Domestic Politics

Angola is an example of the use of ‘disorder as a political instrument’ whereby non-transparency, non-accountable authority and a weak legal framework provide dynamics for elite accumulation. Despite some cosmetic changes, little was done to close the massive gap between the political class and citizens during the year. A personal presidential style of rule with patronage networks and political cooptation of opposition parties under conditions in which the latter received state funding continued. A cabinet reshuffle in December (which followed an earlier reshuffle in October), in line with the provisions of the 1994 Lusaka Agreement that established the government of national unity and reconciliation under the direction of Movimento Popular de Libertação de Angola (MPLA) saw new União Nacional para a Indepêndencia Total de Angola (UNITA) members. UNITA leader Isaías Samakuva realigned its representation with the consolidation of its three former factions.

The MPLA leadership failed to open out to civil society and opposition parties, or transform itself from a classic national liberation movement, seeing itself as the only legitimate expression of all Angolans, rather than as being one of several parties in a pluralist system. Juliao Mateus Paulo ‘Dino Mattross’ – elected at the MPLA congress in December 2003 as secretary-general of the party instead of the younger João Lourenço – pointed to the MPLA ‘old guard’ retaining power amid suspicions regarding the ambitions of Lourenco. President Dos Santos thus kept his options open and strengthened control over his party, with the strong possibility that he will stand as the party's presidential candidate, despite earlier denials. The MPLA undertook a recruiting drive especially among ex-UNITA fighters – forcibly, UNITA alleged. The MPLA, despite a lack of agreement with the opposition on many aspects of the forthcoming elections, such as the dates, plus the composition and independent status of an electoral commission, appointed a party secretary for organisation and mobilisation: Faustino Muteka, a senior party member and former minister for territorial administration will coordinate the party's electoral strategy.

UNITA, as a now unified party, and in line with other parties' attempts to move beyond previous ethno-regional loyalties, made some tentative links with civil society initiatives on combating the ‘insider-outsider’ divide in Angolan politics. UNITA initially called for early elections, but subsequently appeared to accept, or even want, delays till 2006. On 6 December, UNITA called for the creation of an independent electoral commission representing government, civil society, churches and opposition parties. On 21 October, Frente Nacional de Libertação de Angola (FNLA) reappointed its veteran leader Holden Roberto as party leader for a ten-month period after lengthy faction fighting with followers of his challenger Lucas Ngonda. The second day of July saw the assassination of Mfulumpinga Lando Victor, leader of the Democratic Party for Progress and National Alliance (PDP-ANA) and member of the council of ministers, an advisory body that brings together all the parties represented in parliament. Victor was a longstanding and vocal critic of government and his party blamed the state, pointing to previous assassinations of government opponents.

Promised parliamentary and presidential elections, for neither of which conditions are yet in place, were proposed (but not finalised) for September 2006 and 2007 respectively, with Luanda estimating their cost at $ 430 m – a sum to which the EU said it would contribute if there was “a proper and conducive environment.” UNITA and other opposition parties boycotted the constitutional commission. In September, President Dos Santos set a provisional election date. There was disagreement over whether the constitution should be redrafted before or after elections. The opposition parties put forward electoral proposals on 29 September, with the National Assembly inconclusively debating the constitutional commission in October. An Intersectoral Commission for the Electoral Process was set up in early December under the minister of territorial administration, Virgilio Fontes Pereira.

One necessary precondition for free and fair elections, the handing in of an estimated 5–10 m small arms, with an estimated one-third of Angolans being armed, was only addressed by civil society initiatives, despite a government announcement on planned civilian disarmament in March. Fears of widespread banditry after incomplete disarmament and demobilisation did not materialise. By January, the government had spent $ 187 m on the processes and by early 2004 the majority of the demobilised (mostly UNITA, but some IDPs) had left the quartering areas and returned home or to other destinations. The Angola Demobilisation and Reintegration Programme (ADRP) for 105,000 UNITA (excluding female ex-combatants until mid-2004) and 33,000 government soldiers was launched in April. Despite some disbursed funds, few promised vocational or economic support programmes were set up. The World Bank in January looked to provide 50,000 demobilisation kits for ex-UNITA soldiers as part of an ongoing project. There were few instances of social conflict involving returnees, according to the UN Office for Humanitarian Affairs (OCHA).

