USITC STUDY ON SUB-SAHARAN AFRICA: ANGOLA OVERVIEW

UNCLAS SECTION 01 OF 03 LUANDA 000823 SIPDIS STATE FOR USITC, AF/S AND AF/EPS E.O. 12958: N/A TAGS: ETRD OTRA AO SUBJECT: USITC STUDY ON SUB-SAHARAN AFRICA: ANGOLA OVERVIEW REF: STATE 85109 SUMMARY -------------- ¶1. (U) Embassy Luanda is pleased to provide the following overview of Angola's infrastructure conditions and export competitiveness for the USITC. In the six years since Angola emerged from civil war, the government has embarked on huge public investment projects to revitalize the country. Investments to rehabilitate roads, ports, the agricultural sector and the electric grid are starting to develop a friendlier investment climate. END SUMMARY. Overview of Land Transport -------------- ¶2. (U) At the time of independence in 1975, Angola had a total of 76,676 kilometers of road network: 7,777 kilometers of paved road, 28,018 kilometers of gravel roads and 36,528 kilometers of earth roads. During Angola's decades of civil war, roads and bridges were destroyed, leaving communities isolated for many years. Railway infrastructure and rolling stock were devastated. Airport runways and other airport infrastructure were destroyed as well. Much of the road network has received little or no maintenance since war's end in 2002. According to the Ministry of Public Works, by the end of 2008, 4,500 kilometers of regular roads will be rehabilitated. Landmines continue to be a concern in Angola. The government, with assistance from international donors, is actively clearing landmines, but much work yet remains. ¶3. (U) Since war's end in 2002, the government has been rebuilding transportation networks. Construction companies from China, Portugal, and Brazil are busy throughout the country. The quality of the new work was questionable, especially at first, but improved inspection regimes are knitting the country back together again. Similarly, the major east-west railroads are under reconstruction, with completion dates from late 2008 through late 2011. Port services -------------- ¶4. (U) Angola has four main ports: Luanda, Lobito, Namibe and Cabinda. The port of Cabinda serves the northernmost province. Plans drawn up to construct roll-on/roll-off container terminals at Luanda and Lobito have not been implemented. There are two terminals at the Luanda port: Unicargas (for both container and general cargo; and Multi-terminals, for general cargo. ¶5. (U) The port of Luanda is a natural harbor where the seaward shelter provided by Luanda Island and the bay secure anchorage for vessels of nearly any size. The maximum draught at the access channel is 9.5 meters and at the quays 9.5-10.0 meters, with the exception of the local traffic terminal at Cabotang, where it is 3.5-5.5 meters. One constraint on port operations is port access. The Port of Luanda is in the center of the city, which seriously constrains its growth in the medium and long term. New sites are being developed north of the present site. Construction of a new container terminal in Cacuaco, about 20 km from Luanda, and development of a dry port in Viana, 30 km from Luanda, are planned. At least US$70 million will be invested in the dry port project by the Multi-Parks Company. In 2007, the port of Luanda handled 444,867 containers, corresponding to 3,032 million tons of cargo, compared to 3.19 million tons in 2004, and 2.01 million tons in the first six months of 2005. The Port Authority projects port traffic to reach 7.4 million tons in 2010 and 12 million tons by 2020. ¶6. (U) The port of Lobito is also important and likely to become more so when the railroad to Huambo is completed. Lobito's waiting time of two or three days compares favorably with Luanda's, which varies between weeks and -- in extreme cases -- several months. Port of Lobito Deputy Director Pedro Joaquim partly attributes Lobito's faster times to a difference in port organization. Luanda's piers are proprietary, while the Port of Lobito handles all ships on a space-available basis, according to Joaquim. ¶7. (U) The commercial port of Namibe was built in 1961 and is considered Angola's best natural port, with a harbor up to 12 meters deep and a large bay with ample room to expand port activities. It is also the most run-down of Angola's ports. Many of the port's cranes are out of repair. The functional cranes date back to the 1970s. The port authority plans to lengthen the commercial port by 500 meters and to rehabilitate the iron-oreloading terminal to accommodate ore from the planned reconstruction of the iron mines in Huila province. ¶8. (U) In 2005, the port of Cabinda launched a four-year plan to modernize existing infrastructure and develop new capacity, with the aim of boosting its regional importance. In 2007, as part of the central government's Public Investment Program for Cabinda, the port was granted $100 million to finance expansion costs. The enhancements, which are expected to be completed this year, will LUANDA 00000823 002 OF 003 allow the port to receive ships of greater capacity and also handle cargo for neighboring countries. After the