government Archives

Artigos

João Lourenço’s macroeconomic achievements and the problem of youth unemployment: a financing proposal

Abril 30, 2023/in Research documents /by CEDESA-Editor

The recent macroeconomic achievements of the João Lourenço government

After years of crisis, recession and almost economic despair, which, of course, translate into the electoral results of the past August and the constant unrest of social networks, the Angolan government has a very encouraging macroeconomic framework.

Gross Domestic Product (GDP) growth designed by the International Monetary Fund (IMF) to 2023 is 3,5%, a robust number[1], mainly, bearing in mind that the country has been in recession since 2016, with a peak negative in 2020 of -5.6%.

The recent predictions of the IMF foreign debt point to a 63.3% ratio of GDP. Once again, it should be noted that by 2020, this ratio corresponded to 138.9% of GDP. There are several factors that explain this fall, some nominal, but it is impressive.

In turn, the state’s general budget for 2023 has a global surplus tax balance of 0.9% of GDP, and proposes to create a positive primary balance in the order of 4.9% of GDP.

In inflation, the homologous variation of March 2023 is 10.81%[2], demonstrating a fast and consistent drop.

Fig. No. 1-decreasing inflation (source: BNA)

Consequently, there is no doubt that the Angolan economy has changed since 2016, and from an uncontrolled country and on the brink of bankruptcy, we have a healthy macroeconomic situation.

Youth unemployment: a serious and persistent problem

Despite the good news in the macroeconomic front, the population still looks alien to success and popular feeling is not corresponding to the numbers.

An explanation for such a phenomenon is the persistence of high unemployment, especially youth unemployment. According to the Instituto Nacional de Estatísticas(INEA) in the IV quarter of 2022, the total unemployment rate was 29.6%, which represented a slight drop from previous quarters, but meaningless.

In relation to the young population (between 15-24 years) the unemployment rate is 52.9%[3].

This number is not acceptable and there is no economy that can be considered healthy as long as such a phenomenon persists.

The consequences of a high unemployment rate are known and are numbered here. It is a waste of resources, showing that the economy is not working at its potential level, but in an inefficient way. Of course, it is a situation that has the potential to generate an increase in poverty and also social unrest.

Certainly, a good part of the social unrest that exists in Angola, whether on the streets or on social networks, directly and inappropriately results from youth unemployment. Therefore, the consequences are extremely and inappropriately negative.

Fig. No. 2- Consequences of the high youth unemployment rate in Angola

Youth unemployment: social resilience rate and dangerous systemic instability

From the constitutional order and stability of the state point of view, there is a systemic point for youth unemployment that must take into account and be underlined.

There will be a threshold where the unemployment rate becomes unbearable and leads people to political action to modify the situation, it will be a kind of trigger that gives rise to revolutions, subversions, regime changes, etc. We will call this a social rate of resilience to unemployment, as constituting the unemployment threshold that a society supports without revolt.

Therefore, the point is that a youth unemployment rate above 50%, in an essentially young country and with an expansive demographic growth rate, is an explosive rate and may be very close to the social resilience rate. This means that the present rate of youth unemployment is perhaps the largest factor of political destabilization of Angola and has the potential of overthrowing constitutional orders and crying out by elements of extra-legal action.

It is at this time “that fighting unemployment becomes the priority of priorities. … When the threshold of tolerance to unemployment is reached, it is necessary to act quickly and in strength. Temporization serves nothing, nor does it serve to develop an apology speech based on economic difficulties.[4]”

It is never too much to note that Hitler’s rise to power and his subsequent popularity in the 1930s with the German people was due to unemployment and the solution he gave to the problem. German unemployment dictated the fall of the Weimar Republic in Germany and the establishment of the Nazi dictatorship. Unemployment is the provocative of extremism and agitations, superior to any other.

Therefore, it is considered that in the present Angolan economic state, the fight against youth unemployment has become the priority of priorities.

Fighting Youth Unemployment and Financing: The Autonomous Financial Instrument (AFI)

It is evident that the Angolan private economy does not have the ability at this time to create the jobs needed to make the unemployment rate of its crisis threshold. It is obvious that mass intervention of the state is necessary to create employment to an acceptable social level.

State programs must be traditional, based on the massive construction of infrastructure, roads, ports, and strategic industry, as well as in specialized technical training and sending young people to several provinces for social support tasks in the area of basic sanitation, housing, primary health and agriculture.

They do not serve the palliatives that market economies adopt in these situations: unemployment allowance, internships, vocational training for conversion, tax benefits. These policies only work in the face of short oscillations of supply and job search curves, they do not operate in structural and permanent unemployment situations.

The fight against youth unemployment has to be the object of a massive national program with rapid effects that leads into employment offer to several million young people.