UNDP launched its 2004 Mine Action Programme in December 2003, after reaching only 7% of the appeal total of $ 9 m the previous year. Leonardo Sapalo, the Director-General of the National Demining Institute (INAD), said there were likely to be less than 5 m landmines, rather than the 10 m that many in the international community thought. The process of returning refugees was not completed, although UNHCR expect to finish in 2005. UNHCR managed to transport home 51,000 of its target 90,000, citing a late start, poor road conditions and rehabilitation after de-mining, and lack of onward transport. It helped another 12,000, who returned on their own, leaving an estimated 54,000 outside the country. Most refugees and IDPs returned home under their own auspices. The government announced in September that remaining IDP centres would be closed by the end of the year. 80% of IDPs were women and children, suffering high levels of mortality, malnutrition, illiteracy, poverty and HIV/AIDS. Angola submitted its first consolidated report to the Convention on the Elimination of all forms of Discrimination Against Women (CEDAW). This outlined the high representation of women in central government. In mid-July, at a CEDAW conference on women's rights in Johannesburg, the Angolan vice-minister for the family outlined the need for special resources to promote gender equality in a situation of structural, legal and traditional discrimination against women in the areas of property, inheritance and sexual violence.

The year saw some improvements in the observance of human rights, despite a Human Rights Watch report in July pointing to a substantial gap between freedoms promised constitutionally and their realisation, which is largely confined to Luanda and coastal regions. Among the three major exceptions to this improvement was the situation in Cabinda enclave, where fighting for independence has persisted since 1963. According to Human Rights Watch, security forces killed, arbitrarily detained and tortured civilians with impunity, and denied civilians access to agricultural areas, rivers and hunting grounds. After the virtual destruction of the liberation movement, Frente para a Libertação do Enclave de Cabinda (FLEC) in the previous year, there was little evidence of it abusing human rights. The Cabindan civic association, Mpalabanda, was finally allowed to take form under Catholic Church auspices in March, and a peace march went ahead in July. There were allegations of torture, harassment of journalists and opposition activists and lack of freedom of expression elsewhere in Angola. Media continued to be characterised by small audiences, low literacy rates and a government monopoly of television and controls over radio. There was continuing refusal to allow independent radio stations, such as the Catholic Radio Ecclésia, to operate outside Luanda. Hopes for a community radio station in Mbanza Congo ended when its putative premises were sacked. The mass expulsion of 62,000 Congolese and West Africans for alleged illegal diamond trading led to human rights abuses, according to different sources. Thirdly, there were allegations that UNITA was the victim of political violence by the MPLA in Kalima, near Huambo City, and Cazombo, near the Zambian border. The MPLA viewed the latter incident as being the spontaneous reaction by the local population to a disliked former UNITA general who was returning home. This may be true, although it has been used as a pretext before.

There seemed little progress in the judicial arena, such as a constitutional court, to ensure international obligations are fulfilled in any new constitution, or ending problems for habeas corpus linked to a scarcity of judges. Despite parliamentarians calling for widespread consultation in December over the appointment of an ombudsman, the government unilaterally appointed a former justice minister Paolo Tjipilica. Civil society, including churches and NGOs, remained relatively weak and unable to affect policy, despite several initiatives. Such organisations in Luanda continued to argue that yet another bilateral accord between the government and UNITA is not enough. Instead, it called for deeper political change. There were occasional protest demonstrations, including by opposition parties, despite the ever-present police forces. More newspapers were launched, although largely in the urban and coastal regions. The Inter-Ecclesiastical Committee for Peace (COIEPA) announced plans for a major conference in 2005. On 30 March, civil society organisations under the leadership of the Open Society set up the ‘Campaign for a Democratic Angola’ and called for elections in 2005.

Foreign Affairs

Angola appeared more concerned about its image internationally and within the continent, although without necessarily giving up hegemonic notions in Central Africa to rival or complement South Africa's further south. Foreign policy continued its turn away from often-violent attempts to stamp out UNITA rear bases in neighbouring countries. Luanda remained acutely aware that its fortunes were linked to international oil consumers, although its military and economic assets continued to give it bargaining power.

