Angolan Embassy in Canada

SPEECH BY MINISTER OF THE ECONOMY OF THE REPUBLIC OF ANGOLA
CHATHAM HOUSE CONFERENCE
WHAT IS THE FUTURE FOR AFRICA’S EMERGING MARKETS?
London, 7 May 2009

Dr Robin Niblett, Director of Chatham House
Professor John Atta Mills, President of Ghana
Lord Mark Malloch-Brown, Minister of State for Africa, Asia and the United Nations, Foreign and Commonwealth Office

It is for me a great honour to have the opportunity to say few words in this respectable forum, at the Royal Institute of International Affairs. The Chatham House has earned an immense prestige and recognition as one of the leading institutions in investigating and analysing fundamental international issues, promoting since 1920 a better comprehension about this kind of issues, with a particular prominence for the current relations between the nations, in all the regions of the world.

As the very interesting discussions have clearly shown, the subject of this conference could not be more timely or, at the same time, more relevant to our region, the African continent.

It was here in England, just over 200 years ago, that what historians refer to as the period of modern economic growth started. Before then there was no significant distinction between the pattern or rate of growth of different countries, in terms of growth or income per capita.

It was with the industrial revolution that was born here and spread to other European countries and crossed the ocean, establishing itself in the United States, that physical labour was progressively replaced by machines and technology.

Two hundred years later, we are now witnessing a revolution of identical scope and consequences. Emerging from the foundations of industrial society is a society of knowledge, a globalised society in which information systems are increasingly interlinked and information technology is based on that real world network, the internet.

The decisive factor for increasing productivity and for continual economic growth has ceased to be simply the physical labour force, the mechanisation of production or even finance capital. The intelligence of solutions and modern technology based on highly complex modern technology have become the decisive factors for unceasing economic growth. The decisive factor for the continual growth of countries has ceased to be objects and become ideas. Objects wear out and lose value in time, while people’s capacity to produce new ideas is infinite. This is why the economic growth of countries is also infinite.

How is Africa - this continent which in the past gained no advantage from the industrial revolution - positioning itself and preparing to face up to the unstoppable process of globalisation?

It is true that the starting point is very unfavourable for our countries. We not only have to face all the challenges confronting all the other continents in a highly competitive international climate, but we have to lay the foundations for a modern industrial society and gain the ground lost compared with other continents.

But it is also true that, unlike what happened at the begin of the industrial revolution, we Africans are today the masters of our own destiny.

The challenge facing African countries like ours is to draw the maximum benefits from this society of knowledge, so as to do four essential things rapidly:

Strengthen democracy and the internal cohesion of countries;
Develop the institutional capacity of states and achieve significant improvements in governance;
Guarantee high rates of economic growth and improve the quality of life of citizens; and
Promote better integration in international economic structures.

If we succeed in achieving these goals, we shall certainly be among the winners in the process of globalisation in which we are all involved.

My Government, the Government of the Republic of Angola, after having successfully faced many obstacles to the development of our country, including a long and highly destructive war, is committed to this challenge. We want to be among the winners in the globalisation process!

This forum is about the emerging markets of Africa as a whole. As Angola’s Minister of the Economy, I have the advantage of being able to use this closing session to talk about my country, which is really a great privilege, for which my thanks for the organizers of this event.

The Angolan people achieved peace just over seven years ago. In only seven years we have taken decisive steps, consolidating peace and strengthening democracy and national reconciliation.

The climate of peace and stability and the intelligent and realistic economic policy adopted by our Government have made it possible to consolidate macroeconomic stability and lay the foundations for rapid and robust economic development, putting the Angolan economy among those with the highest growth rates in the world. Angola can therefore, be regarded as a major emerging market in Africa.

It should be stressed that this growth rate is not merely a result of the growth of the oil industry, though Angola is, of course, still a country too dependent on that commodity. The high rates of economic growth are also a very visible result of the public investments the state has been making since the achievement of peace and once political stability was guaranteed. At the end of this seven-year period, we are proud to see that the investments have been fruitful.

There were many who advised us at the time to reduce budget expenditure and channel additional revenues from increased oil prices into a reserve fund for future generations. We did both things, since there are not contradictory. We created a National Treasury Reserve Fund to take some of the additional revenues resulting from the rise in oil prices and we invested seriously in the recovery and rehabilitation of the country’s productive and social facilities. Without the adequate physical and social facilities built today, future generations would have difficult lives.

