Efficiency, as measured by promotion rates, is not high. In 1985, the promotion rates were 9th grade- 56?; 10th grade- 72Z; 11th grade- 66Z; and 12th grade- 74?, with an average rate of 662. A major learning problem is the low proportion of Angolan teachers. Thus, in 1986, 71 teachers (31S) were Angolans and 157 (69Z) were ^cooperantes'. The predominance of foreigners poses serious problems already described with respect to technical secondary education. Moreover, this situation calls attention to the inability of the Institute for Educational Sciences to produce graduates to teach at the National Institutes of Education. The demand for these graduates is very high, not only to replace 'cooper--tes" but also to expand enrollment significantly in these Institutes. 34. Unless the institutional capacity to produce teachers both at undergraduate level and at secondary level is dramatically increased, primary education will have to continue to recruit unqualified teachers. These teachers have access to in-service training. In-service training is the responsibility of the National Department for In-service Training, which is part of the National Directorate for Teachers Training. It is divided into two stages. Stage one has the objective of giving education equivalent to Level II for those teachers who completed the 4th grade. Stage two is the equivalent of Level III and is given to those teachers who completed the 6th grade. Stage one was first applied in 1980 to teachers in 13 provinces. It is a correspondence course which uses radio, and its contents were developed within the National Department for In-service Training. The results were far from satisfactory, perhaps in part due to the large number of teachers enrolled (21,600). Also, the ability to send the materials in time and receive the homework was drastically affected by the war. Thus, a review carried out at the end of 1981 showed that of those starting (21,656), 6,614 became dropouts; of the remaining 15,042, 6,874 were advanced. Stage two suffered a 4-year delay because of lack of UNESCO support and is presently being implemented together with stage one. Although results are not known, one aspect deserving attention is the delay, caused by the mail service and the fact that teachers have little time to study after fulfilling their normal duties. 35. Pre-University Courses. Pre-university courses last two years and lead to entrance in the university. There is general agreement that two years are not adequate to provide the knowledge required in university courses. In a pilot experiment, the course was extended to three years in 1986, the options were limited to Social Sciences and 'Exact Sciences', and the attendance was limited to regular students. Enrollment increased from 1,382 in 1977 to 3,721 in 1985, at an annual rate of 13Z. At the present, there are 14 schools, of which three have their own buildings, six share facilities with the National Institutes of Education and three are located in secondary technical education schools. Promotion rates were 57? for the 1st year and 48Z for the 2nd year in 1986. As in other secondary schools, the teachers are predominantly "cooperantes' (48Z), and part-time teachers - 303 ANNEX IX Page 13 of 18 (34Z), followed by full-time teachers (151) and other (3Z). In this case, the relatively low number of teachers (134), makes it easier to substitute "cooperantes" and part-time teachers, provided that teacher wages became competitive. D. HiRher Education 36. Courses and Enrollment. The Agostinho Neto University, founded on November 26, 1976, offers undergraduate courses at three sites: Luanda, Huambo, and Lubango. Luanda has the largest campus with 701 of the students. The other students are in Huambo (102), Lubango (7X), and in correspondence courses (132'. The facilities in Luanda are spread through- out the city and many buildings were adapted to serve as faculties. The problems of transportation aggravate the isolation among faculties and prevent better use of classrooms and other spaces. 37. Located in Luanda are the office of the President and its supporting units, the National Center for Research, and five faculties: Science, Law, Economics, Engineering, and Medicine. In Huambo, there are four faculties: Agriculture, Law, Economics, and Medicine. Located in Lubango are the Higher Institute of Educational Sciences, and the faculties of Law and Economics. The faculties of Law and Economics, both in Huambo and Lubango, function precariously because the number of resident teachers is far below the actual need. Because of this problem, teachers from Luanda are regularly sent to teach intensive courses. The Agostinho Neto University, part of the Ministry of Education, is under the direct supervision of its Minister. 38. One major problem is the great degree of divergence between the university and the needs of the society. Extension services, one of the main forms of interaction with society, are practically non-existent. The Center for National Research has not made any significant contribution to a better knowledge of the problems of the nation. The evidence is that the production of articles and books by teachers is minimal. Given these circumstances, the expected leadership is not provided by the university. The selection of the candidates for the university is done through a process called "encaminhamento'. This process considers both grades in secondary education and the student aspirations. TheLe is neither a clear description of how "encaminhamento" is carried out nor background information on the students who applied to the university and those who were selected. 39. Enrollment in the university has grown from 1,405 in 1975 to 5,732 in 1986, at an annual rate of 13.62, even though it declined in 1976 and 1977 (see Table IX.8). Actually, only in 1982 did enrollment reach again the pre-independence level. Most of the students also work, and the job assures them the possibility of attending classes. Students whose families live elsewhere have room and board provided by the university free of charge. - 304 ANN_E IX P&ge 14 of iq Table IX.8 - ENROLLMENT IN HIGHER EDUCATION - 1970/86 No. of Students 1970 2,125 1971 2,435 1972 3,094 1975 1,405 1976 1,093 1977 871 1978 1,254 1979 1,918 1980 2,333 1981 2,798 1982 2,991 1983 3,441 1984 4,493 1985 5,034 1986 5,732 40. The number of students in the various faculties can be seen in Appendix Table J.9. Between 1984 and 1986, the increase in students was largest ir. Economics and Education, which also have the larger faculties. The great number of specializations in some faculties raises the question of the cost per student. Possibly, the alternative of studying abroad should be favored in some cases. Thus, for example, the Faculty of Sciences offers courses in the following areass biology, physics, geophysics, geology, mathematics, and chemistry. This faculty has about 700 students and, like all other faculties with the exception of Medicine, the cou-ses last five years. It may be the case that, given the quality of the course, its unit cost and low efficiency, some specializations should not be offered. Mnother similar situation is that of the Faculty of Engineering, which offers architecture, civil engineering, electrotechnics, mechanical engineering, mining, and chemical engineering. Of the remainder, Agricul- ture offers courses in agronomy and veterinary science, and Economics offers two specializations: planning and accounting. 41. Efficiency and Resources. Information on internal efficiency is not satisfactory and suggests that promotion rates vary in different faculties between 402 and 802. One way to get an indicator of productivity is to relate the number of graduates in a given year to the number of new students five years before, only Medicine and correspondence courses last six years (Appendix Table J.10). The number of new students was estimated by taking 20X of the enrollment in the previous year plus the increase in enrollment. The indices of productivity obtained were 262 in 1984, 1OZ in 1983, and 23Z in 1982, suggesting large inefficiencies. If the stock of graduates until 1984 (740) is related to enrollment up to 1980 (8,874), the indicator of productivity is 8X. The learning process is affected by many factors. Concerning the students, it was seen that most are part-time students and their previous schooling was not satisfactory. Another crucial factor is the inadequate supply of reading materials. Libraries do not have even enough textbooks, partly because of import restrictions on the acquisition of books. There are few bookshops and they have a poor - 305- ANNEX IX Page 15 of 18 selection of books. As a consequence, most of the readings consist of class rnotes distributed by professors or the translation of excerpts of foreign books. 42. Given the limited number of full-time Angolan professors, there is a widespread use of part-time teachers and of Omonitoreso or students with teaching responsibilities (Appendix Table J.ll). In addition, as mentioned before, many courses do not have all the required teachers and hence the need to use teachers from Luanda to teach intensive courses. Finally, the most common used alternative--the *cooperantes"--have their efficiency impaired by language and cultural problems. Also, this solution is costly because their wages are partly paid in foreign exchange. In conclusion, the professors are inadequate in number and often in qualifications. There is a need of massive training abroad, coupled with attractive wages, to reduce significantly the proportion of part-time teachers and of "cooperantes". Most of the 'cooperantes' are Cubans, Vietnamese, Italians, and Portuguese. The proportion of *cooperantess was 42Z in 1984, 47Z in 1985, and 352 in 1986. Since part-time teachers have less contact hours with students and supposing these contact-hours are half of that of the full-time teachers, the proportion of the contact-hours by scooperantes" is, respectively, 522, 54Z, and 43Z. The decline in 1986 of the proportion of 'cooperantesa reflects the foreign exchange crisis resulting from the decrease in oil prices. 43. Another question, related to the curricula, is the relevance of what is being learned. The curriculum for the economics course has been of particular concern to the Government. The Government's administration and the management of enterprises require, in the middle and higher echelons, people capable of utilizing the concepts and tools of economic analysis. However, the number of disciplines which offer such concepts is far from sufficient. Improving the curriculum, including a change in content to better reflect contemporary contributions, should improve decision-making and the prospects of successful economic reforms. Proposals now being discussed of changing the economics curricula at both secondary and university levels place more emphasis on disciplines such as statistics, economic theory and financial analysis and on better understanding the workings of a market economy, while reducing ideological training. These proposals have received considerable support from the government officials responsible for the implementation of SEF. Finally, laboratories and equipment in courses such as Agriculture, Engineering, and Medicine are in a poor state, pointing to the need for maintenance and the purchase of laboratory materials. In terms of research needs, the existing laboratories are greatly inadequate. 44. The Government's planned expenditures for the Agostinho Neto University have fluctuated in the past, even in nominal terms (Appendix Table J.12). Thus, these expenditures were smaller in 1983 and 1984 than in 1982. The most important component, personnel expenditures, is responsible for between 512 and 672 of total expenditures. Outlays on equipment and other durable goods are very small, varying between 32 and 72 of total expenditures. Expenditure on food represents more than half of that on durable goods. The payment of "cooperantes" as a proportion of personnel expenditures is, in most years, in excess of 1OZ of personnel expenditures. - 306 -- ANNEX IX Page 16 of 18 The complete reliance on government sources of financing has two drawbacks: it restricts the funds available, which frequently suffer budget cuts, and it reduces the flexibility of spending. Since most students also work, part of their salaries could be used to pay for board and lodging, as well as for purchasing reading materials and, possibly, for a small tuition. Cost recovery could be extended to other areas, e.g., making the increase of extension services and the provision of consultant and research services to firms more viable. In this way, the degree of insulation of the university from society could be reduced. 