ReportNo. 8906-ANG Angola An IntroductoryEconomic Review (In Two Volumes) Volun e II: Annexes and Statistical Appendix

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ANGOLA

AN INTRODUCTORYECONOMIC REVIEW

TABLE OF CONTENTS

Volume II - Annexes and StatisticalAppendix

Page No.

ANNEX I ECGNOMICDEVELOPMENT DURING THE COLONIALPERIOD 1

A. Introduction. 1 B. A South Atlantic Link...... 2 C. Settlementand Contract Labor. 6 D. Soldiers and Industrialization. 13 E. Economy and Society at Independence. 21 Bibliography...... 25

ANNEX II THE ANGOLAN ECONOMY IN CCMPARATiVEPERSPECTIVE 28

ANNEX III GOVERNMENT INSTITUTIONS...... 30

ANNEX IV THE SYSTE4 OF NATIONALACCOUNTS IN ANGOLA 32

ANNEX V THE LEGJ.'FRAMEWORK OF SEF. . 40

ANNEXVI THE TAX SYSTEM .... 47

ANNEX VII AGRICULTURE.. . 51

A. AgriculturalPerformance, Policy and Production Response...... 51 B. Major AgriculturalProducts ...... 55 C. Rural Structure...... 63 D. AgriculturalSupport Servicesc. .. *.. 66 E. AgriculturalPolicy Adjustmentand Reform...... 70

ANNEX VIII TRANSPORTATAND COMMUICATION...... 73

A. Sector Overview and Organization. . 73 B. Highway System .... 77 C. Rail Transport...... I. .... 82 D. Air Sector e.. 86 E. Maritime and Port Sector. . 91 F. Mail and Telecommunica tions 99 G. Availabilityof Modal Spare Parts. 104 H. MINTEC Analysis and Planning. 106 I. Issues, Prospectsand Recommendations 113

This documenthas a restricteddistribution and may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout World Bank authorization. Page No.

ANNEX IX EDUCATION,**,. .** ...... 118

A. Structureand Organizationof the Education System ...... 118 B. Primary Education ...... 124 C. Secondary Education ...... 127 D. Higher Education ...... 130 S. Recommendations ...... 133

List of Annex Tables ...... 136

Statistical Appendix ...... 136 Maps ...... 214 Map I Angola 214 Map II Angolas Relief ...... 215 Map III Angolas PopulationDen .....sity# ...... 216 ANNEX TABLES

Page Number

Annex I: ECONOMICDEVELOPMENT DURING THE COLONIAL PERIOD

1.1 Principal Exports, 1950-73...... 4*.... 24a 1.2 Major Imports, 1952-73...... 24b 1.3 Output of Major Agricultural Products, 1952-73...... 24c 1.4 Population and GDP, by Type of Activity ...... 24d I.5 Manufacturing Output by Major Industry Group, 1966-70 ...... o...... 24e 1.6 Balance of Payments, 1955-73...... 24f 1.7 Monetary Development, 1960-73...... 24g 1.8 Gross Domestic Product, 1953-73...... 24h 1.9 Selected Social Indicators...... 24i

Annex VI: TAX SYSTEM

VI.1 Petroleum Taxation, 1980- ...... 87 47 VI.2 Changes in Price and Output of Crude Oil. 1980-86 .. 48 VI.3 Transfers to Government by Selected Public Enter- prises, 1984-86 ...... 49

Annex VII: AGRICULTURE

VII.1 Distribution of Cattle and Goats in Southern Angola ... 63 VI1.2 Losses of State owned Agricultural Enterprises .. . 64

Annex VIII: TRANSPORT

VIII.1 Output of MINTEC Controlled Transport Services, 1985-87 ...... o...... 74 VIII.2 Output of Transport and Communications Sector...... 75 VIII.3 Road Network, by Type and Length, 1986 ...... 77 VIII.4 MINTEC Bus Utilization Data, by Province, 1985...... 79 VIII.5 ETP Urban Bus Performace Indices, 1985-87...... #. 80 VIII.6 Rail Transport, Passengers and Cargo ...... 83 VIII.7 Railway Locomotive and Rolling Stock Data, 1985-86..... 84 VIII.8 TAAG Operations, by Market, 1986 ...... 87 VIII.9 ENAMA Airport Network, 1987...... 89 VIII.10 Size and Output of Maritime Fleets, 1986 and 1987...... 92 VIII.11 ANGONAVE Cargo, by Category, 1986 ...... 93 VIII.12 SECIL Maritima Fleet, Selected Data, 1986...... 94 VIII.13 Main Port Freight Throughput, 1985-1987...... 97 VIII.14 Cabotage Traffic, 1985...... 98 VIII.15 Throughput of Angolan Mail Office, 1986...... 101 VIII.16 Inter-urban Telephone Network, 1975 and 1980 ...... 102 VIII.17 ENATEL and EPTEL, Selected Data, 1985 and 1986...... 103 VIII.18 MINTEC Short Term Strategy, 1987 ...... 109 VIII.19 Projected Freight and Passenger Movements...... 112 VIII.20 HINTEC Proposed Program, 1987...... 112 Page No.

Annex UXt EDUCATION

IX.1 Government Budget for Education, 1980-87...... 123 IX.2 Government Expenditure on Education, 1980-82...... 123 IX.3 Primary Education - Number of Teachers, Classrooms and Schools, 1981183...... 125 IX.4 Primary Education Enrollment Ratios...... 125 TX.s Primary Education Net Enrollment Ratios for four Provinces ...... #.*...... *...... 126 IX.6 Primary Education - Average Promotion, Repeat and Dropout Rates, 1980-84...... 127 IX.7 Enrollment in Higher Education ...... 131 ANNEX2 Page 1 of 24

ECONOMICDEVELOPMENT DURING THE COLONIALPERIOD

A. Introduction

1. Unlike the majority of former European colonies in sub-Saharan Africa, which became independentin the late 1950's and early 1960's, Angola has been an independentnation only since 1975. The length of the Portuguesecolonial presence in Angola (over 500 years) and its particular characteristicsleft a colonial legacy which continuesto constrainAngolan economic development. The unique nature of the Portuguesecolonial system is that it was based on an indigenouslabor system that was never free." Domestic slaverywas legal until 1870 when it was replacedby a brutal system of forced labor (euphemisticallycalled contract labor") until 1961 when it was abolished in the wake of the nationalistuprisings. Moreover, since the 1920s, Angolan developmentpolicy focusedprimarily on raising the number and prosperityof the white settlersand increasingthe coffers in Portugal at the expense of the indigenousAngolan peoples. Angola's best agriculturallands were seized by Portuguesesettlers. Angola became the dumping ground not only for hundreds of thousandsof largely illiterate Portuguesebut also became the repositoryfor Portugal'skey exports such as alcoholicbeverages, in particularin the twentiethcentury. Prior to the outbreak of the armed struggle in 1961, Portugueseeconomic interests enjoyed a virtual monopoly over investmentsin the colony and, given Portugal'sown economic under-development,this caused unique distortions in the Angolan economy not found in parts of Africa colonizedby the British, French, or even the Belgians. Finally, the fact that over half of the 325,000white settlershad never gone to school and the vast majority of the rest had less than four years of education,resulted in the Portugueseoccupying almost every position in the modern economic sector from engineersand doctors to waiters and taxi drivers. Thus, shockingly few Angolans were trained in any skilledprofession. The singularityof Portugueseoverseas policy makes it particularlyimportant to analyze the pattern of colonial developmentin Angola in order to understandthe opportunitiesand constraintsof the People'sRepublic of Angola fourteen years later.

2. Angola's colonial economy can be characterizedthrough various stages or cycles of development. These cycles can even be named after the major export and its directionsslaves to Brazil, coffee to Portugal and oil to the United States, each cycle defining a period during which the external se:tor of the economy is dominatedby a particularproduct, by a particularmarket or both. The analysis of Angola's developmentcannot neglect the interactionbetween economicdependence and colonial rule. For purposes of exposition,the colonial economichistory of Angola can be divided into three broad periods. The first period includes the early alliance between the Portugueseand Congolesecrowns, as well as the slave trade directed mostly to Brazil, (sometimesreferred to as a South Atlantic link). The second period begins with the hundred years of transitionfrom slaves to coffee, during which territorialoccupation and settlementtook place, and includes the emergenceof a coffee export economybased on -2- AM=X I Page 2 of 24 quasi-forced labor. In the forties, the Angolan economy Initiated a growth process that involvedconsiderable immigration from Portugal, in response to the coffee boon. The white settlerpopulation increased from 44,000 in 1940 to about 325,000by 1974. Generallyfavorable prospects for external trade were decisive in the evolutionof internal conditions,reflected by changes in industrialregulation, in agriculturalincentives, In labor laws and in monetary policy. A third period begins with the Portuguesemilitary response to the 1961 armed revolt when some of the economic constraintsof colonial rule where relaxed, allowing rapid industrializationto take place alongsidethe coffee economyand concludeswith the beginning of the 'oil boom" which immediatelypreceded the 1973 price increaseby OPEC and the 1974 Portugueserevolution.

B. A South Atlantic Link

3. It is believed that in the thirteenthcentury Angola was inhabited primarilyby Koisan-speakinggroups who wire forced to migrate by the push of Bantu-speakingpeoples whose migratorypatterns and developed (slash and burn) economies took them into the territory. Some were well developedkingdoms (e.g., Luanda and Kikongo)who moved southward into Angola during the thirteenth and fourteenth centuries in search of new areas to cultivate.

4. The first encounterbetween Europeansand Angolans occurred in 1483 during a voyage of Diego Cao on his way to find a sea route to India. The initial contactsbetween the Portugueseand Kikongo were quite egalitarianand included the establishment of diplomatic relations between the two Kingdoms. The Kongo royal family even urged Lisbon to send missionariesto facilitatethe conversion of Kikongo to Christianity. Within a decade of the first contacts, however, Portugal focusedalmost all attentionon the slave trade and by 1526 the situation had deterioratedto the point that the Rongo 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 Kings' own family." 1/

5. At the time, the Congo occupieda vast region, includingthe parts south of the present Congo and Zaire and north of Angola, where the capital was situated. The region was denselypopulated. The populationlived 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 latter being used to make a fermenteddrink called malufo. This spirit constitutedon of the country'sprinciple handmade products,besides weaving and metal-working. While malufo was produced by the peasants and satisfiedan Important dietary requirement, the rest of production was reserved

1/ Paiva Manso, Historia do Congo, p. 54.

21 W.G.I. Randles, L'Mcien Rovaume dutKongo des oriaines 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. -3-

Page 3 of 24 for the nobility. Metal-working(iron, copper and gold) was practisedin this part of Africa from the first century B.C. 31 In the same vay as palm was used to produce malufo, the productionof cereals also gave rise to a manufacturingprocess for obtainingflour. The first European chronicles also note the raising of beef cattle, sheep, and poultry, but animal traction and the weaving of wool vere not practised.41 Except for the sowing of the land, agricultural work was the responsibility of the wamen. Overall, availabletools were extremelymodest, although despite periods of drought or plagues, produwtion was described as abundant.

6. Land belonged to the kingdom. On the death of a particular farmer, all his fixed property reverted to the King or traditional chiefs, who then decide on the future of the estate. Inheritancewas therefore dependenton royal consent. The recorded testimoniesagree that this policy preventedprivate wealth accumulation,so that the differences between rich and poor were determinedfor each generationby 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 receiverkept for himself a certain percentage. Although some testimoniesreport that the processwas quiet harmonious,other testimonies report that the collectionof taxes almost always implied (principallyin the backward regions) the resort to violence,provoking occasional revolts. 5/

7. Long-distancetrade vas controlledby the King or by the governors of the rrovinces. Salt from the coast and from mines and raffia products form inland areas were two of the main products exchanged. Some Portuguese chroniclesnote 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 acquisitionof food; it is merely conjecturedthat the zimbo may have served, in certain cases, for long distance trade. Moreover, the zimbo togetherwith other products and even slaves,were used to pay taxes. 61 The King is reported to have fixed the prices of products. 71 Indeed, the

31 R.P.A., History of Angola, p. 34. 'The blacksmithenjoyed considerable economicprestige ... he was frequentlysoothsayer, judge and witch- doctor. The fact of possessionof metal weapons made certain tribes and peoples superior in offensivepower over their neighborswho had only stone weapons. This explainshow the Bantu, who arrived in the territory inhabitedby the Koisan, settledthere.*

Al Op.cit.,Randles, p. 69-70. This and the followingsection are based on citationsof H. de Bolonha.

51 Cavazzi, cited in Randles,p. 76.

6/ Felner, History of the Kingdom of the Congo, cited by Randles, Op.cit.

7/ Proyat (1776) cited by Randles, Op.cit. -4-

Page 4 of 24 analysis of documentationfrom the various periods suggest that such prices remained relativelystable over four centuries.

8. The first at-empt at white settlementoccurred in 1575 with the arrival in Luanda of Paulo Dias de Novais who landed with the title of "donatariolof the Augolan coast, a method of colonizationused in Brazil. Novais and his men were more interestedin finding the fabled (but nonexistent)silver mines near Cambambe than in establishingpermanent white settlements. They also brought the pursuit of slaves carried out among the Kikongo in the north to the area around Luanda inhabitedby the Kimbundu. A period of wars and incursionsfollowed, during which the rumors about the existenceof silver mines in Cambambe proved to be false. 8/ This coincidedwith the Braziliandepression, and forced the colonial power to search for a new economicuse 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 colonialeconomic activity until the mid 19th century. Since Angolan slaves were mostly sent to Brazil, a South Atlantic link emerged between these two Portuguesecolonies. Throughout,the internationalmarket conditionswere highly rewardingfor the slave trade. 9/

9. The Dutch conquertof Brazil, in the middle of the seventeenth century, led Holland to seek control of the source of tLe slaves,whi-h were more numerous in Angola than anywhere along the West African coast. The Dutch made strategicalliances with key Angolan leaders, like the famous Queen Nzinga, w..ohelped them drive the Portuguesefrom the coast in 1640. The Dutch did not accede to Queen Nzinga's admonitionto eliminate all Portuguesein the area as they found the Portugueseto be useful middlemen in the slave trade. Luanda was reconqueredin 1648 by a 'razilianfleet led by the Governor of Bahia. Once the area was recovered by the Portuguese,the Dutch were naturally forced to evacuate the Importantslave markets of Luanda and Benguela (foundedin 1617), and other lesser ports in the north. The Sa expeditionwas almost entirely financed by Brazilianmerchants and undertakendespite the clear policy of Dom Joao IV not to offend the Dutch in the difficulttimes followingthe Portuguese restoration. The King even threatenedto punish Sa, who neverthelesswas the initiator of a period of 12 years during which the governorsof Luanda were Brazilians. During that period, the Brazilianslave trade became so predominantthat there was a local revolt against the arrival of one of the governorsin 1670, when appointinga new governor from Portugal,the Crown granted a Charter to the Luanda settlersfor their protection.

10. During the Brazilianconsulate, the conflict against Congo and Matamba for the control of the inland trade continued. The African

8/ D. Birmingham,Trade and Conflictin Angola. 1483-1790 (OxfordsClaredon Press, 1966), p. 62.

9/ Bernard Founous Cours sur le Develorpmentde l'Afrique- Amorce du Sous- DevelopDment:La Traite Negrire. QuelQuesdonnes chiffres (IDEP - Dakar, March, 1979) Page 5 of 24

Kingdoms were defeated between 1665 and 1681 and both Kings accepted a truce, becoming vassals of the King of Portugal. However, the Portuguese continuednot to control the slave trade, given that they had to pay a toll to the Imbangalasfor the caravans coming from the Londa Empire. For that reason, it was necessary to return to the regime of exchange,with pricet dictated by the English and French competitionin the north. By that time, however, the sugar boom was over and Portugalwas going through a severe depression. The volume of the slave trade decreasedaccordingly.

11. There are no reliable recordson 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 ax purposes,as having Brazilian destination,although they wout. go to SpanishAmerica instead. 10/ North European competitionfor African daves 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 controlledover BOXof the West African slare trade. Portugal,however, handled about two-thirdsof the south Atlantic trade. In the perlod 1700-1850,almost 1.8 milijon slaves were exported by Angola and Congo, whereas Brazil importedabout 3.6 million. Almost all of Angola's exportswent 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 anticipationof 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 importsat a high level until the midd:e of the century. At the end of the period, there is little doubt that Angola and the Congo were severelydepopulated as compared to the 16th century. Contrary to what seems to have occurred in West Africa, the increase in populationbrought by new food products like maize and manioc was not sufficientto offset the drain of the slave trade.

12. The colonial trade mechanisms lay basically in the relationship between the owerful coast merchantsand the traditionalchiefs inland or in the wander1.zg activitiesof the hawkers, the small white, mixed race and black merchants,components of an incipientcreole society. It is in this creole society that attempts at economic diversificationwere made several years before the abolitionof slavery. In fact, from 1764 to 1772 an active economic policy was pursued in Angola under the governorshipof Sousa Coutinho, leading,for example,to attempts at producing iron industriallyin Nova-Oeiras,near Massangano. These efforts collapsed after Coutinho'sdeparture but when the Braziliandemand 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

10/ Jorge Braga de Macedo, Colonial Develovment of Anaola: The Rise 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. -6- AQNEX I Page 6 of 24 banks of the Cuanza, gained importanceand Portuguesecoming from Brazil settled in the Namibe desert where Mocam2deswas founded. Most of Angolan foreign trade was with Brazil, the slaves being paid for by Braziliancane liquor and gold.

13. Slaverywas abolishedin three phases, spanning over forty years. First, there was the prohibitionof slave exports in 1836, followedby the abolitionof slave trade under the Po.tugueseflag six years later; finally there was the abolitionof slavery itself, in 1878. The prohibitionwas felt as a great loss and in the 1830's the idea of remainingassociated to prosperousBrazil found many supportersin the local 'comprador'class. Nevertheless,the pro-Portuguesefaction won and some effortswere 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 territoryand, until 1915, this product was to be Angola's first export,with yearly averages on the order of 2,000 tons. 11I

C. SETTLEMENTAND CONTRACT LABOR

TerritorialOccupation

14. At the Berlin Conferencein 1885, the principleof effective eccupationwas accepted over the Portugueseidea of priority of discovery. The partitionof Africa imposedobliged Portugal to effectivelyoccupy the territoriesit claimed to have discovered. This led to renewed interestin the explorationand the 'pacification'of the interior,and to a debate over the use of the colonies. The debate was dramatizedby an English Ultimatum in 1890 against the Portugueseidea of linkingAngola and Mozambiqueby land (the so-called 'pinkmap"). In Angola, Portugal had occupied Luanda and its immediatehinterland since 1575, and Benguela and surroundingdistricts since 1617. However, only in the lgth century can the Portuguesepresence be consideredstable in parts of the north (south of the Kingdom of Congo) or on the coast south of Benguela). In 1906, the settledare% refers mostly to t4e zone of influenceof the Benguela railway,built by the Englishwith the purpose of transportingthe minerals from Katanga and the Copperbeltand owned mostly by TanganyikaConcessions. The scant penetrationand its pattern demonstratedthe considerable dependenceof the colony on external factors. Moreover, it suggestedthat after all these centuries,Portugal's colonial policy had been unable to secure an administrativeoccupation comparable with that achieved by the other partners in the Berlin Conference. This explains the statementthat the effectivePortuguese presence was limited to 65 years in about 80 of Angola's territory.12/

11/ Joao Maria Cerqueirad'Azevedo, Subsidios para o 'studo Economicode Angola nos Ultimos Cem Anos (Luanda, 1950).

12/ Gerald J. Bender, Angola Under the Portuguese-The Myth and The Reality, (Berkeley:University of CaliforniaPress, 1978), Chapters 3 and 4. A map of the settled area in 1906 is reproducedin Randles, 7- ANNEXI Page 7 of 24

15. At the end of the First World War, when various military occupa- tion campaignswere in progress in the southern,central, and northeastern parts of the country, the internat.onalprice of rubber fell. This trend continued and, in the 1930's, it forced the disappearanceof rubber from the list of Angolan exports.where coffee already comes first in 1926. During this period of falling export prices, and national humiliationfrom the British ultimatum,some measures of colonialpolicy became relevant, such as the customs restrictionsof 1892, which attemptedto transform Angola into a closed market for Portuguesewines and textiles. Angola would thus be prohibitedfrom manufacturingspirits which had become one of the main imports. In 1906, moreover,the native poll tax was introducedto alleviate the continuingcrisis of the Angolan public financesand facilitatethe recruitmentof forced labor.

16. Simultaneously,important railway lines began to be built, linking the coast to the interiorof the country. In 1909, the Luanda-Malange Railwaywas inaugurated,crossing a large segment of the territorywhere the commercialexchanges and the plantationshad acquired considerable economic importance. The constructionof the Benguela Railway (C.F.B.)was initiatedsix years earlier, though only in the 1930's does it attain the objectiveof reachingthe eastern frontier to serve as the outlet for mining productionfrom the Belgian and Britishpossessions. A third railwaywas to connect the port of Mocamedes to Lubango, where the Portuguesehad establisheda colony since the end of the 19th century. Internationalinveitment in Angola was reflectednot only in its use as a corridor by the BenguelaRailway, but also by investmentsin the mining sector, especiallyin the diamond area of Lunda, where an associationof English, South African, Belgian and Portuguese interestsgave rise to Diamang in 1921. In 1929, the productionof diamondshad reached 250 thousand carats and employed over 6,000 Africans as well as 155 Europeans. First attempts to win petroleumwere made in 1917.

Monetary Reform

17. The negative effects of the Great Depressionon the prices of raw materials, three successivelocust plagues in the 1930's and budget mismanagementcontributed to the colony's economic difficulties. A monetary reform designed to stabilizethe Angolan currencywas introduced in 1926. This was the origin of the wangolar' (which enjoyed fixed parity with the Portugueseescudo) as well as of the OJunta da Moeda de Ang3la' (AngolaMonetary Authority),a GovernmentDepartment controlling the matters dealingwith currencycirculation as well as the managementof the Monetary Reserve Fund. The Authority supplied the colony with the amount of Oangolares0 to cover transfersfrom Portugal as well as Portuguese Escudos in Lisbon to cover transfersfrom Angola. The Bank of Angola began to issue angolaresin 1928.

18. Despite this reform and the fact that the country'sfinances were kept under control until the end of the fifties,monetary difficulties

op. cit. 8 AMNEX I Page 8 of 24 plagued the colonial economy since monetary creationwas directly linked to falling export revenues. The transfersof the settlersto the mother country and the slump in the export business opened a trade balance deficit in 1929, leading to the promulgationof the 'Acto Colonial'in 1931, where the social, economic and financialpolicies of Lisbon for the colonies took constitutionalform. In the face of the persistingcrisis, the Portuguese governmentimposed credit ceilings,set up an Exchange Fund and restricted the transfer of funds, requiringthe surrenderof 75? of export receipts and a strict control of imports. These measureswent against the objective of transformingAngola into a Portuguesesettlement colony. Regarding authorizationfor transferof profits, the restrictionswere less severe, suggestingthat the objectiveof attractingforeign capital was seen as instrumentalin settling the territory. Governmentcontrol, relaxed after the coffee boom in 1946 and again in 1963 when monetary integrationof the so-called "EscudoZonem was introduced,was to return forty years later with the restrictionon payments in 1971. In the meantime,the economic stabilizationand recovery of the colony was initiatedwith the reduction of imports, thus allowing a trade balance surplus during the Second World War.

The Coffee Boom

19. During the war, Portugal increasedits share of Angolan imports from 39? to 65. At the same time, the occupationof land by the settlers increasedrapidly, :uostly in the north. Official statisticsrefer the share of the land controlledby the settlers as having increasedfrom 12 to 4OZ in two years, probably an exaggeration. One of the means used to spread control over land was to demarcatethe estates to encompassAfrican coffee productionas 'naturalgrowth". Productionin 1946 can be consideredthe result of land occupationsat the beginningof the decade, since the coffee trees needed five years before the first harvest. In 1945, diamondswere the principalexport in value terms, but in 1946 despite a 40? increase in diamond exports, coffee exportsbecame the main export, reachingover 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 cultivationfurther, and turned out to be a powerful attractionfor the immigrationof settlersfrom Portugal. The white populationincreased from 44,000 in 1943 to 173,000 in 1960, which togetherwith the 53,000 of mixed race represented5? of the total populationof 4.8 million. In any event, demand for skilled labor in Angola was so strong that, from the mid - fifties, it was no longer necessaryto have a 'letterof appointment", generally issued by the employer in the colony and guaranteeingthat the settler/immigrantcould find work there.

20. Besides coffee,whose share of total exports remainedbetween 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 fortieswere a decade of acceleratedgrowth, due to the favorabletrends in raw material prices, especiallycoffee and cotton. The -9- ANNEX I Page 9 of 24

subsequentstagnation starting in the mid-fiftiescoincides with the fall of raw material prices despite the increasedquantities exported. During the same period, close to one half of importswas accounted for by wines and spirits, textiles,freight vehicles, bulk and work iron, industrial machinery and equipment,and railwaymaterial (Table 2).

21. Angola's principalcustomer in the fiftieswas 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 supplierwas 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 accountingfor about 10X. The predominance of Portugal in Angola's imports,while exacerbatedby the legislation reservingthe Angolan market for certain Portugueseproducts, such as textiles and wines, was not as pronouncedas in other European colonies, perhaps a reflectionof the mother country'srelative underdevelopment.

22. The rise in the value of coffee exports after 1946 helped the Angolan trade balance,which showed surplusesbetween 1950 and 1956, the largest one being recorded in 1953. From 1957 to 1960, the trade balance was in deficit, due to both the temporaryfall in the price of some exports (coffee, sisal and raize), and a sustainedgrowth in imports,mainly of textiles,wines and equipment. Nevertheless,the rate of growth of imports declined sharplyover the period. This sharp drop in the pace of imports did not prevent a seriousexchange crisis. Although some restrictionson the spendingof foreign exchangeearnings had been imposed already in 1955, more drastic restrictivemeasures were imposedby the Lisbon authoritiesin 1959. Residentswere required to surrenderto the territory'sExchange Fund approximately9oZ of foreignexchange earnings,besides adhering to a list of prioritiesfor imports. This situationremained in force until 1963, when a new system of payments came into force in the 'EscudoZone'. Colonial Policy of the 'New State'

23. Integratingthe colonies in a Portugueseeconomic union was one of the objectivesof Salazar's "New State". Indeed, the Colonial Act mentioned the principle of 'naturalsolidarity' between the metropolisand the colonies in article 34. This natural solidaritywas said to be the foundationof the various economies,and stemmed from the 'moral and political links' between the metropolisand the colonies. In the fifties, Portugal exchangedmanufactures for tropicelmaterials with its overseas territories. However, the level of developmentof Portugal and its colonies, implied a pattern of trade for metropolitanPortugal which made it unlikely that the 'EscudoZone' would be able to exercisemonopoly power in internationaltrade, in line with the objectiveof collectiveself reliance desiredby Salazar.

24. The PoliticalConstitution of the PortugueseRepublic was enacted in 1933, but it was not until 1951 that the philosophyof economic integra- tion with the colonieswas fully accepted. Article 34 of the ColonialAct was thus replacedby article 158 of the Constitution,and a paragraphwas - 10 - ANNEX I Page 10 of 24 added which clearly stated the objectiveof national integration:'The economic reorganizationof the overseas territoriesmust integrateitself 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 facilitatedby appropriatemeans, includingthe gradual reductionor eliminationof tariff duties. The same principlewill apply insofar as possible to the circulationof people and capital assets'. In the same statute, the colonieswere renamed 'overseasprovinces' - a traditionallabel which had been abandonedafter the Republican revolution of 1910.

25. At the time, though, Portugueseattempts to establishan economic union with the colonies began to clash with the general European trend toward decolonization. Thus, in 1953, when countrieslike France and England were starting to prepare for the decolonizationof their colonies, Salazar'sgovernment promulgated the Lei Organica do Ultramar (Overseas TerritoriesAct), stating the objectivesof Portuguesepresence as 'exploitingthe resourcesand the peoples' togetherwith 'raisingthe living standardsof the natives within the frameworkof social justice".

26. Steps were thus taken to facilitatetrade between the various Portuguesecustoms territories,so as to move towards a customs union. A decree in March 1957 establishedfree trade among the differentoverseas provinces as far as their domestic productionwas concerned. It was also decided that metropolitanimports 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 Portugalwere generallygranted a 50 percent rate reductionin the tariff of the overseas provinces.

Contract Labor and InternationalFactor Mobility

27. It was thereforein the fifties that the authoritiesin Lisbon createda frameworkthat would justify their presence in African ter- ritories,despite the shifting internationalvalues and the increasing reluctanceof internationalagencies to condone European colonialism. The number of home-based companiesthat began to invest in the colony increased,and many settlerswhose prosperityderived directly or indirectlyfrom the coffee boom starteda considerablenumber of small and medium-sizedcompanies. In all cases the availabilityof local labor was the basic condition,whether by the practice of low wages or by the resort to so-calledcontract labor ('contratados').

28. Manufacturingindustry, very incipientand geared to the local urban population, was based on the refining of sugar, treatment of tobacco, spinning and weaving, soap-makingand fish derivatives(mainly fish-meal). The cement, beer and textile industries(those carrying largestweight in the manufacturingsector), the large agriculturalcompanies and the import-exporttrade were tied to Portuguesecapital, 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 - 11 - ANNEX I Page 11 of 24 mining sector (mainlydiamonds, copper, manganese and iron) and also in some agricultural companies such as Cotonang and SETA which had Belgian/Portuguese and American/Portuguese capital respeXtively. Industrial licensing continued to bar entry to the colonial economy for industriesthat might have generatedcompetition with Portugueseexports into Angola. Hence the Angolan economycontinued to be sustainedby mining and agriculturalactivities.

29. The expansionof the plantationsand the mines and the launching of work on infrastructurecreated a strong demand for labor, in part satisfiedby the methods of recruitmentalready described. More specifically,recruiting officers provided forced labor in the diamond mines and plantations,while police raids provided the labor for public works, especiallythe opening of new roads. The vast majority of the contract labor was recruitedamong the farmersand herdsmen of the central provinces. Prior to the fifties,the number of forced workers is difficult to determine. Recruiterstravelled 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-paymentof taxes and for misdemeanorsto the corruptionof some tribal chiefs. An alternativeform of recruitmentwas through the imprisonment,in the cities, of natives ('indigenas')who were not carrying a valid work permit. The use of forced labor was to eiminish 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 conditionsin farms and mines. This was the first result at the armed struggle that started in 1961.

30. In the fifties, the majority of the indigenouspopulation was employed in agriculture,and the commercialnetwork, which extended from the principalmarkets 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 agriculturepossessed large estates or resided in the settlements. As the name indicates,these were zones in which the settlers' families were fixed, developing the agro-livestock potentialof certain areas of the territory,which had b.en selectedby the central governmentauthorities. The regime of settlementswas intendednot only to provide an incentivefor the immigrationof Portuguesefarmers, but also to rationalizeand improve farmingproduction, bearing in mind the requirementsof the export markets and domesticconsumption (Table 3). The creation of new agriculturalbodies - farm cooperatives- also began to be encouraged. Togetherwith this associativemovement, there was a growing interventionof the Provincial Agricultural Technical services, chiefly in the "campaignsfor the stabilizationof indigenous/itinerant agriculture,with the aim of organizing indigenous rural life, creating a class of small, settledfarmers, which both facilitatedtechnical and social assistanceand protectedthe soil against erosion".

31. The prevailingsocial structurecould be roughly describedin terms of the followingcategories: (a) a dominant class whose representa- tives remained in the colony for the term of their 'servicec'mmissions', -12- - Page 12 of 24 useful even as a means of promotion in metropolitanpublic life (in a sense this was an 'absentee"class, becausemost of its members did not reside in Angola); (b) an upper middle class consistingof residentEuropeans (and their descendants)who became owners of medium-sizedcompanies or attained top positions in business or public administration,thus controllingthe 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 172,000white inhabitants,almost all the 50,000 "assimilated*blacks and nearly all of the 53,000 mixed-racepeople); small proprietors,salaried employeesand petty officialswere 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 race: a large number of white workers having a standard of living comparableto part of the lower middle class, and employed rural workers, entirely black, and with lower wage levels than the urban proletariat;and te)in the four or five cities, and chiefly in Luanda, a kind of 'lumpen-proletariat'became noticeableand included the majority of the black populationwho lived in the 'mucequesasurrounding the capital, as well as white street vendors and under-unemployedworkers.

32. Although official statisticson 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 internalmigrations to the cities (mainlyLuanda). In the civil service, the wage categorieswere practicallythe same as in Portugal, though fringe benefitswere sometimeshigher. Social stratificationroughly 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 unskilledworkers were black. Even jobs of the latter kind were also, to some extent, filled by whites towards the end of the 19609.

Economic Causes of NationalistRebellion

33. In 1960, in the north of the country, the continuingcoffee 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 countrysidewas attributedto the high prices charged by the traders in the hinterlandand the low quality of the products they sold. While the resentmenttowards the bush traderswas cormon in the whole territory,native property rightswere more respectedin the rest of the country than in the coffee growing region. The occupationof land by settlerswas practicedon a smaller scale in the center, and was almost non-existentin the extreme south of the country,where the herdsmen kept possession of their cattle. - 13 - ANNEX I Page 13 of 24

34. Perhaps because of the coffee bioom,but certainlyas a reaction to the drastic increase in the Portuguesepopulation (up 570t from 1950 to 1960 is the coffee district of Uige), political/culturalmovements espousingAfrican nationalismgrew during the early fifties. In 1952, 500 Angolan nationalistssent a petition to the United Nations requestingthe end of Portugueserule. In 1953 the Party for the United Fight of Angolan Africans, was foundedand became the MPLA in 1956. The presidential electionsof 1958 in metropolitanPortugal revealedalso that a number of settlerswere against Salazar, since the oppositioncandidate Delgado is thought to have won in Luanda. The campaign led to the arrest of 57 nationalists(the majority consideredof mixed race) in December 1959. This politicalarrest set a course that would culminatein the beginningof an armed struggle for independencein February-March1961, followedby a generalizedinsurrection in the northern countryside.

35. The lack of organizationand technicalmeans on the part of the northern rebels, their cruel treatmentof the settlersand the prevailing tribalismobstructed the progress of the insurrectionitself. The rebels controlledvarious agriculturaland plantationcommunities in the then district of the Congo, causing damage to equipmentand buildings,but leaving the coffee trees practicallyunscathed. The reaction to the rebels came with a vengeance:between 8,000 and 30,000African Angolanswere killed, the former being the Portugueseofficial figure and the latter being the one the United Nations committeeaccepted. According to the same source, by December 1961, another 150,000 inhabitantsfrom the northern rural areas fled to the Republic of the Congo-Leopoldville.

36. The events of 1961 led to reformistmeasures, supportedby a new reinforcementof the military presence in Angola. In particular,these reforms allowed the access of a greater number of Angolans to secondary education and intermediateposts in public administration as well as the changing of work relations,with the substitutionof the Native Work Code by the Rural Work Code. The resortingto contract labor became more and more sporadic. This contributedtowards the creation of a more modern labor market, despite the limitationderived from the racial compositionof the unskilled labor force. Because a large share of immigrantlabor 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 capacitywere rather small. Only the cultivationof cotton was seriouslyaffected by the armed struggle,especially since its production area - the Cassangebasin - was the scene of serious incidentsin the aftermath of peasant protests. This led to a massive flignt 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 differencewas probably due to the realizationthat the Angolan economy depended much more on the export of coffee than on cotton. As discussedin the following section,as a result of the events of 1961, the Lisbon - 14 - ANNM I Page 14 of 24 authoritiesalso abolishedsome laws and regulations,thus increasingthe number of economic activitiesthe colony could develop; they also improved wage conditionsand created rural markets",where the surplusesof the peasants could be sold in an organizedfashion. These new policies. togetherwith the rising Portugueseimmigration and military contingent stationed in the territory,amounting to over 6000 people, created employmentand increasedoverall purchasing power, laying the basis for the expansionof industrialactivities as well as coffee production.

38. In the sixties,Angolan exports continuedto be dominatedby the coffeeldiamondtandem. Sisal remained the third most importantexport 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, followedby coffee, diamonds and iron ore. Other products carryingweight 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 followingyear until 1972, it was replaced by Portugal,which bought about one third of Angola's exports,both agriculturalproducts and minerals. Portugalwas not always the final destinationthough, since diamondswere re-exportedto the United Kingdom. In 1973, the US would again top the list of countriespurchasing from Angola (with 282), mostly due to oil and coffee exports. Portugal accounted for about one quarter of exports, followedby Canada, Japan, and major European countries.

39. From 1962 onward, the Angolan econow- startedto recover from the 1957-60 exchange crisis as well as from the temporaryfall in the prices of its exports. A comparisonof internationalprice 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 Angolan 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 exceptionof the years 1967 and 1968, as a result of a strong rise in imports of equipmentand motor vehicles). The strengthof the external balance is evident in the data presented in Tables 6 and 7 below.

40. Unlike the early coffee cycle, during which the structureof merchandisetrade seemed to change more on the export than on the import side, a change was noticeablein the compositionof imported goods after 1965. Growing importsof transportequipment, industrial and farming machinery and equipment,raw and worked iron indicatedthe effort to equip the light manufacturingand extractiveindustries as well as the creation of infrastructure,such as roads and other forms of communication.The rising military contingentmay also have helped step up the importationof Portuguesefood and drink products,as well as textiles.

41. Regarding the supplier countries,Portugal remainedat the top of the list even though its share of Angola's importsgradually diminished from 442 in 1961 to 262 in 1973. In 1971, Portugal'sshare 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 - 15 - AXN= I Page 1S of 24

Portuguese consumer goods, a pattern similar to the one which followed the protectionistregime of 1892 can be observed in the structureof trade during the sixties. Despite the increase in volume, Portugal'sshare was decreasing significantly.

A New Colonial Economic Policy

42. As mentioned above, after the events of February 1961, the Lisbon authoritiesfelt the need to reinforcethe Portuguesepresence in the territory. To this end, the Portuguesegovernment adopted a series of measures which stimulated export-led economic development and industrialization in Angola. This was also the policy that the Portuguese governmentwas pursuing for the developmentof the mother country, in the frameworkof the European Free Trade Association (EFTA),of which Portugal was a foundingmember since 1960. At that time, Portugal'saccession to the General Agreementon Tariffs and Trade (GATT) required the creation of an additionalfree trade area with the overseas territories,in such a way as to avoid the applicationof the most favored nation clause to the trade between GATT partners and the Portuguesecolonies.

43. A significant step was taken by a Decree in November 1961 which abolished all barriers to the free circulation of domestic productswithin the various territoriesof the nation. As general economic conditions warranted, capital account liberalizationwas also to be attained. The abolitionof customs duties was to be implementedprogressively, in accordance with the level of imports. Existing quantitativerestrictions, or the introductionof new ones were to be justifiedon grounds of facilitatingthe adaptationof economic activitiesto the new conditionsof competitionor in situationswhere a particularsector was experiencing difficultieswhich threatenedthe economic situationof a region and no other measures could be taken. This Decree also took measures to promote the eliminationof disparitiesbetween legal and administrativesystems, which hindered inter-regionaltrade, as well as the improvementof transportation. Finally, the Decree contemplatedthe liberalizationof exchange controlsbetween territories.

44. Even from a strictlycommercial viewpoint, Portuguese economic integrationhad much weaker effects than the integrationof the metropolitanarea with Europe, includingboth the European Free Trade Associationto which Portugal belonged and the European Community,with which it signed a free trade agreementin 1972. In the fifties, the share of the overseas territoriesin metropolitanPortugal's imports declined while the correspondingshare increasedfor exports. In the sixties, however, both shares declined significantly. In 1972, the share of Europe in metropolitanPortugal's trade reached562 for imports and 62Z for exports, up from 40S in 1954, while the correspondingfigures for shares of all the 'overseasprovinces, were 10X (down from 17? in 1954) and 15? (down from 25Z in 1954). The introductionin 1961 of a free trade area with the overseas territorieswas thereforenot as importanteconomically as it was politically. - 16 - ANNEX I Page 16 of 24

45. Accordingly,an exchange rate union was set up in 1963, which was maintaineduntil 1971. The new system of payments,known as the Escudo Zone, started from the principle that there would be no shortage of foreign exchange in any of the componentparts of the system.Ifthis should occur, the Monetary Fund of the Escudo Zone would intervene,granting credit to the Exchange Fund of the colonial territoryin deficit. For example, an Angolan importerwho purchasedmerchandise from Portugalwould have to pay his debt in 'Angolan'escudos to the Exchange Fund which was managed by the Bank of Angola, which would then automaticallyeffect the transfer,in Portugueseescudos, to the creditor in Portugal.

46. The improvementin the foreign exchange situationthus allowed the liberalizationof payments outsideAngola. The system of designating prioritiesfor transfers,in force since 1955, was abolished. The surplus in the overseas territories'external paymentscontributed to the overall surplus of the "EscudoZone' in the period. Despite the emergence of a growing trade deficit after 1964, invisiblereceipts allowed a surplus on the current account throughoutthe period. Similarly,despite a deficit on capital account between 1963 and 1968, the overseas territoriescontributed to the accumulationof reserves at the Bank of Portugal,a situationnot unlike the Franc Zone during the same period.

47. An 'InvestmentCode' was also enacted in April 1965 to strongly encouragethe flow of foreign capital to Angola. This Code - which also coincidedwith a greater opening of the Portugueseeconomy to foreign investmentfrom other countriesin the Organizationof Economic Cooperation and Development (OECD) - was seen as a signal for the start of the "race for the progress of Angola'. The Lisbon authoritieswanted to be able to count on the military, politicaland economic supportof the major OECD countries. Therefore,they could no longer keep exclusivecontrol of such widespreadnatural resources;it was necessaryto share them. Later in 1965 scheme of 'new industriallicensing, was revoked,cancelling the previous legislationthat prohibited the setting up of new industriesin the colonies,especially textiles.

Coffee-LedIndustrialization

48. These new policies contributedto the year 1965 being a turning point in the growth of the Angolan economy. From a level of about 17Z of gross domestic product in the early sixties,the industrialsector (includingextractive and constructionindustries as well as manufac- turing proper) reached 38Z of GDP in 1970. Metropolitanand foreign capital were concentratedin both the more capital-intensive-xtractive industriessuch as diamonds,oil, iron ore, petroleum derivatives,cement and the more labor-intensiveactivities of the agriculturalsector, such as coffee, cotton, sisal, sugar, tobacco. In addition to these activities, which in one way or another used natural resources,several manufacturing activitieswere created in the sixties,particularly during the second half of the decade, includingchemical products,paper, glass, electric cables, paints and metal containers. - 17 - ANNEXI Page 17 of 24

49. Industrywas very dependenton Portugal from where a high percentage of raw materialsand semi-finished products came. The Portuguese authorities encouraged the processby exemptingthose materials and products from import duties. There were also tax exemptions granted by the Overseas Minister for the new industriesto be created in the colony. These exemptionsand tax incentives allowed the developmentof some industrialzones, 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 protectivecustoms measures against competitiveimports.

50. The sectors of activitythat dominatedlocal industrywere: food and beverages,textiles and tobacco, contributing(in the 1966-71 period) an average of about 542 to the global value of sector output (Table 5). The food and drink industriesalone accountedfor 44Z of total output. Overallmanufacturing industry grew, between 1962 and 1967, at an average annual rate of 15?, and, from 1968 until independence,at a rate of 202. This growth reflectsthe effects of economicmeasures such as the InvestmentCode, new Rules of IndustrialLicensing, dismantling of Customs tariffs, tax exemptions,and investmentin transport infrastructure, adopted in the mid-sixtiesand incorporatedin the Interim DevelopmentPlan (1965-67)and the Third DevelopmentPlan (1968-73).

51. Although Angola had one of largest industrialsectors south of the Sahara, the participationof the manufacturingsector in exports from Angola was weak. As shown in Table S, the average percentageof gross industrialproduction exported was about 20? during the 1966-71 period, the rest being absorbed by the domesticmarket. By 1973, the food and beverage industriesrepresented about 6? of the total export value, the chemical industry about 0,42 and textiles about 6X. With respect to the textile industry,more than half of the value of these exportswas accountedfor by cotton wool for metropolitanPortugal, and the remainderby fabrics and other textile articles exported to Zaire and Sao Tome and Principe, accordingto the Bank of Angola (1973Report). The local textile industry (which had strong competitionfrom Macao) concentratedbasically on seed-removalor ginning and pressing of cotton, spinning,weaving and finishingof cotton, the shreddingof sisal and rope-making. Malange was the main center of the cotton textile industry,with the factoriesof Cotonang and the city's AgriculturalCooperative.

52. In addition to the increasedindustrial activity, large- scale agriculturaland other projectswere also implementedin the sixties and early seventies. The Rural ExtensionMissions were created in 1971, to co-ordinateprojects for the developmentof zones with agricultural potential,inmuch the same way as the settlementscreated in the fifties. Besides the promotionof agro-livestockactivity, these projects were also intended to improve the living conditions of the peasant population. In the Lunda district, the activitiesof Diamangbecame quite significantin the late sixties,when productionreached 2 million carats. About 20,000 people were employed by the company,which also had a dominant role in providing the regiou with infrastructure. - 18 - AM=E I Page 18 of 24

Colonial Finances

53. Angola had its own budget, containingall of the revenues and expendituresauthorized by the Central Government. Expenditureshad to be fully covered by the revenuesobtained from the colony's resources. From the thirties onward, Angola's general budget always showed an overall surplus. However, after 1961, the effort requiredby the colonialwar, which was not entirely supportedby the extraordinarytax for the defense of Angola, caused the budget surplus to drop, and even requiredborrowing at times. The budget structure,which did not change much from 1930 through 1973, included an "ordinarybudget" and an "extraordinary"budget. Ordinary expenditures included civil service and its management. Revenue sources includeddirect and indirecttaxes, taxes on industriessubject to special tax schemes as well as taxes on other activities. Until 1973, the direct taxes were the most importantrevenue source, but after that year the taxation of industriessubject to a special scheme (e.g., oil products) took the lead because of the large increasein oil production. Taxes accountedfor half of revenuesand state property provided about one quarter. The extraordinarybudget includeddevelopment expenditures on social and economic infrastructure. Up to the end of the fifties, these expenditureswere mostly borne by Angola itself in view of the large surplus available. From the sixtieson, extraordinaryexpenditures were mostly financed by loans providedby Portugal as well as shares of Diamang profits, sales of bonds and proceeds from a tax on extraordinaryrents (impostode sobrevalorizacoes).

Money and Bankina

54. The r&pid growth of the Angolan economywas facilitatedby the liberalizedpayments system. Even though the Escudo Zone seemed beneficial to the metropolis (wheremost of Angolan savingswere transferredthrough 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 accumulatedliabilities to the Monetary Fund. Indeed, the liberalizedsystem of paymentswas to be abolishedagain when the financial system was seriously strained by an extraordinary volume of delayed transfers. In November 1971, Lisbon once again introducedlimita- tions with a view to "stoppingthe accumulationof the so-called'delayed transfers'from the province to the metropolis,and trying to create the conditions required for the regularizationof those 'delayedtransfers' (see Table 6 on the balance of payments).

55. The general principlesin the decree which re-imposedexchange restrictionswere the following:a) the limitationof transfersfrom each of the overseas provinces abroad (includingother national territoriesas well as foreign countries)to the extent of the cover obtainedby the same province; and b) the channellingto the officialmarket means of payment which fed the parallel foreign exchangemarkets, to prevent unofficial dealings in escudos or in foreigncurrency. Thus, the colonieswere subject to prior registrationof imports,exports and re-exports,as well as to Ospecialand prior' authorizationof current invisibletransactions, and the import and export of capital. At the time, there was concern in - 19 - ANNEXI Page 19 of 24

Portuguesegovernment circles about the effects of the limits imposedon imports (especiallyAngolan and Mozambiquan)on Portugueseexports, assuming that such limitations"of merchandisefrom the metropolisare reduced to the barest minimum for the realizationof that objective". The list of prioritiesfor the spendingof foreign exchange favored the imnort of equipmentand raw materialsto the detrimentof other current consUier goods. In other words, the exchange systemwhich came into force in 1972 reinforcedthe Code of Investmentof 1965, trying to turn it into a true instrumentof developmentfo. Angola, based on the transformationof agriculturaland mining products.

56. Acceleratedgrowth dating from the early sixtieswas accompanied by a strong money supply increase (about 8431 from 1960 to 1973). During that period, the share of currency fell from 28S in 1960 to 62 in 1973. The high level of banking time depositsare shown in Table 7, as an indicatorof the financialdevelopment experienced by Angola. Another indicatorof financialdevelopment, 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 appearanceof a parallel exchange market where the Portugueseescudo brought 10 to 201 more than the official exchange rate. Moreover,a certain inflexibilityof the system of payments between the two countriesin force since 1963 raised difficulties in obtainingPortuguese escudos in time to meet the growing demand due to the accelerationof economic growth.

