Angola: Towards peace and democracy (2002-2007) (coninued)

The rehabilitation of transport infrastructure focused initially on roads and bridges in Luanda but extended to rail and to main links between the capital and the cities and provinces (AfDB/OECD 2008, 132). In 2007 alone, 1 200 km of roads and 94 bridges were restored and 1 500 km of road is scheduled for repair in 2008 (AfDB/OECD 2008, 132). The rail line between Luanda and Namibe has been completed and the line from Luanda to Malanje will be repaired by the end of 2008, as will the line from Namibe to Menongue (AfDB/OECD 2007, 110; AfDB/OECD 2008, 132). The need for demining has delayed work on the Benguela railway line (Lobito to Lubumbashi) until 2010 (AfDB/OECD 2008, 132). The rapid growth of the economy has strained existing infrastructure, resulting in plans to expand electricity output but 42% in 2007/8, build a new international airport for Luanda and upgrade the city's port and create a deep-water harbour (AfDB/OECD 2007, 116; AfDB/OECD 2008, 132).

In the post-war period the economy has recovered rapidly and the government has managed to establish macro-economic stability (UKTI 2008). The hyperinflation that characterised the final years of the war (300% in 1999, 325% inflation rate in 2000) was steadily brought under control (141% inflation rate in 2001; 98% 2003; 43.5% in 2004) to increasingly manageable levels (23% in 2005, 12% in 2006 and 11.8% in 2007) (UKTI 2008, LWB Undated; AfDB/OECD 2007, 113; AfDB/OECD 2008, 123). Fuelled by a rapid expansion in output and the rising price of oil the economy has posted impressive real growth rates, 15.3% in 2002, 4.9% in 2003, 20.6% in 2005, 18.6% in 2006 and an estimated 19.8% in 2007 (LWB Undated; AfDB/OECD 2007, 107; AfDB/OECD 2008, 123). As a result of the high growth rates, unemployment has declined from 39.8% in 2002 to 25.2% in 2006 and a projected 3 million additional jobs were to be created in 2007 and 2008 (AfDB/OECD 2008, 133). However, high inflation rates have eroded purchasing power and real wages have declined (AfDB/OECD 2008, 133).

High oil revenues have enabled a steady reduction in public foreign debt from 99 % of GDP at the end of 2001 to 53.6% at end 2004, 39.5% at end 2005 and 15.6% at end 2007 (AfDB/OECD 2007, 114; AfDB/OECD 2008, 129).

In January 2001 Angola joined the Organization of Petroleum Exporting Countries (OPEC) and received a production quota of 1.9 million barrels per day (Energy Information Administration 2008). The economy's high dependence on oil is a matter for concern. In 2005 oil was responsible for more than 56% of GDP and 94% of exports, in 2007 57.1% of GDP, about 90% of exports and 75% of state revenue (AfDB/OECD 2007, 108; AfDB/OECD 2008, 124; UKTI 2008). Diamond mining is the second largest contributor to the economy, contributing about 5% to export earnings in 2005 with huge unexploited reserves believed to exist (AfDB/OECD 2007, 109). Production increased rapidly, by 16.2% in 2005 and 30.9% in 2006, but fell by 3% in the first half of 2007 due to heavy rains that disrupted production (AfDB/OECD 2007, 109; AfDB/OECD 2008, 125). In November 2005 a beneficiation industry was started to add value through cutting and polishing stones (AfDB/OECD 2007, 109; AfDB/OECD 2008, 125).

Economic growth and post-war reconstruction has fuelled a construction boom, with the sector posting growth rates of 17 per cent growth in 2005, 30% in 2006 and 4.9% in the first half of 2007 (AfDB/OECD 2007, 110; AfDB/OECD 2008, 126). Agricultural recovery has been slow, averaging 13.3% between 2000 and 2004, hampered by lack of infrastructure, landmines and low productivity (AfDB/OECD 2007, 109, 110). Poor growing conditions led to a bad harvest in 2005/6 but growth rebounded to 9.3% in 2006/7 as mine clearance restored land to cultivation (AfDB/OECD 2008, 125). Although the sector is the economy's major employer it contributed only 8.6% to GDP in 2005 (AfDB/OECD 2007, 109, 110). Manufacturing, destroyed by the war, has grown rapidly (67.4% between 2000 and 2004 period, 24.9% in 2005 and 30.7% in 2006), but remains a small component of the overall economy (AfDB/OECD 2007, 110; AfDB/OECD 2008, 125).

Everywhere whatever social infrastructure there had been, such as schools, hospitals, clinics and other public facilities, lay in ruins (Human Rights Watch 2003, 2). In 2000/1 an estimated 68% of the population was living below the poverty line and 28% in extreme poverty; by 2004 68% was still living below the poverty line (AfDB/OECD 2007, 119; UNHCR 2005, 1). The post-war boom has seen an uneven distribution of income, withy a relatively small proportion of the population benefiting from the new wealth, while high levels of inequality persist. In 1997 the Gini coefficient for Luanda was estimated at 0.62, with a higher rate supposed for the country as a whole and in 2005 it was estimated at 0.64 for the country as a whole, among the highest in the world (de Sousa et al 2001, 4,5; AfDB/OECD 2008, 135). Development indicators of access to services, health and education remained amongst the worst in the world. Life expectancy was estimated at a poor 41.7 years in 2005 (UNDP 2007/8). Infant mortality rose between 2001 and 2004 from 250/1000 live births to 260/1000 before declining to 154/1000 in 2005 (UNDP 2007/8; AfDB/OECD 2008, 133).

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