45. Although the information on resources and enrollment is limited, it is possible to estimate recurrent unit costs for some courses. These costs were estimated using planned expenditures data. This overestimates actual costs because of budget cuts. The distribution of the general expenditures, i.e., those not appropriated to a course, were made proportionally to the number of students. The tertative results for 1984 are the following: the courses of Law and Econ"omics in Huambo have a unit cost of 69,000 Kz, as compared to 73,400 Ye: in Lubango. The unit cost for the Institute for Educational Sciences iTi Lubango is 88,300 Kz and for Medicine at Huambo is 95,100 Kz. Finally, the courses offered at Luanda (Engineering, Law, Economics, Sciences, and Medicine) have an average unit cost of 109,800 Kz, whereas the unit cost of the Agriculture course in Huambo is 300,700 Kz. The average unit cost for the university, considering all resources are spent only in teaching is 105,500 Kz. E. Recommendations 46. A first recommendation deals with the issue of teacher training. It is evident that the negative effect of the massive exodus of the Portuguese continues in spite of the cooperation of foreign teachers and the efforts made to increase the number of qualified teachers. The first priority should be to train teachers, possibly abroad, to eliminate the need of correspondence courses and to replace most of the 'cooperantes" at the Institute for Educational Sciences in Lubango. This measure, together with curriculum changes and provision of adequate reading materials should improve substantially the knowledge of the graduates of these institutions. At the secondary level, the National Institutes of Education would directly benefit from the availability of better teachers. Only when the existing Institutes have been strengthened through replacement of most "cooperanteso and improvement in facilities, should expansion be contemplated. The suggested approach places emphasis on quality and institution building and recognizes that there are no short-cuts to the time-consuming preparation of more qualified teachers. Measures with more immediate impact on primary education are changes in the curriculum to be set by the National Institute for Educational Research and improvement of in-service training funded by international agencies. Finally, the issue of teachers' wages should receive careful attention as the solutions proposed are contingent on the ability of the educational system to retain its best teachers. 47. Reorganization of MED should have four goals. First, the recognition that the responsibility for vocational training should not be with MED. The nature of its problems differs from those of regular education, since its content and teaching methods are specific, and the - 307 -- ANNEX IX Page 17 of 18 demand of firms must be assessed to avoid external inefficiencies. Thus, the agency responsible for vocational training should not be part of MED, a tax on firms should finance its activities and the courses offered should reflect more closely manpower needs. A second goal is to place the responsibility of the National Center of Literacy with MED. The evidence is that the literacy programs are costly and ineffective. The resources of the Center should be used by regular education to help improve the very low efficiency. Thr third goal is to strengthen educational planning and management as well as improve the information system. At the moment, decision-making is hampered by poor information and a centralization of decisions. There is little awareness of the need for cost control and a large time-lag exists between decisions and implementation, which results in excessive delays. Thus, the fourth goal is to work further towards decentralizing decision-making, especially regarding the financial management of resources. 48. Reorganization will improve the use of available resources. However, there is a clear need for additional budget resources to increase the minimum level of capital expenditures to avoid further deterioration of school buildings, to replace needed equipment and teaching materials, and to improve teacher's wages. It is clear that school construction and main- tenance should draw resources from the community, both local firms and parents, more intensively. This is the most viable way to expand enrollment in the near future. Cost recovery measures should start by imposing a fee for board and lodging. Food purchases are a large item in budget expendi- ture and it is not possible to justify, on equity grounds, their supply free of charge. Another potential source of revenues is permission for the schools, especially the secondary technical schools, to sell goods and services. The cash need of the schools could in this way be partially solved. 49. The lack of qualified management is a problem which negatively affects decision making and implementation both in the Government and in large firms. There is need for curricula reform in the economic courses, both in secondary technical schools and at the university. Also, the creation of administration courses should receive full support. For this purpose, better coordination of INORAD with the university is required. The best way to deal with the lack of Angolan teachers is to receive technical assistance from a reputable university for the training of teachers abroad, a program of visiting professors and the provision of text-books and other teaching materials. Of course, foreign aid to provide scholarships, books and equipment, and visiting professors is also crucial in other specializations. 50. Primary education can hardly keep pace with population growth. Until there is a substantial increase in efficiency, needed to restore the levels existing prior to the decline of the early 1980s, the priority should be on the quality of education. Improved maintenance of school buildings, better teachers and changes in the curriculum are the main steps to reduce the existing wastage to more acceptable levels. School construction should aim as much at the elimination of third and fourth shifts as at increasing the number of places. The cost of increasing quality can, to a large extent, be compensated by the reduction in the cost of inefficiency. The - 308- ANNMEX IX Page 18 of 18 shift in resources that is required to produce these results is the main task in primary education. In other words, increasing the number of those students iho complete four years of education should be viewed as more important than improving the odds of access to the first grade. 51. Secondary education has so far received relatively few students. Enrollment should expand as a larger number of students finish primary education. Before this happens, it will be necessary to deal with two issues. First, it is probably desirable to reduce the number of years of basic education to seven or six years and to increase in the same way the number of years in secondary education. Second, the role of general education should be enlarged vis-a-vis technical education, which is more costly and the graduates which do not enter the university should have access to training courses before entering the labor market. 52. The Agostinho Neto University has to increase the proportion of full-time Angolan professors, reducing both the number of part-time teachers and of 'cooperantes". For this purpose, it is necessary to increase the relative wages of university teachers and the opportunities to study abroad. Considering the number of courses and specializations, the lack of teachers in some courses and the inadequate existing libraries and research faciliti- es, available resources are spread too thinly. One possibility is to send students abroad instead of having them enrolled at the university. Another possibility is to increase the common core of the curricula. The univer- sity's buildings in Luanda are located in different sectors of the city and were built for other purposes. The existence of a campus should improve the use of the physical facilities, as well as teacher time, libraries and other resources. The first steps in this direction, i.e., selecting the land, and developing construction plans should be taken in the near future. - 309 STATISTICAL APPENDIX -39 Page.PageIof3 Li.st of Tables kane No. A. KEY MACROECONOMIC INDICATORS A.1 Private Sector and National Accounts ................. 312 A.2 Government Sector .................................... 313 A.3 Foreign Sector ....................................... 314 B. LAROR FORCE AND WAGES B.1 Population 1900-1986 ................................. 315 B.2 Urban and Rural Population 1970-1986 ................. 316 B.3 Economically Active Population by Economic Sector .... 317 B.4 Number of Salaried Workers Affiliated to the UNTA 1981-85 ............................................ 318 B.5 Monthly Average Salaries of UNTA Affiliates by Type of Occupation, 1981-85 ........................ 319 B.6 Number of Employed Workers and Average Salary by Sector under BNA Control in 1987 ................... 320 B.7 Moathly Family Budget for 1980, 1985 and 1989 ........ 321 C. GROSS DOMESTIC PRODUCT AND EXPENDITURE C.1 GDP by Sector (Factor Income Approach) at Current prices, 1982-87 .................................... 322 C.2 GDP by Sector (Product Approach) at 1980 Prices 1982-87 ............................................ 323 C.3 Product Estimates in Current and Real Kwanzas and in Current Dollars, 1980-87 ........................ 32; C.4 GDP Structure and Growth at 1980 Official Prices 1980-87 ............................................ 325 C.5 GDP by Type of Expenditure, 1982-87 .................. 326 D. GOVERNMENT FINANCE D.1 Government Revenues, 1980-89 ......................... 327 D.2 Transfers from Public Enterprises by Sector, 1984-86. 328 D.3 Subsidies to Public Enterprises, by Ministry, 1980-89 329 D.4 Economic Classification of Government Expenditure.... 330 D.5 Functional Classification of Government Expenditure.. 331 D.6 Government Financed Investment by Public Enterprises. 332 D.7 Summary of Government Finance, 1980-89 ............... 333 E. BANKING AND BALANCE OF PAYMENTS E.1 Balance Sheet of Banco Nacional de Angola ............ 334 E.3 Balance Sheet of the Banco Popular de Angola ......... 335 - 310 - STATISTICAL APPENDIX Page 2 of 3 Page No. E.3 Money Supply Data .................................... 336 E.4 Balance of Payments, 1980-87 ......................... 337 E.5 Major Merchandise Import Expenditures ................ 338 E.6 Major Export Earnings, 1980-87 ....................... 339 E.6(1) Major Export Earnings Projections ............ 340 E.7 Balance of Payments Projections E.7(1) Baseline Case ................................ 341 E.7(2) Optimistic Scenario .......................... 342 E.7(3) Pessimistic Scenario ......................... 343 E.8 Stock of External Debt, 1982-87 ...................... 344 E.9 Projected Debt Service Obligations ................... 345 P. AGRICULTURE F.1 Agricultural Production: Present Estimates and Early 1970s Levels ................................. 346 F.2 Agricultural Production Trends, 1955-73 .............. 347 F.3 Farm Level Official Prices ........................... 348 F.4 Supply of Agricultural Inputs ........................ 349 F.S Agricultural Exports (Imports) ....................... 350 F.6 Food Imports ......................................... 351 F.7 Projected Agricultural Production Response to Policy Reforms ............................................ 352 S. ENERGY G.1 Oil Production and Reserves, 1986-90 .353 G.2 Projected Crude Oil Exports, 1987-91 ................. 353 G.3 Investments in Crude Oil Exploration and Development. 354 G.4 Projected Petroleum Products Consumption ............. 354 G.5 Electricity Demand Forecast .......................... 355 H. INDUSTRY H.1 Structure of Industry, 1984 .......................... 356 H.2 Structure of Employment in Enterprises, 1984 ......... 357 H.3 Average Number of Employees in Companies with Over 500 Employees ...................................... 358 H.4 Production of Manufacturing Industry. Comparisons between 1973 and 1987 .............................. 359 H.5 Production of the Manufacturing Industry, 1973-87 .... 360 H.6 Main Characteristics of the Manufacturing Industry in 1974 ............................................ 363 H.7 Public Sector Investments in Manufacturing Industry: 1980-87 ................................. 364 - 311 - STATISTICAL APPENDIX Page 3 of 3 PaRe No. I. TRANSPORTATION 1.1 Bus Passenger Data for MINTEC Enterprises, 1984-85... 365 1.2 ETP Urban Passenger Transport in Luanda, 1985-87 ..... 366 I.3 Vehicle Operating Costs, 1987 . .............. 367 1.4 Railway Income an: Expenditure Statements, 1985-86 ... 368 I.5 TAAG Civil Aircraft Fleet Utilization Data, December 1986 ....................... 369 1.6 ANGONAVE 1986 Cargo by Category . ............. 370 1.7 ENATEL Telephone Systems, 1980 and 1985 .............. 371 J. EDUCATION J.1 Per Capita Educational Expenditures by Province, 1983 ..................................... 372 J.2 Ministry of Education, Expenditures by Category, 1980-87 .................................. 373 3.3 Enrollment in Regular Primary Education, 1970-85 ..... 374 J.4 Enrollment in Adult Education, 1970-85 ............... 375 3.5 Primary Education - Promotion, Repeat and Dropout Rates, 1980-84 ............................. 376 J.6 Enrollment in Secondary School Courses, 1970-85 ...... 377 J.7 Secondary Technical Schools - Promotion and Evasion Rates, 1983 and 1985 ....................... 378 J.8 Graduates from Secondary Technical Schools, 1980-84.. 379 J.9 Enrollment in Higher Education, by Faculty, 1984-86.. 380 J.10 Higher Education Graduates, 1975-84 .................. 381 3.11 University Professors, by Type and Nationality, 1984-86 .................... ...... 382 J.12 University - Expenditure by Category, 1980-87 ........ 