57. Another indicationof its financialdevelopment is the consider- able 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 Industrial, 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 associationof Banco Totta and Standard Bank of England; as well as Banco Inter-unidoan associationof Banco Espirito Santo and The First National City Bank). In addition to the commercial banks, special investmentbanks also operated in Angola, mostly engaged in credit operationscovering real estate, industry,agriculture and cattle- breeding. These included Institutode Credito de Angola. Banco de Pomento Nacional,and Caixa de CreditoAgropecuario.

The Ori2ins 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 searchinghad begun much earlier. In 1952, the Ministry of Overseas Colonieshad been autho- rized to sign a mining concession with Companhia de Combustiveisdo Lobito (Carbonang). Carbonang establishedthe Missao de Pesquisasde Petroleo (Petrofina,which began working in a coastal region between the rivers Kwanza and Zaire. In 1955, oil was discoveredin a region near Luanda called Benfica. Oil extractionbegan in 1958, in small quantities. Only after 1968 did oil become noticeable in the list of Angolan exports,with 0.1$ of the total value of exports. In the followingyears, though, oil exports increased, rapidly becoming one of the key exported products. In - 20 - Am=A I Page 20 of 24

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, fishmealand corn. As of the end of 1973, there were four companieswith a concessionfor search and exploration,the most importantbeing the Cabinda Gulf Oil Company (CABGOC),a subsidiaryof Gulf-Oil.

A FraRile Pattern of Growth

59. Despite the limitationsof the data, the output figures reported in Table 8 show a pattern of acceleratedoutput growth in the mid to late sixties,which becomes increasinglyinflationary in the last years of the colonial period. The effect of the governmentbudget on the one hand and external constraintson the other, on this pattern of growth are illustratedin Table 8. Throughoutthe period, private savingsexceed private investment,the differencefluctuating from 2S to 7Z. This is consistentwith accelerationof growth in the mid to late sixties,when the new colonial policy began to have a positive effect on industrialization, and induced greater investmentopportunities. Indeed, the decompositionof this differencebetween public dissavingand foreign investmentconfirms that growth acceleratedin the late sixties,inducing an overall budget deficit of 5S of GDP in 1971, whereas in the late fifties and early sixties the deficitwas less than 22.

60. To understandAngolan developmentin the late colonialperiod, it is importantto examine relativeprice movements,as suggestedby the ratio of output deflatorsin Portugal and the United States and in Angola, given that the nominal effectiveexchange rate measured with equal shares for the two countries remained fixed until 1971, and only registereda slight revaluationin 1971 and 1973. A real devaluationof about 6Z over the second half of the fifties is evident, exactly offset by a real revaluation over the second half of the sixties,and stabilityof the real exchange rate in between. In the early seventies,however, there was a change in the macroeconomicbalance, with the savings/investmentgap disappearingin 1973, and a real revaluationof 20? developingbetween 1971 and 1973, and of 25Z between 1973 and 1975. It is clear that the extraordinary improvementin the terms of trade may make Angola in the early seventies another example of the so-calledDutch disease, observed in many developing countries,whereby manufacturingis discouragedand loses competitiveness due to the export of mineral resoturces.

61. The real appreciationof the Angolan currency also appears to be a strong reason to doubt that the coffee-ledindustrialization could ever have turned colonial Angola into a newly-industrializing country, even without strong protective barriers. The income elasticity of imports was originallyclose to 2, but it was negative in 1972 - a consequenceof the change in the payments regime - and fell below 1 in 1973. A comparisonof receipts from trade taxes and imports does not suggestan increase in protection,but the elasticityremains about 1.5, suggestingthat the level might be considerablein light of the free-tradeobjective. In any event, given the availableevidence, the demise of coffee-ledindustrialization was due largely to oil and exchange rate appreciationrather than changes - 21 -

Page 21 of 24 in tariffs, given that the changes in paymcnts regime implied stricter exchange controls.

62. The oil boom thus obscured the fragilityof the industrialization pattern brought about by the combinationof primary product exports and a rising urban population,increasingly made up of soldiers,as well as a growing group of settlersand mixed groups,with no political allegianceto 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-SaharanAfrica, it masks large discrepancies between the income of the white and lassimilado* population and the remaining90S. Per capita income of the black populationwas less than 1OX of averagewhite and "assimilado'incomes (thoughthere were significantvariations in the latter category). In addition to this perverse pattern of income distribution,education and health standards did not significantlydiffer from the ones observed in African countries with lower incomes per head. This suggests that, whatever the effect of colonial rule in bringingAngola to the middle-incomelevel in the early seventies,it did not bring higher socialwelfare at the time of independence (See Table 9 for some Angolan 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. ECONOMYAND SOCIETYAT 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.

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 of staples and other essential comodities. The muceque merchants were a symbol of colonial oppression, which was - 22 - ANXEt I Page 22 of 24 reinforcedevery day since the shops made evidenthow weak the purchasing power of black familieswas. Customersalso found falsifiedproducts, weighing and measuring frauds as well as threateningand racist behavior. Among whites, the muceque business was seen as the result either of the lack of skill or capital to set up another comnmercialactivity. The muceque merchants and, to a lesser extent, the traders in the bush, were led to exploit all the opportunitiesfor 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 resentmentagainst these merchantsmade them a logical target for anti-colonialfeelings among the population.

65. The bush merchantswere not only devoted to sell but also to buy products from peasants and re-sell them to wholesalers. These dealerswent out of business later than the muceque dealersdid, and rarely as a result of direct violence upon them. Most fled when overall village safety was at stake or the threat of agitationbecame intense. When these two groups of merchants vanished,a source of social tension and occasionalracial conflict ended but a serious problem came to the fore: the supply and distributionchannels vanished and no alternativearrangements were in place. The lack of internal trade activity,together with the existing military and politicalconditions created an atmosphera) If the colonial economywas first hit by the deteriorationof foreign trade and commercialand financialactivities, the entire colonial society quickly collapsedafter civil rights were restored for the whole population. People -2spondedin a way that seemed to reflect the importanceof their roots in the country:most of the adults made plans to leave while many of their grown childrenborn in Angola, mixed as well as white, initially chose to stay. Those plans notwithstanding,a massive exodus of the Portuguesepopulation began.

66. Beginningin the last quarter of 1974, over-invoicedgoods began to be suppliedagainst import contracts,as a way to smuggleout foreign currency, further reducing the quantity of goods imported,since prices had also increasedsharply in the wake of the oil crisis. The production stoppagesalso explainwhy 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 commercialvehicles dropped from 38? in 1970 to 102 during the same period. Value figures reported in the 1974 Report of the Bank of Angola show a 15t increase in 1971, no change in 1972173and a drop of 50? in 1974. For export trade, due to a terms of trade improvementof about 751 impliedby the oil price rises, quantitieswere slightlyreduced but values almost doubled.

67. In contrast to most of the colonialperiod, on the eve of independence, the financial situation of the country was excellent. However, the economy was quickly disintegrating, with the collapse of distributionnetworks and the subsequentfall in production in 1975. Against the backgroundof declines of 30? in economic activity and even higher figures for exports, small industry geared to the domestic market was temporarily stimulated by wage increasesin 1974. According to the - 23 - AM Page 23 of 24 booklet of official statisticsfor 1974. food industriesincreased output by 25Z and textile industriesincreased by over 402.

68. After the mid-1974 cease-fireagreements with the Portuguese,an intense social and politicalupheaval, soon to have significantmilitary consequ-!lces,was felt throughoutthe country,but mostly in Luanda. At year-end, the Alvor agreement,between the three parties recognizedby the colonial authority,namely the PopularMovement for the Liberationof Angola (MPLA),the National Front for the Liberationof Angola (FNLA)and the NationalUnion for the Total Independenceof Angola (UNITA)established the date of independenceas November 11th, 1975 and determinedthe conditionsfor the transitiongovernment. It was formed by an equal number of Ministers from each one of the three Movementsas well as from the Por- tugueseGovernment. A triumvirateperformed the functionsof Prime Minister accordingto a monthly rotation. The PortugueseArmy as well as armed people attached to the three Movements formed the Mixed Armed Force of Angola.

69. Only two months after the transitiongovernment was sworn in. though, new encounterstook place between the MPLA and FULA, 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 governmentwas almost paralysed,a reconciliationattempt took place in Nakuru, Kenya, resultingin a protocol signed by the three different parties. However, this protocol did not last longer than a few weeks and was followedby open war between the liberationmovements, this time involvingUNITA as well. In August 1975, the Angolan territorywas divided into three zones, with Luanda held by the MPLA and the PortugueseArmy.

70. A short while after the transitiongovernment began, the Minister of the Economy, who had been selectedby the Portuguese,submitted an Economic Programu for acceleratedgrowth based on the existing infrastruc- ture and on the production levels obtainedbefore the Revolution. A reductionin foreigndependence and a better distributionof resourceswere other objectivesincluded in the developmentpolicy recommendedby the transitiongovernment. 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 possibilityof carrying out electionsand forming a stable government. At the same time, it was necessary that most of the technicaland professionallabor force remain in Angola. As none of those conditionswere met, the program did not begin to be implemented.

71. When shortlyafter the cease-fireof Nakuru, violence resumed, there was a sudden change in the attitudeof the Portuguese. Very quickly,nearly all farms were abandonednot only by the farmers themselves but also by workers who had no pay and fearedmilitary attacks. The same applied to most of the small and middle-sizedindustries, while commercial activity in towns was mostly confined to drawing down inventories. With the interruptionin supplies,and the massive flight of Portugueseowners and technicians,together with the paralysisof most banks, Angolan - 24 - AMNE I Page 24 of 24 industry suffered a devastatingblow from which it has not yet recovered. The same characteristicsmanifested themselves in constructionactivity, which was already in recession. The exodus of the Portuguese,both from public and private managementand other technicalactivities, created an enormous vacuum, since an insignificantnumber of Angolans had the chance to get proper skills, and some of those who did also left the country.

72. As the colonial administrationceased to functionwithout being replacedby any of the liberationmovements, taxes were not collectedand maintenanceof infrastructureceased. Large businesses(commercial, agriculturalor mining) kept their local managementbut limited their activitiesas much as possible to a mere presence. For securityreasons, even oil productionwas suspendedfor a few months. As far as transporta- tion was concerned,the Luanda airport and the seaportsoperated under top priority of evacuatingthe Portuguesepeople and their belongings. It is estimated that Angola lost by destructionor smuggling752 of its stock of trucks,which was about 27,000 vehicles. Finally as a result of the country'sdivision into three warring zones, any regular long distance communications,including postal services,were suspended.

73. 'WhenLuanda 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 designatedas IndependenceDay, the colonial period ended and all the conditionsfor a protractedeconomic and social crisis were in place. - 24a -

ANNEXI

Table 1.1 ANGOLA ------

PRINCIPAL EXPORTS (Z), 1950-1973

Year Coffee diamonds 0i1 Sisal Other

1950 34.0 9.0 0.0 9.0 48.0 1951 48.0 7.0 0.0 10.0 35.0 1952 41.0 11.0 0.0 10.0 38.0 1953 53.0 10.0 0.0 5.0 32.0 1954 44.0 12.0 0.0 6.0 38.0 1955 44.0 12.0 0.0 7.0 37.0 1956 47.0 10.0 0.0 6.0 37.0 1957 42.0 13.0 0.0 6.0 39.0 1958 41.0 15.0 0.0 6.0 38.0 1959 39.0 17.0 0.0 8.0 36.0 1960 35.0 14.0 0.0 11.0 40.0 1961 36.0 17.0 0.0 8.0 39.0 1962 44.0 13.0 0.0 10.0 33.0 1963 40.0 16.0 0.0 12.0 32.0 1964 49.0 13.0 0.0 8.0 30.0 1965 47.0 16.0 0.0 5.0 32.0 1966 48.0 18.0 0.0 5.0 29.0 1967 52.0 18.0 0.0 3.0 27.0 1968 45.0 17.0 1.0 3.0 34.0 1969 34.0 20.0 5.0 2.0 39.0 1970 32.0 19.0 11.0 2.0 36.0 1971 33.0 13.0 18.0 2.0 34.0 1972 28.0 11.0 25.0 2.0 34.0 1913 26.0 10.0 30.0 2.0 32.0

Sources Bank of Angola, Annual Reports - 24b -

ANNEX I

Table I 2

ANCOLA

MAJORIMPORTS, 1952 - 73 ______.___

Goods 1952 1961 1968 1973 ____ b------

Fabrics 14 11 6 5

Wines and spirits 10 11 6 3

Vehicles and accessories 7 6 12 11

Iron works and bar 6 8 10 8

Railroad tracks and other materials 4 13 - -

Industrial machinery and appliances 3 2 7 13

Gasoline and fuel oil 4 4 2 3

Other Imports 52 45 57 57

TOTAL 100 100 100 100

SOURCEs Estatisticas Industriais 4* Direccao dos Servicos de Estatisticas, Luanda 1974. - 24c -

AM___ I

Table 1.3

ANGOLA

PRODUCTION OF MAJOR AGRICULTURALPRODUCTS (1952-1973)

(thousandtons)

ITEMS 1952 1961 1968 1973

Cotton seed 21 13 41 79

Coffee (Rob./Arabic&) 51 68 198 225

Manioc - - - 1100

Corn (b) 70 150 142 300

Sisal 2S 59 58 60

Sugar cane - 643 69 967

Palm-oil (a) 20 47 48

------(a) Estimates (b) Acquisitionsby *GrImLo de MLlho do Ultramare

SOURCEZ Relat6rioe Contas do Banco de Angola - 24d - AMNE I

ANGOLA Table 1.4

POPULATIONAND GDP BY TYPZ OF ACTSVITY (2)

POPULATION PRODUCTION (GDP)

BRANC9ES 1960 1970 1966 1970 OF ------ACTIMVTY (1) (2) (3)

PRIMRY SECTOR: 83.0 76.0 32.0 32.0 23.0 (Agric., Forestry and Livestock)

SECONDARY SECTOR: 14.0 11.0 38.0 14.0 21.0 (Mining. Manufacturing and Construction)

TERTIARY SECTORs 3.0 13.0 30.0 54.0 56.0 (Transportation, Services and Public Administration) e------SOURCE: (1) Adapted from "La Guerre en Angolal, Mario de Andrade and Marc Olivier, Paris: Maspero, 1971;

(2) GDP is from a sample of 80 of output reported in 'Servindoo futuro de Angola", Costa Oliveira, Luanda, 1972.

(3) GDP includes non Monetary Flows (about 201) which are all ascribed to agriculture, according to estimates in IV Plano de Fomento. - 24e -

A=NNX I

SableIS

ANGOLA

MANUFACTURINGOUTPUT BY MAJOR INDUSTRY GROUP, 1966-70

(PERCENTAGES)

ITEMS 1966 1967 1968 1969 1970 __._____ ------

Food and drinks 46 46 45 42 43

Fabricslshoes 10 10 10 10 10

Chemical and oil products 19 15 15 16 14

Ron metal mineral 8 7 7 8 7

Metallurgical products 2 2 3 3 S Machinery 1 6 5 6 6 and equipment Others 14 14 15 15 15

Total 100 100 100 100 100 Rate of growth of Total - 26 22 19 17

SHARI OF ZXPORTSI 20 22 21 21 18 -e------…------

SOURCE: EstatisticasIndustriais e Direccaodos Servicosde Estatistica(Luanda 1974). Share of exportable production adapted from IV Plano de Fomento(1974-79), vol. II and Relatorioe Contasdo Banco de Angola. TIM I T 1.

A1AU3 OF PAYMT3 (155-1907)

1956 (c) 19o (e) 195 (b) 1l07lc) 107 (5) ablItCreit Bela.. Debit CreditBalance btt Creit Bale...Debt CreditSBenc Debit Creit Salea.. h Criet Ao t SoMlS. 2U J1 8810 M -227 7270 77 03 1SM 11 -168 15Ul4 17107 1C83 ) ercaudise ...... 1743 23 M 2411 2184 473 46 6 206 11388 16 -222t 12 1447 1175

b) bvIIbl Trade...... 9 214 -701 2414 284 426 210 180 537 O 111M 49212 Towtri trIv.Tramsfors 4109 21 -41 675 *1 -704 679 so 4M2 10 07 -?0 Trom.rtree . 42 113 70 16 lS 094 881 8on 57 116 1274 11U0 Capita g vesme. .. 10 118 -45 M -18 501 84 -407 216 12 708 1 -755 (leoledlgofficial) 84 U -20 Sl 140 158 1130 I04 701 3 118$ 426M

2. CepitelFlom...... - M o $59 C2 in No 07 70 I51 64 61 8. Officlal Re_eve .... . 1743 21 -79 81 8149 107 705 342 -7 14700 12963 13 1741 17717 -80

SOWCEt Citedby W. Merqwu Is Problemee o le.eevivstkoel.o de Apple* 15 lb)Il plea.4 F _set(1858-7) (0 R.lr. * Conse do Seon. de _lsie 249

-- ~ ~~~~~~~~~~~~~~~~~~~- 24g--- - ANNE I

--- new---- Table I.7

ANGOLA

MOVETY DEVLOPMINT, 1960-73

(PERCENTAGES)

ITEM 1960 1965 1970 1971 1973

Time DepositsuM2 1.0 4.0 19.8 21.2 24.3

)A21GDP 30.5 35.7 50.5 59.2 56.8

Sources Adapted from olelatorio e Contas do Sanco de Angola." - 24h ANNEX I ANGOLA Table 1.8

GROSS DOMESTIC PRODUCTS, 1953-73

(IMLLION ESCuD0S)

CURRMXT YEAR PRICES 1963 PRSCES

1953 (1) 9C78 9759 1961 (2) 12665 13890 1963 (2) 14820 14820 1965 (2) 19200 17167 1967 (2) 24633 19829 1969 (3) 33676 24042 1971 (4) 42078 27196 1973 (4) 58707 29391

SOURCE: (1) Adapted from CIII Plano do Fomento: (1968-73): (2) Gathered from Estimativas Abreviadas do wendiento Mationcal do UMtramar Portugoss,MERNU, Lisboa, 1969; (3) Gathered from Oservindoo fPturo de Ansola', Costa Oliveira, Luanda, 1972; (4) Gathered fram WorM Tables, Vol. I-Economic Data; - 241 - ANNEX I ---_ _---_ Table 1 9

ANGOLA

SELECTED SOCIAL INDICATORS, MID-1970S

POPULATION

Total (1975; in thousand) 6,687.1 Annual Growth Rate (1970-75; percent) 2.5 Urban Share (19751 percent) 17.8

GNP per capita (1975; US$) 404.0

EDUCATION Adult literacy rate (19701 percent) 7.6 Primary enrollment rate (1970) 59.0 Secondary enrollmeat rate (1970) 7.0 Primary Pupil Teacher Ratio (1970) 44.0

EEALTHAND NUT UTION Infant Mortality rate (1975; per thousand) 166.6 Life Expectancy (1975; years) 39.0 Population per physician (1970) 9130.0 Calorie Supply per capita (1975; percentage of requirements) 80.2

Sources World Bank, EDP date files - 25 -

REPO_TS

Anuarios Estatistatos de Antola (1952 to 1965)

EstlmativasAbreviadas do RendimentoNacional do Angola do Ultramar Portuaues,Lisbons Miasao de Estudo do RendimentoNacional do Ultramar Portugues (HERNC), 1969

InformseaooEstatisticao,Instituto Nacional de Estatisticade Angola (1970 to 1974)

Planos do Fomanto ti Angola (1g, 2g, 3o e 4g)

Relatorio o Contas do Banco de Angola (1953 to 1974)

Relatoriosda SecretariaProvincial de Economia. 1962-68and 1972, Dtreccao Provincial dos Servicos de Economia de Angola

BOOKSAND ARTICLES

Andrade, Mario and Olivier, Marc., La Guerre eo Anola, Paris: Ed.?. Maspero - Cahiers libres, 1971

Bender, Gerald J., Anmola Under the Portugese - The Myth and the Reality, (Berkeley:University of CaliforniaPress, 1978)

Bhagavan,M.R., Antola's PoliticalEconomy 1875-85 (Uppsala, ScandinavianInstitute of African Studies, 1986)

Bhagavan, 4.R.,Prospects for SocialistIndustrialixation, Uppsala, Scandianivan Institute of African Studies, 1986)

Birmingham,D., Trade and Conflict in Anaola (1483-1790). Oxford: ClarendonPress, 1966

I Birmingham,D. and Martin, P.M. History of Central Africa, Londons Longman, 1983

Carreira,Antonio, Angola. da escravantanaao trabalho livro, Lisbont Ed. Arcadia, 1973

Castro, Armando, 0 Sistema Colonlal Poreu_uesem Africa, Lisbon: Ed. Caminho, 1978

Cerquoira d'Azovendo,Joao Maria, Subsidios iara o Estado Economrico de Antola nos Ultimos Com Anso, Luanda, 1950

Comte, Phillippe,Lhabolition du travail force en Afri_ue Portutaise, policoplado,*/d

Costa Oliveira, Jose Eduardo, Servindo o Futuro do Antola, Luanda, 1972 - 26 -

Delgado, Ralph, Historia do Anaola, Lisbons Ed. do Banco do Angola

Dilolowa, Carlos R., Contribuicaoa Histgria Economicsde Angola, Luanda: I.N.A., 1978

Duffy, James, A Queation of Slaves, Oxfords ClarendonPress, 1966

Estermann,Carlos, Etnoarafiado Antola (Sudoestse Centro), Lisbon: Institutode InvestigacaoCientifica Tropical (I.I.C.T.)

Ferreira,Eduardo de Sousa, Asiectos do ColonialismoPortuRues, Lisbons Soara Nova, 1974

Founou, Bernard, Cours sur le Developpementde l'Afriuue- Amorce du Sous-develoDwmentsLa Traite Neariere.ouelaues donnees chiffrees, Institut Africain de Developpement ?conomique et de Planification(IADEP) - Dakar, March 1979

Goncalves, Antonio C. KAnLo - Le Lignage contre l'Etat, I.I.C.T. e Univ. de Evora, 1985

Goncalvos, Jose, Le Develoywmentdu CapitalismeColonial en Angola, IADEP. Dakar, 1973

Goncalvos, Jose, Sobre a Economia Colonial de Angola, draft, Centro de Socio-Econoamia(CSE)II.I.C.T., Lisbon, November 1987

Guerra, H., Angola. EstruturaEconomica e Classes Sociais, Luanda, 1974

Ouimaraos, A., Uma Correnie do ColonialismoPortugues, Livros Horizonte, 1984

Henderson,Lawrence W., Antola: Five Centuries of Conflict (Ithaca, Cornell UniversityPress, 1979)

Historia de Antola, Rep. Popular de Angola, mimeo, sid

* Hodges, Tony, Angola to the 1990ss The Potentialfor Recovery (London,The Economist IntelligenceUnit, 1987)

Kaplan, Irving (ed.),Angola: A Country Study (Washington,American UniversityArea Handbook Series, 1979)

Kitchen, Helen (ed.),Angola. Mozambieue and the West (New York, Praeger, 1987)

Klein, Herbert, 'The PortuteseSlave Trade from Ancola in the 18th Century".Journal of Economic History, Dec. 1972

Macedo, Jorge Braga de, Notas sobre a Historia Economicado Angola, mimeo, Luanda: CCFM , 1975

Macedo, Jorge Braga de, Colonial Develoymentof Antola: The rise gad fall of a South Atlantic link?, mimeo, Yale University,March 1978 - 27 -

Macedo, Jorge Braga de; Cristina Corado and Manuel Porto, the timins and seouencina of trade liberalizationevisodos in Portuaal,draft, Country Policy Department,The World Bank

Macedo, Jorge Braga de, "CollectivePegging to a Single Currency: The West African Monetary Union' in Economic Adjustment and Exchanae Rates in Developint Countries,ed. by SebastianEdwards and Lisquat Ahamed, NBER, the UniversityChicago Press, 1986

Macedo, Jorge Braga de. Inter_endenciaEconomica. Sistema M.onetario Internacionale IntegracaoPertuseuesa, ed. Banco de Fomento Nacional, Lisbon, 1977

Macedo, Jose, Autonomia de Angola, Lisbon, 1910

Marcum, John, The Antolan Revolutions The Anatomy of an Explosion (1950-62), Cambridge, MA: MIT Press, 1969) and The Antolan Revolution: Volume Two - Exile Politics and GuerillaWarfare (1962-76),(Cambridge, MA: MIT Press, 1978)

Martin, Ph-'lis, M., HistoricalDictionary of Anaola, Metuchen, N.J., The ScarecrowPress Inc., 1980

Memoria a respeitodos eacravos,Communicacao em 1973, reeditadapor Cadernos 'Homen e Sociedade",Porto: Pub. Escorpiao,1977

Mendes, A., 0 trabalho assalariadoem Angola, Lisbons I.S.C.S.P.U., 1966

Randless,W.G.L., L9Ancien Rovaume du Konto des orizines a Ia fin du XIX siecle, Paris: Ed. Mouton, 1968

Redianha,Jose, Distribuicao.Etuica de An ola, Luandat Centro de Informacao e Turismo de Angola (C.I.T.A.),1971

Santos, Fernando,B., Antola na hora dramaticada descolonizacao, Lisbon: Ed. Prolo, 1975

Smith, Cervase C., The Third PortugeseEmuire (1825-1975).a Study in Economic Imperialism,Manchester University, 1986

Somerville,K., Antola. Politics,Economics and Society, Londont Frances Pinter; Colorado:Lynne Rienner Inc., 1968 - 28 - ANNE It Page I of 2

THE ANGOLAN ECONOMYIN COMPARATIVEPERSPECTIVE

1. This Aniex presents some comparisonsbetween the social and economic conditionsof Angola and those of other countries in sub-SaharanAfrica. Such comparisonsare based on statisticaldata which are of especiallypoor qualityand should thereforebe viewed cautiously.1I Nevertheless,they can provide a useful general portrait of Angola's economic and social developmentin comparative perspective.

2. Social conditionsin 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 61 in low income countriesand an average of 50 in sub-Saharan countries. Related social indicatorsalso place Angola in the lower range of low-incomecountries. It is estimatedthat in 1985, 160 infants out of 1,000 born in Angola died before reaching one year of age. This compareswith an average of 69 for low-income countriesand an average of 113 for sub-Saharan Africa.

3. Indicatorsof health conditionsalso 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 estimatedpopulation of 15,521 per physician in Angola in 1985 compareswith an average of 5,410 for low-income countries (1984 data), and 23,760 for sub-SaharanAfrica (1984 data).

4. While indicatorsof social conditionsin Angola place it in the lower range of low-incomecountries, 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 1987 Angolan per capita GNP was equivalentto US$537. This compares to a 1987 average of US$290 for low-incomecountries, US$330 for sub-SaharanAfrican countries,and US$1200 for lower middle-incomecountries.

5. The structureof productionin Angola differs from the average for sub-SaharanAfrica in that agricultureand fisheries contribute a significantly smaller share of output. For example, from 1980-87, 21.0S of Angolan GDP at 1980 official prices came from agricultureand fisheries,44.7? from industry, and 34.3? from services. This compares to a 1987 average in Sub-SaharanAfrica of 33Z from agricultureand fisheries,28? from industry,and 40? from services. The difference is explainedmainly by the impact of the war on rural areas and by the large share of oil output in Angolan GDP.

11 In the intercountrycomparisons that follow, data for countries other than Angola are from the World Bank's World Develonment Report 1989. (OxfordUniversity Press% 1989), and World Develooment ReDort 1987 (OxfordUniversity Presss 1987). - 29 - AM= Page 2 of 2

6. The structureof aggregatedemand in Angola is much more oriented toward governmentconsumption and away from private consumptionin comparisonwith most other countries in sub-Saharan Africa. From 1982-87, government consumption in Angola averaged 30S of GDP, private consumption averaged 522, gross domestic investment averaged 17?, and exports of goods and non factor services averaged 42?. This compares with a 1987 average for Sub-Saharan Africa of 15 for governmentconsumption. 72? for private consumption, 16Z for gross domestic investment,and 252 for exports of goods and nonfactorservices. The comparativelylarge weight of government consumption reflects mainly the burden of var expenditureson the budget. In Angola, defense accountedfor almost 44S of recurrentexpenditure in 1984-87. In addition,large expendituresare incurred for military equipment. In sub-Saharan Africa, defense expenditures averaged 11.2? of total central government expenditure 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 40? and 60? since fluctuations in oil prices introducea strong elementof instabilityin the budget. On the other hand, non-oil taxes are relativelylow, averaging10? of non-oil GDP in 1985-87. In sub-SaharanAfrica, the average ratio of taxes to GNP was 171 in 1985.

8. The Angolan budget deficit, at 8? of GNP in 1985-87, is more than twice as large as the average for sub-SaharanAfrica (3.3X of GNP in 1985). The budget deficit has been a major cause of the rapid growth of the broadly definedmoney stock in Angola,which has averaged 172 annually from 1982 to 1988. In Angola, this growth in the money supply did not result in open inflationin the official market because of tight and pervasiveprice controls and the fixed exchange rate, which at present is grossly overvalued. However, strong repressedinflationary pressuresare evident in Angola in the extreme scarcitiesof goods offered at official prices and in the very large differencesbetween prices in the official and parallelmarkets (which tend to range between 1 to 20 and 1 to 60).

9. The structureof Angolan merchandiseexports is very unbalanced,due to the extreme dependenceon petroleumexports. In Angola, fuel and mineral exports comprise more than 90? of total exports. Diamonds account for most of the rest. The average sub-SaharanAfrican country derived 48Z of its merchandiseexport earnings from fuels, minerals, and metals, and 40? from other primary commodities. The only sub-Saharan African countries which share Angola's extremely unbalanced dependenceon the output of one sector are Zambia and Nigerla, which derive 93? and 91? respectivelyof their export earnings from miteral exports (copperand oil).

10. Angola's holdings of gross internationalreserves are characterlstic of the low levels generally maintained by low and lower-middle income countries. Angola's reserve holdings from 1985-88 covered on average about 1.2 months of imports. This compareswith a 1987 average of 2.1 motths coverage for sub-Saharan African countries. In the area of external debt, Angola's situationis also fairly characteristicof other sub-SaharanAfrican countries. In 1987, Angola's external debt was about 115 percent of GNP. In 1988, its external debt was 244 percent of export earnings. Fully servicingits debt in 1988 would have required almost half of Angola's export earnings. On average, sub-Saharan African external public debt was 81 percent of GNP in 1987. Debt as a percentageof export earnings averaged 330 percer.t. The average ration of scheduleddebt service to goods and service exportswas 61 percent. - 30 - ANNRX III PAGE 1 of 2

GOVERNMENTINSTITUTIONS

General AsDects

1. The Popular Movement-forthe Liberationof Angola, MPLA, was founded in December 1956 with the objectiveof liberatingthe country ..om colonial rule. The armed struggle against the Portuguesecolonial regime began in February 1961. After a period of struggleswith other rival liberationmovements in 1975, the MPLA assumed control of the Governmentwhen Independencewas proclaimedin 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 "leadingforce of the Angolan State and Society,'organized and acting 'accordingto the principlesof DemocraticCentralism' and having as its strategicobjective the constructionof socialism. Party structuresare visible in all aspects of the country'ssocial, economic and political activity. The MPLA-PT is associatedin particularwith all major decisions concerningthe country'seconomic management. In addition to guiding the activitiesof administrativedepartmevts, enterprises and trade unions,which are the three focal points of the country'seconomic activity,the Party alco defines basic principlesand policies. The ConstitutionalLaw reinforcesthe dominantposition of the MPLA-PT, particularlythrough Article 2 which gives the Party *the economic and social leadershipof the State in its efforts to constructa SocialistSociety.'

The Organizationof the MPLA-PT

3. The MPL-PT's higher organs area

(i) The Congress, at the national level,whose functionsinclude electing the Presidentof the Party, determiningthe orientationof internal and externalpolicy;

(ii) the Conference,held at national,provincial, municipal and communal levels,which is responsiblefor orientingregional activities accordingto the decisionsof the Congress and of other central organs of the Party;

(iii) the Assembly of Members, held at the level of base organizations, which are structuredin cells and committeesformed in work places, residentialunits, etc., and are grouped spatiallywithin the country'sadministrative framework, namely communes,municipalities and provinces;

(iv) the Central Committee,which ensures the directionof the Party in the periods between the Congresses,and the PoliticalBureau, which directs politicalactivity between Central Committeemeetings; and

(v) the President of the MPLA-PT,who is a full member of the Central Committeeand of the PoliticalBureau, elected by the Congress. The Presidentof the People's Republic of Angola is the Presidentof the MPLA-PT. - 31 - Page 2 of 2

4. The MPLA-PT guides and directs the work of popular and social organizations, such as the National Union of AngolanWorkers (UNTA).which is a non-Party organization. The Party's orientationsare transmittedthrough the influenceof MPLA-PT members within this organization.

General OrganizationalAspects of the State

5. Two organizationcharts are attached to this Annex, one showing the relationsbetween governmentand party organs (Chart 1) and the other showingthe main structureof the Government(Chart 2). As indicatedin Chart I, each of the designated"spheres, of governmentis linked to a correspondingparty unit. The People's Assembly is Angola's supremeorgan of State power and it normallymeets twice a year. Law 2/86 introducedimportant modifications in government structure. New changes were introducedat the beginningof 1989. The Head of State is also the Head of the government.

6. Two other organs of the State apparatusshould be noted, the Council of Ministers and the Council of Defeuse and Security. The Council of Ministershas the traditionalfunctions of organizing,directing and coordinatingall the ministries'activities. It is also chargedwith preparingthe National Plan and the General State Budget for discussionand approvalby the People'sAssembly. The Council of Defense and Securitywas created in 1984 and assumes the functions of the Council of Ministers in the periodsbetween meetings of the latter. It is presided by the Presidentand constitutedby the Ministers of Defense, Interior and Security,the three Ministersof State and others. Since it is a more flexible body than the Council of Ministers,it has been particularlyimportant in making decisions regardingeconomic policy.

7. Territorially,of Angola is divided for politicaland administrative purposes into provinces,municipalities, communes, neighborhoods and settlements. The People's Assembliesare the highest organs of State power at each level of the territorialdivision of the country. The executiveorgans of these Assemblies are the Provincial, Municipal and Communal Commisariats. The Commissariatsare directed by a Commissarwho is the representativeof the Presidentand of the Governmentat the provinciallevel. Law 8/81 which establisheslocal state institutions,has not been applied. Therefore,certain basic legal instruments for decentralizingadministrative actions have not been created.

8. The lack of operatingregulations is in fact, a quite common situationin Angolan economic administration.Thus, operatingregulations do not exist for the National Price Directorate,for example,or for a large proportionof the National Directoratescovered by the Ministries.These institutionswere 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'sjobs defined. Thus, a large part of public administrationlacks a descriptionof the activitiesit is supposed to perform.

9. An Economic Commisionpresided by the Read of State and includingby 13 Ministerswas created in 1988 to discuss all the importantdecisions in the area of economic policy and in particularto approve the legislationand all the more importantmeasures requiredby the implementationof the SEF program. The Commiesioncomprises three sub-committeesfor economic affairs, for the productive sectors and for social affairs, respectively. The Commissionis supportedby a technical committee,which prepares the proposalsof decisions,the draft laws and the analysis of the problems submittedfor discussion. - 32 - ANNU IV Page 1 of 8

THE SYSTE( OF NATIONALACCOUNTS IN THE PEOPLE'S REPUBLICOF ANGOLA

Introduction

1. This Annex has the followingpurposess (a) to provide a brief presentationof the current system of national accounts and of its scope and limitationsas regards nationalproduct and expenditure;and (b) to analyze the difficultiesinvolved in establishinga unified system of national accounts. It considersthe available informationfrom each of the three approachesusually followedin compilingnational accounts:factor income, production,and expenditure. Some general remarksare then made about requirementsfor a unified set of accounts. Finally a first effort is made to estimate GNP per capita in US dollar terms.

GDP Estimates Using the Factor Income Aporoach

2. The gross domesticproduct at factor cost (GDP fc) refers only to official transactions,and consistsof total factor income,as presentedin the various ministries'reports on financialexecution of the National Plan. Although limited in scope, the methodologyfor this calculationis satisfactory. However, the quality of the calculationsis constrainedby 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. Informationby enterpriseis furnishedonly in the reports on industryand fishing; the remainingexecution reports provide only aggregates,some of these being incomplete,so that indirect estimatesmust be used, with varying degrees of reliability. It must also be noted that the calculationsare performed by the supervisoryministries, and thereforedo not correspondexactly to the standard economic classificationsfor output by sector. For example, sugar cane as well as sugar productionis included in the industry accounts,because agroindustryenterprises are supervisedby the Ministry of Industry.

3. The followingparagraphs describe the scope and the quality of the calculationsof value added by sector.

(a) Agriculture.Forestry and Livestock

This includes the activitiesof state enterprises,associations, and the output of small-scalefarmers traded by the state through the Ministry of Internal Commerce. It also includesFrescangol marketing (i.e.,the distributionof importedmeat). It excludes on-farm consumptionand sales to the parallel market. It is estimatedthat only 1O of output passes through the official market. - 33 -

AM=U IV Page 2 of 8

(b) Manufacturingand Minint

This includesoutput from state, mixed, and private enterprises, togetherwith the productionand processingof sugarcaneby state enterprisesin Benguela and Bengo. The calculationof value added in this sector covers approximately802 of total activities.

(c) Fishint

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 enterpriseManpesa in Benguela,which was excluded from the 1983 and 1985 figuresbecause of delays in the provision of data); ship repair (four enterprises,three belonging to the state, and one being a joint venturewith Portuguesenationals, i.e., the former Sorefame);salt extraction(accounts for the two state enterprisesare included,although there a-e certain private enterprisesthat were excluded,mainly in Namibe province);and wholesale fish marketing (fourenterprises, ret iling being part of the commercialsector). Not includedare r.tput produced by fishermennot belonging to organizations(thiL being sold in the parallel market), own consumption,and the output from two salt- extractingenterprises in Namibe. In addition,the accounts excludehalf the landingsresulting from operating agreements with non-Angolanenterprises, although the tax on fishing rights paid by foreign fleets is included.

5d) Transportationand Commications

This includesenterprises operating road transportation(64), rail transportation(four), airlines (two, one of which is TM G), ports (five),and communications(three). Accounts in this sector do not include transportation-relatedenterprises supervised by other ministries,and whose accounts are reportedby those ministries, such as fishingand internalcommerce. There are also some transportation-related enterprises whose accounts are not recorded anywhere (as in the case of industrialenterprises). The accounts also excluded small private freightand passenger carriers estimates.

(e) Construction

This includes state and private enterprisesconcerned with construction,engineering, the manufactureof construction materials,and the Angola engineeringlaboratory. It excludes self-constructionand constructionby non-Angolanenterprises operating in the oil sector (drillingactivities are regarded as part of the oil sector,but the accounts for the constructionof houses, buildingsand other works are not recorded anywhere),and in the energy sector (i.e.,Gamek in Kwanza). It is estimated that value-addedcalculations cover only 502 of the sector. -- 34-

Page 3 of 8

(f) Petroleum (and LNG) 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 Sonangol rentals and interest. Although Sonangol does not regularly provide balance sheets for inspection and recording in the national accounts, the statistics are reliable, and include about 70Z of value added generated by the sector. (g) Electricity l/ 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) Cowmrce

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 aercantil)--i.e., deposits in BNA(the National Bank of Angola) by private, state and cooperative retail enterprises--and from the marketing margin (officially set at 25X),excluding administrative expenses (published in the Ministry of Commerce's execution report). This results in a value added of between 152 and 18Z of GDP. The coumercial fund information provided by 8NA is comparable to the data in the National Plan's financial execution report, so that the statistics used are cross-checked. 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 of the Ministry of Planning, the baskets are bought from Angoship, a private enterprise providing supplies for vessels. The enterprise uses the resulting revenue (in Kz) to buy US Dollars from the Government at the official price.

1/ Water is excluded from the country. - 35 - AM IV Page 4 of 8

4. For calculatinggross domestic product at market prices (GDP mp), indirect taxes are added to the gross domestic product at factor cost (GDP fc), and subsidiesare subtracted. Indirect taxes include those applied to the productionand consumptionof industrialalcohol, petroleum products, liquifiedgases, domesticallyproduced beer, importedbeer, and other taxes on productionand consumption,together with national reconstructionstamp taxes, tax payment certifications(selo de verb.), the oil industryoutput tax, export and import levies, taxes on services,and the people's resistancetax. The people's resistancetax is incorrectlyclassified as an indirect tax, because it is really a surtax applied to income taxes payable by natural and legal persons. The sourcesused in calculatingindirect taxes are the National Plan's financialexecution reports (whichcontain the enterprises'own figures). These show a small statisticaldiscrepancy with the data published by the Ministry of Finance (which indicate the figures for budget execution). Included as subsidiesin the calculationof national accounts are all losses published in the National Plan's financial execution reports; i.e., total subsidiesto state enterprises (UEEs) are equal to OGE transfers (i.e., losses from UEEs plus allocationsof availableown resourcesand price subsidies)plus loans to enterprisesfrom BNA, covering the differencebetween total losses and resourcesprovided by OGE. Such a classificationis incorrect,because the loans are not used solely to finance the enterprises'deficits, even if interestand amortizationpayments are later deferred.

GDP EstimatesUsing the Product Approach

5. In 1986 the Angolan authorities,with the assistanceof the United Nations Development Program (UNDP), began preparing preliminary estimates of GDP based on the value added productionapproach using 1980 official prices. While these estimates are still tentative, they represent an improvementin the estimatesof subsistenceagricultural production and are not as distortedby delays in delivery of the required information. The estimateshave been prepared for 1980-87 using data mostly from the enterpriselevel, complementedby indirect estimatesand ministry informationto complete the availabledata series and to check the reliabilityof the aggregates. The defined sectors follow the Angolan classificationof economic activities,but can easily be translatedinto the standardUN classification.

6. The followingparagraphs describe in more detail the estimatesof the valued added productionof each of these sectors.

(a) Industry. This comprisesextractive and manufacturing activitiess energy,mining, metallurgy,metal construction, electronics,machinery, chemistry, rubber, printing,lumber, paper, constructionmaterials, transport materials, glass ceramics,textiles, clothing, leather goods, food, beverages,coffee, sugar, tobaccoand other manufacturing. Productionis mostly by state,mixed, and private firms as well as foreign enterprises,which account for about 902 of the total. The remainingcomponent comes from estimatesof the output of small producersnot under government - 36 - AM Page 5 of 8

supervision,which were based on previous studiesof productioncapacity and indirect information.

(b) Construction. This includes the constructionactivities of state enterprises(under the Ministries of Construction, Energy, and Petroleum),foreign firms, and self- construction. It includes self-constructionestimates, based on population growth, size of a standardhouse, cement consumption,and internationalindicators.

(c) Agriculture.Livestock, Forestry and Fishing. This includes farming, cattle raising, forestry,and fishing activitiesof state enterprisesand of about 850,000 small producers working in associationsor individually. It includes productionfor self-consumptionas well as productionfor the market by state enterprisesand small producers. It includes a self-consumptionestimate, based on the size of the farmingareas, averageproductivity, nutritional habits, and populationgrowth.

(d) Transportationand Communication. This comprises railroads, air, coast and ocean shippingactivities, including loading, unloading,and expeditionservices. Data on communication serviceswere collectedfrom the relevant enterprisesunder the supervisionof the Ministriesof Transportationand Communication. Highway transportationof passengersand freightwere collectedfrom public enterprisesunder the supervisionof the Ministry of Transportation. These estimatesare currentlybeing revised to includemissed informationand add private transportation.

(e) Commer-e. This includes retail and wholesale activities, rural trade, hotels and foreign trade. The commercializationmargins were estimatedfrom state enterprisesales and purchase data. Preliminaryestimates of the value in the parallelmarket are also included. The product approach estimatesof the value added in the commerce sector are an improvementover the previous factor income approachbecause they include the commercialization margins for trade in rural areas and foreign trade. They are also based on actual measure of comercial margins rather than the fixed official margins used in the factor approach. The commercializationmargin from oil exports is not yet included,but exports of oil are included in the industrialvalue added at FOB prices.

(f) Services. Estimatesof the value added in the service are based on the budgeted salaries in the sector. - 37 -

Page 6 of 8

GNP from the ExpenditureSide

7. There is no official calculationof GDP from the expenditureside. Accounts for the public, financialand external sectors are incomplete,and their structureis unsuited to the preparationof national accounts. In addition, there is no coordinationbetween the Ministry of Planning, the Ministry of Finance, and BRA in the use of data. Examples of the inadequacyof existing accounts are that the governmentbudget makes no provision for interestpayments on externaldebt payable by the Treasury, it does not record external debt managed by BNA, and the government acczountsdo not provide any means for calculatinggross fixed capital formation (GICF)by the Governmentand 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 difficulteven to estimate such imports indirectly.i.e., on the basis of capital flows. Requirementsfor the Imnlementationof a UnifiedSystem of National Accounts

8. Developinga reliable,unified system of national accounts requires that it become a politicalpriority. This will be done only when the governmentis convincedof the importanceof national accounts for economic planning,monitoring, and evaluation. Once the politicaldecision has been taken, establishmentof a unified system of national accountswill depend on three factors: organization,discipline, and resource.

9. As regards organization,it is recommendedthat a Departmentof National Accounts be established,subordinate to the Director of Planning at the Ministry of Planning. This measure is justifiedby the need to establisha link to BNA and the Ministry of Finance. Currently, there is merely a project (under an agreementwith the UNDP) for establishinga system of national accounts, in which the natioAal project director must fulfill a number of extremelydemanding 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 Departmentof NationalAccounts should be the responsibilityof the Read of the Planning Board, togetherwith the Departmentof Foreign Exchange for External Trade, PlanningMethodology and Control, International Finance and the Data Processing Center. An alter- native 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 preparationof national accounts should be kept separate from the compilationof basic statistics,which is INE's function. Such a separationwould enable qualifiedexperts to be deployed exclusively in the preparation of national accounts.

10. In whatever department the national accounts are prepared, it is imperativethat efforts to improvethe national accounting framework be closely coordinatedwith the work on basic statisticsdone in the INE. The national accountswill only be based on reliable,well-defined data when - 38 -

Page 7 of S

the INE fulfillsits role as the central institutionwhich speclfies classifications,defines statistical concepts, develops survey methodologies,designs questionnaires, and providesa centralsource for the exchange and publication of nationaldata. Currently,the INE*s performanceof these crucial functions is far from satisfactory. Consequently,any attempt to improvethe nationalaccounts must be combined with a major effort to upgrade the abilityof the INt to provide comprehensiveand accurateeconomic and demographic data in a timely fashion.

11. Establishinga form of disciplineby which economic agents will providethe data necessaryfor operatingthe unifiedstatistical system will be a difficultobstacle, and will requirefirm politicalwill on the part of the country's leaders. An indicationof 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.

12. It must be recognized that developing a national accounting system that can be used vith confidence to monitor the economy, measure the impact of policy changes, and serve as a basis for national economic plans will require a substantial camitment of scarce human resources. While in the short run it is advisablefor the Governmentto contractoutside experts to aid in establishingbasic statisticalmethodologies and procedures,it is imperativethat high quality counterpart personnel are also involved to sensitize the experts to local conditions and to continuethe development of the national accounts after the foreign experts have departed. Establishing technical training programs for personnel involved in data collectionand analysisshould also be a priority.

13. Finally,it shouldbe noted that UNDPis currently Involved in a technical assistanceproject (ANG/841001)directed toward Improvingthe national accounting system. While the projecthas made steps in this direction,its scale is too small to adequatelyaddress Angolan needs and it has been hamperedby delays. For example,the project called for stationingin Angola two expertsin fiscalaccounts and the balanceof payments,but this has not yet occurredbecause, of apparentdelays in appointing Angolan counterpart personnel. Moreover, project participants spent almost the whole of 1986 preparing basic statistics to be used in the national accounts. Consequently, it is suggested that UNDPand the Angolan authoritiesextend this project for at least anotheryear and broaden its scope to includeupgrading the processof collectingand analyzingbasic descriptivestatistics.

Per CanitaU.S. Dollar GNP Estimates2/

14. In derivinga first estimateof Angolanper capita GNP In U.S. dollars, it is better to rely on the data from the production approach

2/ Subsequentwork by the World Bank, begun in late 1989,suggests that the estimatesobtained at this earlierstage are on the low side. - 39 -

A IV Page 8 of 8 rather than the factor approachdue to the former's greater comprehensivenessand better methodologicalfoundation. However, a major drawback of the productionapproach data is that calculationsare reportedlybased on 1980 officialprices and cover a period in which there were major changes in the relativeprice of oil and non-oil production.