expansion, Cabinda's port will have a nine-meter-deep maneuvering basin for ships with a loading capacity of over 1000 tons, and its access channel will be 80 meters wide, allowing for the simultaneous passage of two ships. With the improvements in place, officials estimate that the port will register annual growth of 50-70% from 2008 to 2010. In 2002, the port of Cabinda received roughly 2,000 containers. In contrast, the port received roughly 12,000 containers in 2007. Electricity distribution -------------- ¶9. (U) Empresa De Distribuicao De Electricidade (EDEL) is responsible for supplying electricity to Luanda, while the Empresa Nacional de Electricidade (ENE) is responsible for 15 provinces in the rest of the country. Both operate under the Ministry of Energy and Water (MINEA) and are subject to government price controls. The current price regime does not cover operating costs, and, faced with difficulties in collecting revenue, ENE and EDEL require subsidies to stay in operation. ¶10. (U) Electricity distribution is moving slowly toward technical adequacy in Luanda, but managerial problems remain. A new dam built with Brazilian assistance produces sufficient power for the city's needs, but the transmission lines are still not reliable. Prices will have to be raised to fund operations, but a tradition of free electricity presents problems for implementing new rate structures to pay for improvements. Hydroelectric power served many cities before the civil war, but the dams and their generators must be repaired if power is to be restored. Consequently, hydroelectric power restoration is moving forward slowly. ¶11. (U) MINEA has four dam projects underway and plans to increase transmission capacity and create a national electrical grid serving 15 cities. Over the next seven years, MINEA plans to add 6,000 MW in generating capacity nationwide. The Agricultural Sector -------------- ¶12. (U) Agriculture, including livestock and forestry, accounts for about 8 percent of Angola's GDP. The main crops are bananas, plantains, sugar cane, coffee, sisal, maize, cotton, cassava, tapioca, tobacco, and vegetables; livestock and forest products could also become significant. Of the country's area of 124 million hectares, 54 million are potential pasture land and 35 million are arable. Of the three main agricultural and ecological zones, one is dependent on seasonal rains, the second is a transitional zone suitable for growing drought-resistant crops, and the third is an arid zone that would require substantial irrigation for agriculture. Areas of rain forest are substantial. ¶13. (U) Before independence, Angola was a major agricultural producer, self-sufficient in food, and a substantial exporter of many crops. At present, the country has no formal agricultural exports, and even informal cross-border trade with interior countries is limited, given the sparse populations along the eastern borders and the distance between these borders and major production areas. The damage caused by the civil war forced the country to become a major net importer of food and agricultural products. Coffee production was the most severely affected, dropping to near zero. Before its civil war, Angola was the world's fourth largest exporter of coffee. Exports plummeted in 1974, right before independence, and have not recovered. Both Arabica and Robusta coffee bushes remain in place in a number of provinces and continue to be harvested. One association of growers claims it could readily produce 2,000 metric tons per year of organic coffee. Staple grains were adversely affected during the war. Roots and tubers were less affected and production has increased dramatically in recent years, especially cassava. ¶14. (U) Angola produces citrus fruit, but not for export. It does not produce shea butter in significant quantities, nor does it export pineapples. Angola does not use or export hides in commercial quantities. It has no leatherworking industry, does not raise rubber trees and does not have a rubber industry. Textiles and Apparel -------------- ¶15. (U) Angola has no textile or apparel industry. The last textile plant in Angola closed in 1998. One company twice attempted making clothing in Angola, but abandoned the effort because of costs and difficulty in training staff. That company moved its operations to India. Tourism Services -------------- ¶16. (U) Angola does not have a tourism industry. Angola's immigration law does not recognize tourism and requires a letter of LUANDA 00000823 003 OF 003 invitation from a domestic sponsor for all visitors. Hotel space is extremely tight, especially in the capital. To have a reasonable chance of reserving a room, business visitors need to make arrangements three months in advance. Construction of new hotels is currently underway in Luanda and other cities in the country. Angola does have tourism potential, particularly in eco-tourism. It possesses a long and diverse coastline and various ecosystems. Wildlife in the South of the country is slowly migrating north from Namibia after fleeing during the civil war. HAWKINS