Black Market Based on ‘Beer Standard’ Flourishes in Marxist Angola

Domingos Francisco, a 15-year-old in a Michael Jackson T-shirt, studied the passing prey from behind mirrored sunglasses. Slowly, he began to grin the grin of dollar signs. He had a live one.

“Have a look,” he said, selecting a slightly scuffed black loafer from his tilted wooden table. “Real Italian leather. A good price, too.”

How much?

“Sixty thousand kwanzas ,” said the would-be tycoon. At Angola’s bank, about $2,000. On Angola’s quirky black market, based on a “beer standard,” about 24 cans of Heineken.

Good old Western capitalism, with a touch of Yankee profiteering, is surfacing in the darndest places in Africa. Here in Marxist Angola, atop a sunbaked old trash dump overlooking the Atlantic, is a new market called Roque Santeiro, “the miracle worker.” And anyone with a little nerve can make a fast buck.

It’s all illegal, of course. But everyone from Angolan police officers to Cuban soldiers to Portuguese diplomats are too mesmerized by the sheer variety of the selection to complain: light bulbs and batteries, argyle socks and Winston cigarettes, lace panties and nylon boxer shorts, even toy trucks. All theirs for a fistful of kwanzas .

Government Overlooks It

And the Angolan government, trying to resurrect an entrepreneurial spirit deadened by 13 years of state controls, is looking the other way.

“There’s been an intoxication here with the rhetoric of Marxism over the years,” the ambassador of a small African nation said recently. “But in practical terms, between us, it doesn’t amount to much today.”

All across Africa, from Tanzania and Ghana--birthplaces of African socialism--to Mozambique and Congo, capitalism is peeking out from beneath the smothering blanket of Marxism. Countries are peddling their state enterprises to private firms, letting their currencies float, lifting price controls and generally trying to ride free-market forces out of their troubles.

The independence movement in Namibia, for example, is amending its long commitment to socialism as it prepares to take over the newest sovereign nation in Africa. Seeing the rough going for state control in most of Africa, the South-West Africa People’s Organization (SWAPO) recently announced that it supports limited private enterprise in an independent Namibia.

‘Deal With Realities’

“Everybody has to deal with realities,” Anatoly L. Adamishin, the Soviet Union’s deputy foreign minister for Africa, said recently. “Personally, I don’t think they are going to build socialism in Namibia. And there are few people in the Soviet Union who would advise them to.”

Angola is the newest and one of the most surprising examples of Africa’s move away from state-controlled economies.

Strongly tied to the Soviet Union and officially unrecognized by the United States, the Angolan government began to embrace a free-market economic recovery plan about a year ago.

The government has not accomplished much so far, but it has drafted some new laws, ended price controls on fruits and vegetables and promised to eventually sell off the state-run companies, open a Chamber of Commerce and invite foreign investment.

But the nation’s change of heart, along with its willingness to sign the U.S.-mediated peace accord with Cuba and South Africa, has raised hopes here not only for an economic recovery but also for a thaw in Angolan-American relations and an increase in development aid.

Oil Earnings Finance War

Although rich in oil and easily capable of feeding itself, Angola remains one of Africa’s least-developed countries. About half of the country’s oil earnings is used to pay for its 13-year war with the U.S.-backed rebels of Jonas Savimbi’s National Union for the Total Independence of Angola. (The Soviet Union contributes $1.5 billion a year in military assistance to the government, U.S. officials say.)

The war has forced 1 million people from their homes in the countryside, leaving them with a margin of survival that is “very, very slim,” a U.N. relief worker said. One child in three dies before its fifth birthday. Only in Afghanistan and Mozambique do children have less of a chance to survive.

The seaside capital of Luanda, once a picture postcard of coffeehouses and Portuguese architecture, is a study in decay. Many elevators have not worked for years, and long ago the salt air turned the pastel facades a slate gray. Interruptions in the water supply are so frequent and persistent that one embassy keeps a private stock and sends its workers home with buckets full. Hospitals exist, but medicine does not.

“What happens if we get sick?” a recently arrived relief worker asked an Angolan health official.

“If you’re tough, you live,” the official said. “If you’re not, you die.”

