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FACTBOX-Key political risks to watch in Angola
September 30, 2010 / 3:10 PM / in 7 years

FACTBOX-Key political risks to watch in Angola

LUANDA, Sept 30 (Reuters) - Reports of an imminent government reshuffle and rising tension between the ruling MPLA party and the main opposition UNITA party are worrying investors in the major African oil producing nation of Angola.

The MPLA, which emerged victorious from a 27-year civil war against UNITA in 2002, has been accused of corruption and of not doing enough to tackle widespread poverty.

Other concerns include uncertainty about a successor to President Jose Eduardo dos Santos and heavy dependence on oil revenue, feeding demands for more transparency as Angola tries to regain investor confidence after the global financial crisis.

GOVERNMENT SHAKEUP

Media reports about an imminent government reshuffle and the possible sacking of powerful Economy Minister Manuel Nunes Junior have raised uncertainty about the economic outlook.

Nunes Junior oversees monetary policy, a $1.3 billion loan programme with the International Monetary Fund and is also in charge of setting up the country’s first sovereign wealth fund.

Transport Minister Augusto Tomas, who has won praise from the ruling MPLA party for restructuring national airline TAAG, is seen as a possible successor to Nunes Junior.

But analysts say Nunes Junior’s removal would harm investor confidence as the economy slowly recovers from the global economic downturn. The government estimates GDP will grow 6.7 percent this year, up from 2.4 percent in 2009.

Central bank head Abraao Gourgel and Finance Minister Carlos Lopes could also be sacked, according to reports.

Watch out for:

- A speech by the president to parliament on Oct. 15 where he could announce the shake-up.

- More names being floated as successors in local media.

POLITICAL BICKERING

The campaign for Angola’s 2012 elections is off to a shaky start with the opposition UNITA party saying the deadly riots in Mozambique over price increases last month could lead poverty stricken Angolans to do the same.

UNITA leader Isaias Samakuva made these comments after the government raised fuel prices by up to 50 percent last month.

The polls in Angola will only be the second since the end of the civil war that pitted the Russian and Cuban-backed Popular Movement for the Liberation of Angola (MPLA) against UNITA, backed by the United States and apartheid South Africa.

The MPLA, which won the war in 2002 and 82 percent of the vote in elections two years ago, is likely to win the elections in 2012, but it looks increasingly worried about UNITA’s accusations of not doing enough to fight poverty and corruption.

The army and police have so far deterred unhappy Angolans -- an estimated two-thirds live on less than $2 a day -- from publicly protesting against the government.

Watch out for:

- Protests from taxi drivers forbidden from raising fares.

- Signs of civil unrest in shanty towns around Luanda.

TRANSPARENCY

Dos Santos has been uncharacteristically vocal about corruption after his government turned to the International Monetary Fund for a loan last year.

His comments on zero-tolerance for corruption prompted parliament to pass a law this year to punish officials caught stealing from the state.

But it is hard to change the rules of the game when the players remain the same.

The decision-making process tends to be opaque, with access to the key players in the government limited. The private media is also seen to be controlled by members of the government. [ID:nLDE67A112]

Reliable statistics and market-relevant information are scarce, with the MPLA holding a huge sway over the media.

Such lack of transparency can lead to unwelcome surprises, such as when the Angolan government announced commercial arrears of an estimated $6.8 billion far exceeded prior expectations.

Watch out for:

-- The government delivering on its pledges to crack down on corruption.

- The government announcing a new batch of surprising debt numbers.

SUCCESSOR

The MPLA’s landslide victory in the first post-war election in 2008 left political rivals in tatters, enabling dos Santos to change the constitution and increase his powers.

The new charter will enable the 68-year-old ruler, widely expected win the 2012 election, to remain in power until 2022 although there is speculation he will retire before then.

The big question is whom dos Santos will pick as vice-president for the race. That person will be seen as the successor to one of Africa’s longest-serving leaders.

Despite criticism for holding power for more than three decades and having a huge influence over politics and the economy, dos Santos is widely seen as key to peace and stability.

Vice-President Fernando Piedade Dias dos Santos is a natural successor to dos Santos but he has health problems and could be outflanked by ministers of state Manuel Vieira Dias or Carlos Feijo.

Watch out for:

- Changes in the government ahead of the 2012 elections.

- Any comments from dos Santos about his plans to retire.

OIL DEPENDENCY

Oil has helped Angola pick up the pieces of a devastating civil war to become sub-Saharan Africa’s third biggest economy after South Africa and Nigeria. But as in many oil producing nations, Angola’s oil dependence can also be a curse.

Despite moves to diversify and invest in sectors such as agriculture, oil still accounts for 90 percent of Angola’s export income but employs less than 1 percent of the population.

The oil price slump in 2008 left Angola struggling to pay civil servants and forced it to delay paying billions of dollars to construction firms rebuilding the nation after the war.

In Angola’s oil-rich province of Cabinda, rebels from separatist group FLEC fatally attacked the Togo soccer team in January as they made their way to the African Nations Cup.

The roots of the conflict are long and complex but one grievance is that many Cabindans have is that they see little of the oil that comes from their land. FLEC leaders in exile called off their armed struggle in July.

The IMF, the World Bank and ratings agencies, which have given Angola the same B+ rating as Nigeria, have all urged the African nation to do more to diversify its economy.

Should Angola fail to broaden its economy, it risks becoming another Nigeria where quarrels about the distribution of oil wealth have fuelled civil unrest.

Angola rivals Nigeria as Africa’s biggest oil producer.

Watch out for:

- New policies to diversify the economy into sectors such as agriculture.

-- The outcome of peace talks between government and FLEC.

-- Ability of the government to pay back $6.8 billion in late bills to construction firms.

POVERTY

More than eight years since the end of the civil war, millions of Angolans still live in shanty towns while unemployment is running at around 50 percent. Last year’s recession has only increased their anger and frustration.

Their resentment is stoked by reports of government corruption and plans to relocate millions of people living in huts around Luanda to unfinished housing projects further away from the capital.

Dos Santos has pledged to build 1 million homes for the poor in four years at a cost of $50 billion but such plans have repeatedly been delayed.

The war between the MPLA and UNITA devastated Angola’s farming sector, forcing millions to flee to the cities.

Watch out for:

- A repeat of street protests last year over forced evictions

- Government uses security personnel to force residents out of shanty towns, which could spark protests. (Editing by Jon Herskovitz and Giles Elgood)

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