Aid for Oil: Angola Looks East

By Dave Durbach

To the rest of the world, Africa has seldom been more than a stockpile of resources. Following centuries of slavery, colonialism and Cold War wrangling, foreign interest in Africa waned.

Lately, though, the tide has been changing. With energy sources facing an uncertain future, the developed world has placed Africa firmly back on its agenda. The best example of this must be Angola.

Portugal ruled the country for centuries until a coup at home brought Angola sudden independence in 1975, a power vacuum and a protracted civil war. In 1992, Angola changed from a one-party Communist system to a multiparty democracy.

Lasting peace since 2002 has seen frantic foreign investment. Estimates put annual growth at around 30 percent, making Angola's one of the world's fastest growing economies, thanks largely to its booming oil industry.

In June this year, Angola replaced Nigeria as the continent's top oil producer.

East Asian countries have been leading the charge to invest in infrastructure in exchange for oil. The past four years have seen South Korean companies bag contracts for cotton farms, residential villas and an IT college in the capital Luanda, to the sum of over $300 million.

In March this year, the South Korean government expressed interest in investing in Angola's biofuels industry. In May, Angola became one of the few countries to be allowed multiple entry visas to South Korea.

In exchange, South Korea is getting its share of Angolan oil. In October 2006, the two governments signed a memorandum of understanding in Seoul to allow South Korean companies such as the Korean Petroleum Development Corp. (Pedco) and Daewoo to explore and develop both land and offshore oil and gas fields in Angola.

At the same time, South Korea is reportedly Angola's biggest supplier of oil platforms.

North Korea has joined the party, too. Kim Yong-nam, president of the Presidium of the DPRK's Supreme People's Assembly, accompanied by his ministers of foreign affairs, foreign trade, public health and others, arrived in Luanda on March 23 this year during an African tour that also included visits to Namibia and Uganda.

The delegation passed on a message of goodwill from Kim Jong-il to Angolan President Jose Eduardo Dos Santos, and also met with Angola's prime minister and president of the National Assembly. On March 25, the two countries signed a joint document to strengthen ties.

China has been causing the biggest stir of all. In 2004, China extended a $2 billion ``oil-backed" loan, with the two countries agreeing that Chinese construction companies would build the infrastructure projects financed by the loans, ensuring that a significant portion of that money ultimately returns to China.

China's Vice Premier Zeng Peiyang visited Angola in March 2005, signing nine agreements covering cooperation in government and private sector initiatives, including a long-term supply of oil to China's Sinopec oil company.

In 2006, Angola replaced Saudi Arabia as China's largest source of oil. Sinopec and Angola's state oil company Sonangol successfully bid a record $2.2 billion to develop two deep-water blocks, and the Angolan government unsurprisingly chose Sinopec as its partner in the development of the $3 billion Sonaref refinery, reportedly with the help of South Korea's Samsung.

In return for oil, Chinese companies have built roads, railroads, bridges, hospitals, schools, telephone networks, shopping centers, office buildings and housing projects. Chinese Prime Minister Wen Jiabao visited Angola in June 2006, offering billions more dollars in loans.

Not one to look a gift-horse in the mouth, the Angolan government reiterated its adherence to the one-China policy and ``national reunification."

Since 2006, Japan has granted millions of dollars to help eradicate landmines, upgrade hospitals and combat diseases like malaria and polio, often via the U.N. and local nongovernmental organizations (NGOs).

In 2007, the Japan Business Federation (Nippon Keidanren) sent a 50-member study mission to the country to scout for investment opportunities. Already, the Angola Japan Oil Company (Ajoco), Mitsubishi Petroleum Development Company and Teikoku Oil Co. have their eyes on the prize.

At the end of May this year, the Angola Press Agency reported that Singapore was interested in investing in Angola through staff training in skilled sectors such as banking.

The Angolan ambassador to Singapore announced that a bilateral accord was in the pipeline. Singapore, which has its own oil reserves, is already involved in Angolan oil, for example transporting offshore oil installations from Korea to Angola.

Oil accounts for roughly 92 percent of Angola's total export revenue. Diamonds, also benefiting from increased investment, make up most of the rest, highlighting the country's total dependence on these two natural resources.

Despite the huge amount of cash flowing into the country, the poor have reportedly been slow to see the results. Skeptics believe that local corruption and China's human rights reputation will cause more harm than good. They know that Africa has been here before.

Foreign involvement in the past has invariably meant exploitation, with little given back besides debt and poverty.

How long will the current wave of optimism hold out? Here is an opportunity for Angola to set an example for other African leaders and make their income work for the people, without idealistic and inflexible IMF strings attached.

For Asian leaders and investors, here is the chance to prioritize people over profits and prove that history needn't always repeat itself.

The writer is a South African teaching English in Chungju, North Chungcheong Province. He can be reached at durbdev@yahoo.co.in.