Housing is scarce, and foreign diplomats, relief officials and even U.N. workers must often spend months in crowded, $100-a-night government hotels awaiting permanent accommodations. Large steel crates used for oceangoing freight are being turned into middle-class housing in one neighborhood.

One of Angola’s most glaring shortages is of skilled workers. Hundreds of thousands of Portuguese workers, from plumbers to economists, left in 1975 when Angola became independent from Portugal. Now Angola spends much of its valuable foreign exchange earnings to hire foreign companies for the simplest tasks.

Luanda’s garbage, for example, is carried away these days by a German-owned firm, run by Swiss managers, that imports everything from trucks to garbage bins.

Roque Santeiro is one of the signs that things are changing in Angola. The market pulses like a Prohibition-era saloon, festive and nervous. On a recent afternoon, a pair of Angolan soldiers chasing a thief through the crowd fired two shots into the air, sending hundreds of women with heavy shopping bags diving for cover beneath wooden tables topped with merchandise.

“Normally, I try not to come here. I don’t feel safe,” Alice Schacht, a 38-year-old single mother, confided. “But at least you can buy things.”

Shelves Are Never Bare

Roque Santeiro, and several new markets like it, are the only places in Luanda where the shelves are never bare. Striped slacks, soda pop, watches, children’s shoes, tape players, shoes, deodorant spray and irons are among the goods that seem to materialize out of thin air. Prices at the market are set by the force of demand, not by government fiat as in the rest of Angola.

“Everywhere else in the world, some people work in the government and other people prefer to work in the market. That’s what we do here,” said a woman selling children’s clothing, who identified herself only as Maria. “If we buy this pack of cigarettes for 2,000, and sell it for 2,500, we win 500. Then we take that money and look for other things to sell.”

Domingos Francisco, like most of the marketeers, buys his wares early each morning at the docks from ships arriving from Europe. When school lets out, he becomes a shopkeeper, carefully displaying only one shoe of a pair to guard against theft. He says he makes a profit of about $2.50 a day.

“My family needs many things,” he said, “so I must sell things to try and help them.”

The markets serve a valuable purpose in Angola’s economy by providing a safety valve for the overvalued local currency. The official exchange rate is 29 kwanzas to the dollar at the bank, but everywhere else it is 2,000 to 1.

That puts foreign embassies and foreign companies in a bind. To pay their local employees a living wage would require millions of dollars at the official exchange rate. A pair of shoes at Francisco’s stand would cost $2,000, for example.

So, many foreign firms use the “beer standard” to meet their payrolls. They give employees credit at a government supermarket that caters to foreigners and accepts only dollars. The workers use their credit to buy Heineken or Beck’s beer, for about 50 cents a can, then carry the beer across the street and sell it for 1,000 kwanzas a can, roughly 70 times the price at the official rate of exchange.

Beer, hot or cold, is the most readily convertible currency in Angola.

Pushed by Lenders

Like most countries in Africa, Angola was pushed toward free-market principles by its need for Western development help. Organizations such as the World Bank and the International Monetary Fund, heavily influenced by the United States, insist on a Western-style economic recovery plan before lending money or assistance to African nations.

Until recently, the only major relief organizations working in Angola were UNICEF and the Red Cross. But half a dozen international relief agencies have set up offices or made exploratory visits in the last year.

The desire for friendship with the United States burns deeply, and it was partly for this reason that Angola agreed to the recent peace accord that calls for 50,000 Cuban troops to leave Angola and for free elections in neighboring Namibia.

Yet Angola remains entwined in a superpower stalemate. While both the Soviet Union and the United States supported the peace agreement, the Soviets continue to support the government army and the Americans continue to support the anti-government guerrillas.

U.S. Oil Companies Active

Americans already do plenty of business with Angola. American oil companies extract 90% of this country’s petroleum. UNICEF distributes $6 million a year in U.S. food aid. But the United States has never had formal diplomatic ties with the Angolan government.

“Normalization of relations with the United States is very important to us,” Angolan President Jose Eduardo dos Santos told American journalists recently. “We have a poor and small country. We have no interest in confrontation with a superpower.”

A prime piece of real estate near Luanda is often cited as evidence of Angola’s sincerity. Situated on a hilltop with sweeping ocean views, the plot has been vacant throughout the more than 13 years of independence.

Local folklore has it that the government is holding the lot open for an American embassy.