The Republic of Angola is situated in the south of Africa, bordering the Atlantic Ocean along a coastline of 1,650 km. With a total land area of 1,246,700 square kilometres, 37 times the size of the Netherlands or twice of France (INE, 2012). The country shares its borders with the Democratic Republic of the Congo, Republic of the Congo, Namibia and Zambia. Angola has 18 provinces.
The population consists out of various ethnic groups. People of mixed European and African origin dominate the economy, and a large part of the population carries Portuguese family names. The official language is Portugese, but also many other local languages are spoken. The total population is estimated at 19million.
This report describes the current status of the horticultural and potato sector in Angola and its options for further development and expansion. The study focuses on the possibilities of the Dutch agribusiness to facilitate these horticultural developments. Existing information has been collected, but information on agriculture was not easily available. In addition, during a mission to Angola industry stakeholders have been interviewed. During these in-depth interviews primary information was gathered and previously collected data were validated.
Agriculture in Angola has huge potentials and can contribute to food security and might decrease the country’s dependency on food imports. Currently there is limited knowledge on the sector. Therefore there is a need for an inventory of the actual situation of horticulture and the potato sector in Angola, a description of the actual situation, and an assessment of possible developments. Specific needs related to technology and knowhow of local growers are identified. Dutch suppliers can fulfill those needs and can contribute to a future development of horticulture and the potato sector in Angola.
The government is trying to reduce the dependency on oil by developing other industries. As a result every sector of the economy, from fishing to banking, has seen growth and investments, both foreign and domestic. This is also driven by the need for reconstruction after the war.
Due to the economic bankruptcy during the war Angola has a highly dollarised economy. The government is making important steps to keep more money in the country and have it flow through the national banking system. As a first step, all oil companies were obliged to make all Angola related financial transfers through Angolan bank accounts.
Angola’s economic development faces many challenges, ranging from bureaucracy to a lack of skilled labour, leaving the country dependent on import and expatriate workers for many key sectors of the economy.
Petroleum products dominate Angola export trade figures. Diamond is yet another significant contributor. These two products constitute more than 95% of the total export value. Angola exports products mainly to China, France, the USA and EU (Figure 2.2). Almost all crude oil export from Angola goes to China and the USA. The increase in international oil prices is a primary driver for Angola’s export growth. Angola’s export value has increased sevenfold in the period 2002-2010.
the colonial period, Portugal has been the leading trade import partner of Angola. The country imports food, textile products and consumer goods. Other key import partners are South Africa, the USA, Brazil, the UK, France, China and South Korea. As the Angolan economy is evolving, there is a gradual increase in imports. However, with exports much higher than the import value, the country has a favourable balance of payment. Being a part of the least developed countries, Angola benefits from duty-free preferential agreements by the EU (known as EBA, ‘Everything But Arms’) and the US (known as African Growth and Opportunity Act, ‘AGOA’).
There are no agreements between the Netherlands and Angola for bilateral development aid. However the Dutch Government has several facilities to promote economic development and to enhance the trade between Angola and The Netherlands. The main instruments are the Programma Collectieve Promotionele Activiteiten (CPA), the facility Ontwikkelingsrelevante Infrastructuurontwikkeling (ORIO), Prepare2start and 2g@there. In addition there are newly established tax treaties that enhances the local taxation and also the export credit insurance applies for Angola.
The Dutch interest in Angolan oil and Liquefied Natural Gas (LNG) and the Angolan interest in Dutch ‘know- how’ and the technological expertise to cultivate and transport these are key factors for an advantageous mutual cooperation. Also, the Dutch tradition in maritime transports and in the management of ports is of great interest for Angola.
The main priority of the Dutch embassy in Luanda is to promote trade between the Netherlands and Angola. In the meantime Angola has moved up in the ranks of Dutch export. Many agricultural products are being traded such as seed potatoes, concentrated milk and eggs (Table 2.4). The total Dutch export value to Angola has almost tripled in the past decade. The Netherlands imports circa 1% of the total exported oil value from Angola.
Angola has an area of agricultural land almost 30 times the Dutch area and over 150% of the Ethiopian area. The country has almost 58 million ha of arable land, of which only around 5-8 million ha (about 8%-14%) are currently being used; this is an increase from 2.2 million ha in 2001/02, mostly because displaced people returned home and started to farm again. These households currently produce at subsistence level. This shows huge potential to develop the agricultural production and to become self-sufficient. In the end Angola even can become an exporter of agricultural products.
During the colonial period, a variety of crops and animal products were produced in Angola. In the north, cassava, coffee and cotton were grown. In the central highlands, maize was cultivated. In the south, where rainfall is lowest, cattle herding was prevalent (www.embangola-can.org/agri-fisheries.html). Large plantations where run by Portuguese that produced palm oil, sugarcane, bananas, and sisal. The commercial farmers were dominant in marketing these crops, however, and enjoyed substantial support from the colonial government in the form of technical assistance, irrigation facilities, and financial credit. They produced the vast majority of the crops that were marketed in the cities or exported (www.embangola-can.org/agri- fisheries.html).