15. Since the authoritiesspecified the 1980 value added in the oil sector by convertingdollar oil sales and costs of productioninto kwanzas at the official exchange rate (29,918kwanzas to the U.S. dollar), the 1980 oil sector value added in U.S. dollarswas obtainedby using the official exchange rate to reconvertthe data into dollars. Using the authorities' estimatesof oil productionvalue added for subsequentyears at 1980 prices, an index of the real value added from oil productionfor 1980-87 can be constructed. This index, combinedwith the annual average dollar prices of Angolan oil from 1980-87,permits an estimate of the nominal value added from Angolan oil production.

16. Convertingthe value added from non-oil productioninto U.S. dollars is more problematic. From the authorities'production estimates using 1980 official prices, an index of the real quantity of non-oil productionvalue added can be constructed. However, it would be misleading to use the official exchange rate to convert the 1980 kwanza value of non- oil productioninto U.S. dollars since there are strong indicationsthat the official exchange rate was overvalued. In fact, the official exchange rate, which was establishedin May 1976, had by 1980 substantially appreciatedin real terms. Rough estimatesindicate that the 1980 purchasingpower parity exchange rate for officiallyprices goods should be depreciated232 relative to the official exchange rate. Using this estimate,to obtain a U.S. dollar measure of non-oil productionfor 1980, indicatesthat oil productionwas 292 of GDP at factor cost. Since alternativeestimates have placed oil productionas 30 to 35? of GDP, the resultingU.S. dollar GDP estimate for 1980 appears reasonable,but perhaps biased up slightly. Finally, assumingthat the dollar price of non-oil productiongrows at the same rate as the U.S. GNP deflator,a nominal U.S. dollar estimate of non-oil productionis obtained for 1980-87.

17. From the U.S. dollar estimatesof oil and non-oil productionas well as populationand 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. - 40 - ANNEX V Page 1 of 7

LEGAL PRAMEWORKOF SE?

1. The content of the SEP program is such that it requires adju'tmentof major areas of the law. The Governmentof Angola has already publishednew legislationon foreign exchange,economic activitiesin general, securities,foreign investment,and state enterprises. This annex provides an overview of the content of these various legislative initiatives. Their developmentat the regulationlevel is at an advanced stage and legislationon the banking system and procurementis also under preparation. Legislationgoverning enterprise management and economic planning has also been approved.

2. The followingoverview of the legislativemeasures 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 changesmade in the area of foreign investment and public enterprisesare worth highlighting. Foreign investmentoutside the context of mixed economy enterprisesis now permitted in other than import substitutionactivities, the approval process has been simplified,and arbitrationis recognizedas a means of solving investmentdisputes. In the field of public enterprises,the emphasis is on providingeffective autonomy,on the enterprisestaking responsibility,on reducingthe number of supervisory bodies and delimiting more clearly their supervisory function, As stated above, there is a series of legal instrumentsunder preparationwhich will develop those reviewedhere and complementthem. It is to be hoped that their applicationwill be in the same spirit with which they have been or are being prepared.

Exchanie Law (Law 9188)

3. The exchange law establishesthe obligationof deliveringto the exchange authority (the Minister of Finance) the foreign exchange received by the residents,forbids compensation of debts and creditsbetween residentsand non-residents,and limits the ability to carry out exchange functionsto the entities so authorizedby the exchange authority. One of the reasons for issuingthe new law is the fact that exchange legislationis very dispersed,out-of-date and unknown to the public at large. The law applies to the state enterprises(unidades economicas estatais) and to the State itself and its servicesor to public collectiveentities whose activitieswill be regulatedseparately.

4. The Central Bank is responsiblefor managing the foreign exchange and resolvingany doubts on whether a person or entity is or is not a resident for purposes of the exchange law. Only with Central Bank authorizationmay residentsopen foreign exchange accounts or non-residents foreign exchange accountswith national credit institutions. The law has detailed provisionson monetary and jail sanctionsfor foreign exchange contraventions. The Central Bank has also exclusiveresponsibility to instituteany suits for breaches of the Exchange Law. - 41 - ANNEX V Page 2 of 7

S. The Exchange Law has been developed by three regulations approved by the Council of Ministers,Decrees No. 11/89, 12/89, 13/89 dated April 29, 1989. They cover current operationsof invisibles,operations related to goods and operationsrelated to capitals

(i) capital operationsneed authorizationby the Central Bank and beyond a certain level by the Minister of Finance. Foreign investmentwill need to be authorizedand registeredby the Central Bank. The Central Bank is responsiblefor issuing the correspondinglicence;

(ii) goods operations: the import,export or re-exportof goods requires a licence. The licensingauthority is the Ministry of Foreign Trade. The first fortnightof each month the Central Bank will inform the Ministry of the maximimiamount of foreign exchange availablefor licences to be issued the next month. Priority in the issuanceof licences is given to those which will meet the objectivesof the National Plan. Overall, the distributionof licences is left with the licensingauthority:

(iii) invisibless The licensingauthority is the Central Bank which may give global licences for up to 180 days when it is necessary for the activitiesof the beneficiary.

Law on EconomicActivities (Law No.10/88)

6. This law is a basic or frameworklaw to regulateeconomic activity in the country. It applies to activitiesrelated to the production or distributionof goods or the renderingof serviceswith the objectiveof making a profit. The State reserves itself activitiesin central banking functions,military industry,distribution of water and power, basic sanitary services,telecommunications, transport, except for short range maritime transport,and port and airportadministration.

7. No economicactivity may be performedwithout previous authorizationby the competentauthorities. Economic activitymay be developed individuallyor throughenterprises. Enterpriseactivity may be performed by state enterprises,mixed enterprises,cooperatives and private enterprises. State enterprisesare classifiedas enterprisesto which the Law of State Enterprisesapplies, which means enterprisesowned by the State but operatingunder commerciallaw. Mixed enterprisesare those established by state funds or state enterprisesand private capital (nationalor foreign).

8. The law recognizesthe right of individualsto practise their own professionsindependently and the right of individualsand companiesto associateto further their economic and professionalinterests. Except for central banking and military industrythe Council of Ministersmay, exceptionally,authorize the performanceof economic activitiesby other private parties in the other sectors reservedto the State. Natural resourcesowned by the State in terms of the CoastitutionalLaw may be explored only through concessionsor other regime not involvingthe transfer of ownership. - 42 - AM= V Page 3 of 7

9. The Law gives the Council of Ministers 60 days to define the rules for the reorganizationof the public enterprisesector in order to establishsector and regional prioritiesand criteria of economic,technical and financialviability. The Council of Ministersis chargedwith revising the legislationon establishmentand functioningof cooperatives, nationalizationand expropriation,intervention of the State in private enterprises,and licensingof economic activity. In the meantime,any interventionof the State in private enterpriseson the basis of the existing legislationrequires authorizationby the Council of Ministers.

SecuritiesLaw (Law No.8188)

10. This law regulatesthe issuanceof treasurybills with the objectiveof raising financingfor the national budget and to balance the monetary resourcesdistributed as salarieo to the level of goods available. In addition,it was necessary to create a legal instrumentto give the State the possibilityof proceedingwith the financialrestructuring of state enterprisesand to channelnational savings towards the financingof investments.

11. The law provides for the followingtypes cf securitiess

(a) Savings bonds describedas bearer bonds with maturities ranging from 12 to 18 years. Savingsbonds may be subscribedby individuals,residents in Angola, and will be denominatedin kwanzas but, at maturity, the holder may receive the total or partial amount of the bond in foreignexchange.

(b) Developmentbonds which will be nominative,with a maturity of up to 7 years. Developmentbonds are intended to be subscribed by collectiveentities and the interestor the capital of these bonds may be paid in foreign exchange. The funds raised by the issuanceof these bonds will be used exclusivelyto finance investmentsincluded in the general budget of the State.

(c) Restructuringbonds which will be nominativewith 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'sAssembly will determineannually the global limit of the bonds to be issued under types (a) and (b). Restructuringbond amountswill be decided by the Council of Ministers. The bonds will be exempt from taxes, may be pledged and can't be subjectto expropriationor any other act of interventionby the State.

Foreign InvestmentLaw (Law No.13188 of June 16, 1988)

13. This law abrogatedthe previous law of 1979 which was never developedby the necessaryregulations. It has as an objectiveto improve the organization,function and supervisionof the Governmentrelated to foreign investments.and to simplify the process of negotiationand - 43 - ANNEXV Page 4 of 7 approval. This law expresslyleaves standing the laws applicableto petroleumand mining to the extent that they don't contradictit.

14. Foreign investmentswill be permittedby entities of adequate technicaland financialcapacity provided that the investmentsare in accordancewith the social and economic developmentinterests of Angola. The law excludes from investmentby non-residentsthe areas of defence, central banking, education,health, water supply and sewerage,electric power, postal services,telecommunications, social communications, administrationof ports and airports,air transport,long range maritime transport. This list notwithstanding,the Council of Ministersmay authorizespecific investmentsin areas complementaryto those so listed.

15. A foreign investmentmay consist of the actual transfer of funds, supplier'scredits, equipmentor rights to industrialprocesses. Decree No. 6/89 created the Foreign InvestmentCabinet (GIE) which is responsiblefor the applicationof the law and the evaluationof 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 industrialprocesses or suppliers'credits. The Council of Ministers is competentto determinethe priority areas in which foreign investmentshould take place.

16. ForeigrLinvestment may take place through the following possibilitiess

(a) Mixed Enterprisesof a foreigncompany with a state enterprise. The state enterpriseshould have 51Z of the equity unless the Council of Ministers permits a lower percentage.

(b) Joint EnterDrisesof a foreign investorwith a non-statal national investor.

(c) Private Enterprisesentirely owned by the foreign investor.

17. The law specificallyprovides that in the first three cases the requirementsof commerciallaws regardingthe establishmentand registration of companiesapply. In the last instance,it goes further to say that the companies so establishedwill be regulatedby commerciallaw.

18. The law recognizesa just and equitabletreatment to the investorsand in particularit guaranteesthe repatriationof profits or of the foreign investor'sshare in case of liquidationor sale of the enterprise. In both instances,the prior authorizationof the Minister of Finance is required. In case of expropriation,the investorwill be given *just compensation".

19. Entities establishedunder this law may be given certain incentives,such as the exemptionor reductionof income taxes and customs duties on inputs or outputs. They may also benefit of other incentives availableunder existing legislationin cases in which they reinvest - 44 - ANNE V Page 5 of 7 profits, develop activitiesof a social character,and train and use local labour and management.

20. A specific investmentproposal must be presented to the GIE which will evaluate it within 90 days. After evaluation,it will make a recommendationfor approval or rejectioato the Minister of Planning. If the Minister accepts the recommendationof approval,the investmentproposal is forwarded to the Council of Ministers for final approval. The Council of Ministershas 45 days to decidefrom the date of evaluation. The GIE will keep an investmentsregister.

21. In case of disputesbetween the foreign and local investorwhich can't be solved amicably, the partiesmay have recourse to arbitration accordingto UNCITRAL rules. It should be emphasizedthat the disputes which may be subject of such arbitrationare not those involvingthe State but only those between the local and foreignpartners. 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 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 obligationof 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 investorsand which will affect the assessmentof whether to invest in Angola is an attractiveproposition. The main ones would be the Labour Code, Tax and Exchange laws and the PortugueseCommercial 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 publicationfor investorsbe issued with practical advice and guidance on all the relevantlegal norms and administrative proceduresapplicable to foreigninvestment in Angola. This publication could also include informationon bilateral treatieson investment protection,double taxation,or recognitionof arbitral awards.

Law of State Enterprises(Law No.11188)

25. It is the objectiveof this law to reinforcethe autonomy of the state enterprises,to increasetheir efficiencyand rentability,to increase their influencein the distributionand commercializationof their products, and to improve the process of constitutionand organizationof state enterprises.

26. State enterprisesare defined as those owned by the State with separate juridicalpersonality, and administrative,financial and patrimonialautonomy. The law states the principleof autonomy in the managementof the enteprisesand, except as provided by the law, no organism of the State or other third party has any right to interferein the conduct -45- ANNEX V Page 6 of 7 of the enterprisebusiness. State enterprisesare expected to generate profits, to charge for their products or services and to be self-financing. Enterprisesshould be managed so as to increaseefficiency and productivity, to make investmentsbased on their rate of return, and assessmentof risk and of period needed to recoverthe invested capital,and to increase the professionallevel and the working conditionsof their workers.

27. State enterprisesare responsiblefor the preparationof multi- year plans and budgets and annual plans and budgets. They may fix the prices of their products on the basis of current legislationand are subject to taxation. They respond of their obligationswith their own patrimony. The State is not liable for their obligations.

28. At the time of their constitution,the State provides each enterprisewith a 'fundo de constituicao'('establishment fund") which would be in an amount adequate for the exercise of the enterpriseactivity. Profits after taxes will be allocatedin accordancewith the following priorities:constitution of a legal reserve as requiredby commerciallaw, of an investmentfund, and of a social fund. Any remainingprofits will be distributedto the State as owner of the enterpriseand to workers in order to recognizetheir individualperformance.

29. The supervisionof the enterprisescorresponds to the Ministries responsiblefor the sector ("Ministrode Tutela') of the activity concerned and Finance. The sector Minister guides and supervisesthe activitiesof state enterprisesby defining the developmentpolicy of the economic activity concerned,approving the multi-yearplans and budgets proposed by the enterprise,evaluating the performanceof the enterprise,appointing the administratorsand directorsand approvingthe enterpriseaccounts. In case of companiesof large dimensions,the Council of Ministersmay require approval by the Minister of Planning of the multi-yearplans and budgets and of the investmentprograms of the enterprise.

30. Enterprisesmay only be created by the Council of Ministers by decree. They are subject to the registrationrequirement of commerciallaw.

31. The organizationof the enterprisesconsists 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 responsibilityfor preliminaryapproval of the multi-yearplans and budgets, investments,follow up the activitiesof thc 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 Presidentappointed by the Council of Ministersor the 'Ministrode Tutelaw dependingon the size of the enterprise,one Board member each by the OMinistrode 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 Presidentis the Director General appointedby the Ministro de Tutela. The - 46 - ANNEX V Page 7 of 7 other two members are appointedby the Minister of Finance and the workers. The Board meets every three months and decides by majority of its members.

33. The Managementconsists of the Director,Deputy Director and those responsiblefor various areas of the enterprise(area managers). In the case of large enterprises,the Director is appointedby the Ministro de Tutela as proposed by the Board, or by the Ministro de Tutela without any further interventionof other parties in the case of smallerenterprises.

34. The Management Council is a consultative organ which the Director needs to consult on the draft plans of the enterprise, accounts, report on the executionof the plan, sales of fixed assets, investment programs,classification and trainingof workers, management appointments and criteria to give premia to compensategood performance. This Council is composed of the Director, area managers, two party representatives,and one representativeof the trade union.

35. The Fiscal Council is basicallyresponsible for checking compliancewith the laws by the enterpriseand giving its opinion on the accounts. It consists of a presidentand two members. The Presidentand 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 performedby one person appointedby the Minister of Finance. All members of the Fiscal Council will need to be registeredaccountants and not be staff of the enterprise.

36. The statuteof manager of public enterpriseshas been regulated by Decree No.6189 of March 13, 1989 providingfor a definitionof the technicalrequirements, duration of the mandate, cases in which they may be removed and accountability.

37. In addition to the participationof workers in the Board and in the Management Council, the law provides for WorkersAssemblies which will 'analyze'the drafts of the plan and budget of the enterprise,degree of execution of the plan, productivitylevel, working conditionsand compliance by the enterprisewith the labour legislation.

38. The extinctionor dissolutionof a state enterpriseis the responsibilityof the organ which created it. The commerciallaws of bankruptcyor dissolutionof companiesdo not apply to state enterprises. Consequently,the law provides for a special liquidationcommission which will dispose of the assets of the bankrupt or dissolvedenterprise and settle the claims. The State will pay out of the budget any claims accepted by this commissionwhich the assets of the enterpriseare not sufficientto cover.

39. The new law will be applied to existing enterprisesas determinedby the Council of Ministers on a case-by-case basis and as part of the process of fimancialrestructuring of the public sector. Decree No.36189 of July 22, 1989 establishedthe EnterpriseRestructuring Cabinet (GAREV) for these purposes. The successof the new law will depend on how effectivelyit is applied in terms of non-interference,accountability and how effectivelyprices and salariesare also liberalized. - 47 - A= VI Page 1 of 4

THE TAX SYSTEM OF ANGOLA

1. Tax revenue in Angola is derived from four main sourcest taxes from the exploitationof petroleum,taxes on income, taxes on production and consumption,and taxes on internationaltrade.

Taxes on Petroleum

2. The governmentreceives revenue from exploitationof Angola's oil reserves in the form of royalties,taxes on profits and a share in the profits of Sonangol,the state-ownedoil company. Two types of agreement govern the relationsbetween the governmentand the operatingcompanies. The tax regimes appliedby these agreementsdiffer in their impact on governmentrevenue. The loint venture agreementbetween Sonangol and the foreign partners is the oldest type. Under this agreement,Sonangol, the sole concessionairefor oil explorationand production,shares the investmentwith foreign companies. The joint venture pays three kinds of taxes: (a) a royalty, currently202 of crude oil sales; (b) a tax on profits of 65.752; and (c) a tax on excess profits (transactiontax) of 702. a. Under the more recent productionsharing agreements,Sonangol subcontractswith foreign companiesto undertakethe explorationand productionoperations in return for a share in the output. The foreign company retains part of the output (maximum502) to cover its costs ('cost oil'), and pays a 50t income tax on its share of the remainderof the output ('profitoil'), In addition,the governmentreceives a share in Sonangol'sprofits. The principaldifference in fiscal impact between the two agreementslies in the tax yield over time. Compared to a joint venture, the productionsharing agreementyields less revenue in the early years when high initial costs result in retainingthe full 50X 'cost oil' allowance. Furthermore,it tends to provide Sonangol,rather than the treasury,with the largestpart of Angola's share, while in joint ventures the bulk of the revenue accrues directly to the governmentin the form of taxes. In 1986, joint ventures accountedfor approximately802 of governmentrevenue from oil. Table VI.1 shows a breakdownof government revenue from oil.

Table VI.1t PETROLEUMTAXATION, 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 Transactiontax 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 ------e___ ------TOTAL 33.9 45.2 21.0 26.7 42.3 41.7 30.1 35.8 35.8 Source: Appendix table D.1 -48 - AmNX 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 productionfollowed a slump during 1972-82. The latter resulted from a lack of explorationand developmentduring the few years after independence. Output then doubled between 1982 and 1986, which cushionedthe effect of the fall In the oil price, and contributedto 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 operationsare the primary source of oil taxes, and excess profits are highly taxed, governmentincome from oil reacts more sharply to variations in price than in production. Another factor that preventedthe 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 includedarrears for 1983-85when no transfers were made.

Table VI.2s CHANGESIN PRICE AND OUTPUTOF CRUDEOIL, 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: IBRD: hntgola.Energy Assessment.

Taxes on Income

5. This category includes four types of taxes: transfersfrom public enterprises,corporate income tax, personal income tax, and a tax on income from capital. Together they are the principalsource of non-oil taxes, accounting for betweenhalf and two-thirdsof the total. Income taxes on the whole have not performedwell, judging by their average nominal growth of 2-1/22 a year since 1980. This has been largely due to a lack of growth in the transfersfrom public enterpriseswhich account for the bulk of these taxes. However, the other tax components show a more encouraging trend.

6. Transfers from public enterprises. Public enterpriseshave to remit part of their profits to the state. Uhtil recently this share was: 90? for firms in the productive sectors, 97? for those in the petroleum sector, and 98? for service industries. With effect from 1986, the transferableportion has been reduced to a flat 50?. The share of these transfersin total taxes on income declined from around 80? in the early 1980s to 67X in 1985 and 62? in 1986. As most enterpriseshave greatdifficulty in preparing timely accounts, the transfer to the State is - 49 - MM VI Page 3 of 4 calculatedon the basis of the planned financialresults for the year as agreed by the managementand the Ministry of Planning. It is payable in quarterly installments. When actual data become available,adjustments are made.

7. In 1986, the financialsector accountedfor the largest share of profit transfers (232), followedby internal trade (191) and fisheries (172) (see Appendix table D.2). Of the 137 enterprises(excluding Sonangol) that made transfers that year, 3 firms account for 302 of total transfers (BMA, Cafangol and the National Lotteries),and the 10 largest contributors for 572 of the total. However, the profits on which they are based do not always represent genuine operatingresults of these companies. E.3., the profits of Cafangol include increasesin the value of large state-held stocks of coffee, and the resultsof fishing enterprisesinclude part of the fish catch of foreign operators.

Table VI.3: TRANSFERSTO GOVERNMENTFROM SELECTEDPUBLIC 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 Expedicaoconjunta -- 3 5 Emprotel -- 6 -- Frescangol 4 Other 47 47 51

TOTAL 100 100 100

SourcesMinistry of Finance

8. Corvorate income tax. A basic rate of 35 is levied on the income of enterprisesin the private sector, includingso-called mixed enterprises in which the state has a share (impostoindustrial). In addition,there is a progressivesurtax ranging from 2 to 30S imposedon the same income (impostode resistenciapopular). While the maximum tax rate on enterprise profits is, thus, 652, the average is around 502, which equals the current share of profits transferredby state enterprises. The share of corporate income tax in total tax on incomes rose from 142 in 1980 to 282 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 12 to 402 for wage and salary earners,deducted at source,and from 32 to 602 for those independentlyemployed. The system is quite complex, and collection problems are severe, although there has been a considerableimprovement in - 50 - AMIEX VI Page 4 of 4 tax yield in recent years. Nevertheless,total tax collected,including from those independentlyemployed, representedonly 32 of the total governmentwage and salary bill in 1986, and less than 61 of non-petroleum taxation.

Taxes on Productionand Consumption

10. These indirect taxes includeduties on petroleum products consumed locally,on productionand consumptionof beer and about a hundred other productswhether produced locally or imported,stamp duties, and royaltyon diamonds. Together they accountedfor 222 of non-oil taxes in 1986. After stamp duty, the most importantsource of these taxes is the duty on beer. However, beer production,and thus the tax yield, is sensitiveto the availabilityof imported inputs,which accounts for the fall in revenue in 1986, when foreignexchange allocationsto industrywere reduced. Moreover, theft and payment-in-kindof workers is widespreadin industry and further reduces the indirecttax base.

Taxes on InternationalTrade

11. Given Angola's relativelyhigh level of imports, taxes on imports could be a significantsource of budgetary revenue. However, in 1985 the effectiveduty on (recorded)merchandise imports was only 9.4?, having dropped from 15.5Z in 1982. These import duties have been contributing between 15 and 252 of non-oil taxes. An outdated import tariff, serious collectionproblems, and a shrinkingtax 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 importscarry low duties. Moreover, the tariff structureis complex and hinders implementation.

12. The collectionproblem has severalcauses: the import tariff is complex,which makes proper applicationdifficult; the Customs service operates with about a third of its estimatedpersonnel requirement,and staff lack necessary qualifications;1t availabletransport, communicationsand office equipmentare totally inadequate;and due to the war, the surveillanceof borders is hazardous and communicationis difficult. Tax collection1.9 further affectedby the decline in the volume of importson which duty is paid. Many importsare covered by exemptions issued by various authorities,and tax evasion is widespread. The latter is made easier by the lack of authoritycustoms staff have in the port. Army, police, port security staff and others interferewith the customs operations. Many take advantageof the lax applicationof procedures governingimportation and clearanceof goods; unauthorizedimports are a major source of supply of the parallelmarket. 21

11 According to one estimate,the Customs service requires a total of 2,800 staff. Its actual strength is only 832.

21 More than 502 of imports are said to enter Angola without an import license. - 51 - ANNEX VII Page I of 22

AGRICULTURE

A. AgriculturalPerformance. Policy and ProductionResponse

I. AgriculturalPerformance. Seventy to eighty percent of the populationderive a living from agriculture,which generatesabout 20 percent of official GNP. 1/ With an area of 1,246,000km 3 (481.3 thousand square miles) and diversifiedecological setting, Angola can grow a large variety of tropical and semi-tropicalcrops. Extensiveareas are suitable for grazingwith the Southern regions free from the tse-ts4 fly. Arable land is plentifulwith estimatesranging from five to eight million hectares. There is potential for significantproduction of a broad variety of agricultural,livestock and fisheryproducts, 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 irrigationin the cold season in the plateau region,to other cereals suited to the hot, rainy season; from robustacoffee 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'sforestry, livestock and fisheriespotential. 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. Eucalyptusand pine, of proven economic value, performwell in commercialplantations, especially above the 1,200 - 1,300 meter line.

2. Agriculturalproduction, including livestock and fisheryproducts, grew steadily until the disruptionby the anti-colonialwar. Angola was self-sufficientin all major food crops. The production of maize, the basis of the diet in the heavily populatedcentral zone, had reached 710,000 tons in 1971, sufficientto permit si&-ificantexports (112,000 tons). Surplusesof 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 largestexporter of coffee, it was also one of the world's major producersof sisal. Exports of forestry productswere considerableand livestockresources were abundant. Accordingto 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 (1,600km) and Benguela's sea current provide rich potentialfor fishing along the Southern seaboard. In the early seventies,fish harvest reached 700 thousand tons.

3. Since independence, agricultural output has experienced a dramatic decline which has affectedvirtually all products. The sudden departureof

1/ Representsonly agriculturalproduction marketed through official channels. estimated to be 10 to 15X of total production. - 52 -

Page 2 of 22 the Portugueseresulted in the abandonmentof most of the Portuguese-owned and managed farms. and created a manpower vacuum in many areas that are crucial to the effectivenessof agriculturaloperations, such as agricul- tural marketing,transport, input supply and research. Another major cause of the poor agriculturalperformance since independenceis the war. The limited access to the rural areas, the destructionof infrastructure,the disruptionof families and communities,and the budgetarydemands of the war have had an immense iapact on agriculturalactivity. Finally, an equally importantcontributory factor has been the failure of agricultural policy and governmentintervention to provide producerswith adequate incentivesand the necessarysupport services.

4. The current situationin the sector is in stark contrast to both pre-independenceproduction levels and to Angola's agriculturalpotential. Appendix Table F.1 presents estimatesof current output levels for a range of agriculturalproducts compared to pre-1975 figures. Productionof the principal staple foods (maize,cassava, sorghum,millet) is estimatedat 25-35Z 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 declinedby only about 202, and the goat populationactually grew by around 502, the number of swine as well as beef productionwere 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 transformedfrom a country self-sufficientin food to one dependenton increasing food imports, includingfood aid, and on the verge of famine. Food aid requestedfor 1987/88 amounted to 200,000 tons of cereals, three times morer than the 68,000 tons requestedin 1983/84. The ability of government to finance commercial food imports diminished from 238,000 tons in 1983184 to 94,700 tons in 1986187. In addition, 18,000 tons of meat were imported in 1987.

6. Agriculturalexports have virtuallydried up. Productionof coffee, until 1973 the principalforeign exchange earner,had fallen to 13,500 tons in 1987 as comparedto 240,000 in 1974. Timber exports in 1985 were only 142 of the volume exported in 1973. A number of products that were previouslyexported are now imported (e.g., sugar, palm oil, beans).

7. AgriculturalPolicy. The massive abandonmentof the Portuguese- owned and managed farms at independence created a vacuum with which the new governmenthad to deal. With commercialprivate sector agriculturedisin- tegrating,a centralizedorganizational set-up was introducedin an attempt to quickly fill the gap and establisha state controlledagricultural model. The central governmentinstitutions dealing with agriculture,have since formally administeredprices, 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 deficiencies. 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 tr produce and market output. Prices at all levels have been centrally - 53 - ANX VXZ Page 3 of 22 determinedand ;arely changed and consumergoods have become increasingly scarce in the countryside.

8. A plethora of agriculturalagencies has been establishedin spite of severe deficienciesin qualifiedstaff. Only 1 percent of the labor force under the jurisdictionof the Ministry of Agricultureis classified as technicaland most agriculturalschools are closed. Under the Ministry of Agriculturealone, there are more than one hundred public enterprises and agencies. They include state farms and integratedagrarian complexes, as well as specializedforestry enterprises,service companies,etc. Under yet differentbureaucratic jurisdictions, other public entities are responsiblefor agro-industriessuch as sugar cane, the production of agriculturalimplements and materials. In summary,Angola's initial experimentwith centralizationand administrativecontrols is understandable,in view of the post-independencedisruption and insecurity and is to a large extent a reaction to the harshnessof the Portuguese system of private sector exploitationand the subsequentthe disarray followingthe massive exodus of Portuguesefarmers and traders. Neverthelet:s,the maintenanceof these policies despite the obvious constraintsand failures is now recognizedby many Angolan policy-makersas a mistake and especiallyby those at the Ministry of Agriculture. 9. In addition to the problems of securityand inadequatepolicies, investmentin agriculturehas been limitedand poorly planned and Imple- mented. In 1986, for instance,of the US$12.6 million in foreign exchange equivalentoriginally approved for investment,only US$2 million was made available, in view of the severe balance of payments constraintsand the central control and allocationof foreign exchange. Moreover,while a cursory review of the 1986 investmentperformance shows a level of implementationexceeding 100 percent, it appears that 69 percent of the total investmentfor agriculturewent to build 900 residencesin Ruanza- Bengo, a questionableproject not contemplatedoriginally in the Ministry of Agriculture'splan. In contrast,only 47 percent of the planned investmentfor trainingand support services took place.

10. ProductionResponse. Becauseof the internalconflict and the uncertaintyas to how and when it will end, two differentsituations of geographicresponse are examined. (a) secure areas; the part of the country under governmentcontrol where agriculturecan be carried out consists primarilyof the western coastal strip and amounts to about 202 of Angola's land area. The supply of agriculturalproducts from these areas is of considerableimportance. Three million inhabitants,or 382 of the population,live there, the majority concentratedin the urban centers of Luanda, Lobito, Benguela,Lubango and Namibe. And (b) insecure areas; the rest of the country'sterritory is subjectto considerablesecurity constraints and limitations of movement.

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 largely of the territory of the Fifth Mllitary Region (provinces of Namibe, Huila and Cunene). Areas of greatest potential are the Huila Uplands, the - 54 - ANNEX VII Page 4 of 22 mid-Cunene Valley and the plateau strip from Lubango to Matala/Capelongo; and (b) the North-NorthwestZone(N-NW); this consistsof the coastal strip from Cabinda to Sumbe (formerlyNovo Redondo),of varying width but widest in the Soyo and L4anda-Dondo areas, coinciding with Baiso Cuanza.

12. In the South-Southwest Zone(S-SW) zone, the Huila Uplands and the strip extendingeastward to the Cunene (Matala-Capelongo)have high agriculturalproduction potential, especially for maize growing. Within a short period (twvoto four years), Huila could probably supply the entire S- SW region'smarket grain needs, estimatedat 90,000, tla in addition to the farmers' own consumptionof about 70,000 tla. Infrastructureis mostly in place in this area. The traditionalsector plus a number of medium-size commercialfarms in the plateau area are expected to respondquickly 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 followingan improvementin incentivesfor farmers. Huila could also contributesubstantially toward meeting the region'sdemand for beans, potatoes,sweet potatoes and various fruits (pears,apples, citrus and plums). Livestockpotential is considerablein the S-SW region, particularlyfor cattle. Sufficientsurpluses to meet the regional requirements,estimated at 8,000/10,000tons of beef per year, are possible in the short run. Pot¶ntialexists to meet the needs of the N-NW region as well, which includesthe denselypopulated Luanda area. The region also has considerablepotential for export crops of which cotton and tobacco are the most promising. Processingfacilities for these crops exist in Benguela. The alluvial plains of the Benguela and Namibe areas in the S-SW offer high potential for irrigatedagriculture. The supply of horticulturalDroducts and tropical fruit (bananas,papayas, mangoes, avocados)could easily be assured from the truck-farmingarea of the Cavaco in the Lobito-Benguelaarea and those in Bero-Giraulin 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. Shipmentsof food from Huila, in addition to what is already brought in by air, are problematic because of the long distancesinvolved and the lack of security. Cultivationof the basic food staple, Cassava. is best suited to the N-NW area. Cultivationof this crop has already been considerablyexpanded in the areas around the capital. Cassava is now grown on many thousandsof hectares of 'musseque"-typesoils on the Luanda plateau. Its expansion into the interior of the strip has been continuingsteadily, despite the fact that unit yields have fallen sharply as a result of viral di-eases. Another major crop is sweet votatoes which is grown in the wet lowlands. Various forms of peas and beans such as the cowoea, the piaeonpeaLor Angola bean and the hyacinth bean are also grown, while maize is also becoming quite popular. Fruit and vegetable arowina in the Luanda surroundingsare carried on by large numbers of family-typeoperations. This source constitutesthe main supply of fresh produce for the capital. A wide variety of horticulturalproducts are grown in the dry season and tropical fruit the year round. - 55 - ANNEX VII Page 5 of 22

14. Developmentshould focus on rainfed crops since they will contributemost decisivelytoward resolvingthe regional food problem. Nevertheless,because of rapid populationgrowth and land scarcityarising from a lack of security,irrigated agriculture should also be considered. From a technical point of view, prospectsfor irrigatedagriculture in the N-NW strip are good. Land suitablefor irrigatedcrops in the Lucala- Mucoso zone have been identified. Developmentof 30,000 ha based on gravity-typeirrigation would be feasible throughdiversion of the Lucala river. Until such time as this area comes under irrigation,efforts in the river plain will be limitedto the areas that are least affectedby flooding. A wide variety of crops is raised in this area (bananas,oil palm, mangoes, papayas and citrus) togetherwith a range of horticultural products. A substantialproportion of the agriculturalproducts sold in the Luanda markets today comes from this region.

15. The N-NW strip is also suitablefor cotton. It used to be grown in large parts of Bengo and CuanzsaSu; provincesand especiallyin the Catete, Dondo, Porto Amboim and Sumbe areas where industrial-scalecotton ginneriesare still to be found. Peasant farmers are familiarwith the crop and the traditionalsystem of cultivationpractices. They should readily respond to policies and incentivesaimed at reactivatingcotton production.,jivestock 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 thousandsof hectares of prairie land on the Porto Amboim and Sumbe plateaus. This used to be an extensivecommercial ranching zone with some tens of thousandshead of improvedcattle, while the raisingof Karakul sheepwas becoming a significantactivity. Reactivationof stock raising in this zone should not presentmajor difficulties. The forestEr sector is also of significancein the N-NW region with a considerableproduction 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 the area of infrastructurefacilities, most of which are still usable or can be rehabilitated.

B. Maior AgriculturalProducts

16. This section presents in some detail the characteristicsof the major agriculturalproducts most of which will respond significantlyto structuraladjustment and reform. The areas referred to are the 36 agriculturalzones (AZs), identifiedin Map 1 attached to this Annex. They were delineatedby the Angola AgricultureStudy Mission, 1970-71 (Miss&ode InqueritosAgricolas de Angola). They representhomogeneous units on the basis of soil, economic and environmentalcharacteristics.

(1) Crops and Forestry

17. Cotton was for decades confinedto the semi-aridcoastal strip (Az 718 and 15) where productionfluctuated because of low and irregular rainfall. Cotton growing in the Cassange Basin (AZ 9) was more satisfactorydue to more and regular rainfall. In the coastal zone cotton - 56 - ANNEX VII Page 6 of 22 is grown on heavy soils (vertisols)known locallyas the *black Catete soils" (terrasnegras de Catete) which retain water well. Starting in the mid-sixtiescotton spread to other regions,covering large areas in the Cubal and Quilengues regions (AZ 23 and 27) where rainfallpatterns are much more favorablethan along tLe coast; also to the Malange plateau, especiallyin 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-aridSouth and Southwest,more particularlythe extensiveCunene lowlandsand adjacentareas. Total productionof 86,000 tons, of which 25Z (19,992tons) from peasant holdings and 75? (62,795 tons) from the commercial sector,Was reported in the 1970/71 crop year. At present cotton production is down to about 300 tons. Peanuts (Ground Nuts) are a traditionalfood in northern and easternAngola. In the traditionalgrowing areas, peanuts do well on recently cleared light soils. Peanuts are a traditionalsmallholder crop grown for both on-farm consumptionand for sale, promisingquick responseto production incentives. Productionin 1970/71 amountedto 26,936 tons, mostly from the smallholders,although commercialproduction was rising sharplyat the time, notably in the Cubal-Gandaregion (AZ 23). Present productionis only, about 1,700 tons.

18. Rice is an importantcrop in the areas of the Cuquema and Songo Rivers. Smallholderrice growing takes advantageof the temporaryflooding during the rainy season which coincides with the growing cycle. Yields vary depending on fluctuationsin water levels. Rice is grown commercially in regions such as the Quibala (AZ 17), where the flooding of river bottom lands can be controlled,and on higher elevationsin northeasternLunda (AZ 10), where upland rice is grown. The semi-aridbelt in southernAngola, particularlythe vast river plains of the Cunene and Cubango, should also be able to produce high rice yields. In 1971)72 paddy (unhulledrice) productionamounted to 57,604 tons. Smallholderproduction was approximately52? of the total. At present rice productionis estimatedat about 800 tons. Bananas grow throughoutmuch of the country and are an importantelement in the local diet. Areas of greatestpotential are limited, however, to the littoraland sublittoralzones north of the Coporolo,extending from the shorelineto 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, irrigationis needed, and deep, fertile soils with the correct characteristicsare required. Best conditionsare found in the lower reaches of the main watercourses. These river valleys offer the most favorableclimatic conditionsthigh mean annual temperatures(above 23-24 degrees C), stable temperatureand weather conditions. Commercialbanana growing started early in the sixtiesin the Cavaco Valley (Benguela), spreadingto favorableareas 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 cultivationspread considerablyduring the sixties. Growingwas initiallyconfined to higher elevations (above 1,600- 1,700m) in the Central Plateau, in the mountainousregion of Vila Flor - Quipeio. The cultivationsoon extendedbeyond to the Central Plateau (AZ 24) and in surroundingtransitional zones (AZ 17 and 31). The Cela region - 57 - ANNEX VII Page 7 of 22 became particularly important for commercial growing, in the early sixties. as the main supplierof 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. Potentialalso exists in the alluvialbottom lands along the coast south of the Rio Catumbela, particularlythe valleys of the Cavaco (Benguela)and the Bero and Giraul (Namibe). In 1971172production amounted to 138,757 tons with 54 percent from the commercialsector, and 46 percent from the smallholder. Productionhas since declined to about 8,000 tons. Sweet Potatooesare an importantlocal food staple, followingcassava and maize in importance. They are grown widely throughout the country, on land adjacent to river bottoms. They require relativelyfertile soils, either dry (or not very susceptibleto flooding)or growing on higher ground or hillsides in rainierareas. They are usually associatedwith other crops (intercropping). Yields are best in the humid and subhumid areas with higher mean temperatures; they do less well below latitude of 14 degree S. Estimatedproduction was about 250,000 tons in 1973. Present productionis estimatedat about 100,000 tons.

20. Robusta Coffee is grown over a wide area, ranging from the northern and northwesternfrontier zones to latitude12 degree S along the mountain relief between the sublitoralzone and the subplateauregion in the interior. This area benefits from ocean moisture which helps form ein- shore fogs of considerableduration in the dry season, offsettingthe lack of rainfall. This sustains the dense semideciduoustype forest where robustacoffee (coffeacanephora) is a subforestshrub. 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 plantationscan be establishedunder the cover of the natural forest. Certain savannaareas (AZ 17) borderingthe forest and enjoying similarclimatic and soil conditions(paraferralitic soils and ferrisols),are also favorablefor coffee plantationsunder forest cover. Arabica Coffees Favorableconditions for arabica coffee are found in the central region above elevationsof 1,400 - 1,500 meters where mean temperaturesfluctuate in the 18-19 degree C range and mean annual rainfall is in excess of 1,300 mm. These areas are associatedwith a particular type of paraferraliticsoils (thick,agrillaceous and well structured), with capacity to retain and store water for the 5-6 month dry period. Serra da Chicuma, where commercial growing predominates, and Andulo- Nhareia, where smallholderproduction prevails, are traditionalarabica growing areas. (AZ 24). Output of arabica coffee is small, representing not more than 4-5? of the total quantity of coffee traded. Total coffee production (robustaand arabica) reached 240,000 tons in 1974 but has declined to 13,500 tons since then.

21. Suaar Cane is grown over a vast expanse of Angolan territory(AZ 718, 17, 22/29, 23, 27, 33, 34, 35 and 36). Productionscale requirements and high costs of sugar mills limit the potentialareas. Irregular rainfall in areas otherwisesuitable make irrigationnecessary. consequentlysugar mills were all establishedon the coastal belt and on - -4 margins of large rivers,where--in addition to large tracts of suitable iuvial soils--theyfound a convenientand assured source of irrigation - 58 -

A= VII Page8 of 22 water. This low-lying littoral and sublitoral zone, particularly the 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 1970171 sugar production was 75,864 tons. By 1974175 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 Acucareira do BomJesus) has in the interim suspended operations. 22. Beans: Various types of beans are consumed by the population. Important are 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 typesof "peal and ^bean^ are Angola, Congo or pigeon peas (Cajanus cajan) and hyacinth beans (Lablab vigor), characterized by their hardiness and adaptability; the former are of part$cular interest for northern Angola, especially the drought-prone areas (AZ 2 and 718). Production in 1970171 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. Fruits 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 lighttexture, conditions found in large parts of AZ 4, 5, 13114, 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 largeparts 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, - 59 - ANM= VU Page 9 of 22 making sunflowergrowing an attractiveproposition for Angola. From a start in the early sixties, productionrose steadily to almost 20,000 tons a year (17,930 tons in 1970/71). Present productionis negligible. Cassava is the most widely consumed food of the local diet. It is a traditionalcrop in the northern half of Angol: Z 1, 2, 3, 4, 5, 6, 9, 11, 13/14, 19, and 21). Climate and soils are y favorablefor cassavas 6-7 month rainy season followedby a dry season, rainfall rangingbetween 700 mm and 1,400 mm, mean annual temperaturefrom 21 degrees C to 26 degrees C, and relativehumidity averaging65Z over the year. Cassava is eminentlya peasant crop. Productionamounted to 1,134,262tons in 1970171, exclusivelyfrom the smallholdersector. It is presentlydown to 250,000, though this estimate is very tentative.

25. Sorghum (known locallyas massambala)is a cereal characteristic of hot, dry climatic zones, found particularlyin the semi-aridband occupying the South and Southwesternparts of the country (AZ 27, 30, 31 (southernportion), 33, and 34). Sorghum, and also millet, another cereal resistantto drought, are closely linked with the traditionalpractices of pastoral peopleswho engage in subsistencefarming and cattle raising. Sorghum is relativelyundemanding in terms of soils and cultural practices, and it adapts well to heat and drought. It provides a good dietary complementto the milk and dairy productswhich are the mainstay of the local population. Productionestimates are difficultto 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 characterizedby its hardiness,and is more drought resistantthan sorghum. It is well adapted to the poor sandy soils of the South and Southeast. Like sorghum,it is typical of the subsistence agricultureof pastoral peoples,who frequentlyestablish their plots (lavras)in areas that have been manured by their cattle.

26. Maize is the basis of the diet in the denselypopulated central region of Angola. It is grown over a wide area. Essentiallya rainfed crop, it is the cornerstoneof smallholderfarming (AZ 17, 18, 24, 25, 30 and 31). Most favorableconditions are found between latitudes14 degrees S and 15 degrees S, with precipitationin the 800-1000mm range concentratedin a relativelyshort period of 4-5 months. This characteristicrainfall pattern changes from S to N, with the rainy season growing longer and having a brief dry period (knownas the pequeno cacimbo) separatingtwo periods of heavy rainfall. Well-structuredargillaceous soils are well suited to this crop, particularlythose with vertic characteristicsand even tropical fersialiticand parferralit5csoils. Until the mid 19709, Angola produced sizablemaize surpluses. Output in 1970171 amounted to approximately709,750 tons, of which almost all came from the peasant sector. We estimate present productionto be about 250 to 300 thousand tons a year, mostly for home consumption.

27. Oil Palm (elaeisguineensis) grows in a band of territoryin the N and NW up to an elevationof 500-600m. Oil palm trees are found in the hot, humid valleys (AZ 1, 2, 3, 4, 6, 7/8, and 15), where dry-seasonwater requirementsare met by groundwaterclose to the surface. Palm oil plays a major role in the local diet, extendingfar beyond the tree growing areas. - 60 - m arII Page 10 of 22

Smallholdercultivation would be of considerableinterest along the banks of the major watercourses. Oil productionwas in the 20,000 ton range in the early 1970s with the smallholdersector accountingfor about 10 percent of the total. Productionhas since declined to negligiblelevels, 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 subplateauregion of Lucala-Cacuso(AZ 13114), and South, in the Bocoio- Cubal region and subplateauregion (AZ 23). In addition to these areas with favorabletransportation infrastructure (with the s6uthern area also benefittingfrom proximityto the port of Lobito), sisal plantationswere also found in other parts of the country, notably the interiorplateau in Kuanza-Sul. Yields were generallyhigh. The Lucala-Cacusosubplateau zone can be identifiedas the most favorablearea for this crop. (AZ 17,23 27). The region generallyhas a subhumidclimate with a relativelyhot six-month dry season followedby a rainy season with precipitationaveraging 800 - 1,100 mm. and good soils. Sisal cultivationhas virtuallyceased today. Productionwas around 48,000 tons a year in 1970/71.

28. Tobacco is an importantsmallholder crop especiallyin the Cacuso-Cotaarea (AZ 13f14) and a significantcommercial crop in the Southwest,particularly in the Quilengues-Chongoroiarea (AZ 27). Smallholderproduction is in small plots using simple technologyto produce a dark air-driedtobacco with ready local market. Commercialgrowing is practicedon the moderatelyfertile light or medium-texturedsoils found along the banks of the major rivers of the Southwest,yielding high quality flue-driedyellow tobacco. In addition to the traditionaltobacco-growing areas listed above, other regionsalso lend themselvesto this crop, notably AZ 25, 31 and 34. Tobacco productionsatisfied the needs of the Angolan market. Three processingplants (two in Luanda and one in Benguela)were fully employed. In 1973, 4,800 tons of Virginia and Burley type tobaccowere produced,including a few hundred tons of dark tobacco produced by the smallholder. Today productionis negligible. Wheat growingwas widespreadin the higher-elevationareas of the planalto, particularlyin the Central Plateau (AZ 24) and the Huila Highlands (AZ 30), where it is cooler during the rainy season. Cooler conditions *coincidewith the crop's vegetativecycle, making it rather susceptibleto rust and causing considerablefluctuations in output. Thus, whereas productionin the fiftieswas in the region of 30,000 tons, the 1970171 harvest amounted to only 22,566 tons. The smallholdersector contributed 432 of the total. Trials at the Cunene ExperimentalStation for Irrigated Crops (AZ 34) with irrigatedwheat, produced excellentresults, effectively controllingthe rust problem.

29. Forestry Resources: Angola's forestryresources and potentialare considerable. In 1973, 182.0 thousand tons of forestryproducts were exported. In 1985 wood exportswere 24.9 tons, up from 1.2 thousand tons in 1980 (Appendixtable F.6). Maiombe in Cabinda (AZ 1) and Dembos (AZ 3) regions have the main forestrypotential. Dense humid forestsare the centers for the productionof 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 Southeastof Angola, (AZ 26/28, 32 and - 61 - ANNEU VII Page 11 of 22

35), the dry forest or open forest stands growing in the vast territory covered by Kalahari sand also include a variety of speciesof economic value such as girassondeand mussibi. The potentialfor exotic svecies 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, found in extensive areas at higher elevations. The eucalyptus area exceeded 150,000ha in the early 19708, with the wood produced going to the Alto Catumbelapulp mill and the Benguela Railroad. A second pulp mill was under constructionin the mid seventiesbut was never completed. The Alto Catumbelapulp mill has been out of operationfor severalyears.

(2) Livestock

30. Livestockpotential is significantthough productionfaces similar difficulties as the rest of agriculture. Water has become a major problem. Livestock acquires special importancein the immediatefuture considering that about 45 percent of livestock is found in relatively secure areas. Native livestockherders, pastoralists,raised cattle as a way of life long before the arrival of the Portuguesecolonizers in the 1500s. In the early colonial period Portuguesemerchants exchangedgoods for animals with the pastoralists. As the colonial rule became more established,merchants turned farmersand cattle raiserswhile continuing to trade with the native people. Later, large scale rancheswere es- tablishedwith improved animal stock and increasedcommercialization. The pastoraliststravel from place to place as a way of life, searchingfor water and grass, trying to escape from tripanosomiasis transmitted by tsd- ts4 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'slife in these regions,the standard of value, and cattle are part of the festivitiesof birth. puberty, and wedding. Though pastoralism and ranching are different systems of cattle raising, the two became interdependent.The ranchers were the main source of meat, the pastoralistswere an alternativesource, with the stock they maintained as their securityand savings. The disruptionof ranchingat independenceand the neglect of the pastoralists,compounded by security problems and lack of goods for exchange,reduced beef productionfrom 24.5 thousand tons a year in the early seventiesto 3.5 thousand tons at present. Having been a meat exporter in the early 1970s, Angola is now a meat importer,importing about 20.0 thousand tons of meat yearly.