Classic economists will counteract that the state has no funds for such comprehensive and massive programs. It is at this time of reasoning that the fight against corruption comes in. According to figures now presented, “Angola recovered six billion dollars and seized another 21 billion in the context of the asset confiscation, half of which abroad[5]. It is not known exactly how much of these values are merely provisional seizures and how many are already available to the state. The truth is that they are appreciable amounts.

The concept that proposes to finance mass programs against youth unemployment is simple: all youth employment financing programs will be funded by a mechanism outside classic credit, creating an exceptional vehicle based on seized assets.

Some of the assets seized, for example, up to an amount of $ 5 billion will serve as a capital or guarantee of an autonomous financial instrument (AFI) that will launch employment promotion programs. The financing of this program will be based on the seized assets and will be paid through securities issued by AFI.

AFI either will pay the programs directly with securities that issue based on seized assets or issues debt securities to raise funds for this payment. What is certain is that it would create money outside the classic system and thus allow to create hope for the unemployed, making the fundamental connection between the fight against corruption and the fight against unemployment, which we consider primordial.

Fig. n. º3- Simplified scheme of the financing of unemployment programs

Conclusions

Youth unemployment is the greatest threat to Angolan political stability. The theme must be seen and create massive state intervention mechanisms funded by an autonomous financial instrument supported by the assets seized in the fight against corruption.

AFI would pay employment programs with securities based on these actives.

[1] https://www.imf.org/en/Countries/AGO (accessed at 19th April 2023)

[2] https://www.bna.ao/#/pt (accessed at 19th April 2023)

[3] Folha de Informação Rápida _ Inquérito ao Emprego em Angola _ IV Trimestre 2022, (INEA 2023), p.9

[4] Jean-François Bouchard, O Banqueiro de Hitler, 2023, p. 2022.

[5] https://observador.pt/2023/04/18/angola-recuperou-6-mil-milhoes-em-dinheiro-e-apreendeu-mais-21-mil-milhoes-em-ativos/ (accessed at 19th April 2023)

Angola: new Constitution, new Republic?

Janeiro 30, 2023/in Research documents /by CEDESA-Editor

REFLECTION PAPER

Current situation and anocratic regimes

In a usual situation, the agitation and tension that was felt in the months preceding the general elections of August 2022 in Angola, it would have given rise to the normality and quiet functioning of the institutions until the following electoral act occurred in 2027. However, the strong divisions that were felt and that kind of almost global strife that existed until August does not seem to decrease, creating a situation of constant aggression, without an end to the sight in the present system. Symptom of this is the recent interview given by the opposition leader to a Portuguese newspaper, which declares “neither I nor the party recognize MPLA’s victory, because we know that Unita had more votes. We heard people across the country. Society wanted us to take over the institutions, but we didn’t want chaos.[1] ”

Consequently, on the one hand, the main opposition party has assumed a policy that we will call the “double road.” Such a policy disputes government within the institutions, although not recognizing its legitimacy, also challenging the institutions themselves. The “double road” accepts that the opposition is made within institutions and outside them; In a way, institutions are seen as another instrument of a broader project of confrontation with the government. It is evident that this posture leads to a difficult manichaeism to manage and undermines any openness and respectability that is intended with the investment. The lack of respect for institutions makes everything too dependent on the will of the political decision makers and the conjuncture.

On the other hand, the government party is embarrassed to lead its announced reforms, it is as if the party were not one but two parties. A party mass is dissatisfied with the proposed changes, it wanted that João Lourenço to be just a more skilled manager than José Eduardo dos Santos, but not to introduce background reforms, another sector wants to be taken effective reforms and is bothered by the eventual slowness of these reforms. They have the notion that without a deep reformist process, Angola can become a state with no future.

There is thus a strong instability, for various reasons, in parties that form the sustainment of the political system.

The National Assembly does not seem to be a deliberative chamber of the nation’s feeling, but a mere stage of a broader dispute, becoming in a means and not an end, removing it the sovereign weight that would be inherent.

With a more frightening record the justice arises. The one who is the basic pillar of a democratic rule of law offers more doubts than certainties. In combating corruption, with honorable exceptions, the judicial system has been based on inefficiency and slowness, not already realizing where this structuring program of the state is walking. As we have already written: “It is true that the supreme court’s design contained in the 2010 Constitution helps to its dysfunctionality. In fact, the Angolan constitutional legislator wanted to make a court following the model of the US Supreme Court grafted in a judicial system of Roman-Germanic type, that is, Portuguese. Now a top court in the Portuguese, German or French judicial system has nothing to do with a top court in an Anglo-American system. They are different concepts and structures. What is asked for an American supreme court is not what one asks for a Portuguese Supreme Court. In the first case, only large and innovative law issues arrive there. It is already a kind of court of reflection, while in the second Roman-German case-the Supreme acts as a last instance of appeal for almost all cases. However, in Angola, a court was thought in the American way to operate in a Portuguese manner. Therefore, a light structure that was only dedicated to a small number of cases had to face the task of being a usual court of appeal for a myriad of cases. That could only give bad result, as it gave. In addition to the dysfunctionality of constitutional design, it has been understood that the judges of the Supreme Court do not have adequate preparation to deal with the complexities of economic and financial crime, not having throughout their career came across with these issues at the sophisticated level to which they have been appearing, which has led to some much criticized decisions and to a large procedural default.

