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Economic diversification driven by infrastructure overhaul

Article - January 11, 2016

A decade of massive annual investments in strengthening Angola’s transportation and logistics network looks set to continue and boost regional connectivity as the government forges ahead with major infrastructure projects and aims to attract up to an additional $10 billion in investment from domestic and foreign partners.

In 1975, the population of Angola hovered between 5 and 6 million people. More than three decades later, and despite a devastating war which took hundreds of thousands of lives, the population of Angola is now poised to surpass 20 million. GDP growth for the country clocked in at a promising 4.4 per cent in 2014, and on the heels of more than 10 years of peace, an expansive reconstruction programme under the leadership of President José Eduardo Dos Santos continues to push the country forward.

Ambitious improvements to Angola’s transport networks, infrastructure, housing and educational system are all taking effect, many of which are already revolutionising the way Angolans communicate, live, study, conduct business, trade, and connect with neighbouring countries in sub-Saharan Africa. Among the most wide-reaching of these changes has been a new initiative launched under the auspices of Angola’s Instituto Nacional de Habitação (INH), which endeavours to provide over 200,000 new housing units in 14 city centres by the year 2017. Driven by the need to accelerate urbanisation in a way that is mindful of Angola’s unique social and demographic realities, the plan emphasises the creation of urban communities that provide flexible, affordable urban housing to citizens who lack the credit traditionally needed to purchase a home.

Given the very strong sense of community that Angolans have, INH officials have underscored the importance of developing new housing in a way that facilitates the unity of extended families of relatives and neighbours. Though especially in rapidly urbanizing areas, space has become a challenge, developers are overcoming land shortages by building multi-storey units which make better use of land, but also serve the additional purpose of blurring the lines between classes by making urban centers more inclusive of people from all socio-economic backgrounds. In parallel, the INH’s ambitious housing project is expected to serve as a boon for the private sector, where the domains of construction, building materials, and estate can largely benefit if they succeed in identifying and responding to emerging needs.

In Angola, given the cultural importance of owning, rather than renting a home, basic access to dignified and affordable housing is changing the lives of many families who have accepted to move to more urban areas and can now provide their families with a greater variety of resources, among the most significant of which is better access to education.  

Angola has long struggled with illiteracy. The devastating effects of the civil war took a huge toll on the country’s already fledgling educational system, though now, following over a decade of peace, the Angolan government is well aware that the only way to nourish the country’s continued development is through providing greater sustenance for the minds of its people. An educational infrastructure overhaul is currently underway, aimed at boosting the literacy rate and increasing the number of years that Angolans spend receiving formal education. Still, one of the largest challenges to this restructuring continues to be the shortage of qualified teachers, though since the end of the war the number of educators has already quadrupled to nearly 300,000 – a testament to the country’s thirst for education and commitment to making it accessible to all Angolans.

Funding for new educational programs is another challenge, as private schools with international partnerships charge hefty tuition fees that are out of the range of the average Angolan. As a result, the Ministry of Education has been revising tuition policies in a way that is more considerate of family income, and increasing its budgets to emphasise primary education.

As access to education is improved, the government is also taking great pains to ensure the enhanced quality of education in Angola. In partnership with institutions like the World Bank, funds are being provided to support training programs for Angolan teachers and administrators who are expected to take charge of school management and help foster the integration of IT and communications into the everyday curriculum. Ultimately, the hope is to reform the Angolan educational system in a way that creates a more direct pipeline between students and job opportunities; providing them with the knowledge and professional training required to thrive in the key industries and drivers of the Angolan economy.

Finally, from an infrastructure perspective, since 2004, there have been massive investments in the rehabilitation of the country’s road, railway, port and air infrastructure, amounting to around $4.3 billion per year. Most of this spending has been financed by Chinese loans and credit lines, and is heavily skewed towards transport, which accounts for 70 per cent of total spending. Economy Minister Abrahão Gourgel reaffirmed the government’s ongoing focus on the sector earlier this year, stating that the country would continue to prioritise vital infrastructure spending in its budgets despite lower oil prices this year. According to Julião Mateus Paulo “Dino Matross”, Secretary General of the People’s Movement for the Liberation of Angola (MPLA), the government is working first and foremost towards a strategy of sustained peace and national unity that will improve the lives of each Angolan family. “As an Angolan, you have to feel good in your own country,” he says. “We want to eradicate poverty and create an orderly life for our citizens – to challenge the past, and to provide Angolans with the opportunities and conditions that will allow for a better life. These are the goals of the MPLA.”