The policy of rapid rehabilitation and modernisation of the country’s productive and social facilities led to greater movement of goods and people, decisively stimulating national and foreign private investment and starting fundamental structural changes in Angola’s economy. It should be stressed, in this respect, that since 2006, the Gross Domestic Product of the non-oil sector has grown more rapidly than that of the oil sector, which is a positive indication of the diversification of Angola’s economy.

The correctness of the economic policy is clearly shown by the fact that despite the policy of rapid recovery of facilities, the success of the policy of macroeconomic stabilisation made itself most felt in respect of inflation and the monetary situation. The national currency has remained stable, playing its role as a means of exchange and reserve of value every more effectively.

Between 1989 and 2008, a 19-year period, the Angolan economy had an average growth rate of 9% a year;
In just the last five years of that period, that is, from 2004 to 2008, the average annual growth rate was about 17.4%, which means an accumulated growth of 102.2% in real terms. That is to say, Gross Domestic Product more than doubled in five years;
In 2006 the growth rate of the non-oil sector was 25.9%, compared with 13.1% in the oil sector, while in 2007 growth was 25.7% in the non-oil sector against 20.4% in the oil sector.
In 2008 the rates were 15% in the non-oil sector against 12.3% in the oil sector.
The inflation rate has been falling from year to year, registering rates close to 10% in the past three years:

12% in 2006;
11.79% in 2007; and
13.2% in 2008.

It will be recalled that even in 1996 there was hyperinflation, with an annual accumulated rate of 3,000%.
The Government’s economic policy will be pursued in such a way that inflation will fall to one-digit rates in the next few years.

In a forum of this type we cannot but express our pride that these successes were the result of a policy formulated and implemented by Angolan technicians, specialists and leaders, at times in contradiction with the certainly well intentioned advice of some international financial organisations. In Angola we consider that it is we Angolans who have the political responsibility and patriotic duty to develop our country. It is we who know the specific aspects of our economy and the behaviour of our economic best actors. Not only do we take this responsibility on our own shoulders, but we are also capable of directing and transforming our own realities.

Angola is not a country closed to the outside world. Angola has relations with all countries in the world based on real cooperation and mutual gain. We have the best relations with the Bretton Woods organisations, the IMF and the World Bank. The last IMF assessment of the Angolan economy confirmed the successes we have referred to. All these successes give us the credibility of a responsible and competent Government, a precondition for the establishment of international partnerships, both institutional and in terms of business.

The results of the legislative elections held in September last year show the Angolan people’s confidence in the work of the Government. We believe that the increase in direct foreign investments and the growing interest of the world economy in Angola are also a result of the ever greater credibility arduously gained by our work.

We want to build a just, equitable and developed society in Angola, in which hunger and extreme poverty are eliminated, based on equal opportunities for all citizens, with special emphasis on human development and the fair distribution of national income, so as to ensure political and social stability. A society that guarantees that families have proper housing, clean water, electric power, education and health services and other public benefits that contribute to social wellbeing.

We know that this goal is very ambitious. But we are convinced that, with an economic and social policy that establishes the right priorities, we will achieve the society we want to see. There are two priorities in our strategy: investing in human capital and in the rehabilitation of economic and social facilities. This is the strategy we are implementing and we hope that it will lead to our being winners.

Thousands of kilometres of roads have been built in recent years, which has increased the movement of people and goods and made it possible to strengthen national cohesion;
Angola is modernising and expanding its network of ports and airports, as well as its railways;
The electric power production and distribution grid is being developed through numerous projects ranging from large-scale ones like dams to smaller mini-hydro-electric schemes;
We are building a telecommunications system based on the most modern technology;
We are also building large-scale agricultural projects, like irrigation schemes and we are seriously planning integrated rural development;
We have a programme of creating special economic zones and industrial centres, developing agro-industrial production and construction. We believe this to be the most effective way of ensuring that public and private investments are complementary, ensuring economies of scale and more rapid, sustained and diversified economic development;
Social facilities have also benefited. Many primary and secondary schools have been built, a university city is being completed and many health centres and hospitals have been built all over the country.
Ladies and gentlemen,
The world is experiencing a large-scale and profound financial and economic crisis comparable only to the great depression of the thirties.
This crisis affects every country in the world, including Angola, whose economy is affected in essentially the following ways:
Reduction of oil and diamond revenues as a result of the fall in export prices;
Effects on activities, investments, profitability and employment in the oil and diamond sectors;
Fall in financial inflow from abroad, both public development aid and direct foreign investment;
Greater difficulty in acquiring external financing;
Pressure on the country’s foreign exchange reserves as a result of the reduced inflow of foreign exchange.

