Post-war resource management in Angola
A Seminar 2008 by Centro de Estudos e Investigação Cientifica (CEIC), Angola
and Chr. Michelsen Institute (CMI), Norway
As Angola's long civil war has ended and the most immediate reconstruction priorities are being met, the country faces an historical opportunity to convert its vast resource wealth into welfare for its people. Yet nearly six years into the peace, considerable challenges prevail. The seminar invited researchers, policy makers and civil society representatives from Norway, Angola and beyond to reflect on Angola's transition and how the country can set itself on a path towards fairer resource management.
- Provided a forum for discussion of challenges and opportunities in relation to Angola
- Presented recent CMI and other research on Angola
- Presented a programme of CMI-CEIC cooperation for 2008-2010
Gunnar M. Sørbø, CMI
I wish you all a warm welcome to Bergen and to the Chr. Michelsen Institute for this Seminar on Post war Resource Management in Angola. A particular welcome to all our guests from Angola and esteemed scholars from abroad. Although in essence our gathering today is a research seminar it has a most definite policy content and will address important issues of public policy on the Angolan side as well as the Norwegian side.
We are very happy to have with us Albertina dos Santos, the Press Attache from the Angolan Embassy in Stockholm. We are most pleased that the head of the Southern and West Africa Section of the Norwegian Ministry of Finance Kåre Stormark could be with us and help us explore the Angola Norway relations at the present and future.
Another particular welcome goes to Lars Ekman from the Norwegian Embassy in Luanda. He has been working with us in developing the programme which we today launch and in a hands-off manner provided a most constructive input.
The seminar today is one of the events marking the three year programme (2008-2010) of cooperation between (CEIC) Centro de Estudos e Investigação Científica at the Catholic University of Angola UCAN (Universidade Católica de Angola). Since the start of the week we have had planning and implementation meetings for all 16 sub-projects under the programme. Tomorrow CEIC and CMI will have our first Annual Meeting for the programme with the representative of the Norwegian Embassy in Luanda.
We have started the programme already. Two of the sub-projects where field work is already under way deal with issues around the forthcoming election in Angola and the political parties.
The programme also includes support to our partner CEIC in research administration and IT where our own staff uses our experience to help CEIC build a strong and effective organisation. The IT team from CMI is now in Angola working with their counterparts and the administration team leaves shortly after the Seminar.
I wish you all the best for this hectic day of exchange of ideas and exploration of resource management issues and Norwegian policies for cooperation. Thank you!
The CMI-CEIC cooperation programme 2008-2010: A brief presentation
Jan Isaksen, CMI - Salim Valimamade, CEIC
This Seminar, apart from mirroring important issues of the post war pre election development in Angola and reflect some of CEIC's and CMI's workover the last year, Also signifies the start of a cooperation programme between the two institutions over the time 2008-2010. The programme aims to
- contribute to policy analysis in order to avoid a 'resource curse' situation in Angola.
- strengthen the foundation of knowledge, relevant to Norwegian-Angolan cooperation now and in the future.
It is funded b the Norwegian Government through the Norwegian Embassy in Luanda and StatoilHydro to the tune of NOK 21,5 million and has 16 constituent programmes that comprise
- 1. Project Management and Financing
- 2. Social Science Studies
- 3. Augmenting teaching resources at UCAN
- 4. Acquisition, Project Control and Financial Management
- 5. ICT Capacity
- 6. Economic and Judicial Incentives for Peace: Dissemination and New Research
- 7. Effects of Angola's 1992 election experience on the 2008-9 elections
- 8. Political Parties in Angola
- 9. Macro modelling
- 10. Analysis of the budget system and public expenditure
- 11. Participation, representation and taxation in local governance
- 12. Health, poverty and public expenditure
- 13. Comparative Corporate Strategies
- 14. Angolan infrastructure in a regional perspective
- 15. Land and Legal Plurality in Angola
- 16. Micro Credit for Sustainable Development in Angola
Six of the programmes have already started
PowerPoint presentation: CEIC-CMI Programme 2008-2010 (Valimamade - Isaksen)
Session I: Ambiguous transitions
Chair: Jan Isaksen, CMI
Keynote address: Angola: a society not yet civil
Patrick Chabal, Kings College, London
The relationship between civil society and transition to democracy is important for Angola but also for Africa as a whole. What future for civil society in Angola and Africa can the elections bring about? In such an analysis it is important to take history into account, as well as to clearly define the concept of ‘civil society' in contemporary Africa. Democracy is usually conceived of in procedural terms - i.e. free, peaceful, and orderly elections. Civil society can be defined as those organizations that do not directly compete for political office (i.e. charitable, social, not for profit, etc.). In a democracy civil society organizations (CSOs) can act freely.
