TEM Lab: Angola – ExxonMobil / Esso Angola

The curse of oil is suffered by many countries. Technically speaking a resource curse, as it is more generally referred it, is a situation in which a nation’s heavy reliance on a particular resource, such as oil, leads to numerous negative economic and social outcomes. The factors which accompany a resource curse are:

• An oil rich government that relies on oil royalties for the majority of its revenues. Such a government is not responsible to the people, as it doesn’t need to tax the people to maintain its livelihood. Oil rich regimes are often corrupt, with massive amounts of money being filtered from public accounts to private holdings.
• Mass migration from rural to urban areas. The wealth produced by oil tends to become concentrated in urban centers. The higher wages and living standards that this brings to the cities attract many people from rural areas. Slowly, more and more people flood to the urban centers, where inadequate infrastructure struggles to meet the needs of so many new city-dwellers.
• The diminishing effectiveness of other social and economic developments, such as environmental preservation, agriculture, and education.
• Slower economic development than similar states that have no oil.

Several oil rich states in sub-Saharan Africa are good examples of the resource curse. Equatorial Guinea, Chad, and Angola all have significant oil deposits, but the money does not seem to be having a significant positive impact on the living standards of the majority of the people. Largely, the negative effects outlined above are occurring in these and other nations. In particular, the wealth from oil production seems to remain concentrated in the hands of a small number of powerful, and now wealthy. There appears to be little trickledown effect from this elite wealthy group to the average citizen

In Angola, the oil curse has had a strong upward influence on the price of goods and services. The reason for this is a simple question of supply and demand. Some citizens earn much higher incomes due to their participation in the petro-carbon economy. Their marginal willingness to pay is therefore much higher than that of other Angolans. Because of the huge income gap between the city dwellers and rural citizen, vendors of goods and services can make more money by selling to rich urban dwellers at a high rate than by selling to a many poor rural citizens. The constant migration of people to the cities drives prices even higher.

Additionally, because of Angola’s long civil war domestic production of most food and household items has dropped substantially. For this reason, most processed goods are imported. The constant export of oil allows the nation to maintain a positive trade balance. This means that the available supply in any given market is usually lower than demand of locally produced goods. This drives the price up. Our experience has been that food in Angola is, generally speaking, as expensive as eating each meal at the Super Bowl Stadium.

On the road in Angola

1. We have not been to a country with so few paved highways; the infrastructure needs serious attention.  If you ask for a road map you will see that there are only four or five main paved roads that connect all the cities in a country nearly twice the size of Texas.
2. We have not been to a country where time is this fluid.  Your driver says he will pick you up at 9:00am; at 11:15am and after several phone calls he will show up.  Another example, we were invited to a lunch with the Governor of Malanje Province at noon, the lunch eventually started at 4:30pm.  Every activity went according to his schedule.  The only people that seemed to be looking at their watches while waiting were us four Americans accustomed to western culture.
3. We have lived through some of the scariest driving we’ve ever experienced in our lives (Yes, this includes our experiences in China, Italy, and Russia).  Every time we get into a car or walk along a paved road, our lives are in danger.  Drivers race at freeway speeds past small children walking on the soft shoulder and goats come out of nowhere causing drivers to slam on their breaks suddenly and often.  The highways have only two lanes, yet passing on hills and curves is very common and considered safe as long as you honk your horn.  70% of the vehicles are motorcycles and 25% are trucks and buses: a deadly combination.  We could go on in details, but our mothers will be reading this post so we’ll save the rest for when we return to the U.S.
4. We have not seen so many A.K. 47’s locked and loaded anywhere else in the world.  Every guard carries one over his shoulder.  There are typically three or four guards standing at the doors of banks and government buildings nonchalantly holding an extremely lethal heavy-duty weapon.

Women farmers in Quibala

Teach a man to fish Teach a woman to farm

Why are women farmers targeted as the recipients of agricultural training and aid when the goal is to raise the standard of living for a rural community? The reason is that women typically will spend more of their income on their children’s health and education than men.

