Angolans resentful as China tightens its grip - CNBC Africa

Angolans resentful as China tightens its grip

Southern Africa

by REUTERS 0

The multi-billion dollar loans he signed with China last month have angered Angolans. PHOTO: sourced from: http://news.xinhuanet.com/

When a halving of oil prices left a gaping hole in Angola's finances this year, it became clear sub-Saharan Africa's third largest economy needed help fast - and President Jose Eduardo dos Santos knew exactly where to turn.

But the multi-billion dollar loans he signed with China last month have angered Angolans who say they have been left behind as politicians and China share the spoils and Africa's second-largest oil producer becomes ever more reliant on Beijing.

China has lent Angola around $20 billion since a 27-year civil war ended in 2002, according to Reuters estimates.

Repayments are often paid with oil or funds go directly to Chinese construction firms that have built roads, hospitals, houses and railways across the southern African country.

This means, however, dollars don't end up entering the real economy, increasing costs for ordinary Angolans.

"I think the president humiliates Angolans," 35-year-old cook Marisa told Reuters as she bartered with a street trader over peanuts and bananas in the capital.

"The agreements with China are a benefit for them and the president and not for us."

Police visibility has increased in the streets of Luanda in response to public suspicion and dissent over how much the government would concede to Chinese interests in its bid to revive an economy hit by low crude prices.

More than a dozen people were arrested on June 20 for allegedly planning protests threatening "order and public security" in response to dos Santos' China trip.

FLEC, a militant group that wants independence of the northern oil-rich exclave of Cabinda, demanded China repatriate all its citizens from the region within two months or risk being "severely punished".

Angola has the best-funded military in sub-Saharan Africa and dissent is usually quelled quickly and ruthlessly, making any significant public backlash against the government unlikely, security experts say.

"IN A PICKLE"

Apparently aware of unease at home, dos Santos, a Soviet-educated petroleum engineer who has been in charge for 36 years, kept the details of the latest deals secret and stressed the "cooperation" and "mutual benefits" from his Beijing visit.

Chinese Premier Xi Jinping hinted at a much more lopsided relationship, saying he had agreed to "assist" Angola, China's largest supplier of crude after Saudi Arabia.

It is almost impossible to miss Beijing's influence in Angola, from construction site signs in Chinese script to expensive Chinese restaurants and seedy "Asian-only" massage parlours in the capital's alleyways.

Despite reservations from jobless Angolans, economists see China's dominant role in Angola as necessary.

Angola, which relies on oil sales for 95 percent of foreign exchange revenues, slashed a third off its budget and said it would need to borrow $25 billion this year - $15 billion domestically and the rest abroad.

"Lower oil prices have put Angola in a bit of a pickle and the most obvious place to turn is China," said Cobus de Hart, an analyst at NKC African Economics. "If China can help Angola get out of the fiscal hole then it could be a positive step."

Despite this, many Angolans are distrustful of the relationship, pointing to the millions who still live on less than $2 a day and World Bank studies that rank the country 169 out of 175 countries in terms of income equality.

Beijing's role in Africa has often been criticised by Western governments and some African leaders who call it neo-colonial - taking resources in return for infrastructure that supports China's construction industry.

"CHINA THE MASTER"

There are around 50 Chinese state companies and 400 private companies operating in Angola. They are supposed to use 30 percent Angolan labour but industry sources say this is rarely observed and Angolans tend to get the lowliest positions.

"Always the Chinese will be the master and the Angolan the helper," said Paulo Nascimento, a 29-year-old Luanda taxi driver. "This is our country. We should be in charge."

Chinese firms strongly deny accusations of exploitation, arguing that they have done more to rebuild Angola since the war than Western critics sitting on the sidelines.

"I think Angola does not have too much money so China is a very good choice for them," Pascal Wang, 36, marketing manager at Chinese telcom company ZTE, told Reuters. "We don´t come here just to do business. We want to help Angolans."

With the exception of investment from former colonial power Portugal and offshore oil drilling by U.S. and European oil majors, Western governments, donors and investors have focused their attention elsewhere in Africa.

There are signs this may be changing.

France's AccorHotels, the world's fourth-largest hotelier, sealed a deal last week with Angolan insurance and investment company AAA Activos to open 50 hotels by 2017. The deal coincided with a visit to Luanda by French President Francois Hollande.

The World Bank, meanwhile, agreed to $650 million in financial support this month, the first funding from the Washington-based lender since 2010.

Until the benefits of investment reach the masses rather than the elite, resentment against foreign investors and the government is likely to fester.

"We have always been slaves," Nascimento said. "We are lost in the world. We are the leftovers."

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