Regarding the history of transitions there are a few general assumptions today: 1. Democracy is path driven : democratic practice brings forth benefits that call for more democracy - both individuals and institutions see merit in democracy, which results in further democratic consolidation.; 2. Democracy is the same as free multiparty politics; 3. Democratisation opens up space for CSOs; 4. Democratisation means more accountable politics and thus less poverty. These ideas are all derived from the western world, but such a ‘blue-print' is hardly warranted in Africa. It is also not possible to show that democracy actually brings benefits such as economic growth. Rather than seeing democracy as the condition of growth, in the West it was the result of growth. There is no reason why this should be any different in other parts of the world, as the experience of East Asia confirms.
It is commonly assumed, and accepted by the development aid agencies, that the emergence and strengthening of CSOs in Africa will increase demand for more democracy and thus create more space for CSOs. But, are these CSOs really the result of societal activism? There seems to be some confusion about cause and effect. Many CSOs are actually driven and developed by donors, and space for CSOs opens up through donor conditionality. Donor driven CSOs may not be the best vehicle to represent the public. Also, since Angola is not dependent on aid, Angola can and does resist such conditionality.
In Africa Works (Chabal & Daloz, 1999), what are called the illusions of civil society in Africa are analysed. Some of the findings are that civil society is rarely separated from the state and that a majority of CSOs are funded from the outside (or perceived to be). This has meant that the same neo-patrimonial system is at play here, leaving little scope for civil society in Africa to play a role like that achieved by civil society in Eastern Europe during the 80s. On the surface many CSOs may seem to be ‘real' but in actual facts many are political parties in disguise, or are co-opted, or merely exist to tap into aid. Usually CSOs are donor driven in order to put issues on the agenda, and the few real grass-roots organizations that may exist don't get outside funds.
In Africa, the state and civil society cannot be separated. Rather they should be seen as two sides of the same political process. In Africa, power is about the control of resources and thus the control of the state. Multiparty politics complicate this slightly, but there is no real room for coalitions, opposition, etc. The winner takes all. If we recognised the intermingling of state and civil society in the political of Africa our understanding of power would be quite different.
Civil society in Africa can be roughly divided into three types: 1. The outside driven organizations or organisations set up to receive donor funds. These are usually what the west perceives as ‘civil society'; 2. Professional, vocational or economic organizations, which include churches, trade unions, etc. They remain in the same game of patrimonialism as the first group. 3. Local grass-roots organizations which include, inter alia, ethnically based associations. These are the only ones that could be seen as an embryonic form of civil society in the real sense. These are sometimes rejected by the west as they usually lack administration and accounting, and are often disorganized. There is a big distinction to be made between western style democracy and accountability. This is why donors are misguided to ignore the last group.
Angola is not so different from this ‘African analysis' so as to warrant its own reading. Rather Angola is best understood by a comparative analysis approach. The Luanda Creole elite, is of course the result of historical facts and may have decisive influence, but even this apparent difference is not unique in Africa.
The Luanda Creole elite is an identity marker that can be employed in a fluid and flexible manner so as to include a variety of members. What is however a key condition for membership is allegiance to the regime and in recent years allegiance to the president. This elite was consolidated during the war when the MPLA emerged as the ‘modern' party with a socialist forward looking image and agenda. US criticism (that the MPLA was a soviet stooge) at the time only helped legitimize the party and the elite. The failed elections in 1992 sealed the transformation and consolidation of power with the near-complete closure of public space - even for the Catholic Church. Now this elite is firmly rooted at the helm of state power and controls huge resources. While the Luanda-Creole elite appear to be central for the future of Angola, this is not a unique situation in Africa and may change through the evolution of the neo-patrimonial system, as has happened in other countries.
While the war provided a justification for the suppression of public space for civil society, the substance of the practices did not change with either peace or more recently liberalization. The approach to civil society is still hostile and the state fears the CSOs it does not control.
