This is the fourth report on Angola under the Country Advisor Agreement between the Norwegian Agency for Development Cooperation (NORAD) and Chr. Michelsen Institute (CMI). The report consists of a Part I synthesising and assessing recent information regarding political, economic and social developments in Angola, and a Part II focussing on democratic decentralisation. The latter maps out the main characteristics of the local governance system in Angola, and analyses the reforms which are in preparation. The focus is on how the current 'deconcentration and decentralisation' reform process - a key ingredient in the 'good governance' tool-box - will transform the Angolan state.