Angolan Elections 2022: What about the Economy?
Angola will hold a general election on August 24th to elect both the country’s President and its parliament, the National Assembly. In all there are eight parties contesting the election, but no-one has any doubt that only one of them, the main opposition party UNITA, can seriously challenge the MPLA, which has ruled Angola since Independence from Portugal in November 1975. The ballot paper offers voters a choice out of all eight parties, in an order determined by lottery, and each party has a list of candidates, the first on the list being their candidate for the Presidency.
PART ONE: AN OVERVIEW
Angola’s President, João Lourenço, and his main rival for the presidency, Adalberto Costa Júnior of UNITA, are on the campaign trail, attending rallies in each of the country’s 18 provinces. UNITA is hoping it can capitalize on public discontent by taking votes away from the MPLA, which has ruled uncontested for 47 years.
The economic downturn of recent years has seen a steep rise in the level of unemployment along with an equally steep rise in the cost of living. This has presented the MPLA government with a huge problem: how to guarantee food supplies for a population that over the past decade has grown by more than one million every year. Angola cannot produce enough to be self-sufficient and depends on imports for many products, including rice, a basic staple. In many areas, people say they can no longer afford to feed their families more than once a day and voters with empty bellies are also hungry for change. This has led to huge turnouts of people to show support for UNITA when the election caravan passes through.
The most important issue in any election, particularly at a time of crisis, is the Economy.
On the campaign trail, President João Lourenço of the MPLA and his main rival, UNITA’s leader Adalberto Costa Júnior, make grand promises about what their party could deliver over the next five-year term. They say they will reduce the national debt, increase revenues, and create a budget surplus to fund new dams and reservoirs to solve the recurrent drought crisis in the South, and improved road and rail links so farmers in the North can get their produce to market.
Both the two main parties promise to stimulate economic diversification, reduce the Treasury’s dependence on revenue from the oil and gas sector and fund essential development projects. Yet there has been remarkably little discussion about economic issues, let alone analysis of the two main parties´published programmes on the economy in the (mainly state-owned) national media. Unlike mature democracies around the world, there is no independent scrutiny of the details of their economic plans to determine whether they are realistic and can be executed.
Diversifying the economy depends on good governance to ensure implementation – so that budget funds are properly directed to the ends for which they are intended. For example, to ensure the delivery of vital infrastructure such as a stable supply of power and water to guarantee production and well-built and well-maintained road and rail links to deliver products and goods across the country. Angola is desperate for a political and legal regime which rewards honest business practices, backed by an impartial and independent judicial system. Ordinary citizens need these guarantees before they can feel confident about investing their savings in enterprises that will ultimately benefit them and their community. These would be small businesses with realistic prospects for growth, which can create jobs and stimulate local economies.
These days Angolans are all-too-aware of the corruption and waste under the former MPLA President José Eduardo dos Santos, and they are losing patience with his successor, whose anti-corruption campaign has targeted some of the guilty but not others. The entire structure of governance – the public administration at national, provincial, and municipal levels – remains staffed by people selected because of party loyalty rather than competence. Major reform is long overdue to remove a swathe of underqualified and self-dealing officials whose incompetence and diversion of funds are the major impediments to effective delivery of development programmes, including those aimed at improving food security.
President Lourenço’s first term was marked by caution – he needed to secure control over a divided party by retaining loyalists, even if they too were equally guilty of incompetence and corruption. Angola’s President has executive powers that far exceed those of the leaders of democratic countries.
It is all too evident that the only way the President can deliver his campaign promises is if he embarks on major reforms, starting with the appointment of a fresh economic team of reputable and well-qualified economists who can bring honesty, integrity, and competence to their departments. He needs to be able to enforce the existing laws on conflicts of interest by political appointees, to end the practice by which government officials enrich themselves by diverting resources from programme budgets to businesses fronted by associates or family members.