Angola is characterized by a patrimonial system of distribution and the Angolan state is convinced that there is no need for an autonomous civil society outside the state structures. Through the availability of vast natural resources and Sonangol as an instrument, the regime is wealthy enough to disburse patronage and key benefits to the ‘in-circle' crowd. There is only really one choice: either with the MPLA or against it. The support by the population to the regime and the MPLA is thus purely instrumental.
To make sense of transition in such a setting, one has to ask what the possible foundations of civil society could be, and how civil society could contribute to a renewal of the political processes. - There is no reason to assume that radical changes are possible. Rather, the best analysis might be that Angola suffers from ‘arrested development', marked by the absence of social space after independence and no sense of the ‘public good'. What was ‘soviet rule' in Eastern Europe is ‘presidential rule' in Angola. But the relationship that existed between the former GDR or Hungary with the west, does not yet exist between the Angolan people and the west.
While changes are foreseen these will not be as quick or AS RADICAL as expected by many. As long as power is concentrated IN one person, and as long as there is no change, there will be no space for CSOs.
Comments on Patrick Chabal's presentation
Alex Vines, Chatham House
Angola's economy is strongly controlled by a presidency that wields power through personalised networks which, as in many African and other countries, can be more important than the formal institutions. In these networks, money and favours are allocated by patrons to clients, in exchange for political support. Five years after the end of the civil war, the ruling Movimento Popular de Libertação de Angola (MPLA), has fully consolidated its political hegemony. President Jose Eduardo dos Santos sits at the centre of an extensive patronage network, skillfully appeasing conflicting interests both nationally and with the party. Since the late 1990s the presidency has not been answerable to parliament, the MPLA or other institutions although the Finance Ministry had gained influence in policymaking, especially after the war ended in 2002.
Political and economic reforms do not mean that the government has given up on the hope to ensure continuity. Reforms are aimed, above all, at adapting to change while remaining under control. This has had negative implications for political openness until today. Though Marxism-Leninism has long been abolished, the notion that the state should provide for all remains potent. The government will continue to with gradual economic reforms, but with oil prices high and new sources of finance readily available, IMF-styled reforms will be limited particularly on the system of political patronage.
It is during a cycle of low oil prices that Angola's rulers are open to reform efforts. The real first political opening occurred at the end of the 1980s and early 1990s as a result of international pressure (collapse of the Soviet Union) and low oil prices. The opening was stunted by the return to war in 1992 but never smothered. Following the Lusaka Protocol in 1994, there was a steady growth of civil society activities that continued even when the country returned to war in 1998. Now, open discussion in the private media of government shortcomings are rampant, in stark contrast to the early 1990s.
The reformists faced huge difficulties in the war but reform has been consolidating since 2002. Under a new finance minister inflation is down 34% and falling, and the kwanza has been broadly stable against the dollar. Reform has not only brought better macroeconomic stability, but also a measure of greater transparency in public revenue management. However, these reforms have limits. Transparency, if improving, is still weak, and rapid GDP growth has not significantly benefited millions of Angolans. Despite structural changes, including integration of revenues and expenditures into a unified system to improve coherence of budgetary management, the economic team has not enacted fiscal consolidation necessary for long-term stabilisation. Although reforms will upset some mechanisms for redistribution of rents, new ones are being created; the patronage system is not fundamentally being disrupted. A gradualist approach to reform allows the replacement of oil rent seeking opportunities with new ones, without necessarily meaning loss of control.
High profile transparency campaigns on Angola by international NGOs since the late 1990s have had limited influence on economic policy-making inside Angola. These campaigns have had more impact by raising the profile of transparency with donors and the IMF, and with foreign investors and international capital markets. They have had some limited resonance with a domestic audience.
With a spike in oil prices, external partners hold limited influence over the government and its behaviour. President dos Santos in his New Year address to the diplomatic corps stated that "globalization naturally makes us to see the need to diversify international relations and to accept the principle of competition, which has in a dynamic manner, replaced the petrified concept of zones of influence that used to characterize the world." Angola's engagement with China should be seen in this respect but also Spain and Germany are expanding their links among others. Lufthansa has just started a weekly flight to Luanda from Frankfurt.