383 J.13 National Center for Literacy - Expenditure by Category, 1982-87 ............................... 384 ANGOLA PRIVATE SECTOR AND NATIONAL ACCOUNTS MACROECONOMIC INDICATORS, 1982-87 1982 1983 1984 1986 1986 1987 Per Capita GDP Real Growth -0.070 -0.046 -0.003 -0.063 -0.120 0.028 Privato Consumption Real Growth -0.18 -O.0O -0.221 0.031 -0.143 Per Capita Private Consumption Roal Growth -0.178 -0.030 -0.240 0.00B -0.164 Private Consumption / GDP Ratio 0.680 O.560 0.646 0.437 0.500 0.406 Total Investment C GDP Ratio 0.171 0.161 6.170 0.193 0.226 0.174 Domestic Savings / GDP Ratio 0.08S 0.169 0.156 0.249 0.163 0.292 National Savings / GDP Ratio 0.052 0.133 0.126 0.214 0.146 0.245 Foreign Savings I GDP Ratio 0.119 0.028 0.044 -0.021 0.081 -0.071 Total Consumption (Priv. + Gov.) / GDP Ratio 0.914 0.831 0.844 0.761 0.837 0.708 Source Mission Estimates (~~~~~~~~~~~~~~~~~~~F ANGOLA GOVERNMENT SECTOR MACROECONOMIC INDICATORS, 1982-87 ____________________________-____________________ 1982 1983 1984 1986 1988 1987 ________ _______ _______ _______ _______ _______ ________ _______ _______ _______ -______ --_____ _______ Current Receipts / COP Ratio 0.304 0.316 0.388 0.389 0.383 0.290 Direct Taxes / CDP Ratio O.154 0.178 0.218 0.232 0.182 0.169 Indirect Taxes / CDP Ratio 0.098 0.093 0.109 0.099 0.083 0.078 Others Receipts / CDP Ratio 0.064 0.048 0.080 0.069 0.098 0.043 Current Expenditures / CDP Ratio 0.328 0.331 0.381 0.402 0.387 0.344 Current Transfers / GDP Ratio 0.010 0.011 0.012 0.018 0.619 0.016 Interest / Current Receipte Ratio 6.000 0.000 0.000 0.00o 0.000 0.000 Subsidies / GDP Ratio 0.052 0.048 0.049 0.070 0.031 0.025 Budgetary Savings / GDP Ratio -0.022 -0.014 0.026 -0.013 -0.023 -0.064 Government Investment / GDP Ratio 0.016 0.009 0.017 0.011 0.024 0 eit Capital Transfers / GDP Ratio 0.092 0.04S 0.048 0.035 0.030 0.033 a Government Consumption / GDP Ratio 0.264 0.271 0-299 0.314 0.337 0.302 Source : Mission Estimtes ANGOLA FOREIGN AND MONETARY SECTORS MACROECONOMIC IND7CATORS, 1982-87 1982 1983 1984 1985 1988 1987 FOREIGN SECTOR Exports (Goods + NFS) / GDP Ratio 0.402 0.407 0.427 0.464 0.809 0.463 Exports Volume Growth Rate -0.089 0.411 0.134 9.1S6 0.20S 0.277 Nominal Exports Growth Rat -0.122 0.119 0.118 0.101 -0.418 0.742 Imports (Goods + NFS) / GDP Ratio 0.487 0.399 9.441 0.409 0.371 0.335 Imports Volume Growth Rate 0.104 0.221 -0.087 -0.205 9.002 Nominal Imports Growth Rate -0.133 -0.108 0.373 -0.101 -0.22S 0.200 Resource Balance / GDP Ratio -O0.88 0.008 -0.014 O.O58 -0.082 0.118 Not Factor Payments / GDP Ratio -0.039 -0.041 -0.03S -0.039 -0.049 -O.07 Not Current Transfers / GDP Ratio 0.008 0.906 O.0O 0.004 09031 0.010 Current Account Balance / GDP Ratio -9.119 -o.028 -0.044 0.021 -0.081 0.071 Stock of Foreign Reserves / Imports 0.087 0.098 0.109 0.125 0.106 0.139 Debt Service / Export. (Goods + NFS) 0.161 0.177 0.141 0.129 0.314 0.220 Debt Service / GDP Ratio 0.0S6 09072 O.OB0 0.080 09097 0.100 Stock of Long-Term Debt / Exports (G 1.148 1.113 1.072 1.045 1.747 1.255 Stock of Long-Term Debt / GDP Ratio 0.4eo 0.463 0.4S8 0.485 09639 9.69 MONETARY SECTOR Stock of Private Credit / GDP Ratio 0.318 0.848 9.627 0.681 9.635 9.640 Stock of Loans to Government / GDP R 0.541 0.463 0.612 9.U45 0.741 0.748 Stock of Money and Quasi-Money / GDP 0.714 0.830 0.889 1.910 1.124 1.136 _____________________________________________________________________________-_--- _ --_-_-_-_---------_- Source : Mission Estimates 1-3 :r- tD I Ij X - 315 - APPENDIX Table 5.1 ANGOLA POPULATION, 1900-1986 YEAR POPULATION (Thousand) 1900 2,716 1910 2,922 1920 3,131 1930 3,344 1940 3,738 1950 4,145 1960 4,840 1970 5.646 1975 6,520 1980 7,722 1981 7,918 1982 8,119 1983 8,326 1984 8,537 1985 8,754 1986 8,990 Source: Anuarlo Est,%tistico and Instituto Nactlonal de Estatistica. - 316 - APPENDIX Table B.2 ANGOLA URBAN AND RURAL POPULATIION 1970-1986 (thousands) YEAR URBAN RURAL URBAN AS % OF TOTAL 1970 789 4,857 14 1975 1,182 5,338 18 1980 1,781 5,941 23 1982 2,067 6,052 25 1984 2,385 6,142 28 1986 2,773 6,217 31 Source: Instituto Nactilonal. - 317 -. APPENDIX Table B.3 ANGOLA ECONONICALLY ACTIVE POPULATION BY ECONOMIC SECTOR FOR 1985 SECTORS Number of Percentage Emploged Workers of Total _______________________ - ________________ - - TOTAL 2i09ti83 100.0 Productive Sector 15529i2 73.6 IndustrY 237516 11.3 Construction 155298 7.4 Agriculture and Livestock 748094 35.5 Silviculture 8720 0.4 Transport 177566 8.4 Communications 12219 0.6 Commerce 186457 8.8 Others 27042 1.3 Non-Productive Sector 484956 23.0 Comunal Services 47034 2.2 Education and Science 139655 6.6 Culture and Arts 24528 1.2 Health, Social Assist., Physical Culture, Sports and Tourism 103160 4.9 Finance and insurance 19466 0.9 Administration 118872 5.6 Others 32241 1.5 Unemployed 71215 3.4 Source : fnstituto Nacional de Estatistica - INE - 318 - APPENDIX Table B.4 ANGOLA NUMBER OF SALARIED WORKERS AFFILIATED TO THE UNTA BY TYPE OF EMPLOYER AND SEX, 1981-85 Type of Employer 1981 1982 1983 1984 1985 ------ … ---~ ~~--- --------------------- --- … --------- Total 606789 609477 621762 628860 665581 Government and State Enterprises '17544 515277 523389 528705 553881 Men 408935 404050 409602 413209 432416 Women 138609 il1227 113787 115496 121465 Mixed Enterprises 28771 31662 32812 32802 34191 Men 21819 30510 31566 31529 32170 Women 952 1152 1246 1273 1421 Private Enterprises 60474 62538 65561 67353 77509 men 52122 54575 57119 58447 66003 Women 8352 7963 8442 8906 11506 Source Instituto Nacional de Estatistica - INE Uniao Nacional dos Trabalhadores de Angola - UNTA - 319 - APPENDIX Table B.5 ANGOLA MONTHLY AVERAGE SALARTES OF UNTA AFFILIATES BY TYPE OF OCCUPATION, 1981-85 Type of Occupation 1981 1982 1983 1984 1985 Managers 16060 16500 16500 16500 16500 Technicians 14500 15500 i8000 18000 18000 Ehplo,ees 6500 6500 8000 8250 8500 Industrial Workers 5800 7000 8850 9500 9500 Agricultural Workers 4466 4466 5612 5761 5161 Average 7094 7692 9299 9640 9758 Average Growth Rate ( 8.4 20.9 3.7 1.2 Source: Instituto Nacional de Estatistica - INE ANGOLA NIlER OF EMPLOTED HORNERS AND MtlLY VERUGE SAARY B SECTOR WIER WMO CONTROL IN 1986 Setor Govrnent I State Enterprises I Nixed Enterprises 1Private Enterprisnt Cownptivs Others Total Number of Monthilt Nber of NMothIigI Nuder of Mnthbig! mber of Montblvt Wumbr of tmthl,I Nuber of ti.nthl, Nutber of Ronthlgt itrers. Averagel torters Averaet tetrts Avagel Vrtkers Average Htrs Avewge Hotwers Average, Hter,s Aeage: Salrgi Salanl Salargi Salaor Salull Salarg SalarVt Agricultare 3153 13251 57609 5639 165 1329 4293 9999 273 6644 2 15633 65425 578 Comarce I926 12419 15655 11Ut2 125 15292 12095 I116 147 3519 29M8 11419 Hthel 174 16608 5650 11332 16 1981 10 9 1313 51 3167 7121 11371 Construction 5739 159U6 1074 9955 445 11431 9676 4972 33933 9531 Transport 1075 13062 17615 12190 39 121S3 9624 4841 29153 999t Food 642 1713 10707 1009 137 1696 549 5371 3 1569 4 12563 16922 8997 Meal llurgy 114 16494 6u45 912 1394 9602 7543 9146 EdcItion 36151 19593 6631 11243 *U 1160 42969 17439 Hood 31 19I935 165U 19867 763 7251 2452 11634 0 Credit and Insurance 593 16U3 1690 665 21 26491 1764 m7 Textile 519 15423 4667 961 1369 9551 562 14129 97 1964 7214 9677 Graphic 969 12396 2163 7533 491 21902 3512 11255 Health 194 12925 20 1"99 99 12923 2195 12653 Servicen 72931 17133 7351 135 91 12403 468 17315 29 32249 2215 16925 67397 16657 FIshers 629 36409 10592 m9 25 13394 1946 6813 257 9097 1362 9916 Elctricity 306 2596 2U10 16479 115 22579 331 9O5 4 6998 M6 16277 Extractiv 6a7 13634 2022 12542 233 435965 194 l0in m6 37461 anufacturing 6 961719 231i 12934 2351 964 4662 12617 Defense Chnical 17 261 5021 1297 46 1010 642 16229 2 532 4 11:13 5732 12569 Others 1396 7162 5673 1291 IS 14996 3030 2791 10 4469 m 26673 23629 9634 Total 159661 15935 8196 9175 23 45f271 W32 968 1143 9770 3017 14M 411171 12u98 Corrected Total 0) 159624 15963 1N06 975 273 10673 59329 9 143 776 3017 14991 4690l 11774 (a) Exclude nod and maufacturleg In the Sevrmeat kecor and extract ly industry In tht Mixed latrpis SectIr. Sice B ibco ihclmeal de ala - 01 Miii. ntiutes i ! N ANGOLA MONTHLY FAMILY DWhET FOP 1989, 1985 and 1989 Product Items Unit Quantity (W) Prices Expenditures Prices Expenditures Prices Expenditures (Parallol Market) (Official) (Official) Luanda, 1989 19890 1986 Kz) Kz) (Kz) (K) Kz) (z) Rice kg 16.0 10W0.9 165W0.0 21.9 316.0 86.0 626.0 Beans kg 19.0 2000.0 20000.0 40.6 406.0 46.9 460.0 Past kg 6.9 2000.0 10200.0 29.0 146.0 31.0 166.0 Cornmeal kg 15.9 1200.0 189000.0 8.6 127.5 17.5 262.6 Fresh Fish kg 20.0 1000.0 20900.0 28.0 680.0 30.0 600.0 Beef kg 16.0 2990.9 39999.9 90.0 1350.0 90.0 1360.9 Chicken kg 16.0 2600.0 37600.0 86.0 1276.9 119.0 1650.0 Sardines kg 5.0 2400.0 12009.0 197.0 636.0 148.6 742.6 Soft Drink I 20.0 4000.0 89W00.0 27.0 649.9 40.0 8900.9 Cigarettes un 30.0 400.0 12090.9 20.9 600.0 40.0 1200.9 Soap kg 5.0 2000.0 10000.0 28.0 140.0 37.0 185.0 Toilet Soap kg 6.0 2000.0 19999.9 88.0 449.0 164.0 820.0 Beer 1 24.0 39.0 72720.9 40.9 960.0 59.9 1209.O Banana kg 10.0 790.0 799.0 7.0 70.9 13.5 186.9 Onion kg 10.0 990.0 90 9 0.9 18.8 188.9 13.0 189.U Edible Oil l 29.9 1110.0 22200.0 42.0 840.9 65.0 13009. Margarino kg 6.0 19.9 599.9 100.0 600.0 116.9 689.0 Instant MlIk kg 10.0 800.0 8000.0 90.0 900.0 90.0 M.e SWlt kg 3.0 899.9 900.0 8.0 9.0 8.0 9.9 Garlic kg 6.0 4000.0 20000.0 47.0 236.0 40.6 292.5 Wine I 10.0 3500.0 56000.0 223.0 2239.0 366.6 3566.0 Coffe kg 10.0 4W0.0 40000.0 116.9 1160.0 296.0 2960.6 Bread kg 3U.0 2999.9 6999.9 17.0 610.0 17.0 619.9 Total Expenditures ..............6353..... 6a20.0 .........9 14026.6 ......... 29211.6 Memorandum Items: Annual Average Official Price Incrasee In the Period 1980-86 (.) 7.6 Monthly Family Expncditures Ratio Between the Parallel *nd Official Market. In tho Beginning of 199 .28.6 Source; Planning ainistry and Mission Esti tes a, (F) for a typical family size of six persons tS 5 ANGOLA GDP BY SECTOR (FACTOR INCOME APPROACH), 1982-86 (Kz millions at current offical prle s) -------------------------------------__ _ _ _ _--- - - - - - - -- --__- - -- - - - - - -------------__- _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ ( X ) 196 ( X ) 1986 ( ) Average 1983-86 _________________--_-____-___- - ----------------_-- -__________________________________________------- PRIMARY SECTOR 12.4 14310.6 16.4 16408.8 13.7 12.7 Agriculture and Livestock 10.4 11528.9 8.4 12679.8 16.6 10.5 Fisheries 2.0 2783.7 2.0 3729.2 3.1 2.3 SECUNDARY SECTOR (.) 44.2 64378.9 46.9 42697.9 36.5 41.5 Manufacturing and Mining 9.0 12616.4 9.2 13041.0 10.9 93 Petroleum 82.1 44601.1 32.5 23892.7 19.9 28.1 Construction 2.6 6131.4 4.5 4979.1 4.2 3.6 Electricity 0.6 1030.0 0.8 686.1 0.6 0.6 TERTIARY SECTOR 43.4 58519.8 42.7 60811.2 50.8 46.8 Comere 10.8 14656.0 10.7 15022.4 12.5 11.8 Services 28.7 35949.4 28.2 37292.0 31.1 26.2 Transport and Comunications 5.8 7914.4 6.8 8596.8 7.2 6.7 CDP at Factor Cost (e)100.0 137209.3 100.0 119917.9 l W.O 100.O CDP at Market Price () 142993.3 130091.9 …__ ______________________________-…--------…- -----------…---------------_______ Sourcos Planning Ministry and Mission Estimates (e) Mission Estimates GDP at market price for the period 1983-86 CDP at factor cost for 1982 Value added by the secundary sector for 1982 Note The estimates using the factor Income approach are Incomplete and therefore not comparable with the new estimates using the product approach. See Annex IV. ANWOA CDP BY SECTOR (PRODUCT APPROACH), 1982-87 --- ---- …----… - ---- -- - --- --- --- (X) 19sS (X) 1986 (X) 1987 (X ) Averae 1982-87 PRIMARY SFCTOR 21.3 32876.0 20.3 33112.0 19.5 28106.0 15.2 20.4 Agriculture and Forestry 20.4 81237.0 19.3 31392.0 18.4 26630.0 14.4 19.6 Fishing 6.8 1639.0 1.6 1720.0 1.0 1476.0 0.8 1.0 SECUNDARY SECTOR 43.8 78170.0 47.1 87877.6 51.8 106407.0 67.0 46.3 Oil 30.9 54300.0 33.6 686064.0 38.8 8417b.6 46.6 83.2 Other Industry 9.8 18780.0 8.6 11487.0 6.7 14742.0 8.0 9.0 Oil Construction 0.2 666.0 6.4 4828.0 2.7 637.0 0.3 0.7 Other Construction 8.2 7490.0 4.6 6718.0 3.4 6849.0 3.2 3.4 TERTIARY SECTOR 84.9 52527.0 32.6 49227.0 28.9 61623.0 27.8 838.3 Commerce 8.9 11873.0 7.3 10642.6 6.2 11669.0 6.6 8.1 Services 22.3 33990.0 21.0 32479.0 19.1 34106.0 18.4 21.3 Transport and Communications 3.7 86e4.0 4.1 8208.6 3.6 6351.0 3.4 8.9 CDP at Factor Cost 100.0 181673.0 106.0 170216.0 100.0 185036.0 166.0 166.0 GDP at Market Price 165.6 165583.2 102.6 176771.7 103.9 192085.2 103.8 104.1 …________ …____________ - _____ __ - _ -- _-__-_--…_--- _ -----…----…--_-… - _ -______ Sources : Planning Ministry and Mission Estimates ANGOLA PRODUCT ESTIMATES IN CURRENT AND REAL KWANZAS AND IN CURRENT DOLLARS, 1980-87 1982 1983 1984 1986 1988 - 1987 __ _ _ ________--__-------------_---------------------------------- --__ -----_ -------____ ----- Millions of Kwanzas at 1980 Official Prices Industry 48122 58937 82859 89080 77531 98921 Oil 31745 41948 47937 64306 88084 84179 Other 18377 14989 14922 13780 11487 14742 Construction 4725 61S8 5611 8090 10348 8488 Oil see 353 270 600 4828 837 Self Construction 2866 2242 2443 1957 2843 3192 Other 1313 2683 2448 5533 2875 2857 Agriculture, Forestry and Fishing 34C85 33206 32972 32876 33112 28105 Fishing 1760 1375 1318 1839 1720 1475 Forestry 341 399 576 570 412 59 State Agriculture 890 5834 5595 4743 4921 3896 Peasant Agriculture Com_rcialized 1816 