Ruben Rosenberg Colorni

Development and Democracy in Africa

Ms. Vegelin
May 25th, 2011

Transforming Wealth in Welfare – A study of Angola's and the Democratic Republic of Congo's efforts
towards development.
 Introduction

In the month of April 2008, Angola tacitly surpassed Nigeria to become the continent's largest
oil producer1, and achieved GDP growth rates that surpassed those of China and India2. Although
growth levels have stabilized since then, the country of Angola has been, and still is, considered to be
one of the fastest growing economies in the world3. Despite the reducing indicators, the large majority
of Angolans still do not have access to the social provision and economic opportunities necessary to
overcome their condition of poverty. The development indicators of the country have also improved
little since the cessation of the decades-long civil war in 2002, not paralleling the country's fast
economic ascent. The local and national governments have actively been attempting to strengthen the
public and political institutions as well as encouraging economic diversification with only little success.
Among the problems identified by a number of scholars are Angola's traditional patronage-based
economic culture, lack of skilled workers, and the “distortionary effects of an economy dominated by
oil”4.
The Democratic Republic of Congo has been in turmoil under the effects of a civil war since
1998, but has witnessed a fair and rather stable growth of macroeconomic indicators in the past few
years. Unlike Angola, agriculture is the dominant sector of the economy accounting for over half of the
GDP and employing over three-quarters of the labour force although the mining sector is expected to
be the country's primary vehicle for growth and development. Congo represents a problematic and
delicate situation with regards to development as it borders numerous conflict zones in two other
countries as well as being entrenched in a bloody conflict itself. The development situation of the DRC
is difficult to gauge as there is a general lack of accountability and transparency and, thus, a consequent
lack of reliable information. Human rights abuses continue to plague the DRC despite movement
toward democratic rule and an end to the civil war, during which both national and rebel forces have
been consistently reported of having committed atrocious and heinous acts, including mass rape and
sexual violence as a weapon of war. Despite this situation, life expectancy, infant mortality rates and
HIV/AIDS prevalence rates, as well as other development indicators, have slowly but steadily
improved.
Interestingly, China has taken interest in both countries' economic and natural resources in order
to fuel its increasing need for raw materials, namely the mineral known as “Coltan5” in the DRC and
crude oil in Angola. Many see the recent advances of China in these two countries, and numerous more
in the African continent, as a new form of colonialism, disguised under the euphemism of “resource-
backed finance” and development.6
Both ravaged by civil war, holding similar development indicators, and both holding an
established and fundamental economic relationship with China, a question arises to the international
community: how successful have the neighbouring states of Angola and the Democratic Republic of
Congo been in transforming vast wealth of resources into social welfare and furthering sustainable
long-term economic development?

1 Angola’s Political and Economic Development

2 Angola’s Political and Economic Development
3 Angola’s Political and Economic Development
4 Angola’s Political and Economic Development

5 Coltan is the industrial name for columbine-tantalum, a rare mineral essential to the production and manufacture
electronic capacitors, used in consumer electronics products such as cell phones, DVD players, video game systems and
computers. It is found in soil residues dating back 3 billion years.
6 China Outdoes Europeans in Congo
 Historical Context

Both Angola and Congo share a similarly brutal colonial history which has influenced and
characterized most of their social and economic development from the 15th century until the present
day.
The Portuguese Colony of Angola was established in the latter part of the 16th century, and was
followed, thirty years later, by the granting of the status of “city” to Luanda. Portugal's rule over
Angola was mostly driven by the economic interests of slave trade, which was utilized to provide large
plantations and mines in Portuguese colonies in South America, such as Brazil, with manual labour.
This constituted an economic problem as the prosperity of the province was largely dependent on this
trade relationship with Brazil, and perpetuated the slave trade to Brazilian plantations long after it was
legally abolished in 1830. During this time, Angola was not only the largest provider of slave labour to
Brazil, but to most of the Americas, including the United States.
During the 19th century towards its close, a system of forced labour was implemented to replace
domestic slavery. Ironically, it is widely agreed that it was this forced labour which provided the basis
for development of plantation economy and the economically essential mining sector throughout the
19th century. Forced labout was also employed, along with British financing, to construct the nation's
three majour railways from the interior to the coast, the most important being the Benguela rail-road
connecting the copper zones in the Eastern part of the country with the commercial port of Lobito.
Full administrative control of Angola's interior by the Portuguese was not achieved until the
commencement of the 20th century following a long series of failed attempts to establish forts and
copper mines, thwarted by a coalition of tribes determined not to be subjugated. Despite slavery having
been made illegal by the Portuguese government, once the country's interior was subjugated, the slave
trade once again flourished.
Angola achieved its independence from Portugal in 1975, but the peace was brief as conflict
and competition arose among different movements and actors that characterized Angola's political
scene at the time. It was not long before the country precipitated into a civil war during which the
Popular Movement for the Liberation of Angola (MPLA) managed to acquire and hold control of the
country although opposed by two factions: the National Liberation Front of Angola (FNLA), and the
National Union for the Total Independence of Angola (UNITA)7. The MPLA leadership was a Marxist-
philosophy based group composed of urban intellectual and cultural and political figures, which
bolstered its rule with oil revenues and was aided both by the Soviet Union and the Cuba8.
The other factions, UNITA and FNLA, were instead funded and fuelled by black marked
diamond revenues and was largely aided by South African military advisers, provided with Chinese
weapons and equipment as well as covert military and financial assistance from the CIA9. War between
the two sides shook the country for twenty-seven years, during which an estimated 1.5 million people
died, over 4 million were internally displaced, and another five hundred thousand fled the country10.
As a result of the Angolan Civil war almost the entirety of the infrastructure developed by the
Portuguese, comprising or roads, railways, bridges and agricultural infrastructure, was demolished and
decimated. Also, much of the population, including an entire generation of youths, was left with no
memory of life in peacetime, making it a difficult concept for those to imagine and strive for. There
have also been other implications, as Angola today lacks enormously of a skilled labour pool as nearly
half of its population is under the age of fifteen; the health-care system has only recently begun
reconstruction and despite slight improvements, the country's infant mortality rate is among the highest

