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Angola BACKGROUND TO ECONOMIC DEVELOPMENT
The Angolan economy has been dominated by the
production of raw
materials and the use of cheap labor since European rule
began in
the sixteenth century. The Portuguese used Angola
principally as a
source for the thriving slave trade across the Atlantic;
Luanda
became the greatest slaving port in Africa
(see Slave Trading in the 1700s
, ch. 1). After the Portuguese Empire abolished
the slave
trade in Angola in 1858, it began using concessional
agreements,
granting exclusive rights to a private company to exploit
land,
people, and all other resources within a given territory.
In
Mozambique, this policy spawned a number of companies
notorious for
their exploitation of local labor. But in Angola, only the
Diamond
Company of Angola (Companhia de Diamantes de
Angola--Diamang)
showed even moderate success. At the same time, Portuguese
began
emigrating to Angola to establish farms and plantations
(fazendas) to grow cash crops for export
(see Agriculture
, this ch.). Although these farms were only partially
successful
before World War II, they formed the basis for the
economic growth
that shaped Angola's economy in the late 1980s.
Before World War II, the Portuguese government was
concerned
primarily with keeping its colonies self-sufficient and
therefore
invested little capital in Angola's local economy. It
built no
roads until the mid-1920s, and the first railroad, the
Benguela
Railway, was not completed until 1929. Between 1900 and
1940, only
35,000 Portuguese emigrants settled in Angola, and most
worked in
commerce in the cities, facilitating trade with Portugal.
In the
rural areas, Portuguese settlers often found it difficult
to make
a living because of fluctuating world prices for sugarcane
and
sisal and the difficulties in obtaining cheap labor to
farm their
crops. As a result, they often suspended their operations
until the
market prices rose and instead marketed the produce of
Angolan
farmers.
But in the wake of World War II, the rapid growth of
industrialization worldwide and the parallel requirements
for raw
materials led Portugal to develop closer ties with its
colonies and
to begin actively developing the Angolan economy. In the
1930s,
Portugal started to develop closer trade ties with its
colonies,
and by 1940 it absorbed 63 percent of Angolan exports and
accounted
for 47 percent of Angolan imports, up from 39 percent and
37
percent, respectively, a decade earlier. When the price of
Angola's
principal crops--coffee and sisal--jumped after the war,
the
Portuguese government began to reinvest some profits
inside the
country, initiating a series of projects to develop
infrastructure.
During the 1950s, Portugal built dams, hydroelectric power
stations, and transportation systems. In addition,
Portuguese
citizens were encouraged to emigrate to Angola, where
planned
settlements (colonatos) were established for them
in the
rural areas. Finally, the Portuguese initiated mining
operations
for iron ore, manganese, and copper to complement
industrial
activities at home, and in 1955 the first successful oil
wells were
drilled in Angola
(see Extractive Industries
, this ch.).
By 1960
the Angolan economy had been completely transformed,
boasting a
successful commercial agricultural sector, a promising
mineral and
petroleum production enterprise, and an incipient
manufacturing
industry.
Yet by 1976, these encouraging developments had been
reversed.
The economy was in complete disarray in the aftermath of
the war of
independence and the subsequent internal fighting of the
liberation
movements. According to the ruling Popular Movement for
the
Liberation of Angola-Workers' Party (Movimento Popular de
Libertação de Angola-Partido de Trabalho--MPLA-PT), in
August 1976
more than 80 percent of the agricultural plantations had
been
abandoned by their Portuguese owners; only 284 out of 692
factories
continued to operate; more than 30,000 medium-level and
high-level
managers, technicians, and skilled workers had left the
country;
and 2,500 enterprises had been closed (75 percent of which
had been
abandoned by their owners). Furthermore, only 8,000
vehicles
remained out of 153,000 registered, dozens of bridges had
been
destroyed, the trading network was disrupted,
administrative
services did not exist, and files and studies were
missing.
Angola's economic ills can also be traced to the legacy
of
Portuguese colonial development. Although the Angolan
economy had
started to show strong signs of growth by 1960, most
developments
had originated recently and precariously. Many of the
white
settlers had come to Angola after 1950 and were
understandably
quick to repatriate during the war of independence. During
their
stay, however, these settlers had appropriated Angolan
lands,
disrupting local peasant production of cash and
subsistence crops.
Moreover, Angola's industries depended on trade with
Portugal--the
colony's overwhelmingly dominant trade partner-- for both
markets
and machinery. Only the petroleum and diamond industries
boasted a
wider clientele for investment and markets. Most
important, the
Portuguese had not trained Angolans to operate the larger
industrial or agricultural enterprises, nor had they
actively
educated the population. Upon independence Angola thus
found itself
without markets or expertise to maintain even minimal
economic
growth.
As a result, the government intervened, nationalizing
most
businesses and farms abandoned by the Portuguese. It
established
state farms to continue producing coffee, sugar, and
sisal, and it
took over the operations of all factories to maintain
production.
These attempts usually failed, primarily because of the
lack of
experienced managers and the continuing disruptions in
rural areas
caused by the National Union for the Total Independence of
Angola
(União Nacional para a Independência Total de
Angola--UNITA)
insurgency. Only the petroleum sector continued to operate
successfully, and by 1980 this sector had helped the gross
domestic
product (GDP--see Glossary) reach US$3.6 billion, its
highest level
up to 1988
(see
fig. 6). In the face of serious economic
problems
and the continuing war throughout the countryside, in 1987
the
government announced plans to liberalize economic policies
and
promote private investment and involvement in the economy.
But most
observers believed that the key to Angolan economic
success rested
only partially with the privatization of production. Even
if peace
were achieved, the economy would still have great
difficulties in
reaching its full potential.
Data as of February 1989
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