Angola and the resource curse

Angola and the resource curse

Introduction

Angola is one of the largest oil exporting countries in Africa with unexpected characteristics such as wealth inequality and underdevelopment. The problems face Angola despite having a very high gross domestic product (GDP).  Economists classify such countries as a rentier state.  Rentiers are the states, which gets super ordinary revenues from natural resources. Angola is one of such countries because of its high dependence on oil, a natural resource. The Problems facing Angola are common to other rentier countries which economist refers to as a resource curse. The resource curse is a situation where countries rich in natural resources face authoritarian leadership, which withholds citizen accountability to resource allocation. This study analyses resource cause in Angola, its causes and the effects it has on the country and the surrounding. Also, it suggests a policy to solve the problem, its benefits, and challenges.

Analysis of Angola’s Resource cause

The economic statistics available are enough to qualify Angola as a rentier state. The economy of the country depends heavily on a natural resource, oil that contributes to 95 percent of all export and 45 percent of the country GDP (Angola Facts, 2015). However, natural resource is a problem for the country. It experiences characteristics of resource cursed country experienced by some rentier states. The problems include authoritarian government, unequal distribution of wealth, political instability and conflicts between groups.

Although the country elects leaders in a fair election, the political system is far from democracy and the leaders exhibit an authoritarian regime. The government institutions, which are supposed to serve the country benefits a few people including the elite, military and the president (Cameron, 2017). The government and a few elite people shape the institutions to protect them as they pocket most of the revenue collected from the oil. On the other hand, because of the threats from the authoritarian government, the institutions obey and sides with the president to avoid losing their jobs (Baumgartner, 2016). All those mechanisms are meant to prevent any question from the citizens why the government is not serving their interests.

The current regime has changed the law to allow the state to convert Angola into a one-party state. It, therefore, means that there will be no opposition to oversee the corruption going on in the oil fields. The government is centralised with the president at the top and a sophisticated protection network below (Cameron, 2017). The president uses the network to bring confusion against each other for continuous corruption in the oil field. The various constituents whom the president uses are equal in political power, and they include the Movement for Total Liberation of Angola (MPLA), which is the ruling party, the oil company, ministry of planning, economy, and finance (Baumgartner, 2016). Also, there is intelligence and armed forces.

Another problem facing the country is the conflict between political groups. The various political parties have been fighting for several decades and through do not seem to be settled. The three major political parties, MPLA, Social Renewal Party (PRS) and the UNITA although they were together in fighting for Angola’s independence, they later started to fight against each other at the time of the civil war (Cameron, 2017). In the first general election held in 1992, there was supposed to be a runoff for the president. However, there emerged violence with the opposing parties to MPLA claiming that there was no transparency in the elections. The conflict has been a fight to the power, which will give the groups a chance to control the rich oil business. Another conflicting group was Cuba, South Africa, the United States, and the Soviet Union, which sidelined with separate guerilla movements involved in the civil war (Organization of Petroleum Exporting Countries, 2015). The guerilla groups were also fighting for oil control.

 

The conflicts between groups resulting from natural resources have shifted from group to group, and they are now functioning through political manipulation. The presidential system of Angola prescribes that the president share the powers with other leaders (Baumgartner, 2016). However, the former president Dos Santos had pulled all the powers towards the presidency. Dos Santos has commanded the military, headed the state as well as the ruling political party MPLA.

Angola is also experiencing a very high rate of corruption. The government lacks transparency in its financial transactions, which it classifies among the state, secrets. Transparency International, in their corruption perception index released in 2014-ranked Angola as number 161 out of 174 in corruptions (Transparency International, 2014).  The country loses much money in the oil business that goes to the pockets of a few people. The estimate of money lost form Freedom House is above one billion dollars every year. The government maintains cloud transactions and where the institutions concerned with transparency like the Catholic Church cannot access them.

The standard of living for Angola’s citizens is very low. The government is not concerned with developments, which would raise the living standards of people. The fact that Angola is earning a lot form the oil business with a 45 percent GDP does not make the government change the lives of people from the way they were during the civil war (Cameron, 2017). There have been no programs, which would see people recover from a series of independence and civil war. The efforts of the International Monetary Fund (IMF) to negotiate with the Angolan government in ways of helping people recover from the civil war have not yielded (Cameron, 2017). The reason is that the government does not want to disclose its transactions, which are required by the IMF to allow the launch of such programs. Also, the government does not want much interference from such organization to avoid discovery of their unclean oil deals.