7 Angola's Political and Economic Development

8 Angola's Political and Economic Development
9 Inevitable Revolutions
10 Angola's Political and Economic Development
in the world11.
The DRC has a similarly bloody history to that of Angola as its military, business and political
leaders have consistently abused their authority to exploit and appropriate the DRC's vast natural
resource supply such as gold, diamonds and coltan. However, contrary to popular perception, the
conflicts over the country's natural resources are not a new phenomenon which spontaneously
developed in the 1990s but is, rather, the continuation of historical patterns of exploitation established
under Leopold II and the Belgian colonial rule. The Belgians first colonized Congo in the late 1878 by
establishing the Free State of Congo which was effectively the private property of King Leopold II, and
would thus be at his disposal and any revenues acquired from it would be his private income. The
colonial era in the DRC commenced the current trend of natural resource exploitation by a restricted
elite to the grave detriment and lacked development of the effective entirety of the Congolese people
throughout the past century. Many foreign countries have contributed to the propagation of the conflict
in the DRC by supporting the different forces12. Namibia, Angola and Zimbabwe supported Kabila,
while Uganda, Rwanda and Burundi supported rebel forces. This abuse of power has resulted in
civilian deaths, rape, torture, the use of child soldiers, and child labourers13.
King Leopold II first utilized Congo and its supply of slaves and forced labour to exploit ivory
and rubber, which allowed him to amass a vast personal fortune. There was also an immensely
advantageous strategic advantage to Congo's location as it would allow control of strategic trading
routes to West and Central Africa on and along the Congo River14. Leopold II never set foot in Congo15,
but had instead entrusted the job of the country's administration to a former journalist named Henry
Horton Stanley at the expense of an estimated ten million deaths in forced labour camps.
During Belgian rule over Congo, the access to land of the indigenous peoples was restricted by
law in order to ensure that the only the ruling elites and their associated would have exclusive access to
Congo's extremely lucrative ivory, rubber and palm oil businesses, as well as ensuring the the
enormous wealth derived from these profits would remain in their hands16. Congo's administration was
in fact more akin to that of a business rather than that of state, as described by a prominent Canadian
activist:

“From the 1880’s on... political and community relations in the Congo function on the basis of
colonial capitalism as provinces were controlled centrally, and deals were made with foreign mining
companies giving them full rights to exploit all forest products in the Congo, as well as the right to
police and “bodily” detain people living within these concessions. In exchange, the foreign companies
had to share their profits with the state, which was comprised of Belgian elites who treated these
profits as their private fortune rather than using the money for Congolese development. The vast
majority of commodities in the Congo were exported to Belgium and America.”17 - War Child Canada

The independence movement of Congo intensified and gained momentum in the two decades
preceding the granting of its independence on June 30th, 1960 following 75 years of colonial
oppression. Despite the efforts of the Belgians to exploit the country's resources, the infrastructure that
had been left behind was not sustainable or adequate, and there were no Congolese that had been
properly instructed in how to fill their positions in government departments. More astonishingly, in 75
years or rule and administration, the Belgian colonization of Congo produced fewer than 30 Congolese

11 Angola's Political and Economic Development

12 Brief Political History of the DRC
13 Angola's Political and Economic Development
14 The Colonial Legacy of the DRC
15 The Colonial Legacy of the DRC
16 The Colonial Legacy of the DRC
17 The Colonial Legacy of the DRC
university graduates, no Congolese army officer, engineer, agronomist or doctor, rendering the attempts
to governance very difficult under the new Prime Minister Patrice Lumumba who was insistent in
returning the Congo's natural resources and wealth back to its native people. Lumumba was, however,
also further challenged by “Cold War Politics” and the secret attempts of Belgium and the united States
to interfere in the newly forming political structures to ensure a continued monopoly over Congo's
resources18. The United Stated and Belgium consequently proceeded in fomenting dissent and rebellion
within newly formed Congo and helped fun and train secessionist movements in the resource-rich areas
of Katango and south Kasar1920. The United States' Central intelligence Agency (CIA) continued and
intensified its operations in the DC throughout the cold war and included the assassination of Patrice
Lumumba2122, the support of the subsequent Mobutu military dictatorship with more than $300 million
in weapons and $100 million in military training23.
Following the 1994 genocide which ravaged the neighbouring country of Rwanda, Congolese
presiding dictator Mobutu granted refuge to the “interahamwe”, a group of Hutus which had been
largely responsible for it and which continued to launch attacks into Rwanda from the Eastern Congo.
This provocation in turn resulted in the Rwandan Army's response invasion of the DRC. The Army was
initially intended to track down the interhamwe, but soon changed modus operandi and began
exploiting the natural resources in the region such as diamonds, minerals, water and coltan . During
24

