Sustainability of Economic Development in Angola Essay Sample free essay sample

Angola is on the South Atlantic part of West African Coast between Namibia and Congo Republic. The paper entitled The Background Note: Angola ( 2007 ) from the Bureau of African Affairs and Angola Fact File ( n. d. ) revealed that the state is known as a Lusitanian settlement since 1671 when it was wrestled from the Dutch in 1648 by series of treatise and wars. The paper farther reported that the primary involvement of Portugal towards Angola is slavery. Native Angolans were purchased from their head to work in sugar plantations in Sao Tome. Prinscipe and Brazil. By the nineteenth century. Angola became the biggest beginning of slaves non merely for Brazil but besides for the Americas including the United States. The formal bondage was replaced with forced labour in Angola when the pattern was outlawed by the terminal of nineteenth century. The forced labour system continue until 1961 when in-migration of the Whites specifically the British was encouraged by Portugal ensuing to great racial favoritism patterns. It was due to this oppressive status and the wish to emancipate themselves that native Angolans started a series of civil wars which lasted for about 27 old ages until 2002. In 1975 Lusitanian gave independency to Angola. and rise to power of the dominant Rebel groups. the UNITA or the National Union for the Entire Independence of Angola under the leading of Jonas Savimbi and MPLA ( Popular Movement for Liberation of Angola ) headed by Agostinho Neto. By the terminal of 1976. Agostinho Neto. the leader of MPLA was in complete control of the authorities and permitted private companies to develop the small-scale industries and this resulted to significant economic dealingss with Western provinces. particularly with Angola’s oil industry. Neto died in 1979 and de los Santos became the leader of the MPLA. The national election in 1992 resulted to get the better of of Savimbi and de los Santos was declared President. This resulted to an rebellion led by Savimbi for the ground that he was cheated in the election. The paper farther reported that following Sustainability of Economic Development in Angola 2 Savimbi’s decease caused by the revolution . the AngolanGovernment and UNITA signed the Luena Memorandum of Understanding formalising the ceasefire. It was in December 2003. that the first interim Angolan Republic was declared through the aid organize the UN and the USA. The economic activities from 1975 continues up to the late 1990’s and this made possible the smooth economic transmutation of Angola get downing in early twenty-first century. The prevailing radical sentiment of the leftovers of UNITA and MPLA contributed to the sentiment as to the sustainability of economic reforms being experienced by Angola. This paper aims to find the said sustainability based from available documented information on prevailing economic indexs. The Background Note: Angola ( 2007 ) revealed that the last population nose count of Angola was in 1970. The paper continued stating that approximately 1. 5 million Angolans evacuated and died as a consequence of the 27 old ages civil war. The Population Structure and Demographic Report of Country Studies ( n. d. ) said that â€Å"According to the United States Department of Commerce’s Bureau of the Census. Angola’s 1988 population was about 8. 2 million. The United States Department of State gave a 1 986 figure of 8. 5 million. while the United Nations ( UN ) Economic Commission for Africa estimated the mid-1986 population at 8. 9 million† ( Population Structure. 1st par. ) . The Demographic Report farther revealed that as of 1988. 46 % of the population is under age 15 and the average age is 17. 5 old ages old and merely approximately 4. 6 % were at 60 old ages and supra. The Background Note: Angola estimated that the 2006 population is about 15. 5 million. The addition is non due to increasing birth rate but due to return of people from emptying and reintegration to urban society from contending and concealing in the mountains during the civil war. The Population Trend and Forecast for Angola ( 2007 ) by Cinimar. com projected an upward tendency in population Sustainability of Economic Development in Angola 3 ( Fig. 1 ) of Angola up to from 2000 which was the start of the peace procedure up to twelvemonth 2012. This is an indicant of the developing trust of the Angolans towards the authorities and its developing economic system. Fig. 1. Forecasted population tendency of Angola. 