By increasing female farmers’ level of production and income through training and access to necessary inputs, reinvestment in families and surrounding communities will occur. This reinvestment into the community will help to ensure a better future for younger generations through reduction of hunger and poverty.

• Women make up 43 percent of the agricultural labor force in developing countries. However, women are less likely to own land, and own fewer amounts of land when they do.

• When women have the same amount of land as men, there is over a 10% increase in crop yields.

Similar to the idea of “teaching a man to fish”, teaching a woman to farm ensures the investment doesn’t end with a single person, and that others in society will be better off.

Sources: USAID and FAO’s Annual Report 2010-11

Mother and daughter in Wako Kungo market

Quibala early morning

Demographic

• Land Mass: slightly less than twice the size of Texas.
• Population: nearly 20 million people, (the population of metro New York City)

Education

• 45% of the population is under 15 years old.
• The average education level is 6th grade.
• 2.6% of GDP is spent on education.
• Women literacy rate is 58%.
• Male literacy rate is 83%
• The mayor of Quibala estimates that 15% of the kids attend primary school (elementary school).  An even smaller selection of those who pass primary school move on to secondary school.

Economy

• GDP is $100B. (25% of ExxonMobil’s 2011 revenues)
• Oil production and its supporting activities contribute about 85% of GDP.
• The national labor force is 85% comprised of farmers.
• Agriculture accounts for 9.5% of GDP.
• Ease of Doing business in Angola ranks 172^nd out of 183

Healthcare

• Average Life Expectancy is 54 years
• 4.6 % of GDP is spent on healthcare
• 0.8 hospital beds per 1000 people

Technology

• Mobile Cellular Subscriptions: 46 out of 100
• Internet Subscriptions: 10 out of 100

*** Data from CIA Factbook and The World Bank

https://www.cia.gov/library/publications/the-world-factbook/geos/countrytemplate_ao.html

http://rru.worldbank.org/besnapshots/BecpProfilePDF.aspx?economy=angola

During the weeks our TEM Lab team spent in rural Angola, we saw first hand the challenges the small-scale farmers are facing. Lack of access to market and supportive infrastructure, and lack of access to inputs such as seeds and tools are among the most voiced obstacles.

40+ years ago, Angola had a thriving agriculture industry. Unfortunately, that all changed during the country’s civil war that lasted almost thirty years. Much of the infrastructure was destroyed, an estimated 4 million people were displaced, and most of those who stayed relocated to urban areas.

Since the war ended in 2002, there have been efforts to re-develop the agriculture industry in order to diversify the economy and raise the standard of living for farmers, who make up the majority of the workforce.

Many small-scale farmers in other sub-Saharan African countries face the same issues as Angolan farmers, and have found a path from subsistence to entrepreneurship. In World Watch Institute’s blog called Nourishing the Planet, several exciting projects are mentioned that help small-scale farmers. Irrigation technologies such as Kickstart’s manual water pumps have been successful in increasing crop yield and annual income for farmers in Mali and Kenya. As part of the Rural Development Program, Esso Angola and ExxonMobil Foundation already have plans to donate Kickstart pumps to women farmers in Angola, which will help the recipients to increase crop yield (especially during the dry season).

Another example is Care International’s project in Zambia that supplies much needed inputs to local farmers by creating a network of startup agro-dealers, to whom Care offers training and grants. A financial services company called Mobile Transactions, allows farmers and others in the agriculture business in Zambia to use their cell phones as bank accounts to pay for inputs such as seeds or fertilizer.

Projects that use a business approach to support entrepreneurship can serve as a “catalyst to the market” (as Care International terms it), in order to help fill some of the voids that Angola’s small-scale farmers are dealing with.