Self-dealing is one of the greatest impediments to effective governance. Officials appointed for partisan reasons rather than competence are able to avoid scrutiny while engaging in state capture – the privatization of state institutions that ends up transferring national assets into the ownership of the ruling elite.
PART TWO: A COMPARISON OF THE TWO MAIN PARTIES’ ECONOMIC PLANS
Angola does not require political parties in an election campaign to submit their economic plans for detailed scrutiny by a non-partisan, independent economic body capable of that task. Voters cannot count either on expert analysis in the government-dominated media.
In the absence of any other analysis of the viability of campaign promises on the Economy,
Maka Angola has teamed up with economist Yuri Quixina to evaluate the proposals offered by the two main parties, the incumbent MPLA and the largest opposition party, UNITA.
Repaying debt takes a large amount of the budget available for the government to spend. In 2021 the MPLA government says it managed to reduce the national debt from a staggering 121% of the Gross Domestic Product (GDP) (i.e., 21% over and above the country’s total economic resources, making the debt unrepayable) to 84% of GDP. The MPLA is promising to reduce the debt burden further: to 60% of GDP over the coming five years but does not give specifics.
UNITA makes no reference in its published programme to the national debt.
Both the MPLA and UNITA promise to increase revenues but neither gives specifics.
The MPLA says it will increase revenue by broadening the tax base. This would require creating an environment conducive to new business start-ups and job creation. Realistically, this can only be achieved if at the same time the government clamps down on corruption in the public administration. It also promises to cut public spending (but doesn’t say how or by how much). There are no specifics that would show how the government can deliver the promised essential infrastructure while still making reductions across the board, that would result in a budget surplus as they promise.
UNITA also promises to achieve a budget surplus, without giving any detail of how it might accomplish this. There is no mention of how it intends to reduce the budget deficit. It has not yet evaluated the latest state budget reports (even though they have been published and presented to the National Assembly for approval), without which they would not have marshalled the necessary information to be able to see where cuts could be made.
The MPLA has been coy. It hasn’t said whether it will maintain the current tax rate, increase, or reduce it.
UNITA’s manifesto mentions taxation but introduces terms that exist only in Portugal’s tax regime, not Angola’s. For example, it refers to the IRS (Imposto de Rendimento de Pessoas Singulares) Portugal’s Single Person’s Income Tax, instead of Angola’s IRT (Imposto de Rendimento de Trabalho), the Employment Income Tax. And it refers to the Industrial tax as the IRC, Imposto de Rendimento de Pessoas Colectivas.
Both parties promise to increase homegrown wealth creation, the Gross Domestic Product (GDP. The MPLA promises GDP will rise in total by at least 3.5% over the next five years, with GDP from sectors other than Oil and Gas, rising by 4.6%.
UNITA does not offer quantifiable goals.
Both parties have committed to increasing production of oil and gas, the sector that has been the principal source of income for Angola during a period of economic downturn. The MPLA says new discoveries will bring the total output to three million barrels of oil a day, from the current 1,16 million. It also intends to build another two oil refineries.
The MPLA says it expects to increase revenues from other sectors (excluding oil and gas) by 80% over the coming five years. UNITA says it will diversify without giving details and does not set a target for diversification.
The MPLA promises to bring inflation down to under 10% in line with its commitment to the process of harmonizing the region’s economies. UNITA indicates it will reduce inflation but doesn’t say by how much.
The MPLA says it will create 290,000 new jobs over the next five years to bring unemployment down to 25%. In the 2017 election it promised 500,000 new jobs over the five-year term that is now ending but it is unlikely to have achieved its target and doesn’t mention it.
UNITA says it will reduce unemployment without giving any numbers – so even a single extra job would represent success.
(h) Balance of Trade
Neither party offers any specifics on the balance of trade, which reflects the costs of imports compared to the revenues from exports as well as figures showing income from investors. Both parties state they would guarantee sustainability by ensuring stability in the exchange rate and will help Angolan exporters stay competitive in overseas markets without saying how.