Source of Angola’s Resource Curse

Poor institutions in Angola are the major causes of the resource curse. On the one hand, investing in oil, which is in plenty, has forced the state to grow very fast to a level, which bureaucracy and institutions cannot control (Baumgartner, 2016). The oil industry in Angola came at a time when the government was experiencing tension form the independence war that had just ended. However, after independence and before the government became stable, a civil war emerged lasting for 27 years (Cameron, 2017). At that time of war, the military, which was in control, was not in a good position to manage resources. Poor management made the country to rely solely on oil. The government was not well structured to handle the natural resource at that time. Lack of a structured institution to manage the oil resource led to the emergence of a government, which was selfish against the business. To be able to continue practicing poor management, the government had to come up with a way in which it could avoid being accountable to the citizens. The solution was to have the authoritarian government as it is today to spearhead corruption.

A corrupt government led to a group of elite people who would also gain from the resource. The government could not be able to spearhead corruption without experts who would look for market and device mechanisms of making a profit. The result is an oil business which a few wealthy people control in Angola. There is no honesty in the oil business because all the people involved speaking the same language of corruption (Cameron, 2017).   Another source of resource curse is government support of corrupt institutions to suppress their opposition efforts. Angola’s government has manipulated the media, opposition parties, and civil societies so that it can exercise corruption without any opposing force.

Effect of Angola’s resource curse to Africa

Resource curse in Angola is affecting Africa by spreading the curses like corruption and authoritarian governments to other leaders creating a continent of corrupt country heads. Angola being the second largest oil producer in Africa has a significant influence on other counties, which depend on the oil (Cameron, 2017). Most of the leaders engage in the corrupt deals with the country, which they later spread to the whole nation. Angolan government does not have clean deals, which would keep records of sales and payments. The leaders force other country leaders to hide details of the transitions with a promise of giving them a share of corrupted money. Such leaders end up becoming corrupt in their countries. Also, they are attracted by authoritarian leadership which will make them reach similar to the Angolan leaders. The whole continent of Africa, therefore, suffers corruption and needy distributed by Angola.

Policy to solve the problem

To minimize corruption, there should be a law or directive to have transparency in all government transactions. Transparency will allow proper utilization of the oil revenue to benefit every person thereby reducing the unequal distribution of wealth analogy (Topal, & Toledano, 2013). Also, much money will be used to carry out developmental programs leading to raised citizen’s standards of living. However, there is a challenge in accepting the policy from essential decision-makers in the country. Almost every person and institution, which would support the policy, is in the corruption deal. It will be hard for such people with experience of good money from corruption to allow such a plan to go through. The few remaining groups like the Catholic Church do not have enough voice to outdo the current system.

Conclusion

The problem of resource curse is so intensive in Angola that it has extended for many years without change. The most affected people are those who cannot have a share in the government. The government has taken a few people and institutions, to use them in carrying out corruption leaving so much wealth in the hands of a few. All the institutions, which would help the citizens overcome the corruption, underdevelopment and unequal distribution of wealth are in the hands of the government enjoying from the basket of bribery. The challenge problem has left the citizens in the same poor states they were during the civil war. Interventions from different institutions like the IMF have not been able to change the authoritarian regime. The problem has an effect of spreading corruption on the other African countries. Transparency in the government would solve the problem although there are no uncorrupt institutions to institute the policy.

 

Cameron, L. (2017). Reversing the Resource Curse in Angola.

Organization of Petroleum Exporting Countries (2015). Angola Facts and Figures. Retrieved from http://www.opec.org/opec_web/en/about_us/147.htm

Transparency Internationa (2014). Corruption Perceptions Index 2014: Results. (2014). Retrieved  from http://www.transparency.org/cpi2014/results

Baumgartner, B. (2016). Angola – an Oil Dependant Country in Sub-Saharan Africa. Studia Commercial Bratislavensia, Vol 9, Iss 35, Pp 233-242 (2016), (35), 233.

Topal, J., & Toledano, P. (2013). Why the Extractive Industry Should Support Mandatory Transparency: A Shared Value Approach. Business & Society Review (00453609), 118(3), 271–298.

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