“Beginning the country simultaneously a phase of great appeal to foreign investment, as well as betting on the fight against corruption, is well to see that a poorly designed and thought court has to be reformed and remodeled. [2]”

Overall, justice has not offered guarantees of speed and technical impartiality, and its actors have had a surprising tendency to get involved in consecutive scandals.

On the part of the population there is a timid idea, but discussed in many outside, that current institutions and political parties were designed for a war and confrontation environment, and these characteristics are in their core, and therefore are not able in dealing with a new Angola, where the central objectives are the development and well-being of the population. This means that it is considered that the “old” parties no longer correspond to the wishes and interests of the population, not offering consistent and appealing solutions. The abstention rate of the last general elections (54%) is a mirror of this situation.

A National Assembly that has become a mere-instrument-power and counterpower instrument, an inept justice and an anacronic party system, define this Angolan institutional system.

This whole situation, a little diffuse, but whose signs abound, can make the country in an ancracy. What is an ancracy? The ancracy has been defined as an unstable regime that combines elements of authoritarianism and democracy. The ancracy has an incomplete development of mechanisms of dissension and consensualization and is associated with permanent agitation or ingenability, which make the political process difficult[3]. The existence of an annocratic situation increases the likelihood[4] of a civil war. Putting the theme in another way, what it seeks to question is whether the Angolan situation is inherently unstable and can it resort to a civil war?

The answer is simple, although having two parts. No, Angola has not yet experienced an anocracy situation. However, structuring measures are required to exceed present blockages and dissatisfaction.

New Constitution and New Republic

It is necessary to create an agile state, with respected institutions, a functional public administration and a market economy with free and competitive actors, all contributing to the progress and well-being of the population.

The structures inherited from colonialism and wars must be transformed and exchanged for structures of modernity and development, taking into account the culture and history of Angola.

A new historical cycle with a new structure is critical.

The first measure is to establish a new constitution. The current 2010 Constitution is not consensual and, to some extent, is a legal misconception designed to please the personal desires of José Eduardo dos Santos. Fundamental will be to propose a new constitution, more Angolan and more protective of institutions, which marks a fresh start.

It is understood that this new constitution should address aspects as different as the possibility of separate (direct or indirect) election of the President of the Republic, giving him his own legitimacy and ensuring that the president presents himself as a national leader and not a party leader , the creation of a Second Legislative Chamber composed by the traditional authorities (allowing the introduction of different and plural voices in the legislative process, recovering African culture), the introduction of militant democracy mechanisms as the German fundamental law has (such as Karl Loewenstein[5] wrote Democracy should be able to resist those political agents who use democratic instruments to ensure the triumph of totalitarian or authoritarian projects of power, meaning that the Constitution must contain mechanisms of defense and repression of attempts to overthrow the constitutional regime, which now does not exist with sufficient strength in the Angolan Constitution). Obviously, that the reformulation of judicial power, the change in the symbology of the republic, would be other aspects of this new constitution.

A constitutional change is not enough without the organization and administration of the state. Also here the transformation project has to be comprehensive and seeking the release of colonial and Marxist models, introducing a public administration suitable for the new times. Examples may come from Asia, such as China and Singapore[6], or neighboring countries like Botswana or South Africa. The paradigm must be a merit -based administration based on effectiveness and service to the population. Of course, this implies the end of the clientelist influence on administration, deconcentration with autonomy and decision-making capacity, a completely new way of seeing the administrative procedure, not as a set of rules, but a set of good practices and goals dedicated for the common good and effectiveness.

It is evident that only a few topics are left here about advisable structural changes, according to our perspective, to transform Angola into a modern and prosperous state.

[1] Adalberto da Costa Júnior, interview to Nascer do Sol, 20-01-23

[2] CEDESA (2022). A necessária reforma do Tribunal Supremo em Angola, https://www.cedesa.pt/2022/11/24/a-necessaria-reforma-do-tribunal-supremo-em-angola/

[3] Jennifer Gandhi e James Vreeland (2008). “Political Institutions and Civil War: Unpacking Anocracy”. Journal of Conflict Solutions. 52 (3): 401–425; Patrick Regan and Sam Bell, Sam (2010). “Changing Lanes or Stuck in the Middle: Why Are Anocracies More Prone to Civil Wars?”. Political Science Quarterly. 63 (4): 747–759.

[4] Patrick Regan and Sam Bell, Sam (2010). “Changing Lanes or Stuck in the Middle: Why Are Anocracies More Prone to Civil Wars?”. Political Science Quarterly. 63 (4): 747–759.