One of the biggest election promises made by the MPLA in 2017 was that it would reform the economic sector by privatizing state-owned enterprises; it promises to continue this process. In practice, the Angolan economy remains a hostage to the old-style model (state capture) hence growth has been restricted in all sectors outside of oil and gas. The same impediments remain, inhibiting the establishment of a truly professional and autonomous entrepreneurial class.
UNITA has said it is in favour of privatization and promised to produce a report to detail privatization stages. To date this has not appeared.
Delivering electricity throughout the country is key to the infrastructure needed for economic growth. The MPLA promises to continue extending the national grid, which in 2021 covers only 42% of the country with a modest target of increasing coverage to 50%, prioritizing industrial and agricultural zones.
UNITA has not published any targets.
(k) Incentives for Small-Medium Business
Both parties have spoken of improving the business environment, but neither has given any detail, such as tax breaks for business, to bring more people into the tax system to increase revenues. Similarly, neither the MPLA nor UNITA has committed itself to cutting red tape or reforming and reducing the corrupt and unwieldly bureaucratic system which currently is neither efficient nor effective in promoting enterprise. Instead, it creates complex processes that burden both entrepreneurs and existing business owners.
PART THREE: MAKA ANGOLA’S ALTERNATIVE PROPOSALS
The election manifestos of each party have an important place in the democratic system. They allow the electorate to make an informed choice as to which of the parties offers a programme that best appeals to them. Political parties show disrespect for the electorate if they decline to elaborate their public spending plans for government, or avoid setting targets by which their success or failure can be measured
Angolans have the right to demand more. Established democracies such as the United Kingdom require each political party to submit its manifesto promises to an independent body (in the UK this is the Institute for Fiscal Studies) so that the budget implication of their proposals can be evaluated for viability. These analyses are then made public early in the election campaign so that other independent economic experts, the media, and voters themselves are well-informed.
In this spirit Maka Angola here lists its top ten proposals for economic reform.
- Install a new team of highly-qualified and reputable economic experts to set out a viable economic reform plan.
- Set enforceable rules and regulations for the Public Administration to instil fiscal discipline and best practice in administration of public finances.
- Create active employment programs
- Tackle Inflation by reducing the reliance on imports and setting out achievable measures in stages.
- Promote competitivity by adopting free market principles.
- Take active steps to boost economic diversification.
- Open up Angola’s markets to foreign investors.
- Transform the energy sector.
- Invest in human capital.
- Create research hubs partnering universities and private technology companies to underwrite innovation.
In conclusion, Maka Angola notes the lack of specific information available and calls on the government and all the political parties to remedy this for future election campaigns. Set specific targets and report achievements accurately.
There is no doubt that the outgoing Lourenço Administration has made progress but much remains to be done to meet present and future challenges. The Angolan people are increasingly running out of patience. Twenty years have gone by since the end of the civil war, and too many Angolans have yet to see any real change that would improve their quality of life.
Clearly, opposition parties can only benefit from disgruntlement with the party in power, though how this will translate in terms of election results is hard to predict. The leader of the party that wins a majority on August the 24th will have five years as President to produce results and rebuild Angolans’ trust in the system. Their immediate priority should be to waste no more time in reforming government, administration, and the judiciary. They need to throw out the bad apples and replace them with qualified and competent professionals with integrity who are committed to public service and will work honestly and efficiently to translate budget proposals into verifiable results. Their salaries, appraised on the basis of actual achievements, should then be adjusted concomitantly. If Angola is to achieve real democracy, voters must be given accurate and detailed information so they may assess the achievements of the outgoing government and, if necessary, choose a different option. Future voters will have no connection to the national movements that achieved Independence or fought in the civil war. They will want modern, professional technocrats in politics who only make promises they are sure they can deliver. Today’s parties need to reform and refresh their own structures so that tomorrow they and the voters can be confident that more than one of them is capable to govern.