1209 991 1338 1228 974 Subsistence Agriculture 24038 24389 24494 24588 24833 21701 Transport and Conmunications 6620 6643 s5ll 6864 6206 6351 Commerce 15387 13882 13775 11873 10642 11069 Services 34672 34007 34554 33990 32479 34103 GDP at Factor Cost 144361 149233 155132 161673 170216 186036 Indirect Taxes 13779 13066 15786 13808 10439 10422 Subsidies -7484 -6769 -7080 -9797 -3884 -3371 GDP at Market Prices 1S6656 155529 183817 185584 176771 192088 US Dollars at Current Prices GDP at Market Prices 4608.5 4850.1 4988.1 60A8.4 4565.4 5197.0 Net Income From Abroad -151.2 -168.3 -147.3 -174.0 -84.6 -244.1 GNP 4367.2 4481.8 4838.8 4874.4 4470.9 4953.0 Population (millions) 8.119 8.326 8.537 8.754 8.990 9.215 GDP per capita (USS) 555 S69 584 577 607 564 GNP per capita (US1) 537 538 567 557 497 537 Growth per capita GNP -1.8 0.3 5.3 -1.8 -10.7 8.1 Millions of Kwanzas at Current Official Prices GDP at factor cost 159592 187790 181578 196019 185734 210483 GDP at market price 186880 176e34 193219 201803 195908 222264 GNP 181282 189278 187611 194847 192274 211818 Source Planning Ministry and Mission Estimates Note GDP at factor cost estimated by Government using the product approach. See Annex IV. ANGOLA GDP STRUCTURE AND GROWTH AT 1980 OFFICIAL PRICES, 19SO-87 1982 1983 1984 1986 1986 1987 Average Avorage Percentage of CDP at 1980 Officiml Prices 1980-87 1982-87 Industry 33.3 38.2 40.5 42.1 45.6 63.6 40.4 42.2 Oil 22.0 28.1 30.9 33.6 38.8 46.6 30.6 83.2 Other 11.8 10.0 9.8 8.6 8.7 8.0 9.9 9.0 Construction 3.8 8.5 3.8 5.0 6.1 8.S 4.8 4.1 Oil 0.4 0.2 0.2 0.4 2.7 0.8 0.6 0.7 Self Construction 1.9 1.5 1.6 1.2 1.7 1.7 1.6 1.6 Other 0.9 1.7 1.6 3.4 1.7 1.4 2.1 1.8 Agriculture, Forestry and Fishing 24.2 22.3 21.8 20.3 19.6 16.2 21.0 20.4 Fishing 1.2 0.9 0.8 1.0 1.0 0.8 1.0 1.0 I Forestry 6.2 0.3 0.4 0.4 0.2 0.0 6.2 0.3 w State Agriculture 4.8 8.9 3.6 2.9 2.9 2.1 8.7 3.4 ti Peasant Agriculture Commercialized 1.8 0.8 0.8 0.8 0.7 0.5 0.9 0.8 Subsistence Agriculture 16.7 18.3 16.8 16.2 14.6 11.7 15.2 16.1 Transport and Communications 4.8 4.0 3.7 4.1 3.8 3.4 3.9 3.9 Commerce 10.7 9.3 8.9 7.3 8.2 6.6 8.7 8.1 Services 23.9 22.8 22.3 21.0 19.1 18.4 21.7 21.8 GDP at Factor Cost 100.6 100.6 100.0 100.0 110. W 100.6 100.0 Indirect Taxes 9.6 8.8 10.2 8.6 6.1 6.6 8.6 8.1 Subsidies -6.2 -4.6 -4.8 -8.1 -2.3 -1.8 -4.4 -4.1 GDP at Market Prices 104.4 104.2 106.8 102.6 103.9 103.8 104.0 104.1 GDP Growth at 1980 Official Prices (U) Avorage Average 1981-87 1982-87 Growth Real GDP at Factor Cost (U) -1.0 3.4 4.0 4.2 6.3 8.7 2.1 4.1 Growth Real GDP at Market Prices (1) -1.0 3.2 5.3 1.1 6.8 8.7 2.1 4.0 Source: Planning Ministry and Mission Estimates ANGOLA GDP BY TYPE OF EXPENDITURE, 1982-87 Percentage of GOP 1986 1987 1982 1988 1984 1985 1986 1987 Consumption 163878.4 167467.0 91.4 83.1 84.4 75.1 83.7 70.8 Private 97893.4 90288.0 86.0 68.0 64.6 43.7 60.0 40.6 Government 65986.0 87169.0 28.4 27.1 29.9 31.4 33.7 30.2 Gross Domestic Investment 44213.7 38841.2 17.1 16.1 17.0 19.3 22.6 17.4 Private 39630.7 35050.2 16.7 16.2 16.3 18.2 20.2 16.8 Government 4883.0 3691.0 1.: 0.9 1.7 1.1 2.4 1.6 Total Domestic Expenditures 208092.1 196098.2 108.0 99.2 101.4 94.4 106.2 88.2 w 0'.. GDP 195908.3 222255.5 100.0 100.0 100.0 100.0 100.0 100.0 Resource Gap 12183.8 -26157.3 8.6 -0.8 1.4 -6.8 8.2 -11.8 Exports of Goods and NFS 60487.8 100696.8 40.2 40.7 42.7 46.4 30.9 46.3 Imports of Goods and NFS 72651.4 74539.5 48.7 39.9 44.1 40.9 37.1 33.6 Net Income From Abroad -3633.9 -10437.8 -3.4 -a.6 -3.0 -3.4 -1.9 -4.7 Net Factor Services Pay-ents -9629.6 -12639.1 -3.9 -4.1 -3.5 -3.9 -4.9 -5.7 Net Current Transfers 6995.6 2201.3 0.6 0.5 0.6 0.4 3.1 1.0 GNP 192274.4 211817.8 96.6 96.4 97.0 96.8 98.1 96.3 Source iMission Estimates ANGOLA GOVERNMENT REVENUE, 1980 - 89 tKz. billion) 1980 1981 1982 1983 1984 1985 l98 1987 1988 1989 (budget (budget) TOTAL REVENUE 59 758 73 707 50 es6 66 467 74 558 78 618 71 202 64 3899 8958 78 080 TAX REVENUE 61 S80 2 704 41 683 47 148 62 930 68 143 61 758 64 868 63 100 64 88 Taxes on petroleum a3 917 45 186 21 048 28 672 42 287 41 607 30 070 36 803 41 5W Royalty 6387 9 123 6 757 6 981 11 184 10 223 6432 8 720 11 060 Tax on income 14 289 19 681 31 082 31 444 23 838 - income tax 17 80S 26 610 10 703 14 6839 14 035 11 766 7 945 11 879 14 000 - transfers from Sonangol 1 630 1 052 101 9 010 2 889 3 500 - transaction tax 8314 8 400 3 485 5 042 17 047 19 684 6893 12 563 13 000 Non-Petroleum taxes 17 683 17 519 20 537 20 478 20 "83 24 478 21 680 12 855 23 187 _ _ _ - _ j Taxes on Income and property 10 090 10 672 11 440 11 188 10 768 14 897 It 969 10 314 9 020 , - transfers from public enterprises (1) 7 884 8 331 9 199 8 481 8 032 9 70 7 247 4 916 - corporate income tax (2) 1400 1 949 2 028 2 283 2023 4076 3331 3 681 6957 5 - personal income tax 714 243 63 311 561 909 1236 1 540 1 839 - other 108 149 15s 113 162 162 156 178 224 Taxes on International trade 4 193 3 300 6 286 3 878 4 189 3966 4 730 3 416 6 768 - import duties 2337 1 916 3 210 2 528 2700 2533 3150 2 225 4 961 - export duties 54 43 29 43 52 61 35 51 180 - other levibs on imports 1802 1 342 2 028 1 308 1437 1382 1645 1 139 1 626 Taxes on domestic production and consumption 3 380 3 647 3 833 5 410 6 706 5 612 4 983 5 128 7 412 - beer 952 777 626 1 262 1401 1360 1179 1 117 1 562 - petroleum products 473 264 214 1 216 669 871 1 021 808 1 000 - diamonds (royalty) 84 187 213 48 134 316 360 - other products 903 1 088 1 564 989 1012 1742 972 se8 892 - stamp duty 964 1 363 1 316 1 696 2439 1503 1528 1 924 3 00 - other taxes 88 67 60 70 82 88 149 9s 118 NON-TAX REVENUE 8178 11 003 9 072 318 11 826 12 376 19 462 9 741 28 400 13 393 '> of which Rent from property 903 1 819 1 867 2 029 2169 1046 3887 2 016 2 497 Amortization of public enterprises 1 716 1 730 1 828 1 845 1 864 1 883 1 876 177 - Dividends (3) - - - - - 620 238 22 7 700 1 779 (1) Excluding Sonangol. (2) Until 1989 not levied on profits of public enterprises. (3) Includes transfers from public enterprises in 1989. Source Ministry of Finance. - 328 - APPENDIX TABLE D. 2 ANGOLA TRANSFER FROM PUBLIC ENTERPRISES, BY SECTOR, 1984 - 1986 (Kz million) 1984 198E 1988 Industry (48) 1) 796 670 862 of which: Africa Textil 230 - Vininort. 138 - 287 Agriculture (6) 146 1 319 980 of which: Frescangol - - 266 Cafangol 138 1 298 702 Fisheries (18) 887 1 S01 1 227 of which: Edipesca (Luanda) 848 48S 98 Edipesca (Namibe) 351 487 604 Expedicao Conjunta - 229 349 Transport (46) 518 1 153 779 of which: EPTEL 61 li 213 Porto de Luanda - 49 218 Construction (23) 101 260 49 Finance (4) 3 202 1 832 1 B04 of which: BNA 2 098 956 850 National Lotteries 791 739 686 External Trade (7) 400 71 192 of which: Importang 327 - - Internal Trade (54) 1 073 2 106 1 347 of which: Egrosbal (Huambo) - 28 214 Emprotel (Luanda) - 646 - TOTAL 7 067 8 902 7 042 1) The Figure In brackets indicates the number of enterprises that made transfers in 1986. Source : Ministry of Finance. ANGOLA SUBSIDIES TO PUBLIC ENTERPRISES, BY MINISTRY, 1980 - 89 (Kz million) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 (budget) (bud9et) Agriculture 3 922 4 379 3 88 3 430 1 816 1 961 1 250 1 280 Fisheries 309 483 826 168 198 76 - - Industry 1 122 907 1 18S 1 838 1 429 1 374 1 450 1 S00 Construction - 2 062 2 0652 1 848 905 685 400 1 o06 Transport 718 65S 640 310 232 283 - 260 Trade 390 236 106 84 143 - - - Energy and Petroleum 262 208 300 400 Other 1 798 16e 994 954 1 044 1 072 - 200 w TOTAL 8 249 9 182 888 8 432 9 491 14 131 6 028 5 629 4 000 4 030 Source: Data provided by the Ministry of Finance. - 330 - APPENDIX TABLE D.4 ANGOLA ECONCUIC CLASSIFICATION OF GOVERNMENT EXPENDITURE, 1980 - 84 (Kz million) 19dO 1981 1982 1983 1984 Recurrent Expenditure 58 789 57 472 64 886 68 056 69 736 Defence 16 821 18 506 18 267 23 296 31 943 Non-defence 41 948 38 967 38 129 34 761 87 792 of which personnel 16 037 18 634 18 282 18 362 17 487 goods and services 2 606 2 467 2 069 1 694 2 800 subsidies 8 248 9 182 8 665 8 432 9 491 t&ansfers 2 959 3 209 1 690 2 192 2 379 other expenditure 12 200 7 486 5 623 4 091 6 635 Capital Expenditure 18 151 17 752 9 522 12 567 76 920 91 640 72 138 67 578 82 302 Source Dsat provided by the Ministry of Finance. ANGOLA FUNCTIONAL CLASSIFICATION OF GOVERNMENT EXPENDITURE, 1980 - 87 1980 1981 1982 1983 1984 1986 1986 1987 (budget) Economic Services 28 486 46 719 28 697 20 077 24 449 21 114 Agriculture 7 360 7 838 6 337 4 875 3 388 Fisheries 1 030 1 046 1 196 478 588 Industry 4 762 3 346 2 699 2 672 1 980 Construction 8 0S5 9 780 7 198 4 898 4 242 Energy and Petroleum 954 2 493 232 206 4 146 Transport A Communication 2 082 8 138 4 684 2 120 1 239 Trade 2 614 1 294 789 1 089 461 Other services (1) 3 650 11 805 6 683 4 016 6 100 Social Services 13 738 13 886 16 073 14 838 16 754 18 780 21 476 21 964 Education 9 142 9 279 9 849 9 822 9 998 13 734 w Health 3 377 3 a27 3 848 3 6l8 4637 6 286 8 000 Social Security and Welfare 1 219 1 280 1 378 1 399 2121(2) 2 229 General Government Services 21 832 24 108 26 326 30 284 38 243 41 122 Administration 4 811 6 603 8 089 8 989 6 300(3) 9 022 Defence and Internal Security 16 821 18 605 18 257 23 296 31 943 34 308 32 829 32 000 Other Expenditure 13 oe6 7 927 2 040 2 379 2 867 4 063 7 619 9 200 TOTAL 78 922 91 640 72 136 8S 678 82 302 90 488 88 205 93 400 1) includes some expenditure on administration 2) Includes KW456 m. of unclessified expenditure 3) includes KW244 m. part of which is on economic services. Source: Data provided by the Ministry of Finance. t4t1 ANGOLA GOVERNMENT-FINANCED INVESTMENT BY PUBLIC ENTERPRISES (Kz million) 1980 1981 1982 1983 1984 1986 1986 1987 1988 1989 - - - -- - (budget) (budget) Agriculture 2 790 2 780 1 164 714 877 501 1 o00 1 oao Fisheries 61S 610 718 174 246 100 300 S00 Industry 3 621 2 337 1 283 918 519 365 3SW - Construction 5 270 8 738 4 581 2 567 N.A. N.A. 1 947 1 950 2 600 2 700 Energy and Petroleum 902 2 401 62 8 619 1 228 3 300 3 300 Transport and Communication 1 130 7 382 3 789 1 673 284 206 Trade 2 027 847 397 744 163 - - - Other 1 882 11 196 6 BB9 2 787 a301 3 057 6 100 6820 TOTAL 18 118 34 188 17 683 9 475 7686 7 107 13 000 13 870 Source Data provided by the Ministry of Fianance. O> M ANGOLA SUMMARY OF GOVERNMENT FINANCE 1980-89 (Kz billTon) 1980 1981 1982 1983 1984 1985 1988 1987 1988 1989 - - - (budget) (budget) Revenue 9.8 78.7 60.7 56.5 74.6 78.6 71.2 84.4 89.5 78.1 Taxes on petroleum 33.9 46.2 21.0 26.7 42.3 41.7 80.1 36.8 41.6 Other toxes 17.7 17.6 20.6 20.5 20.7 24.5 21.7 18.9 23.2 - on income & property (10.1) (10.7) (11.4) (11.2) (10.8) (14.9) (12.0) (10.3) ( 9.0) - on domestic goods ( 3.4) ( 8.5) ( 8.8) ( 6.4) ( 6.7) ( 656) ( 6.0) ( 6.1) 7.4) and cervices - on international trade ( 4.2) ( 3.3) ( 5.8) ( 8.9) ( 4.2) ( 4.0) ( 4.7) ( 3.4) ( 6.8) Non Tax Revenue 8.2 11.0 9.1 8.3 11.8 12.4 19.5 9.7 26.4 13.4 Total Expenditure 76.9 91.7 72.2 87.6 82.3 90.6 86.2 87.4 106.0 112.7 Recurrent expenditure 68.8 67.5 64.4 68.1 69.7 81.2 75.7 78.4 87.8 92.8 Capital expenditure 18.2 84.2 17.8 9.5 12.6 9.3 10.6 11.0 18.2 20.1 w iA Overall budget deficit 17.2 17.9 21.5 12.1 7.7 12.0 16.0 23.0 16.5 34.6 1 Statistical discrepancy - - - -27.9 31.9 -9.2 7.3 -4.0 - - Financing 17.2 17.9 21.5 -15.6 89.7 2.8 22.8 19.0 16.5 34.6 Domestic : BNA (net) 16.8 17.9 21.6 -15.7 89.7 2.S 22.8 19.0 14.0 24.1 non-bank - - - - - - - - - 6.0 External : loans n/a n/a n/. n/a n/a n/a n/a n/a n/a 3.0 grants 0.4 - - 0.1 - - - - - 2.6 Source : Ministry of Finance : Report on the Execution of the Budget. - 334 - APPEIINIX Table E.1 AN0LA BALANCE SHEET OF BANCO NACTIONAL DE ANG0LA (Kz million) 1983 1984 1985 1986 1987 Assets: Foreign assets 8,317 9,539 18,174 8,322 14,284 Total domestic credit 188,624 215,444 242,973 285,179 305,128 PubiIc sector credit 79,531 118,251 130,211 197,008 230,020 Other credits 109,093 97,193 112,762 78,171 75,108 Other assets (Net) (15,501) (14,333) (2,929) 3,024 237 Total Assets 181,441 210,649 256,219 276,525 319,650 Liabilities: Notes In circulation 60,478 72,809 80,848 92,959 120,838 Total deposits 111,975 125,759 159,209 156,713 163,279 Govermnent deposlt.U 27,710 28.752 35,947 28,662 30,693 BPA dep^sits 15,305 22,570 30,021 38,291 45,907 Other jploslts 88,952 78,423 93,234 89,752 88,668 Forelgn currency liabilities 8,988 12,082 16,162 26,853 35,533 Total Liabilities 181,441 210,649 258,219 276,525 319,650 - 335 - APPENDIX Table E.2 ANGOLA BALANCE SHEET OF BANCO POPULAR DE ANGOLA (Kz mililon) (.. . not available) 1982 1983 1984 1985 1986 1987 Assets: Currency on hand 406 567 955 823 657 3,873 DeposIts In BNA 10,040 15,305 722,571 30,021 38,291 45,907 Private Sector Credit 33 28 20 12 134 Net Other Assets 1,076 1,021 *t58 (209) (762) (1,043) Total Assets 11,522 16,926 23,712 30,655 38,199 48,871 Liabilltles: Demand DeposIts 9,768 14,246 20,198 26,453 33,006 40,584 - Indivldual 9,560 13,561 18,762 24,691 29,927 35,934 - Business 385 852 1,002 1,998 2,992 - Organizatlons 208 301 582 760 1,081 1,659 Time DeposIts 1,754 2,680 3,516 4,203 5,193 8,287 - more than 180 days 612 841 780 813 806 687 - more than 1 year 1,142 1,839 2,736 3,390 4,387 7,619 Total Liabilities 11,522 16,926 23,712 30,655 38,199 48,371 Source: Banco Naclonal de Angola - 336 - APPENDIX Table E.3 ANGOLA MONEY SUPPLY DATA (millions of kwanzas, end of period) 1977 1983 1984 1985 1986 1987 Currency outside banks 14.265 59.911 71,854 80,025 912.302 116,988 Demand deposits B.P.A. NA 14,246 20,196 