The Angolan Government has taken a series of measures to face up to the current international economic and financial situation and has approved the macroeconomic scenario for 2009.

Angola will continue its path of economic growth in 2009, though at a slower rate, in a climate of macroeconomic stability and with a growth rate higher than the estimated 3% population growth rate. This means that in real per capita terms the country will continue to show positive growth rates.

This is fundamental to ensuring that the country can continue its programme of fighting poverty, develop its major projects in the areas of rehabilitating economic and social facilities, boost production and continue its programme of institutional reforms.

In addition, measures are being taken to ensure austerity, diversify the economy and rigorously control expenditure, including the following:

Reducing public expenditure on goods and services, safeguarding minimal mandatory expenses;
Reprogramming public investments, giving priority to already financed large-scale projects;
Speeding up the process of improving finances and restructuring strategic public companies;
Diversifying the economy and increasing net exports, replacing imports of goods that can be produced domestically and improving the balance of payments.

At a time when the world is going through one of its greatest economic and financial crises is a propitious time to look to an emerging economy like Angola.

Angola is experiencing a vigorous period of reconstruction. It has political and social stability, great opportunities for doing business and a great interest in acquiring quality technology.

Within a few months, in January 2010, we are going to host the African football championship. The eyes of Africa are on Angola. We are open to international partnerships in the big investments we are preparing for and which must be made by the private sector, especially in tourist facilities.

Investment in Angola is not only worthwhile, it is also safe investment. The Angolan Government is taking steps to strengthen the national institutions involved in attracting foreign capital and boosting private investment. The National Private Investment Agency is being restructured to meet the requirements of the national economy and private investors better. A Development Bank was established about three years ago as a bank to deal especially with funding the diversification of Angola’s economy using oil revenues.

I hope that this account has in some way shown that Angola is a country of the future in which it is worthwhile being present. Not just when the world recovers from the current economic crisis. It is necessary to be present now.

We invite everyone to join our project to make Angola a country in which it is good to live, in the words of President José Eduardo dos Santos.