31. Beef Cattle raising in toAeSouth and Southeastis dependenton the availabilityof water. Water tends to limit, even more than pasture, the reproductionrate and herd size. In the traditionalpastoral zones (AZ 22129, 23, 27, 30, 31, 33, 35 and 36), cattle numbers reflectedthe limitations imposed by the environment. Numbers would decline sharply at the height of the dry season, when the animals are obliged to crowd around the few sources of water. Hany would die from lack of food brought on by overgrazing. Action was taken in the mid-fiftiesto break the boom-and- bust cattle cycle of abundancefollowed by drought. These measures took the form of providing, throughoutthe region (AZ 22129, 33, 34 and 35), a - 62 - ANNMX VII Page 12 of 22 series of livestockwatering facilitiesby tappingunderground water resourcesand constructingreservoirs. The results of these measures were spectacular. Instead of the old pattern of disastrousconcentrations of animals around the few permanentwater sourcesand on the banks of the Cunene during periods of crisis, the herds remaineduniformly distributed across the territory,allowing a significantincrease. In the course of some two decades, this ezpansionin grazing areas in the South resulted in an increase of one million head of animals (from 1.8 million in the mid fifties to approximately2.8 million in 1974175). The commercialsector increasedsignificantly, with grazing areas ranging in size from 5,000 ha to 20,000. The period saw the establishmentof severaldozen large cattle ranches. Meanwhilebeef cattle raising spread outside the traditional pastoral areas of the South into the plateau region (AZ 13114, 17, 24 and 25) where oxen had hitherto been associatedwith farmingonly as work animals (for plowing and animal traction). The harshnessand difficulties of the environment(poor natural pasture and inadequatehealth conditions) were overcome throughproper disease and pasture control. The central region became a favorablearea for stock raising, and in some respectsmore promising than the traditionalareas in the South. as it was possible to raise a higher number of animals per unit of land without water availability problems. A large industrial abattoir was established in the city of Huambo, processing severalhundred head of cattle a day. Cattle raising in SouthernAngola is becoming increasinglydifficult. South- African troops have systematicallydestroyed the water spots (artesian wells, small dams and water pools), most of which are now unusable. In consequenceof the water problem, security and policy conditions,several areas where cattle were previously raised are now almost deserted.

32. Dairy Cattles To judge by the successachieved 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, particularlyin the higher-elevationplateau regions,potential is as good. At independence,Angola had three main dairy productioncenters. The largest of these was the Cela-Catofedairy with some 60,000 coWs producing120,000 liters a day, followedby Huambo (30,000liters/day) and Matala/Capelongo(15,000 litersjday). Apart from these modern well- equipped creameries (pasteurizedand sterilizedmilk, cheese and butter), there were also smallerproduction facilities near the towns of Lubango, Benguela and Luanda. Goats represent a major source of animal protein for the local populationand are resistantto drought. Like pigs, goats a-e found throughoutthe country. Their concentrationwas highest where a system of markets existed, geared to the consumermarket in Luanda.

33. Herd Estimate: The likely distributionof cattle and goats in Southern Angola is shown in Table VII.l. - 63 -

Page 13 of 22

TABLE VII.1 Distributionof Cattle and Goats in SouthernAngola

Province Cattle Goats

Huila 452 63? Cuneme 302 142 Namibe 10 92

Sourcet Ministry of Agricultureand Mission estimates.

According to the 1971 census, the last census available,there were 2,244,000cattle and 872,000 goats. The Ministry of Agricultureestimated that in 1984 there were 5,408,000cattle and 2, 101,000 goats. For these estimates,it was assumed that the annual net growth rates remainedthe same since independenceas in the colonial period, i.e. an average growth rate of 7S per year for cattle and goats. A 7S growth rate, however, is excessivefor the conditionsprevailing in Angola since independence. The Mission estimatesthat 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 1,300,000animals (AppendixTable F.1). (3) Fisheries

34. Angola has a rich 1,600 km long shore for fishing. The Benguela's sea current improves the potentialfor catch along the Southern seaboard. The 1972 fish harvest reached 600 thousand tons. The Portugueseexodus in 1975 depletedAngola of its fishing fleet and expertiseand the catch declined to as low as 76 tons in 1983. Present estimatesare around 200,000 tons. The increase is due to the agreementsthe Angolan governmentreached with foreigncompanies to fish Angolan waters. These contractshelped 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 amountswere only 195,000 tons. The technologiesused by some foreign fishing fleets are endangeringfuture potential. It is suspected that some use sucking techniques,which cause irreparabledamage to seashoreplankton. There have been reports of deteriorationin fishing locations.

C. Rural Structure

35. ProducerOrganization. Policies regardingthe organizationof agriculturesince independencehave emphasizedstate or collectiveowner- ship. In the words of Agostino Neto, Angola's foundingpresident, 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 - 64 - Am=E VTI Page 14 of 22 transform these small-holdingsinto cooperativesor state farms. . .'. 2/ However, some private commercialfarms continuedto exist and the present S.E.F. program encouragesthe expansionof private commercialfarming and gives greater attentionto the individualpeasant producer.3/ Two main forms of production organizationwere establisheds

1. The AUPs (Aarupamentosde Unidades de Produc&o) or State Farms. Abandoned commercial farms were combined into state-owned production units with managers and workers as public employees.In the case of coffee t:ieyare known as 9 empresas territoriaisde cafe I ( 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 agriculturalenterprises 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 Rwanzas, or 26Z of the reported financialloss of the enterprisesunder the Ministry of Agriculture.

Table VII.2s Losses of State-ownedAgricultural :nterprises ('000 Kwanzas)

1983 1984 1985 1986 AUPs (State Farms) 1,259,957 714,800 399,073 476,590 Comp. Agrfr. e Empresas Locais 849,084 738,100 456,843 449,816 Emp. Territ. Cafe 396,537 725,600 1178,771 951,519 Emp. de ServiTos 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 1,814,523

Sources RelatorioSobre a Actividadedo Sector Agrario em 1986, Ministry of Agriculture,1987. This table does not include ENCODIPAwhich comes under the Ministry of Commerce. Its deficitwas reported to be at about 100 million Kz in 1986.

2. PeasantAssociations. Intended originally to be collectives, some as cooperatives,they have become agglomerationsof peasant households making their own productiondecisions. Their presumed advantage is

21 As reported in M. Wolfers, and J. Bergerol,Angola in the Front Line. Zed Press, 1983 p. 140.

3l The Angolan constitutionallows private ownership: 'privateactivities and property, even those of foreigners,so long as they are useful to the country'seconomy and to the interestsof the Angolan people, - 65 - ANNEX VII Page 15 of 22

priority access to governmentservices and inputs. Unlike state farms, peasant associationsdo not collectivizeproduction.

36. Despite the effort to change the rural structureto conform to ideologicalconsiderations, the underlyingpeasant organizationremains the same as it was before independence. Today the rural structureconsists of three major groupings: (a) declininglarge-scale state farms; (b) relativelysmall numbers of Portuguesefarmers known as 'cooperantes," producingmainly fruit and vegetables;and (c) a large and dominant sector of peasant (small holder) agriculture. Various types of producersmake up peasant agriculture. They includepastoralists herding in the Southern regions; small scale farmers producingmaize, sorgum and cattle in the transitionalzones of the pastoral areas of the South; small farmers of the fertile and densely populatedcentral 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 typicalpeasant family cultivates1.5 to 2.5 ha with subsistencecrops. Rotation and intercroppingis the usual practice. Tools are rudimentarywith the hoe most common. Animal traction is used in some areas as in the fertileareas of Huila province. We estimate that there are about 800,000peasant family units.

37. Whereas peasant agricultureremained essentially unchanged since independence,commercial farming which flourishedin colonial times, has almost disappeared. The Portuguesecolonial policy supportedsettlers from Portugalwith land grants and financialincentives (coffee, cotton, citrus, tobacco, beef, poultry, etc.) Substantialinvestments were made in infrastructuresuch as irrigationand transportin supportof commercial farming. Efficiencyvaried, with highly productivefarms in tIe minority, many of which belonged to urban-basedindustrialists and businessmen. Farm size varied, with some farms as large as several thousandhectares. Commercial livestock production is estimated to have been as high as 40? of the total. The commercial sector was supportedby agro industries, marketing and processing infrastructure. Animal feed mills catered to the dairy, swine, and poultry industries. Other industriesincluded flour mills, slaughter houses, fruit canning, vegetable processing, tobacco, and cotton processing.

38. Marketina. The Ministry of Internal Commerce (MIC) is responsible for the supply and distributionof goods in both rural and urban areas. In rural areas MIC is expected to supply consumptiongoods in exchange for agriculturalproducts. However, the distributionof meat comes under the Ministry of Agriculture. Between twenty and thirty thousandmerchants performed the rural marketing functionbefore independence. Most combined tradingwith farming and cattle raising. The variety and flexibilityof the large number of private traders and entrepreneursresponded to the local conditions in ways which the present centralizednational 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 agriculturalinputs. As a result, the peasant is no longer producing for the market but only to meet his family'sneeds. In - 66 - AMNEX VII Page 16 of 22 response to this situation,a sizableparallel market developedwith prices that range from 20 to 60 times officialprice. With such major markets distortions,government stores have few goods to offer. It is estimated that up to 90X of family income in Luanda is consumed in the parallel market. Imports and food aid are increasingdramatically to close the food gap. As most peasantshave sufficientcereals, imported food goes to meet urban demand, the needs of the armed forces, and the displaced.

39. It is difficultto estimatehow much of the domestic agricultural productionmoves through official channels,although it could not exceed 10 to 151 of production. For instance,in 1986, maize productionthrough officialchannels was 18.6 thousandtons. In contrast,total maize productionis estimatedto be about 300 to 350 thousand tons, having been as high as 700,000 tons in 1971. Consumer goods, when availablein rural areas, can be purchasedup to the value of the produce the peasant supplied the store at official prices. The shelvesof these stores,however, are empty and what goods become availablemove quickly to the parallelmarkets. Greater reliance on market forces is needed, not because such reform is in itself sufficientto encourageagricultural development but because the flexibilitywhich markets allow is a prerequisitefor other requirementsof long-termagricultural development.

D. Agricultural Support Services

40. The Ministry of Agricultureis responsiblefor most agencies and organizationsthat provide servicesto agriculture. Their effectivenessis seriouslycompromised by excessivecentralization and a shortage of qualified staff. In the provinces,the Ministry of Agricultureis representedby the Delegation (Delegag&o)with *directorates'supporting peasant associations, livestock,conservation, and other corresponding services from the national level. The emerging attentionto the neglected peasantry is mistakenlyperceived as requiringthe creation of another layer of costly official institutions. The recently introduced agriculturaldevelopment stations (EDAs),for instance,are already burdened with Departmentsof Planning,Finance, Human Resources, Technology,Supply, etc., another cumbersomebureaucracy. Agricultural policy should move in the opposite directionand should rely less on the public sector because of the latter's severe human, financialand organizationalconstraints. Some of the agriculturalsupport service institutionsare describedbelow.

41. Mechanization: ENAMA (EmpresaNacional de Mecanizag&oAgricola) provides mechanicalservices to agriculture. It is involved in ground clearing,leveling, and constructionof earthworksfor reservoirs. ENAMA's work is presentlyconcentrated in the most secure areas in the south and in large scale state farms. In the absenceof precise data it is difficultto assess the performanceof the ENAMA. It is unlikely,however, that tractor cultivation,with some exceptions,is economic in the conditionsprevailing in Angola. Scarcity of technicaland material resourceshave severely affected the work of ENAMA as well as the rest of agriculturalservices. In 1986 less than 22 of the work force of ENAMA was classifiedas technical. More than 702 of its tractor fleet was inoperativedue to lack - 67 - AN= VII 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 individualdonors promoting their own brands of equipment.

42. Fertilizerand Imolements: DINAMA (Distribuidora Nactonal de Materiais Agricolas)is responsiblefor the procurementand distributionof implements,fertilizer and insecticides.It distributesthese materials on the basis of a national master plan for the agriculturalsector as elabora- ted by the Ministry of Agricultureand approvedby the Ministry of the Plan. DINAMA is heavily dependenton imports (AppendixTable F.4). There exists some Luanda-basedcapacity to manufacturesmall equipmentsuch as machetes,hoes, and plows. Domesticproduction of implementsis at a standstill,however, because of a lack of raw material.s.All chemical fertilizersare imported. DINAMA has warehouses in Luanda and in the provincialcapitals with outlets in some localities,which sell directly to the public and act as distributionpoints for delivery to state farms, peasant associations,etc. However, even when fertilizerand other inputs are available,transportation is a major constraint. The transport fleet of DINAMA cannot meet the demand for transportof large volumes of materials over long distanceson poor quality roads. The problem is exacerbatedby the high percentageof equipmentout of commission, estimatedat about 70? of the fleet. The security situationfurther hinders distribution.

43. Seeds: AGROSEMENTESis responsiblefor the purchase and distribu- tion of seeds. Agrosementeswas formed under the Ministry of Agriculture In 1983. Until then ENCOPIDAwas responsiblefor this service. Seed distributionis given high priority by the Ministry oi Agriculture. The amounts of seed distributedhave been increasingin recent years. The distributionof maize seed increasedfrom 773 tons in 1984, to 1.668 tons in 1985, and 1,994 tons in 1986. There has been some improved seed productionunder Yugoslaviansupervision. There are plans for seed developmentin multiplicationcenters in a number of areas. Even when seeds are timely distributedthe productivityof hybrid seeds is dependent on the timely availabilityof fertilizers(supplied by DINAMA). The coordinationof complementaryinputs has not worked well. AGROSEMENTES emphasis upon hybrid maize appears to be of limited relevanceto the mass of peasants for whom the supply of proven local varietiesmight well be more beneficial.

44. Marketingand Distributionof Goods: ENCODIPA (EmpresaNacional de ComercializaVAoe DistribuigAode ProdutosAgricolas). ENCODIPA provides consumer goods to rural areas in exchange for agricultural products. Until 1981 ENCODIPAwas in the Ministry of Agriculture. Since then it has been under the Ministry of InternalCommerce. It operates through commercialoutlets in urban and rural areas. The amounts of goods procured and distributedby the Ministry of InternalCommerce are determinedby the central government,as are the distributionamong provinces and between cities and the countryside. The goods available throughENCODIPA fall far short of need and the system as presently functioningdoes not provide adequateincentive for productionand exchange. ExtensionServices: The 3dinamizadoresrurais' (rural - 68 - ANNEX VII Page 18 of 22 mobilizers)can be considereda type of rural extensionagents. Approximately1,000 dinamizadoreshave been trained since independence. Attritionhas been around 30X. Their preparationis poor with only about one-thirdreceiving 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 dinamizadoresand the other services -coagriculture.

45. AiriculturalDevelopment Stations (Estagoesde Desenvolvimento Agricola - EDAs) are a recent introductionand a response to the failures of other institutions. EDAs aim to supportpeasant associationsby helping with organization, technical, financial, and marketing services. The intention is to transform the state farms into peasant associations. Unlike state farms peasant associationsdo not collectivizeproduction. The EDAs were designed to fill the gap between DINAMA and AGROSEMENTESand the peasant. They are to receive suppliesand deliver them to the peasant associationsthrough lower level Centros de DesenvolvimentoAaricola (CDAs). The CDAs in turn direct the activitiesof the dinamizadoresrurais (extension). EDAs are flawed by the same structuraland strategicinade- quacies found in the overall agriculturalstructure and policy. They face the same problems as all institutionsset up to serve agriculture,notably a lack of training,an excessivecentralization, a lack of resourcesand economic policies adverse to agricultureand the peasantry.

46. AariculturalEducation and Research. (a) AgriculturalEducation. The institutionswhich serve agriculture,whether private or public, depend upon skilledpeople. The scarcity of trained people at all levels is enormous. The colonial regime provided little training to Angolan nationals. Decolonization and the withdrawalof trained persons depleted all sectors of the skills needed to manage agriculturefrom the most basic level. The situationof the agriculturalschools describedbelow shows the poor state of agriculturaltraining facilities.

47. The AgriculturalSchool at Huambo began graduatingEng. Agronomos (generalagricultural degree) in 1983. It expects eight to ten graduatesa year in agricultureplus four to five in veterinary science. Of about 80 students admitted,752 dropped out the first year. Staff, materials and general infrastructureare very deficient,and lack of food is a main reason for the high drop-out rate. Of the elementaryand secondarylevel agriculturaltraining schoolsin Angola, none is fully operational,due mainly to the security situation. They includes

(1) Escola de N'Gangassol; Situated in the province of Malange, it was inauguratedin 1979 to offer training in basic agriculture,livestock, cooperativedevelopment, accounting and agriculturalmechanization. The plan was to have 300 students. Because constructionwas not completed,the maximum capacity is 80 students. As of August 1983 this school has been closed due to the gravityof the military situation.

(2) Escola de Mecanizac8ode Sumbe; this school is located in the province of Kuanza-Sul. It was inauguratedin 1979. Its objectiveis training in agriculturalmechanization at the regional lerel. Its planned - 69 - ANEX VII Page 19 of 22 capacity was 200 students,but constructionwas never completed. Though enrollmentreached 59 students,the facilitiesproved inadequate. The deteriorationof the military situationin the area forced the school's closing in March of 1984.

(3) Escola de Mecanizacaode Huila; this school is situated in the city of Lubango. It was inaugurated in 1978 as an agriculturalmechanization training school to serve the needs of the provincesof Huila, Namibe, Kunene and Kuando Kubango. The school has a maximum capacityof 120 students,and being locatedin a secure city continuesto be in operation.

(4) Escola Apraria do Cafe da Gabela; this school is in Gabela in the province of Ruanza-Sul. In 1978, 127 studentsstu,.d4 courses in sanitation. Its present state is not clear, but it is probably closed.

(5) Centro ComandanteN'zage (Huila). Closed. Offering only occasional seminars.

(6) Centro de Formac&o de Dinamitadores Rurais Para o Cafe do Kilombo (Yuanza-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 regularcourses. A few training courses are given intermittentlyin the province.

48. With such limltationsin training t'acilitiesand the exodus of qualifiedpersonnel at independence,human resourcesfor agricultureare practicallynon-existent. The human resourcedeficiencies and the long time needed to reach even a minimum criticalmanpower level call for alternativeless human-resourceintensive paths. Even when institutions such as those for extensionand research are consideredimmediate prerequisitesto agriculturaldevelopment, simple and very selectiveforms should be encouragedrather than the wholesale transplantof institutions from environmentswith ample human resources. A better understandingof already existingpeasant systems and their improvementmight be a better approach to rural developmentin these circumstances.

49. (b) AariculturalResearch: The Institutode Investigag&o AgronomLcahas a staff of six agronomists,five of whom studiedat Huambo. The instituteis the entity responsiblefor agriculturalresearch in Angola. It is located at Chianga, 25 km from Huambo. Before independence the institutehad 60 professionals,some with graduate training. With the Portugueseexodus only one remained. The lack of trained people and the dismantlingof the limitedagricultural research at Independence,left Angola with no research capability. Some sporadiccontacts with international research centers take place (CIMMYS,ICRISAT, - 70 - ANXX_ VII Page 20 of 22

INTSORMILL) 41 and national programs, such as with EHBRAPAin 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 communicaticn, however, can take place effectively only when national professionals with minimum scientific and research method training are available. Without Angolan professionalsagricultural research vill remain dependenton external human resourcesand Angola will not acquire the capabilityfor adaptationand continuity.

S. AgriculturalPolicy Adiustmentand Reform

50. Policy Adiustmentand ResDonse. The memory of colonial exploita- t.on and the identificationof that period with a liberalmarket-based agriculturalpolicy, should not prevent the return to greatermarket reliance. The objectivesof SEF are an indicat_onthat Angolan economic policy is beginning to make this distinction. The distributionof power and land ownership are now differentfrom that in the colonial period. The possible adverse effects of market-basedagricultural policy can be dealt with through correctivemeasures and selectivecontrols. The balance between social and economic objectivesin agriculturedoes not have to preclude incentivesfor individualproduction, especially from the peasant- ry.

51. The Governmentauthorities consulted by the Missionwere unanimous about the need for urgent reform of agriculturalpolicy. Policy reform is prerequisiteto the neened technicalassistance, institution building and agriculturalinvestment for the country'slong-term agricultural develop- ment. Present productionlevels are so distant from productionpossibilit- ies and past performance,that an initialpositive response is assured. A program of agriculturalpolicy adjustmentshould draw from experience elsewhere in Africa and shculd includes (a) productionlncentives through remunerativeprices and the availabilityof consumergoods and inputs in the country-side;(b) institutionalreform encouragLnglocal intermediaries and private transportfor marketing and distribution;(c) investmentfor rehabillitationof storageand transportsand (d) coordinatedand focussed technicalassistance and training to strengthenselective support services for agriculture,especially agriculture research.

52. Agriculturalsupply response to price incentiveis shown to be positive throughoutAfrica, and Angolan agricultureshould not be an exception. A recent experiencein Angola illustratesthis. Improved availabilityof goods in the countrysideof the Huila Provincehas brought about significantincrease in marketablesupply. The total productionof

41 CIMMXYT- International Center for Wheat and Maize, Mexico ICRISAT - International Center for Semi-arid Tropics, India INSSORMILL- International Project for Sorghum and Millet, Nebraska EMBRAPA- Brazilian Agricultural Research Company - 71 - ANE VII Page 21 of 22 maize moving through official channels reached 17.5 thousand toons in 1986, of which 1/3 was produced in Huila. Though this performancereflects better security conditionsin this province,it is also an indicationof peasant response to incentives. This productionincrease is modest when consideringthat in 1970 Huila marketed 50.0 thousand tons of maize.

53. MarketingPolicy should focus on improvingdomestic and interna- tional marketing of agriculturalproducts. The marketing structurefor agricultureshould follow the guidelinesof S.E.F. for decentralization and reducingpublic sector dominanceof the economy. Retail outlets should be transferredto the private sector. The Ministry of Internal Commerce (MIC) should become a regulatingand monitoringagency 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 improvemarketing includes (a) legalizationof the OCandongueiro' (privateintermediary) and developmentof 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 InternalCommerce; (c) concession to private traders of a major share of foreignexchange earnings from exports; and (d) review of the operationsof the more than one hundred public enterprisesunder the Ministry of Agriculturewith a view to divestingor eliminatingthem, with exceptionof those providingtechnical assistance, training,and research services.

54. The projected supply responseoutlined in Appendix table F.7 is thought to be attainablewith resourcesalready available. Maize yields are presently about 500 kglha. At present average yields, 1.6 ha per family is needed to meet subsistenceneeds; without land productivitygains a family can increase cultivationto 2.5 ha. with their available labor and land. Even though short term productionresponse can come from the available labor and land, the long term developmentof Angolan agriculture will require improved practices,inputs and trained people. Increasingthe financialand human resources,and improvingthe institutionalset-up and organizationnecessary for such developmentis a long-termprocess. Use of improved seeds, fertilizer,insecticides and animal tractionwill raise yields significantly. The project *Le Developpementdes Cultures Vivrieres dans la Province de Huila, with supportfrom Caisse Centrale de Cooperation Economique of France, expectsyields of 1.5 tons for maize per ha by the participating15,000 target farms. The average yield of maize reportedby the pilot survey at Hogue was 1,216 kg/ha.

55. Increasingagricultral production will require institutional reform to reduce central state control and provide for more relianceon markets and the peasantry. Such a reform is not as radical as it might appear since, in practice,production and distributionof the bulk of the agriculturaloutput already takes place outside the formal institutionsand controls. This is also the case with institutionalpolicy, i.e., the gap between the official,controlled and planned actions and what actually happens, is considerable. - 72 -

Page 22 of 22

56. The Roliticaleconomy of adjustment. A broad liberalizationof agriculturalproduction, marketing and distributionfor all agricultural and food products within the context of a liberalmacroeconomic policy as expounded in the objectivesof S.E.F., is a preriquisiteto reversingthe dangerouslydeclining food situationin Angola and to start re-energizing the country'sagricultural potential. The major part of the economy already operates in the parallel informal sector. As the contributionof agricultureto Governmentrevenue is marginal,with the exceptionof coffee, the liberalizationof agriculturalpolicy will have no adverse effect on current public finance. Rather, with appropriatepolicies, the increase in agriculturalproduction should improve agriculture's contributionto public revenue.

57. The short-termeffect of price liberalizationwill be adverse for those who presentlybenefit from access to agriculturalproducts through channels at controlledprices. But only a small share of the population has access to this limited supply and the percentageof income spent on price controlledgoods 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'-- Govermentstores at official prices. What the agriculturalpolicy reformswill accomplishis to formalizellegitimizewhat is now the paralleleconomy. An indirectbenefit of more relianceon the market, would be the reductionof corruptionwhich the large discrepanciesbetween officialand parallel market prices is fomenting.

58. In conclusion,there are secure areas in Angola for an immediate agriculturalproduction response to policy adjustment. The gap between present levels of productionand potentialis so great, that initial response should be significant. For this to happen the system of state control must move toward much more relianceon markets and private initia- tive than at present. The social costs of such adjustmentare small as the bulk of the agriculturaleconomy is already operatingoutside the formal channels. Policy incentivesand institutionalreforms should be followed by investmentsfor long-termdevelopment of human resources,infrastructure and services to improve productivity. Agricultureis therefore,a key sector in the on-going transitionof Angola from a most sufferingand centrallycontrolled economy, to a country of peace and a market enabling system. Agriculture,especially the food producingpeasantry, will be a beneficiaryof such a change and also a major contributorto its success. - 73 - ANNEXVIII Page 1 of 45

TRANSPORTAND COMKUNICATIONS

A. Sector Overview and Orsanizations

1. Sector Overview. Angola's basic infrastructure reflects strong colonial antecedents and its present configuration, though not its condi- tion, is essentially unchanged since Independence (see map 1). In 1975, the system had an enviable modal mix for a developing nation - rail, highway, air, cabotage and shipping - which provided an excellent oppor- tunity for potential transit facilities to match any coherent economic development planning. -It possesseda distinctivelateral three rail-port corridor symmetry (north,central and southern),supported by feeder road networks. Additional highways providedvery basic north-southprovincial links, as well as access to national borders. The air sector linked all key provincial cities and has subsequentlygrown to become the only dependablemeans of passengerand light freighttransit over much of the country.

2. In general,Angola has a sparse provincialtransport coverage which reflects the export corridor orientationinherited by the Government and the subsequentinability to modify this in the imediate post-colonial period. The air sector has grown significantlyin terms of traffic, stock and revenues during this same period, though its infrastructureremains weak and under-invested. Ports are strugglingto adjust to bi-directional traffic flows, new technologies and a cumbersome, inefficient labor system. Cabotage and international shipping services languish for lack of invest- ment, poor organization and elderly, obsolete ships.

3. In 1987, Angola's transportinfrastructure comprised 72,000 km of roads, 2,500 km 11 of railways,3 internationaland 3 cabotage ports, and a hierarchy of 31 airports. An estimated12,000 non-militarytrucks and 400 buses, 40 locomotives,11 long distance ships, 10 cabotagevessels, and 21 aircraft operated infrequentmodal servicesat low levels of efficiency. Rail and port systems form specificcorridors, 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 corridorsby 7,700 km of paved highway and 64,000 km of secondaryand feeder roads, which togetherwith the air services provide the main means of north-southtravel. Cabotage currently accounts for 180,000 tons of freightbetween the four main ports and has potential for substantialgrowth. The Cabinda enclave is dominatedby the oil industry and the non-petroleuminfrastructure is small.

11 The figure of 2,500 km for the rail network is "operationalor quasi- operational. For example, it includesthe 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 representsthe total registerednetwork, includingabandoned sections. - 74 - ANNEX VTIll Page 2 of 45

4. Output in 1985 and 1986 for the system under the Ministry of Transportand Communications(MINTEC) control is given in Table VIII.1. Total freight traffic for 1986, at around 4 million tons, is about the same for 1985, the roud and maritime sectorsmore than compensatingfor the continuing slide in rail traffic. In 1986 the number of passengerscarried fell to below 30 million, followinga decline in bas services,despite improvementsin rail and air transit. The importanceof 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 post-Independence years in the 1980's is compared with the final year of colonial rule. The data for the first half of the 1980's show a significantdecline in road revenues,rail and maritime holding constant, ports output slightlyrising while communicationsand air travel have both shown strong growth. It is soberingto note, however, that the total sector value in 1985 was less than half that achieved in 1974.

Table VIII.1. OUTPUT OF MINTEC CONTROLLEDTRANSPORT SERVICES, 1985-86.

Freiiht i Passengers2 1985 1986 1985 1986

Road 996.6 1.309.2 29,475.0 19,546.0 Rail 520.6 465.5 7,200.7 7,980.2 maritime 511.9 598.1 - - Air 43.0 34.7 926.7 1,097.7 Ports 1,739.0 1,551.0 - -

Total 3,811.1 3,958.5 37,602.4 28,623.9

Notes: 1. Thousandsof tons. 2. Thousandsof passengers. Source:MINTEC, 1987. - 75 - ANNEX VIII Page 3 of 45

Table VIII.2. OUTPUTOF TRANSPORTAND COMMUNICATIONSSECTOR 11

Sector 1974 1984 1985 1986 1987

Transports 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 Communications 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 nominalvalues. SourcetMINTEC, 1988

5. The sector has significantreal potentialas an earner of foreign exchange which should be recognizedin future national planning decisions. Foreign exchange revenues from internationalair links, foreign shippingand potentialmineral shipmentsby rail could be considerable. The dramatic decline of the rail, port and shippingsectors as foreign exchange earners, however, cannot be easily reversed,especially given the present security situation. The importanceof transportationto the Angolan economy and its central role in national recovery should be explicitlyrecognized in assistance programs. Transport services shouldbe organizedto provide agriculturewith essential inputs, as well as moving produce to marketing and export centers, and providingthe populationwith personalmobility.

6. Role of the Ministry of Transoortand Communications. Before 1975, most transportpolicy issueswere the responsibilityof the Ministry of Public Works, Highways and Transport. The new Angolan government,despite a desire for centralizedplanning, did not continue this apex function,possibly due to the chaotic nature of post- Independenceprovision of transportservices and the need to separate those transportactivities of a strategicnature from those with economic or social impacts. The well documented destructionand exportationof all types of vehicles, as a result of armed hostilitiesand repatriationrespectively, devastated the Angolan stock and the supply of vehicular servicesabruptly ceased in many regions.

7. The Ministry of Transportand Communications- MINTEC - was formed during 1976 and 1977 with the objectiveof providingpublic freight and passenger transport servicesto major markets and users throughoutthe provinces. It was given powers to fix tariffs, routes and service frequencies, as well as regulatingthe inflow of spare parts for vehicles through avice frequencies,as well as regulatingthe inflow of spare parts for vehicles through a material supply organization(ABAMAT) and another for vehicle maintenance (MANAUTO). MINTEC's responsibilityextended to all major modes although its power was in practice limited to assistingthe formulationof policy and monitoringannual performancedata. In an operationalsense, the entities providingair, maritime,cabotage and rail services under the MINTEC umbrella can be regarded as autonmous. - 76 - ANNEX VIII Page 4 of 45

Investmentprograms are probably the main collaborativearea but there is no clear evidence that the National Bank responds to well argued foreign exchange investmentrequests any more effectivelyor rapidlybecause of that assoc-iation.MINTEC is not a major ministry either politicallyor financially, although the newly formed planning unit may do much to correct this in the future.

8. MINTECdata on transportservice flows, levels and efficiencies, together with output and financial informationonly relate to entities under its control. However. road transportis the only mode seriously affected by this constraintsince highway traffic data exclude those trucks and buses operated by parastatalenterprises under other ministries, notably the Ministries of Construction,Agriculture, Fishing, Interior,and Mines and Energy. Data collectionfor private sector vehicles, for example, is presently the responsibilityof the Ministry of the Interior. In general, a number of governmentofficials expressed a desire to return to an apex ministerialdepartment with sole responsibilityfor all transportdata collectionand policy planning. In the absence of such an organization,the mission had difficultyin getting some vehicle data, frequentlyfor understandablesecurity reasons. The considerablefleet of Angolan military vehicles is thereforeexcluded from this report though they do at times provide transportservices in sensitiveareas. It should be recognizedthat MINTEC data under-recordthe numbers of active vehicles in Angola and this should be taken into accountwhen consideringroad transport data in this report.

9. Security. Any review of the Angolan transport and communications secter must be prefaced with details about the securityproblem. Angolan independencewas born out of armed hostilitiesand these have persisted, with varying degrees of intensity,up to the present time. The security problem has disruptedall transportmodes and severelyconstrained corridor dimensions. Services have been cut, capital and equipmentinvestment programs cancelled and domestic transit efficiency has been 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 shipmentshave ceased and port activities,1.7 million tons in 1986, are concentratedon handling import commoditiesfor urban consumption,especially food, for which rail transit is not well suited. Road transportto autarchicregional centers is only possiblewith armed convoys, operating irregularlyand at great cost. The road system has not been systematicallymaintained since Independence,in part due to guerilla attacks, and 4600 km (602) of paved surfacesneed rehabilitation or reconstruction. An unfortunateconsequence of these severe constraints is to attributemany transportmodal inefficienciesto the war and not to managerial incompetence,lack of trained staff, inadequatespare ports, subsidiesand state monopoliesand other constraintspresent in the sector. MINTEC are recognizing this in their planning, and the intent of this report is to achieve a balance between the real and sometimes intractable problems caused by the lack of security,and those unrelatedand Independentissues where improvementswould increasemodal effectiveness. - 77 - ANNEX VIII Page 5 of 45

B The Hishwav System

10. Characteristics. The current road network classifiedby type and length is given in Table VIII.3. The paved part of the system - about 7500 km or 10 percent - accordswith other African countriesand represents basic economic and strategiclinks betweenkey provincialcities and towns. Little or no maintenancehas been given to these highways and more than half the length now requires rehabilitationor reconstruction.Pavement wear over time in the absence of maintenanceis exponentialand unless this problem is rapidlyaddressed, 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 typicallyobserved in most provinces,it representsonly 3 percent of the Angolan network. Since such roads are sensitiveto lack of routineand periodic maintenance,it can be assumed that such roads are now in a very poor condition. The mission travelledgravel highways near Benguela and interviewedtruck operators in other regions,and both confirmedthe high levels of roughness that attends lack of gravel road maintenance.

Table VIII.3. ROAD NETWORK BY TYPE AND LENGTH, 1985.

Paved Gravel 1 Earth Penetration Region

North 2,064 401 7,270 3,011 West 1,756 708 8,074 9,776 Central 2,008 413 9,385 6,159 South 1,738 440 8,917 9,760

Total 7,566 1,962 33,646 28,706 Network Total 2 71,880

Notess 1. Includesother local materials 2. Excludes 443 km. of unclassifiedtypes Source: MINTEC Annuario Estatistico,1986

11. Almost 90 percent of the Angolan road network is either termed earth or penetration. The former has some basic engineeringdesign standardsand the latter is purely judgmentalin aligment, while both rely on the qualitiesof local soils. Here, maintaininggood 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 lack of maintenance since they are inherently weaker than the other, more expensive, categories. Operators stated that some sections of these roads had deterioratedto 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 compensatefor high operatingcosts and low productivityin preciselythose areas where - 78 - ANNEX VIII Page 6 of 45 economic developmentis most vulnerableto high transit costs. To summarize,the highway system is in poor conditionand needs modest funding for improvementswhich can be expected to have high rates of return on investmentlevels.

12. The 1987 truck populationis estimatedat 30,000 units but many of these are not operationalor are severelyunderutilised. For example, in 1986, only 34Z of the heavy vehicles controlledby MINTEC were operational and averaged around 11,500 km a year. Only the State trucking sector may presently import vehicles (thoughthere are plans to change this) and this is reflected in a fleet profilewhich is technicallysophisticated and young in age. A 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 generallyat least 10 years old and of simple, robust design. Fortunately,they are well suited to c-rrent Angolan conditionswhere journeys are rarely longer then 50 km and vehicle trip speeds are low. The representativetruck for this category is a Scania 75 or Mercedes-Benztwo axle 13 ton unit.

13. Road PassenserTransport. All transportmodes in Angola are capable of providingpassenger transit. At Independence,however, it was the road system which offered the best prospectsfor efficientmovements 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 assistancenor large investment plans. Tariffs, if properly structured,would have generatedfunds for maintenance,fleet growth and improvementsin transit infrastructure,such as bases, terminalsand collector stations. A study by French consultants for Luanda mass transit had been commissioned,and the sub-sectorlooked to have a healthy future.

14. The scale and ferocity of the struggle and disruptionof the mid- 1970s altered all these parameters. Most of the vehicular stock comprising over 250,000units was destroyed,exported or abandonedwithout the prospect of adequatemaintenance. This and the exodus of managerialstaff resulted in a dramatic decline in the supply of passenger services. As noted earlier, a principal reason for the creation of MINTECwas to correct these deficienciesthrough the provisionof public transportservices, at both provincialand city levels. In spite of some early success, principallyin the Luanda conurbanation,public serviceshave failed to match demand and are currentlyin a state of total collapse. The war situationhas contributedsignificantly to the decline by diverting potential investmentfunds, restrictingnon-urban flows through destruction of infrastructureand vehicles, and finally creating an impetus for rapid, unplannedurbanization. - 79 -

ANNEX VIII Page 7 of 45

Table VITI.4. MINTEC BUS UTILIZATIONDATA, AVERAGED BY PROVINCES,1985.

Category and Provinces Fleet Size Bus Availability1 Active Buses

1 Bie, Kuene, Kwanza N, Kuando Kubango,Hoxico, 1 - 20 3.3 1.4 Zaire.

2 Cabinda, Huambo,LuandaN, Luanda S, Namibe, 21 - 50 6.5 4.6 Malanje, Uige.

3 Beguela, Huila, KuanzaSul. 51 - 100 10.3 9.3

4 Luanda 236 62.0 53.0

Totals (units) 728 165 2 121 2

Notess 1. Those availablefor service.Active units are those in use. 2. Availabilityis 23Z and Active 17Z, of Luanda's total fleet.

Sources MINTEC, ETP, 1986.

Table VIII.4 gives bus passengerand utilizationdata for the latest availableyears. The MINTEC controlledbus fleet has fallen consistently through the 1980's to around 700 units in 1985, but more importantlyonly 17Z on average are actually operating. This is one of the lowest rates encounteredamong developingcountries 21 and confirms the failureto meet even a small proportionof potentialdemand levels. Passengertraffic levels have fallen for all categoriesof trip - urban, provincialand 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 for the same years. It should be rememberedthat this persistent decline occurred at the time Luanda experiencedone of its largest growth rates with the influx of war refugees.

2/ In the World Bank TechnicalPaper No. 68 ^Bus Services - Reducing Costs, Raising Standards",only Accra (24?) and Lagos (20?) have companies that come close to the Luanda figures. - 80 - ANNEX VIII Page 8 of 45

Table VIII.S. ETP URBAN BUS PERPOEHANCEINDICES, 1985-1987 (1981-100).

1985 1986 1987

Active Units 34 27 23 Trips 30 21 18 Passengershandled 29 19 13 Passengersper trip 96 89 74 Route Kilometers 30 21 19

Source:ETP, MINTEC; 1987

15. How then do people maintain mobility if public transportis not available? In Luanda there ±s some use of local trains. However, in most cases they simply walk, unless they ats prepared to pay for private services. At times, the flow of pedestriansin Luanda is so great that it impedesbus speeds and so contributesto lowering efficiency. The average new trip fare for public transit in Luanda is around 12 Kz. while sharing a private taxi or pick-up costs 500 Kz. This average private fare or 'processoquinhentos' is universaland governs all destinationswithin Luanda city boundaries for passengers,excluding large baggage which is extra. Since the averagemonthly salary is in the region of 12,000 Kz. simple arithmeticdictates that regularuse of private services is not a valid option for most travellers. Accordingly,private companiesand parastatalshave taken to providingbuses to collect their workers, in an effort to compensatefor lack of public transportand assure timely attendanceat work. Such arrangementsare not socially efficient,however, since these buses operate a limited scheduleat less than capacity along routes where lines of prospectivepublic passengerswait at stops.

16. Inter-provincialtraffic has all but ceased, and is unlikely to pick up until after the security situationimproves, although MINTEC has plans for improvingmobility in safe areas. Efforts are thereforebeing concentratedon urban operationsin general, and the Luanda conurbationin particular,to effect short term correctiveactions. These will be discussed in a later sectionof this report.

17. Road Transportand the SecurityProblem. Persistent lack of security throughoutmuch of Angola has had a dramatic impact on road use, vehicle operatingcosts, tariffs and highway maintenance. The typical scenario over the past decade demonstratesthe pernicious effect of regional instabilityon 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 have to increaseto compensatefor reducedpayloads and the risk of severe vehicular damage. Road maintenanceactivities become vulnerable to guerilla activitiesand cease in sensitiveareas. Pavement damage, especially to the mnnaingsurface, is not correctedand the resulting roughnesscauses additionalvehicle damage and higher operating - 81 - ANNEX VIII Page 9 of 45 costs. Tariffs then become so ligh that many products cannot be taken to market and sold at prices that cover productionand transportcosts. If vehicle attacks become severe, regionalauthorities may institutea convoy system where 20 or more vehicles are escorted by armed military patrols. This further reducesvehicle productivitysince it may take days to assemble all trucks, speed of travel is set by the slowestvehicle (typicallyunder 20 kph) and the convoy must stop for any breakdowns. Ultimately,as in 1987, the level of service is characterizedby high costs, low speed, infrequentschedules and inadequatecapacity.

18. These effects can be measured In at least two ways, by surveying Angolan operatorsand by simulatingthe major cost impacts. Data collected from ETP during the mission suggests that annual vehicle utilizationis now 20? of the level before Independence. Cross-checkingwith private operatorsbrought a similar response. Trips that were accomplishedin a week (e.g. Luanda-Andrada-Luanda)prior to guerilla activitiesnow take a month on average and have been as long as 53 days, principallybecause of convoy operations. Another group of constraintsidentified by operators are those resultingfrom a lack of any vehicle servicinginfrastructure over most of Angola. Vehicles thereforetravel with extra fuel, oil, water, spares and food for the crew which combine to raise costs and drive up rates. Tariffs in the public sector have not changed since Independence,but few vehicles are availableat these prices and their route structureis limited. Private sector vehicles are more numerous (thougholder in age) and owners base their prices on real resource costs.

19. Vehicle operatingcost (VOCs) impactswere simulatedby using the VOCs sub-routine(Brazil equations) from the 1986 Highway Design and Maintenancemodel (HDM III), with input data suppliedby ETP Luanda. Surface roughnessis measured in terms of internationalroughness index (IRI) units which record meters of vehicle suspensiondisplacement per kilometer of travel. These values are thereforein nominal terms where imported items are convertedat the exchange rate 30 Km to 1 US dollar. This should not affect the thrust of the arguments,however, since it is the cost differentialsnot the levels that are of interest. Some of the results selected to demonstratethe security impact on vehicle operations and road maintenanceare presentedin the statisticalAppendix Table 1.3. Two average operating conditionswere calculatedfrom Angolan vehicle records;normalt where annual vehicle utilizationis 50,000 km and the vehicle travels fully loaded in each directionof travel; and current: where vehicle utilizationhas fallen to 15,000 km per year and no return loads are available. The drop in annual utilizationaffects lifetime usage. In the absence of road maintenance,the tonlkm cost under normal operating conditionswould be about a third of the cost under current conditions.

20. ETP staff confirmedthat their vehicle utilizationhad fallen by at least these amounts, though they were unable to measure the effect on their rate structure,which had remained unchanged. Using EKM III to quantify the impact of current low levels of use, the ton/km cost is predicted to rise by over 300 percent cAmpared to normal operations, assuming that road maintenance is carried out. However, it has already - 82 - ANNEXVIII Page 10 of 45 been noted that road maintenance has virtually ceased and if this is modeled by deterioratingthe pavement to 12 IRI - as is the case over much of the country - the tonlkm cost rises by over 420 percent from normal levels, and this excludes any war damage premiums. The cost differentials resultingfrom the security problem in Angola as modeled in Appendix Table 1.3 would make most agriculturalproducts impossibleto market, thus affectingboth regionaldevelopment and urban food supplies.

21. Road Accidentsand Safety. It is not surprisingthat the combina- tion of rapid urbanization,poor highway maintenance,disregard for safety and speed restrictions,heavy pedestrianflows and the growingurban mix of light and heavy (including military types) vehicles has resulted in high levels in vehicular accidents, persoaal injuries and property damage. In the first six months of 1987, 2,549 accidentswere reported,resulting in 475 deaths and estimateddamage values exceedingKz 30 million. Urban Luanda accountedfor 75 percent of reported accidentsinvolving over 3,800 vehicles. In comparisonwith the correspondingperiod in 1986, deaths have increasedby 15 percent and accidentsby more than 80 percent. Outside Luanda, Huila and Huambo provincesregistered increased accident rates, although the deterioratingsecurity situation has preventedmany regional authoritiesfrom reportingany data. The figuresare, therefore, incompleteand almost certainlyunder-reported, but at this stage of the review such precision is unnecessary. What is importantfor the planning process is to note that the pain, sufferingand financialpenalties associatedwith trafficaccidents in Angola are on the increase and contributeto the decreasedefficiency and increasedcosts of the road transportsystem.

C. Rail TransRort

22. Background. The rail system was principallydesigned to tran*port minerals and other goods across export corridorsto key Angolan port complexes for maritime trans-shipment. Passengerswere also carried but the relativelysmall number of carriagesin the rolling stock shows it was not the main business activity. The security situationsince 1975 has hit railwaysparticularly hard and the figures in Table VIII.2 demonstratethat by 1985 the value of Angolan railway systemshad fallen to 12 percent of the 1974 figure. Rail output fell even more from 1985 to 86 for freight but not for passengers. This indicatesthat latent passengerdemand should be a feature of a short term recoveryprogram.

23. The financialconsequences of rail's continuinginability to supply those services for which it was designed is shown in Table VIII.6 which gives the simple income and expenditure accounts of vhe three main rail companiesin 1985 and 1986. Only Mocamedes (CFM) made money and in both years it was only enough to offset the losses of Luanda (CFL), leaving the massive annual deficits of Benguela (CFB) to accumulateinto very sig- nificant amounts, sustainableonly through National Bank support.

24. In all three railway systems,a variety of seriousproblems plague operatingefficiency. The rail infrastructureis in poor shape, guerrilla activity has damaged bridges on all three systems and in some regions the - 83 - ANNEX VIII Page 11 of 45

track has been mined. Lack of maintenancehas resulted in loss of rail ballast and the track consequentlycannot supportthe weight or travel speed for which it was originallydesigned. Rails themselvesneed to be made consistent in specificationand renewedover selected sections. Locomotiveshave been under-utilizedand frequentlycommitted to premature scrappingthrough lack of skilledmanpower and spare parts for their maintenance. The passengerand freight trafficdata for the three systems over a selected period (including1973 to show pre-Independence)given in Table VIII.6 demonstratethe seriousdisruptions in service schedules. Locomotivesand stock availabilityand activity for 1985 and 1986 is given in Table VTII.7, togetherwith a breakdown of active units by company in 1986. Yet tle railway companiescontinue to employ the largest number of workers of any mode, nearly 8,000 individuals. The implicationsof these data for each of the main rail companies,together with a descriptionof current activitlesis now given.

Table VIII.6. RAIL TRANSPORT,PASSENGERS AND CARGO1, 1973-85

1973 1978 1980 1982 1984 1985 Luanda Passengers ('000) 946 2,012 4,058 3,047 1,585 1,291 Cargo (1,000 tons) 301 155 129 102 84 63 Benguela Passengers 1,591 1,930 2,470 3,925 3,617 3,871 Cargo 3,279 379 344 296 199 263 Namibe Passengers 394 1,249 1,108 1,398 1,848 2,040 Cargo 6,409 144 - 251 171 196

Notes:~;. Excluding traffic at Amboim

Source:Annuario Estatistico,MINTEC 1986

25. Luanda System. Luanda (CFL) is the neglected rail corridor of Angola. It may have the best potentialfor 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.

26. In 1986 it employedaround 1,400 and carried 1.7 million pas- sengers, about 40 percentof its 1978 figure, and 21,000 tons of cargo, well down from the 1985 figure of 63,000 tons. Its port activitiesare virtuallynon-existent, thus contributingto downtownvehicular congestion, the service to Dondo (210 km) is down to once a day and the line to Melange is cut, with 10 bridges destroyed. The potentialfor providingurban passeager 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 carriagesand other rolling stock to increase service schedules, first within Luanda province and subsequently in other - 84 - ANNEX VIII Page 12 of 45 regions. A proposal to improve this system is discussedin a later section.