1995 to 2012. cenimar. com 12 Dec. 2007. Year GDP in Billions of USD PPP % G DP Growth 2002 34. 76 11. 33 2003 40. 50 0. 37 2004 42. 72 8. 00 2005 48. 87 17. 20 2006 60. 85 14. 20 Fig. 2. Angola GDP PPP A ; GDP Growth Rates 2002 – 2006 Beginning: EIU Country Data The Rising Gross National Product from 2002 to 2006 ( Fig. 2 ) is an indicant that the state is on the route to economic recovery. Increased oil end product coupled with lifting monetary values of oil made possible this GDP growing ( Economic Intelligence Unit. 2007 ) . The EIU farther Sustainability of Economic Development in Angola 4 reported that Angola’s future GDP mark growing is 21. 4 % in 2008 and 12. 9 % in 2009. an ambitious mark that can non be arrived at if the economic system is non sound. The other cardinal indexs Fig. 3. Country Forecast Overview ( 3 Year ) Key Indicators 2006 2007 2008 Real GDP Growth ( % ) 14. 20 14. 50 18. 10 Consumer Price Inflation ( av ; % ) 13. 30 12. 30 12. 00 Budget Balance ( % of GDP ) 14. 80 3. 20 3. 80 Current-Account Balance ( % of GDP ) 31. 50 30. 30 30. 70 Exchange Rate US $ : Euro ( Ab ) 80. 40 76. 70 76. 20 Exchange Rate US $ : Euro ( year-end ) 80. 25 75. 25 76. 25 Beginning: Country Forecast Angola August 2007 to back up the stabilising economic system is presented in Fig. 3. The GDP growing remained ambitious from 14. 2 % existent in 2006 to 18. 10 % mark in 2008 ( EIU. 2007 ) . The consumer monetary value rising prices is targeted steady at 12 % until 2008. The budget of the state is realiza ble and the beginning is good financed as it represents a worsening tendency as to per centum of GDP. This means that because of the high GDP. Angola easy can hold money on manus to finance its disbursement to do the machinery of economic system running. The current importing disbursals is manageable as it represents merely 30 % of the GDP. The pecuniary policy of the authorities is to pull off the exchange rate viz a viz the US dollar and Euro as the economic system depends to a great extent on volatile monetary value of oil in the universe market. The higher the exchange rate value. the more money and capital will flux in to the state. To accomplish this. the importing should be kept low in relation to the export. The Link Report-Angola ( 2006 ) provided the export and import prognosis informations from 1999 to 2010 and the graph is presented in Fig. 4. The state being in the active development stage of the economic system has to import goods and services which are needed to run the economic system. Majority of the import are machineries and parts related to oil and diamond extraction. fabric to dress the population and medical specialties to handle the maladies of the population who are merely retrieving from Sustainability of Eco nomic Development in Angola 5 the depredations of the 27 old ages of civil war. The export is comprised chiefly of oil as it was forecasted to turn by 21. 2 per centum. the Link Report Angola revealed. Fig. 4. Angola Import and Export Target. Year 1999-2010. As reported by the Link Report-Angola. the Angolan authorities was successful in implementing a tight policy related to fundss of the state in 2005 to 2006. They were successful in pull offing the exchange rate policy that resulted to decrease of rising prices. variegation of internal production of goods which included the rehabilitation of agribusiness sector. In add-on. the study said that the Angolan authorities was successful in reestablishment of fiscal constructions and giving support to private sector development ensuing to increase and development of employment and gradual additions in wage. All of this developments were achieved in 2005 and 2006 and an indicant of the sustainability of the economic developments. The study added that consequences in 2006 financial policies indicates that the stabilisation procedure of the economic system resulted from increased degree of sustainable economic development as evidenced Sustainability of Economic Development in Angola 6 by the li fting GDP. falling of the rising prices rate and extraordinary addition of international modesty brought approximately by the lifting monetary values of oil exports. The study farther revealed that economic activities and financial policies execution in the last two old ages resulted to continues grasp of Kwanza against the US dollar and Euro currency. autumn of involvement rates while increasing significantly the capital investings come ining into the state. These developments resulted to favourable conditions related to national and foreign investing. the managing of public outgo and the execution of tight pecuniary policies to safeguard the economic additions. The pecuniary and fiscal developments of a state is a good step of sustainability of economic additions and stableness of the fiscal system which chiefly include the banking establishments. The Link Report Angola revealed that as a consequence of economic activities in the last five old ages. the Net Foreign Assets ( NFA ) of amalgamate Bankss registered an addition of 137. 