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Oil crash exposes Angola’s era of excess

Chinese workers in Luanda, Angola Lilian Liang/PlusNews

There’s never a good time for a drought, but this is a particularly bad period for Angola as it struggles to cope with shrinking revenues as a result of the global oil price crash.

In the southern province of Cunene, 800,000 people – more than 70 percent of the population – are threatened with food shortages due to last year’s poor harvest. The drought has also affected the neigbouring provinces of Cuando Cubango and Huila, where the rural poor do not have enough in their granaries to tide them over to the next harvest in June.

“We can confirm that the level of acute malnutrition across Angola warrants a high impact emergency response,” the development agency World Vision said in a statement to IRIN.

“We gather that supplies of essential medicines are disrupted. We have observed stock outs of therapeutic foods, reduced outpatient services, and increased admissions to in-patient nutrition centres that are ill equipped to provide the required level of service,” the agency warned.

Oil-dependent Angola introduced spending cuts of around 50 percent last year as revenues fell, undermining its ability to cope with the current crisis. In 2014, oil prices were around $100 per barrel. Currently, they are at a low of about $31 per barrel, the local currency the kwanza has been devalued, and nationwide a total of more than 1.25 million Angolans are struggling with crop losses and livestock deaths. 

Although the Angolan government has provided some emergency food rations for the south, the effort is “inadequate to meet the high level of need”. As a result, World Vision has requested funding from the European Union’s humanitarian arm, ECHO, to “support the affected communities, especially vulnerable children”.

It’s a far cry from the free-spending oil boom years when Angola - Africa's second largest oil exporter - tried to make up for more than a quarter century of civil war with a splurge in infrastructural projects and dizzying plans to become an economic and military powerhouse in southern Africa.

According to Angola specialist Ricardo Soares de Oliveira, it was a lost opportunity of “monumental proportions”. State funds were “squandered in pointless projects or hoarded by the few, and most Angolans were left with nothing”.

Writing in the journal Foreign Affairs last year, de Oliveira noted: “As those citizens awake from their dreams of petro-prosperity to leaner times, the key question is where their dissatisfaction will lead, especially now that the state’s resources to buy off rising constituencies are dwindling.”

The government has been quick to crack down on dissent, de Oliveira added.

Silver lining?

But Allan Cain, director of the Luanda-based NGO Development Workshop, says he sees this period as one of opportunity.

“In the past, Angola had sufficient funds to be inefficient, but the country can no longer afford to be inefficient and must find ways of recovering the costs of these services,” he told IRIN. “There are demands from the public for basic services. Aspirations are strong, particularly from the youth graduating from the new universities. There are 21 to 25 of them, compared to just two at the end of the war.”

Spending cuts are forcing reforms to Angola’s system of subsidies – from fuel to water services – resulting in sharp rises in the cost of living, as well as a back-log in the refuse collection programme in the capital, Luanda. Civil servants are only receiving their pay intermittently.

But Cain points out that it’s mainly the middle classes that have benefitted from the subsidies. The gridlocked streets of Luanda are a testament to the cheap fuel in the tanks of the cars the poor cannot afford. 

Neither are the residents of the shanties connected to pipe-borne water. They are forced to buy theirs instead from more expensive private tankers.

“The fall in the oil price is stimulating the government to move ahead on a number of reforms that were already planned but it had been slow to implement,” said Cain. “There is an incentive to make urban services affordable and at a just price for everyone to pay.”


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