26,453 33,006 40,584 BNA less BPA and goverment NA 68,952 76,423 93,234 89,752 88,668 deposits Time deposits BPA NA 2,680 3,516 4,203 5,193 8,287 BNA NA 8 14 8 8 11 Amual ourrency growth rate NA 23.68 19.9X 11.4X 15.3X 26.71 Money Stock (MI) NA 143,109 168,473 199,711 215,060 244,218 mIual growth rate MI NA NA 17.7X 18.51 7.71 13.61 Quasi-Money (M2) NA 145,796 172,003 203,922 220,261 252,516 Amual growth rate M2 NA NA 18.0X 18.61 8.01 14.6X Source: BNA and mission estimates APPENDIX Table E.4 ANGOLA BALANCE OF PAYMENTS, 1980 - 1987 (millions of US 3) l9o0 19S1 1982 1983 1994 1985 1986 1987 Merchandise exports 1,883 1,866 1,629 1,822 2,033 2,238 1,303 2,269 Morchandiso imports 1,868 1,484 1,286 1,147 1,676 1,416 1,097 1,316 Trade balanco 514 872 842 676 468 823 206 953 Service & Income exports 179 278 209 89 111 128 115 92 Interest A dividendo 47 66 28 19 16 22 12 7 Transport 66 B6 el 42 38 85 82 32 Insurance 48 142 108 18 18 67 41 a3 Other 23 26 14 16 40 4 80 21 Service & lncom Imports 664 893 1,115 920 811 864 828 729 Interoet 23 9f 66 41 28 44 81 91 Dividends 44 57 74 94 114 109 83 136 Transport 167 2d5 241 240 204 215 232 158 Insurance 89 el 102 49 64 62 88 20 Technical assistance 161 194 323 217 141 135 146 86 Foreign workers' salaries 26 68 65 75 56 68 72 76 Adminstr A exploration charges 46 121 125 126 168 144 188 167 Travel 11 20 38 21 83 84 13 15 Other 99 81 80 s8 73 58 86 41 Bolance on Invisible* (426) (615) (966) (880) (701) (736) (718) (687) Not unrequited transfers 21 14 27 23 26 20 189 51 Current account balance 110 (286) (537) (182) (217) 107 (U8S) w86 - ---------~~~~~~~------------------------------ Med A long-term capital balance 286 328 511 $72 898 441 286 41 Inflows 476 591 8O6 781 765 845 786 716 Loans 432 448 404 349 460 481 U88 864 Foreign Investment 48 148 402 429 3a8 411 417 386 (In nonpotrolous sectors) O ° O 0 1 1 1 0 Other O 6 a a 7 4 0 1 Outflows leg 268 295 408 867 404 549 674 Principal repayments 183 281 226 298 277 260 3e6 427 Amort of petroleum investmants a 9 66 72 81 139 189 247 Other 8 28 9 43 9 6 O a Basic balance 396 9f (26) 240 181 649 (182) 409 Short-te crapital flows (3O9) (262) is (204) (124) (668) (187) (e7e) I orrorc and omissions Global balance 87 (154) (8) 86 57 (10) (319) (267) …------------------------------------------------------…------ Financing: (87) 164 8 (36) (67) 10 319 267 Resrve variation (- Increase) (87) 164 8 (85) (57) (18) 78 (63) Arrears variation (includ. reached) 6 O O 0 0 27 218 (61) Debt rescheduling 0 0 0 0 28 882 Memorandum: End Year Gross Reserves 309 155 147 182 240 267 179 242 Source: Angolan authorities and mission estimates 338 - APPENDIX Table E.5 ANGOLA MAJOR MEROHANDISE IWMORT EXPENDITURES (mlIIIns U.S.S and as percentage of total) 1982 1983 1984 1985 1985 Total merd*wadise Imports 1,286 1,147 1,575 1,415 1,097 100.01 100.01 100.01 100.01 100.01 Foods & beverages 308 334 460 387 246 23.81 29.11 29.21 27.3X 22.41 Clothing & textiles 115 90 132 110 70 8.91 7.8X 8.41 7.81 6.41 Instrunents & optical goods 13 12 11 10 7 1.01 1.0X 0.7X 0.7X 0.61 Paper, minerals, chemicals, 167 150 171 139 88 & plastics 13.01 13.01 10.81 9.81 8.11 Cemnt, stone, & metals 151 105 253 205 131 11.71 9.11 16.01 14.51 11.91 Electrical & transport 511 448 535 552 547 equlpment 39.71 39.01 33.91 39.01 49.9X Other 25 9 1' 11 7 1.91 0.81 0.9X 0.81 0.61 Source: Ministry ^f FInance - 339 - APPENDIX Table E.6 ANGOLA MAJOR EXPORT EARNINGS, 1980 - 1987 (.. - not available) 1980 1981 1982 1983 1984 1985 1986 1987 Crude Oil (Total - millIons US S) 1,391 1,345 1,246 1,525 1,748 1,906 1,164 2.036 (thousand barrels) 40,705 37,792 39,265 54,852 64,165 73,419 92,151 116,350 (ave. price per bbl) 34.2 35.6 31.7 27.8 27.3 20.0 12.6 17.5 (percent of total) 73.91 72.5S 76.5S 83.71 88.01 85.2X 89.41 89.81 RefIned Oil (Total - mililons USS) 99 104 60 89 92 94 40 76 (thousand tons) 510 511 381 525 533 631 549 701 (ave. price per ton) 194.3 204.1 167.1 170.2 172.7 149.0 72.7 108.7 (percent of total) 5.31 5.61 3.7X 4.91 4.51 4.2X 3.11 3.41 LPG (Total - mIIIIons US S) .. .. .. 32 32 34 22 24 (thousand barrels) .. .. .. 1,489 1,956 2,096 2,011 2,243 (ave. price per barrel) .. .. .. 21 5 16.3 18.4 10.7 10.6 (percent of total) .. .. .. ; 41 1.61 1.51 1.71 1.01 Diamonds (Total - millions US S) 228 181 190 101 65 74 8 98 (thousands carats) 1,459 1,408 1,259 1,002 953 744 175 846 (ave. price per carat) 156.6 128.3 150.6 100.5 68.1 100.0 46.7 116.2 (percent of total) 12.11 9.71 11.6X 5.5X 3.21 3.31 0.6X 4.31 Coffee (Total - IIllIons US S) 164 97 95 71 81 55 53 35 (thousand tons) 47.2 44.6 41.0 26.6 22.8 18.7 18.6 16.0 (ave. price - US $ per ton) 3,468 2,183 2,309 2,667 3.572 2,936 2,851 2,151 (percent of total) 8.71 5.31 5.8X 3.91 4.0X 2.41 4.1X 1.5X Other 0 129 38 4 14 75 16 (0) Total merchandise exports 1,883 1,856 1,629 1,822 2,033 2,238 1,303 2,269 (millions US S) Source: Ministry of Finance and mission estimates - 340 - APPENDIX Table E.6.1 ANGOLA MAJOR EXPORT EARNINGS PROJECTIONS Projections---> 1987 1988 1989 1990 1991 1992 1998 Crude Oil (Total - millions US S) 2,038 2,6831 2,727 2,899 2,918 8,072 8,236 (thousand barrels) 116,860 146,167 161,600 162,680 165,300 154,000 154,600 (ave. price per bbl) 17.6 18.0 18.0 19.0 19.0 20.0 20.9 (percent of total) 89.7X 91.7% 89.2x 88.6x 88.0K 87.8x 87.65 Refined Oil (Total - millions US 8) 76 79 85 92 98 98 104 (thousand tons) 701 722 748 768 778 781 789 (ave. price per ton) 108.7 109.9 114.1 120.0 120.0 126.0 182.8 (percent of total) 8.4X 2.8X 2.8K 2.8X 2.8s 2.8X 2.8K LPG (Total - millions US 6) 24 24 27 81 88 as 87 (thousand barrels) 2,248 2,365 2,478 2,697 2,728 2,764 2,791 (ev-, price per barrel) 10.6 10.0 11.0 12.0 12.0 12.6 18.2 (percent of total) 1.0X 0.8% 0.9X 1.0X 1.0X 1.0X 1.0X Diamonds (Total - millions US S) 98 100 180 210 280 268 278 (thousand. carats) 848 910 1,500 1,680 1,769 1,863 1,942 (eve. price per carat) 118.2 110.0 120.0 126.0 180.0 138.6 148.3 (percont of total) 4.8K 3.6x 5.9% 6.4% ?.OX 7.2K 7.5K Coffee (Total - millions US 3) 84 a8 37 89 40 42 44 (thousand tons) 18 16 1 16 16 16 16 (ov-. price - US I per ton) 2,161 2,237 2,828 2,419 2,616 2,617 2,721 (percent of total) 1.5X 1.2X 1.2X 1.2X 1.2X 1.2X 1.2X -…-------- - - - - ----------- - - - - ------------------ - ---------------------------------- - ----- -- Total of above 2,269 2,870 3,056 8,271 3,308 8,500 3,699 (millions US 8) Source: mision eutimates - 341 - APPENDIX Table E.7.1 ANGOLA BALANCE OF PAYMENTS PROJECTIONS, 1989 - 93 (BASELINE CASE) (millions of US *) Projectionv---> 1987 1988 1989 1990 1991 12m 1998 Trode balance 958 881 917 981 992 1,060 1,110 Ex portg of goods 2,289 2,870 8,068 8,271 8,808 8,600 8,699 Imports of goods 1,816 2,009 2,140 2,290 2,816 2,460 2,690 Non-factor services (net) (841) (709) (766) (808) (817) (8865) (914) Resource balance 612 162 162 178 176 185 196 Not factor incoe (298) (464) (498) (622) (632) (666) (579) Receipts 7 20 22 28 28 26 28 Payments 302 474 619 646 665 580 606 Balance on Invisible* (637) (1,188) (1,268) (1,881) (1,849) (1,420) (1,498) Net unrequited transfer; 51 64 57 6o 68 68 69 Current account balance 868 (248) (279) (290) (294) (804) (814) Capital Account Balance (686) (207) 285 801 46 157 286 Med A L-t Loans (net) (78) 20 74 117 (128) (28) 88 Other (682) (227) 161 184 173 185 198 Overall Balance (267) (454) (44) 11 (260) (148) (28) Financing: 267 464 44 (11) 250 148 28 Reserve variation (- incroeae) (63) 0 0 0 0 0 0 Arrears variation (includ. reached) (61) 464 44 (11) 260 148 28 Debt rescheduling 882 0 0 0 0 0 0 Memorandum: End Year arose Reserves 242 242 242 242 242 242 242 Source: Angolan authorities and mission estimates. - 342 - APPENDIX Table E.7.2 ANGOLA BALANCE OF PAYMENTS PROJE TIONS, 1988 - 98 (OPTIMISTIC CASE) (mulllobis of US 1) Projections---> 1987 1988 1989 1990 1991 1992 1998 Trade balance 958 861 917 1,380 1,876 1,468 1,539 Exports of goods 2,269 2,870 8,065 8,926 8,970 4,200 4,489 Imports of goods 1,818 2,009 2,140 2,665 2,694 2,746 2,901 Non-factor services (not) (341) (709) (755) (892) (902) (955) (1,009) Resource balance 612 152 182 488 474 S1 56a Not factor Income (298) (454) (498) (S6a) (558) (6B4) (678) Recelpts 7 20 22 28 28 8o 81 Payments af2 474 619 698 5S8 694 609 Balance or, invisibles (687) (1,168) (1,263) (1,480) (1,461) (1,619) (1,587) Not unroquited transfers 51 64 67 60 63 6B 69 Current account balance s86 (248) (279) (40) (22) 8 21 Capital Account Balance (686) (207) 238 464 178 289 382 Med & L-t Loans (net) (78) 20 74 198 (82) 82 146 Other (6B2) (227) 181 280 285 288 238 Overall Balance (267) (464) (44) 414 1S0 271 403 Financing: 287 454 44 (414) (160) (271) (403 Reserve variation (- Increase) (63) 0 0 0 0 (148) (4083 Arrears variation (includ. reached) (61) 454 44 (414' (160) (128) 0 Debt rescheduling 882 0 0 0 0 0 0 Memorandum: End Year Gross Reserves 242 242 242 242 242 885 788 Source: Angolan authorities and mission estimates. - 343 - APPENDIX Table E.7.8 ANGOLA BALANCE OF PAYMENTS PROJECTIONS, 1988 - 93 (PESSIMISTIC CASE) (millions of US S) Projections---> 1987 1988 1989 1990 1991 1992 199l Trade balance 953 861 917 C92 609 e44 e80 Exports of goods 2,269 2,870 8,068 2,617 2,647 2,800 2,960 Imports of goods 1,318 2,009 2,140 2,016 2,038 2,156 2,279 Non-factor services (not) (841) (709) (766) (724) (782) (776) (819) Resource balanco 812 162 182 (128) (124) (181) (189) Net factor Income (298) (464) (498) (477) (G05) (548) (689) Recei ptS 7 20 22 18 19 20 21 Payments 802 474 619 496 524 688 809 Balance on invisibleo (637) (1,163) (1,263) (1,201) (1,238) (1,321) (1,408) Not unroquited transfers 61 64 67 so 83 68 69 Current account balance 868 (248) (279) (5640) (667) (612) (8658) Capital Account Balance (636) (207) 236 148 (83) 46 191 Mod & L-t Loans (not) (73) 20 74 40 (194) (89) 82 Other (662) (227) 161 108 111 134 158 Overal' Balanco (287) (464) (44) (392) (650) (568) (468) 45- Financing: 287 464 44 392 S60 568 468 Reservo variation (- incroase) (63) 0 0 0 0 0 0 Arrears variation (includ. resched) (61) 464 44 392 860 568 468 Debt reschoduling 382 0 0 0 0 0 0 Memorandum: End Year Cross Reserves 242 242 242 242 242 242 242 Source: Angolan authorities and mission estimates. - 344 - APPENDIX Tabl- E.9 ANGOLA STOCK OF EXTERNAL DEBT, 1992 - 87 (millions of US 3) (Source: BNA) June 1982 1988 1984 1985 1986 1987 1998 Medium A L-T debt 2,076.3 2,108.4 2,282.7 2,449.4 2,468.5 2,965.1 3,210.2 Short-term debt 271.3 261.7 162.9 260.8 614.5 626.8 691.2 Total external debt 2,348.6 2,358.1 2,446.7 2,700.2 3,071.0 8,581.7 8,901.4 Debt/CDP 62.2X 60.9X 49.4X 58.7X 68.6x 70.1X NA Debt/exports of G A S 127.7X 123.4X 114.1X 114.1X 216.83 161.7X NA Debt service/exports of a & S (1) 15.9X 17.53 14.03 12.83 81.1X 21.9X NA Source: sNA and mission *stimates (1) Debt service Includes only Interest and principal p6yments actually made. ANGOLA PROJECTED DEBT SERVICE OBLIGATIONS ON MEDIUM AND LONG TERM DEBT (as of June 1988) (Millions of US$) 1986 1987 1388 1989 1990 IS19 1992 t993 1994 195 19% 1997 Other Total Western countries 20.5 60.0 27.1 334.2 280.5 316.6 318.5 205.1 118.6 95.3 83.3 58.4 144.4 2,252.1 Capital 16.0 46.8 191.4 232.1 197.2 250.8 264.6 175.6 94.8 78.1 71.7 52.0 129.1 1,737.3 Irkterest 4.4 13.2 105.7 102.2 83.3 65.9 53.9 29.5 23.8 17.2 11.6 6.4 15.2 514.8 Soialist countries 4.6 S9.3 133.1 51.3 56.S 264.8 176.6 171.8 167.1 162.4 0.0 0.0 235.4 1,419.3 Capital 4.6 51.3 123.5 45.6 52.0 229.5 157.6 157.6 157.6 157.6 0.0 0.0 230.1 1,311.7 Interest 0.0 8.0 9.6 5.6 4.9 34.9 18.9 14.2 9.5 4.7 0.0 0.0 5.3 107.6 Official organi2atimns 0.0 0.0 2.4 5.3 5.1 5.1 5.0 4.9 4.7 4.0 0.0 0.0 15.3 51.9 Capital 0.0 0.0 1.4 3.6 3.6 3.8 3.9 4.0 4.0 3.5 0.0 0.0 14.7 42.5 Interest 0.0 0.0 1.0 1.7 1.5 1.3 1.1 0.9 0.7 0.5 0.0 0.0 0.6 9.3 Combined total 25.1 119.3 432.6 390.8 342.5 586.6 500.1 381.8 290.4 261.8 83.3 58.4 395.1 3,723.3 Capital 20.6 98.1 316.3 281.3 252.8 484.5 426.2 337.2 256.4 2339.3 71.7 52.0 373.9 3,091.5 Ir,terest 4.4 21.2 116.3 109.5 89.7 102.1 74.0 44.6 34.0 22.4 11.6 6.4 21.1 631.8 Sc.urce: 1 '.