[5] Karl Loewenstein (1937) Militant Democracy and Fundamental Rights, in: American Political Science Review 31.

[6] M. Shamsul Haque (2009), Public Administration and Public Governance in Singapore in Pan Suk Kim, ed., Public Administration and Public Governance in ASEAN Member Countries and Korea. Seoul: Daeyoung Moonhwasa Publishing Company, 2009. pp.246-271.

Angola: The Employment Legislature

Setembro 28, 2022/in Research documents /by CEDESA-Editor

Electoral results and unemployment

The recent Angolan elections on August 24, 2022 were the subject of intense scrutiny by Angolan and international public opinion. Interestingly a good part of the attention was devoted to political and/or legal subjects. There was a great deal of courts, electoral processes, law application, voting counting, multitude of initiatives and even constitutional revision.

However, the qualitative inquiries that a partner executed during the election period did not point out these as the main concerns of Angolans, but those linked to the economy, namely employment and unemployment. What Angolans seem to ask above all is a job and good living conditions.

Consequently, the issue of unemployment is one of the most important in the activity of the executive who has now taken office.

At this time, the most current data point to a 30.2% general unemployment rate (data from the National Institute of Statistics for the II Quarter of 2022) and the youth unemployment rate (15-24 years) will be located in the 56.7%[1]. The unemployed population over 15 years old in the entire country is calculated in 4 913 481 of people, while young people from 15-24 unemployed is 3 109 296.

Source: Instituto Nacional de Estatística de Angola

Even if they doubt statistics and considering the very large weight of the informal economy, which makes calculations difficult, the reality is that the unemployment rate is too high. By the way, it is almost certain that the high rate of youth unemployment has manifestly contributed to the MPLA defeat in Luanda.

Unemployment is one of Angola’s most serious and important political, economic and social problems.

Government Employment Policy

Government policy regarding unemployment has been essentially passive, although accompanied by some concrete programs.

Essentially, the government expects the effort of macroeconomic stabilization (budgetary equilibrium, public account control, exchange rate liberalization, etc.) to translate into an incentive to private investment that in turn will increase employment.

The inaugural address of the President reaffirmed this approach when he said that “we will continue to work on policies and good practices to encourage and promote the private sector of the economy, to increase the offer of national production goods and services, increase exports and create more and more jobs for Angolans, especially for younger people”[2] (our emphasis).

The Minister of State for economic coordination, now reappointed, had already pointed out this direction when referring to unemployment and public employment promotion programs, he does not mention them concretely, but focuses on macroeconomic aspects. In early September, Nunes Júnior advanced that he was confident in reducing unemployment based on the private sector, claiming that the government was able to “put the country in economic growth giving currency stability and net international reserves” and placed “the country on the economic balance track, exchange rate stability and international reserves”[3].

The government successes in the area of stabilization of public finances and currency politics are not challenged, what is doubtful is the belief that the Angolan private sector has immediate ability to resolve the issue of unemployment.

On the basis of this non-interventional policy on the correction of excessive unemployment is the neoclassical model that summarizes the essence of all economic activity to the free interaction between supply and demand for price flexibility. The neoclassical model has a valid relevance in many areas of economic analysis, but certainly will not be applicable linearly in the job market[4] and even less in Angola.

The government continues to believe that it is sufficient to create the appropriate framework conditions (financial and currency framing) and employment emerges moved by the private sector.

This would be so if Angola were a free market economy with a strong and capitalized private sector. Angola is nothing like that. It is an economy that began with a process of destruction and Sovietization after independence in 1975 and whose “liberalization” after 1992-2002, it was false, or rather, was post-soviet, imitating Mother-Russian: some oligarchs linked to power took advantage of privatization and alleged free markets to quickly “hand in hand” with political power take dominant positions. In fact, there have never been true entrepreneurs, but essentially political entrepreneurs. And there was never a private sector, but a sector of friends of power. This reality has no strength to promote employment as the minister wants.

Making the recovery of employment in Angola dependent and combating unemployment only in the private sector is impossible.

There are two orders of reasons why the policy against unemployment is only based on the private sector.

Firstly, the operation of the market. As a general rule, the labor market does not function as a free market, by obeying the rules of supply and demand defined by the neoclassical economic model that seems to sustain government philosophy, the behavior of the labor market is tendentially rigid, wages are hardly lowered or people are fired without social turmoil and constraints.

In technical terms it is said that the labor market operates as a market without compensation (non-clearing market)[5]. While according to neoclassical theory, most markets quickly reach a balance without excess supply or demand, this is not true for the job market: there may be a persistent level of unemployment. Comparison of the labor market with other markets also reveals persistent compensatory differentials between similar workers.

Keynes in the context of the 1930s crisis studied the subject and concluded that the economy could go into underemployment balances, this means that it can reach a level where it will never employ all potential workers and not leave without the intervention of a “visible hand” that would be the State[6].