27. Benguela System. The Benguela railway (CFB) is the best known Angolan transportfacility. Running a total length of 1,350 km from the port of Lobito to Benguela,then eastward via Huambo vhere the engine sheds are located, to Luau on the Zambianborder, it representsa social, economic and political link that both governmentand foreignnations have found difficultto ignore. It is by far the largest rail company, employingover 4,500 staff. A number of difficultproblems would have to be resolved before the corridor could resume normal operations,including the most seriousone of all, that of security and regionalpolitical stability. There are also big financialand technicaldifficulties to be addressed - the likely cost of renewing all corridor componentsis in excess of US $600 million, at 1985 prices - but these issues are secondary, and should the politicalissues be removed there is no doubt that internationalinvestment funding would be made available. These, however, have to be regarded as long-termplanning componentsgiven the worsening war situationin the south.

Table VIII.7. RAILWAY LOCOMOTIVEAND ROLLING STOCK DATA, 1985-1986

1985 1986 Company Luanda BenguelaMocamedes Locomotives1 Existing 196 165 Available 53 42 Active 51 37 5 22 10 Carriages Existing 184 198 Available 94 99 Active 63 66 22 26 18 Wagons Existing 3,834 3,830 Available 3,114 2,290 Active 2,234 2,124 323 1,528 273

Notet 1. Excludes steam engines. Sourcet MINTEC, 19s6; Lobito PorL TransportSystem, SATCC, 1987; ReconstructionProgram for the Provincesof Huila, Namibe and Cunene, Dar Al-HandasahConsultants for UNDP and Ministry of Planning,1986.

28. Currently,CFB reports that 24 of its locomotivesare now out of serviceor sabotagedand 4espite five extra transferredfrom Mocamedes in 1984, the total of operationaltractive units now numbers around 18. It has standardizedon 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 sectionsof the track east of Huambo. Diesel locomotivesare used on the Lobito-Benguelalink, and from the coast up to Huambo but CFB have the intentionof extendingdiesel use over all its networx given track renewal and availabilityof locomotives. There are sufficientwagons availablebut - 85 - ANNEXVIII Page 13 of 45 passenger coaches are in short supply, and the 26 units are totally inh quate for the existing demand. The Huambovorkshops with its apprentice training school is equipped for all types of repair and maintenance work, although the new diesel repair shop is up-finished. The security problem has closed down the lucrative international mineral business 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. 29. In the shorter term, there are alternative investment options that can be considered for CFB. The Lobito-Benguela-^uambo 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 and exports of produce should create higher levels of rail demand. Even with thib program, however, significant problems remain. Like all other railvay 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. More than any other transport entity in Angola, the future of CFB is firmly in the hands of politicians and the military, not only of Angola but those of their neighbors and the super- powers. 30. Mocamedes Railway. The Mocamedes railway (CaH) contains 756 km of track, most running between Namibe and Menongue in the Cuando-Cubango province. There are two branches; Lubango-Chibia-Chiange (120 kim) now completely abandoned and Dongo-Cassinga (110 km) also closed since the iron ore mirnes ceased operations in 1975. Currently, traffic is operating normally between Namibe and Matala (430 km) and armed military convoys are necessary for travel beyond Matala to Dongo. The war situation makes it difficult to schedule any services beyond Matala, and the proximity to Namibia makes the system vulnerable to sabotage. Nevertheless, CFM has managed to achieve a steady growth in passenger traffic, comprising urban services in Lubango (1.02 million, 1985) and long distance between Namibe and Lubango (1.07 million, 1985). The latter trip takes around seven hours (around 30 kph) for both passenger and freightservices. Costs for cargo are about one third the road tonlkm rate which indicates that any regional agricultural planning will use the rail corridor as a central transit link to the coast. 31. CPMemploys around 1700 staff although there is a distinct lack of trained personnel in all professional categories. The railway needs additional locomotives and rolling stock, particularly passenger coaches. Of the 10 engine units now operational, half are over 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 - 86- MANNEXVIII Page 14 of 45 results in coaches being overcrowded and comfort levels minimal. CNH believes that there is sufficient demandto run a train a day, in both directions. Freight trains are full running eastwards and empty from Lubsgo to Namibe, although regional agricultural planning could bring about a more equitable 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. Second, tecbnical assis- tance is urgently required to help maintain locomotives, upgrade rolling stock and check electrical equipment. Thirdly, there is lack of spare parts and special supplies like lubricants which has resulted in low utilization patterns, as equipment awaits repair, and 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 and synthesis. These will be considered in later sections. D. The Air Sector

33. Angolan Airlir,: . - TAAG. The domestic air system was established in 1940, when 6 seater Rapides operated services between '.uanda 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 reformed in 1977 as Angolan Airlines (TAAG)and by 1980had 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. Table VIII.1 shows that in 1986 over a millionpassengers flew TAAGand 35,000 tons of cargo was carried on comp,any planes. The value to the Angolan economy is considerable, and Table VI1I.Z shows that 45 percent of the total transport and commications sector value in 1985 was attributable to TAAG operations. It is clrarly an extremely important mode in the sector and its continued prosperity and efficiency is critical to economic growth. 34. TMG has the direct responsibility for carrying out a wide variety of activities, ranging from the usual marketingiticketing 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. TMG in early 1986 employed around 5,400 staff but 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 TAAG's scheduled flights in 1986 were actually operated. Timing is also poor and only 32 percent of !aternational flights and 56 percent of domestic flights were considered on - 87 - ANNEXVIII Page 15 of 45 time. 1986 operations grouped by geographic markets are given in Table VIII.*8.

Table VIII.8. TAAGOPERATIONS BY MARET, 1986 Domestic Zone North East Central-South Litoral-South Passenger (2) 25 25 21 29 Freight (Z) 16 16 14 54 International Continent Europe South America Africa

Passenger (2) 64 7 29 Freight (2) 79 13 8 Source: TAAG, 1987.

35. A balance in domestic passengers and freight is noted, with the exception of the coastal routes south of Luanda (especially tbe key Luanda-Benguela route) where there is a strong demand for car,j services. Internationally, Europe continues to dominate the market and more especially the Luanda-Lisbon route within the European network, which accounted for 36 percent of total passenger movement and 42 percent of cargo flows. Luanda-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 TAAGcivil aircraft fleet are given in Appendix Table 1.5. 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 Pokkers. TAAG also operates a fleet of 10 light aircraft. The age in flight hours and years of the long range Boeing's is of interest, indicating that they will soon require replacement. The Boeing 737 is the workhorse of the fleet, and will continue this role despite the relatively high number of annual landings and a steady loss due to accidents (3 aircraft lostO. The Fokkers have also provided excellent service and seem ideal for the smaller airports. The Russian Yak aircraft are not well liked and their use is infrequent, with a number waiting repair at Luanda. 37. Flight crews are highly regarded by TAAGmanagement and the company are confident about the pure operational element of their business. Indeed, three months ago they began separate charter operations. It is the joint problems associated with general management and back-up services that create most problems. Scheduling, management, ticketing, spares and inventory control, support services and airport management are identified by TAAGas constituting constraints to growthand efficiency. Scheduling is a serious problem, particularly on domestic services where Luanda is the - 88 - ANNEXVIII Page 16 of 45 hub airport. Lack of basic servicesat regional airports - fueling, storage, simple maintenance,cleaning and safety features - make it a general rule that aircraft return to Luanda for overnightparking. Overnight bases in addition to Luanda would permit a more efficient route network to be operated leading to higher productivity. Managementof the TAAG umbrella organizationis complex and inefficientin Angola's present condition where staff with technical and middle management experience are difficult to hire. A simpler structure with the timely privatization of activitieslike cleaning and cateringwould be extremelybeneficial.

38. Ticketingis a particularproblem given the existenceof the informalmarket in goods and services,and the consequentvariations between official and parallelprices. TAAG ticket tariffswere last changed in 1982 and remain priced at the official exchange rate. A case of beer (24 cans) sold on the informalmarket at Kz 1,500 per can would raise Kz 36,000 and this is sufficientto buy a US$1,200 airticketat a TMAG booking office. There are some safeguardsagainst arbitrage- permission has to be sought before flying on internationalroutes, for example - but there are no such hindranceson domestic flights. Accordingly,most domestic flightsare heavily overbooked,creating unpleasantairport 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 servicesand attractingforeign customers who have a choice, and currentlyonly 20 percent of TAAG's international passengerspay in foreign exchange. This could be an importantgrowth segment of the market once TMAG becomesmore competitive.

39. Regardingthe problemwith spares, there is a clear need to drasticallycut the TAAG inventorycycle. In addition,improvements to foreign exchange access at the National Bank would enable costly items to be purchasedon 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 suitablecredit arrangements. TAAG has installedcomputer programs to track the parts inventoryso use patterns can be establishedfor more effectiveforecasting. It may soon be ap- propriate to decentralizesome maintenanceactivities, leading to improve- ments at airports like Benguela and thereforemaking domestic scheduling more efficient.

40. Airports and Air Navigation- ENANA. Support servicesneed drastic improvement,especially cabin cleaningand catering. The major problem is a managerialone, although lack of materials like food and cleaning items contributesto a poor service. 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. Efforts also need to be made to improve the operationof Angola's airports,most of which were built in the colonial era for light aircraft. Airports and control of airspace is the responsibilityof the national airport and air navigation developmentcompany (ENAMA),formed in 1980. 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. - 89 - ANNEXVIII Page 17 of £,

41. ENANA's basic activitiesare to ensure an adequatenetwork 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 navigationalassistance. Finally, it must maintain adequate good traffic control over Angolan airspace. The airports under its control are shown in Table VIII.9, grouped by available facilities.

Table VIII.9. ENANA AIRPORT NETWORK 1, 1987.

Cateeorv Number Location

I 1 Luanda

II 11 Benguela,Cabinda, Huambo, Kuito, Lubango, Luena, Halange, Xenongue, Namibe, Sumbe, Uige.

III 4 Soyo, Amboim, Soyo, Wako Kungo

IV 8 Ambriz, Andulo, Damba, Jamba, Luau, Kamgamba, Nzeto, M'Banza Congo Notet 1. Excluding numerous municipal landing strips, technically under ENAMA control. Source: ENANA-U.E.E.,1987

42. ENANA employs over 700 workers, 240 associatedwith air traffic control, around 170 at the Luanda internationalairport and over 200 at regional airports. Category TI airports typically employ between 10 to 20 ENANA staff, while other categorieshave frequentlyless than five personnel. Over half the staff are engaged in various cleaning activities and turnover in this category is high, in spite of the prevailing low Angolan employmentrates. In common with other companies,ENANA has introduced food subsidies and the provisionof transportto work to counter this loss. A critical labor problem relatesto a failure to hire technically trained personnel and is exacerbated by losing staff who have become experienced through on-the-job training within the company. Air traffic control, safety and radio communicationeffectiveness is vulnerable to these persistent staff shortages and partly explains the totally inadequate support services that affect TAAG's operating efficiency. The financial situation 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 National Bank and in 1986 totaled about US$3 million,which the company apparentlyhad never been allowed to access. This has clearly complicatedthe purchase, servicing and replacementof most ENANA equipmentneeds.

43. With the exceptionof Luanda, most airportswere built in the 1960's to meet the modest aviationneeds of that decade. Aircraft were - 90 - ANNEXVIII Page 18 of 45

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 investment in air infrastructure. Currently there is almost total disequilbrium between demand and supply of airport services. Inadequate runways constrain airport capacities; they are too short, have poor geometry for modern craft, potsess 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 loadings. 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 (lack of scales, trained personnel) which can result 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 no decision has been reached on its funding.

45. The colonial radio navigation and conmunication system, with dual civil and military functions, was strengthened in 1974 by improvements recommended by Boeing Aerosystems International and implanted by 1980. However, the much needed support did not materialize due to sabotage and unforeseen air traffic growth rates. Currently, the Boeing system is virtually totally 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. This chronicle of constraints also affects inter-airport communication and services like meteorology, aviation information and statistics, as well as links with neighboring countries.

46. The Luanda international airport complex - February 4 - was established in the 19509, improved 20 years later and rapidly became congested after Independence. In 1985 a new extension for domestic and international flights was completed but for security 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 fvnction as designed, although it already appears to be operating at calacity. The domestic arrangements need a total overhaul and ENANAare presently waiting for a decision on funding proposals to improve facilitiez. Other airport buildings are deteriorating, the parking areas and taxiing path.s need maintenance and rehabilitation work, and the mix of aircraft types (civil, military, passenger, cargo) and variations in size complicates ground control. Paris airport staff have helped develop improved facilities at the February 4 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 and airport facilities throughout Angola must start to receive investment to improve - 91 - ANNEX VIII Page 19 of 45

traffic control,navigation and safety if the sub-sectoris to maintain growth and competitiveness.

E. Maritime and Port Sector

47. Background. At Independence,Angola's 1,650 km of coastline,good network of ports, excellentexport corridorsand potentialfor regional growth focussed governmentattention on port and shippingactivities. State companieswere formed from nationalizedentities, and joint ventures emerged where Angolan experienceand investmentpotential was found to be weak. The sectorshave been through severalcrises but now appear to be showing signs of recovery. Table 1 shows that the 1986 Angolan maritime sector output rose about 17 percent from its 1985 level of 512,000 tons, while total output of all ports dropped 11 percent to 1,551,000tons over the same period. In terms of value, Table 2 shows that in the last availableyear, 1985, maritime value rose 13 percent from its 1984 level of Km 1,617 million while ports rose 18 perce"t to Kz 2,112 million.

48. Interim figuresconfirm that port income decreasedin 1986, reflectingthe joint consequencesof lower oil revenuesand the escalating cost of the war. Ports and shipping representabout a quarter of the total MINTEC transport and comimmications sector value, and are also important for security reasons. These modes are not easily attacked and are the importingchannel for defense supplies,primary goods, spare parts and food aid. They also representa considerableopportunitw for regionalgrowth through the neglectedcabotage sub-sector,and this will be consideredin section 8.

49. Maritime and port activitiesare technicallymanaged through the merchant marine and port national council (DNEMP),linked to MINTEC'a planning division. DNMMPhas 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 sectorwent through a major crisis in the early 19809. Increasesin oil revenuesbrought about a rapid growth in imports transportedby sea. Angonave entered into charter contractsfor much of this business but port and trans-shipmentfacilities proved inadequateto meet the demand. The combinationof inefficientshipping operations,ineffective port managementpractices, weak infrastructureand an overloadedimport license bureaucracyresulted in a total paralysisof 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 calculatedthat demurrageand other associatedcosts totalledaround US$48 million, mostly met by the state. This lead to the whole sector being financiallyrestructured and the period 1983 to 1986 has been one of slow recovery,limited by a persistentfailure to invest in new equipment,ships and physical distributionsystems and to analyze total transportation system costs, rather than specificmodal cost structures. This may change - 92 - ANNEX VIII Page 20 of 45 vith formation of the MIINTECplanning cabinet, who have already made a number of substantial and far-reaching system type recommendations.

51. Maritime Activities. Currently,long distance shipping services are principallyprovided by Angonave-.EEand Secil Maritime, the latter linked to Africa Service (AFSER)of Copenhagen,while cabotage is provided by Cabotang-U$E. Table VIII.10 gives details of their fleet sizes in 1985 and 1986. Imported goods traffic fell significantly in 1986, and this is reflected in the fall in c.aarteredlong distancevessels. The modest fleet size contains old, inefficientand fully depreciatedunits that need urgent replacement. Necessitydictated that when shippingoperations were restructuredin the 1970s, charteredvessels would be used until Angolan ships could be profitablyoperated. Unfortunately,all Angolan vessels were purchasedsecond-hand when many units were already old. Currentlythe fleet is unable to compete effectivelyfor a larger share of the Imported goods shipped to Angola. Export transit, vhere some comparative advantage should exist, remains weak and little opportunity for growth is offered. As a consequence, the fleet is underutilized.

Table VIII.10. SIZE AND OUTPUT ' OF ANGONAVE,CABOTANG AND SECIL MARITIME FLEETS,2 1985 and 1986.

1985 1986 Fleet Fleet Output

ANGONAVEs Company 7 7 Hire/Lease 7 3 output 206,000 CABOTANG: Company 11 11 Hire/Lease 0 0 output 120,000

SECIL MARITIME: Company 3 3 Hire/Lease 14 7 Output 210,000 TOTALS: Company 21 21 Hire/Lease 21 10 Output (2) 536,000

Note: 1. Traffic for 1986 only, in tons. Angonave data slightly larger

than company report,due to reportingperiod. 2. Total MINTEC 1986 output is 598,000 tons. Source:MINTEC, 1987. - 93 - ANNEXVIII Page 21 of 45

52. Angonave, which is not a member of any shipping conference, was formed in 1978 to provide long distance marine cargo services through acquiring its own fleet,supplemented with charteredships on short contracts. It wae hoped thatAngolan flagged vessels would take 401 of total trafficalthough i 1986 the companyclaimed just 20X. Vesselswere purchasedsecond-hand ana by 1983 fleetdeadweight had increasedfrom 7,000 to 95,000tons, which fell in 1985with the loss of a largeship. In the crisisof 1981,Angonave lost controlof theiroperations and became financiallyinsolvent; facing judicial actions, millions of dollarsdebt, theirfleet immobilized, and a ruinedcommercial reputation. The company has recoveredslowly from that trauma but remains under-managed and under-invested. With its charter arrangements, the company currently claimsa capacityof 102,000tons. It has correctlyconcentrated on improvinginternal management controls and stafftraining, but still lacks the financialflexibility required to stay competitivein the transport servicessector. 53. TableVITI.ll categorizes the main commoditiescarried by Angonave in 1986. Governmentfood purchasesmake this categorythe most significant,about 55? of total traffic. The cargowas carriedby shipsin the nationalfleet making 26 voyages,and 51? of the trafficwas in sacks, 401 generalcargo (cratesand bulk)and 91 in containers.The lack of *ilo storageof bulk commodities,especially at Luanda,is one reasonfor the high levelof sack use. The inabilityto handle,store and process containers- which reachedits zenithin 1981182when 12,000clogged Luanda port - is shown in the low usage of thismethod of shipment.In fairness, it also reflectsa fall in the importationof equipment,machinery and spareswhich are almostalmays sent in containers. All shippingcompanies complain about port efficiency levels and possible improvements thatwould increasemarine productivity. These will be considered in a later part of this section.

TableVIII.ll. ANGONAVE CARGO BY CATEGORY,1986 (tons) Catexory Tonnage Food 121,100 Alcoholicdrinks 7,050 Equipmentand vehicles 6,800 Chemicals 31,874 Other products 28,508 Containers(2,335 empty) 5,400 TOTAL 200,732 Source: StatisticalAppendix Table I.6.

54. SecilMaritime offer both long distanceand cabotageservices, and are both smallerand more tightlyorganized than Angonave, despite carrying more traffic. They playeda crucialrole afterthe 1981 crisiswhen - 94 - AME VIII1 Page 22 of 45

Angonave contractscould not be honored and few foreign shipperswould deal with the company. Secil Maritime substitutedfor Angonave and chartered sufficientvessels to maintain traffic flows. With the recent return to financialhealth of Angonave this robe has considerably diminished and the company has sought traffic through tramping operations coordinated through its Copenhagen offices. The need for integratedinvestment programs in the sector and the lack of governmentrecognition in this regard has made the company cautious. Accordingly,the company is not presently investingeven though its fleet is between 16 and 23 years in age, and virtuallyobsolete.

55. Table VIII.12 shows the productivityof Secil Maritime's fleet in 1986 and demonstratestwo key problems facing Angolan ship operators. First, there is the general task of findingwork for the ships and secondly,there is the difficulty '! unloadingat Angolan ports. The latter is highlightedby the cabotagz figures in Table VIII.12, and to show that this is not a special case, some Angonave data for 1985 are presented. To unload 85,000 tons of generalcargo and 114,400 tons of containers (7,629units), the 14 ship fleet spent 1,068 days in port, 25 percent at anchor and 75 percentberthed, waiting to be unloaded. The reasons for this are considered when ports operationsare described,but the consequences are to raise total shipping costs either throughhigher operating costs or demurrage charges.

Table VIII.12s SECIL MARITIME FLEET; SELECTEDDATA, 1986.

Ship TvDe Trips Dave Spent: 2I Port Sailing Cargo Empty

Brasil C 6 229 136 Bengo C 32 326 39 Mar C 18 315 26 Tonnaae

Japan T 34,318 57 96 70 26 Angola T 26,294 74 163 122 41 Dinamarca T 43,067 130 162 98 64 Franca T 19,385 38 87 59 28 Congo T 31,162 61 118 48 70 Argentina T 33,191 149 113 72 41

Notess 1/ C is Cabotage,T is Tramping. 21 Days spent in port, sailing, sailingwith cargo and empty. Sources Secil Maritime, 1987.

56. Cabotang was established as a state company in 1978 to provide cabotage services and is arguably the most neglected Angolan shipping enterprise. This is paradoxical, given the strategicimportance of the coast and the ability to provide safe, reliable yet cheap passengerand freight movements between regional corridor coastal sites. It employs 320 staff, includingYugoslavian, Cuban and Portuguese captains, and in 1986 - 95 - ANNEXVIII Page 23 of 45 reported a small profit of Ka 61 million. Currently,it has between 11 or 13 ships (figuresdisagree) totalling about 8,000 tons deadweight. Ships are old - five exceed 20 years in age - and do not have the design features to competewith other modes for specialized,profitable traffic. The heterogeneousnature of cabotage traffic,weak marketingarrangements, poor operationalmanagement (exacerbatedby control problems)and inferior transshipmentfacilities at port complexescombine to prevent cabotage making a high impact on amelioratingtransport problems in Angola's littoral regions. Tariffshave only been raised once, by 30 percent, since 1978 and a new scale of charges has been sent to the Ministry of Planning for approval. In 1987, it took deliveryof a Dutch built, fast ferry boat capable of carrying 310 passengersand 440 cubic meters of cargo for use on the Luanada-Lobitoroute from January, 1988 onwards. A sister ship will soon join it and a network of schedulesbuilt up, Includinglinks with Namibe, Cabinda and Soyo. The potentialbenefits from efficientcabotage operationsare at last being recognizedwithin MINTEC and complementary port improvementsshould be importantshort term investmentgoals.

57. There are a number of maritime agencieshandling shipping - arrangementsand problems associatedwith Angolan maritime jurisdiction. Agenang-UEEis based in Luanda,while Manubito is a mixed enterprizeusing capital from Agenang, Sonangoland Leopold Walford Holdings-UK. There are alse smaller entities,entirely privatelyowned, notably Hull-Blyth (Ur.) and AMI (Belgium). These companiesseem well organizedalthough they all complainedof poor telecommunications,bureaucratic difficulties and the appallingproductivity of all Angolan ports. Business reflects the 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 first six months of 1987 totalled 796 ships (338 Angolan, 458 Foreign) indicatinga lower final figure for the year. Also the number of Angolan voyages are falling, reflectingfalling disposableoil revenues. Maritime agencies should be recognized as providing *rportant services to shippers, as earners of foreign exchange and an integral part of the maritime transport system, when improvementsare considered.

58. Port Activities. As previously noted, Angolan ports are crucial to the effectiveness of the national transport system. Practicallyall 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 Independenceand possess the characteristic of being designed for the efficientexport of commoditiesin general and minerals in particular. The current need is the inverse;to accomodate the large import needs of the nation, particularlyfood products which must be stored after unloadingto avoid spoiling. Only Lobito has good silo storageand the capacity of that facilitynow needs to be increased. Port productivityis low, at around 50 tons per ship/day compared with 250 tons per ship/dayfor an efficientoperation. Part of the reason is equipment,with crane and forkliftproductivity affected by a combined lack of spares, maintenanceand technicalassistance. In 1985, utilization rates of 35 percent for Luanda and 26 percent for Lobito were recorded for these equipment categories. The port sector employed 8,51O -96 - ANNEX VIII Page 24 of 4S personnel in 1986, the majority being stevedoreson low rates of pay. They are not well managed, with the possible exceptionof Lobito, and this leads to widespread corruptionand absenteeism. Port officialsadmit their inabilityto control the situation,particularly at Luanda, and the *privatization"of some berths and facilitiesis being considered.

59. Table VIII.1 shows that Angolan port traffic fell from 1,739,000 tons in 1985 to 1,551,000in 1986, an 112 decline. Value, however, as seen in Table VIII.2 rose 18Z to Kz 2,112 million. The impact of the closure of mineral shipmentsat both Lobito and Sacomarat Namibe, can be realized by noting that the 1986 value is still only 151 of its 1974 figure. Table VIII.13 shows 1985 and 1986 main port throughput,and it is noted that in 1986 all ports with the exceptionof Cabinda registeredfalls in volume. consistentwith the shipping and agency trafficdata. Figures excludewar material and supplies,however, which were considerableduring both years. Notable also is the small export volume (11? of total),which at ports other than Luanda includes cabotagedata. In the two years, over 23,700 containerswere shippedfrom Luanda compared to less than 6,000 arrivals. Low container arrival figures for 1986 (1.456)confirm both the fall in trade and shippers lack of confidencein the Luanda facility. Inadequate dockside storage can be seen from figures for the movement of cargo from port areas. - 97 - ANNEX VIII Page 25 of 45

Table VII1.13.ANGOLA: MAIN PORT FREIGHT THROUGHOUT,1985 - 1986 (thousandtons)

1985 1986

Luanda All Freight: Import 801 639 Export 57 75 Cabotage 8S 108 Total 942 821 Containersl (In) 4,398 1,456 (Out) 11,392 12,387 Freight (Out)2 824 784 Freight (Warehouse) 109 45

Lobito Total Freights 522 473 Import 466 419 Export 56 54 Freight (Out)2 493 488

Namibe Total Freights 180 156 Import 165 136 Export 15 20 Freight (Out)2 142 106

Cabinda Total Freight: 95 101 Import 81 85 Export 14 16 Freight (Out)2 95 101

Notest 1. Units. 2. Freight tonnage leavingport facility

Source:Annuario Estatistico,MINTEC 1986

60. Cabotage traffic data are given in Table VIII.14 for the ports of Cabinda, Soyo, 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 facilitiesdesigned specificallyfor its trafficand shippingneeds. Historically,cabotage has been given a low prioritywhich is reflectedin lack of security for cargo, poor transshipmentand passengerfacilities, and bad sittingwithin the port complexes. The acquisitionof a new passenger boat has not been accompanied by any related investment in port infrastructure to take advantage of the new service. As a consequence, its efficiency and c mercial impact is weakened unnecessarily. - 98 - ANNEX VIII Page 26 of 45

Table VIU.14. ANGOLA: CABOTAGE TRAFFIC,1 1985

Cabinda Sovo Luanda Lobito Namibe Totals

Cabinda - 700 21.889 3,210 50 25,849 Soyo 260 - 6.791 - - 7,051 Luanda 14,412 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 11,210 125,552

Notes 1. MINTEC and private shipping,tons.

SourcesAnnuario Estatistico,MINTEC 1986

61. Delays in port have been a persistentcharacteristic 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 annual capacity of 7,000 containersbore little resemblanceto the actual capacity based on equipment,storage facilitiesand, most importantly,the ability of the shippersto deal with the complicated,slow moving importation bureaucracy. The exercisewas 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 shippers,agencies and ultimatelythe government. The 1985-86 range of between 1,600 to 2,500 containersprobably representsthe safe capacity of the port at the moment.

62. HINTEC data show recent improvements in turnaroundtimes. In 1985, 327 long distance ships, carrying an average cargo of around 2,700 tons, were handled by Luanda. Each on average spent a total of 18 days, comprising 5 waiting and 13 berthed. It should be stated that any recent improvement in delay times is more likely to be a consequence of a trade decline rather than improvementsin productivity. In addition, Angonave data show that their averagewait 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: at the time the mission was in Luanda, a ship left having taken 73 days (39 at anchor and 34 days berthed) to unload a frozen meat consignment of 2,000 tons. Lack of available storage space played a major role in this delay but the demurragecosts of over US$150,000have to be met somewherein the distributionchain, and ultimatelythe final price. This indicatesthe impact transport costs crn have on commodity prices is non-trivial. - 99 - ANNEXVIII Page 27 of 45

63. All ports require restructuringand Luanda has the most critical need both because of its strategic and politicalimportance, and the growing urban market outside the city perimeter. Lobito is smaller, better organized and possessesimproved facilitiesfor 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 storagecomplex. There is not much to choose between port efficiencies. In 1985, Luanda annual output per employeewas 190 tons and Lobito's was 209 tons. Ships are turned around faster at Lobito;productivity in 1985 vas 48 tons per ship/day (6.6 tons per ship/hour)at Luanda, comparedwith 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 variationbetween ports. Cabotang stated that 1986 comparative daily output tonnage 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, plus an inability to synthesize these elements into a coherent strategyand policy. Low dischargingrates need not drasticallyaffect overall productivityif the other stages in the trancit system work well. The total transportsystem cost, in financialor time terms, is crucial to efficiencylevels. It is when all stages start to fail, become inefficientor are not synchronousthat the cost implications become critical. There is no evidence that a macro-analysisof this type, capturingthe full physical distributioncosts, has been recognizedin any of the governmentdecisions concerning the shippingand maritime sectors. The sector urgentlyneeds trained staff at all levels to motivate workers, identify and correct deficiencies(frequently of a simple nature) and to operate and maintain key equipment. It requiresa radicaloperational 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 survivaland economic recovery of the nation. Therefore,it must have a key role in any investmentprogram. P. Mail and Telecommunications

65. In common with many Angolan sectors,the years followingIndepen- dence for Telecommunicationswere characterizedby nationalizationand reorganization, with the operating needs focussed on maintaining existing service levels in a difficult commercialenviromuent. In 1980, the perfor- mance had deterioratedto a point where furtherrestructuring was neces- sary. The existing mail and telecommunications directorate (DSCT) was disbanded and a tripartite form adopted which comprised:

- a national telecommunications enterprise ENATEL-UME,responsible for domestic telecommunications, - 100 - ANNEX VIII Page 28 of 45

- the Angolan mail service CDA-UEE, to provide national and interna- tional mail and telegraphservices, and

- an internationaland maritime telecommunicationsenterprise, EPTEL- UEE, to complementENATEL.

These entities combinewith a number of small private companies (Standard Electric, Tecuidata,Teletra etc.) to make up the current communications sector. The national council for mail and telecommunications(DNCT) is responsible for coordinating activities and is linked to MINTEC's planning department in a similar manner to the maritime sector.

66. Mail Services. Mail services are clearly vulnerable to the provincial securityproblems in general, and the difficulties with transportin particular. Table VIII.15 shows Angolan mail service (CDA) throughputfor 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 153? while the rest are relativelyconstant, although telegramsare in decline as they are replacedby telex and direct dial telephonelines. Currently,the mail network is incompleteand irregular,due to the securityproblem. Roads cannot be used for most inter-provinciallinks and mail consequently depends on the air sector. Problems of limited cargo space on some planes and the inabilityof CDA to get designatedtransport priority on most modes contributesto delays in distribution. TMAG cannot meet over 13? of their domestic schedulesand this adverselyaffects mail distribution. CDA lack a dedicatedvehicle distributionfleet and the private truck sector cannot offer suitable services because of its structureand paucity of appropriate vehicle types. CDA also lacks simpler forms of deliverymodes like bicycles, and this adds to their distributionproblems. - 101 - ANNEXVIII Page 29 of 45

Table VIII.15. THROUGHPUT1 OF ANGOLAN HAIL OFFICE, CDA, 1986. (thousandsof units)

In Out

RegisteredLetters: 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 3 Telegrams: National 125 125 International 63 64

Sacks of Mail: National 53 53 International 30 27

Source:AnLuario Estatistico,MINTEC 1986.

67. While it may be possible to augment the vehicle fleet through new investmentand speed up delivery schedulesby improvingoperational efficiencies,air travelwill remain the key domestic mode as long as the present security situationexists. If tariffscould be increased,CDA might be able to pay for preferentialtreatment on air and other modes. The planned high speed coastal ferry networkwill offer a complementary form of mail transitwhich merits considerationin CDA's short-term planning. Management and motivationin CDA, like many other UEEs is low, adding to the problems associatedwith improvingoverall efficiencylevels. The average salary is Xz 13,000 per month and there is little opportunity for making more on the job, so absenteeismis high. Government reforms targeted on raisingmail serviceproductivity seems to be the relevant action, and only after such changes should external funding agencies consider supportiveinvestment programs.

68. Telecommunications. At Independence,Angola was served by a short wave telegramnetwork supplementedby automatictelephone systems in five cities, a nine-citytelex link and an earth satellitestation at Cacuaco. Domestic equipmentcomprised 52 telephone exchanges containing 49,000 lines and 9 telex centerswith 470 machines, representingabout 60S of capacity. The new state companies for mail and domestic telecom- munications were formed from existing colonial monopolies, while EPTEL was based on a nationalized private company - Marconi - who were contractedto provide additional technical training and to supply both spares and - 102 - ANNEXVIII Page 30 of 45 equipment. EPTEL was also given the responsibilityfor maritime coumunications,in addition to international telecomunuication services.

69. The period 1975 to 1980 was characterized by guerilla attacks, poor management, lack of technically skilled personnel and the need to continuallymaintain a system that was partly obsolete and operatingunder heavy loads. Telegraphuse dropped dramatically,many local city telephone networks encountered severe operating problems that lowered service quality and telex use encountereddifficulties 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 businessesin 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 16 which compares the 1975 and 1980 networks.

Table VIII.16. INTER-URBANNETWORK, 1975 AND 1980.

1975 1980

System Stations Localities1 Stations Localities

VHF- 48 channels 28 12 15 6 UHF- 24 channels 8 6 3 2 VHF- 6 channels 6 4 3 3 VHF- 1 channel 22 20 3 3 Other 2 2 - -

Notes 1. Communicationsrelayed between stations to exchangesand users in various localities. Source: MINTEC, 1987.

70. The 1980 sector restructuringwas followedby five years of commercial problems characterized by increasing difficulties in maintaining inter-urban systems, a consequence of the security situationand heavy demand. However, planning and investment was at least being taken seriously at all levels and the African DevelopmentBank provided investmentfunds in 1985 to improve internationallinks and efficiency. A system of micro-wave and troposcatter stations now provide links over about 65 percent of the country, a result of the investmentsplanned during this period. Security still affects serviceprovision 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 telephonesystem for the years 1980 and 1985 are given in Appendix Table 1.7. The telex remains susceptibleto lengthybreakdowns which has drawn complaints from transport agencies. In 1985, work began on developingan overall plan for the sector, using funds given by the African DevelopmentBank. Finally, a teleccmmmnicationsinstitute was createdwhich, though in its infancy, recognizesthe urgent need for improved technicaland managerialmanpower capabilities. - 103 - ANNEXVIII Page 31 of 45

71. In 1987, service levels in the sector were still variable and prone to breakdown. The inter-urban network is incompleteand likely to remain so while the severe security and transport problems remain across most provinces. New investmentin automatic exchanges should result in better local and inter-urbanservices, and higher ENATEL revenue. Table VIII.17 gives some selectedoperating data for ENATEL and EPTEL covering 1985 and 1986. The impact of automaticdialing can be seen in the 1986 fall in manual services,combined with the huge rise in automaticuse to more than double the demand projectedby ENATEL. Internationaltelephone use in 1986 was affectedby governmentrestrictions and undervaluesthe actual demand levels. If the internationalsystems can be improved,it is believed that a similar surge in demand to the domesticmarket will take place, especiallyas the current program to improve internationallinks, funded by the African DevelopmentBank, should improve both capacitiesand the number of foreign countrieswith which Angola has direct links. Much of this trafficwill be automatic,thus improvingspeed and cost-effectiveness.Telex use continuesto play an importantrole in Angolan telecommunications,and the growth of the industry in very difficultcircumstances is shown in its 1986 output value rising by 11l over the previous year.

Table VIII.17. ENATEL AND EPTEL, SELECTEDDATE (1985-86).

1985 1986

TelephoneManual 1

Inter-urban 2,509 748 International (In) 2,250 2,120 Automatic2 (Out) 7,753 5,741 Automatic 2 82,000 215,680 Telex 1 National 444 623 International (In) 1,715 1,640 Value 3 (Out) 2,396 2,769 1,297,101 1,435,035

Notes: 1. Thousandsof minutes. 2. Thousandsof impulses. 3. Thousandsof Kwanza. Source:Annuario Estatistico,MINTEC 1987

72. ENATEL admit that the policy of concentratinginvestment into high technologicalareas, to the detrimentof assets such as buildingsand general infrastructurecarries risks. Complementaryinvestments for smaller exchanges,local cable networks and non-urgentmaintenance have also generallybeen sacrificedin the sharp cut-back of governmentfunding. Such a policy is only sustainablein the short to medium term, and must be corrected in any future planning for the sector. Financialcut-backs by the governmenthave affected the largestproject since Independence- Angosat - which would providenational telecommunicationand television - 104 - ANNEX VIII Page 32 of 45 coverageusing satellitelinks. Though it has admirablequalities, and should generate good revenuemaking it extremelyprolitable, it was a casualty of the 1986 budget cuts.

73. It may now be more appropriatefor managementin the telecom- municationssector to concentrateon routineand preventativemaintenance of all assets, and complete all current investmentprograms as rapidlyas possible. Attentionnow must be paid to the persistentmanpower resource problem that has plaguedAngola since Independence. Telecommunicationsis capital-intensiveand skilled techniciansof all types are needed to maintain the various systems at their designed levels of productivity. Unfortunately,ENATEL and EPTEL cannot apparentlyeither attract or retain sufficientnumbers of trainedpersonnel. Governmentactions to correct the salary imbalancesshould accompanyan apprenticetraining program to address the manpower shortages. Since 1975, there are 302 more telephone subscribers,three times more inter-urbanlines, four times the international lines and automatic dialing has produced higher use and profits in the domestic market. However, all this progress is prejudiced by the failure to recruiteducated and trained technicians and managers. G. Availabilityof Modal Spare Parts

74. Mission visits to diffezentmodal operationsnoted that efficiency levels were seriouslyaffected by chronic spare parts supply problems. In theory, public and parastatalorganizations are requiredto put spare parts provision in their prospectivebudgets or *plafonds'which need ministerial approval. Spare parts for most modal equipment requiresforeign exchange. Although some entitieshave authorizationto spend up to a pre-determined level, such as $9,000 for Angolan Airlines (TAAG),generally National Bank approval is required. This may be given part, in full or not at all. It makes no difference if the enterpriseearns foreign exchange or lack of the parts may damage utilization,revenues and profitability. TAAG have had 'hush kit' purchase requests for Boeing 707's waiting approval for four years, even though lack of such noise control deviceswill ban those aircraft from using most CommonMarket (EEC) airports from January 1988.

74. The rules governing the supply of spare parts are basically simple. Public or parastatalenterprises need to estimate their needs 12 months ahead and include the estimatedspare parts need and costs in their annual budget for approval. Mixed companieshave greater flexibilitysince the private partner can generallyprovide the foreign exchange and companieshave such agreementssanctioned in the legal establishment contract approvedby the government. A good example of the differentcost impact this can produce is given by consideringthat ETP truck operations at Base Bungo, Luanda have had items on order for over 12 months. Also TAAG carries a US$18 million spare part inventoryto meet contingencies given their normal eight-monthwaiting period for parts. In comparison, Intertransportes,a joint venture trucking firm with a road freight contract for the Kapanda dam project, receivesa monthly ISO 40 foot containerfrom Italy into which telexed spares requirementscan be shipped. This allows all spares to be placed on a 28-day cycle. Good cost control makes an importantcontribution to efficiencyand profitability. - 105 - ANNEX VIII Page 33 of 45

76. If enterprisesare very large and importantthey may be allowed to deal direct with suppliersbut the majority of transportoperations must deal through the governmentimporting agencies DMPORTANGor ABAM&T. The heterogeneousmix of transporttypes, makes and models in Angola, all obtained from a wide range of suppliersand nations, presentshuge problems for any single importingagency. The problem of heterogeneityis particularlyacute in road transportand MINTEC set up maintenancecenters for specific vehiclemakes - MANAUTO's- in the late 19708 to meet selected repair needs. Privatevehicle owners are permitted to take their vehicles to these centers but generallychoose not to do so. The inabilityof the official vehicle maintenancesystem to cope with demand in an efficient manner has predictablyresulted in alternativeprivate informal arrangementstaking over. There is strong evidence that suppliesdestined for the public sector find their way into the informalmarkets and a new Volvo N10 fuel injectionpump 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 MINTEC have proposed an entirelynew joint enterprisedistribution system to ensure the regular supply of spares and materials for motor vehicles. TAAG has also made some recommendations to keep inventorycosts down and both these schemeswill be discussed in later sections.

77. tail is criticallyaffected by lack of trained personneland spare parts for the maintenanceof locomotivesand rolling stock. A total of 165 locomotives,198 passengercarriages 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 those 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 necessarilyconfined to rail transportation. The crucialneed here is trained personneland it may be more efficientto 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 centerswith assigned counterpartstaff.

78. All transport and comunications entities have problems organizing their spare parts requirementsthrough the exisitinggovernment arrange- ments. Maritime stock seem to cope reasonablywell within the current system, helped in part by the surplus capacity in the sector which means that lower utilizationand efficiencylevels due to lengthywait! g for parts is not critical. In addition,ships can get serviced in foreign shipyards should it be necessaryon a voyage, and this allows for particularcategories of repair and maintenanceto be treated effectively. Cabotage does not have these maintenancealternatives and is reliant on Angolan yards. Cabotagevessels are elderly and requirefrequent attention so a real problem exists if cabotage is to grow in the manner desiredby MINTECplanners. However, this could be turned to national advantage by developing the well located shipyard of Estalnave to the point where it can - 106 - ANNEX VIII Page 34 of 45 quickly schedule and service all cabotagevessels. This would result in a southernAtlantic yard for small vesselswhich could be used by other African cabotage vessels and foreign fishingboats which are currentlyso numerous. This representsa very valuable potentialsource of foreign exchange.

H. MINTEC Analysis and Plannina

79. Evaluation. The shortcomingsand difficultieswithin the transport sector and their adverse effects on economic efficiencyand growth lead the Second Congress of the MPLA-PT in 1986 to redefinebasic objectivesand to requireMINTEC to developnew plans for their implementation. These objectiveswere to make road transportthe basic nationalmode, complementedby rail and cabotage,and supplementedby the air sector. On the internationalmarket, air would remain the passenger mode and maritime the long distance freightmode, although both would be expected to improve service levels, competitiveperformance and profitability. It was hoped that a program of short term measures could be identifiedthat would lead to rapid improvementsin selectedmodal services. MINTEC set up a small planning unit to diagnose the central issues and make recommendationsfor improvement. The unit decided to examine the key areas of infrastructure, running stock and equipment, personneland training,finance and service levels for each main mode. Their findingswere released late in 1987 for considerationby the Minister, prior to submissionto higher ministries.

80. Analysis. The analysis of the period 1975 to date is reasonably accurate in terms of performance,output and modal value data but the key role of central planning in this period and its total inabilityto forecast, organize and operate transport services is understandably ignored. Perversely, the failure in many sectors is blamed on insufficient regulation or the wrong type of planning. Their main findings, by mode, ares

(i) Good growth prospects exist for cabotage operations, both freight and passenger, given port infrastructural improvements. Though it is consideredto have little flexibilityand requiresmodest investment,its low cost per kilometer of travel over similar congestedair routes and securitymake it extremelyattractive.

(ii) Rail corridorsshould be treated separately. CFL is operatingin most secure corridorsand merits evaluationfor investment. CFB is most affected by the military-politicalstruggles and its short term prospectsare limitedto the Lobito-Benguela-Huambosection of the corridor. CPM has good prospectson the link Namibe-Huila, but no investmentsare presentlyworthwhile from Huila to Menongue. Rail's low cost per ton or passengerkilometer is more than offset by the vulnerabilityof the infrastructure,large investmentneeds and fixed corridor route systems.

(iii) Highway infrastructureand use have been affectedby loss of security and vehicle operationsby loss of authorityby MINTEC. - 107 - ANNEX VIII Page 35 of 45

Roads requiremodest investment,have great flexibility,can easily be extended to new regions and allow goods and passenger movements at affordableprices. MINTEC claim that one ton of air cargo is equivalentto 5 tons by truck, 15 tons by train and 20 tons by sea.

It is proposed to reintroducean effectiveroad transportfreight and passenger service, reactivaterailways only in secure areas, invest in cabotage oper#tionsto take pressure off passengerdemand for air services and to expand inter-provincialroad trade links, thus allowing air to develop a strategybest suited to its operatingcharacteristics.

81. Technologyneeds are addressedby focusingon the utility of renovatingthe existingvehicle fleet and modernizingother modes like rail, coastalvessels, some aircraft and all modal infrastructure,using the latest technologywhere possible. This raises the need for trained staff to install and maintain such technology,and conflictsvith the desire to reduce dependenceon foreignassistance. Finally, the choice of technology,equipment suppliers,spare part needs, technicaltraining and financinghave also to be considered. In 1986, the sector employed about 36,000 personnelof which 91 were unskilledworkers, 7.52 administrative personneland only 1.52 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. Mn1TEC's planningunit consideredthree elements of the transportationproblem; markets, modes and ownership. Markets were grouped into international, inter-provincial (national) and provincial for both freight and passengertraffic. The modes were treated as single entities (ignoringmulti-modal systems) and ownershipwas defined as either state, mixed, private national and private foreign. The latter still causes much unease in Angolan planning circlesand is only seriously consideredin the air sector, as counterpartsuppliers of international services. Matrices were drawn up representingacceptable combinations of mode and ownership forms, and MINTEC action for each combinationidentified six categories;develop, reorganize,negotiate, regulate, reduce and not allowed. Broad types of action,appropriate for short-termimpacts, were developedfrom this exercise and are summarizedin Table VIII.18.

83. MINTEC's planning unit is extremely well organized. Inter- -provincial links that meet the criteria developed by the MINTECunit, together with project flow rates, 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 complementexisting flows. It is difficult to give a comparisonbetween predictedand currentvalues, since cabotage passenger and inter-provincialroad freight and passengermovements are not currently recorded. However, within the projected provincial passenger data, Luanda-Luanda accounts for 15 million passengerscompared with 1.2 million current passengers. Generally,the figures representmodest projectionsand should well coordinatedtransport systems be implemented - 108 - ANNEX VIII Page 36 of 45 and operated efficiently,the actual demand data are likely to be much higher.

84. Short-termmeasures are given in Table V11.20 although no costs were availableat the time of the mission. Timing is fortuitous,however since assistanceand guidance on cost-benefitand economiclfinancial evaluationscan 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 r6duction in state or quasi-stateintervention can be considered.

85. MINTEC has also made proposalsfor telecommunicationinvestment but most center on completingprojects underway,particularly the micro-wave system (not yet 502 installed)and the seriouslydelayed cable network in Luanda. - 109 -

ANEX VIII Page 37 of 45

Table VIII.18. MINTEC SHORT TERM STRATEGIES(1987)

Sector Preitht

Internationals ImproveAngonave and SecilMaritime productivity, profitability,aim for greatermarket share. Re-organizeCFB in Lobito corridor. Re-organizedocks. Set up containercompany.

National: Diminish air cargo. Regulate road transport. Coordinate needs with National Council of Carriers. Improve cabotage facilitiesat ports for north-soutb links. Organize road transportinto zones. consistentwith rail corridors. Regulate road transport.

Provincials Reorganizeroad transport,set prices and control supply of services. Set up road transshipment terminals.

Passengers

International: TM G¢ better service, improvedcompetitive image, better negotiatedcomercial contracts. No foreign operationswithout joint agreements.

National s Develop inter-provinciallinks, using rail corridors where possible. Provide a cabotage service to relieve overcrowding on littoral routes. Reorganizeand regulatethe private bus operators,no foreign companies.

Provincialt Organize provincialtransport sector. Allow regulated private operations. Regulationthrough licensesand user charges.

Source:Esquema Director do Sistema de Transportacaona RPA, MINTEC 1987. - 110 - ANNEX VIII Page 38 of 45 MNAWCPLAf OR INTEROVWCUL FGN FLOWS

CONGO FRGHT cx=~ ftaiway ~~ Road /s ~~~~~~~~~ lWt~~~~~~~~atlt.

/ - - -\ ZAIRE

i~~~~~tg

o~~~~~6 - MA*R -_ _ L

AtIlntic SU

)ULx ocean \:Ky^f.19 >6-i MOXICO, \ \ / { \ ~~~~~~~ZAMBIA

\ ~~~NAMiBIAA \ BO~~~~~~8TSWANA 20 @0 m *°, t,00 200 300 400 o so 100 IS0 200 2350

Figure 1 - 111 - ANNEX VIII Page 39 of 45 MNTECPLANS FOR INTER-OVINCIAL FLOWS

CONGOJ PASSENGERS - ~~Paffway Road Air

12 .ZAIRE ZAIRE Mart.