The growing geo-strategic interest of the US in the Gulf of Guinea – ‘the American lake’ – and Angola in particular as alternative sources of supply to the Middle East was illustrated in its better relations with Angola. The country gained a growing share of the US market and the latter has become Angola's chief trading partner, political patron and major aid donor – although not yet its chief arms supplier. In January, and contrary to its 2001 decision in relation to human rights and corruption, the US awarded Angola preferential AGOA treatment. This usually rewards countries that show progress towards market-based economies and embracing democratic principles (or, cynics would allege, which have oil that the US wants). Some saw Angola's lack of opposition to the invasion of Iraq as being rewarded by AGOA access. The US administration spoke positively about Angola's cooperation in combating terrorist links to conflict diamonds. A new US ambassador, Cynthia Efird, was appointed in early July. As well as building a large new embassy in Luanda, the US discussed military training for Angola's armed forces and improving security at airports. However, Angola showed awareness of the new balances of world power in the 21st century by entering into a loan agreement with China in March and by its increasingly close relationship with the Chinese, who are busy extending their influence in Africa.

Angola's term as non-permanent member of the UN Security Council came to an end. During its period in office, the government had agreed on a number of joint positions with Brazil, a long-time ally. The year saw further UN withdrawal as OCHA closed in June and UNDP and the Transitional Coordination Unit (TCU) were due to be taken over in 2005 by the UN Development Assistance Framework (UNDAF). In July, Angola became the 19th African country to join NEPAD's APRM signalling its commitment to a more collective African agenda. NEPAD secretariat staff doubted whether Angola would meet many of its conditions. In March, Franca van Dunem, MP, was elected a first vice-president of the new Pan-African parliament.

Reflecting moves towards a more united SADC, Angola, which had been its chair during 2004, continued to draw closer to South Africa , with whom it previously had difficult relations. It signed agreements with Pretoria on repatriating refugees, and in February the Development Bank of Southern Africa made the first South African investment loans to Angola. There was also cooperation in mining, with joint diamond mining projects, and between the intelligence services, shown by the visit of the South African Minister of Intelligence Ronnie Kasrils to Luanda in September.

A regional power agreement (WESTCOR) was signed in October with Botswana, the Democratic Republic of the Congo (DR Congo), Namibia and South Africa on using the Inga hydroelectric plant in DR Congo. Close links with Namibia were underscored by the president's visit there on 21 March. Reflecting its historic ties to West and Central Africa, Angola took part in the International Conference on the Great Lakes Region on 19–20 November 2004, a UN initiative to tackle problems facing Central Africa. The Secretary-General of the Community of Central African States is an Angolan, and the FAA, the Angolan army, is training the new integrated army of the DR Congo in Bas-Congo. Angola agreed to send 6,240 soldiers to the UN peacekeeping mission in Côte d'Ivoire (UNOCI), but after objections because of Luanda's closeness to Abidjan – paradoxically, given previous UNITA links with the government there – it withdrew. It is said Angola played a role in preventing the attempted coup in Equatorial Guinea.

There were marginally better relations with France and Switzerland. Following a three-year investigation, in December, the Swiss attorney-general dropped charges against French/Angolan Pierre Falcone, who had allegedly diverted millions of dollars of Angolan government money during complex renegotiations over its $ 2.9 bn debt to Russia (‘Falconegate’). Abandoning prosecution (although there were still charges against him in French courts and an international arrest warrant) resulted in an estimated $ 17 m being released to Angola for humanitarian purposes. Luanda pledged to honour its agreement with the Swiss government that the money released from a frozen Swiss bank account by the ending of ‘Falconegate’ would be used for landmine clearance and development.

Socioeconomic Developments

Angola, like many oil-producing countries, has the paradoxical link between the exploitation of oil, gas and minerals and high rates of poverty indicators, such as child malnutrition, low healthcare spending, low school enrolment rates and poor adult literacy (and war). As an oil enclave economy with few forward and backward linkages, the industry employs only 10,000. Over one million Angolan people remained dependent on UN-funded food aid, and one child died every three minutes of preventable causes – 480 per day. Oil accounted for 90% of exports and 80% of tax revenues and economic diversification to combat such indicators was still awaited. The effect of oil wealth is to cause economic contraction and inflation through high local prices, expensive exchange rates and depressed levels of manufacturing in other sectors, plus lack of national accountability, especially with increased world demand, tightening supply and, in 2004, extremely high prices. Angola is also the fourth or fifth largest diamond producer – another enclave sector with little regulation or accountability. Two reports in October from Global Witness and Partnership Africa Canada questioned Angola's compliance with the Kimberley process on controlling conflict (‘blood’) diamonds.