The second reason is the magnitude of unemployment in Angola. It is one thing to expect that the private sector hire people when unemployment is 10% and it is intended to go down to 6%.

It is possible that economic growth automatically increases employment. Okun’s famous law[7], even though it is inaccurate, tells us that a 2% rise of the product (GDP) implies a decrease of 1% of unemployment. Thus, if Angola’s GDP increased 4% by 2023, unemployment would only drop 2%, i.e. to 28%. Manifestly insufficient.

Explanation of the Okun Law

Therefore, there is a problem here for the economic theories in which the government rests on its policy. To go down unemployment to acceptable levels, for example 8%, 11 years would be needed with an average growth of 4% per year. Only in 2033 would unemployment be at a satisfactory level for the well-being of the population.

Exemplification of the necessary to achieve an unemployment rate of 8% without state intervention

Alternative and complementary policies

It is possible that this reality was what led the newly deposed minister of state to the social area, Dalva Ringote, to announce the “redinamization” of several government social programs. Although it has not specifically referred to unemployment, it is assumed that training programs, education programs and fighting poverty are included in the portfolio of the minister’s concerns and begins to have some inflection in the passive orthodoxy of the fight against unemployment[8].

It is evident that there are no miracles, but there has to be a government effort to idealize a more active employment policy than the private sector and expected economic growth supplemented.

Essentially this policy would be based on three pillars:

EMPLOYMENT PLAN

i) The hiring of staff for the State for the coverage of fundamental needs in education, health and social solidarity. Here the focus would be the hiring of licensed staff to occupy positions of human Capital that reproduce social welfare;

ii) The grant to private companies to hire contract workers, giving preference to Angolans;

iii) the launch of vast professional training programs for unlicensed citizens to provide them with practical qualifications in agriculture and in several posts.

In order to finance these massive programs to fight unemployment, one would have to rely, in part, on budget surplus funds and, on the other hand, on the famous recovery of assets in the fight against corruption.

There is no doubt that much of the government’s future is based on what will be done in the employment area. This will really have to be the employment legislature.

[1] INEAngola:https://www.ine.gov.ao/Arquivos/arquivosCarregados//Carregados/Publicacao_637961905091063045.pdf

[2] Presidência da República de Angola. Discurso de Investidura, 15-09-2022, in https://www.facebook.com/PresidedaRepublica

[3] https://correiokianda.info/governo-cria-programas-para-reducao-de-desemprego-no-pais/

[4] See a balanced description in Dagmar Brožová, Modern labour economics: the neoclassical paradigm with institutional content, Procedia Economics and Finance 30 (2015) 50 – 56.

[5] See for example: Willi Semmler & Gang Gong, (2009), Macroeconomics with Non-Clearing Labor Market, https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.587.8716&rep=rep1&type=pdf

[6] The best explanation remains Paul Samuelson & William Nordhaus, Economics, 2019 (20 Ed).

[7] See previous footnote.

[8] https://www.verangola.net/va/pt/092022/Politica/32628/Dalva-Ringote-anuncia-%E2%80%9Credinamiza%C3%A7%C3%A3o%E2%80%9D-dos-programas-de-combate-%C3%A0-pobreza-e-seca.htm

Angola’s new strategic partners and Portugal’s position

Outubro 29, 2021/in Research documents /by CEDESA-Editor

Angola’s new strategic partners: Spain and Turkey

Two recent intense diplomatic exchanges at the highest level point to the emergence of new strategic partnerships for Angola. In a previous report, we warned of realignments in Angola’s foreign policy[1]. Now, what happens is that this realignment continues, and at an intense pace. The President of the Republic João Lourenço is clearly giving a new dynamic to Angola’s foreign affairs, which is not seen to be affected by some internal unrest on the way to the 2022 electoral process.

The most recent examples of the President’s diplomatic activity are Spain and Turkey. The important thing in relations with these countries, is not whether or not there is a visit at the highest level, it is about having an intensity of visits by both parties and clear objectives designed. It can be said that from a mutual perspective, Spain and Turkey are becoming Angola’s strategic partners.

Let’s start with Spain. Last April, the prime minister of Spain, Pedro Sanchez, who barely left the country during the Covid-19 pandemic, visited Angola. The visit was seen as marking a new era in bilateral cooperation between the two countries and led to the signing of four memoranda on Agriculture and Fisheries, Transport, Industry and Trade. The agreement regarding the development of agribusiness was particularly relevant, in order to build an industry that transforms raw material into finished product in the future, relying on the experience of Spanish businessmen. As is well known, agriculture is one of the Angolan government’s areas of investment in relaunching and diversifying the economy[2]. Therefore, this agreement is dedicated to a fundamental vector of Angolan economic policy.

More recently, at the end of September 2021, the President of the Republic of Angola visited Spain where he was received by the King and the Prime Minister. On that visit, João Lourenço clearly stated that he was in Spain in search of a “strategic partnership” that went beyond the merely economic and business sphere[3]. In turn, the Spanish authorities consider Angola as a “priority country”[4].

