* 27-year civil war destroyed agriculture
* Angola’s economy reliant on oil exports
* Banana, sugar farming set to cut $5 bln/year food bill
* Economists say dos Santos must cut military spend
By Joe Brock
CAXITO, Angola, May 19 (Reuters) - After decades of civil war destroyed Angola’s fertile farmland and a booming oil industry pushed out all other commerce, Santa Rodrigo wondered how she could ever bring up her five children in the poverty that surrounded them.
Angola’s government spends more on its military than any other department, and is often criticised for failing to answer the needs of its population - there are many like Rodrigo - while industries like manufacturing and food production have collapsed.
So the result of an investment in 2005 to irrigate the land where Santa Rodrigo lives - Caxito, around 60 kilometres from the capital Luanda - is being seized upon by observers and economists as a success story they hope to see repeated.
Banana plantations are thriving again in the tropical plains of Caxito, to such an extent that Angola, which imports 90 percent of its food at a cost of $5 billion a year, has finally been able to stop importing bananas.
And Rodrigo has a job, one of 9,000 Angolans employed on the plantations. It’s a rare case of agricultural progress in a country where only 30 percent of land is cultivated.
“It was very difficult before the bananas returned. No one had jobs, we struggled to eat,” said Rodrigo, 34, slashing down the yellow fruit that hangs in bulging clusters beneath a canopy of giant green leaves.
“It can’t just be oil in Angola. It has only helped the rich people get richer,” Rodrigo added.
Like most projects in Angola, Caxito’s renewal has been paid for with the Chinese money that began pouring in after Beijing and Luanda agreed huge oil-for-infrastructure deals in 2004.
As a result banana production in the Caxito project has risen from 76,000 tonnes in 2012, to 247,000 in 2013, not only ending banana imports but also allowing exports to neighbouring Democratic Republic of Congo. A new processing plant there will soon produce banana chips, sweets and turn leaves into packaging.
“This project has made a huge difference to the region, not just the jobs but it provides food and companies have helped with schooling and healthcare,” said Joao Mpilamosi, President of agriculture firm Caxito Rega.
Under Portuguese rule, Angola was the world’s third largest coffee producer and exported sugar, cotton and rubber.
But 27 years of civil war devastated the farmland across the southern African country.
Ten million land mines were scattered across its terrain and infrastructure was destroyed. By the time the war ended in 2002 the government’s priority was its 50 billion-a-year in oil sales, which swiftly took a stranglehold on Africa’s third largest economy.
Agriculture still accounts for only 10 percent of GDP while crude oil exports, around half of which go to China, account for around 95 percent of foreign exchange revenues.
Other farming projects are in the works, however.
A 100,000-acre farm around 300 kilometres east of Luanda owned by public-private partnership Biocom is due to produce 260,000 metric tonnes of sugar by 2018, ending imports.
Biocom is owned in a partnership between state-oil company Sonangol, a government investment fund, Brazil’s Odebrecht and Damar, an Angolan company owned by Vice President Manuel Vicente and top state security officials.
Despite pockets where farmers are flourishing again, Angolan agriculture still has major problems to overcome.
The government had to slash a third off its budget and seek $10 billion in foreign loans after a glut in global production caused oil prices to halve and cost the country a big drop in oil revenue.
This means already paltry investment in agriculture may slip further still.
On top of this external investment remains tough to attract. Angola is still one of the world’s most difficult places to do business due to bureaucracy and corruption, while weak infrastructure pushes up costs.
The country ranked 181 out of 189 economies in the World Bank’s ease of doing business survey.
Some feel Angola will only be able to feed itself properly if the government changes its spending priorities.
President Jose Eduardo Dos Santos is often criticised for continuing major military spending, the highest in Africa, at a time of peace and when government revenues have dropped. His opponents say the military is used to extend his 36 year rule.
“We should acknowledge the government has made progress in agriculture but they must do much more,” Angolan economist Manuel Jose Alves da Rocha told Reuters.
“With oil revenues down, agriculture spending is falling while defence has not been cut.”
Farmers in areas like Caxito are hoping dos Santos diverts more oil funds away from defence and into industries that support job creation in the war-wrecked country.
“It’s better we grow bananas,” said Bellita Pasqoul, 20, tossing bunches of fruit into water troughs.
“We can’t eat the oil.” (Aditional reporting by Herculano Coroado; Editing by Sophie Walker)