Angolan civil society also plays a role, especially faith groups. The roots of current Angolan civil society can be traced to the early 1990s, where they emerged in a hostile environment. Even with these limitations civil society is growing in fits and starts. Limited openings during the "mini-peace" of Bicesse (1991-92) and especially during the Lusaka process (1994-98) were quickly occupied by civil society (private media, church organizations, independent labour and professional unions, human rights organizations). The ruling MPLA party sought to retain control throughout this period, adapting its strategy to the changing context. By the end of the 1990s, civil society had grown sufficiently robust for an emerging peace movement to challenge through meetings, demonstrations and advocacy the government's determination to achieve a military solution to the war with UNITA (1999-2002). Following the military victory over UNITA in 2002, hurdles remain but the end of the war removed a key obstacle and has opened up new opportunities and challenges for processes of change.
A national NGO initiative to influence the new land law shows that local civil society has some influence. A draft was provided in June 2002 - and the work of the Rede Terra. There are many examples of indirect influence over the Angolan government from NGOs operating in a non-confrontational manner. Indeed the government has recognized its lack of skills and capacity and many projects are implemented by NGOs such as the efforts to reintegrate ex-combatants.
The election cycle is important for Angola. The MPLA is likely to do well in the legislative elections and benefits from access to oil revenues and the boom in public spending since 2005. The main question is whether the MPLA can gain 2/3 majority to change the constitution. UNITA's main source of revenue is its $13-$14m allowance for its deputies elected in 1992. There are 98 political parties registered currently in Angola -but only a handful will win seats.
The presidential election in 2009 are to be followed by local elections which are part of an effort to decentralize, but the presidency and MPLA are watching this carefully. However, oil wealth has expanded Angolan horizons, ‘blue skies thinking' for 2020 in Angola for health and education and oil prices has been commissioned. We also see greater pressure for more efficient service delivery, including access to clean water. Indeed in Luanda's peri-urban areas more community groups like Chabal's category three have emerged, football associations etc. These may become future entities that through organized protest will call for greater accountability of their leaders.
The MPLA understands that change is inevitable but wants to ensure that it controls the pace and it remains in power for decades to come. Oil very much helps it achieve that vision.
Session II: Resources for whom?
Chair Aslak Orre, CMI
The budget process
Jan Isaksen, CMI
This section of the seminar focuses on the budget and its importance for Angola's development socially economically and politically. While Salim Valimamade will focus on some of the outcomes of recent budgets, my presentation will focus more on the system and the process itself.
State expenditure in Angola has quadrupled over the years 2002 - 2004. This means that the system to handle this increasing flow of resources and put it to good use as government investment and consumption will have to increase its capacity to keep pace with the situation or risk the loss of resources in inefficient government operations.
Relatively speaking, the government revenue means more to the average Angolan citizen than to citizens in most countries. As the oil revenue to the nation (in principle) all end up in the fiscus and is such a major part of the entire national product the responsibility of handling it falls on government.
This is likely to b the case for many years to come even though the oil production will peak off in a few years time it will be over the current (2008) level up to 2013 and may well grow after that when new exploration and production fields come in.
The budget system
The budget process is conceived in different ways. The model we used in Angola has as its first stage the situation of the annual budget in a longer term perspective by means of a long term plan. If a budget is seen only year by year it will not be rational or realistic for the reasons that the processes and projects fed by the budget do often take more than a year. So the Link to the Medium Term Plan is important somewhat in the same way as the next step which is a Review of current policy, setting the allocations of the budget in a policy context. Then follows the budget preparation which requires a number of sub steps among others tactical and strategic games between the Ministry of Finance and the line ministries and other budget units. Approval by cabinet and by parliament follows before the Execution of the budget. Under-way the budget is monitored to find out whether the given allocations have the intended effects also evaluation may take place although this is more often taking place at a later stage. The accounting for what actually is spent and the reporting about this to the legislative and to the public is important both during the budget year and at the end of the year. Finally follows auditing which has important functions in corroborating the trust between the state and its citizens in ensuring them that laws and regulations are followed in spending shared resources.
It is the state and execution of these parts of the process which determines how the entire system is able to translate political objectives into a macro economic framework which is in line with the resources available nationally an allocation which further the political social and economic objectives and use the budgetary funds efficiently towards these objectives.
Looking at our summary results from the CMI study, the OECD standards as well as the Open Budget Initiative 2006 and the ‘Governance Matters' indicators of the World Bank clearly gives the impression that the budget system as it is now is inadequate to deal with the handling of Angola's vast mineral resources.