Now it will be seen how these broad intentions will materialize in practice, but what is certain is that both countries are clearly betting on an increase in both economic and political relations and their declarations and goals seem to have a direction and meaning.

The same kind of intensified relationship is being established with Turkey. Last July, João Lourenço visited Turkey, where he was extremely well received. From then on, it was agreed that Turkish Airlines would fly twice a week from Turkey to Luanda. It was also announced that Turkey has opened a credit line on its Exxim Bank to boost bilateral economic relationship. This means that the Turkish financial system will finance Turkish businessmen to invest in Angola. As early as October 2021, Turkish President Erdogan visited Angola. This visit was surrounded by all the pomp and circumstance and expressed an excellent relationship between the two countries. Like Spain, Turkey has an aggressive strategy for Africa, where it wants to gain space for its economy and political influence. The agreements signed by Erdogan and João Lourenço were seven, namely, an agreement on mutual assistance in customs matters; a cooperation agreement in the field of agriculture; an agreement for cooperation in the field of industry; a joint declaration for the establishment of the joint economic and trade commission; a memorandum of understanding in the field of tourism and a cooperation protocol between the National Radio of Angola and the Radio and Television Corporation of Turkey[5].

The approach with Turkey, like that of Spain, has as an immediate and structuring objective “that [the Turks] bring above all know-how that allows us to quickly and efficiently diversify and increase our internal production of goods and services”, using the words of João Lourenço[6].

In these two challenges by João Lourenço there is an obvious determination, or rather two.

First, seek new sources of investment that support the fundamental diversification of the Angolan economy. This is extremely important, and the Turkish and Spanish economies are properly diverse to be able to correspond to the model intended by Angola.

The second aspect refers to the need Lourenço feels to detach Angola from an excessive relationship with China and Russia, without harassing them, but looking for new partners. The geopolitical weight of the Cold War and the subsequent implementation of the Chinese model in Africa, with which Angola is identified, weigh heavily in the evaluations of foreign ministries and investors. Thus, Angola is looking for new openings and a “detachment” from that previous brand, not least because Russia does not have the financial muscle to make large investments in Angola, and China is in the middle of an economic turmoil. As we already know, “the Chinese economy grew 4.9% in the third quarter of this year, the lowest rate in a year, reflecting not only the problems it is facing with the indebtedness of the real estate sector, but also the effects of the energy crisis.”[7] This means that China needs a lot of Angolan oil, but it will not have financial resources for large investments in Angola.

In fact, the relations between China and Angola and the need for a reassessment of the same, especially in terms of oil supply and the opacity of the arrangements, will have to be a theme for an autonomous report that we will produce in the near future.

Portugal’s position. The ongoing deberlinization

Having established that the importance of the intensification of Angola’s relations with Spain and Turkey is established, an obvious question arises: and Portugal?

Portugal has tried to be Angola’s partner par excellence, and for this it has accommodated itself, in the past, to the several impulses of Angolan governance.

Currently, there are good political relations between Angola and Portugal. Just recently, João Lourenço said: “I was fortunate that during my first term in office we were able to maintain a very high level of friendship and cooperation between our two countries.” He also added that “personal relationships also help. Therefore, over the years, we have been able to build that same relationship with President Marcelo Rebelo de Sousa and Prime Minister António Costa”.[8] There is no doubt that favorable relations are established between Angola and Portugal. It also helps that Portugal has three ties that are felt every day; historical ties, cultural ties, especially linguistic ties, and emotional ties.

However, despite the satisfaction expressed by the Angolan President regarding the good relations between the two countries, there are structural issues that cast shadows on the relationship and make Portugal’s position less relevant to Angola than in the past, generating some caution on the part of Angola in relation to excessive involvement with Portugal. Actually, there is a decline in the Portuguese position in Angola, vis-à-vis Spain or Turkey, or Germany, France or the United Kingdom. There is an ongoing de-Berlinization of Angola’s foreign policy. João Lourenço sees Portugal as an ally in the CPLP, but not as a gateway or platform to Europe. There, he wants to relate directly to each of the specific European countries. The old idea that pervaded in some European chancelleries that Angolan topics were specific to Portugal and should be dealt with from, or at least, with the Lisbon competition (which we call Berlinization), ended. Each of the European countries now deals with Angola without Portuguese intermediation and vice versa.

This fact results essentially from three factors. One of an economic nature, and two of a political nature.

In the first place, Angola seeks, in its foray around the world, countries with the potential and capital to invest. It is searching for capital to develop its economy. Now Portugal, jumping from crisis to crisis and having a clear lack of capital for its development, will have much less means to move to Angola. And in the famous Portuguese Recovery and Resilience Plan there is nothing specific for investment in Africa or Angola in particular. Consequently, with no provisions highlighted for Angola in the Portuguese Plan, it is clear that the African country will have to go looking for massive investments elsewhere.