The uncertain economic situation was compounded by crackdowns on the informal sector, where most Angolans make their living. Allegations are that such crackdowns, rather than being on claimed public health or traffic circulation grounds, serve the interests of politically connected larger traders, who object to being undercut by smaller ones. The public sector remained large, at three-quarters of all formal sector employment, but poor in quality and coverage, in part due to war and the collapse of infrastructure. Employees remained poorly and spasmodically paid and trained, under-resourced and under-motivated. There has been very little trickle down, given the problems of a two or three tier society – the capital and coastal regions benefited to some extent from oil, but the hinterland struggled. The government has budgeted for 16% growth, although economist José Cerqueira said that real wages have been diminishing every year.

Minister for Public Works Higino Carneiro said in Lisbon in March that it would cost $ 4 bn to rebuild infrastructure. Many bridges were repaired throughout the year using Luanda's own money, with money for the second phase due to come from a Chinese loan. The mayor of Luanda was sacked after a Luanda management commission under Carneiro was set up in January in response to the deterioration of infrastructure in the city as well as refuse collection. There were controversial proposals and forced relocations in connection with a multi-lane thoroughfare for Luanda to relieve congestion. A new mayor has since been appointed after Carneiro was sacked in October, possibly to prevent him from controlling the Chinese infrastructural projects, which will now come under a new ‘reconstruction cabinet’.

Angola earned $ 9 bn from oil, diamonds and granite. It pumped over 1 m barrels of oil per day with new major projects coming on-stream to increase this considerably next year. Diamonds were expected to increase to 150,000 carats through the doubling of the capacity of the Catoca diamond mine from $ 50 m to $ 100 m. In April, the diamond-purchasing company Sodiam opened an office in Luanda, after an agreement with Lazare Kaplan International. Increases in coffee production were expected in the year, although low world prices and possible overproduction might affect progress. Little diversification occurred elsewhere.

Allegations of unaccountability, lack of transparency and siphoned-off oil revenues continued in the year. Hundreds of millions of dollars supposedly continued to vanish into a ‘black hole’ between state oil company Sonangol, the treasury and the presidency: Global Witness alleged that dos Santos had $ 37 m in Luxemburg banks and was due to benefit personally from Russian debt negotiations. The government admitted that high-ranking government personnel had deposited money in private foreign bank accounts. It stated, however, that this was a precaution undertaken during the civil war and was to protect the Angolan treasury. Deputy Prime Minister Jaime said in March in the US that massive discrepancies were due to bad accounting practices and different revenue conversions between kwanza and dollars by different agents. IMF figures for 2003–04 were that of an annual $ 5 bn earned from oil, more than $ 1 bn had gone into private bank accounts – three times the UN Consolidated Appeal for Angola in 2003. The missing billions were uncovered in the KPMG Oil Diagnostic Programme, which is comparing revenue reported as paid by the oil companies operating in the country – currently, mainly Total and ChevronTexaco – with the money that actually appeared on the government's books. International oil companies were, as usual, contractually not allowed (even had they wished to) to publish what they pay to the state, meaning that ordinary Angolan citizens had no information with which to call their government to account over use or misuse of state funds. In September, ChevronTexaco, the largest oil producer in Angola, announced investment of $ 11 bn in Angola between 2003–08.

In the absence of multilateral debt relief and lending to reduce its debt burden, the Angolan government preferred to seek more expensive but less onerous private loans. Despite oil prices reaching over $ 50 per barrel, the government preferred to repay its $ 12 bn debt rather than spend on development. Oil production is set up so that foreign oil companies can recoup their enormous investment outlay by taking an increased share of production revenues until costs are paid. Government can use this investment as collateral, however, to fund reconstruction or pay debts off. There have been steps towards fiscal and financial transparency in revenues and as yet unfulfilled promises on addressing the vast off-budget and unrecorded expenditure. Inflation came down and government claimed they expected it to be 30% by the end of the year, through the government selling dollars and thereby using up foreign exchange. The floating exchange rate was maintained and there were the beginnings of privatisation. Jaime told the South African journal ‘Business Report’ in March that government accounts would soon be audited by the International Finance Corporation arm of the World Bank.

In May, government followed up publication of the executive summary by publishing KPMG's full Oil Diagnostic Report on how much of Angola's oil revenues are deposited in the central bank. The cabinet/council of ministers announced agreement with its main findings and the ‘road map’ for implementation, although not with the proposal for a new agency to manage the oil industry, despite discussions with oil companies on how to manage their relationship. The government also disclosed a bonus payment of $ 300 m from the ChevronTexaco Block 0 deal and promised further disclosures. It also set up a reserve fund to hold higher than expected oil receipts, although there were few indications on how this would be spent. In October, the government announced the first-ever audit of Sonangol, although nothing has yet been made public. Some action was taken against corruption, perhaps with an eye to elections. Although this was mostly against lower level officials, the former governor of Bengo Province was fined for irregularities in awarding contracts, and a local director in Zaire Province was sacked and charged with embezzlement.

