Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN) Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN)

Rehabilitating the coffee sector in Angola
George Odour

Acknowledgements: FANRPAN acknowledges the New Agriculturalist website as the source of this report:

An overview of Angola:

Situated on the South West coast of Africa, Angola is the fourth largest country of Africa (1.2 million km2) and can take advantage of considerable natural resources - agricultural (manioc, maize, coffee), mining (diamonds) and oil. The country's fertile land is plentiful for its population of about fifteen million inhabitants. However, Angola's full growth and development potential is not exploited yet. After three consecutive decades of war (independence from 1961 to 1974, civil war between the 1976 to 1991; and the third war period following the outcome of the first round of presidential elections held in September 1992 interrupted by 4 years of peace, which were initiated with the signing of the Lusaka Peace Accords, in November 1994). Since the April 2002 Luanda accords, peace has returned. About 4 million displaced persons have returned to their communities, including most former combatants from UNITA.

The agricultural sector in Angola has especially been devastated by 27 years of war, and currently represents about 8% of GDP. Investments are concentrated in the oil sector. The marketing system has been affected, roads, bridges and other rural infrastructure have largely been destroyed, and as many as 10 million land mines are scattered about the country. According to the Mine Action Program, 4,000 mine fields have been identified and the de-mining program concerns 4.7 million landmines, 26,000 km of roads, at a cost of US $285 million. Since 2002, 27 roads and 374 villages have been opened by the UN security team. The country depends on food aid to meet its internal requirements and agricultural exports have virtually disappeared.

This is in sharp contrast to both the situation of thirty years ago and the potential of the sector. At one time Angola was not only self sufficient in food production, but it exported surplus maize from its smallholder sector. In addition, the coffee sector was a major earner of foreign exchange. At Independence agriculture was hard hit by the exodus of Portuguese settlers who had run large farms and also provided the marketing and credit networks for smallholder farmers. The Government tried to take on these functions and also nationalised most of the large farms which had been abandoned, attempting to run them as state farms. The state tried to exercise controls throughout the agricultural sector, regulating prices, and using parastatals for the import and distribution of both agricultural inputs and some food products.

The attempts at central control and planning by the Government were not successful. By the mid 1980s the Government began to change its policies, opting for a more liberalised economy with an increased role for the private sector. In agriculture, this meant selling or turning over some of the large state farms to private operators. In addition there was some liberalisation of prices.

On an economic level, the successive processes for economic stabilisation brought out a recovery and a real GDP growth around 10% between 1994 and 1996. In 1997 real GDP growth declined to 7.6% and for 1998 a further reduction was expected. Between 1994 and 1998 the contribution of oil exploitation to the GDP increased from 35% up to 45%. At this time, it represents nearly half of GDP and about 90% of Government revenues and export earnings. Angola increased its oil production from 903,000 barrels/day (bbd) in 2002 to 1,230,000 in 2005. High oil prices in 2004 and part of 2005 have translated into high export revenues. Output per capita nearly doubled from US$764 in 2002 to US$1,550 in 2005. However, Angola is still classified as a developing country under stress. Real GDP reached 11.7% against 3.4% in 2003. Despite its abundant natural resources, 64% of the population lives with less than a dollar a day. Subsistence agriculture still drives the rural economy. Improvements in transport infrastructure are desperately needed, as well as increasing access to inputs like seeds and fertilizer, and opening up marketing opportunities. However, according to the World Bank, many producers may be unable to compete with imported food at the current exchange rates once road links have been fully restored. Given the risks of inefficiency and corruption, it cautioned against renewed public sector involvement in providing inputs or marketing1.

Since 2000, Angola has embarked on a programme of economic stabilization leading to lower inflation (from 268% in 2000 to 55% in 2004, further expected to decline further to less than 20%). Since May 1999, following the liberalisation of the exchange policy, the Central Bank of Angola publishes the daily Kwanza reference rate (AOK), which is the moving average of commercial bank lending rates. The difference between the black market and the official exchange rate is minimal (less than 1%).

  1. IMF Article IV Staff Report - 22 February 2005

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