74 % amounting to Kz 533. 039. 07 million. Furthermore. the National Bank of Angola registered an N FA of Kz 256. 1 67. 7 million in December 2005 and Kz 684. 017 a twelvemonth after or an increase of 167. 02 % stand foring Kz 427. 849 million in absolute figure. This means that accretion of capital in Bankss resulted which is an indicant of the trust that investors has to the economic system. The study farther revealed that the standby recognition by the authorities from the banking system registered a 68. 5 % addition from December 2005 to stop of 2006. In absolute footings. the standby recognition rose from US $ 724. 6 million in 2005 to US $ 1. 286 billion in 2006. This important addition is associated with first-class relationship among the fiscal system and the economic system and straight to the stabilised status. Analyzing the growing in the existent sector give an indicant as to what economic agent Sustainability of Economic Development in Angola 7 provided the growing. This is an of import information in the sense that the state can nail what sector of the economic system is strong and which sector demands focused development. The Link Report-Angola emphasized that the growing marks of the economic system of Angola were adjusted bas ed from the existent public presentation of economic indexs and pegged at 19. 8 % which was a realistic figure sing the historical growing norm from the old old ages of 20. 6 % . This information was supported by the intelligence column from Reuters entitled â€Å" Angola cuts GDP growing prognosis in 2007† by stating â€Å"Angola has cut its economic growing prognosis for 2007 to 19. 8 per centum from 31. 2 per centum. reflecting a bead in oil gross and grasp of its currency. the Kwanza. the state-run Jornal de Angola said on Friday† ( 1st par. ) The crude oil sector grew by 21. 2 % in 2006 chiefly due to increase in monetary value of rough oil in add-on to consider maintaining of high degrees of production. The non-petroleum sector which is comprised chiefly of public plants. building. diamond and other mineral extraction registered a growing of 17. 2 % . In entirety. the crude oil sector based from the growing rate achieved represented a 57 % part to the economic system and the non- crude oil sector added 43 % of the value. The Link Report-Angola farther reported that in the non-petroleum sector. agribusiness. forestry and fishing contributed 8. 59 % and the services related to fiscal system such as Bankss and insurance services amounted to 13. 9 % . These information clearly indicated that the non-petroleum sector specifically the agribusiness and fiscal system services is being developed besides to lend to a more stable economic foundation sing that entire dependance in oil grosss is non economically practical due to monetary value volatility of the trade good. On the existent advancement and accomplishments of Angolan economic system. it is interesting to observe the information being shared by the print media as this papers the milepost of their advancement and Sustainability of Economic Development in Angola 8 adds credibleness to the claim that the economic sustainability is here to remain. The column entitled â€Å"Economy – Development Angola economic roar even strengthens â€Å"of Africa News ( 2007 ) reported that Angolan government’s GDP growing mark of 17 % for 2007 is pessimistic due to the fact that the IMF based on latest economic studies expects the economic system to turn by at least 31 % . The Africa News farther reported that the oil sector is expected to turn by 40 % this twelvemonth. In consequence. the oil production end product will turn from 1. 434 to 2. 019 1000 barrels per twenty-four hours. Several international economic establishments see Angolan economic system to be developing at full velocity. Co mplementing the oil sector growing is the 13. 