Angola Aircraft Acquisitions Fly in the Face of Mounting Burdens

By Pedro Agosto

LUANDA, Angola, February 7, 2019/ — Saddled with a growing debt burden and struggling to eradicate poverty, Angola still has the luxury of splurging millions in foreign currency under the state carrier’s fleet restructuring and modernisation programme.

This is the latest in a series of deviations by President Joao Lourenco from his pledges to deal with the mismanagement of public funds since he succeeded Jose Eduardo dos Santos, in power for 38 years until September 2017.

Lourenco recently approved the plan by national airline, TAAG to negotiate the supply of new aircraft with Boeing and Bombardier, under its fleet renewal process.

The president has subsequently ordered his Ministers of Finance and Transport -Archer Mangueira and Ricardo de Abreu respectively – as well as TAAG executives to start negotiations with the “different funders available” for the purchase of the new aircraft.

The order also authorizes the Minister of Transport to “unleash the instruments to structure and set up the financing operation for the acquisition of aircraft” and “negotiate the refinancing of two Boeing 777-300 ER aircraft” TAAG acquired in recent years.

Amounts are not specified in the document but research suggests some aircraft the parastatal intends to purchase cost US$23 million each.

TAAG, despite having received new fleet between 2014 and 2016, intends to purchase 11 aircraft.

However, critics raised concern this would be tantamount to wasteful expenditure considering TAGG’s current fleet of 13 Boeing aircraft, three of which are 777-300 ERs, were modern.

The company also has five 777-200 and another five 737-700 used for domestic and regional connections.

“TAGG’s so-called fleet modernisation at this stage is unnecessary as its fleet was acquired in recent years,” said analyst Dominique Jordao.

“To be spending so much yet there is severe poverty and to be seeking more funders despite our trap in debt reflects misplaced priorities,” Jordao added.

The Southern African country is grappling with a debt burden.

It secured $2 billion in Chinese financing late last year during Lourenço’s first visit to Beijing.

Before then, government projected its debt to rise to $77,3 billion-over 78 percent of gross domestic product (GDP)- by the end of 2018. Over $21 billion was already owed to China before Lourenco’s visit.

Alongside debt, poverty is another serious issue in Angola, Africa’s second-biggest oil producer (after Nigeria), which is bearing the brunt of the decline in the sector over recent years.

According to Borgen Project, the anti-poverty think-tank, unequal distribution of wealth is among other factors contributing to poverty, with 55 percent of Angola’s population of over 30 million living on less than $1 a day.

Government struggles to provide basics such as running water.

A fifth of the employable population is out of work.

“Oil and diamond extraction bring a lot of revenue to Angola, but much of the wealth stays with large companies and elite individuals, like politicians,” the project stated.

Maka Angola, the anti-corruption and pro-democracy organisation, pointed out Lourenço’s own behavior during his first year in office contradicts his narrative.

It started with lavish spending during a state visit to Europe, where the Angolan delegation went on a spending spree, chartering at least three aircraft, including a Boeing 787 VIP private airliner, a Boeing 737 and a Gulfstream business jet.

It contradicted Lourenço’s pledges his narrative of being a modest person.

“Today, after 18 months in office, the impetus (to fight corruption and lavish spending) seems to have loosened and few results are in sight,” Maka Angola’s Moiani Matondo stated.

Lourenco justified TAAG’s plans to acquire new aircraft, saying it would “boost its business policy and achieve its strategic objectives.”