Angola: Focus on the informal economy

[This report does not necessarily reflect the views of the United Nations]
LUANDA, 7 March (IRIN) - Once known as the Paris of Africa, Luanda is now but a shadow of its former self. Decades of civil war has taken its toll, and it shows.

Streets in the downtown district are strewn with litter and most of the musseques (informal settlements) do not have running water or a sewage system. While the regular power cuts may inconvenience expatriates and the nouveau riche from time to time, locals complain about just about everything. No water, no electricity, no jobs, not enough schools and a health care system on the verge of collapse.

Home to some four million Angolans, most of whom escaped the fighting in the interior, the city's infrastructure is heaving under the strain. There is little sign that any of Angola's oil and diamond wealth has been spent here.

While the government in the past sidestepped the concerns of its urban population, often citing the 27-year-long war effort as reason for its failure to deliver basic social services, observers point out that peacetime has ushered in a whole new set of expectations.

But as authorities grapple with the big picture - post-war reconciliation and economic reconstruction - ordinary Angolans take to the streets to eke out an existence.

What Luanda may lack in fine stores, the city makes up with the sheer number of imported consumer goods available from street vendors. Caught in lunchtime traffic, the city is a riot of colour and activity.

It is not uncommon to find goods unavailable in shops in the hands of the hawkers who zigzag through the traffic whenever it come to a halt. From carpets to ceiling fans, one gets the impression that it would not be altogether impossible to furnish an apartment from the comfort of your vehicle.

The sellers are among millions of Angolans who depend on the informal economy for survival. In the 1990s, the government introduced economic reforms which sounded the death knell for an already weak formal sector. Restrictions were placed on foreign exchange and taxes were hiked. Today, if Angolans have anything to sell, the best market is the dusty streets.

In a tiny makeshift workshop just two streets from the hustle of central Luanda, shoemakers Manuel (28) and Morena Veleira (26) were discussing possible designs for their sandals. For the past nine years the Benguela-born brothers have been selling hand stitched shoes, leather bags and sandals to a relatively steady clientele.

"The sandals are now known as the famous Benguela sandals. M&M creations," Manuel said coyly.

"But it is a difficult to make these shoes. The leather is not always available and when it is, it's very expensive. Also getting the clasps for the sandals is extremely difficult. The quality of the material is also far better in Benguela than in Luanda. Now that there is transportation between provinces, we may be able to get the material from there," he hoped.

Under the tutelage of a well-known shoemaker in their southern provincial home, the Veleira brothers learned their craft. In the early 1990s they moved to Luanda in search of work and a better life. However, without the necessary tools, they found only occasional jobs, often the source of much frustration because of the low salaries.

"This is the only thing I know how to do. It is my art and without it I would not know what to do. Fortunately, in 1993 an ex-soldier sold us his demobilization kit. Included in the kit was a carpentry set and shoe moulds. This saved us," Manuel said.

On average the brothers sell six pairs of sandals per week. The prices range from US $20-35.

Asked why all of the merchandise was priced in dollars, Morena replied: "The suppliers sell everything to us in dollars and that is why we have to sell to our customers in dollars."

Money made from the sandals is spent on rent (US $50 per month), material and salaries. The brothers employ two assistants.

"We try to sell our sandals along the beach, at times at exhibitions and of course, the Roque Santeirio," Morena added.

The Roque Santeirio is a sprawling open air-market in the city centre, often cited as one of the biggest markets in Africa.

"Some months are good, others aren't as good. The government doesn't support small businesses. There are many talented young people, but without some kind of support their talent goes to waste. Perhaps if the government created small loans for us we could use this to buy the necessary materials. Not much has changed since the end of the war, but we are waiting and hoping for some improvement," Manuel told IRIN.

In another part of the city, 35-year-old Rosa Texeira idles at a hotdog stand which offers some relief from the scorching sun. She is what locals refer to as a 'kinguila' or a money changer.

Given the weakness of the local currency, Angola has become a dollar-driven economy. The money changers are the heart of the parallel market.

But recent draft legislation which discourages traders from operating in areas not designated for business could bring an end to Texeira's livelihood.

"I have four children and two younger brothers to support. I came from Kuanza Sul 16-years-ago to stay with family in Luanda. I soon realised I needed to find a job. What I'm doing right now doesn't pay very well. I buy from a money seller and then put a mark-up on that. On average, I make about 100 kwanzas [US $1.50] a day. That must go towards taxi fare which is about 20 kwanza (30 US cents) a day and put food in our mouths," Texeira told IRIN.

Her eyes dart across the road, ever vigilant that police could swoop down on her at any time.

"Although everybody is exchanging money in this way, we must still be very careful of the fiscal police. They are known to take you away and put you in prison. This has not happened to me as yet. Things have to get better in the country. They can only getter better," she added.

To assist the urban poor, two NGOs, the Development Workshop (DW) and Care International, have provided small loans to traders. Traders can obtain loans of US $100-150 to develop their businesses. When they repay those loans they then can apply for bigger loans of up to US $500.

"The repayment record is extremely good. In fact it is well over 90 percent return, which of course is very promising," DW director Allan Cain told IRIN.

Now in its third year, the DW micro-credit programme has targeted women-headed households in Luanda and Huambo, Angola's second city. During the war, large numbers of women had to manage on their own after the death of their spouses.

"Almost 60 percent of people employed in the informal sector are women. This has become the only means through which people can survive. The difference is the DW micro-finance scheme moves away from dependency on external assistance and instead looks toward a more sustainable livelihood approach," Cain said.

He added: "What we are seeing at the moment is that the majority of people, not only in Luanda but across the country, have become increasingly vulnerable. The continuing lack of proper sanitation, poorly equipped health and educational facilities can also be directly related to the high mortality rates associated with endemic diseases such as malaria and diarrhoea."

Angola's health indicators are among the worst in the world. The mortality rate for children aged under five is almost 30 percent. But according to the UN Development Programme Development Report 2000, state expenditure on health has declined from 3.3 percent of gross domestic product in 1985 to only 1.5 percent in 1999.


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