ANGOLAN GOVERNMENT FOOD DISTRIBUTION SYTEM GETS

UNCLAS SECTION 01 OF 02 LUANDA 000474

SIPDIS

SENSITIVE
SIPDIS

JOHANNESBURG PASS TO FCS

E.O. 12958: N/A
TAGS: ECON EFIN ETRD AO
SUBJECT: ANGOLAN GOVERNMENT FOOD DISTRIBUTION SYTEM GETS
OFF THE GROUND


LUANDA 00000474 001.2 OF 002



1. (SBU) Summary: At a program cost of nearly USD 1 billion,
the GRA,s food distribution and retail system, PRESILD, is
up and running with great publicity and fanfare. Under
PRESILD the GRA will create regional bonded warehouses,
supermarkets in every province, open air markets in every
municipality and even purchase bulk food commodities from
abroad in an attempt to make more food available throughout
the country at lower prices and under healthier conditions.
Using foreign partners to construct and manage the markets
initially, the GRA plans to privatize all the retail
components by 2010. While the first markets have brought
lower priced and higher quality goods to the market, the cost
of the goods is still prohibitive for even Angolans who make
the minimum wage (USD 93 per month). Many gaps remain on how
the GRA will overcome the lack of roads to transport products
efficiently and cheaply to the interior; how the spending
will be monitored, and the level of transparency with which
the privatization will occur. End Summary.

What is PRESILD?
--------------

2. (U) PRESILD - The Program of Restructuring of the Logistic
and Distribution System of basic products to the people is a
near USD 1 billion system designed to provide distribution of
food throughout Angola which includes three regional bonded
warehouses, thirty-one retail supermarkets and 162 open
market facilities ) one for each municipality in Angola.
The aim is twofold: to ultimately enable the lower class to
secure basic goods at a reasonable price and to develop
outlets and the distribution system for locally-grown goods.
In addition, the government will take on purchasing of food
commodities from overseas in order to bring products to
market more cheaply. In early announcements of the project
it was also touted as a way to &break the foreign-held
monopoly on food distribution which has caused such high food
costs in Angola.8 Note: This was directly aimed at a group
of Lebanese immigrants, who in partnership with
well-connected Angolans, dominate the import of food stuffs
into Angola. The government has backed off this argument
after the markets began opening, however. End note.


3. (U) The GRA has opened six retail supermarkets since March
8, and in this first phase ending June 15, plan to inaugurate
a total of eight Nosso Super,s (&our supermarkets8). The
government has developed a lavish advertising campaign for
the PRESILD project, and inundates the two national
television stations with commercials. Each new Nosso Super
is inaugurated by a high-ranking government official, with
President dos Santos taking the honors for the first super
market, and each opening has enjoyed wide print coverage in
the government-owned daily newspaper.


4. (U) Three supermarkets have been opened in Luanda, others
are located in Lubango, Huambo and Malanje cities. The three
in Luanda are located in the lower class areas of the city,
near the intended consumer. Constructed by the Brazilian
construction firm Odebrecht, according to a basic design and
incorporating many pre-fab parts, the structures can be
completed fairly quickly. P/E Chief visited the Sambizanga
store: about 30,000 square feet large, well-lit, clean, with
shelves stocked with goods. The staff of seventy, many of
whom had been recruited from the Shoprite supermarket (a
large South African run supermarket),was friendly and
helpful in answering questions. The items in the basket of
basic goods were prominently displayed along with a price
list. Some locally grown fruits and vegetables were
available as well.


5. (U) The basket of thirteen basic items (flour, sugar,
salt, ground manioc, ground maize, powdered milk, dried fish,
rice, beans, palm and vegetable oils, and soap) sells for
6,955 kwanzas, (USD 93) and is meant to provide basic foods
for a family of six for one month. However, these items are
only slightly cheaper at Nosso Super than at other grocery
stores in town, and the total cost is still very high in a
country where the minimum wage (recently increased) is only
USD 93 per month.

Who Runs PRESILD?
--------------

6. (SBU) Officially PRESILD is under the leadership of
Minister of Finance Pedro de Morais, but Vice Minister of
Commerce, Manuel da Cruz Neto, has been the hands-on leader
of the process. He told emboffs that the PRESILD team was
largely pulled from various ministries including Finance,
Commerce, Transportation, and Industry, but has no dedicated

LUANDA 00000474 002.2 OF 002


office space any only a few of its own employees. Cruz Neto
said that in addition to developing a food distribution and
retail system, the government also wanted to develop local
capacity to manage retail outlets and create employment. He
noted that the GRA plans to privatize the entire system by

2010. The system will include three enormous warehouses, one
each in Luanda (Vianna); Benguela and Malanje to serve as
central distribution points for the north, center and
southern parts of the country. These will begin operation in
early 2008. The thirty one supermarkets are currently being
constructed and operated in partnership with foreign
companies but will pass to Angolan ownership within three
years, in theory allowing the Angolan owners time to train
along side more experienced management. Finally, the third
phase of the project will encompass 162 open air markets )
one for each municipality in Angola. These are designed to
take the place of the informal outdoor markets which have
grown spontaneously. They will be equipped with electricity,
running water, refrigeration and washable surfaces in order
to ensure healthier standards by providing vendors with
sanitary means of safeguarding foodstuffs. These municipal
markets will also include areas/shops for non-food items.
Cruz Neto told us that the PRESILD team had conducted focus
group sessions with current market entrepreneurs to learn
their needs and discuss market realities such as how much
additional rent they would be willing to pay for such basic
amenities. These too will be privatized once operational and
self-sufficient by 2010.

Comment: Why PRESILD?
--------------

7. (SBU) The GRA has devoted enormous time, energy, and
funding into creating PRESILD. Some critics dismiss it as a
return to a socialized economy, while others chalk it up as a
pre-election deliverable. On paper it is an impressive
project with many good intentions. First, in a disease
prevalent country such as Angola, providing healthy
conditions for food storage and sales should have a great
positive effect on the population. Second, before the civil
war the Planalto (interior highland) provinces were the
breadbasket of Angola and currently produce fruit and
vegetables which rot on shelves due to the lack of an
internal distribution system. By creating such a
distribution system and retail outlets, the government can
provide outlets for small farmers. Five years after the end
of civil war, the Nosso Supers are the first supermarkets to
appear in many provincial capitals (the South African
Shoprite group is also expanding, but only to the larger
regional capitals.) The ultimate success of this project
depends on two factors -- improvement of the road
infrastructure and increased domestic agricultural
production. While efforts are underway to do both, it is
unclear that they will be completed by 2010. Without more
inexpensive and higher quality local production, and the
means to get it to market, it is unclear that the Nosso
Supers and future open air markets will be able to operate
profitably and remain stocked. The future privatization of
the system should also provide and excellent chance to gauge
the extent of the Government's improvements in transparency.
End Comment
FERNANDEZ