> " m m - 346 - APPENDIX Table F.l ANGOLA AGRICULTURAL PRODUCTION: PRESENT ESTIMATES AND EARLY 1970'S LEVELS Products 71/72/73 86/87 (tons, or as indicated) Max. Production Act.Production Cotton (Algodao) 86,015 (71) 307 (86) Sugar Cane (Acucar) 80,000 (74) 14,000 (87) Groundnuts (Amendoim) 26,936 (71) 1,688 (86) Paddy Rice (Arroz) 57,604 (71) 772 (86) Banana 75,000 (73) 24,000 (86) Potatoes (Batata) 138,757 (71) 8,000 (87) Sweet Potatoes (Batata-doce) 250,000 (73) 100,000 (87) Cafe 240,000 (74) 13,500 (87) Beans (Feijao) 65,500 (71) 2,452 (86) Sunflower (Girassol) 21,008 (72) 120 (86) Wood (Madeira) 553,664 (73) 64,000 (86) Cassava (Mandioca) 1,134,262 (71) 250,000 (87) Sorghum/Millet 74,000 (71) 20,000 (87) (Massambala/Massango) Maize (Milho) 710,000 (71) 250,000 (87) Palm Oil (Oleo de palma) 20,000 (73) 560 (86) Sisal 47,920 (71) 238 (86) Tobacco (Tabaco) 4,800 (73) 114 (86) Wheat (Trigo) 22,500 (71) 210 (86) Beet (Came de bovino) 24,500 (73) 3,536 (86) Cattle (Bois) (heads) 4,300,000 (73) 3,420,000 (87) Goets (heads) 872,000 (71) 1,300,000 (87) Swine (Suinos) (heads) 500,000 (73) 150,000 (87) Source: As for Table 1. Refer to Chapters I and II and relevant Annexes - 347 - ANGOLA APPENDIX Table F. 2 AGRICULTURAL PRODUCTION TRENDS, 1956 - 78 (000 tons) Product 6S/69 66/68 71/78 Crop.: Cotton (raw) 22.1 30.0 82.6 Bananas N/A N/A 98.7 Potatoes N/A N/A 100.5 Coffee 91.9 188.3 226.6 Beans 7.6 14.0 59.6 Sunflowor N/A N/A 21.0 Groundnuts 15.0 N/A 28.0 Cassava 650.0 N/A 928.0 Corn 106.6 138.7 202.1 Sisal 47.1 59.0 53.6 Leaf Tobacco 2.9 6.0 4.0 Wheat 2.7 22.6 12.1 Rico 18.5 18.6 28.4 … …-…- - --- -… ------------ Source VarIous Rlatorios * Contas do Banco de Angola Data is unreliable and roferss mainly to marketed production. Useful for goneral trends In production. - 348 - APPENDIX Table F.3 ANGOLA FARM LEVEL OFFICIAL PRICES (Kwanzas per ton) Product (tons) 1973 1980 1986 Cotton 7,901.3 40,06o.6 Groundnuts 4,674.4 27,S06.0 50,000.0 Rice 2,297.4 13,500.0 Sweet Potato 988.6 7,S60.0 17,500.0 Potato 2,644.3 14,606W.6 Coffee Ban 11,741.6 67,000.0 Onion 6,142.9 16,600.0 50,006.0 Coconut 1,710.2 17,000.0 Cassava Flour 1,900.6 17,000.0 Beans 3,632.1 23,506.0 35,000.0 Cassava dry 1,187.9 8,080.0 20,000.0 Sorghum and millet 1,000.6 10,000.0 Maize 1,368.5 18,008.0 15,000.0 Palm Oil 6,683.8 38,508.0 100,000.0 Sunflower needs 4,011.8 25,000.0 Tobacco 6,008.6 76,066.6 Livestock: Cattle 5,617.8 16,066.0 Goats 6,697.0 16,000.0 160,000.0 Pork 8,026.4 19,660.0 150,000.0 Source: Ministry of Planning Averag, prices of campanhas de comercializacao no campos - 349 -. APPENDIX ANGOLA Table F.4 SUPPLY OF AGRICULTURAL INPUTS 1984 1986 1988 INPUT Unit Imports Domestic Import Dometic Imports Domestic Toole Hoes 1 921,000 - 46f,000 94,202 959,921 149,648 Knives I - 247,080 - 164,000 - 183,680 Other 1 469,004 482,000 26,616 954,239 100,000 Fertilizers Simple ton - - 10,800 - 10,560 - Mixed ton 8,250 - 12,080 - 20,080 - Seeds Maize ton - 700 990 723 1,238 1,277 Boans ton - 899 90S 554 203 802 Groundnuts ton - 88 500 56 100 17 Potato ton 1,786 88 2,990 76 2,061 876 Vegetable ton 42 - 2 - 69 1 Others ton - 603 214 800 a 258 Implements Plows 1 - 8200 - - - 8822 Sprayers 1 - - - - - - Motor Pumps 1 - - 1997 - 1040 - Grinders 1 - - _ _ 116 - Source: R-latorlo Sobre a Actlvidade do Sector Agrarlo * 1986 - 350 - APPENDIX Table F.5 ANGOLA AGRICULTURAL EXPORTS (IMPORTS) ('000 Tons) Product 1962 1968 1979 1973 1980 1985 1986 Coffee 156.9 188.6 180.5 218.7 47.2 1R.7 15.8 (a) Cotton 5.7 11.0 23.6 23.3 - - Sisal 68.8 52.4 65.9 53.0 - - Bananas 2.0 14.8 36.0 77.0 - - Wood 51.2 135.7 129.4 182.0 1.2 24.9 Maize (b) 116.7 153.3 171.7 112.0 (142.7) (79.6) Tobacco 0.8 3.2 1.6 6.8 - - Beans 10.1 14.2 12.0 28.6 (31.6) (59.2) Sugar 36.5 13.7 11.3 9.7 (73.4) (59.2) Palm Oil 12.6 10.5 11.3 2.6 (1.2) (0.7) Rice 2.5 2.0 1.2 4.5 (55.1) (35.8) Source: Relatorio e Contas do Binco de Angola and Customs Data (a) Does not include exports via VIGIMEX (b) Total imports of cereals in 1988/87 were 152.5 thousand tons (Commercial imports plus food aid). See Table 1.1 - 351 - APPENDIX ANGOLA Table F.6 FOOD IMPORTS Products 1982 1983 1984 1985 Animal Products 37.2 43.8 40.9 36.1 Vegetable Products 90.9 72.0 103.3 76.1 Fats, Oils 27.6 31.5 33.5 39.9 Other (beverages) 63 80.0 65 63.1 Total 218.7 227.3 242.7 215.2 Sourcet Customs data - Incomplete and below actual levels - 352 - ANGOLA APPENDIX Table F.7 PROJECTED AGRICULTURAL PRODUCTION RESPONSE TO POLICY REFORMS (*) Projected Output Production 71/72/78 Present Year 01 Yoer 62 Yoar 03 (tons) Maize (**) 66,66w 40,600 se,606 66,o 100,000 Casava () 02e,e6 200,000 260,606 866,666 400,000 Beans 68,666 2,006 2,W66 86,666 6,000 Sorghum/Millet (,) N/A 2,066 6,600 10,606 10,000 Potatoes 100,600 5,000 16,000 16,006 25,000 Coffee 226,0W 15,000 20,60 20,600 36,000 Cotton 80,200 2,006 4,06 6,66 8,000 Sugar 76,000 14,006 16,006 16,006 15,000 Tobacco 4,860 nil 50 466 s80 Bananas (ass) 16,000 25,00o 2,006 80,0o 35,000 Wood (***) 638,664 60,000 100,000 16,60 200,000 Cattle ('0w) 5,408 8,420 8,800 8,806 4,000 Beef (tons) 24,600 8,600 8,700 4,600 8,000 Poultry (o000) 4,200 nil 4,200 4,500 6,000 Swine 881,066 54,006 6,000 6w0,eoo 630,000 Goats ('066) 872 1,800 1,400 1,600 1,600 Fisheries (s***)(tons) 467,000 1956,000 200,600 200,000 260,000 - - - -w-- - - -- -- - -- - - -- --- (1) Source: Mission Estimates; Relatorlo * Conta* do Banco de Angola; Relatorio Sobrn Actividates do Sector Agrario * 1986 (as) Mainly for home consumption (sea) Export quantities (essa) Angolan share 353 - APPENDIX Table G.1 ANGOLA OIL PRODUCTION AND RESERVES, 1986-90 ------------------------------------- (in 1,000 b/d) -------Actual---------- ----------Projected-------------- Production by Area 1986 I 1987 1988 1989 1990 X …--------------------------------..-----------------------------------__-----__-- Cabinda 190 67.4 220 256 246 246 54.9 Block 3 50 17.7 85 113 128 136 30.4 Block 2 6 2.1 10 29 39 38 8.5 Onshore 36 12.8 36 36 32 28 6.3 -------------------..-------------------------------------------------__-----__-- Total 282 100 351 434 445 448 100.1 Reserves (in million bbl) 1,418 - 1,622 1,525 1,438 1,286 - ---------------------------------------------------------------------__------__- Reserves to Production Ratio (years) 13.7 - 12.6 9.6 8.8 7.8 - Source: Sonangol, Ministry of Energy and Petroleum. Table G.2 ANGOLA ANGOL --------- PROJECTED CRUDE OIL EXPORTS, 1987-1991 -------------------------------------- 1987 1988 1989 1990 1991 -------------------------------------------------------------------__--------__- Oil Production (million tons) 17.55 21.70 22.25 22.40 22.50 Exports (million tons) 16.05 20.02 20.75 20.90 21.00 International Price of Oil (USS/bbl) 17 18 18 19 19 Export Revenues (million US$) 1,992 2,631 2,727 2,899 2,913 Source:------------o---------o-----and----------ssion-------esti-__---ates.--__- Source: Sonangol and mission estimates. - 354 - APPENDIX Table G.3 ANGOLA INVESTMENTS IN CRUDE OIL EXPLORATION AND DEVELOPMENT ---------------------------------------------------- (in USS million) ---------1980-1986-------- ------- 1987-1990 1/ - Annual Annual Total Average in Z Total Average in Z Cabinda 816 117 30.0 815 203.7 39.7 Block 2 493 70 18.1 180 45.0 8.8 Block 3 879 126 32.2 770 192.5 37.6 Congo/Kvanza 242 34 8.9 80 20.0 3.9 Others 294 42 10.8 205 51.3 10.0 -------------------------------------------------------------------__------- Total 2,724 389 100.0 2,050 512.5 100.0 -----------------------------------------------------------------__--------- 1/ Projected Source: Sonangol and mission estimates. Table G.4 ANGOLA --------- PROJECTED PETROLEUM PRODUCTS CONSUMPT1ON ---------------------------------------- Average Annual Change 1/ 1986 1987 1988 1990 1992 1980-86 1986-92 -------------------------------------------------------------__--------------__--------- LPG 30,200 31,408 32,664 35,330 38,213 9.22Z 4.012 Gasoline 104,110 108,257 112,570 121,727 131,616 4.06? 3.99? Kerosene 46,310 49,090 52,034 58,465 65,692 7.502 6.032 Jet Fuel 260,500 266,193 272,005 284,158 297,051 17.972 2.212 Gas Oil 344,770 357,874 371,481 400,284 43i,346 4.58? 3.81Z Fuel Oil 119,200 122,984 126,896 135,120 143,912 -1.95Z 3.19? Asphalt 4,200 4,284 4,370 4,546 4,730 2.87Z 2.00? -----------------------------------------------------------------__----------__--------- Total 909,340 940,090 972,020 1,039,630 1,112,560 6.63z 3.42? ---------------------------------------------------------------------------------------- 1/ Least square estimates Source: Sonangol - 355 - APPENDIX Table G.5 ANGOLA ELECTRICITY DEMAND FORECAST ------Energy GWhh----Peak Demand (MW) 1/--- Low Medium High Low Medium High -----------------------------------------------------------------__----- 1986 756 756 756 139 139 139 1987 771 771 771 142 142 142 1980 829 862 896 152 158 164 1995 1,140 1,351 1,602 208 247 293 2000 1,914 2,211 2,400 350 404 439 -------------------------------.-------------------------------------__- 1/ Installed capacity in 1986: 431 MW; firm capacity in 1986: 324 MW Source: Energy Sector Assessment Report ANGOLA STRUCTURE OF INDUSTRY - 1984 ____________________________ I of Likely Manufacturing Likely Tutelage Ministry I of Enterprises Enterprises Manufacturers _________________ -------------------------- _____--_---_------- as a 2 of all (or other institution] EEU Priv Mix Coop Tot EEU Priv Mix Coop Tot Enterprises --- ---- --- ---- _--- --- ---- --- ---- --- ------------- Industry 139 91 11 0 241 126 83 10 0 219 912 Petroleum 2 10 0 0 12 0 3 0 0 3 25Z Energy 5 3 1 0 9 0 1 0 0 1 11Z Fisheries 21 15 1 0 37 9 7 1 0 17 461 Construction 24 12 4 0 40 8 4 2 0 14 352 Agriculture 65 14 0 0 79 15 2 0 0 17 22Z £ Transportation 64 21 1 0 86 0 0 0 0 0 ox Internal Commerce 48 50 0 1 99 0 0 0 0 0 02 External Commerce 9 18 0 0 27 0 0 0 0 0 02 Education 3 1 0 0 4 2 1 0 0 3 752 Culture 3 6 0 0 9 0 0 0 0 0 0k Health 2 23 0 0 25 0 0 0 0 0 ox Housing 1 1 0 0 2 1 0 0 0 1 502 Coordination 1 0 0 0 1 0 0 0 0 0 02 Finance 3 0 0 0 3 0 0 0 0 0 ox Planning 0 1 0 0 1 0 0 0 0 0 02 Labor 0 1 0 0 1 0 0 0 0 0 02 Defense 1 0 0 0 1 0 0 0 0 0 02 (Presidency] 1 0 0 0 1 1 0 0 0 1 100Z [MPLA] 9 0 0 0 9 1 1 1 1 4 44Z Totals 401 267 18 1 687 163 102 14 1 280 412 =e= === =,= === === === ,, , ____ Source: Mission Estimates based on data in: Ministero da Industria tD Registo Geral de Empresas Luanda, Abril 1984 ANGOLA STRUCTURE OF EMPLOYMENT IN ENTERPRISES - 1984 Likely Menuf. Employ. as a X of *ll Employment Likely Manufacturing Employment Employmnt Tutelage Ministry - - - - ---------- ----------------------------------------- --- (or other institution] EEU Pr 'ate Mixed Coop. Total EEU Private Mixed Coop. Total 27X Industry 62,184 9,719 23,950 9 84,953 48,911 9,470 3,496 0 61,877 3X Petroleum 3,233 3,193 o 0 6,426 6 1,748 9 0 1,748 491 Energy 2,473 201 e02 0 3,276 O 96 9 e g6 an8 Fisheries 6,853 1,246 168 0 8,288 3,286 618 le8 0 4,072 131 Construction 12,063 2,070 2,001 O 16,994 2,999 1,449 1,636 0 6,114 eX Agriculture 83,816 3,319 0 a 66,929 8,727 300 0 0 9,027 ex Transportation 28,173 2,299 6,614 0 34,486 0 0 0 6 0 ex Internal Comm rce 19,990 3,827 o 560 24,167 0 o 0 0 6 les External Comerce 468 1,117 0 0 1,573 O 6O 6 O ex Education 310 8S O 0 396 310 85 O O 395 es Culture 228 259 a 6 487 O 0 O a e 97X n HeIath 157 258 o 0 415 O 0 6 e es HousIng 710 22 0 0 732 710 a O 6 716 ex A Coordination 760 a O 0 760 0 0 0 0 t eX Finance 712 6 0 0 712 0 0 a 0 a es Planning 0 8 0 0 8 a 0 0 0 0 Labor 0 75 0 0 76 6 O 0 6 6 1O6X Defense 0 6 6 0 6 a a 0 0 a 24X [Presidency) 331 o O O 831 381 a 0 0 331 EPLA] 2,614 0 0 0 2,614 634 o O 6 634 34X --- - ------ ------ --- -- ----- =- Totals 192,807 27,697 31,835 360 252,689 65,908 13,764 5,33a O 85,002 _~~ = e == = =_ Max. for any one enterpr.: 9,086 1,571 19,564 360 19,564 9,060 1,571 1,026 6 9,660 Min. for any one enterpr.: 4 1 36 350 1 14 11 e6 6 11 Standard Deviation 861 157 4,610 0 1,064 893 193 319 6 712 Average 481 104 1,769 360 384 404 139 410 6 309 Source: Mission estimates based on data in: Registo Goera de Empresas; op.cit. I I I I a I 1- I. I U It3: 1 - 358 - APPENDIX Table H.3 ANGOLA AVERAGE NUMBER OF EMPLOYEES IN COMPANIES W/OVER 500 EMPLOYEES DIFFERENTIATED BY PUBLIC AND PRIVATE Ministry UEEs Private Agriculture 1,537 550 Industry 1,627 659 Transportation 1,810 659 Internal Commerce 777 -- Average of all 87 1, 1,515 628 1/ There are 87 enterprises with more than 500 employees each under the combined tutelage of the Ministries of Agriculture, Industry, Transportation, and Internal Commerce. Source: Mission estimates based on: Registo Geral, op.cit. ANGOLA PRODUCTION OF THE MANUFACTURING INDUSTRY; COMPARISONS BETWEEN 1973 AND 19871/ …-----------------------------------------------------------------__------- Food Processing Light Industry Heavy Industry …-------------------------------- ------------------------- ------------------------------- Products 87173 Products 87/73 Products 87173 Beer 38.98 Cloth 32.93 Tires F/Vehicles 6.53 Soft Drinks 14.56 Covers 10.91 Inner Tubes F/Vehicles 0 Fermented Drinks 42.02 Cotton Threads 3.86 Buses 0 Liquors and other Spirits 18.61 Leather Shoes 43.42 Passenger Vehicles 0 Vinegar 36.01 Canvas Shoes 5.65 Bicycles 37.65 Sugar 18.96 Plastic Shoes 28.87 Motorcycles 89.75 Molasses 18.53 Processed Tobacco 57.10 Cisterns 0 @ Alcohol 19.67 Matches 9.52 Dry Batteries 5.78 Corn Meal 41.07 Plywood 54.55 Batteries 27.10 Wheat Flour 38.26 Vinyl 132.58 Acetilene 62.66 Frech Yeast 0 Tarpaulins 1272.73 Oxygen 85.13 Spaghetti/Pasta 41.52 Soap 12.59 Electrodes 13.36 Biscuits and Cakes 29.37 Liquid Detergents 46.13 Steel Rods 9.41 Cooking Oil 31.04 Paints 16.45 Black Tube 0 Margarine 8.44 Glues 22.86 Zinc Sheets 0 Instant Coffee 0 Plastic Bottles 8.28 Machetes 65.65 Canned Meats 0 Sisal Bags/Burlap 41.51 Cardboard Boxes 0.45 Salt 3.87 Plastic bags 10.47 Conductor Cable Lines 11.01 Refined Salt 0 Sponge Cushions 23.06 Radio Recepters 129.62 Paper 0 Paper Paste 0 Cutlery 23.91 J I Metallic Capsules 0 1 1e 1/ Comparison of physical output. 013 Note: 0X indicates that production had stopped by 1987. Products whose manufacture ' was started after 1973 are not included. Source: Tables A2-1, A2-3 and A2-4 in Appendix 2. ANGOLA PODUCTION OF W4FACTI*D PINXSTRY - FOOD SECtOR; 1073 - 1987 annual groath.rato PRiUJt unit 1973 -- 1977 1978 1979 1990 1961 1982 iS 1984 i98S 1988 1987 77-87 87/77 Bar hi 1.198.030 639,541 668 ,10 776 300 713,761 670,908 62 ,893 690 249 685 681 652,936 883,430 466.170 -2. WS 73S Soft Dr;nks hi '492,520 284.720 248,580 234.220 263,125 27/6,491 181,816 124,383 99,382 110,200 71,310 71,720 -12.943 WSS ;ce and Concentrate. 