_; ~LUAN NORTE AtlanticLI Ila, ,

Ocean moxicov

y .>HuiLa\ \ \ ~~~ZAMBIA

tt iv-EN ~~EA U^

\ ~~~NAMIB1AA \ ~~~~~~~BOTSWANA

0 so 100 150 200 250

Figure 2 - 112 - ANNEX VIII Page 40 of 45

Table VIII.19 PROJECTED MIGHT AND PASSENGERMOVEMENTS 1

Mode Freisht (tong) Passengers

Road: Inter-provincial 155,000 4,240,000

Rails Inter-prov..ncial 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. Projecteddata, based on MINTEC 1987 proposals. Sources Esquema Director,MINTEC 1987.

Table VIII.20 MINTEC PROPOSED PROGRAM, 1987

Mode Action

Road: Urban ReorganizeUrban Bus Transit System Inter-provincial Rebuild links and provide freightand passenger services: Luanda - Malange, Luanda - Uige, Huambo - Huila, Huambo - Benguela, Huila - Malange.

Rails Urban Develops Luanda - Luanda, Inter-provincial Re-opens Luanda - Malange, Huila - Namibe.

Cabotage Create regular,efficient services between: Luanda - Cabinda Luanda - Lobito Luanda - Namibe

Air Operate a reduced schedule profitably and navigation.

SourcesAdapted from Esquema Director,MINTEC 1987.

The desires to improve service, strengthenpublic confidenceand employee morale, improvemaintenance and increasetraining programs have not yet - 113 - ANNEX VIII Page 41 of 45 been translatedinto firm proposals. MINTEC has given the problem of spare part provisionmuch thought,and have developedan entirelynew distributionsystem for the road sector. This is absolutelynecessary if the stated MINTEC desire to developbus and truckingoperations is to have any hope of success. The cumbersome,inefficient central importing agencieswould be replacedby single manufacturerparts distribution systems reflectingthe importanceof makes in the vehicle fleet composition. It is proposed to have two levels, the first representingkey Lanufacturerslike Scania,Mercedes, Volvo and IPA where the supply of parts is absolutelycrucial to national productivityand a second tier representingminor makes whose impact is less vital. The second tier would be simpler in structurebut it would not be at a co mrcial disadvantage. Manufacturershave been contactedand seem willing to seriouslyconsider investingin 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 Central Bank. It is hoped that the new financial and economic changes now being considered will provide the impetus for such an agreement. Potential investmentprograms are now presented.

I. Issues. Prospectsand Recommendations

86. Issues. The sector would benefit from generalplanning changes and specific restructuringat all levels of modal activity. It is characterized by the following constraints:

(a) Limited land-basedmodal operationsdue to the poor security situation.lack of infrastructuremaintenance, reduced demand patterns and inadequatevehicular 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 supportexisting operations. This results in costly passengerand cargo rates in real terms and an inefficientdemand for modal services. In general, the supply of services is totally inadequateto meet the demand at official price levels and parallel pricing of maintenanceand services is present in the road sub-sector,together with queuing and time delays in other modes.

(c) Inabilityto cope with the rapid urbanizationnoted in many provinces,especially those that are consideredmore secure. Freight shipments(notably food) are affected but the most chronic failure is the lack of urban passengertransit systems to meet the needs of the growing city populations.

(d) Foreign exchange limitationsthat complicateor prevent the purchase of equipment and spare parts for all transport ad communications modes. Much of this is due to planning rules and National Bank procedureswhich 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 - 114 - ANNEX VIII Page 42 of 45

types. These difficultiesthen contributetowards sustainingthe present unreliableand inconvenientservice schedules.

(e) Employmentpolicies are inconsistentand ineffectualwithin the sector. Skilled staff are difficultto retain and state enterprisesfrequently required to maintain large numbers of untrainedemployees who are troublesometo motivate and manage. Training and educationalschemes are not commonplace,and there is a dearth of technicianein all modes that affects productivity, service levels and preventativemaintenance. Remunerationis poor and opportunitiesfor auto-consumolimited so staff turnover, especiallywhere skills are marketable,is high.

(f) Infrastructuremaintenance is poor and costly in terms of its effect on modal output and profitability. It also has social opportunitycosts given that labor intensivepolicies could be adopted to reduce operatingcosts while generatingemployment opportunities. Many land systems are in a quasi-abandonedstate; airfieldslack basic facilities,rail tracks and stations are damaged and inoperative,and the highwaynetwork is in a deterior- ated conditionand lacks any service facilitieslike fuel stations and food stops for drivers over much of its length. Ports require both physical works (quays)and equipmentmaintenance programs to improve efficienciesand preserve investments,especially for cabotage operations.

(g) The collapse of officialprice levels for many goods and services, and the attendantrise of the parallelmarket has caused distortionsin the pricing of transportservices. It is important that planning changes should avoid subsidiesand allow modes to compete on equal terms. In this latter respect, the private sector needs to be stimulatedand subsequentlysupported, and there is good potentialfor growth, particularlyin highway and cabotage operations. MINTEC should be encouragedto avoid regulationand licensingas a means of controllingthe sector and aim for a mixed competitiveeconomy.

87. ProsDectsand Recommendations. In planning correctiveaction, the transport sector has limited capacity to absorb the related elements of large investmentprograms. 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 difficultiesin meeting disbursementtargets for locally-financedelements because of irregularsupply of locally-manufacturedmaterials. In these circumstances,a program focusing on short-termhigh impact projects and modest financingseems an appropriateform of investment,supported by policy changes at Governmentlevel. Large single projects should be evaluated separatelyonce their consequencesin terms of sectoral absorptivecapacity are recognized.

88. MINTEC have proposed new transport plans reflecting Provincial, Regional and national/international needs and these should influence modal - 115 - ANNEX VIII Page 43 of 45

and inter-modalinvestments and project selection. 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, particularlyhighways and cabotage. In addition,all tariffs are grossly distortedand require urgent review. The followingspecific actions are recomended for the various modes.

89. Highways. Vehicle fleets should be increasedand vehicle life extended through easier access to capital for new vehicles and spare parts, trainedmechanics and improvedmaintenance facilities. In addition, stricter control of drivers and loads, and improved road conditionswould contributesignificantly to prolongingvehicle life. Highway infrastructureneeds to be monitored on a regularbasis to identify construction,rehabilitation and maintenanceneeds. This would requirethe creation of an effective highway maintenance organization in Angola, possibly in three-tier form to reflect a national-provincial-district structure. 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 countriesand vehicle licenses should be freely availableas long as applicantsmeet requiredoperational standards. Tariffs should be determinedby market forces and efficientoperators should be allowed to run multi-vehiclefleets. In urban transport,bus fleets need expanding and their routes improved to reduce vehicle damage. The desirabilityof parastatalbus operationsneeds evaluationand the private sector compris- ing taxis, pick-ups and mini-buses should be allowed to grow. In planning terms, road investmentis appealingbecause its flexibilitypermits 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 levelswithout undue regulation. It also has attractive employmentprospects, particularly in the areas of road constructionand 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.

90. Cabotape. Regional development requires that goods and produce from the area are transported to major markets without delay and at low cost. Cabotage has an excellent potential for providing services over part of the regional transportlink from the producer to consumer, though it present performanceis dismal. MINTEC is proposingprograms for both passenger and cargo cabotage investment,principally in the ship fleet which is presentlyold, unreliableand incapableof giving the desired level of service. Two new 320 passenger ships are operatingbetween Luanda and Lobito but facilitiesat all ports need to be improvedto allow coastal ships to be promptly berthed, unloadedand serviced. The existing arrangementsrepresent a seriousobstacle to efficientcabotage operations.

91. Railways. Investmentrequirements for Angola railway systemsare considerable. There is a need to rehabilitatethe permanentway, replace damaged bridges, renew rolling stock, purchase new engines, renovate signalingand communications,improve transshipmentfacilities, train adequate numbers of technicalstaff and ensure a regular supply of spare - 116 - ANNEXVIII Page 44 of 45 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. Railway 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 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. TAAG 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 ENANAairport safety and comunications could be improved within the domestic system, TAAGcould operate its aircraft over a longer daily period and so improve utilization. Due to tariff distortions and the fixed exchange rate, TAAGis subsidizing all its activities in real resource terms. A sequential adjustment to the tariff structure is urgently needed to allow TAAGto operate from a sound financial base. 93. Communications. The transport sector, in commonwith other commercial sectors, would benefit from improved public communications at all levels. Commnications 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 1986 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. The 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 IINTEC and technical assistance and equipment could be provided where such investments contribute to the success of a transport project.

94. Human resources are a majorissue 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 - 117 - ANNEX VII Page 45 of 45 methods used to the fullest extent possible. This can be achieved by adopting a regionallprovincial 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. - 118 -

Page 1 of is

EDUCATION

A. Structureand Organizationof the EducationalSystem

1. The present educationalsystem was establishedby Decree 26 of January 1977 and changed by Decree 40, of May 1980 which divided it into three levelssbasic or primary education,secondary education and higher education. While the first two levels offer regular courses for students in the normal age range, vocationaltraining and adult educationare available also to older students.

2. Regular Education. Primary educationis also divided into three levels, in additionto one year of preschool. The first level lasts four years and is compulsory. The second and third levels each last two years. School attendanceshould start at six years in preschoolclasses; the first level should be completedat age 10, the second level at age 12 and the third level at age 14. However, acceptableages 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 educationis to provide the knowledge required to obtain skills through on-the-jobtraining or secondaryeducation. Secondary education is open for studentswho have completedthe third level and offers two alternativessthe pre-university,a two-year course leading to entrance in the universityand secondarytechnical education, offering different specializationsand having a durationof four years. The system does not track as tCe completionof a level or its equivalentsopens the same alternatives. Thus, secondarytechnical education also provides access to higher education.

3. The 2-year duration of the pre-universitycourse has proven insufficientto provide the studentswith the knowledgerequired for universityentrance. As a result, it has been extended,on an experimental basis, to three years. Access to secondaryeducation and higher education is determinedby a system called "encaminhamento",which considersprevious grades, vocationalaspirations and the number of places available,in the selectionof students. There are 14 pre-universityschools. Of these, only three have their own facilities,located in Luanda,Uige and Malanje. Eight schoolsuse facilitiesprovided by the NationalEducational Institutes and three schools share them with secondarytechnical institutions. This, in part, reflects the fact that the pre-universitycourses conceivedin 1978 are in a transitionphase. Both curriculumand duration need to be reviewed in order that they can adequatelyfulfil their role of providingthe knowledge required for admissionto the university.

4. Secondarytechnical education is a four-yearcourse and has two programs. The first program is a teacher-trainingcourse for primary educationteachers at the National Institutesof Education,located in 14 provinces. Besides these institutes,there are, in Luanda, the National instituteof Physical Educationand the PedagogicalIndustrial Institute. The former provides training for physical educationteachers and the latter trains teachers in industrialdisciplines for secondarytechnical education. The second program offers specializationsfor techniciansin areas such as agriculture.electricity, health, mechanics, fishing, and finances in the - 119 - ANNEX IX Page 2 of 18 secondarytechnical institutes. Only 12 of the institutesare functioning as two were recentlyclosed. During the last two years, studentshave to gain practical experienceby working as apprenticesin jobs related to their specializations.Most students of secondarytechnical education are "working-students',i.e., are employeeswho are daily relieved if their duties for a numbfherof hours in order to attend classes. For example, many teachers are also students at the National Institutesof Education in order to become certifiedteachers. The existenceof working-studentsnegatively affects learning.

5. The AgostinhoNeto University,established in November 1976, is the sole institutionof higher educationand has three sites: Luanda, Huambo and Lubango. In Luanda, there are the Facultiesof Law, Economics, Sciences,Engineering and Medicine. In Huambo, there are the Facultiesof Agronomy and Medicine,as well as Economicsand Law. In Lubango, there are courses in Economicsand Law as well as in the Institutefor Education Sciences. The purpose of this Instituteis to provide teacher training for teachers of the National Institutesof Education. The Institute for EducationalSciences offers its courses also in Huambo and Luanda, although in these cities it does not have residentprofessors. These courses are correspondencecourses and have many inadequacies. The facultiesof Economicsand Law at Huambo and Lubango do not have a sufficientnumber of teachers. As a result,many disciplinesare not offered on a regularbasis. To remedy this situation,professors from Luanda are sent at regular intervalsto teach short-term,intensive courses.

6. Some facultiesoffer 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 correspondencecourses also last six years. Only the completionof the second level provides a diploma. Most studentsare 'working-students'who receive full salaries. Students living in other cities receive free board and lodging. In Luanda, the Universityhouses the National Center for Research; its policies are designed by the NationalCouncil for Research,a unit of MED having the rector as its president.

7. Adult Educationand ProfessionalTrainina. Students too old to be accepted by regular primary educationhave other options. Adult education is offered correspondingto levels I, II and III of primary education. In level I, it is a two-yearprogram divided into four semesters,the first one correspondingto literacy. Levels II and III each have a two-year durationalso divided into four semesters. Those completing level III have access to secondaryeducation. Adult classes are given at night using the facilitiesof regular schools.

8. Literacy programs equivalentto the first semesterof Adult Education are carried out by the National Center for Literacy. The Center conducts one-year programs using volunteerteachers and the program and manuals used are specificallydesigned for the students'needs. The resourcesfor these programs and their executionare managed by the Party (MPLA-PT). - 120 - ANX IX Page 3 of 18

9. Provisionalschools (concentratedin rural areas) offer a four- year course to children older than ten years and to dropouts. The first two years are spent learningbasic skills and the last two years are dedicated to vocationalskills such as agriculture,carpentr7, masonry, shoe-making, printing, etc. Provisionalschools are boarding scbools and, as such, also cater to children and teenagerswho have been abandonedor orphaned. Many provisionalschools have had to be closed due to the war. At the moment, there are 13 provisionalschools located in Bie (3), Njsibe (2), Luanda, Benguela,Huila, Luanda-Norte,Malanje, Huambo, Kuango-Suland Uige.

10. The centers for vocationaltraining are in a state of flux, pending the reorganizationthat will occur accordingto legislationstill being discussed. Up to now, these centersprovide regularcourses 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 supervieion. There are 45 Centers operated by MED and 73 within firms. The Centers controlledby MED offer two cycles. The first cycle, correspondingto level II of primary education,takes two years and the major differencein relation to regular primary educationis its objectivesto provide the studentwith a marketable skill. In other words, the Centers provide a terminal educationand thus offer an opportunityfor their students to acquire a skill that is in demand. The second cycle apparentlyhas few students and offers courses equivalentto level III of primary educationproviding equal access to secondaryeducation.

11. There are three main problems regardingthe Centers. The first is the lack of coordination,supervision and control, that should be exercisedby MED. As a result,many existing facilitiesare underused and the same specializationsare taught with differentprocedures. The second problem results from the lack of knowledgeabout the need of qualified workers. There is a governmentquestionnaire about the occupational structureof the existing labor force in a firm and its future manpower needs. However, many firms do not answer the questionnaireor do not answer that part regardingtheir manpower needs. Finally, there is the problem of financingthe Centers. Recently,the governmenthas made an effort to deal with these problems. The reform of MED has placed the responsibilityfor coordinationof vocationaltraining with the Vice-Ministerfor Vocational ?raining. New legislationestablishing the National System for Vocational Training under the responsibilityof the same VIce-Ministeris being proposed. Thus, this system maintains the utilizationunder MED, which does not have the human and financialresources required for the job and is not familiarwith the teachingprocedures and curriculaof professional training.

12. Ministry of Educationt Obiectives.Organization and Resources. The main objectivesof educationalpolicy are formulatedthrough the MPLA-PT Congressesand resolutions,and throughGovernment 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 followedby the educationalsystem, includingnationalization and secularizationof schools, compulsorybasic education,free education,and cooperationbetween communityand school. The First ExtraordinaryCongress of the Party (1980) - 121 -

Page 4 of 18 reaffirmedthese policies and showed concernwith the qualityof education. The Second Congresswent further in its concern,with the issues of quality and efficiency,recommending a diagnosisof the educationalsystem. Recently, in its 20th meeting held in November 1987, the Party'sCentral Committee approved two documentscontaining the diagnosisand expressedits concerns for more effectiveactions pursuing the existing priorities.

13. All governmentresponsibilities and resourcesrelated to educa- tion, with some exceptions,are centered in MED. This ministry has four administrativelevelss central administration,provincial delegations, municipal delegationsand communal units. Tne central administration coordinatesthe educationalpolicies, sets the guidelines,allocates the resources,determines curricula changes, buys schoolmaterials, sets teacher wages, supervisesschools, organizesteacher-training programs, etc. It has two Vice-Ministers,each responsiblefor Departmentsor Directorates(see Chart -). In addition, there are the supportingunits and the hierarchical relationshipwith the provincialdelegations.

14. Under the reorganizationof MED, through the Decree 9187, the responsibilitiesof the Vice-Ministerswere changed. Previously,one Vice- Minister was responsiblefor primary educationand the other for secondary technicaleducation (includingthe pre-universitycourse) and for the UniversityAgostinho Neto. Now, the University refers directly to the Minister. One Vice-Ministerhandles all matters relatedt:; secondary technical education and vocational training and the other is responsiblefor general education, consisting mainly of primary education. The changes increasedthe number of the supporting units from five to nine. Many units, such as the Planning Unit, InternationalAffairs, Legal Affairs, Budget Administrationand Numan Resources,exist in all Ministries. International Affairs deals mainly with the administrationof the "cooperantesacontracts.

15. The Vice-Ministerfor General Educationhas under his authority the National Directoratefor General Education,which comprisesfour DepartmentssPhysical Education,Adult Education,Speclal Education and Extra-curricularActivities. The former organizationdoes not differ significantlyfrom the new one as the responsibilitiesof the Vice-Minister were maintained with one exception. The Vice-Minister for Technical and Vocational Education has three directorates under his authorityt secondary technicaleducation, vocational trainingand teacher training. A comparison with the previous organizationreveals the followingchanges: university affairs are now handled directlyby the Minister and the pre-university course is the responsibilityof a Vice-Minister. The added responsibilities include teacher training and the coordinationof vocationaltraining. The advantagesof reallocatingthe responsibilityfor this level of teacher training are not clear. The main purpose of the organizational change was to place the responsibilityfor coordinationof vocationaltraining, which is facing a major crisis, in MED. At the moment, regular educationtaxes the planning abilitiesof NED, which are very weak, and burdens the administrationwith unsolved problems and large inefficiencies. It is hard to understandhow 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 administrativeresources. - 122 -

Page 5 of 18

16. A more promising direction of change would be toward decentralization of decision-makingin favor of provincial and municipal delegations. Decentralizationwould result in shorter delays and a greater involvementof lower authorities. The scope for decentralizationinvolves actions with regard to maintenance of schoolsand school supplies. An importantmeasure in this respectwas the decentralizationof budget elaborationand implementation. The organizationof the provincial delegationsis similarto that of the Ministry of Education,with support units and executivedepartments, although their number is smaller. For example, the provincialdelegation in Huila has three supportingunits (PlanningUnit, School Supervisionand 'CooperantesmAffairs) and eight departments(General Education, Adult Education,Vocational Formation, Budget Administration,Physical Education,Human Resources,Extra-Curricular Activitiesand Public Relations). In addition,there is a Consultation Council, formed by the department'sdirectors. Contacts between the provincialdelegation and the municipaldelegations and connunsl coordina- tions are severelyhampered by difficultcommunications, large d'stancesand poor roads. There is no reliable informationnetwork between the hierarchicallevels, and the autonomy given to the school's directorsis minimal. As a result, delays in decision-makingaffect the schools, drasticallyreducing the number of school days and causingmore adverse teaching conditions.

17. Not all governmentresources for educationare included in the budget of the Ministry of Education. Separatebudgets exist for the Agostinho Neto University,the NationalCenter for Literacy and the National Institutesfor Languages and for Scholarships,as shown in Table IX.1. The allocationfor the National Institutefor Languagesis very small. While the National Institutefor Scholarships,which started in 1982, receives about 3Z of the educationalbudgets, the National Center for Literacy is far more important,receiving in most years more than 102 of the government educationalbudget. The Center is part of the Departmentof Education, Culture and Sports, a unit of the Secretariatof IdeologicalMatters of the MPLA-PT. The Center promotes one-year literacycourses for agricultural workers, cooperativeworkers and employees. Those courses are equivalentto the first semesterof the Course for Adult Education.

18. During the period 1980-87,education received an average of 122 of the governmentbudget, with 10 being allocatedto the Ministry and 22 to the other institutions,including the university. Even in nominal terms there are large fluctuationsin budgeted educat.'onalexpenditures. For example, in 1985 these expenditureswere 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 expendituresreduced actual real expenditureseven further. In the period 1980/82 (Table IX.2) sizablecuts were made both in total government expendituresand in educationalexpenditures; the National Center for Literacy and the National Institutefor Languageswere most affected. - 123 - U u~-z Page 6 of 18

Table IX.1 - GOVERNMENTBUDGET FOR EDUCATION - 1980187 (Kz millions)

198 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 AgostinhoNeto

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- 4 140 81 * 377 384 tute for Scholarships _ 11.644 10.413 11.23 9.702 9.559 12.855

*Missing information

Table IX.2 - GOVERSMENTEXPENDITURES ON EDUCATION- 1980182 (Kz millions)

1980 1981 1982 Expendi- Reduction Expendi- Reduction Expendi- Reduction tures _() tures (2) tures jS

Ministry of 7.883 21 7.929 12 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 - 124 - AM=EX XX Page 7 of 18

19. The distributionalimpact of educationalexpenditures can be seen in regional terms by comparingthe per-capitaexpenditures for educationby the 18 provinces. For 1983. the central unit of NED absorbed 8.22 of MED expenditures. Expendituresin the provinceswere an average Kz 916 per capita, varying from Kz 469 in Bie and Km 715 in Luanda Norte, to Kz 3364 in Kuando Kubango and Kz 1784 in Benguela. The bulk of planned expendituresby the Ministry of Educationis of a recurrentnature. Capital expendituresare, for most years, less than 11 of total expenditures. Personnelexpenditures account for more than 802 of total expenditures. Expenditureon food is significant,which calls attentionto the need to reevaluatethe free room-and-boardpolicy. The budget for the National Center for Literacy reveals that personnelexpenditure is the most important single item, representingmore than 802 of total expendituresand about 1O0 of the Ministry of Educationpersonnel expenditures. This large share of resourcesemployed in literacyprograms for adults raises serious questions about its cost-effectiveness.

B. Primary Education

20. Enrollmentin regularprimary education in the period 1970186 shows a rapid growth up to 1979, and a sharp decline thereafter. The number of students increasedfrom 484,000 in 1970 to 671,000 in 1976, and 1,932,000 in 1979, decliningsubsequently to 1,047,000in 1986. Enrollmentgrowth since Independencereflects the priority educationreceived from the new Government. However, the attempt to enforce compulsoryeducation has suffered severe setbacks,which deserve some explanation. While data on number of classrooms,number and qualificationof teachers and number of daily shifts is not availablefor this period, it is reasonableto assume that the increase in enrollmentbetween 1976 and 1979 has overtaxedthe capacity of the system in physical terms by increasingstudent/teacher ratio as well as increasingthe number of schools operatingwith three or four daily shifts. Also, there is no evidence of an increase in qualified teachers in this period that would partiallycompensate for the loss of qualifiedteachers after independence. Thus, the threefoldincrease in enrollmentmust have been accomplishedwith a smallernumber of qualified teachers.

21. School maintenance has probably suffered from a combinationof intensive use and insufficientrepairs. Similarly,school materialshardly kept pace with enrollment. Thus, enrollmentexpansion must have increased inefficienciesand would hardly be sustainable,even if other factorswere kept in check. But during the early eighties,war problems and economic problems intensified,with damaging consequencesfor the educationalsystem. War consequenceswere felt in many ways. Firstly, impairmentof the transportationnetwork disrupteddistribution of school supplies in many areas. Secondly,the dislocatedpopulation overburdened facilities in urban or secure areas. Thirdly, they contributedto the decline in the number of teachers through the draft of young soldiers. Fourthly,production losses and the cost of the war effort reducedthe resourcesavailable for peaceful activities. - 125 -

Page 8 of 18

22. The distortionsin the economy and the centralizedallocation system reduced local productionof school and constructionmaterials as well as the distributionnetworks. As the Import content of further education materials increased,their availabilitywas affected by foreignexchange constraints,which also reduced the ability of the country to rely on foreigners (6cooperantes6)to reduce the shortageof qualifiedteachers. Perhapsmost damaging is the effect of distortedwages on teachermorale and supply. Since teachersdo not receivepayments in kind, many consider their income insufficientand leave their jobs.

23. The decrease in resourcesavailable for primary educationis shown in Table IX.3. For three years there are figures for the number of schools,classrooms and teachers. The number of teachers declined23.62 from 1981 to 1983, whereas the reductionin enrollmentwas less (122). Those who left because of low wages were probably the most able and qualified. The decline in classroomswas larger (40X), forcingan increase in the number of shifts and In the ratio students/classroom.

Table IX.3 - PRIMARYEDUCATION - NUMBER OF TEACHERS,CLASSROOMS & SCHOOLS 1981183

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 enrollmentrates for primary educationand level I declined by 422. The high figuresfor the gross enrollmentrates for level I reflect the freat number of over-aged students. For example, in 1981 almost half the studentsin level I were more than nine years old, as revealed by the comparisonof gross and net enrollmentrates. High dropout rates are also the main cause of net enrollmentrates of less than 1? in levels II and III.

Table IX.4 - BASIC EDUCATION - ENROLLMENTRATES

1980 1981 1982 1983 1984

Gross EnrollmentRate 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 EnrollmentRate

Level I (6-9 years) - 72.4 69.4 - - Level TI (10-11 years) _ 0.9 0.6 _ _ Level III (12-13 years) - 0.1 0.1 - -

Sources Etapa Diagnostica,MED, 1986. - 126 - ANNIEX IX Page 9 of 18

25. The Censuses of 1963 and 1984 do not provide informationon schoolinglevel for those enrolled. However, they allow calculationof net enrollmentrates for primary educationand level I, on the assumptionthat students between 7 and 10 years old are in level I and that studentsbetween 7 and 14 years are in primary education. The results do not indicatemajor regional differences,as only Namibe has smallerenrollment rates, shown in the table below.

Table IX.5 - NET ENROLLMENTRATES - FOUR PROVINCES

Luanda Zaire Cabinda Namibe Net EnrollmentRate Basic Education 94.4 83.5 80.5 70.8 Level I 83.3 81.2 77.3 68.1

Source: Censuses of 1983 and 1984.

26. There are indications that the deteriorationin 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 resourcesthan those presentlyavailable. Adult educationenrollment also shows a decline between 1980 and 1984 and a substantialincrease in 1985 and 1986. This type of educationwill have to expand to accommodatethe studentswho cannot attend regularprimary educationclasses because of their age. The reductionin enrollmentin regularprimary educationvastly increasedthe potentialdemand for adult education. The problems faced by primary educationare illustratedby a study of demand for education in Luanda in 1986. Of the 221,400 studentsin the age group of 5-14 years old ,whotried to enroll, 31,200 did not find places in pre-schooland first grade. Of the remainder190,200, at least 71,200were in the third shift or in classes with more than 40 students. If one considersthat the third shift reduces the class hoursjday of the other two shifts and that the high number of dropouts is partly a consequence of high repeat rates, the conclusion is that conditionsfor learning are extremelyunfavorable. The study also mentions the need for an additional780 teachers.

27. InternalEfficiency. Efficiencyin primary educationis low. One way to look at internalefficiency is to observe promotion,repeat and dropout rates (see Table 1X.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 promotionrates are higher in Level III. Taking the average value for 1980184, promotionrates vary from 29.2Z in grade 6 to 45.0? in grade 3 and retentionrates (promotionplus repeat rates) vary from 63.42 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 promotionrate for each grade shows a steadfastdecline. The reductionof promotion rates in the Level I is always larger than 1/5. This evidencepoints to a severe deteriorationin primary education in the early 19809. - 127 -

Page 10 of 18

Table IX.6: PRIMARYEDUCATION, 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 StatisticalAppendix, Table J.5.

For the Level I, a cohort study shows that of a 1000 studentsstarting the 1st grade 604 are promoted 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 consecutiverepetitions. The average number of years it took to be promotedwas: 1st grade - 1.46; 2nd grade - 1.85; 3rd grade- 2.12; and 4th grade- 2.43.

28. For each studentwho completesthe Level I, the averagenumber of years spent in school either by himself because of repetitionor by dropouts is 7.03. Thus, wastage resultingfrom repetitionand evasion increasesthe cost by 75?. The resultsare even worse for levels I and II. Of the 142 studentswhich start Level II, only 60 eventuallyreach 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 continuesthe upward trend observedLevel 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 studentwho starts the Level II and graduatesfrom the Level III, the averagenumber of years spent in school either because of repetitionor because of dropouts is 40. In this case, wastage increasesthe cost tenfold.

C. SecondaryEducation

29. Secondaryeducation has three major branchess secondary technicaleducation, a four-yearcourse offering several specializations; the National Institutesof Education,a teacher trainingcourse designed for primary educationteachers; and the pre-universitycourse, a two-year course leading to entrance into university.

30. SecondaryTechnical Education. Secondarytechnical 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). Economicsoffers the followingspecializations: administration, commerce, stEtistics, finance, and planning. Industry offers courses in construction,electricity, mechanics, chemistry, and politechnics. Enrol.mentin secondary technical education has grown every year since 1978, to J,646in 1985, at an annual rate of growth of 23? (see - 128 - ANNEX IX Page 11 of 18

StatisticalAppendix, Table J.6). This continuousexpansion of enrollment was achieved despite serious problemswhich affected drasticallythe 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-timeteachers, teachers having a main job outside the Institute,and studentsencharged with responsibilities(monitors). Full- time teachers are usually Ocooperantes";among nationals, those having an outside job constitutea majority because of a lack of incentivesto be a full-timeteacher. Thus in 1986, of 513 teachers,372 were scooperantes", 25Z were part-timeteachers, 16? were full-timeteachers, 13.5 were monitors, and the remainder8.52 were classifiedas "other*. Because of language problems and cultural differences,the work of acooperantes*is not very effective. These circumstancesare aggravatedby their many nationalitiesand differentinstitutional and technicalbackgrounds. The burden of teaching falls mainly on part-timeteachers and monitors.

31. Two other aspectswhich constrainlearning relate to reading materials and equipmentused. Reading materialsare generally adapted from foreign sources and do not adequatelycover the subjectsnor are they produced in sufficientnumber for all students. Also, there generallyis no library. Equipmentis inheritedfrom colonial times, is well maintainedbut insufficient,and modern importedequipment frequently does not function because of maintenanceproblems and a lack of importedparts. Thus, it is not surprisingto find a high evasion rate in the first year (9th grade) and an average promotionrate of 481. Aside from a generallylow internal efficiency,Table J-7 in the StatisticalAppendix reveals two facts. First, promotionrates in most cases are higher for the last grade. Second, the comparisonof efficiencyin 1983 and l9U reveals an increase in efficiency in 1985. Low promotionrates are reflectedin the modest number of graduates (see StatisticalAppendix Table J.8).1/TnAgriculture, the number of graduatesfluctuates, with a maximum of 84 graduatesper year. The Economicscourse shows a decliningnumber of graduates,aggravating a serious bottleneck,that of middle administrationechelons in governmentand in firms. Industry graduatesare increasingat modest rates, far below the economy'srequirements.

32. One positive change towardsthe improvementof efficiencywould be to give the Institutesthe authorityto allocatetheir budgetary resources and so reduce the delay in the purchase of materials for class-roomsand laboratories. Another proposal,to allow the Institutesto sell goods and servicesand in this way have their own source of revenues,has not yet been consideredby the Government.

33. National Institutesof Education. There are 14 National In- stitutesof Educationwith the responsibilityfor training teachers for primary education in four-yearcourses. Enrollmentin these Institutes increasedfrom 778 in 1978 to 3970 in 1985, at an annual rate of growth of 262 (see StatisticalAppendix Table J.6). However,when one compares the number of graduateswith actual needs, a wide gap is observed. From 1981 to

11 Additional informationon agriculturaleducation is provided in Annex VIz. - 129 - AM IX Page 12 of 18

1985, the graduateswere 1743 (1981-68;1982-228; 1983-4611 1984-526; and 1985-460)or less than 52 of the stock of teachers. Thus the graduatesof the Institutesare not enough even to compensatefor normal attrition,let alone to replace those who left because of low wages. Since most students are teachers,the net additionof teachers is practicallynegligible. Efficiency,as measured by promotionrates, is not high. In 1985, the promotion rates were 9th grade- 561; 10th grade- 722; 11th grade- 66Z; and 12th grade- 742, with an average rate of 662. A major learningproblem is the low proportionof Angolan teachers. Thus, in 1986, 71 teachers (312) were Angolans and 157 (69?) were 'cooperantes'.The predominanceof foreignersposes seriousproblems alreadydescribed with respect to technicalsecondary education. Moreover,this situationcalls attentionto the inabilityof the Institutefor EducationalSciences to produce graduates to teach at the National Institutesof Education. The demand for these graduatesis very high, not only to replace 'cooperantes*but also to expand enrollmentsignificantly in these Institutes.

34. Unless the institutionalcapacity to produce teachersboth at undergraduatelevel and at secondarylevel is dramaticallyincreased, primary educationwill have to continue to recruit unqualifiedteachers. These teachershave access to in-servicetraining. In-servicetraining is the responsibilityof the National Departmentfor In-serviceTraining, which is part of the National Directoratefor TeachersTraining. It is divided into two stages. Stage one has the objectiveof giving educationequivalent to Level II for those teacherswho completedthe 4th grade. Stage two is the equivalentof Level III and is given to those teacherswho completedthe 6th grade. Stage one was first applied in 1980 to teachers in 13 provinces. It is a correspondencecourse which uses radio, and its contentswere 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 drasticallyaffected 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 remaining15,042, 6,874 were advanced. Stage two suffereda 4-year delay because of lack of UNESCO support and is presentlybeing implementedtogether with stage one. Although results are not known, one aspect deservingattention is the delay, caused by the mail service and the fact that teachers have little time to study after fulfillingtheir normal duties.

35. Pre-UniversityCourses. Pre-universitycourses last two years and lead to entrance in the university. There is general agreementthat two years are not adequate to provide the knowledge required in university courses. In a pilot experiment,the course was extendedto three years in 1986, the options were limited to Social Sciencesand *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 131. At the present, there are 14 schools, of which three have their own buildings, six share facilitieswith the National Institutesof Educationand three are located in secondarytechnical education schools. Promotionrates were 57? for the 1st year and 482 for the 2nd year in 1986. As in other secondaryschools, the teachers are predominantly'cooperantes' (48Z), and part-time teachers - 130 - AMMX I Page 13 of 18

(342), followed by full-timeteachers (15?) and other (32). In this case, the relativelylow number of teachers (134),makes it easier to substitute 'cooperantes*and part-timeteachers, provided that teacherwages became competitive.

D. Higher Education

36. Courses and Enrollment. The AgostinhoNeto University,founded on November 26, 1976, offers undergraduatecourses at three sitess Luanda, Huambo, and Lubango. Luanda hRs the largestcampus with 702 of the students. The other students are in Huambo (102),Lubango (7S), and in correspondencecourses (13?). The facilitiesin Luanda are spread through- out the city and many buildingswere adapted to serve as faculties. The problems of transportationaggravate the isolationamong facultiesand preventbetter use of classroomsand other spaces.

37. Located in Luanda are the office of the Presidentand its supportingunits, the NationalCenter for Research,and five faculties: Science, Law, Economics,Engineering, and Medicine. In Huambo, there are four facultiess Agriculture,Law, Economics,and Medicine. Located in Lubango are the Higher Instituteof EducationalSciences, and the faculties of Law and Economics. The facultiesof Law and Economics,both in Huambo and Lubango, functionprecariously because the number of residentteachers is far below the actual need. Because of this problem, teachers from Luanda are regularly sent to teach intensivecourses. The AgostinhoVeto University,part of the Ministry of Education,is under the direct supervisionof its Minister.

38. One major problem is the great degree of divergencebetween the universityand the needs of the society. Extension services,one of the main forms of interactionwith society,are practicallynon-existent. The Center for National Researchhas not made any significantcontribution to a better knowledgeof the problems of the nation. The evidence is that the productionof articles and books by teachers is minimal. Given these circumstances,the expected leadershipis not provided by the university. The selectionof the candidatesfor the universityis done through a process called *encaminhamentoo.This process considersboth grades in secondary educationand the studentaspirations. There is neither a clear description of how encaminhamento' is carried out nor background information on the studentswho applied to the universityand those who were selected.

39. Enrollment in the universityhas grown from 1,405 in 1975 to 5,732 in 1986, at an annual rate of 13.6?, even though it declined in 1976 and 1977 (see Table IX.8). Actually,only in 1982 did enrollmentreach again the pre-independencelevel. Most of the studentsalso work, and the job assures them the possibilityof attendingclasses. Students whose families live elsewherehave room and board provided by the universityfree of charge. - 131 -

Page 14 of 18

TableIX.8 - ENROLLMENTIN HIGHEl EDUCATION- 1970186

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 studentsin the various facultiescca be seen in Appendix Table J.9. Between 1984 and 1986, the increase ir studentswas largest in Economicsand Education,which also have the lr ger faculties. The great number of specializationsin some facultiesraises the question of the cost per student. Possibly,the alternativeof studyingabroad should be favored in some cases. Thus, for example, the Faculty of Sciencesoffers courses 3m the followingareass biology, physics, geophysics,geology, mathematics,and chemistry. This facultyhas about 700 students and, like all other facultieswith the exceptionof Medicine,the courses last five years. It may be the case that, given the quality of the c¢4rse, its unit cost and low efficiency,some specializationsshould not be offered. Another 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 veterinaryscience, and Economicsoffers two specializationst planning and accounting.

41. Efficiencyand Resources. Informationon internalefficiency is not satisfactoryand suggeststhat promotionrates vary in different facultiesbetween 40X and SOX. One way to get an indicatorof productivity is to relate the number of graduatesin a given year to the number of new students five years before, only Medicine and correspondencecourses last six years (AppendixTable J.10). The number of new studentswas estimated by.taking 20S of the enrollmentin the previous year plus the increase in enrollment. The indices of productivityobtained were 262 in 1984, 102 in 1983, and 23Z in 1982, suggestinglarge inefficiencies.If the stock of graduatesuntil 1984 (740) is relatedto enrollmentup to 1980 (8,874),the indicatorof productivityis 8X. The learningprocess is affected by many factors. Concerningthe students,it was seen that most are part-time students and their previous schoolingwas not satisfactory. Another crucial factor is the inadequatesupply of readingmaterials. Librariesdo not have even enough textbooks,partly because of Import restrictionson the acquisitionof books. There are few bookshopsand they have a poor - 132 - AN IX Page 15 of 18

selectionof books. As a consequence,most of the readings consist of class notes distributedby professorsor the translationof excerpts of foreign books.

42. Given the limitednumber of full-timeAngolan professors,there is a widespread use of part-timeteachers and of 'monitores'or studentswith teaching responsibilities(Appendix Table J.11). In addition,as mentioned before, many courses do not have all the requiredteachers and hence the need to use teachers from Luanda to teach intensivecourses. Finally, the most common used alternative--theecooperantesm--have their efficiency impairedby language and cultural problems. Also, this solution is costly because their -wagesare partly paid in foreignexchange. In conclusion,the professorsare inadequatein number and often in qualifications. There is a need of massive training abroad, coupledwith attractivewages, to reduce significantlythe proportionof part-time teachersand of "cooperantes'. Most of the cooperantes'are Cubans, Vietnamese,Italians, and Portuguese. The proportionof scooperantes'was 422 in 1984, 472 in 1985, and 35Z in 1986. Since part-time teachershave less contacthours with students and supposingthese contact-hoursare half of that of the full-timeteachers, the proportion of the contact-hoursby "cooperantes'is, respectively,52S, 542, and 432. The decline in 1986 of the proportionof 'cooperantes" reflects the foreign exchange crisis resultingfrom the decrease in oil prices.

43. Another question, relatedto the curricula,is the relevanceof what is being learned. The curriculumfor the economicscourse has been of particularconcern to the Government. The Government'sadministration and the management of enterprisesrequire, in the middle and higher echelons, people capable of utilizingthe concepts and tools of economic analysis. However, the number of disciplineswhich offer such concepts is far from sufficient. Improvingthe curriculum,including a change in content to better reflect contemporarycontributions, should improvedecision-making and the prospects of successfuleconomic reforms. Proposalsnow being discussedof changing the economicscurricula at both secondaryand university levels place more emphasis on disciplinessuch as statistics, economic theory and financialanalysis and on better understandingthe workings of a market economy, while reducing ideological training. These proposalshave receivedconsiderable support from the governmentofficials responsiblefor the implementationof SEP. Finally, laboratoriesand equipment in courses such as Agriculture,Engineering, and Medicine are in a poor state, pointing to the need for maintenanceand the purchase of laboratorymaterials. In terms of researchneeds, the existing laboratories are greatly inadequate.

44. The Government'splanned expendituresfor the AgostinhoNeto Universityhave fluctuatedin the past, even in nominal terms (Appendix Table J.12). Thus, these expenditureswere smaller in 1983 and 1984 than in 1982. The most importantcomponent, personnel expenditures, is responsible for between 512 and 672 of total expenditures.Outlays on equipmentand other durable goods are very small, varying between 32 and 72 of total expenditures. Expenditureon food representsmore than half of that on durable goods. The payment of 'cooperantes'as a proportionof personnel expendituresis, in most years, in excess of 102 of personnelexpenditures. - 133 -

Page 16 of 18

The complete relianceon governmentsources of financinghas two drawbacks: it restrictsthe funds available,which frequentlysuffer budget cuts, and it reduces the flexibilityof spending. Since most students also work, part of their salaries could be used to pay for board and lodging, as well as for purchasingreading materials and, possibly,for a small tuition. Cost recovery could be extended to other areas, e.g., making the increase of extensionservices and the provisionof consultantand research servicesto firms more viable. In this way, the degree of insulationof the university from society could be reduced.

45. Although the informationon resourcesand enrollmentis limited, it is possible to estimate recurrentunit costs for some courses. These costs were estimatedusing planned expendituresdata. This overestimates actual costs because of budget cuts. The distributionof the general expenditures,i.e., those not appropriatedto a course,were made proportionallyto the number of students. The tentativeresults for 1984 are the followings the courses of Law and Economicsin Huambo have a unit cost of 69,000 Kz, as compared to 73,400 Kz in Lubango. The unit cost for the Institutefor EducationalSciences in Lubango is 88,300 Xx and for Medicine at Huambo is 95,100 Kz. Finally, the coursesoffered at Luanda (Engineering,Law, Economics,Sciences, and Medicine)have an average unit cost of 109,800 Kz, whereas the unit cost of the Agriculturecourse in Huambo is 300,700 Xz. The average unit cost for the university,considering all resourcesare spent only in teaching is 105,500 Kz. E. Recommendations

46. A first recomendation deals with the issue of teacher training. It is evident that the negative effect of the massive exodus of the Portuguesecontinues in spite of the cooperationof foreign teachers and the efforts made to increase the ntumberof qualifiedteachers. The first priority should be to train teachers,possibly abroad, to eliminate the need of correspondencecourses and to replacemost of the cooperantes'at the Institute for EducationalSciences in Lubango. This measure, togetherwith curriculumchanges and provisionof adequate readingmaterials should improve substantiallythe knowledgeof the graduatesof these institutions. At the secondarylevel, the National Institutesof Educationwould directly benefit from the availabilityof better teachers. Only when the existing Instituteshave been strengthenedthrough replacementof most *cooperantes' and improvementin facilities,should expansionbe contemplated. The suggestedapproach places emphasis on quality and institutionbuilding and recognizesthat there are no short-cutsto the time-consumingpreparation of more qualifiedteachers. Measureswith more immediateimpact on primary education are changes in the curriculumto be set by the National Institute for EducationalResearch and improvementof in-servicetraining funded by internationalagencies. Finally, the issue of teachers'wages should receive careful attentionas the solutionsproposed are contingenton the ability of the educationalsystem to retain its best teachers.

47. Reorganization of NED 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 teachingmethods are specific,and the - 134 -

Page 17 of 18 demand of firms must be assessed to avoid external inefficiencies. Thus, the agency responsiblefor vocationaltraining should not be part of MED, a tax on firms should finance its activitiesand the courses offered should reflect more closelymanpower needs. A second goal is to place the responsibilityof the National Center of Literacywith MED. The evidence is that the literacyprograms are costly and ineffective. The resourcesof the Center should be used by regular educationto help improve the very low efficiency. The third goal is to strengtheneducational planning and managementas well as improve the informationsystem. At the moment, decision-makingis hampered by poor informationand a centralizationof decisions. There is little awarenessof the need for cost control and a large time-lag exists between decisionsand implementation,which results in excessive delays. Thus, the fourth goal is to work further towards decentralizingdecision-making, especially regarding the financial managementof resources.

48. Reorganizationwill improvethe use of available resources. However, there is a clear need for additionalbudget resourcesto increase the minimum level of capital expendituresto avoid further deteriorationof school buildings,to replaceneeded equipmentand teachingmaterials, and to improve teacher'swages. It is clear that school constructionand main- tenance should draw resourcesfrom the community,both local firms and parents, more intensively. This is the most viable way to expand enrollment in the near future. Cost recoverymeasures should start by imposing a fee for board and lodging. Food purchasesare a large item in budget expendi- ture and it is not possible to justify, on equity grounds, their supply free of charge. Another potentialsource of revenues is permissionfor the schools,especially the secondarytechnical schools, to sell goods and services. The cash need of the schoolscould in this way be partially solved.

49. The lack or qualifiedmanagement is a problemwhich 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 secondarytecbnical schools and at the university. Also, the creation of administrationcourses should receivefull support. For this purpose, better coordinationof TNORAD with the universityis required. The best way to deal with the lack of Angolan teachers is to receive technical assistancefrom a reputableuniversity for the trainingof teachers abroad, a program of visiting professorsand the provisionof text-booksand other teaching materials. Of course, foreign aid to provide scholarships, books and equipment,and visiting professors is also crucial in other specializations.

50. Primary educationcan hardly keep pace with populationgrowth. Until there is a substantialincrease in efficiency,needed to restore the levels existing prior to the decline of the early 19809, the priority should be on the quality of education. Improvedmaintenance of school buildingi, better teachers and changes in the curriculumare the main steps to reduce the existing wastage to more acceptablelevels. School constructionshould aim as much at the eliminationof third and fourth shifts as at increasing the number of places. The cost of increasingquality can, to a large extent, be compensatedby the reductionin the cost of inefficiency. The - 135 - AN It Page 18 of 18 shift in resourcesthat is required to produce these results is the main task in primary education. In other words, increasingthe number of those studentswho complete four years of educationshould be viewed as more importantthan improvingthe odds of access to the first grade.

51. Secondaryeducation has so far received relativelyfew 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 desirableto reduce the number of years of basic educationto seven or six years and to increase in the same way the number of years in secondaryeducation. Second, the role of general educationshould be enlargedvis-a-vis technicaleducation, which is more costly and the graduateswhich do not enter the universityshould have access to training courses before enteringthe labor market.

52. The AgostinhoNeto Universityhas to increase the proportionof full-timeAngolan professors,reducing both the number of part-time teachers and of "cooperantesO. For this purpose, it is necessary to increasethe relativewages of universityteachers and the opportunitiesto study abroad. Consideringthe number of courses and specializations,the lack of teachers in some courses and the inadequateexisting librariesand research faciliti- es, availableresources are spread too thinly. One possibilityis to send students abroad instead of having them enrolled at the university. Another possibilityis to increase the common core of the curricula. The univer- sity's buildingsin Luanda are located in differentsectors of the city and were built for other purposes. The existenceof a campus should improvethe use of the physical facilities,as well as teacher time, librariesand other resources. The first steps in this direction,i.e., selectingthe land, and developing constructionplans should be taken in the near future. - 136 - STATISTICALAPPENDIX Page 1 of 3

List of Tables Page No.

