The Economics of Peace and Security Journal www epsjournal org uk Vol 1 No 1 2006 Angola conflict and development 1961 2002 Manuel Ennes Ferreira an a country achieve its development goals or at least its economic growth goals when it faces forty years of war Angola s case is a paradigmatic example to answer this question From 1961 to 1974 Angolans opposed Portuguese colonial rule by violent revolutionary struggle But from 1975 Angola s independence year to April 2002 the date of the last cease fire a civil war pitted the ruling MPLA party against the main rebel group UNITA Macroeconomic performance differed across these two time periods The purpose of this article is to explore the influence of internal and external economic and political conditions on Angola s development under circumstances of war and to speculate on Angola s immediate future C Conflict and development in the colonial context 1961 1975 In the early 1960 s when the struggle for independence began Angola s economic and social structure was typically colonial Manufacturing industry accounted for only 13 percent of GDP Agricultural production the extractive industry and international trade were the most important GDP contributors The main export good was coffee 36 percent of total export value in 1961 which together with other unprocessed agricultural goods sisal maize sugar cotton and wood amounted to 56 percent of total export value Mined goods such as diamonds and iron contributed another 17 and 4 percent respectively Manufactured goods were just 10 percent of total exports but 88 percent of the colony s total imports Portugal was Angola s principal supplier 44 percent followed by Great Britain 13 percent and the U S 10 percent while the latter was Angola s main export client 21 percent followed by Great Britain 19 percent and Portugal 14 percent Even though Angola had a trade surplus vis vis the rest of the world its substantial trade deficit with Portugal resulted in a negative current account 8 percent of GDP The government budget surplus ran to 7 percent of GDP Indigenous economic activity was very low as was the indigenous level of education and socio economic achievement To lessen criticism from the international anti colonial community and to rally internal support in Angola and in Portugal the colonial masters realized that reform measures to foster economic growth and development in Angola were urgently needed At the time Angola s economy was formally integrated since January 1962 into the Portuguese Economic Area supposedly a free trade zone that included In the early 1960 s Angola s economic and social structure was typically colonial M E Ferreira Angola conflict and development 1961 2002 p 24 Portugal and its colonies But colonial rules had protected Portuguese manufacturing industry and prevented an independent Angolan industrial take off which accounted for the uneven trade between the two countries Economic openness was restricted and independent capital and finance were therefore lacking to support Angolan economic growth An extensive military effort also claimed substantial internal budgetary resources Under relaxed colonial policies Angola then engaged in a mix of Angola engaged in a mix of economic economic openness and domestic openness and domestic market market protection through a policy protection In spite of the anti colonial of import substitution military confrontation and consequent industrialization In spite of the high military expenditure this mixture anti colonial military confrontation led to considerable industrial and and consequent high military economic growth in Angola expenditure this led to considerable industrial and economic growth in Angola The numbers are as follows Angola s military expenditure rose from 6 percent of the budget or 1 percent of GDP to 15 percent in 1967 3 percent of GDP and then fell to 8 percent in the 1970 s 2 percent of GDP A budget surplus was nonetheless achieved in every year in part because 30 percent of Portugal s military budget was spent in Angola subsidizing the Angolan military budget Despite the high military expense the average annual inflation adjusted economic growth rate was nearly 5 percent for the 1962 to 1973 period while that of the manufacturing sector was just over 12 percent The strong domestic market meant that industrial goods accounted for more than 90 percent of total imports and led to an increasing shift toward non Portuguese suppliers in aggregate 74 percent Germany being first with 13 percent and the U S second with 10 percent which were better able than Portugal then itself a developing country to respond to Angola s sophisticated and modem domestic demand From the early 1960 s to the early 1970 s the external trade surplus grew ten fold In 1969 the Cabinda Gulf American oil company started exporting crude oil from Angola 5 percent of total exports and a mere four years later oil exports occupied the largest share of total exports 30 percent the U S being the largest customer receiving 28 percent of all oil exports The current account turned positive in 1972 and 1973 A shift in the export structure had occurred putting non agricultural raw materials crude oil diamonds and iron in first place with 47 percent of total exports against 33 percent of agricultural raw materials At the same time manufacturing products 25 percent of GDP in 1973 and agricultural consumer goods were responding well to domestic demand Deep involvement of Portuguese colonial and foreign economic interests in the export and domestic sectors combined with proper incentives provided by fiscal and industrial economic policies This permitted Angola to overcome hindrances on account of military effort and international political isolation and to achieve some degree of economic development The Economics of Peace and Security Journal www epsjournal org uk Vol 1 No 1 2006 The dark side of this development was a notorious lack of indigenous capability M E Ferreira Angola conflict and development 1961 2002 But the dark side of this development was notorious lack of and lack of promotion of indigenous capability despite some palliative improvements that had been introduced over the years Civil war and development in a centrally planned economy 1975 1992 Following the fall of Portugal s military dictatorship in April 1974 Angola achieved independence in November 1975 the result of military confrontation that had put Portugal in opposition to various
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