1/ tn 104 60 Tin.. Wins hi 87,087 68,212 104,324 60,978 60,080 43,880 33,900 Fermented Drink. hi ISO,200 31,770 28,688 81,163 94,533, 536187 S 8426 87 361 29,994 43,170 39,330 57,230 -O.39 1803 Lquors and other Spirits hi 75,220 21,080 37,667 23,468 li,202 28,838 283787 20,82S 20,763 14,444 16.440 14,000 -5.231 67 Whisky 2/ hi 881 1,619 1,474 73 171 410 70 s0 Vinegar kl 224 178 28 382 134 88 3S0 419 48S 490 380 16.031 1861 tufar tn 972 38,071 36,069 31,843 28,271 19,908 27,768 22,405 20,236 17,416 20,287 15,342 -7.84T 401 a*T tn 80,909 19,558 15,428 12,171 10,874 8,734 13,728 9,B40 9,607 9,260 11,212 8,904 -6.66% 853 Alcohol ki 37,282 1,288 1,888 1,496 800 1,806 1,424 1,648 1,042 794 1,235 759 -4.883 635 Corn Maal tn 3,859 24,969 32,489 60,088 33,627 3S8868 29,824 49,471 42,025 24,252 973 Wheat Flour tn 59 050 39,107 82,607 47,581 81,212 41,802 38,919 27,628 47,167 28.085 31,730 81a Frsh Yeast tn 82,926 1,483 1 459 809 667 988 1,045 370 171 0 0 Ot SpaghettI/Pasts tn 2,282 4,849 6,349 4,704 8,760 6,828 6,384 7,602 8,042 8,261 6,070 3,603 0.76% 743 Biscuits and Cakes t 8 678 1,484 2 386 2879 2,43 1,9069 1,273 936 688 891 400 920 -13.541 621 Cookiny Oil hi 3.132 4,482 7,066 4 074 4,847 8,327 4,383 3,278 4,182 4,851 ',678 4,490 -2.183 1003 Margar,ns tn 14,464 94 2,443 2,S31 1,519 898 1,122 888 56S 260 248 237 -0. 641 243 Insotot Coffee tn 2,809 0 16 6 4 18 28 12 Canned Meats tn 3,263 940 988 426 331 308 403 oN Coffee tn 1,424 1,308 1,268 1,189 976 439 386 108 170 Canned Fruits and Vetsales, tn 2,899 1,675 1,212 Pulp, tn 297 191 Salt tn 96,757 28,006 23,844 20,040 21,913 6,000 3,800 3,746 Refined Salt tn 8,126 8,723 4,014 4,477 3,953 3,135 2,369 Os .___________ ___________ ___________ ____________ ___________------------------------------------------------------------------------------------------ ----------- 1/ Through 1980 included In canned fruits and vegetebloe; production halted since 1983. 2/ Whiaky Included in liquors and apirits through 1970. Source. Ministry of Industry. I .. .0 I 1- I I Z I - AN:OU i'OUCTION OF MWMACTURAIO DOAiSTRY - LIGiT DLCTrRY SECTO; 1973 - 1087 --- -- --- -- --- -- -- --- -- --- -- --- -- -- --- -- --- -- --- -- --- Average *..Us I Groath'ate PRODUT Unit. 1973 -- 1977 1978 1979 1960 1961 1982 19813 1964 1965 1986 1987 77-87 87/77 Cloth M2, 17,975 8,890 8,406 11,532 18.546 18,619 17,081 18,789 7,530 11,814 13,894 8,010 2.031 1521 Covers 000' 972 167 234 256 239 149 253 259 0x 163 180 106 -5.361 63 Cotton, Thread., 0, 8,068 138 136 126 190 214 165 85 25 76 121 110 6.72 881f Trousers 000' 610 877 739 all 817 642 784 606 372 Skilrts 000' 12`3 So0 1,067 712 758 672 1.369 700 833 Shirts 000' 1,92,, 1.878 2,726 2,506 2,178 2.132 1,762 1,369 568 Linens/Sheete N.J. 806 412 1,129 600 353 351 Sock,s ".P. 118 218 168 180 183 Leather Shoes ".P. 324 230 360 310 390 226 4W; 634 332 295 141 Canvas Shoos ".P. 1,006 28 369 286 206 159 218 135 91 131 64 87 -14.941 211 Plastic Shoe. M.P. 1.912 236 267 381 226 107 321 308 481 515 887 532 12.961 2321 ProcesedW Tobacco 1., 3,100 1,468 1,800 1,739 1,821 2,811 2,007 1,980 1.911 2,203 1.789 1,770 1.741 1121 matchim; N.bou 98,058 7,483 19,531 19,147 22.936 44,876 44,697 41,873 35,180 24,694 27,812 8,688 8.491 118 Plywood Ha 8,399 2,4(,1 2,278 2,163 2,861 2.429 3,122 4.240 4,448 4.911 3.641 4,582 5.541 1911 Vinyl 10 264 173 429 493 345 186 658 324 46 294 124 380 -5 725 2021 Tarpaul'ivs M2 it 97 173 22S 203 191 172 119 s0 116 52 140 -7.211 14415 Soep t4 17,562 10,500 6.484 8,782 7.856 6,637 4,185 7.799 11,491 11,012 2,204 Liquid Detergent. kl 310 702 50 1,309 125 748 13 532 601 143 0 Paints 04 8,449 2,636 3,904 4,072 4,488 8,863 2,289 3.302 2,614 1,960 1,390 aOIue. 04 455 259 341 813 496 476 395 557 743 276 274 104 -S.601 431 Painted 01... t4 1,26 6,38 6,521 5,847 7.536 8,038 6,229 0 Plastic Bottles 000' 18,326 627 1.585 1,426 1,084 61,201 460 869 1.375 864 1.3586 1,103 -0.371 33 Plastic Crate. 000 , 282 82 69 38 29 23 0 13 S'ieal Boas/Burlap 0001 8,000 1,120 1,465 2.053 1,78b 1,488 1,384 1,706 2,344 1,780 2,777 3,321 -7.791 2971 Plastic Basa 04 2,672 1,286 2,684 2,796 3,186 3,224 2,738 1,461 1,634 92 2,278 267 -11.641 2219 sponge Cuehion. Yn W8.194 84,597 60,5561 65,977 51.078 33,126 34,837 43,834 41,148 43,000 13,421 Source: Ministry of Industry. It~l ____ ___ wnnual~~I I ANGOLA PR0DUCTICM OF MIUFACTWUC INUTRY - WEAVY DOZTR SECTOR; 1973 - 1987 --------------------------- -- ----------------- -v* ----- annual grosthrete PROWXT Unit 1973 -_ 1977 1978 1979 190 1981 1982 1983 1964 1988 196 1987 77-87 87/77 Tires F/Veh ices Un 191,000 80.543 73 042 108 6S1 87 086 72 7SO 85 250 64 882 34,815 47,707 31,714 12,480 -12.68 251 Inner Tubes F/Vehicle. Un 212,000 37,821 81,649 83,577 48,812 13.224 2,045 4,583 4,333 9,124 4,047 'O Bus" Un 180 0 10 s 116 173 220 77 63 18 101 0 Passengr Vehicles Un sn 0 197 80 384 381 435 437 358 167 3 0 Bicycles Un 6,s. 5,283 9,285 8,750 6,919 4 840 3,996 4 5S4 1,521 1,824 8,303 13,750 -3.091 2601 motorcycle. Un 6,128 1.232 2,007 3,960 6'308 7,608 2,718 1,297 1,697 1,391 8,975 5,500 4.00* 4461 Dunping Boeie Un 54 69 S8 13 70 Street Towers Un 32 9 138 0 0 Semi-Towers Un 0 10 11 0 Apricultural Links Un 18 Cisterns "a 100 8,991 53 77 Disk Crates Un 9 771 30 11 4 7 23 Anial Plough. Un 1,618 1,915 1,847 273 0 0 Dry Batteries oo' 4,329 S,822 o 4741 3,153 2,931 2,808 1SS 1,214 1,076 e57 250 -23.771 6r Batteries Un 82,292 3,984 88,467 S2,304 50,127 n3,778 38,337 18,778 19,750 21.345 19,017 18,860 -10.231 831 Freezers Un 26,896 5,744 3,746 8,092 2,804 4,948 6,348 Aceti l na Ms 238,000 82,456 102 346 118 080 12,8 128408 116,713 127 130 221,362 126,122 14,8605 149,133 4.46S lise Oxrygn Ms 852,000 311,204 268,319 406,432 430,223 484,121 380,770 414,253 389,386 584,930 1,0O7,874 725,339 9.89 23 L1 Electrode. tn 1,879 220 895 813 3'8 210 283 244 298 366 211 all Steel Rods tn 26,572 8,560 2,468 4,134 8 598 2,684 1s670 2 328 1S832 4,099 6,600 2,500 0.611 701 K) Black Tube tn 14,309 1,329 2 4s0 8,Ol 4,064 988 S,562 3,731 2,997 3,112 200 Os Zinc Shets ton 12,009 1,924 2,626 8,258 3,970 3,817 3,137 2,584 3,398 3,682 0o Machete 000 ' 47 's1s 62 68 288 as 44 ' 309 285 138 300 2161 Metel Conteiners tn 1,424 361 1,205 8e 390 Cardboard Bore. tn 22,882 2,319 4,124 3,360 2,888 3,341 2,898 1,406 1,000 1,488 1,615 102 -20.111 41 Conductor Cable Lines tn 1,380 702 405 621 447 848 293 498 512 3S1 411 132 -7.011 221 MaveaI Conat. and Rep. H/h 710,878 880,000 683,184 042,637 1,095,000 1.240,000 Radio Receptors Un 258821 3,338 80, "6 70 945 72 774 90 ,08 886,98 3,828 8389894 3,8531 21,427 33,468 3.391 10031 Televisions Un 0 0 846 1,6S7 8,682 18,219 10, S8 8,600 2,148 8,S29 4,946 6,348 Paper tn 9,308 3,408 3,182 4,016 4,067 Paper Paste tn 32,438 0 0 141 1,787 1,793 Barrel Un. a4213 Motel uckte. Un 23,260 Alueinue Dishes tn 492 429 577 606 44 Cutlery 000 2,610 1,176 744 1,030 1,304 990 1,280 214 3s8 1,940 624 53S MetellIc Capsule. 000o 874,000 218,298 221,488 214,276 281,320 102,16t4 0 0 0s Rubbkr Producte tn 38 20 41 aS 30 Ma+2llic Furniture tn S10 720 215 160 Source Minitrey of Industry I ZI > XI. I rt vc - 363 - APPENDIX Table H.6 ANGOLA MAIN CHARACTERISTICS OF THE MANUFACTURING INDUSTRY IN 1974 (Values iii US$ 000') 1/ Numbers Value of of Enterpr. Employm. Investm. Prod. Food Processing 238 51,037 173,701 188,543 Beverages 65 4,141 54,449 73,819 Tobacco Industry 6 1,284 7,992 35,157 Textile Industry 316 43,327 152,874 97,402 Shoe Manufacture 466 21,862 21,575 4,449 Wood Industry (furniture) 528 13,171 186,890 4,331 Furnit. Manuf. (wo/metal) 88 2,439 3,898 n.a. Paper Ind! 25 4,743 28,268 22,165 Typography 74 1,713 7,874 n.a. Tannery 40 883 2,677 5,748 Rubber Ind. 58 2,307 13,976 14,961 Chemicals 125 4,898 37,913 58,307 Petroleum Derivatives Ind. 6 823 32,283 36,024 Non-metal Mineral Prod. 307 10,447 82,205 30,472 Basic Metallurgy Ind. 39 3,058 22,992 17,047 Metallic Prod. Manufact. 751 15,660 39,331 21,378 Non-elect. Constr. Mac. 116 2,543 8,031 6,339 Electric Constr. Mac. 172 3,510 12,795 16,024 Transport Constr. Mat. 336 9,355 29,331 17,717 Sundry Industry 90 3,049 20,827 2,598 Totals 3,846 200,250 939,882 652,480 Averages: (US$ for values) Per Company: 52 244,379 169,652 Per Worker: 4,694 3,258 -----------------------------------------------------------------__- 1/ At an exchange rate of 25.4 Escudos per dollar. Source: Ministry of Industry. ANGOLA PUBLIC SECTOR INVESTMENTS IN THE MANUFACTURING INDUSTRY; 1980 - 1987 (Millions of Kwanzss) 1980 1981 1982 Food Light Heavy Food Light Heavy Food Light Heavy Investment Category Proc. Ind. Ind. Mining Proc. Ind. Ind. Mining Proc. nd. Ind. Mining Civil Works 10 26 79 308 1,385 206 84 619 31 Equipment 80 26 107 866 710 275 179 577 33F 318 118 Technical Assistance 77 64 129 842 230 84 72 63 Other 1/ 64 23 4 80 17 12 39 184 9 Totals by Soctor 167 358 330 0 700 1,328 1,721 468 700 1,638 488 116 = =5 z= = = = _ _= = Yearly Totals 8S4 4,217 2,260 1/ Mainly for studls, financing coats and interest, a Source: Ministry of Industry. ANGOLA PIUBLIC SECTOR INVESTMENTS IN THE MANUFACTURING INDUSTRY; 1980 - 1987 (Cot 'd.) ---------------------------_----------------------------------__------,-- (MiI'ions of Kwanzas) 1981 1982 1983 1984 1985 -------------------------------- -------------------------____ ----- ----- ----- Food Light Heavv Food Light Heavy Investment Cateogry Total Total Total Proc. Ind. Ind. Mining Proc. Ind. Ind. Mining Civil Works 426,182 188,037 100 68 122 4 2 Equipment 259,891 239,568 268,689 78 20 38 302 Technical Assist.nce 431,908 7,000 20,583 31 110 26 le Other 1/ 21 109 97 a - H ,> Totals by Sector :29 3U4 283 324 4 2 0 0 ' -- G ___ - = = = I CD l IZ Yearly Totals 1,084,295 871,748 483,289 1,140 e '8' 1/ Mainly for studies, financing costs and interest. Source: Ministry of Industry. - 365 - APPENDIX Table 1.1 ANGOLA BUS PASSENGER DATA FOR MINTEC ENTERPRISES, 1984-1985 1984 1985 Urban Fleet 1/ 275 265 Non-urban Fleet 11 367 359 Inter-provincial Fleet 11 104 90 Total Existing Fleet 746 714 Passenger Traffic 21: Urban 28,101 24,457 Provincial 6,161 4,863 Inter-provincial 902 479 Total Passengers 35,164 29,799 …-------------_----------_-------------------------- 1/ Termed vehicles in exi3tetce, although most are non-operational. 21 Units it thousands of passengers. Source: Annuario Estatistico, MINTEC 1986. - 366 - APPENDIX Table I 2 ANGOLA ETP URBAN PASSENGER TRANSPORT IN LUANDA, 1985-1987 -------------------------------------------------- 1985 1986 1987 Bus Fleet (units) 155 155 118 Available Units 30 26 36 Active Units 22 17 15 Trips (number) 71,717 50,216 42,255 Route Kilometerage (thousand) 17,645 12,267 11,177 Passengers handled (thousand) 22,975 14,894 10,500 Receipts (thousand Kwz) 124,834 91,709 103,569 Source:------------ETP--------------N----EC-------1987----- Source: ETP, MINTEC; 1987 - 367 _. APPENDIX Table I.3 ANGOLA VEHICLE OPERATING COSTS 1/, 1987 ________________________________ (Kz per 1000 vehicle-Km) Normal Operations 2/ MCurrent Operations 3/ Component Cost (2) Cost (Z) ------------------------------------------------------------------ Fuel and Lubricants 4,277 18 3,272 8 Tires 3,963 16 3,612 9 Maintenance: Parts 8,043 32 5,146 13 Labor 1,255 5 996 3 Depreciation 4,249 17 20,425 51 Interest 1,529 6 4,596 12 Crew 1,586 6 1,379 4 Total Costs, normal road maintenance 2/ 24,302 100 39,425 100 Tonne/km cost 4; 0,778 2,464 Total Costs, no road maintenance 5/ 37,918 52,793 Tonne/km cost 5/ 1,185 3,300 Notes: 1/ Financial costs (gross of tax), predicted for Volvo N10 6*4 22/24 tonne GVM vehicle from HDH III VOCs model. Cost inputs supplied by ETP Base Bungo depot, Luanda. 2/ Road; paved, 4 IRI, 1,5 positive grade, 1,5 negative grade, 50Z uphill travel, 200 degrees/km curvature, default superelevation, zero altitude, one lane per travel direction. 3/ Road as 2 above. Vehicle; 15,000 km per year, 120,000 km lifetime utilization, 5 years of life, 16 tonnes out but no return load. 41 Normal operations: 32 tonnes per return trip, current operations; 16 tonnes per return trip. 5/ Predicted at 12 IRI roughness, with zero curvature. Source: 1986 HDM III VOCs sub-model, ETP 1987 operating and cost data, Consultant's estimates of highway variables. - 368 - APPENDIX Table 1.4 ANGOLA RAILWAY INCOME AhD EXPENDITURE STATEMENTS FOR 1985 - 1986 1985 1986 Luanda (CFL) Income 61,792 74,802 Expenditures 333,563 290,620 Balance (272,770) (215,818) Benguela (CFB) Income 288,314 312,573 Expenditures 1,474,113 1,513,019 Balance (1,185,799) (1,200,446) Mocamedes (CFM) Income 551,650 478,184 Expenditures 278,328 287,537 Balance 273,322 190,647 Total Deficit (1,185,247) (1,606,911) Source------------------------TEC-----------1987.----__-- Source: MINTEC, 1987. - 369 -- APPENDIX Table 1I.5 ANGOLA TAAG CIVIL AIRCRAFT FLEET 1/ UTILIZATION DATA AT DEC. 1986 …_______________________-_________________________________ Model Year Utilization Landings 1986 Total 1986 Total --------------------------------------------------------------- Boeing 707-373C 63 1,743 64,623 880 16,203 707-349C 65 2,117 65,988 760 15,863 707-349C 67 1,971 64.110 468 14,384 707-347C 68 1,770 54,932 425 16,066 707-347C 68 2,139 51,748 330 18,074 707-382C 69 2,459 56,672 559 16,778 737-2M2C 76 1,663 14,141 1,528 15,888 737-2M2 79 1,727 11,160 1,768 11,687 737-2M2 82 1,765 7,811 1,884 8,430 737-2M2 85 1,954 3,141 2,043 3,378 737-2M2 85 1,931 2,889 1,811 2,799 Fokker F27-600 69 1,709 23,043 1,526 21,015 P27-600 69 1,285 22,457 1,158 22,776 P27-600 71 1,601 18,847 1,205 17,996 P27-600 77 851 4,050 689 2,961 P27-600 82 1,399 5,737 1,238 4,924 Yak Yak-40 77 934 5,700 906 6,640 Yak-40 77 725 5,449 703 6,320 --------------------------------------------------------------- Notes: 1/ Excluding 10 light aircraft; Pin- Aztec (3), Piper Navajo (2), Piper Cherokee (1), Pipe' -.e Comance (1), Islander (1), and Cessna Skyline (1j. Also excludes 1 Lockheed L-LOO and 1 Yak-40 not operational in 1986. 