TRANSPARENCY SNAPSHOT

With large deposits of oil and diamonds, as well as natural gas reserves, Angola is among Africa's most resource-rich countries. It produced 1.7 million barrels of oil per day in 2007, and also generates roughly 10 million carats of diamonds and 26.5 billion cubic feet of natural gas each year. Angola's proven reserves include eight billion barrels of oil and 440 million carats of diamonds.

The Angolan government has taken several important steps since 2002 to introduce revenue and expenditure transparency into the public management of its petroleum and mineral wealth, including new elections and the publication of budgets. But the reforms have been incomplete, and the country retains a host of formal and informal obstacles that keep accounts concealed and prevent citizens from having a direct impact on how the government makes decisions. Angola is not currently a participant in the Extractive Industries Transparency Initiative (EITI).

Long considered one of the world's most opaque states, Angola has been publishing monthly oil receipts for the past several years and has also opened its most recent oil concession bidding rounds to substantial public scrutiny. The government publishes regular updates on the Central Bank's foreign currency reserves, and has improved its mechanisms for intra-governmental expenditure tracking.

Recently, the government consented to the country's first elections since 1992, with legislative polls completed in September 2008 and a long-expected presidential vote likely during 2010. Angolan citizens and observers are watching elections and their aftermath closely, to monitor whether they allow for a genuine referendum on the government’s performance or prompt improved interaction between the state and its populace.

Despite the positive steps toward building a more transparent state, the Angolan regime remains largely closed to public consultation, and many key elements of the extractive sectors continue to operate without citizen scrutiny.

The financial relations between the government and the national oil company Sonangol are complex and secretive, as are the sub-contracting procedures for assigning oil sector work to outside companies, which are frequently closely linked to powerful politicians. On the expenditure side, while the Ministry of Finance does publish national budgets, there is no meaningful role for parliament or civil society in the budget debate, and published budgets often have little power to constrain actual government behavior. Angola ranked 158th out of 180 countries assessed on Transparency International's 2008 Corruption Perceptions Index (TICPI), a decline from a ranking of 142nd in 2006.  Angola ranks 34th out of 47 African countries on the World Bank's "voice and accountability" measure. 

Oil is the overwhelmingly dominant force in the economy, representing 58% of the Angola's GDP and 80% of government revenues. Oil revenues skyrocketed as petroleum prices rose during the recent commodities boom, and Angolan production increased when new offshore fields came online. Average monthly government revenue was 97% higher during the first five months of 2008 than it was one year earlier, and total production increased by 90% between 2002 and 2007. The diamond industry is smaller but still significant, accounting for approximately 3% of GDP and dramatically effecting local communities near the mines.

Revenue Transparency

During its long and destructive civil war from 1975 to 2002, Angola gained a reputation as the quintessential example of the "resource curse": It was a country in which no information about the exploitation of mineral resources was made public and money from the oil and diamond industry helped to fund violence. The government controlled the oil fields and used the revenue to purchase arms, while the rebel group UNITA (the National Union for the Total Independence of Angola) used the illicit diamond trade to sustain its efforts in the face of United Nations sanctions. The government blocked civil society efforts to gain access to information, harassed journalists and activists, and responded to British Petroleum's (BP) 2001 publication of its signature bonus by threatening to terminate the company’s contracts and expel them from Angola.

Since the end of the conflict in 2002, the government has quietly enacted a number of policies that made significant enhancements to revenue transparency. The most important is the publication of monthly petroleum receipts on the Ministry of Finance website. The Ministry publishes figures for each petroleum production block, including the total quantity of petroleum exported, the average price per barrel sold, and the revenues delivered to the government in royalties, taxes, and proceeds from Sonangol-managed sales of profit oil. The country's last bid rounds for exploitation acreage, in 2006, earned the praise of many international observers for opening the contract process to scrutiny. The government publicized the selection criteria and the bidding rules clearly, opened bids in public, and announced the size and specifications of the winning bids, including the signature bonuses.

However, major obstacles remain to government reform and a strong public debate on revenue transparency. The largest is the government's heavy hand in its interactions with civil society. The government jailed journalist Rafael Marques in 2000 and human rights campaigner Sarah Wykes in 2006. Angolan civil society organizations are frequently threatened with closure or prosecution when they speak out about revenue accountability or corruption.

Despite the increase in available information about the bid rounds for oil exploration and production blocks, the processes by which local companies are granted equity stakes in oil consortia, and by which firms are awarded sub-contracts, remain largely opaque. The hidden decisions account for the distribution of hundreds of millions of dollars each year, and the lack of information leaves the government open to accusations that local contracts are used to grant political favors for the well-connected, and not as a tool for broad-based development or the promotion of efficiency in the oil sector.

