ANGOLA of managerial, administrative, and technical talent has hampered economic performance, and misguided and ineffective attempts at collectivist economic planning and centralized decision-making have further precluded development. Only the oil sector, run jointly by foreign multinationals and the PRA's oil monopoly, SONANGOL, has remained well-managed and prosperous. Accounting for around 90 percent of exports and 80 percent of budget revenues, oil has kept the rest of the economy barely afloat. Splintered by war and severe infrastructure deterioration, Angola possesses a number of mini-economies. Urban populations, swollen by refugees and isolated from their natural hinterlands, subsist wholly or partly on foreign food aid or depend heavily on extensive black markets based on barter and illegal currency dealings. The bulk of the population lives in the bush, often in marginal security and barely existing by subsistence farming. Extensive administrative chaos and corruption tend to vitiate reform and normal economic activity, and usual economic indices have little relevance. About half of the PRA's foreign exchange, 40 percent of its budget, and an inordinate proportion of the country's energy and talent are being expended on the war effort. The PRA budget is perpetually in deficit from the heavy military burden. The deficit's magnitude depends on the fortunes of the oil sector. In addition, ailing state enterprises are supported through heavy subsidies and credit facilities. The deficit has been financed by the printing press, increasing the money supply without corresponding improvement in the supply of goods and services. Shortages, artificial price controls, and erosion of confidence in the national currency have encouraged black markets and led to widespread dependence on barter. Despite pronouncements by the Marxist-Leninist singleparty government regarding its intentions to restructure the economy more along market lines, little progress is apparent. The PRA announced in 1988 an Economic and Financial Reorganization Plan (SEF) which was to feature new rigor in financial management, the opening of certain sectors to private enterprise (e.g., legalization of illicit parallel market activities), semi-privatization of commerce and agriculture, restructuring of the largest state-owned enterprises (SOEs), liberalization of foreign investment, and devaluation. Several basic laws have been published and a few price controls have been eliminated. A major reform experiment is proceeding well in Huila Province in southwest Angola. In most of the country, however, reforms have yet to be promulgated or effectively implemented, and the non-oil economy remains moribund. In any case, economic reconstruction and revival will depend on an end to the civil war. The PRA claims to welcome foreign trade and investment and eagerly is seeking Western participation in development projects. Barriers to U.S. exports and capital lie not so much in deliberate PRA policies as in the regime's sheer ineffectiveness and incapacity, as well as in the continued hazards of war. The oil sector, the only one run in a reasonably systematic and straightforward manner and fairly isolated from battle, is the focus of U.S.-Angolan trade and U.S. investment. The United States buys about half of Angola's ANGOLA oil exports, while equipment for the sector accounts for the bulk of U.S. sales to Angola. The ongoing war continues to limit overall opportunities and impose high risks on potential investors. U.S. oil companies have been selling substantial stakes in their Angolan operations to other multinationals. Given the country's huge potential, peace and genuine economic liberalization could provide substantial opportunities for U.S. trade with and investment in Angola. 2. Exchange Rate Policies From 1978 to September 1990, the PRA maintained the official exchange rate for the kwanza (Kz), a non-convertible currency, at 29.918/$1.00. In September 1990, the PRA effected a devaluation of the currency by 50 percent - the first of several similar devaluations intended to determine a true value for the kwanza. All legal foreign exchange transactions are handled by the Banco Nacional de Angola. Foreign exchange is carefully budgeted on an annual basis and allocated quarterly by quota. The rate on the parallel market can be as much as 120 times the official one, i.e., up to 3,500 Kz/$1.00 in 1989 and 1990. In much of the country, in both PRA and UNITAcontrolled areas, barter is common for consumer transactions. 3. Structural Policies Price controls are pervasive, but often meaningless when something is unavailable or found only on the black market. Basic commodities are rationed at officially fixed prices, and prices of many other important goods and services also are fixed. Price ceilings apply to many other products. Minimum purchase prices are established for most agricultural and livestock products and fixed commercial margins are set at various stages of transport and trading. The system is inefficient and incoherent, causing extreme price distortions. Stringent import and foreign exchange controls, rather than pricing, form by far the greatest deterrents to imports. For some time, the regime reportedly has been planning to deregulate most prices. The first concrete step was taken in 1988 when price controls on 52 fruits and vegetables were eliminated. Deregulation will have to be accompanied by heavy devaluation of the kwanza, which the PRA began to pursue in stages, in September 1990. The PRA government has moved slowly in carrying out its announced economic reforms. In 1988, basic laws on privatization, management of state enterprises, and the role of private investment were published. Removal of price controls on some fruits and vegetables in effect legalized their parallel market prices. Guidelines for sale or liquidation of some SOES reportedly are being drafted and a new office is being set up to coordinate foreign investment. However, except in one region in the southwest which has been allowed full autonomy to enact economic reforms, the country basically has not yet felt the winds of change. 