Overall the CMI study shows a rather dismal picture although with some tendencies to improvement in the accounting systems. Both the comparisons of the OBI and the GM indicators show that the Angolan budget system is still one of the least appropriate in the world, but the GM shows signs of improvement since 2002 which has however slackened over the last few years.
There are also other standards and monitoring tools for budget systems. The IMF transparency standards and the INTOSAI/AFROSAI agreements and the PEFA system (which is also focused on the ways in which donors behave) merely give rules or recommendations. The PEFA indicators as well as the ROSC and the world bank ‘products' (standardized assessments or examinations) whereas the others mentioned involve ‘measuring' methods. Being members of the IMF and AFROSAI the Government has implicitly accepted the ‘rules' of those two organisations. A ROSC undertaken in 2006 is still to be published if it ever will. Angola has been subjected to a PER, most recently in 2006-2007, a PEMFAR in 2005 and a CPAR with very negative results in 2002, of which I have only seen a draft
Having established the importance of the budget system for Angola and indicated the less than perfect \state in which it is I will now consider the really important questions. How has it become like that? What can be done and what is done?
What capacities are needed to handle the various processes and the work to be done in an appropriate way? It may be looked at in terms of Human Capacity (that may be increased through education and training), Organisation/ Systems (where structural changes in techniques institutions and organisations are required, the Parliamentary capacity where we may look at both the expertise of the MPs as well as how Parliament is organized for the budget process, Civil society / voice refers to the influence of the CSOs. Finally in what I have called the Fiduciary system I include essentially the extent to which the financial flows are guarded fro misuse, corruption etc.
It stands to reason that given the long period Angola has had with an essentially military organisation of the society, the human capacity has been turned towards the ‘war effort'. A study (Bjørnestad 2006 focusing mainly Huila and Benguela) finds that nearly all civil servants need basic training and an important question is then how fast it is humanly possible to build the staff up to the required level. This is not primarily a question of money but of organisation. Government has its PMFP where training figures prominently but it has not been properly followed up. Virtually all the donors the World Bank, the EU, ADB and ACBF as well as bilaterals have or are planning to have projects focusing training.
Angola has received some well deserved praise for handling certain aspects of the resource curse: Minister José Pedro de Morais was proclaimed the best Minster of Finance in Africa 2007 by the well respected journal "the Banker". The emphasis was on his role in the revitalization of the economy since 2002 and in particular the role in Angola's improvement of the relations to EITI and the control of inflation.
The budget organisation owes much of its development to its historical roots. Budget systems are like organic processes consisting of a myriad of rules and regulations and in addition unwritten ideas, traditions, approaches and methods formed over time. Clearly the long period of a war-situation up to the quite recent did not do any good for the openness and democratic features of the system. But far before that, during the colonial days a central European system was compared to the ‘Anglophone' system was highly centralized and built on ex ante controls. However in Angola the World Bank observes that the ex-ante controls have been built down but not replaced by ex-post controls. Practices introduced during the centrally planned period and subsequently under transitional programmes which flopped and damaging revenue swings still linger.
An often noted tendency that presumably is left from these earlier periods is the tendency to silo-thinking and action. During the more turbulent times ministry and other government units tended to become ‘stand alone' units who had as little contact as possible with others to make sure that they kept any given advantages to themselves.
A major organizational issue for a long time has been then quasi fiscal activities of Sonangol, borrowing and repaying on behalf of government and setting and paying the substantial oil subsidies. Progress has been made in that these activities are reflected in the government accounts but the decision making power as far as can be understood is with Sonangol. The takeover of these activities is partly due to the problem that all expertise I gathered in Sonangol and the Ministry of petroleum has not been able to build up similar capacity.
Talking to parliamentarians the CMI team was positively surprised over their interest for budgetary affairs, given the state of the unelected parliament. However it is clear that the presidential system sets back their influence. Also complaints from parliamentarians included the lack of capacity to understand and analyse the budget proposal both because of the generally low level of knowledge among parliamentarians and because there were no means for such analysis e.g. through a small secretariat that one finds in some other parliaments across the continent.
We shall hear more about this later today but by most reports the CSOs of Angola are weakly organised are quite strictly controlled and watched over by government and among them there are many which do not have any specific interest or capacity for budget work. The recent conference arranged by FES and Ngo's however show some progress in this area.