After independence, the departure of Portuguese farmers and traders in the rural areas undermined agricultural productivity (www.embangola-can.org/agri-fisheries.html). In response, the government set up state farms on land formerly owned by the Portuguese and established the National Company for the Marketing and Distribution of Agricultural Products (Emprêsa Nacional de Comercialização e Distribuição de Produtos Agrícolas– Encodipa). Neither the farms nor the trading system was successful, and by 1984 the government started phasing out the state farms and turned production over to private farmers. To help private farmers, the government established agricultural development stations and provided credits for small-scale agricultural projects. Several hundred state farms were to be turned over to associations of tenant farmers as a form of cooperative. By the end of 1985, the Directorate of Farm Marketing controlled 4,638 farm cooperatives and 6,534 farmers’ associations; but of these, only 93 cooperatives and 71 associations were operational (www.embangola-can.org/agri-fisheries.html).
In the late 1980s, Angola faced difficulties in maintaining agricultural production. Production was stagnating due to problems with marketing and transport, shortages of seed and fertiliser. Also the impact of the war was significant. Land mines and fear of attacks had forced peasants to decrease the production areas, particularly fields distant from villages. The migration of farmers to safer areas in particular had resulted in over- cultivation of land and, as a result, reduced yields. Only the relatively secure Huíla province sustained a reasonable level of production throughout the war.
At the moment the country’s agricultural economy is transforming from a subsistence-oriented farming system toward a more market oriented production system in order to reduce the import dependency and to become self-sufficient. Angola’s main crops are cereals, grain, roots and tubers, pulses, oil crops and fruit and vegetables (Table 2.6).
Before the civil war the importance of agriculture production used to be far larger than nowadays but the potential remained. Now the production picks up again since it becomes safer to return to remote agricultural lands, heavily sieged areas have been demined and rehabilitation programmes kicked in. The population working in agriculture is circa 85%; however, the contribution is a mere 10%.
Technology and infrastructure
Angola is rebuilding its infrastructure after the civil war. Angola’s badly damaged and neglected infrastructure increases the cost of doing business for investors. In particular, the huge numbers of mines from the civil war had been a major obstacle to agriculture development in the past. In the main agriculture regions, the majority of the mines have been cleared. Rebuilding infrastructure is a major policy objective of the Angolan government and Angola has massively developed its infrastructure after the civil war. However, particularly in the agricultural sector, it is often up to entrepreneurs themselves to invest in infrastructure improvements such as irrigation, because waiting for the government to do that may delay projects indefinitely.
The destruction to the power transmission network during the civil war and decades of underinvestment have resulted in Angola suffering from an under-supply of electricity and frequent blackouts. Empresa Nacional de Electricidade (ENE) is the state-owned and only electricity provider in the country. Little is known on the state of the Angolan electricity industry, which is essential for supporting the country’s economic growth (SADC, 2009).
According to the World Banks ‘Doing Business Indicators’ (2011) it takes 68 days for a newly constructed establishment to obtain an electricity connection. The population growth in cities has increased the number of illegal connections to the national grid, worsening power shortages.
Angola has a strong transportation network with railways and roadways covering more than 51,000 kilometres. However, many roads are in poor condition and bridges have been destroyed. As a result transportation costs are high and especially a timely transport of fresh produces is challenging. In 2007, 1,200 kilometres of roads and 94 bridges were rehabilitated. In 2008 the government rebuilt a further 1,500 kilometres of roads. In addition, commuting problems in Luanda harm the business environment, where 90 per cent of economic activity is concentrated.
The overall logistics performance in Angola is poor and insufficient, even below the level of Ethiopia (Figure 2.4). During the fact-finding mission the poor transport infrastructure is often mentioned. This applies to the condition of the roads, but also the availability of means of transport in general and a cool chain in particular.
Angola has an abundant quantity of internal water resources: 8m3 per capita whereas the Netherlands has on average 0.7m3 per capita. The withdrawal is 0.4% of the internal resources: a negligible amount that offers opportunities for large scale irrigation of agricultural production.
The water productivity in Angola approaches the Dutch level and can be seen as high compared with Ethiopia and South-Africa. In Angola, agriculture uses 33% of the total internal water withdrawal, compared with 93% in Ethiopia, 63% in South Africa and 0.7% in the Netherlands (Figure 2.5). Only 3.5% of the 3.7 million hectares of the potential irrigable land have been developed (Espirito Santo, 2008) and the irrigation infrastructure has largely been neglected throughout the civil war and is now being restored.
Angola has 2 international airports. The first one is Luanda International Airport
Quatro de Fevereiro. It has frequent international flights within Africa and also to other continents. Since March 2012, KLM flies directly from Amsterdam to Luanda 3 times a week. Lubango, in the South of Angola, has the second international airport, called Mukanka Airport. From here on international connections are with Windhoek (Namibia).
Angola’s 1,600-km long coastline and its four major ports make it a natural transshipment point for the SADC. The four major ports in Angola are Lobito, Luanda, Cabinda, and Namibe. Some problems persist in the port of Luanda. Ships wait offshore for up to several weeks, raising the cost of transport. During 2007, a long-delayed 20-year concession for management of the port was finally awarded to Sogester, a joint venture between Maersk and an Angolan pension fund. The port is currently being modernised and a deep-water harbour is being realised. Other projects planned by the government include a new container terminal, grain silos and the Viana dry-dock. Also the Dutch tradition in maritime transports and in the management of ports is currently being used to further develop efficiency of the ports and is of great value for Angola.