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	SPEECH BY MINISTER OF THE ECONOMY OF THE REPUBLIC OF ANGOLA CHATHAM HOUSE CONFERENCE WHAT IS THE FUTURE FOR AFRICA’S EMERGING MARKETS? London, 7 May 2009 Dr Robin Niblett, Director of Chatham House Professor John Atta Mills, President of Ghana Lord Mark Malloch-Brown, Minister of State for Africa, Asia and the United Nations, Foreign and Commonwealth Office Ladies and gentlemen, It is for me a great honour to have the opportunity to say few words in this respectable forum, at the Royal Institute of International Affairs. The Chatham House has earned an immense prestige and recognition as one of the leading institutions in investigating and analysing fundamental international issues, promoting since 1920 a better comprehension about this kind of issues, with a particular prominence for the current relations between the nations, in all the regions of the world. As the very interesting discussions have clearly shown, the subject of this conference could not be more timely or, at the same time, more relevant to our region, the African continent. It was here in England, just over 200 years ago, that what historians refer to as the period of modern economic growth started. Before then there was no significant distinction between the pattern or rate of growth of different countries, in terms of growth or income per capita. It was with the industrial revolution that was born here and spread to other European countries and crossed the ocean, establishing itself in the United States, that physical labour was progressively replaced by machines and technology. Two hundred years later, we are now witnessing a revolution of identical scope and consequences. Emerging from the foundations of industrial society is a society of knowledge, a globalised society in which information systems are increasingly interlinked and information technology is based on that real world network, the internet. The decisive factor for increasing productivity and for continual economic growth has ceased to be simply the physical labour force, the mechanisation of production or even finance capital. The intelligence of solutions and modern technology based on highly complex modern technology have become the decisive factors for unceasing economic growth. The decisive factor for the continual growth of countries has ceased to be objects and become ideas. Objects wear out and lose value in time, while people’s capacity to produce new ideas is infinite. This is why the economic growth of countries is also infinite. How is Africa - this continent which in the past gained no advantage from the industrial revolution - positioning itself and preparing to face up to the unstoppable process of globalisation? It is true that the starting point is very unfavourable for our countries. We not only have to face all the challenges confronting all the other continents in a highly competitive international climate, but we have to lay the foundations for a modern industrial society and gain the ground lost compared with other continents. But it is also true that, unlike what happened at the begin of the industrial revolution, we Africans are today the masters of our own destiny. The challenge facing African countries like ours is to draw the maximum benefits from this society of knowledge, so as to do four essential things rapidly: Strengthen democracy and the internal cohesion of countries; Develop the institutional capacity of states and achieve significant improvements in governance; Guarantee high rates of economic growth and improve the quality of life of citizens; and Promote better integration in international economic structures. If we succeed in achieving these goals, we shall certainly be among the winners in the process of globalisation in which we are all involved. My Government, the Government of the Republic of Angola, after having successfully faced many obstacles to the development of our country, including a long and highly destructive war, is committed to this challenge. We want to be among the winners in the globalisation process! Ladies and gentlemen, This forum is about the emerging markets of Africa as a whole. As Angola’s Minister of the Economy, I have the advantage of being able to use this closing session to talk about my country, which is really a great privilege, for which my thanks for the organizers of this event. The Angolan people achieved peace just over seven years ago. In only seven years we have taken decisive steps, consolidating peace and strengthening democracy and national reconciliation. The climate of peace and stability and the intelligent and realistic economic policy adopted by our Government have made it possible to consolidate macroeconomic stability and lay the foundations for rapid and robust economic development, putting the Angolan economy among those with the highest growth rates in the world. Angola can therefore, be regarded as a major emerging market in Africa. It should be stressed that this growth rate is not merely a result of the growth of the oil industry, though Angola is, of course, still a country too dependent on that commodity. The high rates of economic growth are also a very visible result of the public investments the state has been making since the achievement of peace and once political stability was guaranteed. At the end of this seven-year period, we are proud to see that the investments have been fruitful. There were many who advised us at the time to reduce budget expenditure and channel additional revenues from increased oil prices into a reserve fund for future generations. We did both things, since there are not contradictory. We created a National Treasury Reserve Fund to take some of the additional revenues resulting from the rise in oil prices and we invested seriously in the recovery and rehabilitation of the country’s productive and social facilities. Without the adequate physical and social facilities built today, future generations would have difficult lives. The policy of rapid rehabilitation and modernisation of the country’s productive and social facilities led to greater movement of goods and people, decisively stimulating national and foreign private investment and starting fundamental structural changes in Angola’s economy. It should be stressed, in this respect, that since 2006, the Gross Domestic Product of the non-oil sector has grown more rapidly than that of the oil sector, which is a positive indication of the diversification of Angola’s economy. The correctness of the economic policy is clearly shown by the fact that despite the policy of rapid recovery of facilities, the success of the policy of macroeconomic stabilisation made itself most felt in respect of inflation and the monetary situation. The national currency has remained stable, playing its role as a means of exchange and reserve of value every more effectively. The figures speak for themselves: Between 1989 and 2008, a 19-year period, the Angolan economy had an average growth rate of 9% a year; In just the last five years of that period, that is, from 2004 to 2008, the average annual growth rate was about 17.4%, which means an accumulated growth of 102.2% in real terms. That is to say, Gross Domestic Product more than doubled in five years; In 2006 the growth rate of the non-oil sector was 25.9%, compared with 13.1% in the oil sector, while in 2007 growth was 25.7% in the non-oil sector against 20.4% in the oil sector. In 2008 the rates were 15% in the non-oil sector against 12.3% in the oil sector. The inflation rate has been falling from year to year, registering