Transparency in Angola's diamond industry is even worse than it is in the petroleum sector. The government has begun to publish some monthly statistics on diamond revenue, but this data is not disaggregated to the same level of detail as the oil receipts: It spells out revenues by month and tax category, but does not extend down to the company or mine level, making the figures harder to analyze or verify. The state diamond company Endiama has been accused of awarding contracts to foreign companies through secretive processes, and of using political patronage to divert revenues, granting minority ownership stakes to unqualified companies controlled by powerful Angolans. Several reports have asserted that the diamond companies have also wreaked significant environmental damage and that company employees have even beaten and killed Angolans suspected of engaging in furtive artisanal mining.

Angola also has not signed on to the Extractive Industries Transparency Initiative (EITI), which would provide a mechanism for consolidating the government's reforms and ensuring that Angolan civil society has an active voice in revenue monitoring.

Expenditure Transparency

The country's advances publicizing revenue information have not been matched with openness about public expenditures. The oil boom brought billions of dollars in additional revenue into government coffers, but there is little effective oversight of how the increase is being spent.

The Angolan government publishes an official budget every year. In 2008, for the first time, it published the executive's budget proposal prior to formal legislative approval. The Finance Ministry has also begun publishing detailed expenditure reports online, broken down by functional category and geographic region, along with a revised budget report that reflects developments over the first part of the expenditure year. These documents are released only after they have received executive approval, however, and citizen and parliamentary oversight are virtually nonexistent. As a result, the World Bank has determined that the sectoral and regional composition of the budget is ad hoc and does not adequately address equity considerations. Angola scored fourth out of 100 on the 2006 Open Budget Index. Though the government made a handful of improvements in the years that followed, its 2008 score dropped to third out of 100, among the lowest scores in the index's 85-country sample.

The government has instituted an integrated financial monitoring system to track internal financial transfers and public expenditures. While this system has been praised for improving internal controls over spending, it does little to open up accounts to greater public scrutiny. Observers have also criticized the system for imprecise expenditure categories, which make it difficult, for example, to know how much public money is really being devoted to education. The country's lax public procurement policies lead many to suspect that significant leakage and corruption occur through government expenditures.

Besides the continuing weaknesses in the formal public expenditure process, Angolans must also contend with the fact that vast sums of money are spent completely outside of the official process. Sonangol engages in quasi-fiscal expenditures on the government's behalf, including fuel subsidies and the servicing of the national debt. The company has begun to record some payments through the integrated financial monitoring system, but reporting remains far from comprehensive, and there is no external control over the expenditure decisions themselves. Billions of dollars in infrastructure lines of credit are controlled by the National Reconstruction Cabinet, an ad hoc institution that is run by a retired general, who answers only to the president, and that reports virtually nothing about its activities.

Freedom of Information

The Law on Access to Administrative Documents, passed in 2002, nominally grants open access to public documents, as well as the right to request information on the existence of documents on particular subjects. In practice, however, implementation of the law has done little to promote information-sharing. On the same day that it was passed, the government also enacted a State Secrets Law that preserves the government's right to classify information with high discretion. Most journalists and NGOs in Angola say the government has systematically used the State Secrets Law to prevent information disclosure and to intimidate journalists who publish classified information.

Elections and Political Accountability

The legislative elections of September 2008—the first polls conducted in the country in 16 years—were a mixed success. They were carried out peacefully, achieved high voter turnout, were deemed free and fair by observers from the Southern African Development Community (SADC), and the results were accepted by the opposition. They did not, however, proceed without controversy. While the European Union (EU) called the elections "a positive step toward advancing democracy," EU observers noted delays at polling stations and uneven pre-election coverage in the state-dominated media. The ruling Popular Movement for the Liberation of Angola (MPLA) party won more than 80% of the vote: a popular endorsement of its policies but also an indication that the opposition check on power in parliament will remain extremely weak in the coming years.

Only the decisions of a new government in the months to come will show the real impact of new Angolan elections, and reveal whether a culture of citizen accountability and viable constraints on power is emerging in a country with a decades-long legacy of autocracy.  It is also important to note that elections do not represent the only path to government accountability. Despite some positive assessments of the legislative elections themselves, Angola's citizens continue to lack access to an impartial judiciary, meaningful channels of influence with local governments or legislators, broad freedom of speech or assembly, or an open and vibrant press.  Serious constraints to political accountability remain inherent in the Angolan political system.