this 18-month period, the Rwandan Army is alleged to have made over $250 million through the sale of
coltan alone25.
Mobutu fled Kinhasa as the invading army was approaching and a new president was
established, Laurent Kabila, and after two years the Rwandan troops retired upon Kabila's request –
only to return two weeks later joined by the Ugandan army in a new invasion attempt. This resulted in
the Congolese conflict in which the forces of Zimbabwe, Namibia and Angola joined those of the DRC
to ward off the Rwandan and Ugandan armies. By 1999, Rwanda, Uganda, and the Congolese rebel
groups that they sponsored managed to control one third of the DRC however, the interests of the
Ugandans and the Rwandans, and the various rebel groups they sponsored, began to clash26. This
eventually led to the signing of the Lusaka accords by the six warring nations and rebel groups that
same years in an attempt to stop the civil war. The accord called for a cease-fire, the deployment of UN
peacekeepers and the disarmament and repatriation of all armed foreign groups, as well as the creation
of the Inter-Congolese Dialogue to form a transitional government prior to the 2005 elections.
Unfortunately, all parties have not consistently implemented the treaty27. The Congolese Civil War
continues and is now the second deadliest conflict this planet has witnessed after World War II,
resulting in over 5.5 million deaths and numerous more non-fatal casualties and displaced countless
peoples.

18 The Colonial Legacy of the DRC

19 The CIA’s Black Ops: Covert Action, Foreign Policy and Democracy
20 Brief Political History of the DRC
21 The Assassination of Lumumba
22 The CIA’s Black Ops: Covert Action, Foreign Policy and Democracy
23 The CIA’s Black Ops: Covert Action, Foreign Policy and Democracy
24 The Colonial Legacy of the DRC
25 The Colonial Legacy of the DRC
26 Brief Political History of the DRC
27 The Colonial Legacy of the DRC
 Socio-economic context

Current State of Development in Angola

As previously mentioned, the country of Angola has just recently surpassed Nigeria as Africa's
top oil producer, which has fuelled a 16% growth in its real GDP in 2008, a consequent growth rate of
13% the following year, and has now stabilized at 6-7%28.
Assessing Angola's development progress since the end of its decades long civil was has been a
daunting task for both the national governments and the various United Nations' agencies, namely the
United Nations Development Plan (UNDP), in charge of monitoring the Millenium Development Goals
(MDGs). This has been largely blamed on the lack of transparency in the political and economic
systems and accountancy. In recent years, the situation has improved and provided scholars and
analysts with much of the needed information required to make such an assessment.
The Angolan government has realized that situation could heavily discourage foreign
investment, and has made some efforts to promote transparent accounting and governance, in
conjunction with the World Bank, by establishing a system of monitoring of government expenditures
as they occur29. Furthermore, the ministry of finance has been publishing its budgets, oil revenues and
Chinese financing on its website “with an unprecedented level of detail”30. Angola has also made
significant progress towards the achievement of a number of MDGs, as reflected in the results of the
the 2008-2009 household survey31 but not yet reflected in the current Human Development Index
(2010)32. The UNDP has identified particularly impressive improvement in the ability of the Angolan
government to provide universal primary education33, reduce infant mortality rates34, and drastically
improve maternal health and care35. This has largely been due to significant government and foreign
investment in the health and educational sectors, and an active effort to provide services for capacity
development36.
Despite the lack of an approval of a national policy for “gender mainstreaming”, Angola is also
striding towards achieving gender parity and equality. The number of women participating in
Parliament as well as Government, currently standing at 44% and 33% respectively, has been rapidly
increasing and gender parity has almost been achieved in schools37. A further positive note is the
approval in December 2010 of the Domestic Violence Act by Parliament, securing greater protection
for women against domestic violence38. Notwithstanding such improvements, Angolan women are still
the hardest hit by the effects of recent budget cuts and higher inflation rates, which further reduce their
income as well as their family budget. Comprehensive reforms targeted at the eradication or extreme
income poverty and environmental degradation are also deemed required by the UNDP in order for the
country to meet the MDGs39.
The efforts of the Angolan government and people towards developing a more stable society
and economy however have largely gone unnoticed among the international community. Many donors
and policy makers in the international civil, political and scholarly societies still predominantly
28 GDP - real growth rate (Angola).
29 The Millennium Development Goals in Angola
30 May 2008 report from the Economist Intelligence Unit
31The Millennium Development Goals in Angola
32 Angola – Country profile of human development indicators.
33 Millennium Development Goal Nr. 2
34 Millennium Development Goal Nr. 4
35 Millennium Development Goal Nr. 5
36 The Millennium Development Goals in Angola
37 The Millennium Development Goals in Angola
38 The Millennium Development Goals in Angola
39 The Millennium Development Goals in Angola
perceive Angola as “a sea of chaotic corruption”, as suggested by a report by the British Department for
International Development40 (DFID), and argue that the Angolan government has not helped to diffuse
such an impression. A 2007 report by the Council of Foreign Relation's Centre for Preventive Action
states that

"The Angolan government's response to allegations of corruption—a combination of candour, denials,

and evasion—is not always helpful and increases the scepticism with which many view Angola's
current efforts."41 - Toward an Angola Strategy

In effect, the Angolan government has been reluctant at implementing measure that would erode
or reduce the power of the current president, around which the political and economic power of the
country revolves. In one of his statements Lazar Antonic, Angola's director for the International
Republican Institute, deplored the lack of implementation of democratic processes by stating
"opposition parties and viewpoints do not have the same access to media as the ruling party does". This
statement was specifically referred to the Angolan Government's forced close-down of Radio
Despertar, which was one of the few media outlets granting airtime and coverage to opposition political
views and leaders. The lack of transparency also extends to Angola's state run oil company, Sonangol,
and the country as a whole continues to rank among the lowest in the Transparency International's
Corruption Perceptions Index, scarcely higher now than it was in 200242.