A. REY MCROECONOMIC INDICATORS

A.1 Private Sector and National Accounts ...... 139 A.2 Government Sector ...... 140 A.3 Foreign Sector...... 141

B. LABOR FORCE AND WAGES

B.1 Population 1900-1986...... 142 B.2 Urban and Rural Population 1970-1986 ...... 143 B.3 EconomicallyActive Populationby Economic Sector.... 144 B.4 Number of SalariedWorkers Affiliatedto the UNTA 1981-85 ...... * ...... 145 3.5 Monthly Average Salariesof UNTA Affiliatesby Type of Occupation,1981-85 ...... 146 B.6 Number of EmployedWorkers and Average Salary by Sector under BNA Control in 1986...... 147 B.7 Monthly Family Budget for 1980, 1985 and 1989 ...... 148

C. GROSS DOMESTIC PRODUCT AND mXPENDIT"E

C.1 GDP by Sector (FactorIncome Approach) at Current prices, 1982-87 ...... 149 C.2 GDP by Sector (ProductApproach) at 1980 Prices 1982-87 ...... ## ...... * ...... * ...... lSO C.3 Product Estimates in Current and Real Kwanzas and in Current Dollars, 1982-87...... 151...... C.4 GDP Structureand Growth at 1980 OfficialPrices 1980-87 ...... o 152 C.5 GDP by Type of Expenditure,1982-87 ...... 153

D. GOVERNMENTFINANCE

D.1 GovernmentRevenues, 1980-89 ...... 154 D.2 Transfers from Public Enterprisesby Sector, 1984-86. 155 D.3 Subsidiesto Public Enterprises,by Ministry,1980-89 156 D.4 Economic Classificationof GovernmentExpenditure.... 157 D.5 FunctionalClassification of GovernmentExpenditure.. 158 D.6 GovernmentFinanced Investmentby Public Enterprises. 159 D.7 Summary of GovernmentFinance, 1980-89...... 160

E. BAING AID BALANCE OF PAYMENTS

3.1 Balance Sheet of Banco Nacional de Angola...... 161 3.3 Balance Sheet of the Banco Popular de Angola ...... 162 - 137 -

STATISUTCALAPPENDIX Page 2 of 9

Pase No.

E.3 Money Supply Data ...... 163 E.4 Balance of Payments,1980-88 164 E.5 Major MerchandiseImport Expenditue . .165 E.6 Major Export Earnings,1980-88 . 166 E.6(1) Major Export Earnings Projections.... . 167 E.7 Balance of Payments Projections,1989-93 E.7(1) Baseline Case...... 168 E.7(2) OptimisticCase ...... *...... 169 E.7(3) PessimisticCase...... 170 E.8 Stock of External Debt, 19 82-88. 171 E.9 ProjectedDebt ServiceOb llgation . 172

P. AGRICLSTU

F.1 AgriculturalProductiont Present Estimatesand Early19709 Levels .v.e...... 173 F.2 AgriculturalProduction Trends, 1955-73 . .... 174 F.3 Parm Level Official Prices..... 175 V.4 Supply of AgriculturalInputs..... 176 _.5 AgriculturalExports (Imports)...... 177 1.6 Food Imports...... 178 F.7 ProjectedAgricultural Production Response to Policy Refrs...... 179

G. ENE

G.1 Oil Productionand Reserves,1986-90 . .. 180 G.2 ProjectedCrude Oil Exports, 1987-9 .180 0.3 Investmentsin Crude Oil Explorationand Development. 181 G.4 ProjectedPetroleum Products Consumption 181 G.5 ElectricityDemand c o raetst 182

B. IUSTRY

0.1 Structureof Industry,1984...... too. 183 0.2 Structureof Employmentin Enterprises,19844...... 184 0.3 Average Number of Employeesin Companieswith Over 500 Employees...... 185 0.4 Productionof ManufacturingIndustry; Comparisons between 1973 and 1987...... 186 B.5 Productionof the ManufacturingIndustry, Food Sector 1973-877...... 3...... 187 Ext. 1: Productionof ManufacturingIndustry - Light Industry Sector, 1973-1987...... 188 Ext. 2s Productionof ManufacturingIndustry - Heavy Industry Sector, 1973-1987...... 185 - 138 - STATISTICALAPPENDIX Page 3 of 3

Pate No.

H.6 Main Characteristicsof the ManufacturingIndustry in 1974.*. **...... *...... 190 H.7 Public Sector Investmentsin Manufacturing Industry: 1980-87...... 191

I. TRANSPORTATION

I.1 Bus PassengerData for MINTEC Enterprises,1984-85 ... 192 I.2 ETP Urban PassengerTransport in Luanda, 1985-87..... 193 1.3 Vehicle OperatinACosts, 1987...... 194 1.4 Railway Income and ExpenditureStatements, 1985-86 ... 195 I.5 TAAG Civil Aircraft Fleet UtilizationData, December 1986...... , ...... 196 1.6 ANGONAVE 1986Cargo by Category...... 197 1.7 ENATEL TelephoneSystems, 1980 and 19 ...... 8 5 198

J. EDUCATION

J.1 Per Capita EducationalExpenditures by Province, 1983...... 199 J.2 Ministry of Education,Expenditures by Category, 1980-87...... 200 3.3 Enrollmentin Regular Primary Education,1970-85 ..... 201 3.4 Enrollmentin Adult Education,1970-85 ...... 202 J.5 Primary Education- Promotion,Repeat and Dropout Rates, 1980-84...... 203 J.6 Enrollmentin SecondarySchool Courses, 1970-85...... 204 J.7 SecondaryTechnical Schools - Promotionand EvasionRates, 1983 and 1985...... 205 J.8 Graduates from SecondaryTechnical Schools, 1980-86.. 206 J.9 Enrollment in Higher Educatibn,1984-87 ...... 207 J.10 Higher EducationGraduates, 1975-84 ...... 208 J.11 UniversityProfessors by Type and Nationality,1984-87 ...... 209 J.12 University- Expenditureby Categories,1980-897 ..... 210 J.13 National Center for Literacy - Expenditure by Categories,1982-89 ...... 211 PRIVATFESECTOR AN NATIONALACCOWIT MACOCONMIC DIDICATORtS, 1982-87

1962 1983 1984 1985 1986 1987

Per Capita GDPReel Groth -4.0 -4.-46 -O.9 4.O53 -0.120 0.028 Privet. Con |"mptionReel Growt 0.168 -4.06 -0.221 0.031 -0.143 Per Capita Privet ConaimptionReal 41Go -0.178 -0.03 -0.249 6.966 -0.164 Private Con on / Ratio 0660 0.56 9.545 0.437 9.600 0.406 Totl IIt / GOPRatio 6.171 6.161 9.176 0.193 8.226 9.174 Domeslc S gop/ CUP atiZo *.08 0.19 0.160 0.249 0.163 9.2S2 etiosel vige / CP Ratio 0.062 9.158 0.12 0.214 0.145 0.246 Foreig Saviwg / GOPRatio 6.119 0.028 0.044 0.021 0.081 -0.071 Totl Conmlon 9'riv. * 4ow.) /C Ratio 0.914 0 .881 0.644 0.751 9.837 0.708

Source aMiesion Estimates

S@" S St#toZ t~~~~~~~~~~~~~~~~~~~~~

'Iv

1 1k AMA

OIOVMT SECTORACItOECMIC ISICATORS, 1962-67

1982 1988 1964 1ow 1996 1967

Carsoat R I I tlo * .894 0.81 C8M 0.866 0.8" 9.19 Direct T m. / "ptio *.154 *.17t 0.210 0.212 B.182 0.1" Redlirtt Tax" / atIo lO 0.09.9. 0..190.088 0 .078 0thr Rbceipt / GP Ratio 9*. *.09 0.96 9.059 9.09W 0.043 C.eret Eupeadltosr GOOPRatio G.8 9.8 0.181 0.402 0.367 0.84 Cwroat Tramoer. / W Ratlo *.As 911 9.012 0.016 0.019 0.014 Iet.r.at/ Currn Rocte mst.o O.OOOm .M 0.m O.9M O.M 9.iII SWolbdie. / MP Ro .M2 O .48 9.049 0 .970 0.031 9.925 hadstaep Savimp / Ot Ratio 4.42 -6.914 0.925 -0.018 4.028 -9.04 O.verumm.tInv.eteset/ OP Ratio 9.91K f96 O.M17 0.011 0.024 0.010 Capital Traaef.r. / OPsRatio 0.092 0.94 0.948 9.9 0.080 0.083 Q tC _ea.ptioaI P lRatio 0.2U o.m 9.296 9.814 0.837 0.892

Sowr.: USlee EaItimte_

1su MOLL

FOREIGNAM M AETMYSECTORS MCROECONOMIC DODICATORS, 1.92-P

i982 to" 1904 1916 1960 1907

FrSIO SECTOR Cworte* MM / OW fttlo 0.402 0.407 0.427 0.464 9.109 09.453 E as eV Robs 4.0-t0o 9* .411 0.184 0.16 0.205 8.277 Nosise Exporte Growt Ret -4.122 0.110 9.110 *.101 4.410 0.742 import (God + IWS) l GP Ratio 0.487 0.896 0.441 0.409 0.871 0.8a5 Imorts Vol. Grow"hIto 9.1 1.221 4O.07 4.25 *.002 Nimal Iprt Grow" Rat 4.188 4.In f.878 -4.19 4.225 0.200 R.eoeroeDelano. / GO Ralo 4.o 0.0W -0.014 *.0n -0."2 0.118 Not Factr Payn.ot / UW Ratio 4.0809 4.041 4.04 4010 -0.040 4.167 Nt Curret Tnemf*r / RW Ratio .0011 f.00 #116 0.0e4 0 .081 0.010 Curent ALoosestSalan /SP Rt.lo 4.119 4.020 4.04 0.021 .4.001 0.071 Stocl of Forolp 3s..voe/ IZport. 0.007 0.096 O.109 0.126 0.108 0.139 De SlcoeI IExporta (Goods* WI) 0.1U1 0.177 0.141 0.129 0.814 0.220 Deb sre"i / PRt9o 0.5 O.07 6.0W 0.00 S 0.1;0 Stock of lzT De Exports (0 1.140 1.118 M.U2 1.045 1.747 1.265 toek of L D" / U Ratlo 0.460 0.468 0.466 0.45 #.58 G.6$"

mIAETA SECTOR Stock of Private Credit / GOP atio 0.810 .040 0.527 #.681 0.68 *.0 Stoc of Loc to Govbwot / GOPR *.541 9.458 0.012 0.045 0.741 0.746 Stock of Momeland 4uaiMoney / UP 0*.714 .on 0.89J 1.019 1.124 1.180

Sources g ltslo Esletes - 142 -

APPENDIX

Table B.1

ANGOLA

POPULATION,1000-1986

YE" POPULATION (ThoUsand)

1900 2,718 1010 2,922 1920 3,131 1930 3,344 1940 3.738 1950 4,145 1060 4,840 1970 6.64 1975 6,520 1980 7,722 1081 7.918 1082 8,119 1983 8,320 1084 8.637 1085 8,764 1086 8.090

SOurce: Anuarlo Estatipticoand InstitutoNactlonal de Estatistl¢ca - 143 -

APPENDIX Tabl 6.2

ANGLA

URBANAND RURALPOPULATIION 1970-1088 (thousands)

YEAR URBAN RURAL URBANAS X OF TOTAL

1070 789 4.857 14 1975 1,182 5,338 18 1980 1.781 56941 23 1082 2,0B7 6.052 26 1084 2,385 6,142 28 1986 2.773 6.217 31

Source: Instituto Nactllonal. - 144 - APPEDIX

Table B.3

ANGOLA

ECOMNCALLYACTIVE POUTION SY ECONONC SECTOR FOR 1995

SECTORS Numberof Percentage EuslouedMorkers of Total

TITAL 21093 10.*

ProductiveSector 155212 73.6

ladutrg 237S16 11.3 Cotruction 15298 7.4 Atriculture nd Livestock 7494 35.5 Silviculture 0.4 Trrt 177566 8.4 Cum icatians t2219 0.6 cwte 1MM5 S.i Ohers V742 1.3

Uon-ProductiveSector 48495 23.1

Commal-Service 47034 2.2 Educationand Science 139655 6.6 Ctlture and Arts 24528 1.2 lealth, Social Assist., PhusicalCulture, borts and Tourim 103160 4.9 Flannceand Insurance 19466 0.9 Administration 118972 5.6 Othes 32241 1.5

Ibumpllld 71215 3.4

Source I rnstituto Nacionaldi Estatistica - DIE - 145 -

APPUDU

Table B.4

ANGOLA

MO OF MAEDVO E il AT TOTM UWTAtY TYPEOF ElYOE MlDSEl, li-U5

Tupeof Euplow 1I6 1962 1993 16 1965

Total 6 I89 6094M7 61762 626 665581

_ovnunt ad State Etrtwpris 51754 515277 233 526705 81

NM 4U063 4 5 409"6 41328 432416 11m l06609 127 11376 1154 121465

NixedEbtarp i 26771 3162 32612 32 34191

Nm 2769 30510 31566 31529 32770 lom 92 1152 6 273 1421

Priv aterFit m 66474 38 6551 3 7769

No 2122 575 57119 SW 66 um 632 7963 8442 O6 1156

Source I bIitato Ntciu de Estatistica - DE his. Nhimul dos Trbaihadwr de Aola - WT - 146 -

APPENDIX Table B.5

ANGOLA

NIOIITIYAMER SAIES OFUNTA AFFLAIES BY TPE OF OCaFATN", 19M1-C

Twmof Occkption 1981 1i2 193 194 15

ers 16# 165* 165* 165 1

Thicians 14 155 1tow 18o* 1ow

Ewlngm 650 65* 8gm oZS 0S Wsteria)Utrs 5me 71H Om 95 95 Ageictltval Uoters 4466 4466 562 5761 561

Aver 7M4 7692 92m 9648 979 ;wa *rt hate it) 8.4 20.9 3J 1.2

urcel Iustituto Nacioal de Estatistica- INE I .3q - PIN t I

m mm m gm~~~q q aumNpM0) uPag w I~I apq . asiu4 pKU q ut haamaNol. pMM in ' WM .paSAM OmLl VA66 1Mb *10 in1 I31 UN Do 185 US Om in33 -M a161 ( PPSJJ

v Om mu MO mu t a I53 U"t no9MMgt M in 194ow OmU am No 63 am36 9 bg8)2PIP Ms ow got W1 WMK 33 am1 US £1 a9 Ma4p not1 me6 No b as6 13 6333 11 0 91n 631 IrnS "63 5155351i 113193 11gm3 *69 a flPitt 1C.t61W mu33 on3 5316s 1961ml3 mu3 *63El3 SlIPl c a3em o n 9 31 - 1 31 Oa 41to ml a1 wit U au an tm £ *5 313* 196 a6 411 11 16 613 196 gm9 amG 611 hIWI' amiWu "a1gma ENMm a1 amU1 lw on NM39 CHIII 83WASNjPl 9UAt 194 1 ax mu el -M1 LMt 331 3 POJ4 o6l nogm t t on 6113NM cm a so ova" am9" Om1to U93_"AM L4UTA;I fft3391 M 139 3Z 913 I Ta3ol 43m 963"m 81 lot3atit an;W -N4341 19to If"PPSi $a*s nogm em " t*tIt 1 9b 9*9t 1D31NM Sblt tPKm tbo 16N Kam W NI"1"WINA rsA eb l- zt g tai sme"o1 IPAIIJ 11 otw1t a3 6131a 9m UJ I~~~~~3:S61611tAI 13119so SAJ tMA511) 1SA4 .19 tM1o .131$At 666tMA t UP1gm1 4 333tA-m 3SM IMt4363 ISGA 131M" 11'S

^ 11*116t^~~~ft 0 M1^0'~~lt11*11 2W il"t111 PA 1-I116tN ZtAM 1*1W 0 4t 18*1111qP 0 M 11*115t2CIII" tt }tAW

JI POl I SAW I M*AoM l"sniANMoP1"All SUIP M P I I I APlY

t P _~Nll1 'P 1|11111 UNU 3634 PW _U £1111136 PM _ Ull1 P_tP_

riom~~~~~~~~~~ umMuY FAMILYEDAT FOR 106, 19BS*Sd 19I

Predisct _Ite unit qauautit() Priem p"Wediture Pries bpmduwltre Prices Expenditnore (Parell-lMerket) (Offleal) (Official) Lamed..1989 lOS 10865 nic kg 15.0 lw.0 150.0 21.9 15.0 85. 1525.0 seek 1b.0 2010.0 2_910.0 40.0 405.0 45.0 450.0 Pems 5.1 210.0 1110.8 29.0 146. 81.0 166.0 cenrne k 15.0 12.0 19_1.0 5.5 12.5 17.5 52.5 FreshFls k 20.0 low.0 2 .4. e.0 6o.0 86.0 000.0 we kg 15.0 2W.0 11.0 90.0 1850.0 90.0 18W0. Cblcks. kg 15.0 211.0 871.0 65.0 1275.0 110.0 1050.0 Serdime 5.0 2400.0 1im.0 10.0 588.0 148.5 742.5 SoftDrink 1 20.0 4 .0 601W.0 27.0 540.0 40.0 810.0 Cigarettes .0# 400.0 12100.0 20.0 010.0 40.0 110M.0 SIbep 5.0 211.0 10111.1 1.0 140.0 87.0. 165.0 Tellet Suep k 5. 21 . 101110.0 66.0 440.0 104.Wo 0 .0 seew 24.0 3030.0 72720.0 40.0 10.0 50.0 1210 c Sa"a_ bg 10.0 70.0 71. 7.0 70.0 18.5 185.0 I Olen k 10.0 9610.0 91.0 10.3 189. 18.0 130.9 dibl- all 1 20.0 1lf.0 22M.6 42.0 40.0 46.0 IB.0 Msrogiae kg 5.0 191110. .0 11.0 50.0 110.0 5.0 asdteatmilk gi 10.0 1.1 611.0 .0 610.0 9.0 M.* salt kgI 8.0 300.0 911.14 8. .0 8.0 9.0 Orile 50. 41.0 mo 47.0 215.4 40.5 202. Vion, t 10.0 s3 .0 _1. 228.0 220.0 855.5 S56. Cotffe kg 10. 4.0 4 .0 116.0 1160. 206.0 200.0 Mond kg s0.# 21.0 _O 17.0 10. 17.0 50.0 TotalEa4pwoitere ...... 085820.0 ...... 14026.5 20211.6 Now rad- Ites AnnualAvew. OfficlalPrice lcreas In the PerIod100S81 (3) M...... 7.6 thblyFmi II ExpeNdturesattlo eot"" the Pavellel*nd OfficialMbrket io the Seginning of 19 tooS.6o...... B9 28.5 loice Flowimingvial"" *d misslonEJsis-t-s ( ) For a typicalfmlly alsoof sIX persees M1 sin mvSECTS (SOURCES), 1985-86 (K, silIo" at current offteal p1e.t.)

RVARYSECTOR 12.4 14910.0 19.4 low.8 1i.R 12.7 Al4SttUre sa Lv5tn_ 10.4 15.9 0.4 119.6 19.6 1U.5 fd l2.9 gm70.7 2.9 710.2 3.1 2.8 hE m S$CTOR(s. 44.1 0489.0 40.9 407.9 855 41.5 MawafctUrio and intag 9.6 216.4 0.1 13461.0 uj.o O. Petrlsm $2.1 4400.1 82.5 18003.7 19.9 2.1 Conatratlon 2.. 0131.4 4.5 4979.1 4.2 J.5 Elctei.ity .60 l*o. 9.$ MA.1 .e ¢ 45.0 IIUAR SCTOR 48.4 6"10.0 42.7 "011.2 s.0 Cora 39.0 14046.0 39.7 16.4 12.5 11.0 0.rvi.e 2S.? 800.4 23.2 M1.9 81.1 *0.2 Traasp.rt ae Cowinatlos 5.0 7014.4 5.0 650.0 .2 5.7 OF at FPtor Cot (t) M.$ 1et7.3 MI.9 1101.9 1.9 10.9 Gm at vorket PrIce (.) 149100.8 81.0

Sources Plsnlag Mtaistry a MiesltonEstImates () Wastes Estimates CDPat m*rkot price for the Wrod 1900 Sp ot ?"o cS0 for low2 Volvo added by the aseunary secor for 1im Nots The estimates usIa the fo.tr lesesm apprA are Incompleteand therefore st cemprabith tie m estimatesWsis tie product approach.See An..H IV.

