Country Report Angola
- ID: 2114010
- February 2016
- Region: Angola
- 24 Pages
- The Economist Intelligence Unit
The Ministry of Finance has published documents detailing how some US$6bn of Chinese credit will be spent.
According to the ministry, US$5.3bn of the loan will be used to finance 155 public investment projects around the country. These include work on a dam in Kwanza Norte; several new roads and purpose-built industrial hubs; the construction and rehabilitation of hospitals, medical centres, schools, universities, teacher training colleges; upgrade work on Cabinda's airport; domestic water and electricity connections; and irrigation channels to support irrigation projects. In the past, Chinese money has often gone towards big-ticket items such as sports stadiums and government ministries, which have been more about show than utility. However, directing this Chinese money into smaller-scale essential infrastructure projects that are part of the public investment programme is a sensible use of the funds at a time when Angola's public spending is being squeezed by the low price of oil.
As with previous Chinese financing, the bulk of the money will stay in China, and Chinese firms will be paid to carry out the work in Angola. A list has been published of 37 "pre-qualified" Chinese companies that will begin bidding for the projects soon. This method-known as the "Angolan Mode"-has attracted criticism within Angola, notably in relation to the importing of Chinese labour forces and materials, which does little to create local jobs, pass on know-how or support domestic manufacturing. However, in what appears to be a concession to its critics, with this credit allocation, the government has specified that at least 20% of the work must be subcontracted to Angolan firms and that local construction materials should be used where possible (although it remains to be seen whether this will be enforced). The government is claiming that the projects being paid for by the credit line will create 365,000 jobs, although it is not specified how many of those will be for Angolan nationals or how long the positions will last. SHOW LESS READ MORE >