Current State of Development in the DRC

The Democratic Republic of Congo is confronted with a paradox as it is one of the wealthiest
countries with regards to natural and environmental resources, but is one of the poorest countries on the
planet pertaining to human and economic development. In the section dedicated to the historical
context, it has been outlined and argued that the current situation is the result and continuation of a
deeply rooted history of exploitation, conflict and violence.
The DRC holds some of the largest mineral reserves of the planet, accounting for a total of 64%
of the world's total coltan reserves and an estimated 10% of the world's copper. In recent years, and
with the accelerated progress of the digital and technological age, the demand for coltan has sky-
rocketed, providing the DRC with opportunities to earn the capital necessary for its government to
finance social and development projects. However, lack of infrastructure and poor management have
hampered such efforts, and output and efficiency of coltan production do not meet their potential
capacity. The demand for coltan and coltan-reliant products however has also has created numerous
lucrative business opportunities for rebel movements such as the Ugandan People’s Defence Forces
(UPDF), the Rwandan Patriotic Army (RPA), the Rally of Congolese Democracy (RCD), and the
Congolese Liberation Front (CLF) concentrated, just like the coltan ore veins, in the eastern border
regions of the Congo. Since 1998, coltan has also been utilized by the Ugandan and Rwandan armies
and rebels to generate multi million dollar sales utilized to finance and fuel their efforts in Congo. This
can be easily witnessed in the fact that Rwanda and Uganda have in recent years become major
exporters of the raw material, which they do not posses in very limited quantities or at all.
The forces involved in this conflict are primarily motivated by the economic incentives offered
by the exploitation of coltan and other natural resources rather than political ideals. This has resulted in
attacks on villages and devastation of entire communities to gain and maintain control over coltan-rich
areas as well as exploitation of the degrading economic and social conditions to employ children as

40 DFID – Angola.
41 Angola Commission Report
42 Angola: Fourth Review Under the Stand-By Arrangement, Request for Waivers of Nonobservance of Performance
Criteria, Request for Waivers of Applicability of Performance Criteria, and Request for Modification of Performance
Criteria.
labourers to keep up with the mineral's demand as well as their low operating costs. However, the rebel
forces are not the sole culpable, as the DRC's “weak and abusive forces”43 have been both unable to
quell continuing militia activities and have been reported for being responsible for 40% of recently
reported human rights violations in the eastern regions of the country. These reports include accusation
of rapes, mass killing of civilians and summary execution, a practice that the DRC police has been
utilizing against civilians with total impunity44.
Another aspect that derives from the coltan mining in the Congo is its severely negative
ecological and environmental impact. The DRC is home to more of half of Africa's forests, which have
been cleared to access the soil, thus destroying the habitat of the mountain Gorilla, cutting its
population by nearly half in a matter of a few years.
All the aforementioned sources of conflict have resulted in a scarcity of human and social
development in the DRC, and have contributed to its standing as one of the least developed and poorest
countries on this planet. The ongoing conflict which has resulted in enormous fatalities has also had an
impact on the life expectancy at birth, which currently stands at 43 years and is one of the lowest
among sub-Saharan African countries as well as the world. The low life expectancy is also in part
caused by the high rates of tuberculosis, HIV/AIDS and malaria.
The DRC has also acquired the title of “worst country in the world to be a woman”, as its
maternal death rate is the world's highest and violence, sexual or otherwise, against women ins
endemic. Additionally, Congo's inadequate health, social and economic conditions claim the lives of
two children every ten before their reaching the age of five45. The children who do not perish because
of malnourishment, disease or conflict are rarely attending school.
The economic development of the DRC is also encumbered by an extremely high external debt
of around US$ 8 billion – a figure three times greater than the “sustainable” level of debt suggested by
the IMF and WB, and constitutes 93% of the country's GDP. Furthermore, the DRC has not yet fully
qualified for debt relief under the enhanced Heavily Indebted Poor Country (HIPC) initiative46. This
has led Congo to adopt some economic policies suggested by the World Bank and the IMF in order to
acquire the status necessary to apply to the HIPC initiative. Such policies might include the concession
of exploitation of water and other natural resources by foreign direct investors and foreign corporations
and multinationals. A report by the IMF has underlined “the [DRC's] government's lack of commitment
to meet certain requirements” and specified that this has in turn “jeopardized the DRC's ability to
receive some interim debt relief, quality for full relief, and improve the county's overall economic
prospects.
Similarly to neighbouring Angola, transparency has also been deemed a major obstacle towards
achieving a sustainable development plan, and corruption in the DRC is widespread by many
accounts4748. Transparency international's CPI index identified the DRC as one of the ten most corrupt
countries in the world, and specifies that this has hindered efforts to reform the police and military to
hold violators of human rights accountable. To complete this vicious cycle, reforms are further impeded
by the lack of support from corrupt institutions within the DRC, and according to numerous NGO
representatives, the lack of a strong and effective judiciary system further impeder efforts in this regard,
thus promoting a “culture of impunity”.49 The weak judiciary system and its ineffective enforcement of
commercial contracts and laws has discouraged the private sector investment and its traditionally
correlated economic growth. The World Bank has ranked the DRC's enforcement of contracts “among
43 The Democratic Republic of the Congo: GAO-08-562T.
44 The Human Rights Situation in the Democratic Republic of Congo (DRC) during the period of July to December 2006
(Feb. 8, 2007).
45 USAID
46 The Democratic Republic of the Congo: GAO-08-562T.
47 Angola's Political and Economic Development
48 Brief Political History of the DRC
49 The Democratic Republic of the Congo: GAO-08-562T.
the weakest in the world, such that a company might need to expend roughly 150% of a typical
contract's value to ensure enforcement through court proceeding”50.
Given the current implications attached to the production and trade of coltan in the DRC, the
attention of international donors and NGOs has been focused on the government's capacity and ability
in natural resource management. An already existing certification scheme for diamonds, the Kimberley
Process Certification Scheme, has criticized the DRC's government for its extremely weak internal
controls in the field of custom and trade capacity, and ability to successfully track diamond trade of a
number of self-employed miners. Such challenges are only expected as being more pronounced in an
industry where no certification scheme has been implemented, or is even deemed possible. The lack of
involvement of the local civil society, and the fuelling of continued conflict and corruption thus
indicate that an essential part of the DRC's road to a sustainable development and the transformation of
its enormous wealth of natural resources into societal wealth and well being must thus be its ability to
improve natural resource management.