However, we believe that this is not the main cause for the relative decline of the Portuguese position in Angolan foreign policy priorities. There are two other reasons, which are interlinked.

In this sense, there is na element that has caused the disquiet of the current Angolan leadership towards Portugal. This element entails in the fact that in the near past, Portugal constituted what the Financial Times of October 19th[9] described as the place where Angola’s rich (and corrupt) elite collected trophies in assets, a kind of playground for the President’s sons José Eduardo dos Santos and other members of the oligarchy. Now, the Angolan government, apparently, looks with some suspicion at Portugal because of this, specially considering the intervention that banks, lawyers, consultants and a whole myriad of Portuguese service providers had in the laundering and concealment of assets acquired with illicitly withdrawn money of Angola. There is a danger that all these entities are making efforts to undermine the famous fight against corruption launched by João Lourenço.

What happened during the years of inspiring growth in Angola, between 2004 and 2014, significantly, is that Portugal acted as a magnet for Angolans’ savings and income. The Angolan ruling elites, instead of investing the money in their country, went to invest it, or merely park it in Portugal, with disastrous consequences for Angola, which found itself without the necessary capital to make its growth sustainable. The reasoning that can be attributed to the Angolan government is that Portugal allowed the Angolan money obtained illicitly to be laundered in its economic and financial system with such depth that it is now very difficult to recover. Ana Gomes, wisely, always warned about this. In fact, if we look at the assets recovered by Angola, with great significance, there has not yet been public news that any of them came from Portugal. There was the 500 million dollars that came from England, but in Portugal, EFACEC was nationalized by the Portuguese government – and that’s okay from the Lisbon’s national interest point of view- but it was realized that Angola would not receive anything from there, as well as one can’t regard a clear path of receiving from other situations.

To this phenomenon is added a second that is presently noted. Lisbon is serving as a platform for the more or less concealed articulation of strong opposition attacks on the Angolan government. Whether through consultants, press or law firms. In this case, unlike possibly in the case of investments and possible money laundering, these activities will take place in accordance with the law and adequate protections of fundamental rights. However, it will create discomfort in the Angolan leadership, which will possibly see a link between the two phenomena, that is, between the fact that Portugal was a safe heaven for Angolan assets obtained illicitly in the past, and now it has become a local of opposition and conspiracy, above all, to the so-called fight against corruption. It is noticed that many of the movements take place in Portugal and its elites continue to help those who were dubbed by João Lourenço as “hornets”, either judicially or in the search for new places to hide their money.

In concrete terms, the episode of EFACEC nationalization combined with the recent judicial decision to “unfreeze” the accounts of Tchizé dos Santos in Portugal, and the generalization of an anti João Lourenço current in large spaces of the Portuguese media, although they constitute decisions or attitudes that are justified in political, legal or ethical terms in Portugal, they are events that reinforce some Angolan distrust of the Portuguese attitude, which can see the former colonial power in a kind of shadow play.

These situations, which have broadened in recent months, are causing some discomfort in Angola, which may consider Portugal as a kind of safe haven for activities that harm the country. Gradually, conspiracies from Portuguese territory abound, such as meetings and other events

It is precisely the reasons mentioned above that lead us to identify some attempt at political distance between the Angolan government and Portugal. There are no easy answers to these equations, although its enunciation has to be made for reflection by all those involved.

[1] CEDESA, 2021, https://www.cedesa.pt/2021/05/18/os-realinhamentos-da-politica-externa-de-angola/

[2] See report CEDESA, 2020, https://www.cedesa.pt/2020/06/15/plano-agro-pecuario-de-angola-diversificar-para-o-novo-petroleo-de-angola/

[3] Deutsche Welle, 2021, https://www.dw.com/pt-002/jo%C3%A3o-louren%C3%A7o-em-espanha-em-busca-de-parceria-estrat%C3%A9gica/a-59344760

[4] Idem note 3.

[5] Presidência da República de Angola, 2021, https://www.facebook.com/PresidedaRepublica

[6] Idem, note 5.

[7] Helena Garrido, 2021, https://observador.pt/opiniao/o-choque-energetico-e-o-orcamento-em-duodecimos/

[8] Observador, 2021, https://observador.pt/2021/10/22/pr-de-angola-ve-relacoes-de-amizade-e-cooperacao-com-portugal-em-nivel-bastante-alto/

[9] Financial Times, 2021, https://www.ft.com/content/4652e15a-f7ba-4d21-9788-41db251c5a76

Proposal for a pilot job guarantee design in Angola

Maio 11, 2021/in Research documents /by CEDESA-Editor

Introduction: the magnitude of the unemployment problem and the need for a systematic government response

In Angola, in the third quarter of 2020, the unemployment rate stood at 34%[1]. This number corresponds to a chain increase (i.e., compared to the previous quarter) of 9.9% and homologous (referring to the same period in 2019) in the order of 22%[2]. In view of these data, whatever the perspective adopted, it is easy to see that unemployment is a fundamental and serious problem facing the Angolan economy and societies.