5Pu ANOOLA

GO 5 SECTO (PROUCTWPlA, 16-0

~~~~~~(X) im(X) ISV XS) A1o IM-W

PRIAR SEO 21. mm.e M.8 81.6 19.6 2I1n5.0 16.2 3.4 Agriculure bad Frge" 3.4 87.9 19.8 8182. 16.4 2I66.0 14.4 10.5 Fishing .0 So8.# 1.0 1723. 1.e 1476.0 0.0 1.0 #umml1 $KITR 48.0 761.0 47.1 077.0 51.6 1M7.0 57.0 46.8 oal 80.0 68.0 8.0 804.0 800 64170.0 45.5 U.2 9&Jb Rstl r 0.0 8760.0 6.6 11487.0 6.7 14742.0 0.0 0.0 OiI Cosstl ioo 9.2 03n.0 0.4 4620.0 2.7 087.0 0.8 0.7 _3h C4wtr.ctioa S.2 7490.0 4.0 5713. .4 6849.0 8.2 S.4 rvaRy SECTOR $4.9 52627. 82.5 4907.0 20.9 51528. 27.6 88.8 3 Camao. 0. 011.07 7.8 1042.0 0.2 1100.0 0.0 *.z serwvc 22.8 88960.0 21.0 82470.0 19.1 84103.0 18.4 21.8 Tranport nd CoenmCm c teao 8.7 0S04. 4.1 0206.0 8.0 S1.0 8.4 8.9 .Pat Fc"tr Cot 1i.0 161578.0 1i.9 170215.0 13.0 18609.6 13.0 1in. CO at brkeet Pric 11.01 61055.2 102.5 176071.? 108.9 102016.2 103.6 104.1

Ser"I s Plesieg Utaiatry I dission Eskimo..

III| ANOLA

P1t4JT ESTIMATESIN CUREN ANDREAL IWAAS ANDIN CR DM"R, 1982-87

1962 1s99 1984 195 1986 10-8 Sl lilos of Kwainza at 1980 Officlia Price. tndustry 48122 66987 6269 0w 77581 98021 Oil 81745 41948 47987 584" 6604 64179 other 16877 14989 14922 18370 11467 14742 Con.truction 4725 5166 5101 80W 10w U Oil on 868 270 066 4826 087 Self Coestruction 2660 2242 2448 1967 2U48 8192 Other 1818 2668 2448 5g8 2675 2607 Ageiculture, Forestry and Fishing 84901 8828 82972 82870 83112 28105 Fishino 1700 1876 1816 1039 1720 1471 Foretry 841 899 570 570 412 69 Stat. Agriculture 09am 684 6595 4748 4921 80 Pseant Ageiculture Comenrcilixed 1610 129 091 1880 1226 974 Subsistence Agriculture 24063 24M89 24494 24566 24688 21705 Transprt and CounZicti"os 0620 0048 5311 0o64 026 ei1s cown coe 1587 18862 18776 11676 10642 11069 Sefwvc 384572 84407 84554 88990 82479 84108 ODPat Factor Cost 144801 149288 165182 1s1578 170210 16585 adir eWtTme n 18779 i866 16706 18s8m 10489 10422 Subidies -7484 -a7n -7066 -9797 -_6 -8371 1P at Market Price 1505 155520 1081 10564 170771 102636 US Sl lore at Current Pric"

P at larket Price 4698.6 40.1 4986.1 6046.4 45W.4 6197.6 Nt Inome FromAbroad -161.2 -1086.8 -147.8 -174.0 -614.6 -244.1 ow 4857.2 4481.6 4688.0 4874.4 4470.9 4968.0 Poplation (millio") 8.119 8.a20 9.647 6.754 6.90 9.211 GDPper capita (US) 56m C69 5u4 C77 507 54 W pr capita (US) 587 C 8 8 667 567 497 U7 Grwt per capits W . 0.8 6.8 -1.8 -16.7 6.1 Mllions of Kwanzaoat Current OffIcIal Pricoo

MP et fctor cost 159692 107796 181678 19W019 186784 210468 GOP*t mrkot price 160890 17664 198219 201080 196606 222256 St 101282 109270 181511 19484? 192274 211816

Soures : Planning Mliistry and Mlistos Estimates Not : P at factor cost eatinated by Governmentuslng the product approacb. Se Anx IV. ANOLA

CDP SRRCKUnRAnND 1wmAT 1966 OFFICIULPRICES, 1982-87

1982 1968 1984 16 1966 1967 Av.rap Averag

Porcentapsof CDP t 198 OtticialPrioam 1980-87 1962-P

IadustrCr88.8 88.2 40.1 42.1 45.5 58.5 40.4 42.2 Otl 22.0 26.1 80.0 88.0 86.6 46.6 8o.5 J8.2 8.. .9 9. Ovb et11.8 19.6 9.0 6.6 6.7 Costruncti.n 8.8 8.5 J.8 5.6 6.1 8.5 4.8 4.1 * Oil 0.4 6.2 0.2 6.4 2.7 6.8 0.6 Solf C,strnuctloo 1.9 1.6 1.6 1.2 1.7 1.7 1.5 1.0 1.8 O6h.r 0.9 1.7 1.6 8.4 1.7 1.4 2.1 Agricultur.,Forestry wnd Flsbing 24.2 22.8 21.8 26.8 19.5 15.2 21.0 2J.4 1.6 Fishing 1.2 0.9 0.9 1.6 1.6 0.8 1.6 0.6 0.2 6.8 Forestry 0.2 0.8 0.4 0.4 0.2 8.7 8.4 68tatAgrtcalturo 4.6 8.9 8.6 2.9 2.9 2.1 *.9 6.8 PseesntAgriulttere C_ rcIeliled 1.8 *.6 6.6 6.6 0.7 6.5 15.1 Snb.i.s.toAgriculture 16.7 16.8 15.6 15.2 14.6 11.7 15.2 8.9 8.9 Tronsport*nd Cem_mnic.tio.s 4.6 4.6 8.7 4.1 8.6 8.4 6.1 Comner"* 16.7 9.8 6.0 7.8 6.2 6.6 6.7 21.7 21.& Services 28.9 22.6 22.8 21.0 19.1 19.4 1.9 19.6 UP at FasterCost 1.0 110.0 10.0 1. . 1.0 8.6 6.1 Indirct Team. 9.5 6.6 10.2 8.5 6.1 5.6 -4.4 -4.1 Sudsidies -S.2 -4.5 -4.6 -4.1 -2.8 -1.6 U14.1 DP at Mertot Prtice 14.4 104.2 196.6 1M2.5 168.9 168.0 164.0

GOP rosthat 196 OtfticiolPrices (M) Averp Average 1961-97 1982-67

2.1 4.1 GrowthReel UP st FactorCoat (M) -1.0 8.4 4.6 4.2 5.8 6.7 2.1 4.0 GroethReal UP at MarketPriea (M) -1.6 8.2 6.8 1.1 6.6 8.7

Sources Planning Mini"try and Mislos Estiatosw AN=A

GO BY TYPEOF IXPUIIUE 1062

Ka million at current r official prices oeu fGO 1ow tm 16 1968 is" I_IS 196 to6

Ccesemieon 163079.4 97457.0 91.4 63.1 $4.4 75.1 03.7 70.6 Pr7vte. 97698.4 90888.0 66.0 66.6 64.6 48.7 60.0 40.0 Oovwnsss Y60C65.0 07169.0 26.4 27.1 29.9 81.4 8$.7 80.2 Gross 0....tiIvestment 44213.7 86841.2 17.1 10.1 17.0 19.8 22.0 17.4 Privte 89636.7 85060.2 15.7 16.2 15.8 18.2 20.2 15.6 OeAMb.st 408. $9M1.# 1.5 0.9 1.? 1.1 2.4 1.6 Total Domestic Expendituren 208l2.1 190660.2 109. 90.2 1M1.4 94.4 106.2 66.2 ow 19890.8 222255.5 10.0 1. 1.0 Me.0 W0.0 .9 Reserc Gap 12168.6 -26157.3 6.6 4.6 1.4 -4.6 6.2 -11.6 Experts of Goods IIF8 66.0 1896.8 40.2 40.7 42.7 46.4 80.9 4S.8 Import of Goodsand NFS 72661.4 74S89.5 41.7 89.9 441 40.9 87.1 88.5 et1lns.m From Abroad 8688. -147.6 -8.4 -8.O -8.0 -. 4 -1.9 -4.7 Not Factor Servites Pay1st 4629.6 -1269.1 -8.9 -4.1 -8.6 -3.9 -4.9 -5.7 Not Current Traser 5096.0 2201.8 0.6 *. 0.5 0.4 8.1 1.0 w 10224.4 211017.0 96.0 06.4 99.0 90.1 9C.8

Source I Missl)n Eati-ast ;imor NCOL

OOVMENT RVE, 1986 - n9 (Ka. bl I I toon)

los 19al -1902 -lwa -19a4 -1985 - INS -iwa _b51988 (b_t2900

TOTALREVO 5759 8 7t77 S O6o 5 487 74 50 76 518 71 202 B4 89 989 7 6se

TAX KEVIE 51 Sl7O 2 4 41 5s 47 148 02 930 6 143 S1 75 5408S4 0a 1N 64 6 Tas on p.troleas 38917 4 185 21 60 26 672 42 267 41e7 36670W6 56 41 5o

olty 6 67 9 128 6 77 6 991 11 184 1 223 0 482 8 720 11 o Tax oe log. 14 289 19081 8t182 8t 444 28oa8 - le tax 17 On6 260 10 167 14030 14 ON 11763 70 945 1t9 14 83 - truas fram So"aosI 1 G0 1 652 191 9 as 2 669 8 GM -tr.cOtlo tax 6814 0 4ee 8 48 56 42 17 847 19 084 6 S 12 5s8 1s Nowfetro.ujutemm 17 063 175 19 20 53 2f 476 20666 24 470 n 60 12 65 21 87

Txem on lace_ md property 10 090 1 072 11 446 11 16 10708 14 897 11 909 10 14 9 2 -transfre tef pubilc entrpriee (1) 7684 8 31 9 199 8 481 86 2 9 ?5 7 247 4 916 ceorrst Incemtax (2) 1 43o 18 49 2 M 2 283 i2m2 4876 a881 & 8l 6 957 -per_aIlncc. tax 714 243 08 811 581 to 128 154a I8w -*to 1n 149 166 118 152 162 15 170 224 Texason lntrnatiowal trade 4 193 5 205 8 878 4 19 8 0o 4 788 8 415 0 7 -ilp.rt.dutie 2 837 1 05 8 219 2 28 2 70 2 538 81 6 2 226 4 951 - xpert 4tloo U4 48 29 48 52 51 as S1 180 -ether lWie on lwore 1602 1 842 262 18 1 437 182 1 45 1 189 1 025 Taxes on etic prodwctlenaadconsumption 8366 8547 88 33 5 410 576 5 12 490 5 128 7 412

- boor 962 77 025 1 22 1 401 1 360 1 179 1 117 1 S2 - petroleum product 473 264 214 1 216 550 671 1 821 868 1 - dimlds (royeylty) 04 187 218 48 184 816 a86 - other producs 6 16 O0 1664 989 1 12 1 742 072 8o6 892 - stp duty 904 1868 1310 1090 2 428 1 6U 158 1 924 a 566 - othr taxes s 07 so 76 82 88 149 of 118 NON-TAXKINE 6 170 116 98O2 8 818 11026 12 75 19452 9741 20 486 138

ofebwichs Rttre prop.rty 0J8 101 1857 2 029 2169 1 40 a 8687 2 015 2 497 I Amrtiation o publlceutrpe"ri 1 715 1730 1 020 1 45 1 84 1088 165 17 - sbiidsmd (8) - - - - - 620 238 22 7 766 1 779

(1) Excluding Soneangol. (2) Until 1989not levied an proett of publi c enterprises. (3) Includes tranefer. trm public enterprise. In 1969.

Source: Ministry of Finance. - 155 - APPUIZX TABLE . 2

TRANF FRM PU C ENTERlS£S, BY SECTOR,194 - 11 (KI IIlioO)

1984 18 1986 Industry (40) 1) 706 o7 8C2 of which: AfricaTextil - 2# - Vininorte 18 - 267 Agriculture (5) 145 1 *19 o0 of which: Frescangol - - 256 Cafagol 180 1 269 793 Fisheries(10) U3 1 01 1 227 f whitch:Edipesc (Luanda) 84 486 OS Edpesca (Nwibe) 81 467 084 ExpedicaoConjunt - 229 849

Trasport (46) 510 115 779 of which: EPTEL 61 6l1 210 POrPede LUanda - 49 210 Construction (28) 1i1 20 49

Finnce (4) 0202 1 82 1 04 of which: BNA 2 8 on so8 NationalLotteries 71 789 680 External Trad (7) 4ff n 192 of which: Importng 827 - - IntenalTra U(54) 1 670 2 13 1 47 of whichs Erosbl bo) - 20 214 Emprotel (L ) - S - TOTAL 77 9 0y 2 7 042

1) The Figaur In brackeft indicates tho numberof enterprise that made tranfrs In 1066. Source t liatetry of Finance. *ANOKA

SU3IES TO PIUC IMlEUPSIt , BY UDS1 , 190 - 89 (Kxmillion)

low a9w1 1982 u"S 1064 iw uo log? ion Is"

------(buWa) (j)) Avlaltur. 8022 437" W S40 1010 1051 1.20 1 28 FlAbwts 3 4 32 1011 8 19 76 - - ladmeXlry 1132 7 1135 1036 1 42 13 74 14W 153 Coa.t,ruson - 2 an 2 on 1 s4oa 035 4W 1 00 Trsp 710 GM so 319 3 203 - 26 Te" a6m m 1in 4 143 - - - E"go sNWPslrm 02 2gm an 43 OUftr I 6 019 ON 354 1 1 ao - 230

TTAL 6 249 9 162 S O 482 401 14 em 502 4 6 4 4

Source s ODta protid by tim MInistry of fl. §t11I -1' 12 i?I IiS

.I I f

12i; lii U aI8Z iiU Iii I iE|WA|8i;| I!O!I UNOLA

FUUMNCL CLAsIRCATIN OF GOVEWMITEXPENThME, 19 - 67

1i0 161 1902 IWS 1964 loC 1068 1987

- - - - ~~~~- (buj) Ec.mle S tvi. 2C 486 47 n0 268 7 26 W7 24 449 21 114

Aricultur. 7 788 6837 4 M8866 FlXrtz" 1 on 1048 1105 476 in ndust"y 4 72 8 46 2 59 2 On 1 8 Cogewttoe 6655 9078 7 196 460 4 242 Ea.r sod P1oUoin 54 2 498 2SU 1 4 146 T i tort A Coastctioe 2 SU2 138 4 664 2 128 1 239 Trafd 2 14 1 24 76 1 090 451 OObers*rwvc (1) SO I M 6 M68 4616 516 8 ocuial Sewrvce 18 786 18 6 18 0N8 1468891 754 18 766 21 475 21 #64

------Edueton 9142 0a 70 0 64 0622 099 18 784 ""bh " 8n77 827 864 86US 4 e7 5620 a o0 S.cal Sscerity ad Wlfare 1 21 1 280 1 $76 1809 2 121(2) 2 229 onertl Goa4ront Serviceo 21682 24 WS 28 26 284 38 248 41 122

Adeinistretion 4611 566 6N60 6o M8 6 866(8) 0 022 I)f_em* sod InCterol Security 16821 U1 665 1 267 23 295 S048 83486 82 62 82t o Obto Expmndttsr 186 8 7 927 2 140 2 7 2 65 4 on 7 610 9 2t

IUTAL 4 IS h 40 72 180 aWra W W0a4H 0iF

)aluel_ *eeo eupindter. on *denistntleo Incldes K846S*. of umo lod expeaditere includes (44 a. pert of which is on scooomic svicor.

Source s DSat providod by t&. Minlitry of Finace.

Iv -AM

GOVERNMDT-FDWCU SB"iVE uc ENTEPRISES (lC*illlon)

1900 101 1982 188 i9s4 1908 1098 1987 1980 1089

- (buii) tb.i) Agriat11c. 2 790 2 7 1 104 714 677 61 I too 1 m Us61 10 710 174 246 1in see S

1 _dmstv 85 21 2 a3 128 919 519 3#6 s - C.mroetlIo 5 270 6 73 4 61 2 657 L.A. N.A. 1 947 1 06 2 5O 2 70 EUrIW &iPOtolU mI 24J1 0 S 010 1 226 38 a m Tr epotVW Ceinicatlon 1 13 7 882 3 78 1 573 264 21 @

Trod 2 o7 4? W 744 1 - - - Other 11 2 11166 sm 2737 361 3 56IJJ 56

TOTAL 1 110 3108 17S3 9 475 76 717 is 3 a 13670

saro. : tD providedby thX VinltrYof Fl .

1a' SMWRYO GOfEYMNWTFDNANCE 1960-89 (Ka blIIIon)

190 1m 1982 Ion 194 1986 1mu 1987 1 i1989 _ - - 'bj)(biE veaue 569.6 78.7 6.? 56.5 74.6 79.5 71.2 64.4 69.6 73.1

Too"s @ ptroleum 8.9 46.2 21.0 16.7 42.8 41.7 86.1 85.0 41.5 Owthrtaxes 17.7 17.6 23.5 20.5 3.7 24.5 21.7 1.9 28.2 - on daetc Fo O 1) (10.7) (11.4 11.2 "''. (D4* ('. ( s.o _ .1, J'1~- -- t la9006J'S4( 8.5) pk~(8 .a 6.4)4 66.7 (6.06 a (12.)5.5) (5.1)(16.8) (0.74 - on int.rnati0altrade ( 4.1) ( 8.8) ( 5.8) ( 8.9) (4.2) ( 4.) ( 4.7) ( 8.4) ( .8) N. Tax Sew.... 8.2 11. 9.1 6.8 11.6 12.4 19.6 9.7 26.4 18.4 TotalExpeaditur. 73.0 91.7 712.2 67.6 02.8 90.t 86.2 67.4 166.f 112.7 ------

Sbeorrastexperdtture 66.0 57.5 54.4 56.1 09.7 81.2 75.7 76.4 87.6 92.6 0 Capital*andttr 10.2 84.2 17.6 9.5 12.0 9.8 10.5 11.# 18.2 20.1 Ov.calIbud"g defitit 17.2 17.9 21.5 12.1 7.7 12.0 15.0 28.6 16.6 84.0

Statleticaldt crepancy - - - -27.0 81.9 -4.2 7.8 -4.0 - - finalncne 17.2 17.9 21.5 -15.6 89.7 2.0 22.8 19.0 10.6 84.6

Ooe etic : MA (0e) 16.6 17.9 21.6 -15.7 89.7 2.6 22.8 19.6 14.0 24.1 now-bank ------5.9

Extmrnl : loans /; n0/ n/a /a n/a rn/a °J/ nJ/ n/a .8. grantsF n s0.4 R - - 6.1 - 2.5

Source : Minist#yof Finance:Report on the Executionof the Sudget. - 161 - APPENDIX TABLEE.1

UN4A

ULWCE NE OF SMCOSACIUAL DE MOLA (el II am k)am)

1983 1i64 1o5 10s 19? 1980 Asee. Foreign assets 9,317 9,589 16,174 8,822 11,478 11,269 Totaldoewtle credit 166,624 216,444 242,978 26,179 S01,564 849,83 Pubitc sectorcredit 79,531 116,251 166,211 167,008 247,274 296,846 Other credits 1t0,993 97,193 112,761 78,171 54U,31 52,618 Oter assets (Not) (15561) (14,833) (2,029) 8,024 9,210 33,56 Totel Assets 161,441 210,649 260,219 276,525 822,276 394,176

Liabilities: Notes In circulation 60,478 72,809 60,04S 92,059 120,63B 144,561 Totel deposits 111,975 125,759 150,200 166,71 136,0's 18,0602 Governmentdeposits 27,710 26,752 35,047 28,662 27,648 30,698 SPA dposit 16,3B5 22,576 W0,21 38,291 45,007 5t,020 Other deposit 66,952 76,423 98,284 69,752 92,144 112,279 Foreign currencyliabilitle 8,988 12,682 16,162 26,058 35,533 51,616 Total Liabilities 181,441 215,640 268,210 270,525 322,276 394,176

Source: OKA - 162 - APPENDIX TABLEE.2

3ALM~5W OP111 iLA w.a0ML

(.1itame ksumas) (.. notn available) 1062 19U3 1984 1906 1066 1067 1988 Assts: Currency on hand 4e S67 9on o23 W67 3,673 4,301 D poit to i BNA 10,049 15,355 22,571 80,021 38,291 45,97 67,797 Private Sect4r Credit 3a 28 20 12 134 265 Net Other Assets 1,076 1,621 1S8 (209) (762) (1,043) (1,681) Total Assets 11,622 16,926 23,712 35,U6 38,199 46,671 e0,582 LiabtIlties: DemandDeposit. 9,768 14,246 20,190 26,453 33,556 49,564 50,823 - Individual 9,5eo 13,561 16,762 24,691 29,927 85,934 NA - Bus iws .. 8C265t 1,02 1,006 2,902 NA - Organizations 206 m1 562 789 1,081 1,659 NA TimeDeposits 1,754 2,680 8,516 4,203 6,193 6,267 10,259 - me than18e days 612 41 760 8 16 on 67 NA - morethan 1 yer 1,142 1,U39 2,786 3,390 4,367 7,619 NA TotalLiablitites 11,522 16,26 2,n712 39,655 36,199 46,871 60,582

S"rco Gone* Nacionalde Angola - 163 - ANSA APPENDIX TABLE E. 3 MMt PStLY DATA (tillIon.of of .nae, endo pwriod)

1977 119 194 1905 16 1917 1966 Currency outlde banks 14,2M6 59,911 71,64 69,025 92,802 110,6S 140,260 D and deposit. B.P.A. NA 14,240 20,196 26,45 8J8,06 40,584 5U,828 sNa 1ess PA and 0ovrment NA 68,952 70,428 11,284 69,752 92,144 112,279 deposits TIMe deposits PA NA 2,680 8,561 4,208 5,19 8,287 19,259 INA NA 8 14 8 8 11 4 Annual currency growth ato NA 28.6 19.99 11.4X 15.8X 26.7X 19.9X MoneyStock (Ml) NA 148,1M9 168,478 111,711 215,069 249,69S MA2,862 Annual growth rote Sl NA NA 17.7X 18.59 7.7X 16.1X 21.3X quasI-Mony(1t) NA 145,79S 172,a8 208,022 220,201 267,901 813,125 Annual growth rateM2 NA NA 16.09 10.01 8.0X 17.19 21.4X

Source: eA snd *toleon estimatee - 164 - APPENDIX TABLE E. 4

8ANCMOF PPAVTS, UN -6I6

(6 111| U 0

1on 1983 1964 1986 1986 19i7 1986 Merchandiseexpot 1,363 1,621 2,838 2,238 1,'m 2,269 2,466 merchandise tQprt. 1,386 1,147 1,576 1,416 1,09? 1,816 1,38S * b olnc 514 6I5 468 623 206 953 1,081 -,t s A Incomeexportu 179 69 111 126 115 92 127 ^ r'-it A dividends 4? 19 15 22 12 7 14 4WUpIrt to 42 a8 as 82 32 93 ;llUpoft 43 18 18 67 41 33 16 28 10 40 4 3o 21 2 Sorvi4n * 'ceorn Imports O94 901 611 664 28 729 1,767 Intq. se, 13 41 28 44 61 91 371 oIvidbnds 44 94 114 160 63 l3 187 Transport 157 240 264 215 232 1S 295 Insurince 30 49 04 82 a3 20 70 Tochnlcal assistance 161 217 141 135 146 86 237 Foreign workers' selaries 26 75 Se 9 72 76 64 Adminet I oxploration chbrge 45 126 18 144 133 17 489 Travel 11 21 33 34 13 15 15 Other e 5e 7t8 58 a5 41 39 Solon" on invisiblee (425) (686) (7M1) (736) (713) (687) (1,646) Net unrequited transfers 21 2 20 20 139 51 32 Curreot account alme 11 (132) (217) 167 (398) 388 (52) Med & long-term capital balance 2 3702 36 441 236 41 (221) Inflows 475 7*1 765 645 786 716 948 Loans 482 39 46W 431 368 354 499 Foreign investmnt 48 429 8Q6 411 417 3an 449 (T nonpetrolm .etors) 0 0 1 1 1 0 0 other 6 8 7 4 0 1 0 Outflows ISO 406 367 404 549 674 1,169 Principal repayments S 299 VT 260 386 427 643 Asort of petroleum invostmentsn 71 $ 189 1in 247 a26 Other S 43 9 6 O6 6 Basic baIsance 96 249 161 549 (132) 409 (749) Short-ters capital flow (N) (204) (124) (558) (1i7 (676) au A errors and omissions Clobal balance 87 36 57 (16) (319) (287) (365) Financing:s ((7) 10 819 26? 365 Reserve variation(- increas) (67) (5) (65 (16) 78 (68) (29) Arrearsvariation (includ. reched) 0 27 216 (61) 46 Det rchduIling 0 O 0 a 23 382 349 Memorandum: End Year GrossReserves 8 162 249 217 179 242 272

Source: Agolan authoritiesand mlisioen astietes i~~~: !;.' ntd r I s i i t s I. - 0s * *I i e ii: r~~ r i.

ts~~ 0 $slg 0 Major Export EnolIngs 1980 - 1M (.. a not available) 196 1981 1962 1888 1964 165 1980 1987 198

Ieta- *lilla" ISS) 1,19 1,346 1,246 1,525 1,746 1,969 1,164 2,03 2*156 (thousandbarerl.) 46,740 37m92 89,265 64,852 64,166 78,419 92,151 116,86 16454 ae pr. per b1) 34.2 36.6 31.7 27.6 27.3 26.0 12.6 17.5 14.6 (percentof total) 73.93 72.6 76.55 63.7X 86.016 65.23 89.43 W9.ON 7.43

Redll Oil (ToIa -lmlllossVS1) 99 104 o St 982 94 40 76 (thousandtas) 5,19 511 s61 525 68 681 649 761 725 (eve, price per too) 194.3 264.1 167.1 170.2 172.7 149.0 72.7 108.7 60.0 (percentof total) 5.S3 5.63 8.7X 4.93 4.513 4.2X S.1X 3.4X 2.9X

(Toi -Ill lon US S) ...... S2 32 34 22 24 23 (housand barrels) ...... 1,489 1,956 2,06 2,011 2,243 2,256 (ave. priet per barrel) ...... 21.6 16.3 16.4 10.7 10.4 160. (percentof tot l) ...... 1.6X 1.9X 1.53 1.73 1.63 6.9O Olamoada Tol - lltones US S) 22 181 190 261 66 74 6 161 176 (thousands carat.) 1,459 1,408 1,259 1,682 98 744 1n 871 1,046 Cae pric per carot) 161.6 128.3 156.6 169.5 6".1 W.0 46.7 116.2 166.0 0 (percent of total) 12.125 9.73 11.9X' 5.56 8.2X 3.33 0.6. 4.6X 7.1X3 Coffee (ToIl -millons USII) 164 97 9S 71 1 5S 58 35 87 ( thousand taos) 47.2 44.0 F.0 26.6 22.6 10.7 16.6 16.6 16.0 t e, prie - US 9 per too) 3,466 2,138 2,869 2,667 3,672 2,98 2,061 2,151 2,306 (percet of total) 6.73 6.33 6.93 3.9 4.63X 2.43 4.15 1.5X 1.6X Other 0 129 a8 4 14 76 16 0 11 Total merchandise expert. 1,8 1,866 1,629 1,822 2,093 2,238 1,304 2,269 2,466 (mIll tons US 8) Sources tintetry of Finaneo d mission etimates - 167 - APPENDIX TABLE E. 6.1

Projections-> iou. 19i9 Mi.e 19 iu 1998 Crudb Ot I (Totel - tIllIone US 3) 2,156 2,886 2,684 2,976 8,139 8,812 (thousand barrels) 1U4,60 155,660 161.77 150,664 157,837 158,128 *ov-. priceper bbl) 14.0 17.0 19.9 19.0 20.0 20.9 porcent of total) 97.41 8S.7X 68.11 017.6 97.91 06.4X RefinedOil (Total - mIllIone US 8) 64 32 88 48 92 97 (thousand tons) 725 747 720 7tP 727 784 (avo. priceper ton) 88.0 110.6 115.0 1219, 126.0 132.8 (percent of total) 2.66 2.81 2.61 2.61 2.6# 2.61 LPG (Total - mlIIone US 6) 28 24 25 27 29 81 (thousnd barrels) 2,210 2,868 2,481 2,6eo 2,681 2,657 (ave.price per barrel) 10.0 19 1M.e 10.5 11.0 11.6 (porcont of total) 0.91 0.8X 9.8X 0.81 0.6X 0.8X iamond. (Total - millionsUS $) 176 20l 240 276 814 869 (thousands carat) 1,046 1600# 1,200 1,320 1,462 1,597 (ave.price per corot) 168.0 20.0 200.0 298.0 210.3 225.0 (percentof total) 7.11 6.7X 7.51 6.11 8.7X 9.41 Coffee (Total - million* US 9) 87 29 81 82 84 (thousand tons) 0 16 :.6 16 16 i (ave.price - US a per ton) 2,899 1,600 1,872 1,947 2,625 2,106 (perent of tetal) 1.CX . 1.0X 9.6x 0.9X 0.9X 0.9X Other 11 0 0 0 0 0 Total- tilIIonoUS 2,499 2,070 8,162 8,894 8,a00 8,888 Source:Mission estimates -168- APPENDIX

JNGA TABLE E. 7.1

WAM OF PAMlIES IJCtlNS, me - 66 OMW. CASE) (El IIess of UsO)

196 199 190 199 1m9 9 Tradeb lnce 1,081 1,181 I,m 1,8m 1,446 M,63m Exports of goods 2,460 2,970 8,162 8,394 8,696 3,688 Imports of Goods 1,36 1,779 1,690 2, 2,160 2,296 Non-factor services (net) (1,63) (on) (o) (989) (16o1) (1,118) R"ource belance 48 326 4 371 895 419 Ne tftogr I no (07) (659) (6) (715) (742) (772) Recelpts 14 16 17 16 20 21 Paym_nta 622 676 704 783 762 792 Balanceon invisible. (1,646) (15625) (1,614) (1,704) (1,794) (1,689) Not unroquited transfer* 32 as a 3 8 8 40 Current account belnno (56) (301) (3U4) (80) (309) (312) Capital Account Balance 1i (48) a6 (150) (78) 21 Moda L-t Loan (net) (844) (229) (141) (349) (253) (169) Oth er SW L8o 176 183 180 190 Over II Belance (86) (547) (268) (464) (888) (291) Finanncing: $aS 847 26 464 an3 291 Re.erv vartieton(- Increase) (29) 0 O 0 0 O Arrers variation (includ. r eh d) 45 NA NA 464 a8 291 ebt r ch dulIng 349 NA NA 9 O Memorandum: End Yer GrossReserve 272 272 272 272 272n2

ourc: Anaolan authorities and mission estimates. - 169 - APPENDTX TABLEE. 7.2

BALAeX W PAVITS MSETIO, 10 - US (OptimletI.Case) (ml low US 4) Projectione-) 1908 1989 100o 101 1m 109J balanrce I'm1,081 1,101 1, 1,715 1,022 1,7 E torttnof tow*2,466 2,970 a,010 4,078 4,827 4,60 Ruport of go*d 1,J85 1,77 2,211 2,350 2,655 2,663 Non-factor eorvic (net) (1,038) (8O) (1,S7 (1,141) (1,212) (1,209) Resource balance 40 326 gs 573 6o 040 Mat facor I (607) (650) (743) (761) (70) (70) Ree pta 14 1i 21 22 23 26 Pyment. 622 676 764 703 652 62S Belanceon Invisibleo (1,649) (1,625) (1,313) (1,62) (1,991) (2,*0)

Not unreuited tranfer. 32 aa 8C So a 4J Current ccount balance (523) (351) (171) (161) (131) (119 Capital Account Balane 16 (46) 250 3S of 15 Med& L-t Loa (net) (844) (229) (18) (222) (147) (75) Other 6507 18 27 269 2 220 Overall BIlonce (07 ($4) T. (115) (41) 43 FiftencinG: $8 347 (67) 115 41 (43) R.esrvo variation (- rnces..) (20) o a O * 0 Arreor variation (inolud. r _ched 45 NA NA 1 41 (48) Debt rescheulng 340 NA NA 0 INeorand: End Year Groes Resrves 272 7 272 272 272

Source: Angolanauthorities andaision estimates. - 170 - APPENDIX TABLE E. 7.3

BALAU OE IPAINTS PROJICMT lOS1 --S,91 (P Stt C Came) (m

lf0 1989 19 101 1992 0m Trade balance 1,681 1,102 944 1,00? 1,0I0 1,188 Exports of goode 2,406 2,970 2,C46 2,716 2,865 3,e8t Imports of goods 1,36 1,666 1,861 1,79 1,615 1,929 Non-fctor services (net) (,8) (917) (766) (686) (891) (947) Resource balance 48 165 15 1609 188 191 Not factor Incoe (n) (664) (689) (677) (716) (756) Rclpto 14 16 14 16 16 17 Pyent 022 68 68 602 71 772 Balance on Invisbile (1,04) (1,581) (1,425) (1,615) (1,606) (1,702) Net unrequited transfer 32 U 85 so s 40 Current account balance (56U) (446) (446) (472) (498) (524) Capital Accont Balance 10 (40) (185) (351) (28?) (110) lIkd A L-t Loans (net) (344) (229) (279) (458) (35)9 (262) Other 5607 16n 65 1 122 152 Overal B lanc (N) (492) (631) (623) (785) (84) Financing: J06 492 881 828 786 694 Resrve verietion (- lncrnae) (29) 0 * 0 a 0 Arrears variation (includ. reached) 45 MA MA 628 786 O64 Debt recheduling 349 NA A 0 0 M1morandums End Year crs Rerves 2m7 272 27 272 m 272

Soure: Angeolesauthorittes a mlession estimtee. SWMDKOF EXTUNIALNWN41TOT DOBY,192 - So (Ill Io of US 8) (Source: DNA) Jun. 1982 193 1194 198C 1986 1967 1968 "adnu A L-T debt 2,076.8 2,108.4 2,2M2.? 2,449.4 2,466.5 2,966.1 8,210.2 Short-trm, debt 271.3 251.7 162.9 250.8 614.6 825.8 691.2 Total external debt 2,34.6 2,158.1 2,445.7 2,700.2 3,071.0 8,581.7 3,901.4

Debt/WP 52.2X 50.9X 49.43 653.7% 6B.5 70.1X NA Debt/Jxport. of 0 A S 127.7? 123.43 114.1X 114.1X 218.60 151.7X 160.6% Debt ortlce/oxport of 4 A S (1) 16.9X 17.65 14.03 12.83 81.13 21.9X NA

So tresNA and iecon aestimates (1) Debt servicencl_de only Interestand principal peyments actually *mad.

l!J PIOJECTEDDOT SERVICEOSUGAIUNS ON EDDU AM LONOTEM OBT (AS UP OEC. 1968)

(millions US $)

1906 1987 1966 1989 190 1991 1992 1 1966 Otbhr Total 18.2 51.2 196.1 a87.9 881.6 866.5 808.1 189.0 101.9 280.6 2,488.6 Western countrio 1,896.4 Capital 9.8 89.4 152.2 264.9 226.9 266.1 249.2 115.2 86.8 251.8 8.8 11.0 48.9 128.9 189.3 68.5 56.9 24.4 10.6 29.2 587.6 Interest 8,64.1 siaelist countries 25.2 72.0 592.0 616.5 6S8.2 611.6 477.6 2So.6 87.4 Capitol 26C 66.0 525.? 5se.6 462.9 551.0 440.0 822.4 242.8 8a.5 8,654.? 4.7 65. 66.8 57.9 45.8 6o.0 87.6 17.2 7.7 0.9 829.4 Interest 57.0 Official .go_lsationn 0.0 0.0 2.2 6.6 5.5 5.4 5.8 5.0 4.8 'R.5 *.0 .0 1.4 8.7 8.7 8.9 4.0 4.1 8.t 17.4 40.0 Capital 11.0 InOerest 0.6 0.0 0.6 1.9 1.7 1.5 1.8 0.9 0.6 1.1 6,874.1 Combined total 86.4 128.6 719.3 1,12.0 645.5 905.6 791.0 464.2 8S5.2 836.6 80.4 106.2 679.2 629.2 694.7 640.6 698.2 441.8 881.4 806.2 6,496.1 Capital 78.0 Interet 6.0 17.6 111.1 162.6 150.6 144.9 97.9 ,42.5 24.9 81.2 source: OKA

S*s ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. -173- APPENDIX

Table F.1

ANGOLA

AGRICULTURALPRODUCTION: PRESENTESTIMATES AND EARLY1970'S LEVELS

Products 71172173 86187 (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 t86) 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) (MassambalalMassango) 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 (Carne de bovine) 24,500 (73) 3,536 (86) Cattle (Bois) (heads) 4,300,000 (73) 3,420,000 (87) Goats (heads) 872,000 (71) 1,300,000 (87) Swine (Suinos) (heads) 500,000 (73) 150,000 (87)

Sources As for Table 1. Refer to Chapters I and 1I and relevant Anneres - 174 -

Tbl- F. 2

AIC0LTURAL PROUCtON TMW", 1 - IS (NW to".)

Prdc 66/5 65/6 71/7

Crop: Cotton (rw) 22.1 6.0 2.0 Danes N/A N/A 99.t Potatoes. i N/A 12.8 S..:. 7.5 14.6 U9.S Suntlr N/A N/A 11.0 OrorAdut 1X6.6 N/A 56. Casoavo 568.o N/A 26.0 Core 10 186.? MA. Simil 47.1 590. 55.6 LWn Taboo49 2.9 5.0 4.. Wbat 2.7 22.0 12.1 Rnic 10.6 16.0 30.4 Suros Varian Saloaoert a Coat" de Bmo de Angpla Dat Is saroltablo an merrs mainly to marko prodmatleo. Usful for genel trend. In prodution. IW

o~~* e5 5*ooo

,~ ~~~~' 111 j lllg-lV ' lIs I-i

l s t~~~~~~~~~~~S

I **jS..S**S*.l ** *m kU

U a v~ '0 . 4 h. 4 33j]js] - 176 -

ANGOMA Table P.4

UPLY OF AWRCUL L DINf& S 1064 1065 1186

INFPT Unit 2 er.t Dohule Iuput. uesOti. IuporO Dhuestic

Toole He" I 021,611 - 460,i_ 94,202 950,921 149,048 Knives 1 - 247,in - 164,00 - 188,686 aHJhtX1 409,04 482,M ,o1i 904,239 U,Im

Simple too - - £1, - 1,565 - Mixed ton S,2w -12 - 20,.0. -

sI1a. ton - 70 0 7s I28m 1,277 lean to - 80 on tB4 208 811 GreEandntO ton - as tO t6 1a 17 Potato ton 1,7Im Ss 2,99 76 2,551 876 V,astble ton 42 - 2 - a 1 -ttwws ton on2214 so a 25 Zuplenente

Pie. I - 0211F - - - 8822 SpePc - - . _ _ 5 M.t>erPluo 1 - - 1007 - 1146 - *rlnJrn I _ _ _ _ 118 _

S4uarts Reletople Sobre*a Astlvylde do Secot orAaat.o *161 - 177 - A?PUNDU

Table F.5 AEOLA

AGRICULTURALUDORTS (INPORTS) (o000 Tons)

Product 1962 1968 1979 1973 1980 1985 1986 ______------

Coffee 156.9 188.6 180.5 218.7 47.2 18.7 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 -

Muize (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)

Sources Relatorio * Contas do Banco de Angola and Custvom Data (a) Does not include exports via VIGDHX (b) Total Imports of cereals In 1988/87 were 152.5 thousand tons (Commercial Importsplus food aid). See Table 1.1 - 178 -

APPENDIX

ANGOLA Table F.6

FOOD DMPORTS

(in US$ millions) Products 1982 1983 1984 1985

Anaiml Products 37.2 43.8 40.9 36.1

Vegetable Products 90.9 72.0 103.3 76.1

Fats, Oils 27.6 31.!; 33.5 39.9

Other (beverages) 63 80.0 65 63.1

Total 218.7 227.3 242.7 215.2

Sourcet Customs data - Incompleteand below actual levels - 179 - ANGOA A1114IX T;ibl- FJ

55P05 TO POLICYnoPun (.

Projouted Output

Pr.dmwtle nln217 Y.oear a Year if ooar e (ton")

Ceneee (so) "$,on6 M,6W 16,6W 81,6W 400,6W Bsesn "1,6m I'm 2gm0 as,m s,m s.rgbuemi I lot Co)N/A 2,66 5,661 196We 19,6W potatoes 161.61 6,616 is,6 15,616 15,6W coffee 225,6W i GM,6 16,6W 16,6W 85, cotton, 80,161 2:11 41,6W $,w16 0,6 so ~~~~75ON 14,6W 16,6W 15,6W 15,6 ,TM*=4:E all u6 461 so se m(040) is,SW 1516 16.6W 6w, 85,6 Wood(ooo) 588,664 61,6W 161,6 166.6W 166,66 Cattle ('6W) 5,4W9 8,426 38,6 8,so 4,6W Beef (to") 24,_6 8,561 8,7" 4,506 0,61 Poultry ("am) 4,20 all 4,2106 4,61 5,60 Wne 56.616 we,0m2,1,6W 686,6W Gowat.('6W) on7 I'm 1. 11,410 1,600 Fofisries (oo) (tome) 467,0110 156, 20m,6W 21,6W 156,6W

C.) Source: Mimsi.. lEtivateeg R.iatori. * castes de lane" de Ansla; RCleoto Sobr. Aotiwidmts de Sector Agree-41 NS (oe) Wolely for been,eu.t6,o6 (ooo:Eiiort, quantities Asslef bt. - 180 - APPENDIX

Table G.l ANGOLA -- a-- -

OIL PRODUCTIONAND RESERVES,1986-90 ------_----- (in 1,00" bid)

-----Actual------Projected------Production by Area 1986 S 1987 1986 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 m$Ilionbbl) 1,418 - 1,622 1,525 1,438 1,286 -

Reserves to ProductionRatio (years) 13.7 - 12.6 9.6 8.8 7.8 - a______Sources Sonangol,Ministry of Energy and Petroleum.

Table 0.2 AN¢OL ------

PROJECTD C OIL EXPORtS, 1987-1991 _____...... ____......

1987 1988 1989 1990 1991 ______…______.. ______.. s___ _ 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 (US$Ibbl) 17 18 18 19 19

ExportRevenusE (million US$) 1,992 2,631 2,727 2,899 2,913 Source------o----d-mission-e------______.____.______es.______Sources Sonsafgaland raLsianfentfim tes. - 181 - APPENDIX

Table 6.3

ANGOLA

INVISTHNTS IN CRUDEOIL EXPLORATIONAND DEVELOPHENT ------.------..------(in US$ million)

------1980-1986------1987-1990 1/ ------Annual Annual Total Average in Z Total Average in S ------__-- 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/Kwanua 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 PETROLEUMPRODUCTS CONSUMPTION ------,------Average Annual Change 11 1986 1987 1988 1990 1992 1980-86 1986-92 ------__------__------LPG 30,200 31,408 32,664 35,330 38,213 9.222 4.01Z

Gasoline 104,110 108,257 112.570 121,727 131,616 4.06S 3.99?

Kerosene 46,310 49,090 52.034 58,465 65.692 7.50 6.03Z

Jet Fuel 260,500 266,193 272,005 284,158 297,051 17.97Z 2.212

Gas Oil 344,770 357,874 371,481 400,284 431,346 4.58S 3.81S

Fuel Oil 119,200 122,984 126,896 135,120 14S,912 -1.95S 3.19Z

Asphalt 4,200 4,284 4,370 4,546 4,730 2.87? 2.00Z ------Total 909,340 940,090 972,020 1,039,630 1,112.560 6.63S 3.422

11 Least square estimates Sources Sonangol - I62 - APPEDIX TableG.5

ANGOLA

ELECTRICITYDEUAD FOPZCSS?

--.--- Energy h------Pe D d (MW)11--- Low tiediuA 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/ Installedcapacity In 1986*431 KW; firm capacity In 1986: 324 NW Source: EnergySector Assessment Report ANGLA

STRUCTUREOF INDUSTRY- 1984

# of Likely Manufacturing Likely TutelageMinistry I of Enterprises Enterprises Manufacturers ------as a X of all (or other institution] EEU Priv Miz Coop Tot EEU Priv Mix Coop Tot Enterprises ------Industry 139 91 11 0 241 126 83 10 0 219 911 Petroleum 2 10 0 0 12 0 3 0 0 3 251 Energy 5 3 1 0 9 0 1 0 0 1 112 Fisheries 21 15 1 0 37 9 7 1 0 17 461 Construction 24 12 4 0 40 8 4 2 0 14 351 Agriculture 65 14 0 0 79 15 2 0 0 17 222 Transportation 64 21 1 0 86 0 0 0 0 0 Ot InternalComerce 48 S0 0 1 99 0 0 0 0 0 O0 External Commrce 9 18 0 0 27 0 0 0 0 0 O0 Education 3 1 0 0 4 2 1 0 0 3 751 Culture 3 6 0 0 9 0 0 0 0 0 0x Health 2 23 0 0 25 0 0 0 0 0 0x Housing 1 1 0 0 2 1 0 0 0 1 50S Coordination 1 0 0 0 1 0 0 0 0 0 01 Finance 3 0 0 0 3 0 0 0 0 0 01 Planning 0 1 0 0 1 0 0 0 0 0 0o Labor 0 1 0 0 1 0 0 0 0 0 01 Defense 1 0 0 0 1 0 0 0 0 0 ox (Presidency] 1 0 0 0 1 1 0 0 0 1 1031 (MPLAJ 9 0 0 0 9 1 1 1 1 4 442

Totals 401 267 18 1 687 163 102 14 1 280 411 ------| Sources Mission Estimatesbased on data int Ministeroda Industria Registo Geral de Empresas Luanda,Abril 1984 M6GOLt S1tRnUC'lE EMPLOYMENTIN ENTERPRISES - 1N84

Ukeiw Manut. Employ.. asea of all EMployment Likely anutecturtag Employmnt 6Aployanr Tutelae9 mini"try _ top other lnetitutionj EEU Privato 11eWd coop. Total EU Privte Miwed Coop. Tot l 27S rudlfhtry 62,U 9,71n o U4,953 9 49,911 9,470 3,496 0 01,677 ax Petroleum 8,23 $,t80 0 0 0.426 0 1,740 0 0 1,74 49S Energ 2,478 20 60 0 3.270 0 93 a 6 96 sex Fieberleeo 6,S 1,245 16n 9 3.266 8,28S 61e 166 0 4,672 18s Conatuomtlen 12,053 2,070 2,051 a 106,04 2,999 1,449 1,66O6 * ,114 as lelXturo .a.19o 3,319 0 * a,m2 S,m we . a 9,027 a Traneportaiom 26,173 2,29 0,014 0 34,J48 0 0 0o t.raal C_Meo 19,960 3,327 0 35 24,17 0 0 e a o Ixterel C_merco 416 J1,117 9 0 1, 0 a 0 a es Edu=tio J10 so 9 0 896 s10 S6 0 0 9 ex culture 226 2o9 * * 0 ? 0 a 0 a0 973 H"lth 167 26 * a 415 0 0 O a 9 JX "owing 710 22 0 * 732 71 0 a 0 73 3 Coordination 7C 0 * 0 756 0 6 J 0 0 ox Flnae n7 9 9 0 712 0 0 0 0 as Planing 6 * * 8 0 0 0 0 0 Labor 0 75 0 0 7 0 9 a Defen*e 0 0 0 0 0 a 0 243 [Prosw 73 831 0 0 0 381U 81 9 e * 831 twUs 2,614 a 9 6 2,614 084 0 0 6U J4X Totel 191,3 27,607 1,135 3 252,09 65965 13,74 5,3 0 65,62 isimliulg=- mmin.S u

Nba. for any oe enterpr.: 9,060 1,571 19,564 3S0 19,554 9,0 1,571 1,026 O 9,o MIn. fer ay onmOtrr.s 4 1 85 35 1 14 11 66 e1i St_anrd Deviation 851 157 4,651 0 1,064 093 191 819 0 712 Avera 4B1 l4 1,709 as0 34 404 139 419 a at Source:s llon eatietee based on date lot EAgeo. Geral de Emproesa;op.cit.

IN - 185 _

APPUDIX

Table E.S

ANGOLA

AVERAGERU OF EPLYEZ IN COANIES WVOVEI500 EMPLOYE DIFPERENTIATEDBY PUBLIC AND PRIVATE

Ministry UVEE Private ------Agriculture 1.537 550

Industry 1,627 659

Transportation 1.810 659

Internal Comrerce 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 Comerce. e------Sources Mission estimates based on: Registo Geral, op.cit. ANGOLA

PRDUCTIONOf THE MANUFACTURINGIUSTRY; COMPARISONSBETITN 1973 AND 19871/

Food Processing Light Industry Heavy Industry

Products 87173 Products 87173 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 FermentedDrinks 42.02 Cotton Threads 3.86 Buses 0 Liquors and other Spirits 18.61 Leather Shoes 43.42 PassengerVehicles 0 Vlegar $6.01 Canvas Shoes 5.65 bicycles 37.65 p sugar 18i.9 Plastic Shoes 28.87 Motorcycles 89.75 Mblasses 18.53 ProcessedTobacco 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 Fresh 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 OI 31.04 Paints 16.45 Black Tube 0 Margarine 8.44 Glues 22.86 Zinc Sheets 0 InstantCoffee 0 Plastic Bottles 8.28 Machetes 65.65 Calned Neats 0 Sisal Bags/Burlap 41.51 Cardboard Boxes 0.45 Salt 3.57 Plastic bags 10.47 ConductorCable Lines 11.01 Refined Salt 0 sponge Cushions 23.06 Radio Recepters 129.62 Paper 0 Paper Paste 0 Cutlery 23.91 metallic Capsules 0 1/ Comparison of physical output. SI Notes 01 indicatesthat productionhad stoppedby 1987. Productswhose manufacture was startedafter 1973 are not included. …------_----_---___------__------Sources TablesA2-1 A2-3 and A2-4 in Appendix 2. 0OLA

PR01Wcr1i OF M3C1MUG DOSWST - F06 SEr7R 1978 - 1967

P111mmle 1978-- 19_ 79l, 7619re 1980 lost 1 19a2 196 196 1N6 1,66 1967 "-B M i 1.196.0 639.841 64s610 76. s$at 71J.761 670.906 562.9843SW249 e6561 6SM.6 518.430 46.170 -2.i0 mir orAste hi 402.0 2841.720 246a,60 4.2 Z1026,2 76,491 11616 1248 .hd.s sad Cesrse / Os 99.12 110.200 71,310 71,720 -12.94 881 Table 104 6 VI., hi ~~~~~~~~~~~~~~~~~~~~~~~~~~~57,06766.212 104,82 60.978 60.060 43,66 Permate Orlraig hi 38,900 186.90 81,770 go on f us18 94,686 56.187 68.426 87.8011 209,94 48.170 89.3MD 37,230 Liqwer s. other Spirits hi 71,920 21.060 87.6T 28.46 40.so imo Whik 2 I :11206 298,636 23.787 20,625 2W0.76 14U444 16.440 14.000 4.231 6n hi m 1 9 i,4741e1 78 171 410 Vi_ser hi 204 70 s8 flugar 178 26 852 186 86 ag0 419 486 490 8n 16.081 1UN5 fm~~4 97 3601 3.6 1.84 28.271 1906 27,.768 98.406 20.246 17.416 20.2517 35.342 -7.641 Pbl _|e to 60.009 19. is.429 401 Alcohol hi 12.171 10.674 8.734 18.72 9540 9.607 9.260 112 6 .904 -O.361 3 8732 1.26 i, 1.496 600 1.91061 1.4214 1.440 1,042 794 1.286 789 -4.6861 on Cars 11$ 4.a 26499 5469 60.06 w,eeePier to 89,060 8910 38,627u a86t6294 4 .471 42.0 24,5 71S Fresh 56W 47,891 al.81 41,802 16.919 27,628 47,167 25.06 81.73 o1n heel to ORION 1 90 ,6 270 171 Sseshe*bI/Psee Os~~~~fi 2,209 4,4 0 0 on Bimal he sad 689 .0 8.760 6,2 6.38 7,602 0.042 6,21 6.070 8.608 0.6 7411 Cakes he 878 .464f9.866 2.7S9 2.4a 16040 1 98 601 CmhsaySOsl h 8.li 4.463 V6 4.074 4,847 8.3 400 920 -1s.,as 621 lbrorine ta~O 48 8I 4,2 4,811 8.673 4,490 -2.161 100i9 14.464 64 248 2.81 11.10,19 6 8a8 8us 260 246 287 -20.64 241 CoffeeWfo he 2.609 0 18 4 18s 2 12 Cesed ""ste fOs S,96 940) Coffee 0 426 861l 605 4as0 t 1.064 1, 1,266 1.19 976 489 105u 178 Ce1asdFruits gad V igetshleeto 2,89 17 1,212 Pulpt he Sol* l919 4. 96.757 2806 2864 20o4 31.918 6.000 8,80 8.746 Ref lied $41ll 4. 1.1251 8.12 4,0114 4,477 18,068 8,36lU 2.3619 0 1/ hroak96 laudd so eoaseefralts sad ,vegtehl55 pofdsetio, halted eacrso196. IV Wdhisylsslsded In I;qmer sad spirit ka%ba 1979.

I *lb XII P. 1r3 V M5'S o' Su a go tf______,,,,__,_ so we. .3, O.1 cu. 6SuS .W de 1565 UWS- I' Z'ILUrS '$ 6? U a Ut" ItS 65? 15't 1 N'I * 4 t WJ't 't SUtId l Wt~~ I S' U t ' *' U SI'

2St81 ANS mitsn *5 US3 eii #55 "M sn1. on, an 5QI USM 5I8 UN'SW ' NW OQOIS- M ' on565 to M6g'U'n SW. gm6 no'S UQUIT on'sL wlS'Gas Ot M,'e et'S UU U US 0/ tag's mo':: :**;S e s' 5? 55 65 55 5?WI SZ o5l g li i UP1F~~~~~~~ B?C6 CUol #51lt _ MI6 aO - n#1 Um m fet 919,1- OtSta oil on gmnus ab is a-s 6 IN mg~5 M% IP219 191P 36 U ow£5 55 us01 US S SOTI 5 I ? 55 t?*d 6.amN W5SSSl1q A 911#?- Ow* on1a' "W"NonUsW WI L5 S Os UgoUM 115 .6 at% pll W133 . 6'a"on 81.3 t MS£5'II6 65 aJ M? 63 5 WS U 9J5 OW51.3=- M1 81 3Ott 1 #on M5 SonS Sid. ewe 953 55313W5 91101 MS'3weUS"itS'W31#3??c' so onSW OggUS' sds £S~~~t M.55 0.; Wl9 SIb? as. 15? 6? 5? S? AM 5? t#

II-saaU~uW su's-Ott, ta u a? a5* set65 toLS' SNIl vIi

5S U fi lpIIIJSOIW !, US 0 0 GP:a" m;u AWtu 'us Iso'In 0"1 "aiSR6 owlS "Wu,". low Se",: Alt T" 0 0 95'fae' u M's t W:a an ' ms "at . an'" on's ml t " n on," wona .wO m'W t.' w ' . owa.'.r a."O':s Iuwe'use saceZ Du 'o p- *ue g."' £51 in b5,- -0M9 *uu W. ow us a"f.IS OmSW OVII-j 559- hiS189 IS1100 oPtMA1 fi+og':tSP up ui *u -M.rWP.uupeqqg atmW~ anm sIe we' sact gm I see'S 19' sou's 's s WVP eWe aM. upsoP.s an go I: to ,gp't ° up i cUS 9aW's w' as'Sp m' se.': Ao up ewe ga som s, ws PL's:~'s usweota s m'usm w sow s orn. u M:=s "ij

u : C a W I°T sIon an 4w US 60t *9 g'JI l ISt L W IlL'Sn O' Op P00. 1i us'so em' 5I'P' up sqa

J 0e- v uia: os-I ,': aP _. I .p s u 4 no a n:gt o:g I Ig~~' S!r "SSW-SW~~~~~~~~~~~~~~~~~~I LSS U' IPS~I .. g s ittOO- o_ow gti I 1PLS' Pg S'S Wt't"5 PSW IP' I Up' O S'S 805 " ¢*7giSq 0 5£91 ON *55 35? US PIP IS S 891 0 Up inup e.g*~qw&J.S

OJUSU 0Ult tilWt ill0a0t5 0 W7t SIt.s'i Pu'SO 5151U 1 0alu - S&t *tupUtto£05 ma g-ovs'u bwg ots u 'Mms'ss ota's oftN'd1S'v MP't S.S'o OWS upegn4i tt/Lo sos:~~~ us: sos: wer~UNIme: oweu: s SA IS S"P PW

A - U ISP IZIAAP*SWU ANM AUU55 3UWU11VddI0 A~ - 190 -

TSble S.6

aeon sO a ANGOLA

MAIN CNAIAC?URU8TSCSOF TUE MANUFACTURINGINDUSTRY IN 1974

(ValuesIn US$ 000') 1I

Numbers value of of Uuterpr. Zmploym. Invests. 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 33,157 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. Hauf. (wolaetal) 88 2,439 3,698 n.&O Paper Iad. 25 4,743 28,268 22.6i5 Typography 74 1,713 7,874 u.a. Tannery 40 883 2,677 5,748 Rubber lud. 58 2,307 13,976 14,961 chemicals 125 4,898 37,913 58,307 Petroleum DerivativesInd. 6 823 32,283 36,024 Non-metalMineral Prod. 307 10,447 82,205 30,472 BasicMetallurgy Xad. 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 Comatr. Mac. 172 3,510 12,795 16,024 TransportConstr. 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 Co*panys 52 244,379 169,652

Per Worker: 4,694 3,258

1/ At a echange rate of 25.4 scudos per dollar Sources Ministry of Industry. FUC $KM WnYTIET IN TM MA INW@DUSTY; 1960 - 1067

1011 1961 1982 Food Llot "vy Food Light H"vy Food Libt "WVy ,avston CnWoory Proe. led. Ilelmiin rc. tnd. Ind. Illnin Ptee. viol's.1*1

Civil.Wrk 19 25 70 an 1,86 26 64 5a1 ft E3gPg_ of 25 197 6 710 275 170 677 885 S1a 110 TechloelAseIenm 77 54 120 842 gm 4 72 a Other1/ 54 28 4 of 17 12 so 16 9 Totalsby soter 197 1s- * ;a- 1,8," 1,721 40 76 1, 466 110 am m m ammm

Yearly Toals 0654 4,217 2,266

1 bily foro stdle, ti tscingcoos a"d Interest. Soirce isitaty ot Indsty.

-U UIC SECt INVUMW D TMliN UFACTUID DOUSlRY;190B - 198 (Cont'd.) (31li t of NIeen") 1001 1#12 19U8 194 106 - - - Feed L12z.t Ievy Food Ligt ny laveetm-tCateory Totl Tomal TOtal Proc. Ind, lnd. 0laise Proc. Ie. *i. inin

Clvilark 425,102 196,07 1in es 122 4 2 Iquipsast 250,@91 29,6S6 256.960 70 20 s8 662 TecheicelAssie_eocs 481,91 I,' 2J656 81 119 2 10is Other I/ 21 IfO 97 a ______e. ~ _- ___ -_ - _ Totoalby Sotr 220 804 238 824 4 2 * o x Yearly YotUl 1,"4,205 071,748 408,260 1,140 0

Mlsly for stdie, f meebo coslt and 7ntest. Souest Minlistry of laductry. - 192 -

Table 1.1

BUS PASSENGERDATA FOR MNTEC EN?RRPBISBS, 1984-1985 _.______

1984 1985

Urban Fleet 11 275 265

Non-urban Fleet 1/ 367 359

Inter-provincial Fleet 1/ 104 90

Total Existing Fleet 746 714

Passenger Traffic 2/I

Urban 28,101 24,437 Provincial 6,161 4,863 Inter-provicial 902 479

Total Passengers 35,164 29,799

11 Termed vehicles In existence,although m:st are non-operational. 21 Units in thousandsof passengers. Source: Annuario Estatistico, MINTCC1986. - 193 -

mum

Table 1.2

ANGOA

EYP URUN PASSSMGUTRANSPORT 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 Kilomterage (thousand) 17,645 12,267 11.177

Passengershandled (thouand) 22,975 14,894 10,500

Receipts (tbousandOm) 124,834 91,709 103,569 Source:------1987------Sources ETP, KMXTEs 1987 - 194 - APPENDIX

Table 1. 3

VEHICLE OPElATINGCOSTS 1I, 1987

(t per 1000 vehicle-Em)

Normal Operations21 MCurrent Operations3/

Component Cost (2) Cost (2)

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 maintenance21 24,902 100 39,425 100

Tonneikm cost 41 0,778 2.464

Total Costs, no road maintenance51 37,918 52,793

TovnAenk cost 51 1,185 3,300

Notess 11 Financialcosts (gross of tax), predictedfor VolvV N10 6*4 22124 tonne GM vehicle from NDM III VoCs model. Cost inputs supplied by ETP Base Bungo depot, Luanda. 21 loads pved, 4 Ill, 1,5 positive grade, 1,5 negative grade, SOZ uphill travel, 200 degreesilkcurvature, default superelevation, zero altitude,one lane per travel direction. 31 Road as 2 above. Vehile;t 15,000 km per year, 120,000k liftime utilization, 5 years of life, 16 tonnes out but no return load. 41 Normal operations:32 tones per return trip, current operations; 16 tomes per return trip. 5/ Predictedat 12 MI roughness,with zero curvature. Sources 1986 UK III VOCs sub-model,ZTP 1987 operatingand cost data, Consultant'sestimates of highway variables. - 195 - APP___IX

table 1.4

RAILWAYINCOME AND EXPUNDITURZSTATDIINTS F0R 1985 - 1986

1985 1986

Luanda (CFL)

Income 61,792 74,802 Expenditure. 335,563 290,620

Balaunce (272,770) (215,818)

Benguela CCFB)

Income 288,314 312,573 Ezpenditures 1.474.113 1,S13,019 Balance (1,185,799) (1,200,446)

docamdes (CPa)

Income 551,650 478,184 ExtpenditUres 278,328 287,537

Balance 273,322 190,647

Total Deficit (1,185,247) (1,606,911) -e______e______Sources IINTEC, 1987. - 196 - APPSIADTX Table I.5

TAG CIVIL ACRAFT 1//L UTIZATION DAT AT DEC. 1986

Model Year Utilization Landings ______1986 Total 1986 Total e______.______Boeing 707-373C 63 1,743 64,625 880 16,203 707-349C 65 2,117 65,988 760 15,863 707-349C 67 1,971 64,110 468 14,384 707-347C 66 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

737-212C 76 1,663 14,141 1,528 15,888 737-Z21 79 1,727 11,160 1,768 11,687 737-Z21 82 1,765 7,811 1,684 8,430 737-212 85 1.954 3,141 2,043 3,378 737-212 85 1.931 2,889 1,811 2,799

Fokker J27-600 69 1,709 23,043 1,526 21,015 127-600 69 1.285 22,457 1,158 22,776 127-600 71 1,601 18,847 1,205 17,996 127-600 77 851 4,050 689 2,961 127-600 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 ______Notess 11 Excluding 10 light aircraft; Piper Aztec (3),Piper Navajo (2), Piper Cheroke (1), Piper Twin Comance (1), Islander (1), and Cessna Skyline (1). Also excludes 1 LockheedL-100 and 1 Yak-40 not operational in 1986. 21 Units in Bours. Sources TAAG- Situacao Actual e Perspectivas, 1986. - 197 -

APPWZI

Table 1.6

AIOLA

ANGONAVE 1986 CAMG0 BY CATEGORY

(Tovaes 000')

Category Tonage Foods Wheat Flour 35.400 Corn 29,300 Soya Oil l3,600 Halt 10,600 PoweredMilk 7.200 Others 25,000 Sub-total 121,100

AlcoholicDrinks 7.050 Equipment and Vehicles 11 6.800

Chemicals: Fertilizer 23,100 Soap 5,260 Amonium Sulphate 3,514 Sub-total 31,874

Other Products Wagons 3.97S Cement 2.910 Iron Plates 1,47n Others 20.153 Sub-total 28,508

Containers (2333 empty) 5,400

Overall Total 200.732

1 EXcluding military Items. Sources Angonave, 1987. - 198 - APPENDIX TableI.i

ANGOLA

ERATELTELEPMONE SYSTBMS, 1980 AND 1985

1980 1985 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 16,368 11,520 Manual 27 4,090 3.160 29 4,390 3,480 Automatic Indexs11 Local 93 93 Inter-urban 5 25

------0- 11 Index based on number of utomatic to manual calls. Sources MINTEC. 1987 - 199 -

Table J 1

ANGOLA

PUR CAPITAEDUCATIONAL UZNDITURZS BlYPROVINCES - 1983 (kwanza)

Angola 916 Kunene 974 Bongo 1,784 Luadau 717 Benguela 1,381 Lunda Norte 1,335

Bil 469 Lunda Sul 1,335 Cabinda 1,599 Melange 870 Buambo 752 lamibe 1,467 gulle 734 Mexico 764 Kuanda-gubango 3,364 Vigo 1,152 KuanzaNorte 1,326 Zalre 1,320 KunauaSul 844

* Exclusive centraladminLstration expenditures. - 200 -

hPPEUDI Table 3.2

~~~~~~~.4 . ^~~~~~~.^

|~~~~ ' *** *

* * . a

31~~~~ 4 *

w~~~~ a

| Z .. S

s~~~~ .rw" a

W a g - ! a f af

E ~~. .4 5

a,

|I:~]*,. t 1a 3S - 201 -

tblo J.J -mA~~

OLKLMIM REMILA PRIMAREDUATIO, £87047

X, II. III leer Pr...l I Lee II Lvl U? Lvl el.

am70 2,567 440,06 20,8 18,1 464,10 1i07 8,0 494,6 34,7 1,5 54,65 1072 S,464 517,421 40,624 1,84 Meng 1078 1,8J9 57,420 20,5N 3,U01 "8,040 1070 61,446 5,4C 7,8U O,0 6n,46 107 416,0*7 qu6,7 90,81? 29,0 1,63,68 107 7468, 1428.0 118,664 14,66 161,8 107 6UM 171461? 17w66 407 1.68,770 16 464,20 1 ,, 16,2" 86,488 1,56,684 so6 042,81 1,2,6 11,2 11,62 1,8,4 166 "2,440 1,176,480 1,67 5,6 1,166,748 1on 154,7" 1,1,"625 18,14 1,0 1,11,1 16 ,450 6,418 111,654 10,167 1,0117 16 17,64 "7,o6n 1,740 04,746 1 ,186, 1066 112,16 1,012,d 8 1,466 88,J 1,170,06 186 1es5 1,68,66 10,7 81,70 1,174

i ~ ~ ~ Oe:N -202- APPENIX

Table J.4

AGOML&

IMIOLUEBITIN ADULTEDUCATION, 1970-85

Years I Level II Level III Level Total

1980 165,497 56,680 129,7. 234,934 1981 74,9345 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: NED a-n #In a, rs. **u em fu eu o 3 t *,to eis S93- 3l6 *laU 13 36l3e o" 393 *la tIM £32 $1* 13 *la 13 eUel_nJd ssot flu 3IU I93 093 *In I," 55 0nAM ObdStqd £lo3-os 333910 *-93.SS *-n 3la 631*la'O #133flt $lag6 -$lI 'mld wwdbao*J £(U Swit

93** 3-31 I-tt 393S *-3U 1 *63t3 t9tO° , _d

l13 t93t *l t t SOt $la 133nS4do.U $la ra elf 91n $In $la *l #16 4" °_do el" 193 ," $In $3t $la a," 133 .n°O°CJd M66t 6*t3 *39 *3 o-n333 35 363 063 q3S OS_U *sl &,nS ele VW -S." Va 9-1$Va9 9*9tone I'm *-IS $3 g39 Fl $la tF1 l*33d8

FRI 36 03 £631- 93 363t 333g £-13 t-edit *ldtS3 *IA£33 a,"to 193I' £-nel=t* a,318 *lAb."-t *ltaI tt uo _d t$ Van low $l AlSB t" S,= 1Va 1*"t 0w 393 *I" 633 933s 3139 Flft Mt si 01 I,d slot $IO v-t I," #la Va Al= Al= 0uo"9 "a6 V= AW *-n *"p A'" slo slo son vm_* Va u' I" t' In a" 419 t1 "

93,6t - ILVU LAUGdD6W Dd3I NISIKSUd ISlUXVM A3uSMd

*~ .*q.a, OmS-V - 204 -

Table J.6

ANGOLA

ENROLIMENTIN SECONDhIYSCHOOL COURSES - 1970-85

Years Secondary Schools Pre-Uanversity Tchnial Teachers Total 1970 1,697 242 1,939 1971 1,567 1,906 1972 1,975 386 2,361 1973 2,135 405 1,540 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 S,027 4,747 9,774 3776 1987 0 4,790 0 0 sources NED ANGOLA

SECONDARYTECHNICAL SCHOOLS - PROMOTIONAND EVASIONRATES, 1983 AND 1985

9th Class 10th Class 11th Class 12th Class Total

PromotlonEvasion Promotion Evasion Promotion Evasion Promotion Evasion PromotionEvasion 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 1985 (52.0) (14.8) (47.1) (13.5) (57.7) (7.0) (60.7) (1.2) (52.0) (12.4)

Industrial 1983 35.7 30.5 36.8 24.5 42.6 15.2 48.4 11.3 38.2 24.5 1985 (40.4) (24.9) (43.5) (13.8) (51.0) (8.4) (58.8) (9.4) (44.9) (17.5)

Health 1963 67.6 16.2 89.7 2.1 67.8 0.0 95.0 0.0 75.4 7.2 '1965 (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 (M) (*)

Total 1983 44.6 25.6 49.4 15.0 47.9 9.4 6t.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)

Fources MED (*) MissingInformation

a..u - 206 - APP Tabl- J.

UADTE F TEMC CAL tCODY SC0ILS - 1J6/U

Ty" of Cotir. 1ow 16 192 6 * l1ow 16 low

Agr)ultear. 1 4 ay Ie a Ernes.c. us 1-9 8 6 1i a1 Adminitratlto n8 8 14 16 6 6 Cinwere S S is 0 5 5 stetledi1. 5 0 7 0 1 S e Phnase 65 44 6 0 a 5 Planning 61 2 14 0 5

CaetruoI S 7 4 11 U a8 Eleerlolty . 7 1? 17 7 S O MlsOhase a t S 6 5 0 Chemletry a 6 7 24 15 5 a Pollteebie 58 a 5 U 5

.tl 5 42 U 76 a so P1ehtu * * * S U * S Jermalim S S 0 0 0 9 Tefotl28 182 Su2 240 265 65 82

Sources m - 207 -

WP3OIX Tebl. J.O

MAn

nRoUI JV4Nmum EDVAT?R - 134/67

1634 133 IOSS 16

Fculty of 8$1..." 620 g 6 749 Agriculwtur n1 231 m s17 I.e. on at2 741 sO Luanda 6 ~ ~~6 ~~446 446 Lubuag. S ~ ~~0 ~~22 31 lImb. 13~~~~~i a 871 77 Ewe.1.e 749 @19 157 16 L-*orsa Su onma Lubeug. 6 a 16 145 _m . I2V 157 1i 34 Eaghi ewa W 75 674 69S tt. of Ed"X. SI2 U1114 1N7 364 Lube. 88U 881 7 S9

MedIcine 6~~ ~~7478 S S1u Luea,da 553~~~l 01? o78 076 1in US 1i5 23 Tee1 4465 gm4 gm SO

Sourcee Nso. *grkuIer. a 0 5 5 7 14 a7 Law 0 1 0J S 14 a 9000lo=5 0 I S 2 la 75 el to as ftimslalaet 1 4 6 8 14n 0 15 24 14 a li IN*..of ad"s. ftne= a 6 0 0 * 0 a 6 44 44 MSIteIa 7 of 14 is O so 21 21 . 4i 2 Tbt S 27 to 12 47 no N8 15 754

So"re UIlbwIldmd holIabo lNao

Ca - 209 -

TbI. J.11

AM2A

-WvU , amsouMSV iwa M NATIWW.LZM- 19416Y

£OOPORA#MU

fl1tofiI ~ ~ ia Per-t

108621 8 14 20 107 "22 4 19 46

Is" 6 11 1N 22 9m 1: 6 17 28 10o6 U is 1? is I"? 19 6 17 is -s31. 1n8 s 2t 8 17 16 85l 87 81 79 187 7 as 29 0

is"3.os25 1s is 10ow of 6 2 12 39#t so 87 81 7 I0t7 24 2 17 41 2a. f Ed. Soles. is s eof i1 17 16 so to" 26 6 17 6 108 so 0 20 6

1984 84 16 # 11 am 4 a 28 4 me 67 16 86 17 19S7 s 101 64 4

1904 04 79 114 21? low S27 41 73 2" am 198 uSS 146 2t4 un 166 11 174 1i

Sar. s UtlslwaWlsd Aotiab. N*t (.) psrtl.o of PSMrt4ta. COopantes W_ 1904 14S1d0 - 6X. - 210 -

Tbl. J.12

WNrmIRTY- EXPOI1URn BY CATEGZS, 129W/9

6 low9 190I lUI 11 14 103 low 17

F1*M*Mw Ebfwtituro *U.$ 175.6 15.8 M2. 122.3 87.9 821.4 447.8 549.4 Ps'ehme of O00 119.5 84.7 41.9 03.9 72.0 72.4 02.5 139.7 125.0 wbSeblo - 4.5 16.0 7.8 8o.o 22.9 20.4 49.9 46.5 69.8 Peom"e of 8 v'vta 19.1 11.1 11.8 16.6 14.0 14.5 19.6 15.5 18.1 C9. PeYMOUr 173.9 21.4 89.5 09.4 07.6 70.0 94.6 13.8 181.0 Food Pebuiar 9.9 0.0 0.0 10.9 10.0 13.2 12.6 24.4 41.9 Ce-perantes *bp.. *4.6 0.9 19.9 49.7 89.* 88. U5.2 74.0 74.0 TOOI 906.4 197.0 280.5 491.8 88$.6 478.0 U1.2 M19.0 M61.6

Sweet Ore_nso Ogct de Kobuk - 211 -

Table J.1

NATINALCON PU LITMACTa- SWMS TU3 B? CATUNI, 16/

1E 16 16 196 LS 15 1W7 1so pers1o 1 Xmltn W.C It?. M.~ on.? M9 M.4 1.4 M- Puuhbr_ d eooa 151.6 1.4 56.9 5.7 41.1 46.6 49.2 48.6 Disrabl* Goocl 19.6 21.5 15.2 13.2 18.6 10. U.? 21.1 P.p.u, of kawlag 19.8 5.9 4.4 4.3 2.# 6.6 6.1 6.7 08w P.Yu,t 35.6 217.6 66.2 so.' 2.9 22.6 22.1 5.7 TOtI 1,1.8 1,1.2 65.5 M.e 762.6 764.8 M.$ 7.e

Seems O _amtOme d. E sGABON\ RWANDA KENYA P.R. D ANGOLA of the BURUNDI ZAIRE T-ANZANIA R E L I E F L.mnh^ -l . MALAWI Relief in Meters: At.I7t,C .2,,$ANGOLA3 fJ+0 - 200 0 Selected Towns

OCc8/7 / I .' ' 201 - 500 0 Province Capitals

NAMIBIA. ZIMBA8WEt, n 501 - 1000 National Capital

1001 - 1500 Province Boundaries

P.R. OF Greater Than 1501 - International Boundaries

EAtDAiCONG l MILES 0 100 200 300

MBANZA ~~~~~KILOMETERS0 100 200O 300 400 500 CONGO |°0

7 0 \ 7~~~AIRE /7' X < ~~UIGE-t 1 ru

LUCAP"A~ CAXXIT ^

i T AN I ME N _ '"e _A -

OCEAN X 1 2~~~~~~~~~~~~~~~~~~~~~M ~ ~ ~~ * ' HAO +e s J _18 122-

>~~~fMo.m\ X =

Li

in- 10° 0sMUN <*I

NAMBE>pbt-- LUNAM O BDA

12t2 1 2 = GABONX / Y

\gP'otR«e BURUNMz V 3ANGOLA

C L r.4,7a.AyZAIRE"I POPULATION DENSITY 2 Lum" MALAWI Persons Per Km : At/ntica ANGOLA [N7 Less Than 1 0 Selected Towns

Ocean G Province Capitals

SNAMI E71 6 - 20 National Capital .(m 21 - 30 Province Boundaries PPROF Greater Than 30 International Boundaries CAWA' ~ECONG I MILES 0 100 200 300

KILOMETERS 0 100 200 300 400 bOO

CAXITO NOR7-UNA __|

LUANDA IELDA SU'

I~~~~~~~~~~~~~I

|- I WAAf .

18NAMII ~~2 4 2 :4.R b ANGOLA '.7''' CONG30 TA,3ANGOLA} Natoa Capitl |Z- B Main Roads Raflroads - g ;;y.,j-v-\NAMIESIA 2 , g + ~~Airports 4Ports . 1 t2*s_ Province Boundaries P.R. OF - hternaftiona Boundaries ECONG KMILE 0 100 200 300

- X KLOMETERS 0 100 200 300 400 a0 A CONGOQ

Ift.wm I I o

. ~~~~~.~ ~ ~ ~ ~ ~ ~ ~ NRr r N LUNDA 20*-i SUL ro 4jN BEN AO ALNo 0 at"10 ;~~~ZR _02- 9\\

fl W > t NAMIBIE-Q_1

g~~~~~~~~~~~~~~~~~~~~~~~~~~as=o. ThWkmWOkNAMIBIA- . bwSo24~~~~~~~W.0 1AA0 20of rm