Drivers of development in the DRC and Angola – China

Angola – Oil
As previously mentioned, Angola has been depending upon its oil industry to gather the funds
and finances necessary to establish a plan of social security and welfare, and to fuel its economic and
social development with moderate success despite the lack of international recognition. However, an
essential aspect in determining the effectiveness of the employment of these funds lies in the character
of Angola's major trading partners, most notably China.
Angola is dependent on crude oil for almost 95% of its total exports51, and it is almost the only
commodity that China imports from the country52. Angola's crude oil supply to China is so bountiful
that provides the latter with 50% of its total African oil imports53 and it is China's single largest source
of oil. Oil exports to China from Angola have increased sevenfold since the end of the civil war, a rate
that doubles the growth rate of Angolan oil exports to the U.S. During the same period54. However,
Angolan oil production is still dominated by Western companies such as Chevron-Texaco, Total, BP,
and Exxon Mobil55. Now, Angola is China's largest trading partner in Africa. This relationship has
provided the former with a steady influx of funds into government coffers. Since 2002, China has
become Angola's second largest export destination after the European Union, comprising for between a
quarter and a third of the total national exports, and has turned to China for the provision of most of its
development aid under the form of “natural resource-backed infrastructural development, provision of
expertise, skills and labour, and in the forms of enormous loans.
There are inherent disadvantages to this in the field of macroeconomic stabilization, as inflation
reached triple digits during the course of the civil war and external debt sky-rocketed due to the large
loans acquired by the Angolan government to develop its oil infrastructure and it's lack of ability to pay
such loans back56. Furthermore, economic diversification is a crucial issue, as it renders the Angolan
economy and the subsequent welfare of its people on the price of a single commodity and the
fluctuations in trade of such a resource.
In order to satisfactorily develop the oil sector, Angola has turned to China for the provision of

50 The Democratic Republic of the Congo: GAO-08-562T.

51 Five Countries – China in Angola
52 Five Countries – China in Angola
53 Five Countries – China in Angola
54 Angola's Political and Economic Development
55 Angola and China: A Pragmatic Partnership
56 Angola's Political and Economic Development
expertise, own labour and financing amounting to billions of dollars57. Some of such examples include
the refurbishment of the Benguela railway and the rehabilitation of the railway segment between the
port of Namibe and the city of Menogue for US$ 2 billion, the construction of the new Luandan airport
for a total of US$ 450 million, and a US$ 3 billion construction of an oil refinery in Lobito.
The booming of the oil industry in recent years has allowed for the creation of wealth in sectors
which are related to that of oil extraction, production, refining and retailing such as “finance,
hospitality, and other industries that service oil companies”58, but it also preludes a rise in the cost of
both life and business, and creates the economic stratification of the society between those involved in
an industry related to that of oil, and the rest of the population.
In the eyes of numerous economists and analysts, including those of the International monetary
Fund, the Angolan government's macroeconomic policies which allowed it to stabilize its inflation rate
constituted “an admirable job”, and further increased its ability to successfully pay back its creditors59.
However, the opinions on such development differ slightly on the part of African scholars and analysts,
which have expressed mixed opinion regarding the government's efforts to promote economic
diversification as well as “implement a pragmatic development strategy”60 that would allow it to
strategically employ its oil revenues to directly fund development efforts. While some maintain that the
country has made significant progress in this respect since the end of the civil war in 2002, while others
criticize the new government for not having directed enough energy and attention to the alleviation and
eradication of poverty.
It is the concern of a number of foreign relations analysts that the intensification of this
economic and political relationship between China and Angola were established at the expense of its
other diplomatic relationships, especially with the United States61. However, such concerns, although
pertinent and justified, have not been reflected in the foreign investment of EU and U.S. companies and
firms in Uganda. A number of western oil companies have numerous drilling and refining projects in
the country, and the Angolan government has actively sough to expand its diplomatic and economic ties
with a variety of countries such as France, India and the United States62.
The preference of Angola, and many other African countries, for Chinese financing over
European development aid derives from the better conditions attached to such financing such as lower
interest rates, and more lenient repayment time, in exchange for the limited competition present in
Angola.