2/ Units in Hours. Source: TAAG - Situacao Actual e Perspectivas, 1986. - 370 -- APPENDIX Table I.6 ANGOLA ANGONAVE 1986 CARGO BY CATEGORY _______________________________ (Tonnes 000') Category Tonnage Food: Wheat Flour 35,400 Corn 29,300 Soya Oil 13,600 Malt 10.600 Powered Milk 7,200 Others 25,000 Sub-total 121,100 Alcoholic Drinks 7,050 Equipment and Vehicles 1/ 6,800 Chemicals: Fertilizer 23,100 Soap 5,260 Amonium Sulphate 3,514 Sub-total 31,874 Other Products Wagons 3,973 Cement 2,910 Iron Plates 1,472 Others 20,153 Sub-total 28,508 Containers (2335 empty) 5,400 Overall Total 200,732 --------------------------------------------- 1/ Excluding military items. Source: Angonave, 1987. * 371 -' APPENDIX Table I.7 ANGOLA ENATEL TELEPHONE SYSTEMS, 1980 AND 1985 1980 :985 Exchanges Number Capacity Lines Number Capacity Lines Automatic: Luanda 7 37,000 32,370 9 38,500 36,000 Interior 8 15,368 10,800 9 18,368 11,520 Manual 27 4,090 3,180 29 4,390 3,480 Automatic Index: 1/ Local 93 93 Inter-urban 5 25 …-----------------------------------------------------------------------__---__ 11 Index based on number of automatic to manual calls. Source: MINTEC, 1987 - 372 - APPENDIX Table J.1 ANGOLA PER CAPITA FDUCATIONAL EXPENDITURES BY PROVINCES - 1983 ------------------------------------------------------- (kwanza) Angola 916 Kunene 974 Bengo 1,784 Luanda 717 Benguela 1,381 Lunda Norte 1,335 Bie 469 Lunda Sul 1,335 Cabinda 1,599 Melange 870 Huambo 752 Namibe 1,467 Huile 734 Moxico 764 Kuanda-Kubango 3,364 Vige 1,152 Kuanza Norte 1,326 Zaire 1,320 Kunaza Sul 844 * Exclusive central administration expenditures. ANGOLA MINISTRY OF EDUCATION - EXPENITURE BY CATEGOIES - 1980/87 __________________________________________________________- (Kw million) lo" 1980 1981 1982 1988 1984 1985 196 197 Personnel Expenditur.s 9,326.1 7,211.9 7,268.8 8,232.7 7,628.2 7,648.7 7,651.9 8,764.4 19,055.6 Purchaso of Goodn 1,388.3 199.7 184.1 234.2 99.9 163.2 318.3 1,38s.6 382.4 Durable Goods 1,192.2 30.0 21.4 113.6 39.0 56.2 168.8 1,227.4 203.8 Payment of Services 83.9 51.2 56.0 55.3 58.7 73.4 133.3 51.1 44.9 r4her Paymnts 89.6 2,674.5 1,531.3 984.1 617.9 945.9 341.4 804.0 560.9 Food Purchases 254.1 700.0 6C0.0 597.0 400.0 800.0 182.0 296.6 261.3 Cooperantes Expendituro 610.9 0.0 0.0 46.2 60.0 74.4 92.7 379.7 152.5 Total 13,69S.9 10,767.3 9,858.6 10,263.1 8,893.7 9,751.8 6,868.4 12,903.6 11,639.4 Source: Orcomento Ceral do Estedo N) 374 - APPENIIX Table J.3 ANGOLA ENROLLMENT IN REGULAR PRIMARY EDUCATION, 1970-87 I, II, III Years Pre-School I Level II Level III Levol Levels 1970 2,667 440,986 29,268 18,911 484,159 1971 3,029 494,800 34,760 16,076 646,626 1972 8,464 617,421 40,024 18,824 676,769 1978 1,889 687,420 29,599 16,030 618,049 1976 861,446 692,460 70,938 8,625 671,408 1977 416,937 968,678 94,817 19,010 1,072,008 1978 746,828 142,839 113,884 24,668 281,886 1979 664600 1714817 176687 40272 1,931,776 1980 404,266 1,3a2,297 150,204 86,433 1,618,984 1981 842,816 1,268,858 111,191 21,026 1,891,074 1982 292,429 1,178,430 106,678 16,640 1,299,748 1988 264,738 1,065,026 182,284 27,971 1,226,280 1984 208,469 870,410 112,054 29,287 1,011,761 1986 227,654 970,698 180,749 34,746 1,186,192 1986 222,161 1,012,803 127,486 88,802 1,178,091 1967 208,862 1,088,602 108,878 81,707 1,174,087 Source: MED - 375 - APPENDIX Table J.4 ANGOLA ENROLLMENT IN ADULT EDUCATION, 1970-85 Years I Level II Level III Level Total 1980 165,497 56,680 12,757 234,934 1981 74,345 35,856 23,861 134,062 1982 62,420 50,055 32,077 134,552 1983 46,086 31,815 36,630 114,531 1984 40,968 30,303 36,587 107,858 1985 40,106 37,295 56,089 133,490 1986 107,426 51,766 27,811 187,003 1987 125,598 60,754 30,480 216,832 Source: MED - 376 - APPENDIX Trble .3.S ANGOLA PRIMARY EDUCATION: PROMOTION, REPEAT AND DROPOUT RATES - 1980-84 Yoers Rates Oradea - - - - - - -- -- _ - -- -- -- -- -- --- - - - -- -- -- -- -- ----- - - - - - ---- - -- -- - -- - - - - - -- -- -- -- -- - - - is 20 80 40 s6 6o 76 80 1980 Promotion 45.4 48.7 63.2 51.0 32.4 85.6 82.1 30.6 Repeat 80.9 80.8 24.9 25.7 24.1 24.0 28.7 26.7 Dropout 28.7 23.7 21.9 28.8 48.5 40.4 44.2 43.8 1981 Promotion 41.9 42.1 49.0 42.1 31.2 28 9 84.4 36.4 Repeat 31.7 83.0 29.5 84.4 28.7 32.0 28.8 28.2 Dropout 26.4 24.4 21.6 28.5 40.1 89.1 87.8 40.4 1982 Promotion 37.8 87.8 44.2 42.2 80.0 29.2 86.5 81.8 Repeat 28.6 86.1 29.8 82.0 28.2 81.6 28.8 86.7 Dropout 28.6 27.6 28.0 25.8 41.8 39.8 84.7 87.6 1983 Promotion 38.8 86.2 89.6 41.0 30.0 27.1 84.8 84.9 Repeat 89.9 89.6 82.8 85.8 56.6 64.6 49.6 52.0 Dropout 23.6 24.2 27.6 25.2 14.6 18.4 16.1 13.1 1984 Promotion 36.1 86.1 39.o 87.6 28.9 25.2 24.4 24.9 Repeat 82.7 86.1 29.8 29.8 40.6 87.6 28.4 21.0 Dropout 82.2 29.8 81.2 82.8 80.8 87.8 49.2 69.0 1980/87 Average Promotion 89.4 89.6 46.0 42.8 86.6 29.2 82.8 81.7 Repeat 88.8 34.7 29.4 81.1 86.6 86.9 81.4 81.7 Average Dropout 28.9 26.8 25.6 26.1 84.0 84.0 38.8 86.6 1986 Promotion 42.4 89.9 40.4 45.1 22.7 18.6 22.9 20.8 Repeat 80.3 38.1 27.0 28.6 24.6 21.9 16.5 15.2 Dropout 72.8 78.0 68.0 73.6 47.8 40.5 89.4 86.6 Source: MED - 377 - APPENDIX Table J.6 ANGOLA ENROLLMENT IN SECONDARY SCHOOL COURSES - 1970-85 ------------------------------------------------ Years Secondary Schools Pre-University Technical Teachers Total 1970 1,697 242 1,939 1971 1,567 1,906 1972 1,975 386 2,361 1973 2,135 405 2,540 1977 1382 1978 1,075 778 1,853 1912 1979 2,133 1,284 3,417 2043 1980 2,882 1,916 4,798 2299 1981 3,018 2,393 5,411 2722 1982 3,397 2,930 6,327 3713 1983 3,637 3,263 6,900 3424 1984 3,871 3,479 7,350 3195 1985 4,599 4,070 8,669 3721 1986 5,027 4,747 9,774 3776 1987 0 4,790 0 0 Source: MED ANGOLA SECONDARY TECHNICAL SCHOOLS - PROMOTION AND EVASION RATES, 1983 AND 1985 --------------------------------------------------------------------__-------_ 9th Class 10th Class 11th Class 12th Class Total Promotion Evasion Promotion Evasion Promotion Evasion Promotion Evasion Promotion Evasion Rates Rates Rates Rates Rates Rates Rates Rates Rates Rates Agriculture 1983 66.6 27.7 79.1 6.9 83.1 4.8 90.4 6.3 79.6 10.4 1985 (71.3) (14.4) (78.0) (10.2) (70.2) (17.5) (84.7) 3.1 (76.7) (10.6) Economics 1983 47.6 2.4 45.7 14.5 28.9 9.9 90.0 10.0 41.7 17.9 1 1985 (52.0) (14.8) (47.1) (13.5) (57.7) (7.0) (60.7) (1.2) (52.0) (12.4) w Industrial 1983 35.7 30.5 36.8 24.5 42.6 15.2 48.4 11.3 38.2 24.5 1 1985 (40.4) (24.9) (43.5) (13.8) (51.0) (8.4) (58.8) (9.4) (44.9) (17.5) Health 1983 67.6 16.2 89.7 2.1 67.8 0.0 95.0 0.0 75.4 7.2 1985 (76.9) (10.5) (86.1) (9.4) (95.5) (1.1) (90.9) (3.4) (83.8) (9.5) Other 1983 46.1 14.2 40.3 2.2 75.7 8.1 60.0 0.0 51.6 6.7 1985 (23.7) (20.0) (74.3) (18.8) (75.0) (21.9) (100.0) 0.0 (*) (*) Total 1983 44.6 25.6 49.4 15.0 47.9 9.4 66.0 7.7 48.3 17.6 1985 (48.3) (18.7) (57.8) (13.7) (62.6) (30.9) (74.8) (4.5) (55.9) (14.4) Source: MED > (*) Missing Information PC 1 >< z - 379 - APPENDIX Table J.8 ANGOLA GRADUATES FROM TECHNICAL SECONDARY SCHnOLS - 1980/86 Type of Course 1980 1981 1982 1988 1984 1985 1980 Agriculture 0 10 84 67 61 68 29 Economics 189 119 88 89 18 51 64 Administration 23 29 14 15 0 0 0 Commerce 0 8 10 9 0 0 0 Statistics 0 0 7 9 18 0 0 Finance 5S 44 80 88 0 0 0 Planning 61 88 22 14 0 0 0 Industry 0 5u 69 60 81 94 104 Construction 0 7 4 11 18 O 0 Electricity 0 7 17 17 7 0 0 Mechanics 0 6 8 8 0 0 Chemistry 0 9 7 24 16 0 0 Politechnics 0 25 so 0 20 0 0 Other Health 0 0 42 20 75 80 s8 Fishing 0 0 8 0 2B 55 9 Petroleum 0 0 0 28 88 0 so Journalism 0 0 0 0 8 0 Total 189 182 281 249 294 a38 824 Source: MED - 380 - APPENDIX Table J.9 ANGOLA ENROLLMENT IN HIGHER EDUCATION - 1984/87 1984 196 1986 1987 Faculty of Sciences 626 596 745 910 Agriculture 217 281 271 817 Low 680 602 741 546 Luanda O 0 446 448 Lubango 0 0 22 21 Huambo 10 0 271 77 Economics 749 819 1047 1204 Luanda 622 662 764 855 Lubango 0 0 151 146 Huambo 127 157 112 2W4 Enginoerings 760 796 674 09 Inst. of Educ. Sciences 921 1194 1276 984 Lubango 8;5 881 876 399 Correspondence Courses 586 618 g01 SOS Medic - 374 787 628 914 568 617 678 676 121 120 155 298 Totl 4486 S684 5782 5874 Source: Universidade Agostinho Neto ANOU HIGHER EDUCATION GRADUATES - 1975/64 1976 1976 1977 1978 1979 1989 1981 1982 1983 1964 *ta.I Faculty of Sclince 0 0 0 0 0 0 B 6 6 27 42 Agriculture o a 8 o o o e 5 7 14 a7 Law 0 0 0 8 0 e 9 o 30 22 eo Economics * 0 0 8 0 2 100 75 31 20 236 EnginoerInp 12 4 6 3 13 9 16 24 14 6 106 Inst. of Educ. ScT ncea 0 0 0 0 0 9 0 0 0 44 44 medlcne 7 80 14 10 6 a3 21 21 40 46 230 Total 19 87 27 29 19 47 139 131 128 178 754 co Source: Unlvereldae Agoetinho Neto 01 - 382 - APPENDIX Table J.11 ANGOLA UNIVERSITY PROFESSORS BY TYPE AND NATIONALITY - 1994/67 ANGOLANS COOPERANTES e Full-time Part-time MonitorC Faculty ot Sciences 1984 20 0 1S 82 1986 19 1 17 86 1986 21 a 14 29 l9b? 22 4 19 40 Agriculture 1984 8 11 18 22 1986 18 8 17 28 19986 20 10 17 18 1987 19 8 17 18 Economics 1984 6 27 8 17 1986 6 82 0 20 1988 80 37 81 79 1987 7 s8 29 s6 EnginoorIngs 1984 26 25 18 76 1986 Be O 2 72 1988 80 87 81 79 19087 24 21 17 41 Inst. of Ed. Sciences 1984 8 e 8t 66 1985 17 6 18 s9 1986 25 8 17 67 1987 89 9 28 5 Medicine 1984 84 16 85 11 1985 43 0 26 84 1986 8T 16 88 17 1987 t6 161 64 4 1984 94 79 114 217 1986 127 41 78 244 1986 198 111 146 284 1987 168 181 174 158 Source: Univereidade Agostinho Nato (e) The proportion of part-time cooperantes was 1984 - 14% and 1988 - 6X. - 383 -- APPENDIX Table J.12 ANGOLA UNIVERSITY - EXPENDITURES BY CATEGORIES, 1980/89 1989 1980 1981 1982 1989 1984 1985 1986 1987 Personnel Expenditures 629.8 175.6 156.8 292.8 182.8 807.6 812.4 447.8 649.4 Purchases of Goods 129.6 64.7 41.9 89.0 72.0 72.4 92.6 110.7 126.0 Durable Goods 66.6 16.0 7.8 80.0 22.0 20.4 40.9 48.6 69.8 Paymnt of Services 19.1 11.1 11.8 16.b 14.0 14.6 16.8 16.6 16.1 Other Payments 178.0 28.4 80.6 98.4 67.5 79.9 94.6 188.8 161.0 Food Purchases 6.0 0. 0 0.0 16.6 2i.0 18.2 12.8 24.4 41.9 Cooperantoe Expend. 84.6 0.0 10.0 49.7 80.8 88.8 62.2 74.0 74.0 Total 950.4 267.8 289.6 491.2 885.8 478.8 616.2 706.8 851.5 Sources Orcamento coral do Estado - 384 - APPENDIX Table J.18 ANGOLA NATIONAL CENTER FOR LITERACY - EXPENDITURES BY CATEGORIES, 1982/89 1981 1982 1988 1984 1985 19t 1987 1989 Personnel Expenditures 658.6 727.8 729.0 821.7 676.0 520.6 695.6 Purchases of Goods 151.8 120.4 68.9 67.8 41.1 46.0 49.2 48.5 Durable Goods 39.0 28.6 16.2 16.2 18.6 18.8 20.7 21.1 Payment of Services 19.8 6.9 4.4 4.6 10.8 8.6 8.1 8.7 Othor Payments 296.8 217.8 68.2 66.0 27.9 22.9 22.1 61.7 Total 1,126.8 1,071.2 868.6 950.0 762.8 764.8 600.0 708.8 Source: Orcamento Goral do Estado NOTES MAP SECTION .3GABON j RWANDA NYA. of the BURUNDI ANGOLA ACNNDA CONGO ZAIRE TNZANIA ELIE F Luanda\ MALAWI Relief in Meters 2, I!-u0 - 200 0 Selected Towns 201 - 500 (3 Province Capitals NAMIBIA ZIMBABWE _ 501 - 1000 National Capital IB0TSWANAA 1001 - 1500 Province Boundaries P.R. OF g Greater Than 1501 International Boundaries CABIIDAe . . MILES 0 100 200 300 CA ~~~~~~~~~~~~~~~~~~~~~~II I I KILOMETERS 0 100 200 300 400 500 CONGOe? A _ _ _ __,_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ZAIRE - 0 20- 24- \ UIGE LUANDA NflAL 0 Od B!L UIVDA | ATLANTIC BAENGO ; AN,E OCEAN/p HA E / UN 2 -~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 Ic t IV \ NATET I LUBANGO o mw ~~~Ff LUfD S-i> UIL 0 % °* 1 1ff*~ N'IUZ /V *CNJV B CB/G XA 1- OCA 1 LUNAMBA- 12 ' 16 0 \ 24<' -I~ ~ ~ ~ ~ ~ ~ ~ ~~~~I 0~~~~~~~~~~~~~~ CUANDO~~~~~~ GABON RWANDA KENYA of the BURUNDI ANGOLA ¢^° ZAIRE gTANZANIA POPULATION DENSITY Luan a _ MALAWI Persons per Km2 VC NGOLA Less Than 1 0 Selected Towns ZceAMBIAl USW 1 - 5 () Province Capitals NAMIBIA BWE 8 - 20 I9 National Capital 12* LJ _21 - 30 - Province Boundaries 0\ 1' -P.R. OF Greater Than 30 International Boundaries HE CONG MILES 0 100 200 300 CABNDl M'_A_ZA KILOMETERS 0 100 200 300 400 500 'CONGOe2 \ ZA/RE Je @ o |~~ 20' 24' ZAIRE 0/GE ' t ZAIRE aGE mi v cME 0 L \ANA C ZAX ; LUNDA LUCA CAXIT£ AOJ AL,I OR rE 2) loe"s¢ L'UANDA NORTE MA LAN,JE br L. UA I VDA...,., a m W~~~~~~~~~~~~~~~~~~~~~~~~~aI--T.4 a.44 , SAURIMO hrrwer"rrr r ..Aw 71 AM M & TO. ftd Ith W . > CUANZA - C.q 0 PwtO Afftbol~ Oeb" SUL -0 | PA 49 SL av \to LUNDA SULr j ~~N-GUNZA gi2 l , X 1 4 Hr s & zL ~KUITO } MOXICO .tBENWELA 11 Ya " i ' XI 0~~~~~~~~~~~~0N NAMIBE i LUBANGOO i \<|f,II C~~~~~~~~~C c 118i 20 24 GABON ~~RWANDk KENYA 0PR. k of the BURUNIDI A N G O LA C &DA 0OG TNZANIA (M4BOLA= ZAIRE L Tangany,ia u Selected Towns L1a MALAWI G( Province Capitals Atlantic AN OLA 2 M @ National Capital Ocean | ZAMBIA _9) {$ Main Roads ._-' Railroads NAMIBIA +I ABWE Airports \ IBOTSwANA< / \ Oc2K7rr $ Ports \\12 fsse"2e ~ 18 - Province Boundaries P.R. OF International Boundaries - E~~CONG CAB D_A MILES 0 100 200 300 CABIND + KILOMETERS 0 100 200 300 400 500 ZA/IRE + -t2'0 24' \ ) >/E,' \ZAIRE I +UIG LUANDA ~~~~~ NDALATLAID CAXTILAJ orF ¢ | _ % g , ~~~~~> q > t_~~SARIMO 4. __ UA NZANORTE UNDA SUL TM _VI"m,aS BNGUELA 1I U A --B LUAND-4A LU,,N5 NOR~~~~~iMNOG$ MALA NAidlBE UBANGO kOct 0 ;t 9 >>,~~~~SURIM d To~ Pot SUL<.IHig! _/Rouauia LAD - 18 NAM/BERE e ,. - ~ CUNENE X CUBA NGO N - 16L 'o lndhoek 0I A~~~~~~~~~~~~~~~~~~~~~~~* f