rates close to 10% in the past three years: 12% in 2006; 11.79% in 2007; and 13.2% in 2008. It will be recalled that even in 1996 there was hyperinflation, with an annual accumulated rate of 3,000%. The Government’s economic policy will be pursued in such a way that inflation will fall to one-digit rates in the next few years. In a forum of this type we cannot but express our pride that these successes were the result of a policy formulated and implemented by Angolan technicians, specialists and leaders, at times in contradiction with the certainly well intentioned advice of some international financial organisations. In Angola we consider that it is we Angolans who have the political responsibility and patriotic duty to develop our country. It is we who know the specific aspects of our economy and the behaviour of our economic best actors. Not only do we take this responsibility on our own shoulders, but we are also capable of directing and transforming our own realities. Angola is not a country closed to the outside world. Angola has relations with all countries in the world based on real cooperation and mutual gain. We have the best relations with the Bretton Woods organisations, the IMF and the World Bank. The last IMF assessment of the Angolan economy confirmed the successes we have referred to. All these successes give us the credibility of a responsible and competent Government, a precondition for the establishment of international partnerships, both institutional and in terms of business. The results of the legislative elections held in September last year show the Angolan people’s confidence in the work of the Government. We believe that the increase in direct foreign investments and the growing interest of the world economy in Angola are also a result of the ever greater credibility arduously gained by our work. Ladies and gentlemen, We want to build a just, equitable and developed society in Angola, in which hunger and extreme poverty are eliminated, based on equal opportunities for all citizens, with special emphasis on human development and the fair distribution of national income, so as to ensure political and social stability. A society that guarantees that families have proper housing, clean water, electric power, education and health services and other public benefits that contribute to social wellbeing. We know that this goal is very ambitious. But we are convinced that, with an economic and social policy that establishes the right priorities, we will achieve the society we want to see. There are two priorities in our strategy: investing in human capital and in the rehabilitation of economic and social facilities. This is the strategy we are implementing and we hope that it will lead to our being winners. Thousands of kilometres of roads have been built in recent years, which has increased the movement of people and goods and made it possible to strengthen national cohesion; Angola is modernising and expanding its network of ports and airports, as well as its railways; The electric power production and distribution grid is being developed through numerous projects ranging from large-scale ones like dams to smaller mini-hydro-electric schemes; We are building a telecommunications system based on the most modern technology; We are also building large-scale agricultural projects, like irrigation schemes and we are seriously planning integrated rural development; We have a programme of creating special economic zones and industrial centres, developing agro-industrial production and construction. We believe this to be the most effective way of ensuring that public and private investments are complementary, ensuring economies of scale and more rapid, sustained and diversified economic development; Social facilities have also benefited. Many primary and secondary schools have been built, a university city is being completed and many health centres and hospitals have been built all over the country. Ladies and gentlemen, The world is experiencing a large-scale and profound financial and economic crisis comparable only to the great depression of the thirties. This crisis affects every country in the world, including Angola, whose economy is affected in essentially the following ways: Reduction of oil and diamond revenues as a result of the fall in export prices; Effects on activities, investments, profitability and employment in the oil and diamond sectors; Fall in financial inflow from abroad, both public development aid and direct foreign investment; Greater difficulty in acquiring external financing; Pressure on the country’s foreign exchange reserves as a result of the reduced inflow of foreign exchange. The Angolan Government has taken a series of measures to face up to the current international economic and financial situation and has approved the macroeconomic scenario for 2009. Angola will continue its path of economic growth in 2009, though at a slower rate, in a climate of macroeconomic stability and with a growth rate higher than the estimated 3% population growth rate. This means that in real per capita terms the country will continue to show positive growth rates. This is fundamental to ensuring that the country can continue its programme of fighting poverty, develop its major projects in the areas of rehabilitating economic and social facilities, boost production and continue its programme of institutional reforms. In addition, measures are being taken to ensure austerity, diversify the economy and rigorously control expenditure, including the following: Reducing public expenditure on goods and services, safeguarding minimal mandatory expenses; Reprogramming public investments, giving priority to already financed large-scale projects; Speeding up the process of improving finances and restructuring strategic public companies; Diversifying the economy and increasing net exports, replacing imports of goods that can be produced domestically and improving the balance of payments. Ladies and gentlemen, At a time when the world is going through one of its greatest economic and financial crises is a propitious time to look to an emerging economy like Angola. Angola is experiencing a vigorous period of reconstruction. It has political and social stability, great opportunities for doing business and a great interest in acquiring quality technology. Within a few months, in January 2010, we are going to host the African football championship. The eyes of Africa are on Angola. We are open to international partnerships in the big investments we are preparing for and which must be made by the private sector, especially in tourist facilities. Ladies and gentlemen, Investment in Angola is not only worthwhile, it is also safe investment. The Angolan Government is taking steps to strengthen the national institutions involved in attracting foreign capital and boosting private investment. The National Private Investment Agency is being restructured to meet the requirements of the national economy and private investors better. A Development Bank was established about three years ago as a bank to deal especially with funding the diversification of Angola’s economy using oil revenues. Ladies and gentlemen, I hope that this account has in some way shown that Angola is a country of the future in which it is worthwhile being present. Not just when the world recovers from the current economic crisis. It is necessary to be present now. We invite everyone to join our project to make Angola a country in which it is good to live, in the words of President José Eduardo dos Santos. Many thanks for your attention.