Key to the success of this plan is building up the transport and infrastructure networks of Angola, which were either nonexistent or severely damaged during the war, and remain essential to the country’s future growth and prosperity. Along these lines, in late 2014 Transport Minister Augusto da Silva Tomás outlined his vision for how to extend the influence of the transport sector in a way that would enable greater economic development. According to Mr da Silva Tomás, government efforts to reduce dependence on oil could be bolstered by investing in the transport sector, not only to service domestic needs, but also to turn Angola into a regional logistics hub.

Indeed, the transport sector already plays an important role in Angola’s economy. It contributed an estimated 4.3 per cent of the nation’s gross value added (GVA) figure in 2013, and estimates from BMI Research indicate that it will increase to 6 per cent by 2019. Its expansion falls nicely in line with the country’s economic diversification strategy, which will see a push away from hydrocarbons and an uptick in the agriculture and manufacturing sectors. To service these growing sectors, modern, more integrated and streamlined transportation networks will be required to meet emerging needs.

At present, Angola already ranks favourably out of 44 countries in sub-Saharan Africa in terms of transport quality, according to BMI Research, although improvements to reduce congestion in the country’s ports and expand rail and road access remain essential.

In a bid to improve the country’s transportation links, in March 2015 the Ministry of Transport announced the deployment of six new multifunctional railway stations and four flyovers to ease access to the new international airport in Luanda. Following extensive renovations in preparation for Angola’s role as host of the 2010 African Cup of Nations, the airport can now handle up to 4 million passengers per year, and has more than seven international flight arrivals per day.

Furthermore, around 40 kilometres (25 miles) east of the capital another international airport with four runways is currently being built.

Likewise, roads and bridges, which were severely damaged in times of conflict, are also seeing resurgence. Over 300 bridges and nearly 20,000 kilometres of paved roads had been destroyed, although a new network surrounding the country’s main urban centres is quickly helping to improve circulation and access.

In a similar vein, following the National Development Plan for 2013-2017, Mr da Silva Tomás explains that the institutional model of Angola Railways will be modified to connect Angolan lines with railways in the Democratic Republic of Congo, Zambia and Namibia. “The increased transportation of people and goods from the Atlantic coast to the interior of Angola is of tremendous economic and social importance for our country and our region,” he says, adding that the country is committed to building up its networks on all fronts, and is working hard to educate local technical and professional staff to meet future demand.  

Compared to its neighbours in the region, Angola has a huge geographic advantage that it is also using to its benefit, according to Francisco Agostinho Itembo, former General Director of the National Council of Shippers (CNC). By rail, and also by sea, Angola shows great potential, as 90 per cent of products in Africa are traded via maritime routes. This underscores the importance of the improvements that have already been made to the Angolan ports of Lobito and Luanda, and reaffirms the need to continue nourishing the maritime network with new deepwater ports, such as those currently under construction in Cabinda and Bengo.

In parallel, Mr Itembo explains that the National Logistics Network Platform, overseen by CNC, aims to create a more streamlined relationship between different modes of transport. “Especially for sectors like agriculture, livestock, or fishing, the idea is to maximise productivity and improve the trade chain in a way that allows producers to benefit from the most competitive logistics costs, such that end consumers can also benefit from the most favourable prices,” says Mr Itembo. “This is the type of growth and development that can catapult the country into a more stable and diversified economy.”

Hopeful for the future of Angola, Mr Itembo wholeheartedly believes that improvements to the logistics network will pay off. By 2025, he imagines an Angola with dramatically reduced poverty, an unemployment rate below 5 per cent and smaller disparities in wealth across the country.

“Of course, my greatest desire after obtaining peace is an improvement in the lives of every Angolan,” says Mr Itembo, “which can only be achieved if we cultivate our most precious resource – human capital.”

The MPLA’s Mr Matross is of a similarly optimistic mind. In addition to logistics, transport and infrastructural improvements, he believes that foreign partnerships will also help guide Angola toward a brighter future.

“We live in an increasingly globalised world and if developed countries wish to explore relationships with us, they are welcome in Angola,” he says. The country has established laws to facilitate foreign collaboration, Mr Matross explains, and is keen to benefit from the know-how of more experienced partners who can teach and train Angolans to operate, manage and make the best of all the ambitious new projects that are being carried out thanks to the commitment of the government and the hard work of its citizens.

“Although we have achieved peace, we still say the struggle continues,” says Mr Matross. “Not with weapons, but with hoes, machines, construction and books. These are the tools with which we must rebuild our country.