Congo – Agriculture and Coltan

China has acquired a similar trade relationship with Angola's neighbour, the Democratic
Republic of Congo, with particular interest to its coltan reserves. For almost 10 years conflict minerals,
mostly coltan and copper, have sustained and fuelled the ongoing devastating war which has claimed
more lives than any other than World War II. During these years, the world has continued to consume
products made with minerals such as coltan from the DRC as the complex global supply chain diffuse
corporate social responsibility and accountability63. In addition, the mineral is extremely hard, if not
virtually impossible, to tack once refined, making a viable certification system almost virtually
impossible.
Coltan from the DRC is almost impossible to track due to the teeming black market and lack of
governmental regulations as it passes through a minimum of ten intermediaries64 from supply to
57 Five Countries – China in Angola
58 Angola's Political and Economic Development
59 http://www.imf.org/external/pubs/cat/longres.cfm?sk=21422.0
60 Angola's Political and Economic Development
61 Five Countries – China in Angola
62 Angola and China: A Pragmatic Partnership
63 China and Congo's Coltan Connection
64 China and Congo's Coltan Connection
construction. Coltan is initially mined in small manual operations and transferred to the processing
plants through several intermediaries who consolidate and stockpile the ores as well as negotiate the
sales near the mines. Buying houses in urban centres, often connected to rebel forces, in turn purchase
the ore from the miners to then be exported65. A U.N. investigation found that many buying urban
centres knowingly purchase coltan from areas controlled by armed groups and exploit the distinction
between themselves and the suppliers to claim ignorance of the ores’ origin. International companies
then transport most of the ore either directly, or re‐exported via Uganda and Rwanda, to overseas
processing facilities. The cross border smuggling of coltan has also been driven by economic incentives
as the export tax from eastern DRC is greater than that of nearby countries66.
The processing phase of the mineral is “the bottleneck of the supply chain” as almost the
entirety of the ore, approximately 80%, is consumed by three key processors: the U.S. based Cabot
Corporation, German based H.C. Starck and the Chinese state‐owned Ningxia Non‐ferrous Metals
Smeltery (NNMS)67. The increasing majority of such a supply is being diverted to China, with the plan
for China to pay to develop the region and complete the task of state building in exchange for the
precious mineral.

The Chinese Model of Business Development

China has been pursuing a specific, systemic and strategic plan of development and business
relation with Africa. There are some underlying aspects of such a strategy which determine its
application and implementation. Firstly, China pursues such development efforts mostly only in areas
which would also offer them an economic advantage and a satisfactory remuneration rather than an
expense with no return such as is traditional development aid. Furthermore, it does not provide aid in
the form of capital and money, but in the form of loans directly funnelled to those companies, Chinese
and local alike, responsible for the planning, building, maintenance and operation of the infrastructure
and services. Unlike popularly believed, however, the Chinese government does not only finance those
development plans which are directly financially lucrative, but also those which improve the social and
development conditions of a state in order to benefit from such a prosperity in the long-term.
In 2006, the Chinese oil company Sinopec managed to finalize a deal with the Angolan
government for the development of its oil sector. This was partially due to a much higher bid than the
Indian competitor and counter-offer, but was also strongly influenced by the Chinese government's
loans to Angola independent of the IMF conditional ties and requirements68. China has extended three
multi-billion dollar loans to the Angolan government under such conditions – two loans, in 2004 and
2007 respectively, of US$ 2 billion from China Exim Bank, and another in 2005 for US$ 2.9 billion
from China International Fund Ltd69. The two loans from China Exim Bank will be employed to
finance projects intended to develop popular energy, water, health and communication infrastructure
and services as well as improve efficiency in the fishing sector, and is managed by the Ministry of
Finance. The loan from China International Fund Ltd. will instead serve the commercial and economic
interests that Angola and China share, and will thus be employed by the Gabinete de Reconstrução
Nacional (Cabinet for national reconstruction, GNR) to finance railway rehabilitation, highway
construction and the building of the new Luanda airport. The Chatham House paper notes that "Unlike
projects undertaken by the ministry of finance, it is unclear how much money is directly managed by

65 China and Congo's Coltan Connection

66 China and Congo's Coltan Connection
67 China and Congo's Coltan Connection
68 Angola and China: A Pragmatic Partnership
69 Five Countries – China in Angola
the GRN, how funds are allocated among projects, and how much money so far has been spent"7071.
Angola's most successful business relationship is thus also a diplomatic one. As stated
by Angolan president Dos Santos on the occasion of the visit by the Chinese Prime Minister in 2006,
“China needs natural resources, and Angola wants development”72. China's reputation with the average
Angolan is "fantastic. They all think things are starting to work because of the Chinese"73 according to
Filippo Nardin, president of the Angola Educational Assistance Fund. However, critics have suggested
that Chinese workers migrating to Angola are stealing those jobs which should otherwise be intended
for Angolans – credit contractual obligations under China Exim Bank state that a minimum of 30% of
local contractors is required in the Chinese projects, but the government is having difficulties fulfilling
its contractual obligations largely due to the lack of adequately skilled labour74.
An additional concern of the Chinese business development model are those pertaining to the
government's ability to provide the maintenance necessary for the efficient functionality of Chinese
projects and infrastructure after their completion. It will thus be necessary for the Chinese and Angolan
government to focus their efforts on planning and organization to ensure the stability and transfer or
knowledge and expertise, “or risk relying on the Portuguese and others returning in the near future to
rebuild what the Chinese have just completed”7576 according to Campos and Vines of the CSIS, and the
training and formation of an effective, skilled and efficient workforce is likely to take years. A report by
the CFR's Centre for Preventive action cautions that:

"The greatest deficiency in the country is institutional and human capital... patience and forbearance—
rebuilding a country after so much destruction, and creating a more equitable society in which
Angola's leaders are politically accountable, will not be achieved quickly". 77
– Stephanie Hanson, Council on Foreign Relations

However, the Angolan state-owned petroleum company, Sinopec, has a long-standing reputation
for reliability, professionalism and business savvy, as it has proved by providing and positively
managing the funds utilized in the past decade to reduce Angola's external debt78. The Angolan
government is aware of the numerous difficulties in setting up the foundations for a future sustainable
development plan that would benefit the Angolan peoples at large. The GRN and the government have
established a mechanisms whereby 5% of the proceeds derived from the oil sectors are re-invested into
the non-oil sector. Good relations with Western donors are being maintained by the Angolan
government's agreement to pay the bulk of its debt owed to the Paris Club creditors, and amounting to
US$ 2.5 billion, on an accelerated basis as well as seeking greater foreign direct investment by means
of easing investment and business laws. Regardless Regarding the criticisms pertaining to the lack of
transparency and accountancy and the overall opaqueness of the conditions and investments attached to
the Chinese lines of credits, Angola has made efforts to clarify and publicize the Angolan terms for use
of those funds, but more disclosure is still being called for by the international community79.
China has attempted to adapt a policy similar to that of Angola in the neighbouring country of
the Democratic Republic of Congo. In 2007, the DRC reached an accord with the Chinese government
and the Chinese Exim Bank that would provide it with a staggering US$ 8.5 billion. The funds are
70 Angola and China: A Pragmatic Partnership
71 Five Countries – China in Angola
72 China and Congo's Coltan Connection
73 Angola's Political and Economic Development
74 Five Countries – China in Angola
75 Angola's Political and Economic Development
76 Angola and China: A Pragmatic Partnership
77 Angola's Political and Economic Development
78 Angola's Political and Economic Development
79 Angola and China: A Pragmatic Partnership
intended and planned for the building of infrastructure and the development of the country's mining
sector, which is considered the country's most promising industry to fuel foreign direct investment and
allow the DRC's government to acquire the financial revenues it requires to achieve a level of
minimum social welfare to build upon.
The International Monetary Fund has given numerous warnings as to the possible distortionary
and counter-productive effects that such a long might have on the economy of the DRC. It is widely
believed, however, by the Congolese government, peoples and the international community at large,
that such a controlled injection of development funds could constitute a welcome and desirable boost.
The reservations of the international community and the IMF derive from the fear of the Chinese
advancements in Africa as a new form of colonialism, economic imperialism and/or economic
hegemony disguised as a benevolent act, as well as a predisposition of the joint Chinese-African
development plants to lack transparency and accountability. The DRC however has proceeded
cautiously on such terms, as the Chinese have, in order to ensure the successful completion of these
project to mutual satisfaction and advancement, and have thus outlined agreements regarding the
policies which would regulate the labour force as well as, for example, the environmental costs
involved80.
China's interests in the DRC are dependent on its large coltan and copper reserves, but primarily
the first rather than the latter. China is in fact the leader of global electronics production and holds and
increasing share of that market. Furthermore, the growing Chinese middle class represents a growing
consumer market for electronic goods, only fuelling the expectations for global coltan consumption.
Furthermore, data from the past few years suggests that the majority of Chinese ore imports were
destined for the Chinese NNMS. The interest held by China in the DRC's coltan reserves, accompanied
by the ongoing conflict in the eastern part of the country where the majority of coltan reserves are
located, might prompt China to intervene in stabilizing the area and/or cracking down on the conflict
mineral trade81, perhaps even with military or security forces.
There is a drastic difference between the contextual relationship between Angola's and Congo's
trade relations with China. In the DRC, the conflict is still ongoing and the foreign debt levels are still
staggeringly high82 reaching 121% of the national GNI in 200983, the poverty level of the country is
almost twice that of neighbouring Angola (70.3% and 40.6% respectively)8485 and the vast majority of
development indicators of the DRC are far lower than those of Angola. The question arises thus of how
will the DRC be able to repay effectively the lines of credit granted by the Chinese, and whether they
will be able to implement both the changes required of them to create the transparent governance
necessary for a healthy business environment those needed to transform economic wealth of the few
into the social welfare of the population at large.
The infrastructural projects implemented by China in the DRC are a major milestone in DRC's
infrastructural history as they comprise US$8.5, a relatively large amount of money considering that
the 2007 government budget was of US$ 1.3 billion86. The rationale behind the deal between China and
the DRC is based upon the establishment of a state-owned joint venture, Socomin, which will invest a
third of the funds in new mining areas and will utilize subsequent profits to repay these mining
investments and relates infrastructural works. An additional ten million copper per year over a 15-year
period will be mined by Socomin to complement the repayment of these investments.
Drawing inspiration from the criticisms and perceived flaws of the Chinese-Angolan

