Angolan state sector and oil economy

Nationalization combined necessity with ideology. Portuguese owners of factories and plantations fled at independence, forcing the state to take them over to keep them running, while the government also sought to protect mineral and petroleum wealth from foreign exploitation by creating companies to control it. State-owned oil companies negotiated favourable terms with the foreign companies that pump the oil, keeping a large percentage of the profits inside the country. These policies did not emulate the economic system created under colonialism; they combined ideology with necessity to fill the gap left by the Portuguese.

Historical background matters. The Angolan economy had been organized around raw-material production and cheap labour since European rule began in the sixteenth century, and Portuguese settlers, many arriving after 1950, appropriated Angolan land and disrupted peasant production of cash and subsistence crops. Industries depended on Portugal for markets and machinery, and the Portuguese had not trained Angolans to run larger enterprises, so at independence Angola found itself without markets or expertise. According to the ruling MPLA-PT's own August 1976 figures, more than 80 percent of agricultural plantations had been abandoned by their Portuguese owners, only 284 of 692 factories continued to operate, more than 30,000 medium- and high-level managers, technicians and skilled workers had left, 2,500 enterprises had closed, and only 8,000 of 153,000 registered vehicles remained. The government therefore nationalized most abandoned businesses and farms, established state farms to continue coffee, sugar and sisal production, and took over all factories to maintain production. These attempts usually failed for lack of experienced managers and continuing rural disruption by the UNITA insurgency, and only the petroleum sector operated successfully, helping GDP reach US$3.6 billion by 1980, its highest level up to 1988.

In the mid-1980s a fiscal crisis struck. Despite a 21.5 percent rise in the volume of oil production in 1986, government oil receipts fell to only 45 percent of the budgeted level because of the drop in world oil prices; revenues were barely half the 1986 budget; expenditure was cut 5.5 percent, mostly economic-development items, while social services rose 14 percent; and defence spending reached a record 40.4 percent of the 1986 budget.

After the 1975 departure of the Portuguese traders who had monopolized rural trading, the state marketing parastatal Encodipa (Emprêsa Nacional de Comercialização e Distribuição de Produtos Agrícolas) was inefficient, and with scarce consumer goods and manufactured inputs peasants were discouraged from producing surpluses and mostly retreated to subsistence farming. Similar inadequacies by the state livestock marketing company caused serious overstocking in the cattle-raising south-west. Since 1984 the government had been dissolving state farms on former Portuguese commercial farmland, turning the land over to workers and setting up agricultural development stations, peasant associations and cooperatives, and in December 1986 it decreed liberalization of agricultural marketing to allow some free trade in farm goods.

On 17 August 1987 President José Eduardo dos Santos announced the Economic and Financial Rectification (Saneamento Económico e Financeiro, SEF), aligned with the Second Party Congress guidelines of December 1985. He cited the 1986 oil price fall, the 'excessive centralization of socialist planning methods', poor management of state enterprises and corruption; the programme mandated a strong move toward the private sector at home and abroad, IMF and World Bank membership, privatization of nonstrategic state enterprises, ending budget subsidies, shifting from state farms to the peasant sector, raising prices, monetary reform and devaluing the kwanza. Import control was the area the government was least likely to relinquish, and the president conceded the state could no longer prevent deterioration of its traditional services such as education, health, police and civil administration.

Private exchange, above all the parallel market, persisted. The MPLA-PT Central Committee campaigned against graft and the parallel market, which offered at exorbitant prices a full range of goods normally unavailable; by June 1987 forty-two work teams had been established, provincial authorities had ordered all parallel markets closed, and the military was directed to supervise goods movements. Nonetheless in 1988 sources estimated about 40 percent of goods imported through Luanda never reached their destinations because of theft, and with ration cards required for basic foodstuffs the parallel market was thriving in 1988.

The economy of the period was dominated by the oil export industry and drained by the war against UNITA. With the collapse of the cash-crop economy, particularly large-scale coffee plantations, by 1988 the economy depended totally on the oil sector to generate funds, and GDP rose from Kz109.4 billion in 1982 to Kz144.9 billion in 1985. Most oil revenue was quickly spent on defence, most acutely in 1986 when oil prices dropped, and by the late 1980s Angola, once a food exporter, was importing half its grain requirements.

On labour, Angola called itself a socialist workers state and committed to protecting workers' rights and a reasonable wage. In the 1980s all workers belonged to the National Union of Angolan Workers (UNTA) and received a minimum wage; UNTA promoted a 'socialist emulation' programme with bonuses for exceptional productivity, while the government grew dissatisfied with productivity at state-run enterprises and proposed tying wages to performance. Foreign workers' high salaries contradicted the party's ideological commitment to Angolan labour. After the Portuguese departure foreign workers were used in crucial positions, and the greatest Angolanization success occurred in the petroleum sector: by the end of 1985 more than 50 percent of the workers there were Angolans with some technical training, the result of actions by the government and the National Fuel Company of Angola (Sonangol), which employed about half of the workers in the petroleum industry. The 1982 Angolanization law (Decree 20/82) established a special training fund, and intensive training courses and seminars in the petroleum field rose from 66 in 1982 to 151 in 1985.

The party's official politico-economic model should be kept distinct from this state-sector and oil-economy description. The MPLA emerged from the civil war to proclaim a Marxist-Leninist one-party state; the 1975 Constitution, revised in 1976 and 1980, ratified the socialist revolution but also guaranteed some rights of private ownership. Renamed MPLA-PT in 1977, the ruling party claimed the power of the state, converted itself into a vanguard party to lead the transformation to socialism and affiliated mass organizations with the party in accordance with Marxist-Leninist dogma. Its 1977 congress inscribed the designation of a Marxist-Leninist party, the understanding being to practise the Marxist model of 'socialism', not 'communism', and from 1977 to 1979 pragmatic thinking in the party was accentuated. After the Fractionism events the MPLA-PT chose to govern as a single party, dictatorship of the proletariat, with no dialogue with the opposition, inspired by the Eastern European systems of the time. Yet dos Santos's primary goal was economic development rather than ideological rigour. Portuguese-language sources list the party's present ideology as social democracy, democratic socialism, Pan-Africanism and left nationalism, its former ideology as communism, socialism and Marxism-Leninism, and its spectrum as centre-left to left, formerly far-left. The state-sector and oil economy is therefore a bounded phase, not the party's permanent model.

The upper bound of the phase is dated differently by sources, and this entry does not fix a single date for the ideological abandonment. English Wikipedia holds that the MPLA abandoned Marxism-Leninism when the Cold War ended and the Soviet Union fell, declaring social democracy its official ideology at its third congress in December 1990, and styles the party MPLA - Labour Party from 1977 to 1990. Portuguese Wikipedia states that when Angola adopted the multiparty democratic system in 1991 the MPLA abdicated Marxism-Leninism and became a party close to social democracy. The Portuguese-language article on the Angolan constitution of 1992 specifies that on 28 April 1991 the MPLA, at its 2nd Extraordinary Congress, changed its official ideology and abandoned Marxism-Leninism. The legal transition was made by the constitutional revision law of 6 May 1991 (Emenda-Lei n.º 12/91), and the Bicesse (Estoril) Accords of 31 May 1991 laid out a transition to multi-party democracy under the UN's UNAVEM II mission, providing for UN-monitored multi-party elections in September 1992. This entry's endYear of 1991 follows the year the multiparty transition was legislated; it does not fix the date of the ideological abandonment, which is presented with the competing source datings attributed.