8 % growing by the non-petroleum sector showing that the current growing is wide based. The African News farther revealed that foreign investing to Angola is lifting in the last four old ages with a sum of US $ 4 billion. Last twelvemonth. a sum of 463 investing undertakings were approved numbering US $ 794 million. The African News commented that ‘the growing of investing undertakings approved since 2003 shows the turning involvement investors have in making concern in the state. motivated in portion by macro- economic stableness and economic growth† . ( 9th par. ) . There is a prevalent perceptual experience that based from the GDP information. the state of Angola is going a rich state which in the close hereafter can be placed in line with Saudi Arabia and other oil rich Middle East states. The basic inquiry is the wealth being distributed to the people and are they profiting from this GDP growing rates. This is an of import inquiry to be answered candidly as election is fast coming into the state. From the 27 old ages of civil war survival experience. it is perceived by the people that election mean another war as exemplified by their experience in 1992. The intelligence article entitl ed â€Å" Angola: Poor Markss for advancement on MDG â€Å"of IRIN News dated December 13. 2007 revealed that the spread between rich and hapless in Sustainability of Economic Development in Angola 9 Angola. the 2nd biggest oil exporter in Africa. is widening based from the dictum of the United Nations Development Program or UNDP. The Irin News farther revealed that more than 75 % of the Angola’s 16 million people survive on $ US2 a twenty-four hours and about 4 million live on $ 0. 75 or less a twenty-four hours. This means one in every four citizen is populating in utmost poorness as of 2006. Harmonizing to the Irin News. the poorness degree being experienced in Angola can be explained by the inequality on distribution of wealth step or Gini Coefficient. The income distribution step of 0 agencies perfect distribution or the wealth is every bit distributed to every citizen. The rate of 100 agencies perfect inequality. In footings of per centum. the 2005 Progress Report on Angola on execution of Millennium Development Goals. the Gini coefficient of Angola is from 52 to 62 % significance that the wealth is concentrated on really few single households merely. Angola is one of the 191 states signer in the â€Å"2000 Millenium Declaration aimed to cut poorness by half and supply nutrient to all households and instruction for all kids by 2015† ( 3rd par ) . The Irin News reported that Angola is making activities related to MDG. nevertheless. a figure of poorness relief intercession does non straight profit the 75 % of population life in poorness. A instance in point. as reported by the Irin News is the multi-million new airdrome which is considered a incorrect enterprise every bit far as poverty relief is concerned. The Irin News farther reported that harmonizing to a senior economic expert of UNDP in Angola. Michael Botomazava. the inequality of wealth distribution can be explained by capital intensity demands of the oil sector. Merely the monied people can put in oil trade goods and these moneyed people are the aliens and high authorities functionaries merely. Added to this is the fact that little industries and agribusiness was badly damaged by the 27 old ages civil war and needed rehabilitation is still in its initial phase. The Irin News farther revealed that Angola ranks Sustainability of Economic Development in Angola 10 151st among the 158 corrupt states. Wealth concentration is merely in a smattering of elites who use authorities for geting monolithic wealth. The Angolense. a newspaper based in Luanda. capital of Ang ola. revealed harmonizing to Irin News that 10 Angolans have amassed wealth over US $ 100 million each piece about 59 have hidden more than US $ 50 million each in foreign Bankss. The Angolense further revealed that â€Å"President Jose Eduardo Dos Santos was rated as the richest of the rich. followed by a parliamentary deputy. two functionaries in the president’s office. an embassador. a former ground forces head of staff. and the curate of public plants. The seven richest Angolans were all in the opinion MPLA government† ( 10th par. ) . The International Monetary Fund harmonizing to Irin News reported that in late 1990 and early 2000’s. about US $ 1 billion yearly was siphoned from Angola’s oil grosss by these authorities functionaries. Serious state enterprise is needed to impart the benefits of economic additions to the people. Five old ages after the MDG execution. harmonizing to Irin News. Angola registered the lowest grade in 6 of the 8 classs viz. â€Å"eradicating utmost hungriness. advancing gender equality. cut downing infant mortality. bettering maternal health care. contending HIV/AIDS and guaranting environmental sust ainability – but attained the highest grade for accomplishing cosmopolitan primary instruction and a moderate mark for developing planetary partnerships† ( 11th par. ) . With 10 old ages still staying. based from the earnestness of the Angolan authorities to help its people portion the approval of its economic additions. the opportunities of accomplishing the MDG’s will be moderate. the Irin News reported. On the reintegration of displaced people as a consequence of 27 old ages of civil war. the Irin News revealed that about 4. 