Luanda seethes with corruption stories mostly directed toward state money going astray. Some action have been taken to reduce corruption. One is the budgetary system SIGF which has been rolled out to most of government and prevents some aspect of money transfers away from government. Before it was possible to make payments before verification of receipt of goods but SIGFE dealt with part of that. SIGFE however is not linked to the revenue side and to the government establishment register. Also investment expenditure is dealt with by another system run by the MINPLAN. There is no registration of non-financial assets but steps are taken to include this aspect in SIGFE.
The use of natural resource wealth is a key question for future social, economic and political development in Angola. Government largely controls Angola's natural resources and is responsible for their proper use. Public finance management is therefore a key issue for the country. The public expenditure system is heavily influenced by domestic and external historical, technical and institutional factors, human resource availability as well as cultural factors. Such factors must also be taken into account by those analyzing and reconstructing the system. The ‘model‘ focusing solely political factors needs to be adjusted.
Powerpoint presentation: Budget process Angola (Jan Isaksen)
Analysis of the 2008 budget, Macroeconomic aspects
Salim Valimamade, CEIC
Budgetary policy is one of the most important handles for the state impacting the functioning of the market economy and is one of the measures by which the market failures may be corrected, alleviated or mitigated. Monetary policy is also important but during times with regional economic integration it has somewhat lost its importance and its space for intervention. In the Euro-zone, the unitary monetary policy for the countries involved has led to a loss of a fundamental instrument of economic policy in general in areas like inflation control, external competitiveness and domestic productivity etc. These aspects are more and more the role of the national fiscal policies under the space and autonomy of the community and the compromises made. The SADC area countries is in the same manner under way to lose their national influence on monetary policies and concomitantly on the way for a stronger predominance of fiscal policy as instruments for realization of the economic objectives on increased GDP and better income distribution.
Under the budget law in Angola the budget year during which estimates are made for revenue and expenditure are made is synonymous with the calendar year from 1st January to 31st December.
Usually, the budgetary process in Angola has six phases:
- Construction of a general macroeconomic framework.
- Allocation of total resources across Ministries.
- Circulation of instructions to all the organs that will be implementing the State Budget.
- Presentation of proposals by the Ministries, Provincial Governments and other implementing entities.
- Negotiations over adjustment of the budgetary allocations.
- Elaboration of the budget proposal to be submitted to the Cabinet and to the Parliament.
As for government revenue, the National Directorate of Taxation (Direcção Nacional dos Impostos) will make projections for tax revenue in line with the assumptions adopted for the macroeconomic framework. The amounts of revenue projected are then communicated to the National Budget Office (Direcção Nacional do Orçamento) and initiates the process of elaboration of the Expenditure Budget (Orçamento das Despesas) in line with the steps mentioned above.
The policy of macroeconomic adjustment followed by Government since 2000 has intrinsic characteristics that may be compared to the IMF orthodox model. The basis for the model is the sterilization ‘ex ante' of excess liquidity in the economy and here we see a new, may be original, face of the more classical and conventional models.
Even if at a glance it seems useful to review some of the fundamentals of the present situation of the national economy.
Macroeconimic fremework by year (2002 -2007)
GDP at market prices (USD millions)
Rate of increase in GDP
Rate of increase in petroleum GDP
Rate of increase in non-petroleum GDP
Annual rate of inflation
Fiscal revenue from the petroleum sector (pct of GDP)
Total tax revenue (pct of GDP)
Public Expenditure (pct of GDP)
Budget Deficit (pct of GDP)
Source: Ministries of Finance and Planning
The performance of budget management is usually - but not exclusively - evaluated by the balance between revenue and expenditure. The situation in 2007 was, from various angles, very positive and manifest in the accumulation of fiscal surplus by Government as the following table expresses.
Budget balance in 2006 and 2007
(in % of GDP)
Current balance excluding grants
Overall balance excluding grants
Overall balance of commitments??
Overall cash balance
Source: Ministry of Finance - Budget Implementation Report 2007 (Balanço Geral da Execução, 2007).
The fiscal revenue from the petroleum activities continued to dominate the structure of the domestic fiscal system having in 2007 represented 37.1% of the GDP (33.8% in 2006) and 81% of the total public revenue (80.1% in 2006). These percentages represent an excessive and dangerous dependency on revenues from a product which is prone to enormous oscillations in the international market.
