An Opportunity (Lost?) in Angola

An Opportunity (Lost?) in Angola
AP Photo/Richard Drew
An Opportunity (Lost?) in Angola
AP Photo/Richard Drew
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President Joao Lourenco has begun the task of changing Angola from one of Africa’s most notorious kleptocracies into a country that can do business with the rest of the world. It is no small endeavour. In one year in office, Lourenco has unseated many of former President Jose Eduardo dos Santos’ cronies, relatives, and bagmen and has started down the road to economic reform.

But before the International Monetary Fund rewards Angola with a $4.5 billion loan, and before the World Bank opens an office in Angola’s capital, Luanda, Lourenco needs to take a few more steps against corruption.

Angola is the world’s eighth-largest petroleum-exporting nation, shipping out $32 billion-worth of oil annually in recent years. Despite these substantial oil revenues, 30 million Angolans are among the globe’s most impoverished. The 2017 Global Hunger Index, which measures malnutrition and child mortality, ranks Angola 104th out of 118 countries.  The mortality rate for children under the age of 5 in Angola in 2015 was 15.7 percent, the worst in the world.     

Under former President dos Santos, who ruled for 38 years, Angola missed nearly every opportunity to become part of the global economy. The World Bank ranked Angola 175th out of 190 countries in its Ease of Doing Business Index last year. Transparency International ranks Angola 167th out of 180 nations in its most recent Corruption Perceptions Index. The Heritage Foundation classifies economic freedom in Angola as “repressed” and notes, “Modest reforms have somewhat modernized the regulatory environment, but pervasive corruption and institutional weaknesses continue to undermine other important reforms.”

In short, for decades, Angola’s government did not serve its people, but robbed them of their natural resources and economic opportunities.

 Despite the new President’s best intentions, corruption persists in Angola. The Africa Growth Corporation (AFGC), a U.S. public company, invests in real estate in Sub-Saharan African nations in order to develop low- and moderate-income housing. Its rental properties in Angola, valued at $55 million, were stolen by local government and military officials.

Specifically, early last year armed Angolan senior officials seized AFGC’s properties in Luanda, the Angolan capital. They forged AFGC executives’ signatures and, using threats of violence and intimidation, managed to transfer control of AFGC’s Angolan subsidiaries and titles to AFGC’s properties to themselves. Angolan government agencies and the police chose to look the other way.

In another case of acting unlawfully against a U.S. company, the Angolan government refused to fulfill its contractual obligations and pay Florida-based company LS Energia monies owed for providing power generation in Angola. Much like AFGC, LS Energia was forced to file suit for more than $50 million against the Angolan government. As a result of the suit, the Angolan government agreed to compensate LS Energia, but so far has failed to pay. 

There is also the strange case of the $175 million Angolan jobs-training center funded by U.S. and British oil companies. It was never built, and the money provided for funding remains unaccounted for. 

Lourenco is clearly sincere in his desire to put Angola on the right path and to begin to develop the economy in a way that will improve the lives of his citizens. But by not acting on these and other cases of obvious corruption, he is risking his reputation for probity and good government and is persuading foreign companies not to invest in Angola. The ultimate victims are average Angolans, who deserve better. 

Courts have been trying to remedy these problems. AFGC has taken its case to Angolan courts twice. Both times the courts ruled in AFGC’s favor. Last November, an Angolan judge ruled that the property had been taken unlawfully “by violent means” and ordered it returned. A second court order was issued last December.  

But the Angolan regime has failed to enforce the court orders. AFGC is now in U.S. federal court in Washington, D.C., where a motion for final judgment against Angola is pending. LS Energia also is still pressing its case for relief. 

The holdup for both is with Angola’s government. President Lourenco should compensate AFGC and LS Energia. If he doesn’t, the U.S. government -- both the Congress and the Trump administration -- should urge the IMF and World Bank to pause in its embrace of his promising but stalled anti-corruption agenda. A little bit of pressure now can lead to an outcome that benefits all Angolans.  

Scott Mortman is Executive Chair of Africa Growth Corporation. The views expressed are the author's own.

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