The ‘Publish What You Pay’ campaign on transparency of payments continued to target oil companies in relation to Angola and other countries. The Angolan government negotiated with George Soros's Open Society Initiative. The plan, by which transparency would be rewarded through Soros by means of increased investment in Angola, appeared to have foundered after April as oil prices rose. Angola also appeared to be a long way away from signing up to the Extractive Industries Transparency Initiative (EITI), despite some promising statements earlier in the year. Even with its enormous wealth and without corruption, Angola would find reconstruction, de-mining and rehabilitation a daunting problem. Although many see the role of the international community as crucial in both humanitarian and good governance terms, that community did not engage significantly, looking instead for an agreement between the government and the IMF that would signal IMF's belief that Angola's finances were transparently managed.

Few seemed keen on a donor conference called for by President Dos Santos in January, although Belgium offered to play host if it occurred. But insufficient confidence in the government's capacity and commitment to the development process prompted a wait-and-see attitude. Indications were that the international community was keen to invest in infrastructure but less interested in investment in the social sectors. After the government outlined its timetable for its relationship with the IMF in February, Michael Baxter, the World Bank representative for Angola, stated in November that he expected a donor conference in 2005. This followed World Bank Angolan director Lawrence Clark's statement in August that Luanda needed three stages: firstly to produce a PRSP, secondly to implement an IMF Staff Monitored Programme (SMP) leading to full agreement between the IMF and Luanda. There would then be international aid for rebuilding, including a World Bank emergency reconstruction plan – a position seemingly agreed by most international donors.

There were three IMF missions. A preliminary visit in April assessed improvements in the government's handling of macroeconomic data and transparency in oil revenue flows. A second, from 7 to 21 July, while praising the progress of Angola towards macroeconomic stability, worried about rising foreign debt levels and high-interest oil-backed loans from commercial banks. Angola joined the IMF's general data dissemination system to “enhance accountability and transparency.” The visit by its deputy managing director, Takatoshi Kato, who arrived on 31 October, saw praise for progress in transparency over oil revenues and external debt plus Sonangol transactions and macroeconomic management, including publishing of the Oil Diagnostic, despite deficiencies in fiscal information, monitoring and control of public expenditure. The IMF wanted cuts in subsidies, civilian and military expenditure, cuts in ghost workers on the government payroll and for energy, water and food prices to be brought into line with costs. Luanda worried that this ‘shock therapy’ would, by ending subsidies, affect political stability and electoral support. Although Angolan economists expected a growth rate of 10% thanks to increased oil prices, they queried this orthodox formula's suitability for a country combining great needs with poor capacity, and saw it leading to the stifling of domestic recovery by crippling small business and farmers with high interest loans. The government opted rather to increase the fiscal deficit through an expansionist state-funded reconstruction backed by outside loans. The loan agreements, high oil prices with increased oil production and bilateral lending appeared to give Angola greater leverage in its dealings with IMF.

The draft budget for 2005 was announced in October with a proposed $ 1.89 bn deficit, 8.9% of GDP, which is forecast to grow by 11.6%, a figure the government thinks will fall through rising oil taxes and greater lending. The World Bank was due to lend money from its $ 25 m trust fund, which supports reform in low-income countries under stress, calling Angola “policy poor but resource rich.” The fund is for those ineligible for IDA funding due to previous defaulting. The bank also continued its assistance to Angola with an 18-month $ 200 m credit facility from the Emergency Multisectoral Reconstruction Programme to replace the $ 125 m programme that was ending. USAID and the IMF funded a special unit in the ministry of finance to oversee financial flows.

A concessionary oil-backed loan of $ 2 bn from the Chinese Eximbank was signed in March. China needs oil for its all-out industrialisation and export strategy (it currently imports around 30% of Angola's production, just behind the US at 40%), and Angola has both oil and the need for reconstruction. The agreement between them revolved around China's providing infrastructural development, cars and transmission line equipment; helping rebuild Luanda's government buildings; a local rail network; improving the electricity supply and providing agricultural equipment. Local civil society and economists expressed concerns that the deal sought to contract only 30% with local firms, which meant that the Chinese were largely without competition. There were also questions about whether it would be elite-linked firms that got the 30% non-Chinese component. Questions were asked about future capacity to maintain rebuilt infrastructure. The opaque nature of the deal runs counter to the Angolan government's opening up its books to scrutiny, and restricts the IMF's leverage over Luanda. Rows over corruption linked to the Chinese deal led to the sacking of former Cabinet Secretary António Pereria Mendes de Campos van Dunem in December. There was also a syndicate oil-backed loan through Standard Chartered estimated at $ 2.5 bn, aimed, like the Chinese loans, at financing the public investment programme, but also paying off debts to Portugal.

