Angola Sacrifices a Bit of Ideology to Boost Economy

Lopo do Nascimento, the commissar of Angola’s Huila province, was confronted with a classic Third World problem in economic development.

To provide Lubango with milk, should he set up a dairy farm with 200 cows and an ultramodern milk processing plant? Or should he help individual farmers buy two or three cows each, then collect the milk from them for processing and distribution?

Do Nascimento is a Marxist, committed to state ownership and management of the economy, and, as a former planning minister, the architect of much of Angola’s system of state enterprises. But he unhesitatingly chose to distribute the cows to private farmers instead of establishing a big state dairy farm.

Making Pragmatic Decisions

His reason was simple: “We didn’t have anyone who could manage 200 dairy cows and operate a big farm, but we did have 70 or 80 farmers who could look after two or three cows each.

“In theory, a big farm and super-modern plant, the kind where you press a button and the milk just comes out, would have been more profitable, but I would have had to bring in foreign experts to manage it, along with their wives and their families and their cars, and pay for it all in foreign exchange,” he said.

Angolan officials are making many such pragmatic decisions these days, putting results ahead of ideology, as they try to halt their country’s economic decline and lay the foundation for recovery and future growth.

They are not retreating, they say, from the socialism espoused by the ruling Popular Movement for the Liberation of Angola (the MPLA, after its initials in Portuguese), but are attempting to develop an economic system that fits their country’s needs.

“What is socialism?” Do Nascimento asked with a shrug in a recent interview here. “What should the balance be between private enterprise and state ownership? What should the role of central planning be? How should the state try to manage the economy? We are looking for the answers to many questions, and we are looking afresh at our situation.”

The shifts in Angolan policy do not reflect a disenchantment with socialism, he and other officials said, but the realization, growing in many developing countries, that what may have worked in the Soviet Union, in Eastern Europe or in China will not necessarily work here, that Third World nations may not be able to leap over the stages of economic development as they had hoped and that political power cannot guarantee economic results.

“We did make mistakes,” Do Nascimento acknowledged. “We rushed where we should have moved slowly; we did things on a big scale that should have been done on a smaller scale; we applied theories appropriate to countries different from ours; we neglected certain realities like the importance of the peasant in farming. We are now correcting our mistakes and trying to develop a system that is based on our realities.”

For example, the unprofitable 4th of February Cooperative outside Lubango was turned over to a private farmer to manage as a nursery for fruit trees after the government halted a decade of subsidies--and most workers promptly quit because there were no more state funds to pay them.

“This place lost millions under state management,” said Joao Marcos, the new manager, who describes his own nearby fruit and vegetable farm as “very, very profitable.”

Collectivization Seen as Mistake

“There were a lot of problems here,” he said, “and a lot of reasons for them. But mostly it was managers who lacked experience and officials who did not understand that you cannot farm according to economic theories but only according to reality.”

Many other agricultural cooperatives, also formed from Portuguese farms abandoned after Angolan independence 12 years ago, are being broken up and given to peasants so that they can feed their families and grow produce for local markets. The rapid collectivization of agriculture, hailed here a decade ago as an important step toward socialism, is now seen as largely a mistake, at least in its scope and speed.

“The state is not a very good farmer,” Paulino Pinto Joao, the MPLA’s secretary for propaganda, said in Luanda. “Agriculture is best left to the peasants--we have learned that lesson--and the state’s role should be giving them all the help they need.”

Private entrepreneurs, meanwhile, are being encouraged to open stores and small factories again in an effort to increase production of consumer goods and improve their distribution.

“What we are interested in is the efficiency of commerce, not its ownership,” Do Nascimento said.

Even the black market in Luanda, Angola’s capital, once a target for government crackdowns, has been rechristened the “parallel market” and has won a measure of tolerance in recognition that state-run stores cannot fill all consumer needs.

Foreign Investors Sought

And foreign investors willing to bring expertise as well as capital are being sought to help develop Angola’s diamond, mineral and timber resources, which, together with a substantial oil industry and fertile soil, make Angola potentially one of the richest countries in Africa. Angola is twice the size of France, and its population is estimated at 8.7 million.

“The investors’ return will be more than adequate, even more than some here might consider as fair,” a foreign trade official remarked in Luanda. “We want to make Angola attractive to Western investors and we know we have to compete with many countries where it is easier to work than it is here.”

President Jose Eduardo dos Santos, a Soviet-trained petroleum engineer, emphasized in a recent interview with American journalists his government’s commitment to a mixed economy, which is spelled out in Angola’s constitution.

“We have state companies, jointly owned companies, private enterprises,” he said. “This is not a socialist economy but an economy of transformation, and our priority is reconstruction.”

While drawing up plans and seeking foreign assistance for the reopening of long-closed factories and the resumption of agricultural production, the government is trying to reorganize the management of the economy. Reversing past policies, the government now favors decentralization, material incentives and a reduced role for the state.

“The country’s economic future and very independence are at stake,” the MPLA Central Committee said in late June as it called for the faster reorganization of economic planning and financial management, including the whole banking system. The overriding philosophy, the committee said after a four-day review of the economy, should be efficiency, rationalization and planning based both on market values and national needs.

‘Socialism Not a Bible’

But in pushing for increased efficiency in production, the party leadership acknowledged that without increased supplies of consumer goods and the restoration of the value of its currency, Angola could not recover its economic stability, let alone resume its growth.

Many of Angola’s envisioned changes resemble economic reforms that have been made in Hungary, Yugoslavia, China and now the Soviet Union.

“Socialism is not a Bible,” Do Nascimento said. “Lenin was the first to modify it, with the Soviet Union’s New Economic Policy in 1921, to help the country recover from World War I.