The spectacular surge of the non-petroleum sector as noted earlier conformed has not yet created an alternative fiscal base for the state revenue. However the fiscal importance of the of the non-petroleum sectors has increased its share: 6% and 7% respectively in 2006 and 2007 (an increment of about 18.3%) and about 19% (in any of those years) in total public revenue.
Current state expenditure represented in 2007, 22.6% of GDP (21.4% in 2006) and 65.7% of total expenditure (66.2% in 2006). In turn, expenditure from acquisition of non-financial assets increased by 8.3% in 2007, representing 11.8% of the GDP and 34.3% of total public expenditure. These developments followed the strong compromise within Government for rehabilitation and modernization of economic and social infrastructure, which would be essential for guarantying the sustainability of the economic growth and improving the social conditions of the population.
State Budget Expenditure by functional category
(% of total expenditure)
Defense and security
SOURCE: MINFIN - Balanço Geral da Execução, 2007.
In 2007 there was a significant increase in expenditure on the social functions of the state, as this budget component increased 23% from 2006. The most significant increases occurred in the sub sectors housing and community services (82%), security and social support 7.5% and in education (39.6%)
As for the economic function of the Government - expressed by the creation of better conditions for the functioning of the economy and the response of the private sector - budget expenditure was increased by 42.9% from 2006 to 2007. It was in agriculture, fisheries etc (20%) as well as fuels and energy (73%) where the increases were most significant.
One needs to note the decline in financial charges which was brought about by better management of the public debt and a reduction in the stock of public debt.
The external environment for the budget preparation in 2008 was and continues up till now to be extremely influences by the behavior of the international oil markets. However, the government took an excessively prudent attitude in its projections of fiscal revenue from the petroleum sector. Clearly one should not take an over-optimistic view but the differences between the price of a barrel of oil projected by Government and those actually in force have been very large.
The base assumptions for the financial programming of the Governemnt for 2008 was as follows:
- Price per barrel of crude oil - USD 55
- Production of petroleum - 710.6 million barrels
- Rate of inflation - 10%
- Exchange rate - the orientation is towards policies which will reinforce the confidence in the national currency
- Rate of increase in GDP - 16.2%
- Rate of increase in petroleum sector GDP - 13.3%
- Rate of increase in non-petroleum sector GDP - 19.5%
Government thus maintains the objective of changing the productive structure of the Angolan economy in that from 2004 the non-petroleum sector have increased more than have the petroleum sector and the overall economy.
It is probable that once more the rate of inflation will not be attained, even with the determination of sticking to the exchange policy of a gradual appreciation of the national currency. This will not only be related to the boomerang effect of the increase in the price of oil over the national process - imported inflation, particularly from the European area which provides some 65% of the total imports - but equally the damages of the world food crisis which already affects many of the African countries.
Revenues are estimated at USD 24562 thousand millions and expenditure at USD 28784 thousand. The implicit deficit of 8.6% of GDP is virtual, based on the high degree of conservatism used for the price of a barrel of oil.
The structure of the public revenue set for fiscal 2008 continues to be slanted, in disequilibrium and dangerous, as it builds on the continued increase in the price of a barrel of oil in the medium term. It appears that in 2008 the fiscal revenues from oil will represent 77.2% of the total, the rest to be covered by other sources. Customs revenue contributes 2.2% despite of an increase of imports in nominal terms of about 15%.
In terms of expenditure, the recurrent expenditure increased considerably - about 9.5% relative to 2007 and its share of GDP moved from 28.5 in 2007 to 31.2% in 2008. The two most important components were remunerations of the civil service, military and para-military personnel and the corresponding additional expenditure for their functions.
The public investment stood for a share of 42.9% of the total public expenditure an increase of 127.2% relative to 2007. The respective share is USD 12348.6 thousand millions. The Government continues to allocate considerable amounts to public investment while it is known that the average rate of implementation is no higher than 65%.
The progress registered in the management of public finances is linked to the Governments approval in 2002 of a comprehensive programme of modernization of public finance management in which is included the implementation of the State financial system, prominently featuring an integrated system of financial management SIGFE on an Oracle platform.
Powerpoint presentation: Angola Budget 2008 da Rocha - Valimamade
Commentator: Søren Kirk (independent policy analysis):
The six phases of budget process outlined by Valimamade are all characterised by an authoritarian nature. Kirk felt that the main problem was the absence of any legal requirement to disseminate/share the budget for a wider audience.