Problems due to lack of international donor response to the WFP appeal for $ 3.2 m for food for returnees until the end of the year led to vulnerable groups having their rations halved. WFP needed $ 55 m over the year for 88,000 tonnes but raised only $ 47.5 m, with Luanda donating $ 4 m. Lack of funding impacted the transition from emergency to recovery. According to the WFP Vulnerability Assessment for 2004–05, 1.5 m people still faced food insecurity, with most of the population of 13.5 m living in dire poverty. Lack of donor response meant slow distribution of seeds and tools and delays in de-mining for returnee areas. Less than 60% of the UN Consolidated Inter-Agency Appeal for Angola (the last) of $ 262 m ($ 116 m) was received by the end of the year, despite donations from the EC and France. WFP was still feeding a million people at the end of the year, despite cuts. Major NGOs had no funding from the Appeal for, for instance, basic sanitation in a situation where Luanda, a city built for 500,000 people, was growing rapidly towards a population of 4 m, the majority without access to clean drinking water.

The Luanda government announced a Poverty Reduction Strategy Paper (PRSP), entitled ‘Estratégia de Desenvolvimento de Angola até 2025’. It identifies as a long-term project water, sanitation, education and health infrastructures. As with the rest of the PRSP process that began in 2000, there was very little consultation with civil society and the latter described it as a shopping list rather than a plan of action and planned an ‘observatorio’ in 2005 to monitor progress. Against the background of more than one million children estimated to be outside the formal education sector, the ‘education for all’ programme calling for free compulsory and quality education by 2015 and full gender equality was launched in January with Japanese funding through UNESCO. Building began on a number of schools. Angola reported for the first time to UNCHR on the treatment of children. Deputy Prime Minster Aguinaldo Jaime promised in November that there would be a dramatic rise in the 2005 budget for social, health and education spending.

The year saw greater recognition of the need to prepare for an expected rise in HIV/AIDS, with its proven correlation to poverty and conflict. Statistics had indicated a prevalence rate of 5.5%, rising in urban areas to 10%, although these are likely underestimates, with increased movement of population likely to speed the pandemic's effect. A United Nations resolution of 21 December noted the lack of reliable statistics and urged Angola to improve data collection. In December, the World Bank approved a grant of $ 21 m for an HIV/AIDS-, malaria- and TB-control project, which together account for 75% of deaths in Angola. Rural security was not helped by ‘fazendeiros’ (large-scale landowners, often linked to the elite) fencing off rural land in places where the system of traditional land rights determined by elders was either under threat or had collapsed during the war. The application of the new land law was uncertain, although unlikely to help poor rural Angolans. The government still needed to address HIV/AIDS and associated vulnerabilities in rural areas where access is difficult. The country as a whole saw better (if patchy) harvests than its neighbours (except Zambia). In line with other SADC countries, the government confirmed its ban on GM foods, including unmilled US food aid, despite reports of local farmers sowing GM seeds.

Little happened in terms of growth beyond the capital-intensive oil sector to create the conditions for labour-intensive poverty-reduction and to allow a genuine private sector to develop. This would generate revenues available for social investment and for the increased delivery of social services. Despite rhetoric on increased transparency, accountability and democratisation, little was accomplished in the year to overcome the gap between rulers and ruled. Nor was there much to overcome the needs or instability in rural areas or ‘musseques’ (shanty towns). Given the interest of key members of the elite in not changing the patronage system (often called the parallel state), Luanda moved slowly in seizing the opportunities presented by peace and rising oil prices. There remained a need to end corruption and tackle poverty, allow for the development of an independent private sector with an open and transparent tendering process and to transform the political system into a pluralist democracy, including addressing the exclusion of the poor and marginalised, especially women. The underlying unresolved problem was the ‘resource curse’ of oil-based economic enclaves with greater external than internal linkages, meaning a lack of reciprocity between domestic rulers and ruled in all spheres. Despite being the second largest oil producer in sub-Saharan Africa, the country ranked 166 of 177 in the UNDP's Human Development Index.