Angola: Towards peace and democracy (2002-2007)

(coninued)
The rehabilitation of transport infrastructure focused initially on roads and
bridges in Luanda but extended to rail and to main links between the
capital and the cities and provinces (AfDB/OECD 2008, 132). In 2007 alone,
1 200 km of roads and 94 bridges were restored and 1 500 km of road is
scheduled for repair in 2008 (AfDB/OECD 2008, 132). The rail line between
Luanda and Namibe has been completed and the line from Luanda to
Malanje will be repaired by the end of 2008, as will the line from Namibe to
Menongue (AfDB/OECD 2007, 110; AfDB/OECD 2008, 132). The need for
demining has delayed work on the Benguela railway line (Lobito to
Lubumbashi) until 2010 (AfDB/OECD 2008, 132). The rapid growth of the
economy has strained existing infrastructure, resulting in plans to expand
electricity output but 42% in 2007/8, build a new international airport for
Luanda and upgrade the city's port and create a deep-water harbour
(AfDB/OECD 2007, 116; AfDB/OECD 2008, 132).
In the post-war period the economy has recovered rapidly and the
government has managed to establish macro-economic stability (UKTI
2008). The hyperinflation that characterised the final years of the war
(300% in 1999, 325% inflation rate in 2000) was steadily brought under
control (141% inflation rate in 2001; 98% 2003; 43.5% in 2004) to
increasingly manageable levels (23% in 2005, 12% in 2006 and 11.8% in 2007)
(UKTI 2008, LWB Undated; AfDB/OECD 2007, 113; AfDB/OECD 2008, 123).
Fuelled by a rapid expansion in output and the rising price of oil the
economy has posted impressive real growth rates, 15.3% in 2002, 4.9% in
2003, 20.6% in 2005, 18.6% in 2006 and an estimated 19.8% in 2007 (LWB
Undated; AfDB/OECD 2007, 107; AfDB/OECD 2008, 123). As a result of the
high growth rates, unemployment has declined from 39.8% in 2002 to 25.2%
in 2006 and a projected 3 million additional jobs were to be created in
2007 and 2008 (AfDB/OECD 2008, 133). However, high inflation rates have
eroded purchasing power and real wages have declined (AfDB/OECD 2008,
133).
High oil revenues have enabled a steady reduction in public foreign debt
from 99 % of GDP at the end of 2001 to 53.6% at end 2004, 39.5% at end
2005 and 15.6% at end 2007 (AfDB/OECD 2007, 114; AfDB/OECD 2008, 129).
In January 2001 Angola joined the Organization of Petroleum Exporting
Countries (OPEC) and received a production quota of 1.9 million barrels per
day (Energy Information Administration 2008). The economy's high
dependence on oil is a matter for concern. In 2005 oil was responsible for
more than 56% of GDP and 94% of exports, in 2007 57.1% of GDP, about 90%
of exports and 75% of state revenue (AfDB/OECD 2007, 108; AfDB/OECD
2008, 124; UKTI 2008). Diamond mining is the second largest contributor to
the economy, contributing about 5% to export earnings in 2005 with huge
 unexploited reserves believed to exist (AfDB/OECD 2007, 109). Production
increased rapidly, by 16.2% in 2005 and 30.9% in 2006, but fell by 3% in the
first half of 2007 due to heavy rains that disrupted production (AfDB/OECD
2007, 109; AfDB/OECD 2008, 125). In November 2005 a beneficiation
industry was started to add value through cutting and polishing stones
(AfDB/OECD 2007, 109; AfDB/OECD 2008, 125).
Economic growth and post-war reconstruction has fuelled a construction
boom, with the sector posting growth rates of 17 per cent growth in 2005,
30% in 2006 and 4.9% in the first half of 2007 (AfDB/OECD 2007, 110;
AfDB/OECD 2008, 126). Agricultural recovery has been slow, averaging
13.3% between 2000 and 2004, hampered by lack of infrastructure,
landmines and low productivity (AfDB/OECD 2007, 109, 110). Poor growing
conditions led to a bad harvest in 2005/6 but growth rebounded to 9.3% in
2006/7 as mine clearance restored land to cultivation (AfDB/OECD 2008,
125). Although the sector is the economy's major employer it contributed
only 8.6% to GDP in 2005 (AfDB/OECD 2007, 109, 110). Manufacturing,
destroyed by the war, has grown rapidly (67.4% between 2000 and 2004
period, 24.9% in 2005 and 30.7% in 2006), but remains a small component of
the overall economy (AfDB/OECD 2007, 110; AfDB/OECD 2008, 125).
Everywhere whatever social infrastructure there had been, such as schools,
hospitals, clinics and other public facilities, lay in ruins (Human Rights
Watch 2003, 2). In 2000/1 an estimated 68% of the population was living
below the poverty line and 28% in extreme poverty; by 2004 68% was still
living below the poverty line (AfDB/OECD 2007, 119; UNHCR 2005, 1). The
post-war boom has seen an uneven distribution of income, withy a
relatively small proportion of the population benefiting from the new
wealth, while high levels of inequality persist. In 1997 the Gini coefficient
for Luanda was estimated at 0.62, with a higher rate supposed for the
country as a whole and in 2005 it was estimated at 0.64 for the country as a
whole, among the highest in the world (de Sousa et al 2001, 4,5;
AfDB/OECD 2008, 135). Development indicators of access to services,
health and education remained amongst the worst in the world. Life
expectancy was estimated at a poor 41.7 years in 2005 (UNDP 2007/8).
Infant mortality rose between 2001 and 2004 from 250/1000 live births to
260/1000 before declining to 154/1000 in 2005 (UNDP 2007/8; AfDB/OECD
2008, 133).
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References
AfDB/OECD 2007 "Angola" IN African Economic Outlook, [www]
http://www.oecd.org/dataoecd/26/16/38561655.pdf [PDF document,
opens new window] (accessed 22 May 2008).
).