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Angola ROLE OF THE GOVERNMENT
The government, under the control of the MPLA-PT
Central
Committee, directly controlled most of the economy
(see Structure of Government
, ch. 4). Government-owned enterprises took
the place
of private enterprises and businesses. Because most
Portuguese
owners of manufacturing concerns and agricultural
plantations fled
the country at the time of independence, the new
government was
forced to nationalize factories and farms to keep them
operating.
The government also intervened directly to protect the
country's
wealth from foreign exploitation by creating companies to
control
Angola's mineral and petroleum wealth. State-owned
companies in the
oil industry have negotiated attractive terms of operation
with the
foreign companies that pump the oil, keeping a large
percentage of
the profits inside the country. The government's economic
policies
thus have combined ideology with necessity to fill the gap
left by
the Portuguese, without emulating the economic system
created under
colonialism.
But in the mid-1980s, Angola's centralized economy had
fallen
on hard times. Despite a 21.5 percent rise in the volume
of oil
production in 1986, government oil receipts fell to only
45 percent
of the budgeted level because of the serious drop in
worldwide oil
prices that year. As a result, government revenues were
barely half
of the level budgeted for 1986 (see
table 4, Appendix A).
The
government responded by cutting overall expenditures by
5.5
percent, mostly for items related to economic development,
although
expenditures for social services rose by 14 percent. The
war
against UNITA compounded the effect of lost oil
revenue--defense
expenditures rose to a record 40.4 percent of the 1986
budget
(see War and the Role of the Armed Forces in Society
, ch. 5).
Weak economic performance since independence has led
government
planners to reorient economic ideology, endorsing programs
to
liberalize many state policies and return some state
functions to
the private sector. In December 1986, the government
decreed the
liberalization of agricultural marketing, allowing for
some free
trade of agricultural goods to motivate farmers to produce
more for
the local market. Since the departure in 1975 of the
Portuguese
traders, who traditionally had monopolized rural trading,
the
inefficiency of the National Company for the Marketing and
Distribution of Agricultural Products (Emprêsa Nacional de
Comercialização e Distribuição de Produtos
Agrícolas--Encodipa) and
the scarcity of basic consumer goods and manufactured
agricultural
inputs have discouraged peasants from producing surpluses
(see
table 5, Appendix A). Most peasants have retreated to a
purely
subsistence form of farming. Similar inadequacies by the
state
livestock marketing company have resulted in serious
overstocking
in the cattle-raising southwestern region of Angola. Since
1984 the
government has also been dissolving the state farms
established on
land formerly owned by Portuguese commercial farmers and
has been
turning the land over to the workers. Agricultural
development
stations have been set up to provide these farmers with
services
such as mechanized plowing. Furthermore, local peasant
associations
and cooperatives have been established throughout the
country to
organize production and consolidate resources.
On August 17, 1987, President José Eduardo dos Santos
announced
plans to restructure the economy. These reforms, called
the
Economic and Financial Rectification (Saneamento Económico
e
Financeiro--SEF), put the economy in line with the policy
guidelines approved by the Second Party Congress in
December 1985.
In his speech, the president listed several factors
affecting the
economy, including the steep fall in oil prices in 1986,
the
"excessive centralization of socialist planning methods,"
the poor
management of state enterprises, and corruption. The SEF
program
mandated a strong move toward the private sector
domestically and
abroad, including membership in the International Monetary
Fund
(IMF--see Glossary) and
World Bank (see Glossary). The
foreign
investment law was therefore being reviewed, and an office
was to
be established to promote investment and reduce
negotiating costs.
The SEF program also called for the privatization of
nonstrategic
state enterprises, ending budget subsidies to the
remaining state
enterprises, shifting from state farms to the peasant
sector,
raising prices, enacting monetary reforms, and devaluating
the
kwanza. The president noted that because the state had
tried to
enter so many different areas of economic activity, it had
been
unable to prevent the deterioration of the services for
which it
was traditionally responsible, such as education, health
services,
police, and civil administration. One area that the
government was
unlikely to relinquish to the private sector, however, was
control
over imports
(see Foreign Trade and Assistance
, this ch.).
In addition to the general liberalization of economic
policies
that the government proposed, the MPLA-PT Central
Committee also
launched a campaign against graft and the parallel market.
The
parallel market offered at exorbitant prices a full range
of goods
normally unavailable inside Angola. By June 1987,
forty-two work
teams had been established to oversee government efforts
to end
this illegal trade, and the provincial authorities had
ordered the
closing of all parallel markets. In addition, the
government
directed the military to supervise more closely the
movement of
goods at the intraprovincial and interprovincial level.
The
government also started an educational campaign of
"consciousness
raising" on farms and in factories to discourage the theft
and
pilfering that fed goods to the parallel market.
These efforts notwithstanding, in 1988 sources
estimated that
approximately 40 percent of the goods imported through
Luanda never
reached their intended destinations because of theft.
Moreover,
because the purchase of basic foodstuffs required ration
cards, in
1988 the parallel market was thriving.
Data as of February 1989
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