4. Debt Management Policies ANGOLA The PRA began substantial foreign borrowing only in the early 1980s, principally to finance large oil sector investments. Prior to the 1986 slump in international oil prices, the PRA scrupulously met its foreign debt commitments, even those contracted prior to independence. Subsequently, however, large payment arrears accumulated ($378 million by the end of 1986), and major Western export credit agencies suspended cover to the country. The government publicly announced its foreign debt to be more than $5.2 billion in mid-1990. A substantial part of the debt is owed to the Soviet Union for military purchases used to pursue the 15-year old civil war against UNITA. The PRA's recent economic and financial strategy relies heavily on debt rescheduling. In 1989, the PRA obtained membership in the International Monetary Fund and the World Bank. Also, in 1989, official medium and long-term debts were rescheduled by the Paris Club. The United States did not take part in the Paris Club rescheduling. The United States does not recognize or maintain diplomatic relations with the People's Republic of Angola (PRA) and has no diplomatic personnel there to evaluate economic and trade conditions. The potential for U.S. exports to Angola is constrained by certain U.S. laws or policies which prohibit the sale of dual use items, such as certain types of aircraft; extension of Export-Import Bank (EXIM) cover; or utilization by U.S. investors in Angola of tax credits or deferments. Since the sharp decline of its coffee and diamond sectors, Angola's ability to import has depended almost entirely on oil earnings. When oil export growth halted in 1981-82, stringent import curbs were imposed. After some easing in 1984-85, they were re-imposed after 1986's oil price slump. All imports require a license. An annual foreign exchange budget is implemented on a quarterly basis with individual quotas allocated to ministries and state, mixed, and private companies. The quotas are strictly enforced. Company applications are assessed in terms of overall ministerial quotas. Documentary requirements can be burdensome. Equipment for the oil industry, food, agricultural inputs, and consumer goods for rural marketing campaigns receive the highest priority for civilian imports, but military equipment most likely accounts for nearly half of total purchases. In recent years, the government has relied on foreign food aid for a substantial proportion (at least half in 1990) of foodstuff imports. A large part of the country's imports are handled by state trading companies. Except for foreign companies' shares of oil production, most exports are handled by state agencies. Countertrade deals (involving the exchange of oil for imports of goods and services) have been signed with Brazil and Portugal. ANGOLA Foreign investment is very large in the oil sector and significant in many other areas of the economy. However, a 1979 law bans foreign investment in defense, public services, finance and credit, insurance, foreign trade, and the media. No export subsidy schemes currently exist, although among the measures proposed (but not yet implemented) in the government's economic reform package was a foreign exchange retention scheme as an incentive for non-oil export industries. 7. Protection of U.S. Intellectual Property The PRA joined the World Intellectual Property Organization (WIPO) in 1985, but has not adhered to any of the principal conventions on intellectual property. There is no known domestic legislation on intellectual property rights. U.S. industry has not flagged any specific problems regarding intellectual property. Angolan workers do not have the right to form independent trade unions. The sole, legally recognized trade union organization in Angola is the National Union of Angolan Workers (UNTA), which was formed in the late 1950s as an appendage of the Popular Movement for the Liberation of Angola (MPLA) and became the ruling party's official labor wing after independence. The UNTA's monopoly is ensured by the statutory basis of the single-union structure. Strikes are illegal and considered a crime against "state security." b. Right to Organize and Bargain Collectively Workers do not have the right to bargain collectively. The Minister of Labor and Social Security controls the setting of wages and benefits, coordinating with UNTA and employers. C. Prohibition of Forced or Compulsory Labor On Existing legislation authorizes compulsory labor for breaches of labor discipline and participation in strikes. the basis of this legislation, the PRA was first cited by the ILO in 1984 for being in violation of ILO Convention 105, which prohibits forced labor. The 1990 report of the ILO Committee of Experts indicated that the cited legislation remained in force and had not been brought into conformity with ILO Convention 105, which the Government ratified in 1976. d. Minimum Age for Employment of Children There is no information available on this subject apart from the fact that Angola ratified on independence in 1976 ILO Convention 6 governing night work of young persons and Convention 7 regarding the minimum age for employment at sea. The normal workweek for adults is limited to 44 hours. Persons under 18 are limited to shorter workweeks. Minimum wage legislation exists but no recent information is available on wage rates or the extent of their application. No information is available on the existence or adequacy of occupational health and safety standards. f. Rights in Sectors with U.S. Investment U.S. investment in Angola is located in the petroleum industry. There is no specific information available regarding the conditions for workers in this sector. (D)-Suppressed to avoid disclosing data of individual companies Source: U.S. Department of Commerce (unpublished) * Section 8 is an abridged version of Section 6 of the Angola country report included in the Department of State's Country Reports on Human Rights Practices for 1990, submitted to the Congress January 31, 1991. For a comprehensive discussion of worker rights, please refer to that report. |