Smell, but do not touch… What you do not smell is called “funge”… it is odorless, tasteless, dissolves instantly in water and is among the more flavorless substances known to man…*

Funge, in a word is a staple. The average Angolan eats it at every meal, every day. It is commonly made from both corn (maize) and cassava. The thick hearty mash that is created when corn or cassava flour is mixed with boiling water resembles really heavy cream of wheat cereal. As mentioned above, it is flavorless, but hearty.

Over the course of our time here, we have had the opportunity to witness all of the different stages of funge preparation

Soaking, peeling and drying the cassava

1) The large cassava roots are soaked in water to soften them. They are then peeled and cut into small fibrous strips.

2) The strips are placed on a large open area to dry in the sun, such as this black tarp.

3) After the strips are dried, they are placed into a large urn-like drum and hammered into flour using a large rod.

4) The flour is stirred into boiling water, producing the thick gut-filling gruel loved by Angolans everywhere.

Making funge. Photo: http://www.odebrechtonline.com.br

* In the spirit of full disclosure, funge is not consumed alone, save by the very poor. It is usually mixed with some other food, or topped with a sauce or gravy. It soaks up the flavor of whatever it is eaten with, so it is actually very easy to eat. Just eat it with something tasty, and viola, you’ve doubled the calorie and carb intake of your meal.

We recently had a conversation with the mayor of Quibala.  He stated that 90% of the people under his jurisdiction are farmers, and of them, 98% are subsistence farmers.  Subsistence farming is defined as eating almost everything that is produced with very little leftover to sell.

According to the CIA World Factbook, 85% of Angola’s labor force is comprised of farmers who account for about 9% of the $100 Billion national GDP.  Meanwhile, the country is importing over 50% of its agricultural consumption causing some of the world’s highest food prices.

Our question has been, “Why are these subsistence farmers not feeling the demand from Luanda?”

The answer…. “The Vicious Cycle.”

These farmers cannot produce consistent quality or quantity; therefore, major markets such as Luanda will not buy from them.  Because the major markets won’t buy from them, these farmers fail to earn the income necessary to expand and produce the consistent quality and quantity the markets demand.

Here are some current barriers preventing the farmers from producing the consistent quality and quantity:

• Inability to save and prepare for future seasons due to immediate hunger
• Lack of knowledge/training, continued use of traditional bad-practices
• Lack of access to the markets due to a weak national infrastructure (roads, rail, etc.)
• Lack of access to inputs such as tools, seeds, fertilizers, and pesticides
• Lack of access to water and irrigation during the dry months
• Extreme difficulty in obtaining financing

*What has to happen first in order for these subsistence farmers to end the vicious cycle?

Calandula Falls / Quedas de Kalandula

The TEM team was excited for the opportunity to be in Angola to celebrate Independence Day. November 11, 1975 marked the end of 500 years of colonial reign in Angola, and there were celebrations around the country to commemorate the day. In the small town of Calandula, the only hotel in town was full to the brim with families coming to take in the natural beauty of the area and escape the city for the long weekend. The TEM team decided to celebrate the holiday by hiking to the bottom of the magnificent Calandula Falls (or Quedas de Kalandula), said to be the second largest waterfalls on the continent.

The path was muddy and slippery from the frequent rains and wound down to the bottom of the falls through the thick tropical forest. We had two young guides on our hike, Papaizinho and Caetano. Papaizinho literally means ”little dad” in Portuguese, which was a fitting nickname since he was the older brother of Caetano. Caetano was chatting and singing the whole way and took a couple stops to play and swing from the low hanging branches or vines that were within reach. It was a quick hour hike to the bottom and we passed quite a few other groups on the way down. The highlight of the hike was after 15-20 minutes of winding through thick trees and brush, we came to a clearing and looked up to see the falls roaring right before us. Walking carefully along the boulders to get a little closer, we got soaked from the mist coming off the falls. We took in the beauty of the area and headed back up the trail to the road and back to our hotel. All in all it was a perfect way to spend the holiday: lots of laughs, good people and the beauty of Angola.