Fig. Nº 1- Recent evolution of the unemployment rate in Angola (2017-2020). Source: INE-Angola

So far, the government recognizes this problem, but is betting on the recovery of the economy at the private sector level, to resolve the issue, believing that the State can do little to face the situation. The solution lies in economic growth and business dynamism, says the executive. The President of the Republic, João Lourenço, was clear in the last speech of the State of the Nation when he stated: “priority of our agenda [is): to work for the resuscitation and diversification of the economy, to increase the national production of goods and basic services, to increase the range of exportable products and increase the supply of jobs. ” João Lourenço makes an indelible link between the diversification of the economy and the increase in national production and the decrease in unemployment.

Basically, the government relies on the traditional postulate stated by the American economist Arthur Okun, according to which there would be a linear relationship between changes in the unemployment rate and the growth of the gross national product: with each real GDP growth in two percent would correspond to a one percent decrease in unemployment[3]. The truth is that several empirical studies do not confirm this empirical relationship at all, and in recent years in several countries around the world, an increase in GDP has not led to a sharp decrease in unemployment, while in other cases it has, therefore, it is difficult establish a permanent relationship between unemployment and GDP. In addition, the magnitude of unemployment in Angola would imply that in order to decrease the rate for the still frightening 24%, GDP would have to grow 15% …

The fundamental issue is that the problem of unemployment in Angola is not cyclical, but structural, this means that it is closely connected to the permanent deficiencies of the Angolan economy and does not have a mere dependence on the economic cycle.

The fact that the problem of unemployment is structural and of an economic recovery for the years 2021 and onwards is only between 2% and 4% of GDP[4], according to the current IMF projections, imply that such economic animation will have little impact on employment.

In this sense, it is essential to understand that the solution to the problem of unemployment does not depend only on the market and the economic recovery, it requires, at least in the short term, the muscular intervention of the State. It is in this context that this proposal for a pilot experience arises.

Fig. No. 2- GDP growth projections Angola (2021-2024). Source: IMF

A pilot job guarantee experiment in Angola

Starting from the first experience of universal employment guarantee in the world, designed by researchers at the University of Oxford and administered by the Austrian Public Employment Service, which takes place in the Austrian city of Marienthal[5], the same methodology would apply to a specific location in Angola, possibly, to a specific municipality in Luanda.

According to this regime to be implemented on an experimental basis in a municipality in Luanda, a universal guarantee of a properly paid job would be offered to all residents who have been unemployed for more than 12 months.

In addition to receiving training and assistance to find work, the participants would have guaranteed paid work, with the State subsidizing 100% of the salary in a private company or employing participants in the public sector or even supporting the creation of a microenterprise. All participants would receive at least one minimum wage set in accordance with the Presidential Decree that regulates the matter appropriate to a life with dignity.

The pilot Design would work as follows:

i) All residents of the chosen Luanda municipality, who have been unemployed for a year or more, will be unconditionally invited to participate in the pilot design.

ii) Participants begin with a two-month preparatory course, which includes individual training and counseling.

iii) Subsequently, participants will be helped to find suitable and subsidized employment in the private sector or supported to create a job based on their skills and knowledge of the needs of their community or will still be employed by the State.

iv) The job guarantee ensures three years of work for all long-term unemployed, although participants may choose to work part-time.

Fig. No. 3- Brief description of the pilot employment design

In addition to eliminating long-term unemployment in the region, the program aims to offer all participants useful work, be it in paving streets, in small community repairs, in a day care center, in the creation of a community cafe, in access to water and energy , basic sanitation, in the reconstruction of a house, or in some other field.

The pilot project is designed to test the policy’s results and effectiveness and then be extended to more areas of the country.

Financing

“As part of the asset recovery process, the State has already recovered real estate and money in the amount of USD 4,904,007,841.82, of which USD 2,709,007,842.82 in cash and USD 2,194,999,999.00 in real estate, factories, port terminals, office buildings, residential buildings, radio and television stations, graphic units, commercial establishments and others. ”

Thus, the President of the Republic spoke in the most recent speech by the State of the Nation mentioned above.

Now, nothing better than to allocate part of these recovered funds to the promotion of employment. Consequently, an amount withdrawn from there would be used to create an Employment Development Fund which we would simply call, because of the origin of the amounts, “Marimbondos Fund”. This Fund would receive part of the recovered assets and would use them to finance initiatives to promote employment such as the one presented here. Money withdrawn in the past from the economy would return to this one to foster work for the new generations.

With this self-financing model, any constraints imposed by the International Monetary Fund or the need for budgetary restraint would be removed. The promotion of employment would have its own funds resulting from the fight against corruption. There doesn’t seem to be a better destination for money than that.