“Our problem has been that in some respects we haven’t learned from the mistakes of others. We had to make our own.”

The government also has asked the World Bank and the International Monetary Fund for their recommendations, knowing that these measures and the international assistance it is also seeking will probably mean more policy changes and bring Angola closer to the market-oriented economies of the West rather than the centrally planned economies of its socialist allies. But Angola, impoverished and beleaguered, has little choice except a course of such economic pragmatism.

Economy Near Collapse

Except for the oil industry, which continues to grow, the country’s economy is near collapse. Agricultural and industrial output have both declined sharply, oil revenues have been halved by the drop in world petroleum prices, non-oil exports are a fraction of previous levels, and the country’s currency has become almost worthless.

“If Bangladesh was the classic international ‘basket case,’ Angola could be called a paraplegic,” a West European development specialist commented. “We don’t have mass starvation--not as yet--but we don’t have a real economy, a functioning economy, either.”

When Angola won its independence from Portugal in November, 1975, the country was in the early stages of capitalist development and economic growth was virtually arrested there as most professionals, businessmen, commercial farmers and skilled workers--an estimated 350,000 Portuguese settlers and perhaps 200,000 Angolans--fled the country, fearing rule by a black-majority Marxist government.

With only a few educated cadres, most of whom had little management experience, the MPLA found itself attempting to run the factories, about 60% of those in the country, and the plantations, about 80% of Angola’s commercial farms, that had been abandoned by the Portuguese. While the rate of illiteracy has been reduced from 90% to about 65% in the past decade, Angola’s most acute shortage is probably trained manpower of all kinds.

Rightists Challenge Government

The continuing challenge to the government by rightist insurgents of the rival National Union for the Total Independence of Angola, known as UNITA, also has had a devastating economic impact. So many peasants have fled from the countryside that Angola can grow only half the food it needs. Diamond mining has also been reduced by two-thirds--at times halted entirely--by UNITA attacks. Transportation has been badly disrupted, making it difficult to get food to urban markets or consumer goods to rural areas.

A prolonged confrontation with South Africa, which administers neighboring Namibia, has led the government to put even greater emphasis on defense, which consumes more than a third of the state budget and a larger proportion of Angola’s foreign exchange earnings. South Africa invaded Angola at the time of independence in support of UNITA, which it still backs, and its troops continue to operate in the country to prevent infiltration into Namibia of guerrillas of the South-West African People’s Organization.

Helping the MPLA government to counter South Africa and UNITA are an estimated 37,000 Cuban troops and technicians, along with advisers from the Soviet Union, Eastern Europe and Vietnam. Although officials in Luanda asserted that neither Cuba nor any of the other socialist countries is paid for this assistance, Western diplomats there believe that, at least until the drop in oil prices, more than half of Angola’s foreign exchange earnings went directly to pay for the Cuban troops.

What money is left for economic development has gone recently into expansion of the oil industry, which the government views as underpinning the whole economy and which continues to attract considerable foreign investment. Production, largely managed by Chevron at present, stands at about 300,000 barrels a day and new offshore wells being developed by Conoco, Texaco, Cities Service, Marathon and British, French, Brazilian and Japanese companies are expected to increase it to 500,000 barrels a day by 1990.

“Oil sustains everything in Angola,” a Western banker who advises the government said. “Without those $2 billion or so in oil revenues, there would be no food imports, no materials or spare parts for the factories that are still running, no road or air transport, no guns for the army, very little of anything, really.

“The government is well aware of the need to diversify the economy, and its exports in particular, but feels that it must wait a bit longer until the oil industry is built up to the point where it can generate even greater funds for development.”

The MPLA’s difficult military situation makes long-term national planning almost a paper exercise, another Western economist said, and the government instead is focusing its efforts on regional plans in the south, where $300 million in international aid will be sought to finance projects in three provinces, and on the dormant Benguela Railroad, which runs through the center of the country.

But Do Nascimento argues that such decentralization is more than a necessity in Angola’s current circumstances. He sees it as a far better approach to economic growth than the tightly controlled, centralized system of economic planning and management he once headed.

Changing Psychology

“I favor decentralization,” he said, “and not just because I am a provincial commissar now--I did so before as well--because this puts the authority at the level where the energy is, where progress can be made, where most problems arise and where most can be solved. The principle should be that people take a more active part in the decisions affecting their lives.

“We also lack the managerial talent to run a highly centralized system. As we found out, a country as large and underdeveloped as Angola cannot be controlled by a central organization. It is necessary that people at the provincial level have the authority and the competence to make decisions, certainly those executing policies.

“Decentralization changes the psychology of people. They feel more responsible. If something or other didn’t arrive before, they tended to blame the guy in Luanda; now, officials at the provincial level have to take responsibility.”

Do Nascimento is using some of his increased authority, which has been matched by modest amounts of foreign exchange he has from the central government and from a recently negotiated foreign loan, to undertake development projects, some of them unorthodox.

He is spending some of Huila province’s foreign exchange to import seeds, fertilizer, pesticides and farm tools to increase agricultural output. But some of the money will be used to finance the purchase of consumer goods. Aware that there is little for farmers to buy in the state stores and thus little incentive for them to grow more food, Do Nascimento thinks the consumer imports are as important an investment as better seeds.

“There is a direct connection between increased production and the amount of goods available to the producer, whether he be peasant or worker or, for that matter, a private businessman,” Do Nascimento said. “And so the fastest way to increase production is to first solve the problems of commerce, of the availability of consumer goods. Unfortunately, these are not easy problems. But no problem is easy in Angola today.”