Social expenditure has increased and is highlighted but Kirk questioned whether expenditure was well targeted and used. He gave the example that of the 40% the expenditure for education a very large share is purely government administration. Whereas expenditure ought to go to the most pro-poor sector primarily schools receive only one fifth of the total amount
The most important point, underlined by Kirk was the conservative crude prices used by the government. Angola sells at roughly double the price of that used for budget purposes. The institutionalisation of revised budgets every year puts an enormous strain on human capacity. This is an essential point. Kirk concluded that more realistic predictions on oil price are needed.
Cain (DW) pointed out that the resources for whom was not addressed in the presentations. The majority of the formal economy assumes that the state is the essential provider of services. Yet 50% of the people are dependent on informal contacts in order to get access to water. Researchers must capture the information that does not get captured in example by the INE statistics. Scholars must develop new research/analytical tools in order to probably answer the question resources for whom. Researcher must also broaden their questions: who actually benefits from the Angolan oil?
Skaar (CMI): Questions: (i) if you exclude the top 10 % what is left of the GNDP (ii) social expenditure- where does the money go (iii) accountability: is it a lack of capacity or political will?
Pestana (CEIC): The Government's conservative estimation of the oil price and the lack of transparency allows for an accumulation of wealth. The lack of time to communicate the budget and the fact that the manager of the budget is not independent are negative features. The actual expenditure in the budget implementation does not go beyond 65 % of the amount budgeted for many items. The skewed allocation of expenditure worsens the situation.
Amandio (CEAS:): Emphasised that it is necessary to reach consensus among higher clericals in order to enhance the monitoring of budget issues from the side of the church in Angola.
Abreu (IBIS): There is a general lack of statistics, how can per capita be calculated if there ar no demographic statistics? Is there a lack of political will? There is no transfer of power to the municipalities- there is no decentralisation process but a decomposing process. What are the perceptions of the people?
Actors in resource management
Chair: Salim Valimamade, CEIC
Nelson Pestana, CEIC
Inge Amundsen, CMI
Cain (DW): Urbanisation has created a more heterogeneous population Spaces and platforms for CSOs are emerging. Charities and municipality reforms and churches as service providers presents other opportunities.
Calundungo (Adra): The issues are how the CSOs may play an interactive role with the government. There are two ways of regarding civil society: Some researchers look only at the skills, capacity leadership and competence in their judgment of civil society. This is a fundamental mistake. It is important to link civil society with culture and political history: this is civil society. If researchers are only concerned with the first definition one usually ends up with the claims that ‘there is no civil society in Angola' or ‘civil society is fragile'.
NGOs are like CSOs, not homogeneous. To regard NGOs and CSOs as two ‘groups' constitutes a simplified approach. There are different kinds of NGOs. Some believe in change, in changing politics and changing poverty. Some are more confrontational than others and create more tensions with the Government. The challenges for the CSOS are
(ii) how people perceive them, how people recognise what CSOs do.
(iii) The context of Angola: CSOs are more present in people's everyday life than the state (i.e. churches). How can CSOs make the government take decisions that are based upon local experiences and skills?
(iv) The state must recognise all aspects of the CSOs not just their role as service providers.
(v) CSOs must maintain their political independence, this concerns also how people see the CSOs- they see CSOs as political parties. CSOs need to be associated with the public, not as part of the political space.
Commentator: Joaquim Kalesi, MW
Churches and bishop conferences have an important role to play in terms of providing school, health, fighting against corruption and advocating for good governance. Bishops and priests present a good opportunity to change the Angolan situation. It is important to engage with the catholic-church as these are (i) spread across Angola (ii) the government listens to bishops economic and social advice (iii) the majority of Angolans respect the catholic-church and (iv) the church is the voice of the voiceless.
There are few CSOs in Angola due to the fact that the state controls NGOs. There is an emergence of economical and political debate around elections, democracy and human rights. Yet, the main problem is that it is difficult to understand that the civil society is not an NGO. The catholic-church does not want to be classified as or belong to a CSO. To change the situation, we need to work together. NGOs are currently against corruption because the donors want them to be. Also to be a journalist in Angola is a challenge, simply because bishops undermine their legitimacy.
Strømme (NCA) if the protestant and the catholic-church were clever enough to work together Angolans would have a stronger voice. The state currently uses the split between churches to their own advantage.