80 China in the Democratic Republic of Congo (DRC)

81 China in the Democratic Republic of Congo (DRC)
82 World Bank Report 2010 – Congo, The Democratic Republic of.
83 World Bank – The Democratic Republic of Congo
84 World Bank – Angola
85 World Bank – The Democratic Republic of Congo
86 China Outdoes Europeans in Congo
relationship, the DRC has stipulated under its agreement with china that only one in five workers can
be Chinese, and that 0.5% of the investment must be spent on the transfer of technology and training of
Congolese staff. This also addresses another main issue pertaining to the maintenance of Chinese
projects, which is a central point of debate in Angola over the Chinese development and business
projects. Additionally, one percent must be spent on the promotion of social activities in the mining
regions, and three times as much will be utilized to cover environmental costs. A final 10-12% of the
work is required to be sub-contracted to Congolese companies and businesses87.
Paul Fortin, director of the Congolese-Chinese joint mining venture, rebukes the accusations
that China is exploiting the African continent to its advantage and believes that the DRC has an
incredible amount to gain too. Under Mr. Fortin's rationale, Congo's doesn't have to “wait for its
infrastructure until it has the money... [With China] building starts immediately with the natural
resources as guarantee. Except in oil-rich states, I know of no other deal quite like this”88 and many
scholars and analysts believe that if carried out well, this could be a very positive step forward for the
DRC although if managed erroneously could escalate in further humanitarian crises in the region.
The “China Deal” is especially positive for Congolese president Joseph Kabila who's
accomplishments have been mediocre in the eyes of its constituents, who have started to criticize him.
Furthermore, the agreements with China are especially designed to bypass the notoriously corrupt
Congolese bureaucratic machinery as it is directly channeled by the Chinese Exim Bank to the Chinese
state owned enterprises and other contractors89.

Conclusion
Despite similar historical backgrounds, the countries of Angola and the Democratic Republic of
Congo are both alike and different in their plans towards development and the transformation of their
vast wealth in natural resources into social welfare and drive towards sustainable long-term economic
and social development.
Instead of targeting poverty reduction directly and explicitly, the Angolan government has
instead focused on the development of large infrastructure and public works projects with the hopes
that such will aid in the establishment and development of a stable and vibrant economy. These projects
have largely been administered through the Cabinet for National Reconstruction (GRN) which was
established in 2004. Instead on focusing on those areas approached by the many international non-
governmental groups, such as the development of a strong civil society groups and judicial systems,
known as the “software approach”, the Angolan government has instead opted for a “hardware
approach”90 in the hopes that the development of the means for the people to acquire wealth will in turn
result in a societal-wide increase in welfare. There is no doubt that repairs, maintenance and additional
building of Angolan infrastructure and communication systems are vital to a healthy development.
However a 2006 poll by the International Republican Institute, sympathetic to the opposition party,
determines that three-quarters of respondents believed that unemployment is the most important issue
currently facing the country.
Some analysts believe that the agricultural sector is likely to be developed and has the potential
to create a significant number of jobs just as it does in the neighbouring DRC. The World Bank exports
that an approximate two thirds of the Angolan population earns its living from small scale agriculture
despite the Angolan government's allocation of less than 1% of its budget to such a sector. A number of
other scholars and analysts are sceptical about the possible impact of the agricultural sector on Angolan
87 China Outdoes Europeans in Congo
88 China Outdoes Europeans in Congo
89 Angola and China: A Pragmatic Partnership
90 China Outdoes Europeans in Congo
economy as they do not believe it to be particularly internationally competitive due to the high prices
caused by the expensive oil sector. The economic dependence on oil thus makes the economic
diversification necessary for a sustainable development difficult to achieve. "Although the government
is making efforts to train people, it would be unrealistic to think that they train people as quickly as
they build infrastructure” state Campos and Alex Vines of London's Chatham House91.
The DRC has followed much of Angola's philosophy and attitude towards the adoption natural
resource backed development as well as its relationship with China. Despite its inherently more
challenging context, Congo has an incredible potential to become one of Africa's most prosperous
economies and is considered to be essential to ensuring long-term stability in the region92. However, the
return of peace to the majority of the country in 2003 has paved the road for the implementation of
political and economic reforms and recovery.
The DRC however severely lags behind Angola in most, if not all, of the HDI and MDG
indicators and indexes, and is still considered to be one of the least developed countries on the planet.
Despite the dire and drastic current situation, the DRC's external debt rate has improved dramatically
and some improvements can now be seen in the fields of governance and acquiring security. With
regards to the Chinese presence in the DRC and its involvement in the mining operations of copper and
coltan, the opinions are largely mixed. Although some believe that China would be a positive influence
in the region as it would attempt to secure its economic interests attached to the supply of both
aforementioned minerals, others hold the opinion that Chinese involvement in the area will only further
exacerbate the situation as it increases the demand and competition for those very minerals largely
responsible for the conflict itself.
Angola seems to have been much more successful than the DRC in transforming its natural
wealth into social welfare, mostly thanks to the already existing systematic and structural pre-
conditions which allowed it to achieve a more controlled and planned transition to the model of
development which they believe is more akin to their needs, which is that offered by China. The most
notable concern pertaining to Angola is its level of transparency, corruption and ease of business. In the
DRC however, the ongoing conflict and the long-standing history of absolute exploitation, as well as
the creation of a culture of impunity, has obstacled any such efforts towards the goals of a stable
nation/state building.

Word Count: 8,684 (Excluding Footnotes and Bibliography)

91 Angola and China: A Pragmatic Partnership

92 World Bank – The Democratic Republic of Congo
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