4 million displaced from their places in Angola had been resettled and about 314. 000 refugees from outside the state has returned. This reintegration to hold important effects on nutrient production and agribusiness will take Sustainability of Economic Development in Angola 11 sometime and besides dependant on the rate of substructure rehabilitation work and the reintegration of more than 100. 000 ex-combatants who are still in the mountains. When the civil war ended in 1999. deficit of nutrient supply affected about 3. 5 million people but today. the traditional agribusiness supported by giver states and Angola’s distribution of farm inputs. the people affected by hungriness is reduced to about 1. 1 million. the Irin News reported. The study recommended that Angola increase its budget allotment to agribusiness and fishing sector from the current 3 % in order to prolong the development and minimise the hungriness for nutrient job. The economic indexs suggest that the economic additions of Angola is sustainable. The Republic of Angola is fundamentally an oil bring forthing state and as such must develop its oil Wellss to derive the much needed grosss to impart its additions to the destitute people. The lone danger to sustainability of the economic developments is the waking up of the people on the robbery of the caissons by governing functionaries and the evident disregard of the authorities to look at the public assistance of the people which may do another civil war particularly in the close hereafter when democratic election will be held one time more. It can be recalled that in 1992. peace could hold settled in the state if non for the unrest brought about by the perceptual experience that cheating was done in the election ensuing to lift to presidency by now President de los Santos. While there are more financess to pay the debt of Angola to its creditors and more investors are coming in. the other economi c sectors like agribusiness. fishing and fabrication should besides be developed. The development of these sectors will buffer the consequence of monetary value volatility of the oil trade good should the event happened in the hereafter. The economic additions will be more sustained if bulk of the people will be benefited to develop within them the sense of loyal pride. Mentions Angola Cuts GDP Growth Forecast in 2007. Reuters News. July 27. 2007. Retrieved December 12. 2007 from hypertext transfer protocol: //uk. reuters. com/article/oilRpt/idUKJAT00300220070727 Angola economic roar even stronger ( 2007 ) . African News. Media Institute of southern Africa. February 23. 2007. Retrieved December 12. 2007 from hypertext transfer protocol: //www. afrol. com/articles/24460 Angola-Economist Intelligence Unit-The Economist. Alacra Store. August 2007. Retrieved December 12. 2007 from hypertext transfer protocol: //www. alacrastore. com/country-snapshot/Angola Angola: Fact File ( n. d. ) . Promoting Credible elections and democratic Governance in Africa. Eisa. Retrieved Dec. 12. 2007 from hypertext transfer protocol: //www. eisa. org. za/WEP/ang1. htm Background Note: Angola ( 2007 ) . Bureau of African Affairs. December 2007. Retrieved December 12. 2007 from hypertext transfer protocol: //www. province. gov/r/pa/ei/bgn/6619. htm Link Report- Angola. ( 2006 ) . Banc o National de Angola. Retrieved December 12. 2007 from hypertext transfer protocol: //www. chass. utoronto. ca/link/meeting/ctryrep/angola200705. pdf Population Structure and Demography. ( n. d. ) . Country Studies. Retrieved December 12. 2007 from hypertext transfer protocol: //www. country-studies. com/angola/population-structure-and-dynamics. html Population Trend and Forecast for Angola ( 2007 ) . Cinimar. com Factbook and Trend. December 12. 2007. Retrieved December 13. 2007 from hypertext transfer protocol: //www/ . cenimar. com/factbook/trend. jsp? tickerBase=W POP A ; countryCode=AO